BANK FÜR TIROL UND VORARLBERG AKTIENGESELLSCHAFT SHAREHOLDERS' REPORT: INTERIM REPORT AS AT 30/09/2020 Interim Report Contents
2 Important dates for BTV shareholders in 2020 12 BTV Group: notes to the accounts 2020 15 Accounting and valuation principles 3 BTV Group at a glance 30 Significant events during or after the reporting period 31 Notes on the balance sheet – Assets 39 Notes on the balance sheet – Liabilities Management report and notes on BTV 43 Notes on the statement of comprehensive income Group business trends 47 Other and supplementary notes on the balance sheet 4 Economic environment 56 Segment reporting 5 BTV shares 6 Balance sheet and profit trend 61 Statements by the statutory representatives Abridged consolidated financial statements 8 Balance sheet 62 Imprint 9 Statement of comprehensive income 10 Statement of changes in equity 11 Cash flow statement
Important dates for BTV shareholders Annual General Meeting 10/06/2020, 11:00 a.m., Stadtforum 1, Innsbruck (held virtually) The dividend will be published on the BTV homepage and in the gazette of the Wiener Zeitung the day after the Annual General Meeting. Ex-dividend date 16/06/2020 Payment of dividend 18/06/2020 Interim report as at 31/03/2020 Published on 29/05/2020 (www.btv.at) Half-Year Financial Report as at 30/06/2020 Published on 28/08/2020 (www.btv.at) Interim report as at 30/09/2020 Published on 27/11/2020 (www.btv.at)
2 BTV Interim Report as at 30/09/2020 BTV Group at a glance
Profit and loss in EUR million 30/09/2020 30/09/2019 Change in % Net interest income 100.0 100.7 –0.6% Loan loss provisions in the credit business –27.0 2.0 >–100% Net commission income 40.4 36.3 +11.2% Revenue from companies valued at equity 21.2 40.5 –47.7% Operating expenses –140.6 –145.8 –3.5% Other operating income 74.2 79.7 –7.0% Annual net income before tax 66.9 124.2 –46.2% Group net profit for the period 53.6 105.2 –49.0%
Balance sheet figures in EUR million 30/09/2020 31/12/2019 Change in % Balance sheet total 13,636 12,549 +8.7% Loans to clients after risk provisions 8,166 7,938 +2.9% Primary funds 9,364 8,937 +4.8% of which savings deposits 1,517 1,391 +9.1% of which own issues 1,374 1,421 –3.3% Equity 1,786 1,749 +2.1% Managed deposits 15,917 15,717 +1.3%
Regulatory capital (CRR) in EUR million 30/09/2020 31/12/2019 Change in % Total risk amount 8,318 8,300 +0.2% Capital 1,331 1,293 +3.0% of which common equity (CET1) 1,106 1,087 +1.8% of which total core capital (CET1 and AT1) 1,106 1,087 +1.8% Common equity Tier 1 ratio 13.3% 13.1% +0.2 pp Core capital ratio 13.3% 13.1% +0.2 pp Equity ratio 16.0% 15.6% +0.4 pp
Change in Key indicators in percentage points 30/09/2020 30/09/2019 percentage points Return on equity before tax (RoE) 5.1% 9.9% –4.8 pp Return on equity after tax 4.1% 8.4% –4.3 pp Cost/income ratio 59.8% 56.0% +3.8 pp Risk/earnings ratio +27.0% –2.0% +29.0 pp
Number of resources 30/09/2020 30/09/2019 Change figure Weighted average number of employees 1,459 1,505 –46 Number of branches 36 36 +0
Key indicators for BTV shares 30/09/2020 30/09/2019 Number of ordinary no par value shares 31,531,250 31,531,250 Number of preference shares 2,500,000 2,500,000 Highest price of ordinary/preference share in EUR 30.00/27.80 29.20/26.80 Lowest price of ordinary/preference share in EUR 26.80/24.80 23.80/21.80 Closing price of ordinary/preference share in EUR 29.40/27.00 29.00/26.80 Market capitalisation in EUR million 995 981 IFRS earnings per share in EUR 1.95 3.95 P/E ratio, ordinary share 15.1 7.3 P/E ratio, preference share 13.8 6.8
BTV Interim Report as at 30/09/2020 3 Management report and notes on BTV Group business trends in 2020
Economic environment However, in the third quarter, credit spreads narrowed on the After COVID-19 had been successfully contained in the second riskiest bond segments, namely high-yield bonds and emerging quarter, the number of cases rose again around the world in late market bonds. The expansionary monetary policies of the major summer. Nevertheless, the economic recovery continued in the central banks in the industrial regions, increasingly unconven- third quarter. In the industrial regions, the services sector tional monetary policy measures in emerging countries and an remained stable and retail sales exceeded pre-crisis levels. improved economic outlook were responsible for this develop- However, leading economic indicators for the services sector, ment. taking higher credit risks paid off in the third quarter. such as the Purchasing Manager Index, fell slightly towards the end of the quarter as rising case numbers once again made Long-term EUR interest rates fell again in the third quarter. selective lockdown measures necessary, hitting the services The 10-year EUR swap fell by 5 basis points to –0.23%. Money sector particularly hard. Industrial production rose in the third market interest rates (3-month Euribor) also recorded a slight quarter but has not yet returned to pre-COVID-19 levels due to fall of –0.50% (–0.42% as at 30/06/2020). weak global demand, although it has recovered from its second quarter low. Packages of measures introduced by central banks Currency markets and governments continued to provide support in the third The appreciation of the EUR against the USD began in the quarter, but the improvement in sentiment among businesses middle of the second quarter and continued in the third quarter. and consumers stagnated and remained well below pre-crisis This was the consequence, firstly, of a general "risk-on" mood in levels. The USA was unable to agree on a new aid package, the markets, triggered by the improved economic outlook and which is likely to have an impact on domestic consumption in the highly expansionary monetary policies of the Fed and the the coming months. Consumers are still relying on the high level ECB, as a result of which demand for safe havens such as the of support they received until the end of July, which is why US dollar fell. Secondly, the agreement on a European recovery retailers have so far not suffered from higher unemployment. fund led to greater perceived solidarity in the EU, which also had a positive impact on the stability of the EUR. As a result, Interest rates investors expected a less volatile and crisis-proof currency, In the third quarter, global central banks also stuck to their which is why the EUR appreciated significantly against the chosen path of expansionary monetary policy. Key interest rates US dollar in the third quarter. The EUR/USD exchange rate at record lows kept yields on comparatively safe government experienced a minor setback in mid-September as the US dollar bonds from the USA, the European core countries and Japan at became more popular as a safe haven in light of the rising very low levels. infection figures. Overall in the 3rd quarter, the EUR rose by +4.3% against the USD. At the end of the third quarter, The expansionary monetary policies of the major central banks the EUR/USD exchange rate stood at 1.17. not only depressed yields on comparatively safe government bonds through their record-low base rates and numerous The "risk-on" mood in the financial markets and the creation securities purchase programmes, but also lowered the risk of the EU recovery fund also led to an appreciation of the EUR premiums of riskier segments further. against the Swiss franc by just over 1.5% in the third quarter. On 30/09/2020 the EUR/CHF exchange rate was 1.08. The euro The "Pandemic Emergency Purchase Programme" (PEPP), rose by +2.0% against the Japanese yen in the third quarter. launched in mid-March, primarily benefited government bonds Once again, it was more the strength of the euro than the in the peripheral EUR area. The yield on 10-year Italian govern- weakness of the yen that drove the exchange rate from 121.2 ment bonds fell from 1.26% to 0.87% over the course of the at the end of June to 123.7 at the end of September. However, third quarter, while the yield on Spanish government bonds fell the yen was additionally burdened by comparatively weaker from 0.46% to 0.25%. The European Central Bank stepping up as Japanese economic data and the Bank of Japan's ultra-expan- an unconditional buyer on the bond market strengthened sionary monetary policy. investor confidence and led to a narrowing of risk premiums. Yields on European corporate bonds with good credit ratings Currency rates as of 30/09/2020: (investment grade) also fell markedly in the third quarter, as EUR/USD: 1.1702 these are also largely part of the ECB purchasing universe. EUR/CHF: 1.0808 EUR/JPY: 123.68
4 BTV Interim Report as at 30/09/2020 Performance of BTV shares in EUR
30,00
28,00 BTV ordinary share BTV preference share 26,00
24,00 BTV Stammaktie
22,00 BTV Vorzugsaktie
20,00
18,00
16,00 30.09.2015 30.09.2016 30.09.2017 30.09.2018 30.09.2019 30.09.2020
Stock markets The broad European stock market index (STOXX 600), on the After a rapid recovery in the second quarter, global stock other hand, posted meagre price gains of +0.2%. The German markets showed no clear direction in the third quarter. While DAX proved to be the strongest European index in the third European and Asian markets trended sideways in July and quarter with a gain of +3.7%, while the Spanish IBEX came last August, the US stock markets continued their second quarter in a European comparison with a loss of –7.1%. The Japanese recovery. Economic concerns came to the fore again in Nikkei 225 was in the global midfield with a gain this quarter of September, leading to a setback of up to –10% on the global +4.0%. Among emerging market exchanges, the Asia region stock markets. The increasing number of infections (especially (MSCI Asia ex Japan) clearly stood out with an increase of in Europe), combined with even stricter precautionary +10.7% compared to Eastern Europe (MSCI Eastern Europe measures and the upcoming presidential elections in the USA at –6.1%) and Latin America (MSCI Latin America at –1.3%). led to uncertainty on the markets and to an interruption Asia benefited from China's strong economy, while the other of the recovery. two regions were still heavily preoccupied with containing COVID-19. The varied performance of the global markets, especially in July and August, led to a clear divergence in the quarterly BTV shares performance of the individual indices. US stock markets BTV's ordinary shares rose in the third quarter of 2020 posted a positive performance in the third quarter. The leading by +1.4% to EUR 29.40. Preference shares were unchanged US S&P 500 index rose by +8.5% in the third quarter and the at EUR 27.00 at the end of the quarter. tech-heavy NASDAQ Composite even rose by +11.0%.
BTV Interim Report as at 30/09/2020 5 Balance sheet performance of 2019. The credit institution group's common equity Tier 1 Despite the severe recession in the eurozone – and therefore (CET1) under CRR was EUR 1.1 billion, as was total core capital. also in BTV's markets – which began in the first quarter, the Bank The total amount of risk rose by EUR +17 million to EUR 8.3 bil- für Tirol und Vorarlberg Aktiengesellschaft (BTV) reported solid lion. As at 30/09/2020, this resulted in a Tier 1 capital ratio of balance sheet figures as at 30/09/2020. Total assets grew by 13.3% (31/12/2019: 13.1%), a core capital ratio of 13.3% a total of EUR +1,086 million to EUR 13.6 billion by the reporting (31/12/2019: 13.1%) and a total capital ratio of 16.0%. date. Robust customer business and higher cash reserves were the drivers for the significant increase so far this year. Profit trend Interest earnings after risk provisions In BTV's business model, loans to customers are one of the most Compared to the same period in the previous year, interest important balance sheet items. Compared to the end of 2019, income after risk provisions fell by EUR –29.6 million to these rose by EUR +245 million or +3.1% to EUR 8.3 billion. EUR 73.1 million. Interest income fell moderately by Loans to credit institutions also rose by EUR +8 million to EUR –0.6 million, to EUR 100.0 million. Risk provisions EUR 477 million. BTV's enormous liquidity buffer is reflected in decreased significantly to EUR 27.0 million in the year to date the cash reserves, which grew by EUR +856 million to due to the COVID-19 crisis. This item includes a rise in expens- EUR 2.3 billion. Loan loss provisions increased by EUR +18 mil- es of EUR 29.0 million compared to 30/09/2019. lion to EUR 115 million in the first three quarters of 2020. Other financial assets, including shares in companies valued Net commission income at-equity and trading assets, increased by EUR +5 million to Commission income has been extremely robust so far this year EUR 2.2 billion. despite the challenging framework conditions. This was largely due to the securities business, which recorded an increase of Customers' high level of trust in BTV is reflected in the liabilities EUR +1.8 million to EUR 20.1 million. The remaining categories side of the balance sheet: Primary funds rose by EUR +428 in net commission income were all above the previous year's million to EUR 9.4 billion, which means that BTV's strategic level. The net profit in payment transactions amounted to objective of refinancing customer loans with primary funds has EUR 9.8 million, while the profit from foreign currency, cash been more than achieved over the year 2020 to date. This and precious metal trading was EUR 3.2 million. The credit expansion was mainly due to higher account deposits (EUR +348 business grew particularly strongly, with a profit of EUR 6.9 mil- million) and savings deposits (EUR +126 million). The loan-de- lion this category grew by EUR +1.5 million. Other services posit ratio, the ratio of loans to customers after risk provisions business reached a value of EUR 0.4 million compared to to primary funds, was 87.2% as at 30/09/2020 (end of 2019: EUR 0.2 million in the same quarter of the previous year. 88.8%). Liabilities to credit institutions rose by EUR +638 million Overall, net commission income increased by EUR +4.1 million to EUR 2.1 billion. Managed customer funds, the sum of deposit compared to the previous year, to EUR 40.4 million in 2020 volumes and primary funds, grew by EUR +200 million to EUR to date. 15.9 billion, primarily due to growth in primary funds. The massive slump on the stock markets, particularly in March, led Income from companies valued at equity to a fall in the value of securities and thus in the volume of This item includes the profit or loss from companies valued deposits of around EUR –227 million. at equity included in the scope of consolidation. The total contribution of these companies of EUR 21.2 million rep- Particularly in times of crisis, equity becomes even more resents a fall of EUR –19.3 million compared to the previous important than usual. At around EUR 1.8 billion, BTV has year. This significant decline was essentially caused by a nega- a strong capital buffer. Despite the challenging conditions, tive result from the parent bank in the first quarter of 2020, equity increased by a further EUR +37 million in the first half of which resulted from COVID-19-related depreciation require- 2020 compared to the end of 2019. The banking group's ments and a negative profit contribution from the holding in qualifying capital under CRR (Basel III) totalled EUR 1.3 billion voestalpine AG. as at 30/09/2020, an increase of EUR +38 million since the end
6 BTV Interim Report as at 30/09/2020 Trading income and profit from financial transactions Tax situation The slump in the securities markets had a significant impact on Besides the ongoing effect of corporation tax, the amounts trading income and revenue from financial transactions in the recorded under "Taxes on income and revenue" relate first nine months of 2020: Compared to 30/09/2019, trading primarily to the deferred taxes to be paid on accruals and income fell by EUR –3.8 million to EUR –0.5 million, while prepayment adjustments, in accordance with IFRS. Compared income from financial transactions fell by EUR –8.3 million to to the previous year, tax expenditure fell by EUR –5.8 million EUR –0.8 million. to EUR 13.2 million as at 30/09/2020.
