Annual Report LGT Bank Ltd., Vaduz

Annual Report 2015 LGT Bank Ltd., Vaduz

Our company s stable ownership structure enables us to take a long-term approach and gives us a high level of consistency in our management and staff. Thomas Piske, Chairman of the Board of Directors A look inside the Princely Collections For more than 400 years, the Princes of Liechtenstein have been passionate art collectors. The Princely Collections include key works of European art stretching over five centuries and are now among the world s major private art collections. The notion of promoting fine arts for the general good enjoyed its greatest popularity during the Baroque period. The House of Liechtenstein has pursued this ideal consistently down the generations. We make deliberate use of the works of art in the Princely Collections to accompany what we do. For us, they embody those values that form the basis for a successful partnership with our clients: a long-term focus, skill and reliability. Cover picture: Bauer brothers, Hortus Botanicus, detail from Lilium candidum L., c. 1778 LIECHTENSTEIN. The Princely Collections, Vaduz Vienna www.liechtensteincollections.at

Contents 4 Organizational structure 5 The business year in comparison 6 Annual report 7 Balance sheet 8 Off-balance sheet transactions 9 Profit and loss account 10 Appropriation of net profit 11 Flow of funds statement 12 Appendix to the financial statement 16 Remuneration report 21 Notes on the balance sheet 35 Notes on off-balance sheet transactions 37 Notes to the profit and loss account 39 Additional information 43 Report of the statutory auditor 44 International presence

4 Organizational structure as of April 2016 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, Zurich

5 The business year in comparison Balance sheet 2015 2014 Change absolute % Balance sheet total CHF m 29 108.2 30 692.7-1 584.5-5.2 Shareholders funds (after profit distribution) CHF m 2 728.6 2 616.2 112.3 4.3 Client deposit CHF m 16 433.0 16 795.1-362.1-2.2 Due from clients CHF m 12 342.1 11 825.9 516.2 4.4 Profit and loss account Net interest income CHF m 123.4 111.8 11.7 10.4 Net commission and fee income CHF m 270.0 229.9 40.2 17.5 Income from financial transactions CHF m 81.3 65.8 15.5 23.6 Gross operating income CHF m 507.9 438.7 69.2 15.8 Personnel expenses CHF m 203.2 191.4 11.7 6.1 Operating expenses CHF m 165.7 148.6 17.1 11.5 Result on ordinary business activity CHF m 121.8 87.5 34.3 39.2 Taxes CHF m 9.5 24.9-15.4-61.8 Profit for the year CHF m 112.3 492.1-379.8-77.2 Client assets under administration Client assets under administration CHF m 62 380.3 61 268.1 1 112.2 1.8 Personnel (full-time equivalents) Staff at year-end 808 771 37 4.8

6 Annual report Taking into consideration the difficult economic environment, including negative interest rates and volatile currencies, LGT Bank Ltd., Vaduz, can look back on a very positive year with a significant rise in gross profit. impressed by our achievements in the integration of new employees, but also by our offering in the area of continuing education, as well as the opportunities available to staff and management for personal and professional development. Thanks to the higher level of assets under management, income from services rose by 17.5 percent to CHF 270 m. Income from trading activities also experienced an above-average increase of 23.1 percent to CHF 75.5 m. This was driven in particular by a high level of client trading activity in foreign currencies and the anticipation of market developments. Despite the negative interest rates, net interest and similar income rose by 10.4 percent to CHF 123.4 m, which is attributable to active balance sheet management. 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. On the cost side, personnel expenses rose by 6.1 percent to CHF 203.2 m. As at year-end 2015, we employed 808 staff (expressed in full-time equivalents). This corresponds with an increase of 37 full-time positions compared to the previous year. Business and office expenses were up by 11.5 percent to CHF 165.7 m. Overall, gross profit rose significantly from CHF 98.7 m to CHF 139.1 m. The balance sheet total decreased by 5.2 percent to CHF 29 108.2 m due to the appreciation of the franc. LGT Bank Ltd. remains very well capitalized. As at year-end 2015, the tier 1 ratio was 22 percent, and therefore significantly above the minimum regulatory requirement of 8 percent. Positive net asset inflows were once again reported in 2015, and considerably exceeded the currency-related decline in existing assets under management. Assets under management rose by 1.8 percent to CHF 62.4 bn as at year-end 2015. Outlook We have gotten off to a good start in 2016, in line with our expectations, and remain optimistic in our business outlook and opportunities for growth for the remainder of the year and beyond. As in previous years, we expect to see further volatility in financial markets in 2016, and cannot at this time rule out that this could have a negative impact on our earnings performance. This also applies in the event that the Swiss franc should appreciate further. The economic environment will continue to present us with significant challenges. Low interest rates are expected to persist in putting pressure on our performance, at least in the mediumterm. However, we can expect to see positive effects once interest rates are raised, which has been forecast for some time now. A key factor for the successful development of our company remains LGT s stable ownership structure, which enables us to take a long-term approach and gives us a high level of consistency in our management and staff. Accolades for high quality Our high standards of quality in all areas were once again recognized by a number of independent juries in 2015. The Handelsblatt Elite Report awarded LGT Bank Ltd. the highest summa cum laude rating for the 13 th consecutive year, and we received a wholly commended rating from the renowned Fuchsbriefe for the quality of our advice and products. In 2016, the Top Employers Institute designated us as a Top Employer for the second year in a row. The Institute was particularly We will remain a reliable partner to our clients in their financial matters and thank them for the trust they place in us. We also thank our employees for their strong dedication throughout the course of the reporting year. Thomas Piske, Chairman of the Board of Directors Norbert Biedermann, Chairman of the Executive Management Board

