Hypo Landesbank Vorarlberg Annual Report 2015 Annual Report 2015 Key Figures 2015

Passionate. Sound. Advice. A BROAD HYPO LANDESBANK VORARLBERG VIEW HYPO LANDESBANK VORARLBERG ANNUAL REPORT 2015 ANNUAL REPORT 2015 KEY FIGURES 2015 Key figures of Vorarlberger Landes- und Hypothekenbank Aktiengesellschaft (Hypo Landesbank Vorarlberg) – Group reporting per IFRS: in ’000 EUR 31.12.2015 31.12.2014 Change in ’000 EUR in % Total assets 13,902,411 14,185,492 –283,081 –2.0 Loans and advances to customers (L&R) (17) 9,061,358 8,954,412 106,946 1.2 Amounts owed to customers (LAC) (32) 4,995,818 4,662,797 333,021 7.1 Liabilities evidenced by certificates (LAC) (33) 2,402,602 2,313,778 88,824 3.8 Capital resources according to CRR (67) 1,164,758 1,091,473 73,285 6.7 thereof core capital 874,848 807,813 67,035 8.3 Total capital ratio according to CRR 14.87 % 13.27 % 1.60 % 12.1 in ’000 EUR 2015 2014 Change in ’000 EUR in % Net interest income after loan loss provisions 160,646 95,719 64,927 67.8 Net fee and commission income (7) 36,566 35,624 942 2.6 Net trading result (9) 1,020 30,644 –29,624 -96.7 Administrative expenses (11) –92,462 –92,101 –361 0.4 Operating result before change in own credit risk 102,910 54,278 48,632 89.6 Earnings before taxes 121,146 53,979 67,167 >100.0 Key figures 2015 2014 Change absolut in % Cost-income ratio (CIR) 45.34 % 49.42 % –4.09 % –8.3 Return on equity (ROE) 11.67 % 6.45 % 5.22 % 81.1 Employees (54) 729 723 6 0.8 The shareholders of Vorarlberger Landes- und Hypothekenbank Aktiengesellschaft (Hypo Landesbank Vorarlberg) as at 31 December 2015 are: Shareholders Total shareholdings Voting rights Vorarlberger Landesbank-Holding 76,0308 % 76,0308 % Austria Beteiligungsgesellschaft mbH 23,9692 % 23,9692 % Landesbank Baden-Württemberg 15,9795 % Landeskreditbank Baden-Württemberg Förderbank 7,9897 % Share capital 100,0000 % 100,0000 % Rating* Standard & Poor‘s Moody’s Long-term: for liabilities with state deficiency guarantee - A3 for liabilities without state deficiency guarantee A- Baa1 Short-term A-2 P-2 * In October 2015, Standard & Poor’s (S&P) announced a new rating for Hypo Landesbank Vorarlberg: “A–” for non-current liabilities and “A–2” for current liabilities, with a stable outlook. This makes us one of the best-rated banks in Austria. The Bank is currently rated “Baa1” by Moody’s and this rating will remain in place for the time being. Passionate. Sound. Advice. A BROAD VIEW HYPO LANDESBANK VORARLBERG ANNUAL REPORT 2015 2 VORWORT TABLE OF CONTENTS FOREWORD CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT 06 Foreword – Managing Board 16 Organisational chart 24 Economic environment Interviews with the Managing Board 18 Managing Board | Supervisory Board 27 Austrian banking sector 2015 08 Questions to Michael Grahammer 20 Advisory Board 28 Business development 2015 (CEO) Chairman of the Managing Board 36 Development by segment 10 Questions to Johannes Hefel 40 Major subsidiaries Managing Board, Private Customers, Private Banking and Asset 42 Outlook for 2016 Management 44 Compliance and 12 Questions to Michel Haller Risk Management Managing Board, Risk Management 46 Disclosure under section 243a UGB 46 Disclosure regulation for remuneration policy in 2015 3 VORWORT Wien Wels Graz ÖSTERREICH Bregenz Bozen St. Gallen SCHWEIZ ITALIEN SUSTAINABILITY REPORT FINANCIAL STATEMENTS (IFRS) BRANCH OFFICES | SUBSIDIARIES Group management report 58 I. Income statement 146 Headquarters | Internal departments 50 Economic sustainability 59 II. Balance sheet 147 Branch offices 50 Ecological sustainability 60 III. Statement of changes in shareholders’ equity 148 Subsidiaries 51 Social sustainability 61 IV. Cash flow statement 148 Imprint 53 Key employee figures 62 V. Notes 53 Research and development 135 VI. Managing Board | Supervisory Board 136 VII. Subsidiaries | Holdings 142 Managing Board declaration 143 Report of the Supervisory Board 144 Auditor’s report 4 VORWORT AN Michel Haller OPEN Member of the Managing Board EAR HYPO LANDESBANK VORARLBERG CORPORATE BANK | RESIDENTIAL BANK | INVESTMENT BANK Interpersonal contact is irreplaceable. This is why dealing with our customers face to face is so important to us. We take their concerns seriously and do everything we can to support them. 5 VORWORT Michael Grahammer Johannes Hefel Chairman of the Managing Board Member of the Managing Board 6 FOREWORD A CLEAR MESSAGE HYPO LANDESBANK VORARLBERG FOREWORD – MANAGING BOARD Dear reader, sold out in less than three days due to high demand, has already demonstrated that the confidence in Hypo Landesbank Vorarl- Hypo Landesbank Vorarlberg is looking back at one of the most berg’s strength is unbroken. challenging years in its history, but also one of the most successful. So we are all the more delighted to inform you about another In Vienna – now an important core market for us – we moved into very good financial year for our bank in this report. With earnings a new, larger location in the