Operating expenses Group net profit for the period incl. key indicators Many businesses were forced to close during lockdown, This year, the net profit for the period after tax fell by particularly in the tourism sector; BTV's fully consolidated EUR –51.5 million to EUR 53.6 million. The cost/income ratio cable car participations were among those affected by the increased compared to 30/09/2019 from 56.0% to 59.8%. temporary closures of operations. This led to a fall in operating The return on equity before tax decreased to 5.1%, down from expenses compared to the previous year of EUR 145.8 million, 9.9% the previous year. The risk/earnings ratio was 27.0% to EUR 140.6 million. The fall of EUR –5.1 million is spread (previous year: –2.0%) as a result of the development of risk among the three major categories of expenditure as follows: provisions. Staff expenditure fell by EUR –2.5 million to EUR 74.9 million, material expenditure by EUR –1.2 million to EUR 41.9 million Outlook and depreciation and amortisation by EUR –1.5 million to Using an ad hoc report dated 21/04/2020, BTV adjusted its EUR 23.8 million. profit forecast compared to that published in the 2019 Annual Report due to the measures taken to combat the COVID-19 Other operating income pandemic; as at 30/09/2020, that assessment remains un- The temporary closure of the fully consolidated cable car changed. BTV now expects Group annual net profit before tax companies had a negative effect on other operating profit in to be in the range of EUR 42 to 50 million at 31/12/2020. the year-on-year comparison, as this item includes revenue. The most significant factor in adjusting the outlook is a signifi- After the very strong start of the season up until the end of cant decline in earnings from companies included at equity, February, conditions then became difficult until the end of which are significantly below the values on which the budget June. Summer was again satisfactory until September, when is based. The development of the cable cars segment, trading a new Europe-wide increase in COVID-19 cases led to travel income and financial transactions, which is well below expecta- warnings for Austria and, with the wave of cancellations, tions, as well as an increase in risks costs also contribute to this. abruptly led to further sales declines. Overall, these factors in particular led to a decline in this item of EUR –5.6 million to EUR 74.2 million compared to 30/09/2019.
Net profit for the period before tax The stressful factors mentioned significantly reduced the net profit for the period before tax in the previous nine months of 2020: The higher risk provisions in the lending business and the declining profit from companies valued at equity, from trading income and from income from financial transactions led to a decline of EUR –57.3 million to EUR 66.9 million.
BTV Interim Report as at 30/09/2020 7 Abridged consolidated financial statements
Balance sheet as at 30/09/2020
Absolute Assets in EUR thousand 30/09/2020 31/12/2019 change Change in % Cash reserves 1 [Reference to Notes] 2,283,530 1,427,659 +855,871 +59.9% Loans to credit institutions 2 476,931 468,459 +8,472 +1.8% Loans to customers 3 8,281,421 8,036,081 +245,340 +3.1% Other financial assets 4 1,452,589 1,468,796 –16,207 –1.1% Shares in companies valued at equity 5 722,418 712,776 +9,642 +1.4% Risk provisions 6 –115,450 –97,773 –17,677 +18.1% Trading assets 7 57,538 45,919 +11,619 +25.3% Intangible fixed assets 8 1,316 1,483 –167 –11.3% Property, plant and equipment 8a 342,478 347,536 –5,058 –1.5% Properties held as financial investments 8b 61,695 61,902 –207 –0.3% Current tax refunds 9 880 1,075 –195 –18.1% Deferred tax assets 9 9,031 9,046 –15 –0.2% Other assets 10 61,158 66,237 –5,079 –7.7% Total assets 13,635,535 12,549,196 +1,086,339 +8.7%
Absolute Liabilities in EUR thousand 30/09/2020 31/12/2019 change Change in % Liabilities to credit institutions 11 2,148,749 1,510,520 +638,229 +42.3% Liabilities to customers 12 7,990,264 7,515,918 +474,346 +6.3% Other financial liabilities 13 1,426,127 1,469,840 –43,713 –3.1% Trading liabilities 14 5,247 9,096 –3,849 –42.3% Reserves 15 148,011 148,495 –484 –0.3% Current tax debts 16 6,843 6,114 +729 +11.9% Deferred tax debts 16 24 849 –825 –97.2% Other liabilities 17 124,379 139,021 –14,642 –10.5% Equity 18 1,785,891 1,749,343 +36,548 +2.1% Non-controlling interests 18 47,791 43,686 +4,105 +9.4% Owners of the parent company 18 1,738,100 1,705,657 +32,443 +1.9% Total liabilities 13,635,535 12,549,196 +1,086,339 +8.7%
8 BTV Interim Report as at 30/09/2020 Comprehensive income statement as at 30/09/2020
01/01/2020 – 01/01/2019 – Absolute Change Comprehensive income statement in EUR thousand 30/09/2020 30/09/2019 change in % Interest and similar income from application of effective interest method* 114,507 116,177 –1,670 –1.4% Other interest and similar income 16,850 27,342 –10,492 –38.4% Interest and similar expenses* –31,309 –42,862 +11,553 –27.0% Net interest income 19 100,048 100,657 –609 –0.6% Risk provisions in the credit business 20 –26,987 2,014 –29,001 >–100% Commission income 44,078 39,968 +4,110 +10.3% Commission expenses –3,696 –3,638 –58 +1.6% Net commission income 21 40,382 36,330 +4,052 +11.2% Revenue from companies valued at equity 22 21,172 40,484 –19,312 –47.7% Trading income 23 –482 3,275 –3,757 >–100% Revenue from financial transactions 24 –766 7,484 –8,250 >–100% Operating expenses 25 –140,633 –145,759 +5,126 –3.5% Other operating revenue 99,373 105,135 –5,762 –5.5% Other operating expenses –25,222 –25,391 +169 –0.7% Other operating profit 26 74,151 79,744 –5,593 –7.0% Net profit for the period before tax 66,885 124,229 –57,344 –46.2% Taxes on income and revenue 27 –13,239 –19,036 +5,797 –30.5% Group net profit for the period 53,646 105,193 –51,547 –49.0% Non-controlling interests 4,056 4,956 –900 –18.2% Owners of the parent company 49,590 100,237 –50,647 –50.5%
* Due to a reclassification of EUR 2,571 thousand of interest revenue as interest expenditure, the previous year's values were adjusted accordingly.
01/01/2020 – 01/01/2019 – Other income in EUR thousand 30/09/2020 30/09/2019 Group net profit for the period 53,646 105,193 Revaluations from performance-oriented pension plans 1,225 –11,873 Changes in companies valued at equity recognised directly in equity –265 –1,059 Changes in equity instruments recognised directly in equity –9,811 4,305 Losses from sale of equity instruments reclassified under profit reserves –1,233 0 Fair-value adjustment of own creditworthiness risk of financial liabilities 4,040 –551 Gains/losses with regard to deferred taxes, offset directly against total profit –1,669 –920 Total of items which could subsequently not be allocated to profit or loss –7,713 –10,098 Changes in companies valued at equity recognised directly in equity –3,368 572 Changes in debt securities recognised directly in equity 1,149 4,805 Unrealised profits/losses from adjustments in currency conversion 204 55 Gains/losses with regard to deferred taxes, offset directly against total profit –32 0 Total of items which could subsequently be allocated to profit or loss –2,047 5,432 Total other operating profit –9,760 –4,666 Comprehensive income for the period 43,886 100,527 Non-controlling interests 4,123 4,956 Owners of the parent company 39,763 95,571
Key indicators 30/09/2020 30/09/2019 Diluted and undiluted earnings per share in EUR 28 1.46 2.95
BTV Interim Report as at 30/09/2020 9 Statement of changes in equity
Total Sub- owners Non- Statement of changes in equity scribed Retained OCI non- OCI of parent controlling in EUR thousand capital Reserves earnings recyclable recyclable company interests Equity Equity 31/12/2018 68,063 242,030 1,267,961 –8,000 27,746 1,597,799 41,183 1,638,982 Reclassifications within equity 0 0 1,190 –857 –333 0 0 0 Equity 01/01/2019 68,063 242,030 1,269,151 –8,857 27,413 1,597,799 41,183 1,638,982 Capital increases 0 0 0 0 0 0 0 0 Comprehensive income for the period Group net profit for the period 0 0 100,237 0 0 100,237 4,956 105,193 Other comprehensive income ex- 0 0 –33 –9,039 4,860 –4,212 0 –4,212 cluding companies valued at equity Other comprehensive income 0 0 –470 –1,059 572 –957 0 –957 from companies valued at equity Distributions 0 0 –10,182 0 0 –10,182 –99 –10,281 Own shares 0 –633 0 0 0 –633 0 –633 Other changes recognised directly 0 –3 0 0 0 –3 –32 –35 in equity Equity 30/09/2019 68,063 241,394 1,358,703 –18,955 32,845 1,682,049 46,008 1,728,057
Total Sub- owners Non- Statement of changes in equity scribed Retained OCI non- OCI of parent controlling in EUR thousand capital Reserves earnings recyclable recyclable company interests Equity Equity 31/12/2019 68,063 242,436 1,382,352 –13,095 25,902 1,705,658 43,686 1,749,344 Reclassifications within equity 0 0 6 0 –6 0 0 0 Equity 01/01/2020 68,063 242,436 1,382,358 –13,095 25,896 1,705,658 43,686 1,749,344 Capital increases 0 0 0 0 0 0 0 0 Comprehensive income for the period Group net profit for the period 0 0 49,590 0 0 49,590 4,056 53,646 Other comprehensive income ex- 0 0 1,294 –7,448 1,321 –4,833 67 –4,766 cluding companies valued at equity Other comprehensive income 0 0 –7,074 –265 –3,368 –10,707 0 –10,707 from companies valued at equity Distributions 0 0 –293 0 0 –293 –18 –311 Own shares 0 –1,315 0 0 0 –1,315 0 –1,315 Other changes recognised directly 0 0 0 0 0 0 0 0 in equity Equity 30/09/2020 68,063 241,121 1,425,875 –20,808 23,849 1,738,100 47,791 1,785,891
10 BTV Interim Report as at 30/09/2020 Cash flow statement as at 30/09/2020
01/01/2020 – 01/01/2019 – Cash flow statement in EUR thousand 30/09/2020 30/09/2019 Cash position at the end of the previous period 1,427,659 867,497 Profit for the period after taxes without non-controlling interests 53,646 105,193 Non-cash items and other adjustments in net profit for the period 41,450 –11,858 Changes to assets and liabilities from operating activities after correction for non-cash items 895,005 194,897 Operating cash flow 990,101 288,232 Cash inflow from sales 5,265 364 Cash outflow through investments –158,561 –60,678 Investment cash flow –153,296 –60,314 Capital increases 0 0 Dividend payments –293 –10,182 Subordinated liabilities and other financing activities 19,359 –45,600 Financing cash flow 19,066 –55,782 Cash position at the end of the period 2,283,530 1,039,633
BTV Interim Report as at 30/09/2020 11 BTV Group: notes to the accounts 2020
This consolidated interim financial statement of the Bank für the consolidation of capital in the context of the acquisition Tirol und Vorarlberg AG (BTV AG) as at 30/09/2020 has been method is performed by offsetting the consideration against drawn up according to IFRS regulations and the interpreta- the proportionally identified assets and liabilities. The assets tions by the International Financial Reporting Interpretations and liabilities of the subsidiaries are stated at their respective Committee (IFRIC) as these are to be applied in the European fair values at the time of acquisition. As part of the consider- Union, and has been prepared in compliance with the provi- ation, shares of other associates are valued at their share in sions of IAS 34 (preparation of interim reports). the identified assets and liabilities. The difference between the acquisition costs and the net asset recorded at fair value is The Bank für Tirol und Vorarlberg Aktiengesellschaft is an capitalised as goodwill. The capitalised goodwill is subject to "Aktiengesellschaft" (public limited company) with headquar- an annual impairment test pursuant to the provisions of IFRS ters in Austria. The company's registered office is in Innsbruck. 3, in conjunction with IAS 36 and IAS 38. Subsidiaries of lesser The main activities of the company and its subsidiaries include significance for the asset, financial and income situation of the asset management, corporate and retail banking, the holding Group are not fully consolidated. of participations and the operation of cable cars and other tourism business. The segment reporting contains more There has been a change in consolidated entities compared detailed information on this. to 31/12/2019. On 06/12/2019, Silvretta Montafon Holding GmbH acquired three companies, "Besitzgesellschaft St. The accounting and valuation methods applied uniformly Gallenkirch Appartment A & B Joint Venture GmbH", across the Group comply with the standards for European "Besitzgesellschaft St. Gallenkirch Appartment C Joint balance sheets, so that the informative value of these interim Venture GmbH" and "Besitzgesellschaft St. Gallenkirch Hotel financial statements equates to those pursuant to the provi- Joint Venture GmbH", with the purpose of developing hotel sions of the Austrian Commercial Code (UGB), in conjunction and apartment projects in Montafon. In the second quarter of with the provisions of the Austrian Banking Act (BWG). 2020, PURE Schruns GmbH was sold and has since ceased to be part of the consolidated group of companies. Principles and consolidated entities BTV Hybrid I GmbH in Liqu. was removed from the commercial All significant subsidiaries which are controlled by BTV under register on 23/09/2020 following completion of the liquidation IFRS 10 are included in the consolidated financial statements procedure and ceased to be part of the consolidated group of pursuant to IFRS 10. The Group controls a company if it companies in the third quarter of 2020. is exposed to fluctuating returns on its commitment to the company or possesses rights thereon and has the ability to influence these returns using its power of control over the company. In accordance with the principles of IFRS 3,
12 BTV Interim Report as at 30/09/2020 In addition to the Bank für Tirol und Vorarlberg Aktiengesellschaft, consolidated entities include the follow- ing participations:
Voting rights Fully consolidated companies Share in % in % BTV Leasing Gesellschaft m.b.H., Innsbruck 100.00% 100.00% BTV Real-Leasing Gesellschaft m.b.H., Vienna 100.00% 100.00% BTV Real-Leasing I Gesellschaft m.b.H., Innsbruck 100.00% 100.00% BTV Real-Leasing II Gesellschaft m.b.H., Innsbruck 100.00% 100.00% BTV Real-Leasing III Nachfolge GmbH & Co KG, Innsbruck 100.00% 100.00% BTV Real-Leasing IV Gesellschaft m.b.H., Innsbruck 100.00% 100.00% BTV Real-Leasing V Gesellschaft m.b.H., Innsbruck 100.00% 100.00% BTV Anlagenleasing 1 GmbH, Innsbruck 100.00% 100.00% BTV Anlagenleasing 2 GmbH, Innsbruck 100.00% 100.00% BTV Anlagenleasing 3 Gesellschaft m.b.H., Innsbruck 100.00% 100.00% BTV Anlagenleasing 4 GmbH, Innsbruck 100.00% 100.00% BTV Leasing Deutschland GmbH, Munich 100.00% 100.00% BTV Leasing Schweiz AG, Staad 99.99% 99.99% TiMe Holding GmbH, Innsbruck 100.00% 100.00% Silvretta Montafon Holding GmbH, Schruns 100.00% 100.00% Silvretta Montafon Bergbahnen GmbH, Schruns 100.00% 100.00% Silvretta Montafon Gastronomie GmbH, Schruns 100.00% 100.00% Silvretta Montafon Skischule Schruns GmbH, Schruns 100.00% 100.00% Silvretta Montafon Sporthotel GmbH, Schruns 100.00% 100.00% Silvretta Montafon Sporthotel GmbH & Co. KG, Gaschurn 100.00% 100.00% Sporthotel Schruns GmbH, Schruns 100.00% 100.00% Silvretta Montafon Sportshops GmbH, Schruns 100.00% 100.00% Skischule Silvretta Montafon St. Gallenkirch GmbH, St. Gallenkirch 50.00% 50.00% Silvretta Montafon Bergerlebnisse GmbH, Schruns 100.00% 100.00% Besitzgesellschaft St. Gallenkirch Appartment A & B Joint Venture GmbH 100.00% 100.00% Besitzgesellschaft St. Gallenkirch Appartment C Joint Venture GmbH 100.00% 100.00% Besitzgesellschaft St. Gallenkirch Hotel Joint Venture GmbH 100.00% 100.00% BTV Beteiligungsholding GmbH, Innsbruck 100.00% 100.00% BTV 2000 Beteiligungsverwaltungsgesellschaft m.b.H., Innsbruck 100.00% 100.00% Mayrhofner Bergbahnen Aktiengesellschaft, Mayrhofen 50.52% 50.52% Beteiligungsholding 5000 GmbH, Innsbruck 100.00% 100.00% Wilhelm-Greil-Strasse 4 GmbH, Innsbruck 100.00% 100.00%
The leasing companies and the companies of Silvretta Monta- to their seasonal activity. Owing to the structural situation fon Holding GmbH were included in the Annual Report as at within the group organisation, there is a different reporting 30/09, in accordance with their different financial year. date for both the leasing companies and BTV Beteiligung- BTV Beteiligungsholding GmbH, BTV 2000 Beteiligungsver- sholding GmbH. waltungsgesellschaft m.b.H. and Mayrhofner Bergbahnen AG conclude their financial year on 30/11. The companies of The remaining fully consolidated companies were consolidat- Silvretta Montafon Holding GmbH and Mayrhofner Berg- ed using the reporting date of 31 December. bahnen Aktiengesellschaft have a different reporting date due
BTV Interim Report as at 30/09/2020 13 The financial statements of the consolidated companies are There are direct minority interests which result from the adjusted for the effects of significant business events or participation in Mayrhofner Bergbahnen Aktiengesellschaft. incidents between the reporting date for associated companies and the consolidated reporting date. The consolidated earnings for the period allocated to minority interests total EUR 4,056 thousand. The Bank für Tirol und Vorarlberg Aktiengesellschaft holds 100% of the shares in Silvretta Montafon Holding GmbH as at Significant holdings over which BTV has a major influence are 30/09/2020. Only indirect minority interests exist, which are recorded using the equity method. As a rule, a stake of the result of the holding in Skischule Silvretta Montafon between 20% and 50% is considered to be a significant St Gallenkirch GmbH. influence ("associated companies"). According to the equity method, holdings in associated companies are included in the BTV Beteiligungsholding GmbH holds 100% of the shares in financial statements at acquisition cost plus any changes in the BTV 2000 Beteiligungsverwaltungsgesellschaft m.b.H. BTV Group's share of the net assets of the associated company 2000 Beteiligungsverwaltungsgesellschaft m.b.H. holds after the initial consolidation. 50.52% of Mayrhofner Bergbahnen AG.