7 Balance sheet Assets (TCHF) Appendix 31.12.2015 31.12.2014 Change absolute % Cash and cash equivalents 3 906 905 8 301 781-4 394 876-52.9 Debt instruments of public authorities and bills which are eligible for refinancing at central banks 3, 22 12 905 25 623-12 718-49.6 Due from banks 16 8 349 311 5 792 510 2 556 801 44.1 Due from clients 1, 16 12 342 124 11 825 886 516 238 4.4 of which mortgage loans 1, 16 3 149 322 2 929 830 219 492 7.5 Bonds and other fixed-interest bearing securities 2, 3, 4, 23, 39 3 132 236 2 516 272 615 964 24.5 Equities and other non-fixed-interest securities 2, 3, 4, 39 138 1 339-1 201-89.7 Participations 5, 7, 8, 39 205 166 39 23.5 Shares in affiliated companies 5, 6, 8, 21, 39 57 068 57 068 0 0.0 Intangible assets 9 64 23 41 178.3 Tangible assets 8 83 693 83 281 412 0.5 Other assets 41 1 182 169 2 048 509-866 340-42.3 Accrued income and prepaid expenses 41 415 40 251 1 164 2.9 Total assets 29 108 233 30 692 709-1 584 476-5.2 Liabilities (TCHF) Due to banks 16 8 595 147 9 609 484-1 014 337-10.6 Due to clients 16, 24 14 668 018 15 278 901-610 883-4.0 Securitized liabilities 12, 25 1 764 801 1 515 953 248 848 16.4 Other liabilities 42 1 207 100 1 519 692-312 592-20.6 Accrued expenses and deferred income 91 573 78 165 13 408 17.2 Provisions 13, 26, 36 52 852 74 045-21 193-28.6 Subordinated liabilities 40 160 220-60 -27.3 Provisions for general banking risks 13 0 0 0 0.0 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 700 548 208 403 492 145 236.2 Profit for the year 112 333 492 145-379 812-77.2 Total liabilities 29 108 233 30 692 709-1 584 476-5.2 Important: This document is a non-binding English translation of the authoritative German annual report.

8 Off-balance sheet transactions Off-balance sheet (TCHF) Appendix 31.12.2015 31.12.2014 Change absolute % Contingent liabilities 1, 27 3 703 147 3 659 732 43 415 1.2 of which liabilities from guarantees and indemnity agreements as well as from the furnishing of collateral 1, 27 3 703 147 3 659 732 43 415 1.2 Credit risks 318 436 155 455 162 981 104.8 of which irrevocable commitments 1 291 930 116 611 175 319 150.3 of which commitments to subscribe additional contributions for shares or other equity securities 1 26 506 38 844-12 338-31.8 Derivative financial instruments Positive replacement values 30, 41 798 995 1 578 142-779 147-49.4 Negative replacement values 30, 42 1 052 872 1 418 090-365 218-25.8 Contract volume 30 107 463 233 99 526 910 7 936 323 8.0 Fiduciary transactions 29 123 926 194 462-70 536-36.3 Important: This document is a non-binding English translation of the authoritative German annual report.

9 Profit and loss account Profit and loss account (TCHF) Appendix 2015 2014 Change absolute % Interest earned 32, 33 170 866 178 635-7 769-4.3 Interest paid -47 424-66 865 19 441-29.1 Net interest income 123 442 111 770 11 672 10.4 Equities and other non-fixed-interest securities 0 0 0 0.0 Participations 4 954 1 161 3 793 326.7 Shares in affiliated companies 53 64-11 -17.2 Current income from securities 5 007 1 225 3 782 308.7 Commission income from lending business 5 329 5 405-76 -1.4 Commission income from securities and investment business 317 659 276 817 40 842 14.8 Commission from other services 16 305 15 860 445 2.8 Income from commission business and services 339 293 298 082 41 211 13.8 Commission paid -69 255-68 225-1 030 1.5 Net commission and fee income 270 038 229 857 40 181 17.5 Income from financial transactions 81 326 65 805 15 521 23.6 of which from trading 33 75 501 61 337 14 164 23.1 Other ordinary income 43 28 098 30 027-1 929-6.4 Gross operating income 507 911 438 684 69 227 15.8 Personnel expenses 34-203 151-191 448-11 703 6.1 Operating expenses 35-165 680-148 569-17 111 11.5 Business expenses -368 831-340 017-28 814 8.5 Gross profit 139 080 98 667 40 413 41.0 Amortization of intangible assets and depreciation of tangible assets -6 913-7 883 970-12.3 Other ordinary expenses 36, 44-5 114-1 704-3 410 200.1 Value adjustments on receivables and funds allocated to provisions for contingent liabilities and credit risks -5 410-2 874-2 536 88.2 Income from the release of value adjustments on receivables and from provisions for credit risks 197 1 328-1 131-85.2 Amortization of participations, shares in affiliated companies and securities held as non-current assets 0 0 0 0.0 Result on ordinary business activity 121 840 87 534 34 306 39.2 Income tax -9 507-24 889 15 382-61.8 Other taxes 0 0 0 0.0 Income from the release of provisions for general banking risks 0 429 500-429 500-100.0 Profit for the year 112 333 492 145-379 812-77.2 Important: This document is a non-binding English translation of the authoritative German annual report.