architecturally significant Zacherlhaus before taxes of EUR 121.1 million, we more than doubled the building in the 1st district after extensive renovations. Building on previous year’s earnings – which is partly attributable to the this, we want to continue growing in the Vienna region, especially elimination of the risk provisioning for HETA, which was mostly in corporate customer business and in the top segment of the recognised in the 2014 balance sheet. However, this excellent investment business with companies, institutional customers and result also reflects our long-successful business model, our high net worth private customers. healthy credit portfolio and consistent cost management. Focus on high-quality, personal advice It is especially remarkable that we have constantly been able to In recent decades, Hypo Landesbank Vorarlberg has participated produce good results in the years since the 2008/09 crisis. We in many change processes in the banking industry. But we have now count among the top Austrian regional banks with regard to always preserved one thing – our foundation of customer prox- efficiency and profitability. With total assets of EUR 13.9 billion, imity and regional roots. We value stable, long-term relationships we are also one of the top ten Austrian universal banks. with our customers, but also with other stakeholders. Advancing digitalisation will not change this. In recent months, changed Our highlights in 2015 customer requirements have caused a stir in the entire banking It has been confirmed to us by various institutes that we are on industry. We on the Managing Board are also open to new devel- the right track with our corporate policy, which is moderate, opments, but we do not have to follow every trend. risk-aware and focused on sustainable growth. With an “A-” rating from Standard & Poor’s and a “Baa1” rating from Moody’s, we To shy away from digitalisation is like forgetting the customer; are one of the best-rated banks in Austria. An excellent credit overdoing it brings a high (financial) risk and little benefit for the rating is an important endorsement for our investors and our customer. The challenge for us is therefore to connect existing customers and will help us with future refinancing on the capital branches intelligently with digitalisation. Our clear aim is to market, which will become all the more important in the years to augment the consulting-heavy core business of Hypo Landesbank come. The issue of our subordinated bond in autumn, which was Vorarlberg – investment and financing – by expanding digital banking services so that customers benefit from optimum inter- 7 FOREWORD play between technology and people. Despite all the advantages Many thanks offered by digitalisation, it will never be able to replace people. We thank all our customers, business partners and shareholder representatives who continued to honour us with their trust and The big picture loyalty and followed our progress in 2015. We would particularly Day to day, our customers appreciate Hypo Landesbank Vorarl- like to thank our employees for their great dedication and the berg’s integrity, reliability and dependability. Despite a slight outstanding result. They were once again a crucial factor for the decline in total consolidated assets, 2015 we grew in terms of success of Hypo Landesbank Vorarlberg. Thanks to the positive lending and customer deposit business. Our business perfor- cooperation of all these people, we are well equipped to tackle mance has remained stable for decades because we, the Manag- the challenges of 2016 with confidence and to remain a compe- ing Board of Hypo Landesbank Vorarlberg, maintain a broad view tent, reliable partner for our customers. in economically and politically challenging times. As an advisory bank, we like to concentrate on the important details in customer The Managing Board business, but we do so without losing sight of the big picture. In Michael Grahammer addition, we are conscious of our economic, ecological and social Johannes Hefel responsibilities. This is why we have chosen the motto “A broad Michel Haller view” as the key theme for this year’s annual report. Maintaining a broad view is a real challenge in the face of the wave of regulations crashing over banks today. This year, we will be challenged by numerous new regulations and laws as well as low interest rates and the advance of digitalisation. As a healthy bank in a good position, we are confident of closing 2016 well. But we expect lower consolidated net income than in previous years because of the lack of non-recurring effects, increasing operating and personnel expenses and higher costs, e.g. due to the deposit protection and resolution fund. 8 FOREWORD A LONG-TERM STRATEGY HYPO LANDESBANK VORARLBERG INTERVIEW WITH MICHAEL GRAHAMMER How would you sum up the past year? that has persisted for years remained strong.

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