The following holdings were included using the equity method:
Share Voting rights Companies consolidated at equity in % in % BKS Bank AG, Klagenfurt 18.89% 19.45% Oberbank AG, Linz 16.15% 16.98% Moser Holding Aktiengesellschaft, Innsbruck 24.99% 24.99%
BKS Bank AG based in Klagenfurt and Oberbank AG based in The associated companies are considered for the period from Linz are regional universal banks and together with BTV form 01/10/2019 until 30/06/2020 in order to permit the prompt the 3 Banken Group. Moser Holding AG is active in publishing preparation of interim financial statements. Loans and with a focus on print (daily newspapers, free weekly newspa- liabilities, expenses and revenue internal to the Group are pers and magazines) and online. eliminated except where they are significant.
The holdings in Oberbank AG and BKS Bank AG have been ALPENLÄNDISCHE GARANTIE- GESELLSCHAFT m.b.H. is included in the consolidated financial statement for the follow- classed as a joint operation. The company has a concession ing reasons, despite the fact that they are below the 20% pursuant to Article 1(1)(8) of the Austrian Banking Act (BWG). holding threshold: Its exclusive corporate object is the granting of guarantees, sureties and other liabilities for lending businesses of the 3 For the holding in Oberbank AG, there is a syndicate agree- Banken Group. The 3 Banken Group is primarily the only ment between BTV, BKS Bank AG and Wüstenrot Wohnung- source for payment flows that contribute to the continued swirtschaft reg. Gen.m.b.H. and for the holding in BKS Bank activities of the arrangement. It is therefore classed as a joint AG, there is a syndicate agreement between BTV, Oberbank operation in accordance with IFRS 11.B29-32. The proportion- AG and Generali 3 Banken Holding AG; the purposes of these al assets and liabilities of the company are taken into account agreements is to maintain the autonomy of the institutions. In as at the reporting date of 30/09/2020. this way, for both of the cited companies, there is the possibili- ty of exercising a significant influence.
Share Voting rights Proportionally consolidated companies in % in % Alpenländische GARANTIE - GESELLSCHAFT m.b.H. 25.00% 25.00%
14 BTV Interim Report as at 30/09/2020 Accounting and valuation principles the debt instrument shall be taken into account. BTV's consolidated financial statements are drawn up in euros (EUR), as the functional currency of the Group. Unless A business model is an observable instance of how a company otherwise indicated, all amounts are indicated in EUR thou- manages financial assets for the purposes of collecting cash sand. Rounding differences are possible in the following flows. The business model relevant for classification has been tables. determined by the management of BTV. In doing so, the intentions with respect to an individual financial asset are not Spot transactions authoritative, rather reference shall be made to a higher Spot transactions in financial assets are recorded or closed out aggregation level – the management level. The following on the settlement date. business models shall be differentiated for classifying debt instruments: Structured entities Structured entities are companies that have been designed in "Hold": The objective of this business model is to hold the debt such a way that voting or similar rights are not the dominating instruments in order to collect contractual cash flows until factor when assessing control. For example, this is the case if maturity. Allocation to the "Hold" business model presupposes voting rights only relate to administrative tasks and the rights the intention to hold the debt instruments until their respective for managing the essential activities are controlled on the basis maturity. A basic willingness to dispose prematurely and of contractual principles. In the BTV Group, in particular project subsequently to realise profits and losses means that the and leasing companies with limited areas of activity, as well as holding intent for this business model is not present. In this public investment funds, third-party financial companies and context, BTV has defined detailed provisions on the "Non-inter- securitisation companies are regarded as structured entities, vention thresholds" for unexpected sales. These sales are thus provided that the business connection to these entities does only in accordance with the "Hold" business model if they occur not constitute ordinary business activity. In the reporting irregularly, even if they are of significant value, or if the sales period, there were no material contractual or non-contractual occur regularly and are of insignificant value. The corresponding relationships with structured companies. BTV is regarded as the quantitative "Non-intervention thresholds" have been approved sponsor of a structured entity if market operators associate the by the Executive Board and documented internally in the "IFRS entity with the Group, especially through use of the name BTV 9 Policy." in the firm or on business documents in companies for which BTV Group acts as broker. BTV did not maintain any material "Hold and Sell": The debt instruments are held as part of business connections in the reporting period and in this sense a business model, the objective of which is to collect the did not act as a sponsor. contractual cash flows and dispose of the debt instruments.
Financial instruments pursuant to IFRS 9 "Sell": The objective of this business model is to maximise cash Financial instruments pursuant to IFRS 9 are used for the flows through short-term sales and purchases. The collection of approach with other comprehensive income, plus transaction contractually agreed cash flows is incidental. costs, if applicable. The management of BTV has defined the business models as In the event of classification and subsequent evaluation of follows: financial assets pursuant to IFRS 9, a differentiation must be made between debt instruments, equity instruments and derivatives. The "Hold" business model is principally allocated to loans to credit institutions and customers, as well as securities. Debt instruments may be designated as evaluated at fair value through other comprehensive income upon allocation for the The "Hold and Sell" business model is principally allocated to subsequent evaluation (fair value option) if incongruities during securities which primarily serve as additional liquidity reserves. evaluation or allocation are resolved or significantly reduced as a result of such. If the fair value option is not exercised, then on The "Sell" business model is principally allocated to all financial the one hand the classification of debt instruments shall be assets which cannot be allocated to either of the other two coupled to the business model for managing these assets, and business models. This includes in particular securities inscribed on the other the properties of the cash flows associated with in the Austrian Commercial Code/Austrian Banking Act
BTV Interim Report as at 30/09/2020 15 accounts books and investment funds inscribed in the Commer- the event of insignificant retroactive amendments which do not cial Code/Banking Code. lead to a derecognition of the financial instrument, the gross book value of the financial asset shall be recalculated and If the business model of BTV for managing financial instruments a change in profit or loss recognised through profit or loss. In has changed and if such is of great significance for the business the absence of clear regulations in IFRS 9 regarding demarcation activity, then all affected financial assets shall be reclassified pro- between significant and insignificant amendments, a compa- spectively from the time of reclassification – that is from the ny-specific demarcation shall be applied (see here also "Signifi- first day of the next reporting period. The amendment of the cant discretionary decisions", page 24). objective of the business model must have become effective before the time of reclassification. In order that a reclassification Debt instruments are classified as valued at amortised costs for becomes permissible, activities which correspond to the the subsequent valuation if both of the following conditions previous business model may not be exercised after the have been fulfilled and the fair value option not exercised: amendment of the business model. • "Hold" business model In addition to the business model, the cash flow criterion is • Cash flow criterion fulfilled also crucial in classifying according to valuation categories. This means that the contractual provisions on cash flows lead Debt instruments are classified as valued at fair value directly in to established times which represent repayments and interest equity under other results for the subsequent valuation if both payments on the outstanding capital amount only (solely of the following conditions have been fulfilled and the fair value payment of principal and interest – SPPI). Interest in the sense option not exercised: of IFRS 9 is the fee for making money available over a specific period of time, taking into account the risk of default and other • "Hold and Sell" business model risks of basic credit provision, such as liquidity risk. The assess- • Cash flow criterion fulfilled ment of contractual payment features shall be performed for each individual financial instrument using the conditions of With IFRS 9, the separation of embedded derivatives in case of contract applicable upon allocation. debt instruments was excluded. The classification criteria shall consequently be applied to the hybrid contract comprising debt As part of a comprehensive IFRS 9 implementation project, instruments and embedded derivatives. a checklist has been drawn up for use in reviewing the cash flow criteria for the "Hold" and "Hold and Sell" business models. If debt instruments do not pass the SPPI test, or if such are The review of the cash flow criterion is performed using defined allocated to the "Sell" business model, then such shall be criteria. The decision of whether the cash flow criterion is classified for the subsequent valuation at fair value with no fulfilled or not in individual cases is made under consideration effect for the result. At BTV, the lending business is in principle of all relevant factors and represents a discretionary decision. allocated to the "Hold" business model, hence loans to credit If there is interest deleteriousness (modification of fair value institutions and customers with fixed or definable payments of the money), then the transaction does not necessarily have to are measured at amortised cost, if the SPPI criterion is met. be reported at fair value. Fulfilment or non-fulfilment of the cash Where direct write-downs have been made, these reduce flow criterion depends on the type and significance with which the receivables. Value adjustments are reported openly as loan the fair value component has been violated. The review can be loss provisions. performed using a benchmark. If it can be clarified with no or minimal analytical effort that the contractual cash flows of the Equity instruments are in principle valued at fair value. The fair financial asset differ significantly from the comparison cash value of investments in equity instruments is determined either flows of a non-deleterious benchmark instrument, then on the basis of a stock exchange price or on the basis of a qualitative analysis is sufficient. If this is not possible, a quanti- recognised valuation models. tative benchmark test shall be performed. For investments in equity instruments which are not held for In the event of significant retroactive amendments of contractu- trading purposes there exists a one-off, irrevocable option to al cash flows, this shall lead to derecognition of the original recognise all changes in value under other results in equity financial instrument in the balance sheet and a new recognition (OCI option). This option can be exercised separately for each in the balance sheet of a "new" modified financial instrument. In individual financial instrument. In the event of derecognition of
16 BTV Interim Report as at 30/09/2020 the financial asset before maturity, the cumulative amount The profit or loss from fair value hedge accounting is recognised recorded under other income shall not be reposted in the profit through profit or loss under the item "Income from financial and loss account (no recycling). Reposting under another equity transactions." item is permissible. Revenue from customer contracts Derivatives which are not used as hedging instruments shall be The regulations of IFRS 15 define when and how revenue not classified for the subsequent valuation as valued at fair value connected with the receipt of revenue from financial instru- with effect for result according to IFRS 9, just as according to ments, which falls under the regulations of IFRS 9, is received. IAS 39 previously. At BTV, processes and associated internal controls have been implemented to ensure that realisation of revenue from Financial liabilities shall in principle be classified for the subse- contracts with customers is in accordance with IFRS 15. quent valuation as valued at amortised costs. These may optionally be designated for the subsequent valuation as valued Recording of depreciations pursuant to IFRS 9 at fair value through profit and loss (fair value option) if incon- The depreciation model of IFRS 9 stipulates a risk provision to gruities in the valuation or allocation are resolved or significantly the amount of the expected credit loss (ECL). According to the reduced as a result of such. In the BTV Group, the fair value model, expected losses shall be recoded even if no concrete option is used for certain securitised liabilities and subordinate indication of a payment default exists at the time of posting. capital loans which have been secured with derivative financial A value correction for expected credit losses shall be recorded instruments in the context of interest risk control. for debt instruments which are valued at either amortised costs or fair value under other result, and for loan commitments and Derivative liabilities and liabilities from the trading portfolio are financial guarantees, except if such are posted at fair value mandatorily classified as valued at fair value. through profit or loss.