10 Appropriation of net profit Appropriation of net profit proposal of the Board of Directors to the general meeting of shareholders (CHF) 2015 2014 Profit for the year 112 332 596.49 492 145 459.30 Profit carried forward 700 548 163.51 208 402 704.21 Accumulated profit for the year 812 880 760.00 700 548 163.51 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 0.00 Other profit distribution 0.00 0.00 Profit carried forward 812 880 760.00 700 548 163.51 Important: This document is a non-binding English translation of the authoritative German annual report.

11 Flow of funds statement Flow of funds statement (TCHF) Source of funds 2015 Application of funds Source of funds 2014 Application of funds Flow of funds from operating result (internal financing) Profit for the year 112 333 492 145 Depreciation of non-current assets 6 965 7 883 Value adjustments and provisions 21 193 437 057 Accrued income and prepaid expenses 1 164 427 Accrued expenses and deferred income 13 408 7 917 Other items Previous-year dividend 94 640 Balance 110 349 24 179 Flow of funds from changes to non-current assets Participations 39 Shares in affiliated companies 41 146 30 000 Securities and precious metals as non-current assets 45 Intangible assets 2 70 1 Properties 349 7 032 89 2 053 Other tangible assets 90 705 0 779 Balance 7 405 8 359 Flow of funds from banking operations Medium and long-term business (> 1 year) Due to banks 38 276 7 673 Due to clients 19 565 2 740 Bonds 116 077 529 931 Medium-term notes 35 418 7 919 Other liabilities 45 719 67 212 60 Due from banks 15 390 46 171 Due from clients (excl. mortgage loans) 40 817 95 645 Mortgage loans 36 098 19 453 Other receivables 41 185 84 395 Short-term business ( 1 year) Due to banks 1 052 613 2 856 305 Due to clients 630 448 1 711 713 Other liabilities 97 433 267 015 425 902 Due from banks 2 541 411 1 787 470 Due from clients 439 323 1 731 598 Trading positions in securities and precious metals 1 542 367 95 332 0 Securities and precious metals held as current assets (excl. trading positions) 1 014 437 256 893 Other receivables 750 990 723 871 Liquid funds Cash and cash equivalents 4 394 876-966 419 Balance 102 944 15 820 Total 110 349 110 349 24 179 24 179 Important: This document is a non-binding English translation of the authoritative German annual report.

12 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 and Zurich. At 31 December 2015, LGT Bank Ltd. employed 808 persons on a full-time equivalent basis (771 in the previous year). In 2015, the average headcount amounted to 796 persons (739). 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.

13 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. Conversion rates 31.12.2015 31.12.2014 1 EUR 1.0872 1.2024 1 USD 1.0002 0.9936 1 GBP 1.4750 1.5492 1 SGD 0.7060 0.7498 1 HKD 0.1291 0.1281 100 JPY 0.8318 0.8288 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. 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. 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.

14 Appendix to the financial statement 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. 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. 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. 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. 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. Fees arising from securities lending and repurchase transactions, which have been received or paid, are entered as interest earned and interest paid. 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 mediumterm 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.

15 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. 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 guidelines of the European Banking Authority and the principles of the Basel Committee on Banking Supervision. 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. 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. 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. 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. The accounting and valuation principles remain unchanged compared to last year. 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 guidelines and Value at risk limits. An analysis of the aggregate risks and the simulation of worst-case scenarios are carried out on a regular basis.

16 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: The compensation model supports the implementation of LGT s corporate values and objectives and takes the risk elements into consideration. Excellent performance, outstanding dedication and successes achieved with integrity will be rewarded. The compensation model is focused on long-term business success. 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: Decision process Beneficiary Recommended by Approved by CEO of the bank Norbert Biedermann Members of the Executive Board Roland Schubert Ivo Klein Markus Werner Board of Directors of the bank/ccb CEO of the bank HRCC Board of Directors of the bank/ccb 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. Phillip Colebatch 2 H.S.H. Prince Max von und zu Liechtenstein, Thomas Piske

17 Components of the remuneration The compensation model for all employees of the bank consists of a fixed basic salary, a variable remuner ation component and benefits. The following table gives a summary of the individual components of the remuneration. Compensation model Characteristics Element Plan participants Brief description Purpose Fixed Cash Basic salary Employees of the bank Variable Benefits Options Cash incentive Bonus Deferred incentive LTIS 1 Benefits/ Fringe benefits Employees of the bank Senior Management and employees in key positions Employees of the bank Monthly market-based remuneration paid in 13 installments in accordance with the position and the contract of employment Granted and paid annually. Amount of bonus depends on business success and individual performance in the business year in question Options on LGT dividend right certificates granted annually. Three-year blocked period, followed by exercise of the options within four years Pension, insurance, discounts on bank products, right to a sabbatical Reflects abilities, skills and responsibility Rewarding excellent performance, outstanding dedication and successes achieved with integrity 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 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 responsi bility 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. 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.