Hedge accounting The depreciation model stipulates a categorisation of financial Insofar as hedge accounting is applied at BTV, as defined in IFRS assets in three levels of depreciation. The amount of the 9, it is used to cover the income from interest rates and the depreciation depends on the allocation of the financial instru- market risk. Fair value hedges are applied mainly as measures to ment to one of three levels: minimise interest rate change risk and to reduce market risk. The prospective or retrospective provable and documentable Generally, when initially recognised, all financial assets are allocat- effectiveness of hedge accounting is an essential prerequisite ed to Level 1, in which value adjustments for the amount of for application of fair value hedge accounting in this respect. anticipated 12-month loan losses are calculated.. If the credit risk increases significantly after the initial recording of financial assets, The fair value hedge transactions are offset by swapping then a transfer shall be performed from Level 1 to Level 2. interest rates on fixed-interest basic transactions for derivative financial instruments linked to the money market which are Depreciation corresponds to the value that may arise from largely identical but opposing with respect to key parameters. possible defaulting during the remaining lifetime of the financial asset (total lifetime credit loss). Balance sheet reporting of hedging transactions as part of fair value hedge accounting is performed under the "Other financial IFRS 9 stipulates a comparison of the risk of default on the cur- assets" and "Other financial liabilities" items. rent balance sheet date with the risk of default since the initial application for determining a significant increase in the credit Hedged basic transactions as part of fair value hedge accounting risk. are presented under the following balance sheet items: The allocation of financial assets to the three levels as part of • Loans to customers the determination of depreciation is performed at BTV using • Liabilities to customers the transfer logic below. In this context, the entry of the rating • Other financial liabilities and process-related indicators specified in the table determines the level to be applied.
BTV Interim Report as at 30/09/2020 17 Risk level Description Amount of credit loss 1 – low risk New business or no significant increase in probability of default/no negative risk 12-month ECL information 1 – low risk "Low credit risk exemption" (only for owned debt securities) 12-month ECL 2 – increased risk Customer is 30 days overdrawn (no forbearance granted) Total lifetime ECL 2 – increased risk Forbearance granted Total lifetime ECL 2 – increased risk Concerns a foreign currency loan Total lifetime ECL 2 – increased risk Concerns a repayment vehicle Total lifetime ECL 2 – increased risk Significant increase in expected probability of default between first application Total lifetime ECL and current balance sheet date 2 – increased risk Current rating changed compared to initial rating by at least 4 levels Total lifetime ECL 2 – increased risk No new business but initial or current rating missing Total lifetime ECL 3 – default Customer has defaulted Discounted cash flow method / flat-rate impairment calculation
The "low credit risk exemption" is an option and allows banks For financial assets with deterministic cash flows, the expected to assume no significant increase in risk of default of a specific exposure at default results from the contractually owed future financial asset on the accounting date compared to the time of payments. For financial assets with non-deterministic cash first application if the risk of default of the financial asset is low flows, such as loan commitments and guarantees, for example, on the accounting date. This means that the total lifetime ECL the expected exposure at default results, on the one hand, is not applied since a significant increase in the credit risk can from the amount withdrawn on the accounting date, and on be excluded by assumption, hence the value correction shall the other from additional amounts, the future withdrawal of be calculated based on the 12-month credit loss. The "low which can be expected in case of default, by means of applying credit risk exemption" is only applied at BTV for debt securi- credit conversion factors. ties owned which are valued at amortised costs. In general, in the context of depreciation pursuant to IFRS 9, The risk of default of a financial asset can be considered low if: BTV differentiates its customers on the basis of their segment, whereby a total of four segments are used: (i) corporate • there exists a low risk of credit default for the financial customers, (ii) retail customers, (iii) states and (iv) banks. instrument; The segment allocation of a customer influences the predicted • the borrower is capable of fulfilling their short-term probability of default and the loss given default since different contractual payment obligations without issue; and empirical models, approaches and parameters are used in the • long-term disadvantageous changes to the economic and calculations based on the allocation. The loss ratio in case of commercial framework conditions may reduce the ability of default for the non-securitised part of a loan and the predicted the borrower to fulfil their contractual payment obligations, probability of default are based on segment-specific empirical though this is not absolutely certain. evaluations or statistical models.
The estimation of the expected credit losses of a financial The probability of default allocated to a financial asset is asset is performed using a function in which the probability of estimated using segment-specific models which take account default (PD), the loss given default (LGD) under consideration of not just the customer rating but also future-oriented for securities, the exposure at default (EAD) expected in macroeconomic information. Within the framework of the the future, and guarantees received are taken into account. models, the probabilities of default inferred from the one-year The marginal expected credit losses resulting from the segment-specific through-the-cycle rating migration matrices function are discounted and aggregated. which are dependent on the rating are adjusted over the next
18 BTV Interim Report as at 30/09/2020 two years using macroeconomic predictions from an estab- contrasted with current exposures and possible liability. lished external organisation. Forecasts include the develop- The allocation of cash flows differs from case to case, but in ment of macroeconomic variables, such as real gross domestic principle follows the internally set logic which differentiates product growth or growth of real gross fixed capital forma- both in the going concern and gone concern approach between tion, and are used to forecast segment-specific portfolio the three scenarios "best case", "realistic case" and "worst case". default rates, which are subsequently used to scale through- The amount and time of a cash flow is therefore recorded the-cycle failure probabilities. The choice of macroeconomic differently depending on the approach and scenario. variables taken into account is based on an empirical analysis, aiming to illustrate as accurately as possible the segment-spe- For insignificant cases – that is, those where the liability of the cific, historical portfolio default rates by means of macroeco- individual customer is less than EUR 1 million – calculation of nomic variables. depreciation is performed according to blanket criteria. This means that, depending on the respective level of credit- Therefore, the (marginal) probabilities of default thus applied worthiness, a flat-rate percentage of blank volumes (liability in the calculation do not correspond to the through-the-cycle less collateral values) – which is based on historical experien- probabilities, but rather are point-in-time probabilities. For tial values of the affected default portfolio – in depreciation longer time horizons, probabilities of default are extrapolated is calculated. based on through-the-cycle ratings. The predictions of the macroeconomic variables of the external organisation Depreciation is performed analogously to Level 2 to the represent a baseline scenario. The expected credit loss for this amount of the total lifetime credit loss. While in Level 2 baseline scenario is estimated for all financial assets. More- interest and depreciation are recorded separately and interest over, the baseline scenario is complemented by two further revenue is calculated on the basis of the gross book value, internally modelled scenarios, whereby one scenario reflects interest revenue in Level 3 is calculated on the basis of a more positive development and the other a more negative amortised cost and therefore on the basis of the gross book development of the macroeconomic situation. An expected value after deduction of the risk provision. credit loss is also estimated for all financial assets for these two scenarios. Subsequently, a weighted average of the If, in the past, there has been a significant increase in the credit scenario-dependent expected credit losses is calculated per risk compared to the initial application such that a financial financial asset which represents the credit loss actually expect- asset was transferred to Level 2 or 3 but the previously ed, whereby for the expected credit loss over the entire determined significant increase in credit risk no longer exists lifetime all periods up to the end of the lifetime are used for at the time of the current accounting date, then the financial the calculation. For the 12-month expected credit loss, all asset shall be transferred back to Level 1. periods up to the end of the first year, or the end of the lifetime if this is less than one year, are used. For assets which already show signs of depreciation upon acquisition or issuing (purchased or originated credit impaired In case of actual occurrence of losses or the presence of – POCI), depreciation is not recorded during first-time objective evidence of depreciation, the financial asset shall be application due to the use of a creditworthiness-adjusted categorised as depreciated and transferred to Level 3. At BTV, effective interest rate. For these assets, only the changes in therefore, the third level covers all items for which default the credit loss expected upon allocation accumulated since exists pursuant to BTV's internal definition of default. the first-time application are recognised in income or expens- es in the risk provision. The POCI assets are allocated to Level At BTV, all Level 3 items are arranged into significant and 3 upon entry. insignificant cases depending on the liability of the individual customer: BTV has established its definition of default based on the provisions under Article 178 of EU Regulation 575/2013 For significant cases – that is, where the liability of the individual (Capital Requirements Regulation – CRR). A risk item is thus customer is greater than EUR 1 million – the individual value considered defaulted if: adjustment or reserve is calculated using the DCF (discounted cash flow) method in which future discounted cash flows are
BTV Interim Report as at 30/09/2020 19 • a significant obligation of the debtor to BTV is overdue for For creditworthiness risks, Group-wide standard assessment more than 90 days, or; criteria are applied and provided for through collateral. • BTV considers it unlikely that the debtor will settle their obligations to BTV to the full amount without BTV resorting Shares in companies valued at equity to utilisation of collateral (pending payment default), or; This item records the holdings in those associated companies • a significant obligation of the debtor who has been granted which are included according to the equity method. On the forbearance has been defaulted on during the forbearance balance sheet date, the BTV Group assesses whether there are period, and is more than 30 days overdue to BTV upon objective indications that the holdings in associated compa- expiry of the interruption in the period, or; nies could go down in value, for example, if the book values of • a debtor who has been granted forbearance has defaulted net equity exceed the market capitalisation in value. If there during the forbearance period and BTV grants further are objective indications of this, the book value is checked for forbearance upon expiry of the interruption of the period. reduction in value by comparing it to the realisable amount, which corresponds to the higher of in-use value and discount- The assessment of whether a loan is overdue to a customer is ed present value, minus sales costs. based solely on the civil law maturity of the risk item. Trading assets Depreciations of financial assets which are valued at amortised Financial assets held for trading purposes are reported under costs are deducted from the gross book value of the assets. trading assets (see Note 7). These financial instruments serve Depreciations on borrowed equity instruments, which are to achieve a profit from exchange rate and price differences or valued at fair value under other result with no effect for fluctuations in interest within a short-term or medium-term the result, shall be presented in the profit and loss account. resale. All trading assets, that is, positive market values from The deprecation itself does not lead to any decrease in the derivative financial instruments and funds, are valued at fair book value of these assets in the balance sheet, rather it is value through profit and loss. presented under other income. Intangible fixed assets No collateral that may be disposed of independently of the This item includes rental leases, industrial property rights and debtor's default was held by BTV in the reporting period. other rights. The valuation is carried out at acquisition costs, reduced by scheduled depreciation. The scheduled deprecia- Currency conversion tion is applied linearly based on the estimated useful life. Assets and liabilities denominated in foreign currencies as well The expected useful life and the depreciation method are as non-completed foreign currency cash transactions are checked at the end of each financial year and all changes in converted at the ECB reference rate on the balance sheet date. estimates are considered prospectively. As a rule, the amorti- Forward currency transactions are converted at current sation of intangible assets is performed via a useful life of forward rates valid for their maturity. The conversion of the between 2 and 20 years or 40 years for long-term lease rights annual financial statements of the Swiss branches is per- and other licences. formed according to the functional conversion method. Conversion differences on profit carried forward are rec- In the event of a depreciation under IAS 36, unscheduled ognised in equity. Alongside financial instruments in the amortisations are performed. If the reason for an earlier functional currency, there are primarily financial instruments unscheduled amortisation has lapsed, an allocation will be in Swiss francs and US dollars. made to the amortised acquisition or production cost, except in the case of goodwill. Cash reserves Cash holdings and credit with central banks are included in the Property, plant and equipment cash reserves. Property, plant and equipment are valued at acquisition or manufacturing costs, reduced by scheduled and, where Risk provisions necessary, unscheduled depreciation. Scheduled depreciation The particular risks of the banking business are taken into is applied linearly. The depreciation period is 33 to 50 years account by BTV through the creation of value adjustments and for buildings; for operating and office equipment it is 3 to reserves as appropriate. 13 years.
20 BTV Interim Report as at 30/09/2020 Derecognition of the fully depreciated fixed assets takes place made at that time. In the absence of all information required upon decommissioning. In the event of derecognition of to determine the discounting of the implicit interest rate to be assets, the procurement or manufacturing costs, as well as the applied as a priority, BTV discounts the future lease payments accumulated write-offs, are offset. Earnings on asset disposals using the incremental borrowing rate. The leasing liability (sale proceeds less carrying amount) are recorded under other should then be updated in following periods depending on the operating income or other operating expenses. Assets are cap- repayments agreed. The leasing liability should be re-valued if italised at acquisition or manufacturing costs. there has been a change to an estimation of payment expecta- tions already made as part of the initial valuation. Acquisition and production incidental costs and expansion investments are capitalised; however, maintenance expenses The right to use a lease object is valued at amortised cost. are recognised in the period in which they have arisen. These costs include the amount from the first-time valuation of the leasing liability, all lease payments made at or before the Borrowing costs that can be directly apportioned to the start of the term of the lease, initial direct costs and estimated acquisition or production of a qualified asset are included in dismantling costs. the acquisition or production cost. The term of the lease relationship is comprised of the Properties held as financial investments non-cancellation period and periods for which an extension Land and buildings, as well as fittings in rented properties, option will, with sufficient certainty, be exercised or for which which the BTV Group holds as long-term holdings for rental a unilateral termination option will, with sufficient certainty, income and capital growth are shown at the procurement and not be exercised. When assessing whether the exercising or manufacturing cost, minus scheduled linear depreciation over non-exercising of the options is sufficiently certain, BTV takes their expected useful life. into account, in particular, the significance of the asset for the For buildings, the useful life is 33 to 50 years; for fittings in Group, termination costs, costs relating to defining an rented property, the useful life is determined according to the alternative asset value and material installations of BTV. If this duration of rental. The corresponding lease agreements are consideration of all factors as at the date of preparation results shown in the profit and loss item "Other operating income". in a term of a maximum of 12 months, then there exists a short-term lease. Leasing The BTV Group recognises leases in accordance with the For short-term leases and leases whose underlying asset does provisions of IFRS 16 "Leases“. not exceed a nominal value of EUR 5 thousand at the time of assessment, BTV makes use of the optional right not to report Lessee: these leases on the balance sheet, and instead reports If there exists a leasing relationship, BTV records a right of use, payments from these contracts linearly as expenditure across relating to the underlying asset, and a corresponding leasing the term of the lease. liability on the balance sheet. Lessor: When determining whether an agreement involves a lease If all risks and opportunities associated with ownership are pursuant to IFRS 16, BTV assesses, upon conclusion of any transferred as part of a lease, this is considered financial contract, whether the contractual agreement constitutes or leasing. Based on the following indicators, BTV assesses in establishes a leasing relationship. To do this, BTV assesses, on particular whether a lease could be classified as financial the basis of the individual contract, whether the asset value leasing: underlying the agreement is a concretely identifiable asset, whether BTV as lessee is entitled to essentially extract the • At the end of the term of the lease, ownership of the asset is entire financial benefit from use of the asset, and whether BTV transferred to the lessee. holds the right to determine use of the asset. If these three • The lessee has the option to acquire the asset at a price that criteria are cumulatively fulfilled, there exists a leasing is significantly lower than the fair value of the asset at the relationship in the sense of IFRS 16. time of the potential exercise of an option, such that it is sufficiently certain at the start of the lease that the option Pursuant to IFRS 16, a leasing liability should be valued at the will be exercised. start of the lease at the cash value of lease payments not yet • The term of the lease covers the majority of the economic
BTV Interim Report as at 30/09/2020 21 useful life of the asset, even if the right of ownership is not Other provisions are created as required by IAS 37 if the transferred. company has existing legal or factual liabilities which result • The asset is special such that it can only be used by the from historical transactions or events, for which it is likely that lessee without significant change. to meet the commitment an outflow of economically produc- tive resources is required, and a realistic estimation of the If all risks and opportunities associated with ownership are not value of the liability is possible. essentially transferred, a lease is classified as an operational lease. Reserves are subject to annual review and recalculation. This includes uncertainties in estimation which may lead to In the case of finance leasing, the assets held as part of the adjustments the following year. lease are entered as receivables to the amount of the net investment in the lease. The lease instalments are broken Other liabilities down into repayment and interest, whereby the latter should Accounts payable for non-banking services are not inter- be distributed across the term of the lease such that the est-bearing and are recognised at the nominal value. returns from the net investment value are equal across the period on the basis of the lessor's internal interest rate. Tax refunds and tax debts Claims and liabilities relating to income tax are presented in Lease payments from operational leases are reported linearly the items "Tax claims" or "Tax debts". as revenue. In the case of an operational lease, the lessor must value the asset at the outset at acquisition and manufacturing For the calculation of deferred taxes, the balance sheet-related cost, and report this on the balance sheet according to its temporary concept is applied and compares the valuations of type. The asset is subsequently updated pursuant to IAS 16 assets and liabilities with the valuations which apply for "Property, plant and equipment" or IAS 38 "Intangible assets" taxation of the relevant Group company. Differences between depending on whether it is a movable asset or immovable these two valuations lead to temporary differences, for which property. deferred tax claims or liabilities must be shown in the balance sheet. Current assets Other current assets in the non-banking sector are recorded Current income tax claims and liabilities are set at the tax under other assets and basically include inventories, accounts values which are expected to be settled with the respective receivable and other receivables and assets of Silvretta tax authorities. Montafon Holding GmbH and Mayrhofner Bergbahnen Aktiengesellschaft. Inventories are valued at acquisition or Deferred tax assets on unused tax loss carry-forwards are production cost, whichever is the lower, less discounts and presented in the balance sheet when it is likely that in the deductibles, similar price reductions and the net realisable future, taxable profits of a corresponding amount will be value. The acquisition cost is calculated on a sliding average generated. Deferred taxes are not discounted. The option of cost basis. Inventory risks arising from the duration of storage group taxation is used by BTV in its capacity as the parent or reduced applicability are taken into account through company. depreciation. Lower values on the reporting date owing to reduced sales proceeds are taken into account. Genuine repurchase agreements Genuine repurchase agreements are agreements whereby Reserves and provisions financial assets are transferred against the payment of an Long-term reserves for staff (pension, redundancy, anniversa- amount and where it is agreed at the same time that the ry payments and death payment commitments) are shown as financial assets must be returned to their owner at a later stage per IAS 19 using the projected unit credit method. Future against the payment to the transferrer of an amount defined in commitments are valued on the basis of actuarial assessments, advance. The financial assets in question remain on the which not only take into account the pensions which are balance sheet of the BTV Group. These are valued using the known at the date of the balance sheet, but also the expected relevant presentation rules for the respective balance sheet future rates of increase. item. The liquidity obtained from the repurchase agreement is classified as liabilities to credit institutions or liabilities to customers.
22 BTV Interim Report as at 30/09/2020 Net interest income Operating expenses The net interest income includes revenue and expenses which The operating expenses include staff expenditure, material represent compensation for the provision of capital. In expenditure as well as scheduled depreciation of fixed assets, addition, revenue from other assets, from holdings and from amortisation of intangible assets and of properties held as trading assets are also documented under this item. Expendi- financial investments for the reporting period. ture from other financial liabilities, trade liabilities, and interest expenditure for long-term staff reserves are also posted under Staff expenditure includes wages and salaries, variable salary this item. In addition, negative interest rates are reported as elements, legally required and voluntary social costs, staff-re- a separate item. The negative interest costs are shown as inter- lated taxes and levies as well as expenses (including changes est earnings on liabilities and the negative interest income as to reserves) for redundancies, pensions, anniversary payments interest costs on assets. and death benefits, insofar as they have not been included under other income. Interest income and expenses are delimited and recorded on an accrual basis. Income from investments is recorded when Material expenditure include IT costs, office building costs and the legal claim to payment arises. the costs for running offices, costs for advertising and market- ing, legal and consultancy costs, and other operating costs. Risk provisions in the credit business The item "Loan loss provision" includes increases to impair- Other operating income ments and reserves or income from the cancellation of Other operating income shows all the revenue and expendi- impairments and reserves as well as direct write-offs and later ture of the BTV Group which is not attributable to current receipts of already written-down loans in connection with the business activities. This includes in particular the profits from credit business. the renting or sale of properties maintained as financial investments and other fixed assets, cost of sales and revenues Net commission income for non-banking activities, such as insurance and revenue from The net commission income is the balance of the revenues and cable cars and tourism. Furthermore, in addition to expenses expenses from services provisions. Above all, these include for other taxes and levies, this item also includes expenses for income and expenses for services arising from payment the increase in reserves as well as income from the liquidation transactions, securities transactions, credit transactions as of other reserves. well as from foreign exchange, foreign cash and precious metals business and other miscellaneous services. Taxes on earnings and profit Current and deferred taxes on income are reported under this Income from companies valued at equity item. They include the individual Group companies on the basis Revenue from companies valued at equity is posted under this of calculated taxable results from current income taxes, income item. tax corrections for previous years and changes to the tax provisions. Trading income This item includes profits and losses realised from the sale of Discretionary decisions, assumptions and estimates currencies, securities, derivatives and other financial instru- In drawing up the BTV consolidated financial statements, ments from the trading portfolio, and unrealised valuation values are determined on the basis of discretionary decisions, profits and losses from the market valuation of currencies, as well as through the use of assumptions and estimates. The securities, derivatives and other financial instruments from the associated uncertainties may lead in future reporting periods trading portfolio. to additional income or expenses, or may make it necessary to adjust the book value on the balance sheet. The management's Income from financial transactions estimates and assumptions used are based on historical The valuation gains or losses and also revenue achieved from experience and other factors such as planning and likely the derecognition of securities, derivatives, loans and own expectations and predictions of future events, based on issues are recognised under this item. current assessments, with the objective of providing meaning- ful information on the asset, financial and earnings situation of the company.
BTV Interim Report as at 30/09/2020 23 Significant discretionary decisions An active market must fulfil cumulatively the following Discretionary decisions which were made by the company's conditions: management and which influenced the amounts in the consoli- dated financial statement are indicated below. • the products traded on the market are homogeneous; • normally willing contractual buyers and sellers can be found Retroactive amendments of contractual cash flows any time; and pursuant to IFRS 9 • prices are available to the public. In assessing whether a modification leads to a significant change in contractual cash flows and thus to a derecognition A financial instrument is seen as listed on an active market if of the financial instrument, qualitative and quantitative factors its prices are available easily and regularly from a stock are taken into consideration. A qualitative assessment is exchange, a trader or broker, an industry group, a price service always sufficient for financial assets if this assessment can be agency or a supervisory authority and these prices represent used to clearly identify a significant modification. This shall be actual and regularly occurring market transactions. considered in particular in the event of a change of debtor or currency or the granting of a contractual clause which does Valuation procedure through observable parameters not fulfil the cashflow conditions. In the event of a modifica- (Level 2): tion of a financial asset which was not defined beforehand as This category includes OTC derivative contracts, receivables a clearly significant contract adjustment, the assessment is and issued debt securities of the Group classified at fair value. performed using a cash value test. Accordingly, there is a significant change in contract conditions if a present value Valuation procedures through significant unobservable difference between the outstanding debt of the original cash parameters (Level 3): flows and the new cash flows results from the modification and The financial instruments in this category show input parame- amounts to at least 10%. ters which are based on unobservable market data. The alloca- tion of certain financial instruments to the categories requires Uncertain estimates a systematic assessment, especially if the valuation is based on The most important assumptions related to the future as well both observable as well as unobservable market parameters. as other significant sources of estimating uncertainties are The instrument classification may also change over time in primarily affected by the following matters: consideration of changes to the market parameters.
Fair value of financial instruments For securities and other investments which are valued at fair If the other comprehensive income of financial assets and value, the following valuation processes are applied: financial liabilities cannot be derived based on data from an active market, it is determined using different valuation Level 1 models. The input parameters for these model calculations The fair value is derived from the transaction prices as traded are, as far as possible, derived from observable market data. on the stock exchange.
The financial instruments reported at fair value are classified at Level 2 fair value in the three-tier valuation hierarchy as follows. This Securities which are not traded on an active market are valued hierarchy reflects the significance of the input data used for by means of the discounted cash flow method. This means the valuation and is classified as follows: that the future projected cash flows are discounted by means of suitable discount factors in order to calculate the fair value. Quoted prices in active markets (Level 1): The discount factors contain both the credit risk-free interest This category contains equity, corporate bonds and govern- curve as well as the credit spreads which follow the credit ment bonds listed on major exchanges. The fair value of rating and the rank of the issuer. The interest curve for financial instruments traded on active markets is calculated on discounting contains securities account, money-market the basis of quoted prices, insofar as these represent prices futures and swap rates as observable on the market. applied within the context of regular and current transactions.
24 BTV Interim Report as at 30/09/2020 The calculation of the credit spread follows market futures-interest rates, swap interest rates as well as a 3-step process: basis spreads which can be observed continually on the market.
1) If for the issuer there is a bond of the same rank and of the At BTV, derivatives with an asymmetrical payment profile same remaining term which is actively traded on the market, contain interest derivatives (caps and floors). The calculation of this credit spread is used. the fair value is performed here by means of the Black-76-Op- 2) If there is no comparable bond which is actively traded on tion price model. All inputs are either in their entirety directly the market, the credit default swap spread (CDS spread) with observable on the market (money market rates, money market a similar term is applied. futures and interest rates as well as swap interest rates) or 3) If there is neither a comparable bond traded on the market derived from input factors observable on the market (caps/ nor an actively traded CDS, then the credit spread from floor volatilities implicitly deducted from option prices). a comparable issuer is applied (Level 3). This application case does not currently exist in the BTV Group. Loans that are to be recognised at fair value are valued as follows: Level 3 The fair values of the mentioned financial assets in Level 3 Level 3 were determined in accordance with generally recognised Loans that are to be recognised at fair value are valued using valuation processes. Significant parameters are the deprecia- a discounted cash flow method in which the future projected tion rate as well as long-term success and capitalisation values cash flows are discounted for the lifespan of the instrument with consideration of the experience of the management as taking into account the credit risk. The discount curve is well as knowledge of the market conditions of the specific increased by one epsilon, which is calibrated in such a way that industry. the transaction corresponds to the nominal value at the time of initialisation and thus does not generate a valuation gain/ The issues are allocated to Level 2 and valuation is performed loss. The sum of the cash flows discounted in this way gives in accordance with the following process: the fair value.
Level 2 The fair value hierarchy and fair values of financial instruments Own issues are not subject to active trading on the capital are explained in more detail under Notes 31 and 31a. market. Instead, they are retail issues and private placements. Valuation is consequently performed by means of a discount- Risk provisions in the lending business ed cash flow valuation model. This is based on an interest Risk provisions are determined by expectations regarding curve that applies money market interest rates and swap future loan losses and the composition of the quality of the interest as well as BTV's credit spreads. loan portfolio. It is also necessary for calculating expenses on risk provisions to estimate the amount and timing of future Derivatives are also allocated to Level 2. The following cash flows. valuation processes are applied: Depreciations of financial instruments which cannot yet be Level 2 identified are established based on expected credit loss (ECL). Derivative financial instruments are divided into derivatives These depreciations are based on ratings estimates and with a symmetrical payment profile and derivatives with an probabilities of default. Notes on the principles of the applied asymmetrical payment profile. input factors, assumptions and estimation procedures for measuring expected credit losses, for determining whether At BTV, derivatives with a symmetrical payment profile contain the risk of default of a financial instrument has increased interest derivatives (interest swaps and forward interest rate significantly since first application, and for determining contracts) and foreign currency derivatives (FX swaps, cross whether a financial asset is exposed to impaired creditworthi- currency swaps and FX outright transactions). These deriva- ness are explained in more detail in the Section "Calculating tives are calculated by means of the discounted cash flow depreciations pursuant to IFRS 9" on page 17. method which is based on money market interest rates, money
BTV Interim Report as at 30/09/2020 25 Long-term staff reserves UniCredit is alleging that, since 2003, the composition and Long-term payroll reserves are measured using actuarial decision-making organ of the syndicates have changed and that methods. The actuarial calculations are based on assumptions as a whole these have expanded their voting weight in a man- about the discounting interest rate, future wage and salary ner relevant to takeover law, and that thus a bid obligation increases, mortality and future pension increases. should have been triggered.