18 Remuneration report 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. 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. 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 The remuneration paid to the Executive Board is shown in the table below. 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). Overview of the LGT remuneration structure LTIS Blocked period Exercise period Cash incentive Basic salary Remuneration of the Executive Board 2015 (TCHF) Direct Cash payment Deferred Shares/share-linked instruments Basic salary Bonus LTIS Entire EB 1 1 304 1 350 1 312 1 In 2015 there were four members of the Executive Board. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Time

Bauer brothers, Hortus Botanicus, detail from Amaryllis belladonna, c. 1778

Bauer brothers, Hortus Botanicus, detail from Lilium, 1776/1804

21 Notes on the balance sheet 1 Overview of collateral (TCHF) Mortgagebacked Other collateral Without collateral Advances Due from clients (excl. mortgage loans) 5 978 7 916 732 1 270 092 9 192 802 Mortgage loans Residential properties 2 682 174 0 0 2 682 174 Office and business premises 273 291 0 0 273 291 Commercial and industrial premises 164 436 0 0 164 436 Other 29 421 0 0 29 421 Total 31.12.2015 3 155 300 7 916 732 1 270 092 12 342 124 31.12.2014 2 936 610 7 857 549 1 031 727 11 825 886 Total Off-balance sheet transactions Contingent liabilities 569 122 508 3 580 070 3 703 147 Irrevocable commitments 125 934 5 996 160 000 291 930 Commitments to subscribe additional contributions for shares or other equity securities 0 0 26 506 26 506 Total 31.12.2015 126 503 128 504 3 766 576 4 021 583 31.12.2014 117 181 115 497 3 582 509 3 815 187 Impaired due amounts (TCHF) Gross amount due Estimated realization value of collateral Net amount due Specific value adjustments 31.12.2015 18 094 6 788 11 306 11 306 31.12.2014 10 898 3 585 7 313 7 313 2 Trading positions (TCHF) Book value Cost Market value 31.12.2015 31.12.2014 31.12.2015 31.12.2014 31.12.2015 31.12.2014 Trading positions comprising securities and precious metals Debt instruments 1 664 666 46 983 1 694 758 47 464 1 664 665 46 983 listed (traded on a recognized exchange) 1 344 913 46 983 1 370 135 47 464 1 344 913 46 983 unlisted 319 753 0 324 623 0 319 752 0 of which own bonds and medium-term notes 6 482 435 6 539 431 6 482 435 Equity paper 138 1 339 136 1 323 138 1 339 of which own equity paper 0 0 0 0 0 0 Precious metals 361 977 436 092 361 977 436 092 361 977 436 092 Total 2 026 781 484 414 2 056 871 484 879 2 026 780 484 414 of which eligible as security for central bank borrowings 16 612 0 16 606 0 16 612 0

22 Notes on the balance sheet 3 Securities and precious metals held as current assets (excl. trading positions) (TCHF) Book value Cost Market value 31.12.2015 31.12.2014 31.12.2015 31.12.2014 31.12.2015 31.12.2014 Debt instruments 1 480 475 2 494 912 1 483 690 2 493 423 1 484 125 2 505 784 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 1 480 475 2 494 912 1 483 690 2 493 423 1 484 125 2 505 784 of which eligible as security for central bank borrowings 678 113 950 232 602 226 929 160 681 585 955 081 4 Securities and precious metals held as non-current assets (TCHF) Book value Cost Market value 31.12.2015 31.12.2014 31.12.2015 31.12.2014 31.12.2015 31.12.2014 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 785 837 1 791 1 791 870 837 Total 785 837 1 791 1 791 870 837 of which eligible as security for central bank borrowings 0 0 0 0 0 0

23 5 Participations and shares in affiliated companies (TCHF) 31.12.2015 31.12.2014 Participations with market value 0 0 without market value 205 166 Total 205 166 Shares in affiliated companies with market value 0 0 without market value 37 068 37 068 Subordinated claims against affiliated companies 20 000 20 000 Total 57 068 57 068 6 Affiliated companies Business activity Share capital % share of votes Banks and investment firms % share of capital Business result TCHF LGT Bank (Cayman) Ltd., Grand Cayman bank USD 600 000 100 83 6 915 LGT Bank (Ireland) Ltd., Dublin bank USD 50 000 000 75 25 9 211 Other LGT Investment Portfolio Ltd., Grand Cayman investment company CHF 20 000 000 100 100-2 962 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 2015, the shares in banks and investment firms shown under the shares in affiliated companies item amounted to TCHF 17 068 (17 068 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.

24 Notes on the balance sheet 8 Statement of changes in non-current assets (TCHF) Cost Accumulated depreciation/ write-ups Book value 31.12.2014 Total participations (minority holdings) 166 0 166 Total shares in affiliated companies 57 068 0 57 068 Total securities and precious metals held as non-current assets 1 791-954 837 Total intangible assets 281-258 23 Properties Bank premises 193 139-111 356 81 783 Other properties 9 616-9 616 0 Other tangible assets 4 731-3 233 1 498 Total tangible assets 207 486-124 205 83 281 Fire insurance value of properties 203 823 Fire insurance value of other tangible assets 2 512 Real estate intended for sale (not included in the statement of changes in non-current assets) 9 Intangible assets At 31 December 2015, this item included capitalized software licenses amounting to TCHF 64 and at 31 December 2014 amounting to TCHF 23. 10 Pledged or assigned assets and assets subject to reservation of ownership (TCHF) 31.12.2015 31.12.2014 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 351 073 466 763 Actual liabilities 271 355 170 429 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 3 254 929 1 108 770 Liabilities from cash deposits in connection with securities lending and repurchase transactions 0 250 548 Own securities lent or provided as collateral within the scope of securities lending, borrowing transactions and transferred from repurchase transactions 0 158 727 of which capable of being resold or pledged without restrictions 0 158 727 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 3 836 451 2 125 203 of which resold or further pledged securities 303 082 602 988 11 Liabilities in respect of own pension funds (TCHF) 31.12.2015 31.12.2014 Total liabilities 39 439 24 834

25 Investments Disinvestments Reclassifications Write-ups Depreciation Book value 31.12.2015 39 0 0 0 0 205 0 0 0 0 0 57 068 0 0 0 0-52 785 70-2 0 0-27 64 7 032-349 0 0-6 135 82 331 0 0 0 0 0 0 705-90 0 0-751 1 362 7 737-439 0 0-6 886 83 693 206 662 2 515 850 12 Outstanding bonds at 31.12.2015 Interest rate % Year of issue Earliest redemption date Currency Par value TCHF LGT GIM Index Certificates 0.0 up to 2004 28.02.2017 EUR 50 594 LGT GIM Index Certificates II 0.0 up to 2006 30.06.2019 EUR 116 619 LGT GIM Index Certificates II/2 0.0 2006 31.03.2016 EUR 26 511 LGT GIM Index Certificates III 0.0 up to 2008 31.07.2016 EUR 81 874 Crown Absolute Return Index Certificates 0.0 ongoing 30.11.2018 EUR 6 096 Crown Alternative SV Index Certificates 0.0 ongoing 30.06.2017 EUR 84 523 LGT GATS Index Certificates 0.0 ongoing 30.09.2019 EUR 34 929 LGT M-Smart Allocator Index Certificates 0.0 ongoing 31.08.2017 EUR 54 662 2% bond LGT Bank Ltd. 2012 2.7.2019 2.0 2012 02.07.2019 CHF 249 533 1.875% bond LGT Bank Ltd. 2013 8.2.2023 1.875 2013 08.02.2023 CHF 298 707 1.5% bond LGT Bank Ltd. 2014 10.5.2021 1.5 2014 10.05.2021 CHF 298 752 0.625% bond LGT Bank Ltd. 2015 25.11.2025 0.625 2015 25.11.2025 CHF 300 857 For product explanations see appendix 47 on page 41

26 Notes on the balance sheet 13 Value adjustments and provisions/ provisions for general banking risks (TCHF) Value adjustments for default risks Status 31.12.2014 Application Recoveries, overdue interest, currency differences New allocations out of P/L account Releases to P/L account Status 31.12.2015 Specific value adjustments 7 313-16 -484 4 690-197 11 306 Flat-rate specific value adjustments (incl. such adjustments for country risks) 0 0 0 0 0 0 Portfolio value adjustments 8 231 0 29 720 0 8 980 Provisions for contingent liabilities and credit risks 0 0 0 0 0 0 Provisions for other business risks 1 987 0 17 1 618 0 3 622 Provisions for taxes and deferred taxes 70 507-32 132 90 9 546-39 47 972 Other provisions 1 551-10 -31 18-270 1 258 Total value adjustments and provisions 89 589-32 158-379 16 592-506 73 138 less: Value adjustments -15 544-20 286 Total provisions as per the balance sheet 74 045 52 852 Provisions for general banking risks 0 0 0 0 0 0 See also Point 36 14 Share capital (TCHF) Total nominal value Number of shares 31.12.2015 Capital entitled to a dividend Total nominal value Number of shares 31.12.2014 Capital entitled to 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 shareholders 31.12.2015 31.12.2014 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.

27 15 Equity statement (TCHF) Equity capital at the start of the business year Share capital paid in 291 201 Capital reserves 0 Legal reserves 218 500 Reserves for own shares 0 Statutory reserves 0 Other reserves 1 406 000 Provisions for general banking risks 0 Accumulated profit for the year 700 548 Total equity capital at the start of the business year (prior to profit distribution) 2 616 249 +/- capital increase/capital reduction 0 + premium 0 - Release of provisions for general banking risks 0 - dividend from the previous year s profit 0 + annual profit for the business year 112 333 Total equity capital at the end of the business year (prior to profit distribution) 2 728 582 of which: Share capital paid in 291 201 Capital reserves 0 Legal reserves 218 500 Reserves for own shares 0 Statutory reserves 0 Other reserves 1 406 000 Provisions for general banking risks 0 Accumulated profit for the year 812 881

28 Notes on the balance sheet 16 Maturity structure of assets, liabilities and provisions (TCHF) On demand Redeemable Assets Cash and cash equivalents 3 906 905 Debt instruments of public authorities and bills which are eligible for refinancing at central banks Due from banks 1 120 515 Due from clients 47 603 764 213 of which mortgage loans 1 526 78 072 Trading positions comprising securities and precious metals 2 026 781 Securities and precious metals held as current assets (excl. trading positions) 1 467 570 Securities and precious metals held as non-current assets 785 Other assets 45 009 2 171 Total assets 31.12.2015 8 615 168 766 384 31.12.2014 13 095 394 1 001 942 Liabilities and provisions Due to banks 6 634 341 384 852 Due to clients 9 493 288 4 177 540 Savings accounts 677 733 Other liabilities to clients 9 493 288 3 499 807 Securitized liabilities Issued bonds of which medium-term notes Other securitized liabilities Provisions (excl. provisions for general banking risks) 52 852 Subordinated liabilities Other liabilities 240 023 2 172 Total liabilities and provisions 31.12.2015 16 420 504 4 564 564 31.12.2014 16 451 092 5 816 612 Of the securities reported in the balance sheet under bonds and other fixed-interest bearing securities, instruments amounting to TCHF 901 619 (1 116 583 in the previous year) will become due in 2016. Issued bonds due in 2016 amount to TCHF 126 666 (29 313 in the previous year).