Other reserves and provisions In the period from 28/09/2020 to 01/10/2020, the proceedings The formation of reserves requires an assessment of the for taking evidence took place in these review proceedings extent to which the company has an obligation to third parties before the Takeover Commission; the decision of the Takeover as a result of past events. Commission is made in writing. Furthermore, estimates regarding the amount and maturity of future cash flows are necessary for the calculation of reserves. After careful review, with the involvement of external experts, Further details can be found under Note 15b. the Board of Directors assumes that even a new audit under takeover law will not lead to any assertion of a bid obligation. Legal disputes of 3 Banken with UniCredit Bank Austria AG and CABO Beteiligungsgesellschaft m.b.H.: Deferred taxes UniCredit Bank Austria AG and CABO Beteiligungsgesellschaft Deferred tax assets are recognised as tax loss carry-forwards m.b.H. (mutually abbreviated to: "UniCredit") submitted and applicable temporary tax differences. This assumes that in a motion at the Annual General Meeting of BTV in May 2019 future taxable earnings are available to offset the losses. to conduct a special audit with regard to all capital increases Discretionary decisions and estimations are required in order performed by BTV since 1993. This motion was not approved. to determine at what level deferred tax assets are to be set, In light of the rejection of this motion for resolution, UniCredit based on future taxable profit and future tax planning. subsequently submitted an application to the District Court Innsbruck in June 2019 requesting the ordering of a special COVID-19 audit. This application was rejected by order of the court on The COVID-19 pandemic and related measures have led to 20/01/2020. a global economic downturn. Uncertainty surrounding the future impact on the economy remains high. BTV has respond- UniCredit appealed against this decision to the Supreme ed comprehensively to this development in order to provide District Court Innsbruck. its customers with the best possible support in their respec- tive situations. In June 2019, UniCredit then lodged a claim before the Inns- bruck Regional Court to challenge individual resolutions Support packages for retail and corporate customers, especial- of BTV's 101st Annual General Meeting of 16/05/2019. ly tourism customers, were initiated in the course of March. The Innsbruck Regional Court suspended the proceedings for These enabled BTV to respond to customers' needs at an early clarification of a preliminary matter by the Takeover Commis- stage and provide prompt financial security in this uncertain sion in a decision of 19/01/2020. On 09/07/2020, UniCredit environment. Support included the granting of deferrals, filed an action before the Innsbruck Regional Court to chal- bridge financing and capital stock increases. lenge individual resolutions of BTV's 102nd Annual General Meeting of 10/06/2020. BTV has concluded that so far all moratoria introduced to our core markets fulfil the conditions as defined in the EBA These proceedings have not had a discernible impact on the guidelines published on 25/03/2020 and 02/04/2020. The balance sheet. number of customers who use public moratoria is low. As at 30/09/2020, only a few transactions with a total gross book At the end of February 2020, UniCredit submitted applications value of around EUR 656 thousand have been deferred in to the Takeover Commission to review whether the sharehold- accordance with Section 2 of the Second COVID-19 Judicial er syndicates existing at 3 Banken have breached a bid obliga- Accompanying Act (2. COVID-19-JuBG). Instead, BTV has tion under takeover law. BTV is affected by these proceedings concluded agreements that go beyond the scope of the as a member of the syndicates with Oberbank AG and BKS statutory moratorium or are with customers who do not fall BANK AG. within the scope of the statutory moratorium. As a result, there was greater take-up of the support packages listed
26 BTV Interim Report as at 30/09/2020 above, particularly with regard to the duration and target cle default probabilities into point-in-time. Prior to the group benefiting from the support. BTV has also joined the COVID-19 pandemic, portfolio default rate forecasts were Austrian moratorium without legal form notified to EBA and determined using econometric models that used macroeco- has implemented the corresponding European framework nomic factor forecasts as input variables. Given the current conditions. The gross book value of transactions in Level 1 or situation, however, these forecasts are calculated qualitatively. Level 2 covered by the Austrian moratorium without legal This is based on historical portfolio-specific experience, taking form amounts to around EUR 296.8 million, with a further into account forecasts available at the balance sheet date on EUR 3.5 million relating to unused lines of credit. macroeconomic development and the expected effect of any government stabilisation measures. This approach is based on Overall, measures related to COVID-19 (such as deferrals with the estimation that the portfolio default rate forecasts and without forbearance, bridge financing and capital stock determined by econometric models are not sufficiently increases) concern an overall business volume of approx. accurate. EUR 802.4 million, of which around EUR 701.6 million is attributable to loans, around EUR 100.7 million to unused lines As a result of this approach, the forecast default probabilities of credit and approx. EUR 0.2 million to issued guarantees. used in the calculation of expected credit losses are higher This total business volume also includes EUR 131.8 million of than when using the previous econometric model. Portfolio new and already partially utilised credit facilities for which default rates are expected to increase in the near future in all public financial guarantees amounting to EUR 108.3 million three scenarios and in each segment. are available. No significant credit defaults related to COVID-19 have been observed to date. The three scenarios include a basic scenario that shows the expected course of the portfolio default rates. The positive Factors impacting the determination of expected credit scenario reflects a much more positive course of the pandemic losses: and therefore also a faster economic recovery. In the negative The increase of EUR 16.0 million in value adjustments for the scenario, it is assumed that the course is significantly more lending business and provisions for unused lines of credit as negative and that support measures also significantly fail to well as guarantees since 31/12/2019 in Levels 1 and 2 is almost achieve the desired effect. The three scenarios used in the ECL entirely due to the changed overall situation brought about by calculation therefore reflect the uncertainty regarding the the COVID-19 pandemic and the resulting induced increase in expected economic recovery, the medium-term effect of any expected credit losses. The following factors are particularly government stabilisation measures and the resulting effect on important when determining expected credit losses: the expected portfolio default rates.
• Forecast increase in future portfolio default rates and The following table compares the level of allowances for the subsequently increased point-in-time default probabilities lending business and the level of provisions for unused lines per rating class of credit, as well as for guarantees under the scenarios used in • Deteriorations in customer ratings calculating the expected credit loss. The recognised values as • Transfer of transactions from Level 1 to Level 2 due to debt at 30/09/2020 constitute the initial value. While the first three forbearance, rating deterioration and/or increase in value columns show the difference from the relevant initial point-in-time default probability value, the last column shows the aggregated portfolio values by scenario. In connection with the current COVID-19 pandemic, the expected credit loss is also determined using existing calcula- tion logic. However, in order to adequately take into account the current situation, a model component was adjusted using the information available at the reporting date on current conditions and forecasts of future economic developments, including the effect of any government stabilisation measures. The adjusted model component relates to scenario-depen- dent forecasts of the portfolio default rates for corporate and retail customers. They are used to transform through-the-cy-
BTV Interim Report as at 30/09/2020 27 Value adjustments and reserves according to ECL scenarios in EUR thousand Level 1 Level 2 Level 1 + Level 2 Total Total 30/09/2020 55,739 15,048 70,787 70,787 Difference from initial value by Base scenario –341 –420 –762 70,025 scenario Negative scenario +3,383 +3,545 +6,928 77,714 Positive scenario –2,358 –2,284 –4,642 66,145
Loan loss allowances 30/09/2020 6,982 11,167 18,149 18,149 Difference from initial value by Base scenario –204 –310 –515 17,635 scenario Negative scenario +2,017 +2,566 +4,584 22,733 Positive scenario –1,404 –1,636 –3,040 15,109
Reserves for unused lines of credit 30/09/2020 3,063 2,361 5,424 5,424 Difference from initial value by Base scenario –94 –70 –164 5,260 scenario Negative scenario +934 +601 +1,535 6,959 Positive scenario –652 –391 –1,043 4,381
Reserves for guarantees 30/09/2020 45,693 1,520 47,213 47,213 Difference from initial value by Base scenario –43 –40 –83 47,130 scenario Negative scenario +431 +377 +809 48,022 Positive scenario –302 –257 –559 46,654
28 BTV Interim Report as at 30/09/2020 In addition to the regular standard credit assessment process, • rating migrations; a special review of the portfolio was initiated at the end of the • a possible update of future-related information and the first quarter of 2020 due to the COVID-19 situation. Custom- resulting changes in the probabilities of default used for ers were selected and ordered based on their expected calculation, as well as; exposure to COVID-19 as a risk factor. This was derived, • an increase in defaults after government stabilisation among other things, from the customer's industry. This measures have been lifted. comprehensive review of the individual credit ratings taking into account the customer-specific exposure to COVID-19 or BTV continues to monitor the current situation on an ongoing its effects and the continuous and consistent monitoring of basis and will take into account any changes relating to the the individual risk positions since then, taking explicit account expected effects on credit losses when calculating value of the current situation, reflects the potential increase in the adjustments. default risk in the respective individual customer ratings, which are directly and indirectly incorporated into the level allocation via the probabilities of default. Due to the situa- tion-appropriate and current default risk assessment of individual customers, collective consideration of sectors during the level allocation was also not necessary for 30/09/2020. BTV will continue to monitor the development of sectors and sectors as well as individual customer credit ratings in its loan portfolio on an ongoing basis.
Deferrals voluntarily granted by BTV in connection with COVID-19 are individually checked for the existence of a forbearance measure. If a deferral occurs because the borrower is in financial difficulty and the deferral gives them the opportunity to reduce their liabilities in the context of the current economic situation, the deferral is considered a forbearance measure. This results in a transfer to Level 2. Deferrals within the framework of statutory moratoria or moratoria without legal form, which have been notified to the EBA, however, do not lead to a forbearance classification or to an automatic determination of a significant increase in the default risk due to the measure.
The public financial guarantees granted in connection with the COVID-19 government stabilisation measures for new credit facilities constitute an integral part of the contract and are counted as collateral when determining the expected credit losses. However, they are not considered when assessing any potential significant increase in the risk of default.
The uncertainty regarding future economic development resulting from the current COVID-19 situation also increases the uncertainty of the expected credit loss estimates. BTV generally expects an increase in risk provisions due to:
BTV Interim Report as at 30/09/2020 29 Significant business events during or after the reporting period By means of an ad hoc report dated 21/04/2020, BTV adjusted its profit forecast compared to the publication in the 2019 Annual Report due to the measures taken to combat the COVID-19 pandemic (see page 7).
The resolutions at the 102nd Annual General Meeting of Bank für Tirol und Vorarlberg AG, held on 10/06/2020, are published on the BTV homepage (www.btv.at) under Menu > Company > Investor Relations > Annual General Meeting.
The resolutions of the extraordinary general meeting of preferred shareholders of Bank für Tirol und Vorarlberg Aktiengesellschaft on 10/06/2020 can be found online at www. btv.at under Company > Investor Relations > Extraordinary General Meeting.
Since the date of the interim report, there have not been any other activities or events in the BTV Group which are relevant to the report because of their form or content, and which would affect the picture of the asset, financial and earnings situation conveyed by this report.
30 BTV Interim Report as at 30/09/2020 Notes on the balance sheet – Assets
1 Cash reserves in EUR thousand 30/09/2020 31/12/2019 Cash on hand 81,556 32,580 Credit with central banks 2,201,974 1,395,079 Cash reserves 2,283,530 1,427,659
2 Loans to credit institutions in EUR thousand 30/09/2020 31/12/2019 Amortised cost 476,931 468,459 Loans to credit institutions 476,931 468,459
3 Loans to customers in EUR thousand 30/09/2020 31/12/2019 Amortised cost 7,995,162 7,761,136 Mandatorily at fair value 286,259 274,945 Loans to customers 8,281,421 8,036,081
4 Other financial assets in EUR thousand 30/09/2020 31/12/2019 Debt securities measured at amortised cost 914,510 899,342 Debt securities valued at fair value through other comprehensive income (FVOCI) 327,799 345,342 Debt securities mandatorily valued at fair value 8,607 9,490 Debt securities fair-value option 0 2,610 Equity instruments valued at fair value through other comprehensive income (FVOCI) 112,624 125,594 Equity instruments valued at fair value through profit and loss (FVTPL) 35,055 35,055 Positive market values from derivative hedging instruments 53,994 51,363 Other financial assets 1,452,589 1,468,796
5 Shares in companies valued at equity in EUR thousand 30/09/2020 31/12/2019 Credit institutions 703,024 694,580 Non-credit institutions 19,394 18,196 Shares in companies valued at equity 722,418 712,776
BTV Interim Report as at 30/09/2020 31 6 Risk provisions 2020 (presentation of portfolio) As at Addi- Con- Currency As at in EUR thousand 01/01/2020 tions Releases sumption conversion Splitting 30/09/2020 Value adjustments Level 1 5,512 4,923 –3,453 0 0 0 6,982 Value adjustments Level 2 4,482 8,874 –2,189 0 0 0 11,167 Value adjustments Level 3 87,779 20,456 –7,230 –3,712 8 0 97,301 Risk provisions in the credit 97,773 34,253 –12,872 –3,712 8 0 115,450 business Reserves for guarantees/ 43,966 6,558 –1,768 0 0 0 48,756 unused lines of credit Level 1 Reserves for guarantees/ 813 3,722 –654 0 0 0 3,881 unused lines of credit Level 2 Reserves for guarantees/ 6,991 1,692 –4,144 0 4 0 4,543 unused lines of credit Level 3 Reserves for guarantees and credit 51,770 11,972 –6,566 0 4 0 57,180 Total risk provisions 149,543 46,225 –19,438 –3,712 12 0 172,630
Within the risk provisions, the counterparty risk was recorded The columns Additions (+) and Releases (–) contain new directly in the relevant balance sheet items in the reporting business, disposal of financial assets, change in the likelihood period. of default, the adjustment of contractual cash flows and transfers between the individual levels, which are detailed in Note 6a.
32 BTV Interim Report as at 30/09/2020 Risk provisions 2019 (presentation of portfolio) As at Addi- Con- Currency As at in EUR thousand 01/01/2019 tions Releases sumption conversion Splitting 30/09/2019 Value adjustments Level 1 7,746 3,264 –5,149 0 0 0 5,861 Value adjustments Level 2 7,093 3,890 –5,107 0 0 0 5,876 Value adjustments Level 3 82,538 8,262 –12,472 –2,070 72 819 77,149 Risk provisions in the credit 97,377 15,416 –22,728 –2,070 72 819 88,886 business Reserves for guarantees/ 42,250 5,270 –1,664 0 0 0 45,856 unused lines of credit Level 1 Reserves for guarantees/ 686 299 –295 0 0 0 690 unused lines of credit Level 2 Reserves for guarantees/ 7,197 5,275 –4,174 0 37 0 8,335 unused lines of credit Level 3 Reserves for guarantees and credit 50,133 10,844 –6,133 0 37 0 54,881 Total risk provisions 147,510 26,260 –28,861 –2,070 109 819 143,767
BTV Interim Report as at 30/09/2020 33 6a Level transfer in EUR thousand Value adjustment 01/01/2020 – 30/09/2020 Level 1 Level 2 Level 3 POCI* Transfer from Level 1 to Level 2 –1,049 1,049 0 0 Transfer from Level 1 to Level 3 –42 0 42 0 Transfer from Level 2 to Level 1 302 –302 0 0 Transfer from Level 2 to Level 3 0 –76 76 0 Transfer from Level 3 to Level 1 550 0 –550 0 Transfer from Level 3 to Level 2 0 71 –71 0 Total –239 742 –503 0
Reserves for guarantees 01/01/2020 – 30/09/2020
Level 1 Level 2 Level 3 POCI* Transfer from Level 1 to Level 2 –182 182 0 0 Transfer from Level 1 to Level 3 –1 0 1 0 Transfer from Level 2 to Level 1 13 –13 0 0 Transfer from Level 2 to Level 3 0 –2 2 0 Transfer from Level 3 to Level 1 0 0 0 0 Transfer from Level 3 to Level 2 0 0 0 0 Total –170 167 3 0
Provisions for credit 01/01/2020 – 30/09/2020
Level 1 Level 2 Level 3 POCI* Transfer from Level 1 to Level 2 –403 403 0 0 Transfer from Level 1 to Level 3 0 0 0 0 Transfer from Level 2 to Level 1 40 –40 0 0 Transfer from Level 2 to Level 3 0 0 0 0 Transfer from Level 3 to Level 1 0 0 0 0 Transfer from Level 3 to Level 2 0 0 0 0 Total –363 363 0 0
At BTV, the transfers reported from one level to another are posted to the profit and loss account via allocation to or release from the respective items and are included in the values under Note 6 in the respective items Additions (+) and Releases (–).