29 Due within 3 months Due between 3 to 12 months Due between 12 months to 5 years Due after 5 years Immobilized Total 3 906 905 12 905 12 905 4 172 561 2 387 685 502 022 166 528 8 349 311 9 122 090 792 445 1 168 270 447 503 12 342 124 1 843 050 167 232 664 156 395 286 3 149 322 2 026 781 1 467 570 785 594 144 177 563 41 950 56 408 84 607 1 001 852 13 901 700 3 357 693 1 712 242 670 439 84 607 29 108 233 11 514 951 2 664 746 1 787 928 545 115 82 633 30 692 709 1 162 055 355 016 383 58 500 8 595 147 848 084 120 669 28 437 14 668 018 677 733 848 084 120 669 28 437 13 990 285 31 801 94 865 714 808 923 327 1 764 801 31 801 94 865 714 808 923 327 1 764 801 5 290 12 991 117 852 25 011 161 144 0 52 852 40 100 20 160 835 284 156 210 43 775 21 209 1 298 673 2 877 264 726 860 787 423 1 003 036 0 26 379 651 3 420 968 760 946 941 950 684 892 0 28 076 460

30 Notes on the balance sheet 17.1 Claims on affiliated companies (TCHF) 31.12.2015 31.12.2014 Due from banks 1 229 419 1 557 011 Due from clients 4 906 990 5 406 576 of which due from qualified participants (LGT Group Foundation) 597 500 569 200 Bonds and other fixed-interest bearing securities 6 482 44 305 Total 6 142 891 7 007 892 17.2 Liabilities to affiliated companies (TCHF) 31.12.2015 31.12.2014 Due to banks 7 875 658 8 560 062 Due to clients 375 371 534 430 of which due to qualified participants (LGT Group Foundation) 673 1 212 Securitized liabilities 0 0 Subordinated liabilities 0 0 Total 8 251 029 9 094 492 17.3 Loans to governing bodies (TCHF) 31.12.2015 31.12.2014 Members of the Board of Directors 5 724 5 389 Members of the Executive Board 5 859 4 577 Total 11 583 9 966 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.

31 18 Breakdown of balance sheet according to domicile (TCHF) Domestic 31.12.2015 Abroad Domestic 31.12.2014 Abroad Assets Cash and cash equivalents 3 760 278 146 627 8 287 324 14 457 Debt instruments of public authorities and bills which are eligible for refinancing at central banks 0 12 905 0 25 623 Due from banks 4 251 432 4 097 879 2 422 236 3 370 274 Due from clients (excl. mortgage loans) 1 952 222 7 240 580 1 548 411 7 347 645 Mortgage loans 2 615 421 533 901 2 523 107 406 723 Bonds and other fixed-interest bearing securities 6 482 3 125 754 2 648 2 513 624 Equities and other non-fixed-interest securities 138 0 570 769 Participations 66 139 66 100 Shares in affiliated companies 20 000 37 068 20 000 37 068 Intangible assets 0 64 0 23 Tangible assets 77 980 5 713 77 514 5 767 Other assets 614 237 567 932 1 185 347 863 162 Accrued income and prepaid expenses 15 416 25 999 12 560 27 691 Total assets 13 313 672 15 794 561 16 079 783 14 612 926 Liabilities Due to banks 6 717 295 1 877 852 7 792 278 1 817 206 Due to clients (excl. savings accounts) 5 784 405 8 205 879 6 353 032 8 198 527 Savings accounts 563 722 114 012 615 611 111 731 Securitized liabilities 1 764 801 0 1 515 953 0 Other liabilities 603 818 603 282 619 683 900 009 Accrued expenses and deferred income 54 666 36 907 44 401 33 764 Provisions 52 283 569 73 698 347 Subordinated liabilities 160 0 220 0 Provisions for general banking risks 0 0 0 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 700 548 0 208 403 0 Profit for the year 112 333 0 492 145 0 Total liabilities 18 269 732 10 838 501 19 631 125 11 061 584 Balance sheet items are broken down based on the client s domicile, mortgage loans by the location of the property.

32 Notes on the balance sheet 19 Breakdown of assets according to country/country group TCHF 31.12.2015 % TCHF 31.12.2014 % Country Liechtenstein 2 784 271 9.6 2 859 850 9.3 Switzerland 10 533 017 36.2 13 219 934 43.1 Europe excl. FL/CH 6 573 124 22.6 4 851 589 15.8 North America 820 088 2.8 718 421 2.3 Caribbean 5 780 982 19.9 6 176 309 20.1 Latin America 84 748 0.3 112 689 0.4 Africa 66 416 0.2 25 230 0.1 Asia 1 939 782 6.7 2 284 435 7.4 Oceania 525 805 1.7 444 252 1.5 Total assets 29 108 233 100.0 30 692 709 100.0