* Financial instruments with creditworthiness already impaired at the time of acquisition or issue (purchased or originated credit impaired – POCI)
34 BTV Interim Report as at 30/09/2020 Level transfer in EUR thousand Value adjustment 01/01/2019 – 30/09/2019 Level 1 Level 2 Level 3 POCI* Transfer from Level 1 to Level 2 –1,941 1,941 0 0 Transfer from Level 1 to Level 3 –9 0 9 0 Transfer from Level 2 to Level 1 581 –581 0 0 Transfer from Level 2 to Level 3 0 –55 55 0 Transfer from Level 3 to Level 1 0 0 0 0 Transfer from Level 3 to Level 2 0 0 0 0 Total –1,369 1,305 64 0
Reserves for guarantees 01/01/2019 – 30/09/2019
Level 1 Level 2 Level 3 POCI* Transfer from Level 1 to Level 2 –7 7 0 0 Transfer from Level 1 to Level 3 –18 0 18 0 Transfer from Level 2 to Level 1 90 –90 0 0 Transfer from Level 2 to Level 3 0 0 0 0 Transfer from Level 3 to Level 1 0 0 0 0 Transfer from Level 3 to Level 2 0 0 0 0 Total 65 –83 18 0
Provisions for credit 01/01/2019 – 30/09/2019
Level 1 Level 2 Level 3 POCI* Transfer from Level 1 to Level 2 –12 12 0 0 Transfer from Level 1 to Level 3 –1 0 1 0 Transfer from Level 2 to Level 1 98 –98 0 0 Transfer from Level 2 to Level 3 0 0 0 0 Transfer from Level 3 to Level 1 0 0 0 0 Transfer from Level 3 to Level 2 0 0 0 0 Total 85 –86 1 0
* Financial instruments with creditworthiness already impaired at the time of acquisition or issue (purchased or originated credit impaired – POCI)
BTV Interim Report as at 30/09/2020 35 The following table explains the extent to which significant changes in the gross book value of financial instruments in the reporting period have contributed to changes in the value adjustment:
6b Gross book value of financial as- sets valued at AC in EUR thousand Level 1 Level 2 Level 3 POCI Total As at 01/01/2020 7,889,615 1,085,873 153,449 0 9,128,937 Transfer to Level 1 171,444 –170,756 –688 0 0 Transfer to Level 2 –865,752 866,209 –457 0 0 Transfer to Level 3 –22,343 –5,800 28,143 0 0 Additions 2,084,333 197,686 13,133 0 2,295,152 Disposals –1,689,859 –306,086 –41,542 0 –2,037,487 As at 30/09/2020 7,567,438 1,667,126 152,038 0 9,386,602
Gross book value of financial assets valued at FV/OCI in EUR thousand Level 1 Level 2 Level 3 POCI Total As at 01/01/2020 345,342 0 0 0 345,342 Transfer to Level 1 0 0 0 0 0 Transfer to Level 2 0 0 0 0 0 Transfer to Level 3 0 0 0 0 0 Additions 131,381 0 0 0 131,381 Disposals –148,924 0 0 0 –148,924 As at 30/09/2020 327,799 0 0 0 327,799
36 BTV Interim Report as at 30/09/2020 Gross book value of financial assets valued at AC in EUR thousand Level 1 Level 2 Level 3 POCI Total As at 01/01/2019 7,813,483 986,830 141,055 0 8,941,368 Transfer to Level 1 113,666 –113,666 0 0 0 Transfer to Level 2 –327,570 327,882 –312 0 0 Transfer to Level 3 –34,614 –4,328 38,942 0 0 Additions 2,599,983 138,327 13,538 0 2,751,848 Disposals –2,300,813 –264,325 –40,299 0 –2,605,436 As at 31/12/2019 7,889,615 1,085,873 153,449 0 9,128,937
Gross book value of financial assets valued at FV/OCI in EUR thousand Level 1 Level 2 Level 3 POCI Total As at 01/01/2019 311,301 0 0 0 311,301 Transfer to Level 1 0 0 0 0 0 Transfer to Level 2 0 0 0 0 0 Transfer to Level 3 0 0 0 0 0 Additions 236,159 0 0 0 236,159 Disposals –202,118 0 0 0 –202,118 As at 31/12/2019 345,342 0 0 0 345,342
BTV Interim Report as at 30/09/2020 37 7 Trading assets in EUR thousand 30/09/2020 31/12/2019 Funds 36,331 32,430 Positive market values arising from derivative transactions 21,207 13,489 Trading assets 57,538 45,919
8 Intangible fixed assets in EUR thousand 30/09/2020 31/12/2019 Intangible fixed assets 1,316 1,483 Intangible fixed assets 1,316 1,483
8a Property, plant and equipment in EUR thousand 30/09/2020 31/12/2019 Land and buildings 210,325 212,757 of which activated rights of use for leased assets pursuant to IFRS 16 20,963 21,264 Operating and office equipment 132,153 134,779 of which activated rights of use for leased assets pursuant to IFRS 16 150 240 Property, plant and equipment 342,478 347,536
8b Properties held as financial investments in EUR thousand 30/09/2020 31/12/2019 Properties held as financial investments 61,695 61,902 of which activated rights of use for leased assets pursuant to IFRS 16 5,241 5,522 Properties held as financial investments 61,695 61,902
9 Tax assets in EUR thousand 30/09/2020 31/12/2019 Current tax assets 880 1,075 Deferred tax assets 9,031 9,046 Tax assets 9,911 10,121
10 Other assets in EUR thousand 30/09/2020 31/12/2019 Other assets 61,158 66,237 Other assets 61,158 66,237
38 BTV Interim Report as at 30/09/2020 Notes on the balance sheet – Liabilities
11 Liabilities to credit institutions in EUR thousand 30/09/2020 31/12/2019 Liabilities to credit institutions 2,148,749 1,510,520 Liabilities to credit institutions 2,148,749 1,510,520
12 Liabilities to customers in EUR thousand 30/09/2020 31/12/2019 Savings deposits 1,517,135 1,390,739 Other deposits 6,473,129 6,125,179 Liabilities to customers 7,990,264 7,515,918
13 Other financial liabilitiesin EUR thousand 30/09/2020 31/12/2019 Amortised cost 834,617 869,549 Fair value option 539,422 551,161 Negative market values from derivative hedging instruments 25,550 21,938 Liabilities from leases in accordance with IFRS 16 26,538 27,192 Other financial liabilities 1,426,127 1,469,840
14 Trading liabilities in EUR thousand 30/09/2020 31/12/2019 Negative market values arising from derivative transactions 5,247 9,096 Trading liabilities 5,247 9,096
BTV Interim Report as at 30/09/2020 39 15 Reserves in EUR thousand 30/09/2020 31/12/2019 Long-term staff reserves 84,711 87,414 Other reserves and provisions 63,300 61,081 Reserves and provisions 148,011 148,495
15a Actuarial assumptions for the banking sector 30/09/2020 31/12/2019 Financial assumptions Rate for the discount 1.03% 0.98% Pay increase 2.85% 2.80% Old-age pension increase 2.34% 2.28% Discount for employee turnover – – Demographic assumptions Age for pension entitlement: female employees 65 years 65 years Age for pension entitlement: male employees 65 years 65 years Mortality table AVÖ 2018 AVÖ 2018
40 BTV Interim Report as at 30/09/2020 15b Other reserves and As at Con- Currency As at provisions in EUR thousand 01/01/2020 Additions Releases sumption conversion Splitting 30/09/2020 Reserves for guarantees / 43,966 6,558 –1,768 0 0 0 48,756 unused lines of credit Level 1 Reserves for guarantees / 813 3,722 –654 0 0 0 3,881 unused lines of credit Level 2 Reserves for guarantees / 6,991 1,692 –4,144 0 4 0 4,543 unused lines of credit Level 3 Reserves for miscellaneous 9,311 896 –217 –3,872 2 0 6,120 Other reserves and provisions 61,081 12,868 –6,783 –3,872 6 0 63,300
Other reserves and As at Con- Currency As at provisions in EUR thousand 01/01/2019 Additions Releases sumption conversion Splitting 30/09/2019 Reserves for guarantees / 42,250 5,270 –1,664 0 0 0 45,856 unused lines of credit Level 1 Reserves for guarantees / 686 299 –295 0 0 0 690 unused lines of credit Level 2 Reserves for guarantees / 7,197 5,275 –4,174 0 37 0 8,335 unused lines of credit Level 3 Reserves for miscellaneous 5,665 267 0 –499 14 –1,634 3,813 Other reserves and provisions 55,798 11,111 –6,133 –499 51 –1,634 58,694
BTV Interim Report as at 30/09/2020 41 16 Tax debts in EUR thousand 30/09/2020 31/12/2019 Current tax debts 6,843 6,114 Deferred tax debts 24 849 Tax debts 6,867 6,963
17 Other liabilities in EUR thousand 30/09/2020 31/12/2019 Other liabilities 124,379 139,021 Other liabilities 124,379 139,021
18 Equity in EUR thousand 30/09/2020 31/12/2019 Subscribed capital 68,063 68,063 Reserves 241,121 242,436 Profit reserves (including net profit) 1,425,874 1,382,352 Other reserves 3,042 12,807 Owners of the parent company 1,738,100 1,705,657 Non-controlling interests 47,791 43,686 Equity 1,785,891 1,749,343
42 BTV Interim Report as at 30/09/2020 Notes on the comprehensive income statement
01/01 – 01/01 – 19 Net interest income in EUR thousand 30/09/2020 30/09/2019 Interest and similar income from: Lending and money market transactions with credit institutions* 4,505 5,812 Lending and money market transactions with customers 115,498 114,241 Other financial assets 8,898 20,950 Trading assets 21 77 Contract adjustments 189 3 Liabilities 2,246 2,436 Unwinding 0 0 Sub-total interest and similar income 131,357 143,519 Interest and similar expenditure on: Credit institutions' deposits –2,085 –3,942 Customer deposits –10,213 –8,859 Other financial liabilities –12,434 –24,515 Trading liabilities 0 0 Long-term staff reserves –628 –2,148 Contract adjustments –314 –3 Assets* –5,635 –3,395 Sub-total interest and similar expenses –31,309 –42,862 Net interest income 100,048 100,657
The amounts reported in the above table include interest interest method which relate to the following financial assets revenue and expenditure calculated according to the effective and liabilities:
01/01 – 01/01 – 19a Interest income: Details in EUR thousand 30/09/2020 30/09/2019 Interest and similar income: Total interest revenue from application of effective interest method 114,507 116,177 From assets measured at amortised cost* 111,948 112,931 From assets measured at fair value through other comprehensive income (recyclable) 313 810 Positive interest expenditure from liabilities measured at amortised cost 2,246 2,436 Total other interest revenue 16,850 27,342 From assets measured at fair value through profit and loss 11,988 20,479 From assets measured at fair value through other comprehensive income (not recyclable) 4,862 6,863 Sub-total interest and similar income 131,357 143,519 Interest and similar expenses: Total interest expenditure from application of effective interest method –25,136 –23,585 For liabilities measured at amortised cost –19,501 –20,190 Negative interest revenue from assets measured at amortised cost* –5,635 –3,395 Total other interest expenditure –6,173 –19,277 For liabilities measured at fair value through profit and loss –5,545 –17,129 From non-financial liabilities –628 –2,148 Sub-total interest and similar expenses –31,309 –42,862 Net interest income 100,048 100,657
* Due to a reclassification of EUR 2,571 thousand of interest revenue as interest expenditure, the previous year's values were adjusted accordingly.
BTV Interim Report as at 30/09/2020 43 01/01 – 01/01 – 20 Loan loss provisions in the credit business in EUR thousand 30/09/2020 30/09/2019 Allocations to loan loss provisions on-balance –34,631 –15,947 Allocations to loan loss provisions in the credit business off-balance –11,973 –10,844 Release of loan loss provisions in the credit business on-balance 12,931 22,821 Release of loan loss provisions off-balance 6,567 6,132 Direct write-downs –175 –454 Income from amortised loans 294 306 Risk provisions in the credit business –26,987 2,014
01/01 – 01/01 – 21 Net commission income in EUR thousand 30/09/2020 30/09/2019 Commission revenue from Credit transactions 7,408 5,744 Payment transactions 10,880 10,984 Securities trading 21,593 19,666 Currency, foreign exchange and precious metals trading 3,162 2,671 Other services business 1,035 903 Sub-total commission income 44,078 39,968 Commission expenses for Credit transactions –492 –370 Payment transactions –1,121 –1,239 Securities trading –1,471 –1,341 Currency, foreign exchange and precious metals trading 0 0 Other services business –612 –688 Sub-total commission expenses –3,696 –3,638 Net commission income 40,382 36,330
01/01 – 01/01 – 22 Revenue from companies valued at equity in EUR thousand 30/09/2020 30/09/2019 Income from companies valued at equity 21,172 40,484 Income from companies valued at equity 21,172 40,484
01/01 – 01/01 – 23 Trading income in EUR thousand 30/09/2020 30/09/2019 Valuation and realisation gains from derivatives 223 173 Valuation and realisation gains from debt securities –133 –87 Valuation and realisation gains from funds –1,060 2,508 Revenue from foreign exchange and currencies 488 681 Trading income –482 3,275
44 BTV Interim Report as at 30/09/2020 01/01 – 01/01 – 24 Income from financial transactions in EUR thousand 30/09/2020 30/09/2019 Realisation gains – valued at amortised costs 0 0 Valuation and realisation gains – valued at fair value through other comprehensive income (FVOCI) –81 143 Valuation and realisation gains – mandatorily valued at fair value –450 5,562 Valuation and realisation gains – fair value option 107 1,822 Profit (loss) from fair value hedge accounting –342 –43 Income from financial transactions –766 7,484
01/01 – 01/01 – 25 Operating expenses in EUR thousand 30/09/2020 30/09/2019 Staff expenditure –74,892 –77,342 Material expenditure –41,928 –43,147 Amortisations –23,813 –25,270 of which amortisation of capitalised rights of use for leasing objects according to IFRS 16 –2,457 –2,501 Operating expenses –140,633 –145,759
01/01 – 01/01 – 25a Average number of employees in the period, weighted by person-years 30/09/2020 30/09/2019 White collar 982 978 Blue collar 477 527 Payroll 1,459 1,505
The workforce was reduced by the number of employees delegated to subsidiaries outside the circle of companies covered by the IFRS consolidation.
01/01 – 01/01 – 26 Other operating income in EUR thousand 30/09/2020 30/09/2019 Revenue from other transactions 99,373 105,135 Expenses from other transactions –25,222 –25,391 Other operating income 74,151 79,744
BTV Interim Report as at 30/09/2020 45 01/01 – 01/01 – 27 Taxes on income and revenue in EUR thousand 30/09/2020 30/09/2019 Current tax expenditure –15,662 –19,329 Deferred tax expenditure (–)/revenue (+) 2,423 293 Taxes on earnings and profit –13,239 –19,036
28 Earnings per share (ordinary and preference shares) 30/09/2020 30/09/2019 Shares (ordinary and preference shares) 34,031,250 34,031,250 Average float (ordinary and preference shares) 33,920,165 33,932,873 Group net profit attributable to the owners for the period in EUR thousand 49,590 100,237 Earnings per share in EUR 1.46 2.95 Diluted earnings per share in EUR (ordinary and preference shares) 1.46 2.95
The diluted earnings per share are the same as the undiluted earnings per share as no financial instruments with diluting effect were issued. As a result, there are no differences between the values "earnings per share" and "diluted earnings per share".