33 20 Breakdown of balance sheet according to currencies (TCHF) CHF EUR USD Other Total Assets Cash and cash equivalents 3 754 466 19 139 714 132 586 3 906 905 Debt instruments of public authorities and bills which are eligible for refinancing at central banks 12 905 12 905 Due from banks 2 540 979 1 722 836 3 134 370 951 126 8 349 311 Due from clients (excl. mortgage loans) 5 362 050 1 910 503 1 283 997 636 252 9 192 802 Mortgage loans 2 626 073 195 415 61 647 266 187 3 149 322 Bonds and other fixed-interest bearing securities 137 486 749 954 1 050 921 1 193 875 3 132 236 Equities and other non-fixed-interest securities 93 0 45 0 138 Participations 205 0 0 0 205 Shares in affiliated companies 57 068 0 0 0 57 068 Intangible assets 0 64 0 0 64 Tangible assets 77 980 3 348 0 2 365 83 693 Other assets 793 228 1 845 792 386 304 1 182 169 Accrued income and prepaid expenses 12 997 4 167 10 061 14 190 41 415 Total assets 15 362 625 4 607 271 5 542 547 3 595 790 29 108 233 Delivery claims from forex spot, forex futures and forex options transactions 21 165 244 21 728 376 48 847 808 10 262 299 102 003 727 Total assets 36 527 869 26 335 647 54 390 355 13 858 089 131 111 960 Liabilities Due to banks 1 001 581 2 274 173 4 184 249 1 135 144 8 595 147 Due to clients (excl. savings accounts) 2 845 973 3 403 397 6 027 772 1 713 143 13 990 285 Savings accounts 638 249 30 452 9 032 0 677 733 Securitized liabilities 1 303 824 460 977 0 0 1 764 801 Other liabilities 1 142 911 32 842 4 007 27 340 1 207 100 Accrued expenses and deferred income 61 038 5 250 15 716 9 569 91 573 Provisions 50 283 555 2 000 14 52 852 Subordinated liabilities 160 0 0 0 160 Provisions for general banking risks 0 0 0 0 0 Share capital 291 201 0 0 0 291 201 Legal reserves 218 500 0 0 0 218 500 Other reserves 1 406 000 0 0 0 1 406 000 Profit carried forward 700 548 0 0 0 700 548 Profit for the year 112 333 0 0 0 112 333 Total liabilities 9 772 601 6 207 646 10 242 776 2 885 210 29 108 233 Delivery liabilities from forex spot, forex futures and forex options transactions 27 005 259 20 111 758 44 143 365 10 968 457 102 228 839 Total liabilities 36 777 860 26 319 404 54 386 141 13 853 667 131 337 072 Net position per currency -249 991 16 243 4 214 4 422-225 112

34 Notes on the balance sheet 21 Subordinated assets (TCHF) 31.12.2015 31.12.2014 Balance sheet items Bonds and other fixed-interest bearing securities 9 438 0 Shares in affiliated companies 20 000 20 000 Total 29 438 20 000 22 Debt instruments of public authorities and bills which are eligible for refinancing at central banks (TCHF) 31.12.2015 31.12.2014 Debt instruments of public authorities 12 905 25 623 Bills 0 0 Total 12 905 25 623 23 Bonds and other fixed-interest bearing securities (TCHF) 31.12.2015 31.12.2014 Money market paper 352 815 405 768 of which from public sector issuers 0 0 of which from other issuers 352 815 405 768 Bonds 2 779 421 2 110 504 of which from public sector issuers 167 946 286 626 of which from other issuers 2 611 475 1 823 878 of which own bonds 6 482 435 Total 3 132 236 2 516 272 24 Due to clients (TCHF) 31.12.2015 31.12.2014 Savings accounts 677 733 727 342 Other liabilities 13 990 285 14 551 559 Total 14 668 018 15 278 901 25 Securitized liabilities (TCHF) 31.12.2015 31.12.2014 Issued bonds 1 764 801 1 515 953 of which medium-term notes 161 144 136 758 Other securitized liabilities 0 0 Total 1 764 801 1 515 953 26 Provisions (TCHF) 31.12.2015 31.12.2014 Provisions for pensions and similar liabilities 0 0 Tax provisions 47 972 70 507 Other provisions 4 880 3 538 Total 52 852 74 045

35 Notes on off-balance sheet transactions 27 Contingent liabilities (TCHF) 31.12.2015 31.12.2014 Credit guarantees and similar instruments 271 609 406 512 of which for affiliated companies 186 444 294 895 Performance guarantees and similar instruments 3 425 894 3 244 008 of which for affiliated companies 3 366 581 3 203 731 Irrevocable commitments and other contingent liabilities 5 644 9 212 of which for affiliated companies 0 0 Total 3 703 147 3 659 732 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 2015 and 31 December 2014. 29 Fiduciary transactions (TCHF) 31.12.2015 31.12.2014 Fiduciary investments at third-party banks 123 926 194 462 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 123 926 194 462

36 Notes on off-balance sheet transactions 30 Open derivative financial instruments (TCHF) Trading instruments Hedging instruments positive negative contract positive negative contract replacement replacement volume replacement replacement volume values values values values Interest rate instruments Forward contracts incl. FRAs 0 0 0 0 0 0 Swaps 534 468 242 274 6 723 41 758 1 567 747 Futures 0 0 0 0 0 0 Options (OTC) 23 23 3 967 0 0 0 Options (exchange-traded) 0 0 0 0 0 0 Forex/precious metals Forward contracts 607 278 875 368 89 136 292 114 508 69 876 11 213 337 Swaps 0 0 0 0 0 0 Futures 0 0 0 0 0 0 Options (OTC) 54 422 49 872 4 266 179 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) 15 507 15 507 424 240 0 0 0 Options (exchange-traded) 0 0 0 0 0 0 Credit derivatives Credit default swaps 0 0 0 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 0 0 609 197 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 31.12.2015 677 764 941 238 94 682 149 121 231 111 634 12 781 084 31.12.2014 1 237 761 1 177 793 79 314 996 340 381 240 297 20 211 913 Total after consideration of the netting contracts positive replacement values negative replacement values 31.12.2015 268 872 522 750 31.12.2014 681 034 520 982

37 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. 32 Interest income from fixed-interest securities (TCHF) 2015 2014 Interest income from bonds 6 427 45 908 Interest income from money market paper 8 304 9 962 Total 14 731 55 870 33 Income from trading transactions (TCHF) Reported in the P&L under 2015 2014 Interest income from fixed-interest securities Interest income 37 045 1 396 Interest income from credit derivatives Interest income -6-98 Trading in foreign exchange and precious metals Income from financial transactions 86 438 58 622 Securities trading Income from financial transactions -14 555 1 277 Structured products and other income Income from financial transactions 3 618 1 438 Total 112 540 62 635 34 Personnel expenses (TCHF) 2015 2014 Wages and salaries 156 511 138 648 Social security contributions, pensions and social assistance 23 537 20 320 of which for pensions 12 230 10 380 Other personnel expenses 10 155 9 475 Subtotal 190 203 168 443 Adjustment of liability for Long Term Incentive Scheme 12 948 23 005 Total 203 151 191 448 Emoluments to members of the Executive Board 3 966 3 323 35 Operating expenses (TCHF) 2015 2014 Occupancy expense 15 875 15 689 Expenses for IT, machinery, furniture, vehicles and other equipment 58 179 55 453 Other business expenses 91 626 77 427 Total 165 680 148 569 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 44). No extraordinary items were recorded in the years 2015 and 2014. The item provisions contains mainly tax provisions, provisions for projects, as well as provisions for other business risks (see also Points 13 and 26).

38 Notes to the profit and loss account 37 Income and expenses broken down according to office or branch (TCHF) FL 2015 Abroad FL 2014 Abroad Interest earned 157 979 12 887 170 418 8 217 Interest paid -44 382-3 042-64 407-2 458 Current income from securities 5 007 0 1 225 0 Income from commission business and services 240 138 99 155 230 376 67 706 Commission paid -56 252-13 003-58 572-9 653 Income from financial transactions 71 282 10 044 59 811 5 994 Other ordinary income 17 610 10 488 17 411 12 616 Operating expenses -244 508-124 323-237 959-102 058 Other ordinary expenses -4 403-711 -1 610-94 The break down is based on the domicile of the booking branch. 38 Return on assets (Net profit as a percentage of total assets) 2015 2014 Return on assets* 0.39 0.20 * 2014: before release of the provisions for general banking risks

39 Additional information 39 Securities negotiable on the stock exchange (TCHF) 31.12.2015 31.12.2014 Bonds and other fixed-interest bearing securities 3 132 236 2 516 272 of which listed securities 2 422 490 2 012 515 of which listed and treated as current assets 2 422 490 2 012 515 of which listed and treated as non-current assets 0 0 of which unlisted securities 709 746 503 757 Equities and non-fixed-interest securities 138 1 339 of which listed securities 138 1 339 of which listed and treated as current assets 138 1 339 of which listed and treated as non-current assets 0 0 of which unlisted securities 0 0 Participations 205 166 of which listed securities 0 0 of which unlisted securities 205 166 Shares in affiliated companies 37 068 37 068 of which listed securities 0 0 of which unlisted securities 37 068 37 068 40 Subordinated liabilities at 31.12.2015 Interest rate % Maturity Currency TCHF 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 160 41 Other assets (TCHF) 31.12.2015 31.12.2014 Positive replacement values of derivatives 798 995 1 578 142 Compensation account 11 422 23 023 Physical holdings of precious metals 362 762 436 929 Other assets 8 990 10 415 Total 1 182 169 2 048 509 42 Other liabilities (TCHF) 31.12.2015 31.12.2014 Negative replacement values of derivatives 1 052 872 1 418 090 Coupons 105 105 LTIS liability 52 051 55 544 Clearing accounts 102 072 45 953 Total 1 207 100 1 519 692

40 Additional information 43 Other ordinary income (TCHF) 2015 2014 Compensation from Group companies 23 595 24 113 Income from real estate 3 701 4 998 Income from the release of provisions 0 275 Remaining other income 802 641 Total 28 098 30 027 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. 44 Other ordinary expenses (TCHF) 2015 2014 Losses from receivables and guarantees 1 656 743 Transaction losses 641 351 Remaining other expenses 2 817 610 Total 5 114 1 704 See also Point 36 45 Breakdown of client assets (TCHF) 31.12.2015 31.12.2014 Client assets Client assets in own-managed funds (investment undertakings) 14 505 987 14 980 857 Client assets under management 12 807 279 12 579 312 Other client assets under administration 35 067 026 33 707 923 Total client assets (including double counting) 62 380 292 61 268 092 of which double counting 7 854 449 8 050 634 46 Foreign branch offices Business activity Domicile Gross operating income TCHF Headcount Profit for the year TCHF Tax on earnings TCHF Firms LGT Bank AG, Zweigniederlassung Österreich bank Vienna 30 742 91 1 772 250 LGT Bank Ltd., Hong Kong branch bank Hong Kong 109 081 204 5 800 0

41 47 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 (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. 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

Bauer brothers, Hortus Botanicus, detail from Amaranthus tricolor L., c. 1779

Report of the statutory auditor 43

44 International presence Europe America Asia Australia Principality of Liechtenstein, Vaduz Austria, Salzburg, Vienna Ireland, Dublin Switzerland, Basel, Berne, Chur, Davos, Geneva, Lugano, Pfäffikon, Zurich United Kingdom, London United States, New York China, Beijing Hong Kong Japan, Tokyo Singapore Sydney 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 Middle East Bahrain, Manama United Arab Emirates, Dubai A complete address list of all LGT locations can be seen at www.lgt.com

Bauer brothers, Hortus Botanicus, detail from Passiflora caerulea L., c. 1779

LGT Bank Ltd. Herrengasse 12, FL-9490 Vaduz Phone +423 235 11 22, info@lgt.com BIC BLFLLI2X, HR No.: 1122356-7, Reg. Office: 9490 Vaduz VAT No. 50119, UID: CHE-260.887.880 www.lgt.li 50025en 0516 4H BVD