46 BTV Interim Report as at 30/09/2020 Other and supplementary notes on the balance sheet
29 Other data in EUR thousand 30/09/2020 31/12/2019 I) Fiduciary operations
Trust loans: Loans to customers 13,430 12,750 Trust loans 13,430 12,750
Trust liabilities: Liabilities to customers 13,430 12,750 Trust liabilities 13,430 12,750
II) Performance bonds and credit risks
Performance guarantees 381,535 358,945 Credit risks 2,441,562 2,121,774 Performance bonds and credit risks 2,823,097 2,480,719
III) Open capital calls 9,296 9,296
In the reporting year 2019, Bank für Tirol und Vorarlberg to the amount of EUR 10 million, can be called by Gain Capital Aktiengesellschaft participated in Gain Capital Private Equity Private Equity III SCSp as a whole or in several tranches III SCSp, headquartered in Luxembourg, in the form of (capital calls). As at 30/09/2020, there are still outstanding a limited partner deposit to the amount of maximum capital calls totalling EUR 9,296 thousand. EUR 10 million. The total limited partner deposit committed,
30 Regulatory capital and debt levels Authority for CET1, a minimum requirement of 5.800% is The consolidated capital of the Group is reported in accor- required for CET1, which is increased by 2.500% by the capital dance with the framework of Basel III. This is based on EU buffer defined in CRD IV (Capital Requirements Directive IV) Regulation 575/2013 (Capital Requirements Regulation – and by 0.000% by the anti-cyclical capital buffer. For the entire CRR), in conjunction with the Austrian CRR accompanying core capital, a minimum requirement of 10.200% is stipulated; regulation. The capital according to CRR consists of the the total equity must have a minimum value of 12.800%. The common equity (Common Equity Tier 1 – CET1), the addition- leverage ratio indicates the ratio of the common equity (Tier al core capital (Additional Tier 1 – AT1) and supplementary 1) to the leverage exposure (unweighted asset items of the capital (Tier 2 – T2). The respective capital ratios are deter- balance sheet and off-balance-sheet transactions pursuant to mined by contrasting the corresponding regulatory capital CRR). The provisions for calculation and disclosure of the component after taking into account all regulatory deductions leverage ratio within the EU are implemented by BTV as part of and transitional provisions of the overall measure of risk. In its disclosure obligations. The debt level ratio totalled 8.142% accordance with the provisions of the CRR and including the as at 30/09/2020, and 8.670% as at 31/12/2019. outcome of the Supervisory Review and Evaluation Process (SREP) carried out by the Financial Market Supervisory
BTV Interim Report as at 30/09/2020 47 30a Consolidated equity pursuant to the CRR in EUR million 30/09/2020 31/12/2019 Common equity (CET1) Capital instruments qualifying as CET1 300.2 300.2 Proprietary CET1 instruments –31.4 –32.7 Retained earnings and other profit reserves 1,274.7 1,242.1 Aggregated other income –0.3 9.3 Other reserves 140.2 140.2 Transitional changes owing to the transitional provisions for CET1 capital instruments 1.0 1.5 Deductions and adjustment items due to adjustments to common equity (prudential filters) –2.3 1.8 Goodwill 0.0 0.0 Other intangible assets –0.8 –0.9 Regulatory changes in connection with CET1 instruments of financial companies, in which the bank –566.5 –565.0 holds a substantial interest Amount exceeding the threshold value of 17.65% –9.0 –10.0 Other transitional changes to CET1 0.0 0.0 Common equity – CET1 1,105.8 1,086.6 Additional core capital (Additional Tier 1) Changes owing to the transitional provisions for Additional Tier 1 capital instruments 0.0 0.0 Other transitional changes to Additional Tier 1 0.0 0.0 Additional core capital (Additional Tier 1) 0.0 0.0 Core capital (Tier 1): sum of common equity (CET1) and additional (AT1) core capital 1,105.8 1,086.6 Supplementary capital (Tier 2) Paid-up capital instruments and subordinated loans 225.4 205.3 Direct positions in supplementary capital instruments –0.2 –0.3 Changes owing to the transitional provisions for supplementary capital instruments and subordinated 0.0 1.1 loans Other transitional changes to supplementary capital 0.0 0.0 Supplementary capital (Tier 2) 225.2 206.1 Total qualifying equity 1,331.0 1,292.6 Total risk amount 8,317.6 8,300.4 Common equity Tier 1 ratio 13.30% 13.09% Core capital ratio 13.30% 13.09% Equity ratio 16.00% 15.57%
The structure of regulatory capital is based on the final a review of the interim earnings by the auditor was carried out proposal of the guidelines of the EBA (European Banking and an application to the Financial Market Authority for Authority); the values are assessed on the basis of the scope recognition of the interim earnings was made, whereby the of consolidation required by supervisory regulations. retained earnings were credited to equity. This resulted in an increase of EUR +28.5 million. Equity as at 30/09/2020 increased compared to 31/12/2019 by EUR +38.4 million. In accordance with Article 26 of the CRR,
48 BTV Interim Report as at 30/09/2020 31 Fair value hierarchy of financial instruments which are Prices listed in Valuation method Valuation methods not valued at fair value as at 30/09/2020 in EUR thousand active markets based on market data based on market data Financial assets stated at fair value Loans to customers mandatorily valued at fair value 0 0 286,259 Debt securities valued at fair value through other comprehensive 307,004 20,795 0 income (FVOCI) Debt securities mandatorily valued at fair value 8,607 0 0 Debt securities (fair value option) 0 0 0 Equity instruments valued at fair value through other compre- 54,396 0 58,227 hensive income (FVOCI) Equity instruments valued at fair value through profit and loss 35,055 0 0 (FVTPL) Positive market values from derivative hedging instruments 0 53,994 0 Trading assets – funds 36,331 0 0 Trading assets – positive market values from derivative financial 0 21,207 0 instruments Overall financial assets classified at fair value 441,394 95,996 344,486
Financial liabilities valued at fair value Fair value option 0 539,422 0 Negative market values from derivative hedging instruments 0 25,550 0 Trading liabilities – negative market values arising from deriva- 0 5,247 0 tive financial instruments Total liabilities classified at fair value 0 570,219 0
Fair value hierarchy of financial instruments which are Prices listed in Valuation method Valuation methods not valued at fair value as at 31/12/2019 in EUR thousand active markets based on market data based on market data Financial assets stated at fair value Loans to customers mandatorily valued at fair value 0 0 274,944 Debt securities valued at fair value through other comprehensive 324,685 20,657 0 income (FVOCI) Debt securities mandatorily valued at fair value 9,490 0 0 Debt securities (fair value option) 2,610 0 0 Equity instruments valued at fair value through other compre- 63,409 0 62,185 hensive income (FVOCI) Equity instruments valued at fair value through profit and loss 35,055 0 0 (FVTPL) Positive market values from derivative hedging instruments 0 51,363 0 Trading assets – funds 32,430 0 0 Trading assets – positive market values from derivative financial 0 13,489 0 instruments Overall financial assets classified at fair value 467,679 85,509 337,129
Financial liabilities valued at fair value Fair value option 0 551,161 0 Negative market values from derivative hedging instruments 0 21,938 0 Trading liabilities – negative market values arising from deriva- 0 9,096 0 tive financial instruments Total liabilities classified at fair value 0 582,195 0
BTV Interim Report as at 30/09/2020 49 31a Movements in Level 3 of financial instru- Earnings on Success from other operating Transfer from Currency ments valued at fair value in EUR thousand 01/01/2020 P&L income Purchases Sales, repayments Transfer to Level 3 Level 3 conversion 30/09/2020 Loans to customers mandatorily valued at fair 274,944 358 0 58,088 –47,131 0 0 0 286,259 value Equity instruments valued at fair value through 62,185 0 –3,958 0 0 0 0 0 58,227 other comprehensive income (FVOCI) Overall financial assets classified at fair value 337,129 358 –3,958 58,088 –47,131 0 0 0 344,486
Movements in Level 3 of financial instru- Earnings on Success from other operating Transfer from Currency ments measured at fair value in EUR thousand 01/01/2019 P&L income Purchases Sales, repayments Transfer to Level 3 Level 3 conversion 30/09/2019 Loans to customers mandatorily valued at fair 200,567 486 0 96,299 –72,175 0 0 0 225,177 value Equity instruments valued at fair value through 69,007 0 –6,057 704 –1,277 0 0 0 62,377 other comprehensive income (FVOCI) Overall financial assets classified at fair value 269,574 486 –6,057 97,003 –73,452 0 0 0 287,554
Movements between Level 1, Level 2 and Level 3 There have not been any movements between the individual levels in the 2020 reporting period.
50 BTV Interim Report as at 30/09/2020 31a Movements in Level 3 of financial instru- Earnings on Success from other operating Transfer from Currency ments valued at fair value in EUR thousand 01/01/2020 P&L income Purchases Sales, repayments Transfer to Level 3 Level 3 conversion 30/09/2020 Loans to customers mandatorily valued at fair 274,944 358 0 58,088 –47,131 0 0 0 286,259 value Equity instruments valued at fair value through 62,185 0 –3,958 0 0 0 0 0 58,227 other comprehensive income (FVOCI) Overall financial assets classified at fair value 337,129 358 –3,958 58,088 –47,131 0 0 0 344,486
Movements in Level 3 of financial instru- Earnings on Success from other operating Transfer from Currency ments measured at fair value in EUR thousand 01/01/2019 P&L income Purchases Sales, repayments Transfer to Level 3 Level 3 conversion 30/09/2019 Loans to customers mandatorily valued at fair 200,567 486 0 96,299 –72,175 0 0 0 225,177 value Equity instruments valued at fair value through 69,007 0 –6,057 704 –1,277 0 0 0 62,377 other comprehensive income (FVOCI) Overall financial assets classified at fair value 269,574 486 –6,057 97,003 –73,452 0 0 0 287,554
BTV Interim Report as at 30/09/2020 51 32 Fair value of financial instruments, which are not valued at fair value In the following table the fair values are compared to the book For positions without a contractually fixed term, the relevant values. The market value is the amount which could be raised book value was applied. If no market prices exist, then from the sale of a financial instrument on an active market or generally accepted valuation models were applied, in particu- which would need to be paid to make an equivalent purchase. lar analysis using discounted cash flow and the option price model.
Fair value Book value Fair value Book value Assets in EUR thousand 30/09/2020 30/09/2020 31/12/2019 31/12/2019 Cash reserves 2,283,530 2,283,530 1,427,659 1,427,659 Loans to credit institutions valued at amortised cost 466,983 466,829 468,461 468,238 Loans to customers valued at amortised cost 7,996,990 7,890,711 7,757,737 7,664,135 Other financial assets valued at amortised costs 925,779 913,613 906,788 898,791
Fair value Book value Fair value Book value Liabilities in EUR thousand 30/09/2020 30/09/2020 31/12/2019 31/12/2019 Liabilities to credit institutions valued at amortised cost 2,130,379 2,148,749 1,510,654 1,510,520 Liabilities to customers valued at amortised cost 7,966,680 7,990,264 7,500,064 7,515,918 Other financial liabilities valued at amortised cost 874,750 861,155 908,799 896,741
52 BTV Interim Report as at 30/09/2020 Valuation method Valuation methods 33 Fair value hierarchy of financial instruments which are not Prices listed in based on market not based on market valued at fair value as at 30/09/2020 in EUR thousand active markets data data Financial assets not valued at fair value Loans to credit institutions valued at amortised cost 0 0 466,983 Loans to customers valued at amortised cost 0 0 7,996,990 Other financial assets valued at amortised cost 839,824 79,958 5,997 Total financial assets not valued at fair value 839,824 79,958 8,469,970
Financial liabilities not valued at fair value Liabilities to credit institutions valued at amortised cost 0 0 2,130,379 Liabilities to customers valued at amortised cost 0 0 7,966,680 Other financial liabilities valued at amortised cost 0 848,212 26,538 Total liabilities not valued at fair value 0 848,212 10,123,597
Valuation method Valuation methods Fair value hierarchy of financial instruments which are not Prices listed in based on market not based on market valued at fair value as at 31/12/2019 in EUR thousand active markets data data Financial assets not valued at fair value Loans to credit institutions valued at amortised cost 0 0 468,461 Loans to customers valued at amortised cost 0 0 7,757,737 Other financial assets valued at amortised cost 892,574 5,758 8,456 Total financial assets not valued at fair value 892,574 5,758 8,234,654
Financial liabilities not valued at fair value Liabilities to credit institutions valued at amortised cost 0 0 1,510,654 Liabilities to customers valued at amortised cost 0 0 7,500,064 Other financial liabilities valued at amortised cost 0 881,607 27,192 Total liabilities not valued at fair value 0 881,607 9,037,910
BTV Interim Report as at 30/09/2020 53 34 Hedge accounting
Cumulative book value adjustment for Underlying transactions as at 30/09/2020 Book value of the underlying underlying transactions in in EUR thousand transaction fair value hedges Assets Liabilities Assets Liabilities Fair value hedges Interest rate risk Loans to customers 166,351 5,907 Liabilities to customers 103,343 15,610 Other financial liabilities 133,441 20,017
Hedging transactions as at 30/09/2020 in EUR thousand Nominal amount Book value Assets Liabilities Fair value hedges Interest rate risk Other financial assets 233,800 35,710 0 Other financial liabilities 165,475 303 6,491
Cumulative book value adjustment for Underlying transactions as at 31/12/2019 Book value of the underlying underlying transactions in in EUR thousand transaction fair value hedges Assets Liabilities Assets Liabilities Fair value hedges Interest rate risk Loans to customers 166,244 5,457 Liabilities to customers 111,103 16,023 Other financial liabilities 150,288 19,246
Hedging transactions as at 31/12/2019 in EUR thousand Nominal amount Book value Assets Liabilities Fair value hedges Interest rate risk Other financial assets 258,800 35,378 0 Other financial liabilities 165,399 951 6,374
Positive market values for hedging transactions are posted to other financial assets under derivatives, and negative market values for hedging transactions under derivatives in other financial liabilities.
54 BTV Interim Report as at 30/09/2020 Ineffectiveness 01/01/ – Ineffectiveness Ineffectiveness 30/09/2020 recorded recorded Items in the P&L and in the OCI which show in EUR thousand in the P&L in the OCI hedge ineffectiveness Fair value hedges Interest rate risk Loans to customers –316 0 Income from financial transactions Liabilities to customers –16 0 Income from financial transactions Other financial liabilities –11 0 Income from financial transactions
Ineffectiveness 01/01/ – Ineffectiveness Ineffectiveness 30/09/2019 recorded recorded Items in the P&L and in the OCI which show in EUR thousand in the P&L in the OCI hedge ineffectiveness Fair value hedges Interest rate risk Loans to customers 13 0 Income from financial transactions Liabilities to customers –22 0 Income from financial transactions Other financial liabilities –34 0 Income from financial transactions
BTV Interim Report as at 30/09/2020 55 35 Segment reporting The aforementioned reports reflect the structure of manage- Segment reporting is performed by the BTV Group as required ment responsibilities within the BTV Group in 2020. These by the information and valuation rules of IFRS 8. Segment internal reports to the Executive Board, which only satisfy IFRS information is based on the "Management Approach". accounting standards in part, are almost totally automated by This requires segment information to be presented according preparatory systems and interfaces. The reporting dates for to internal reporting as it is regularly used by the company's the data are the respective period closing dates of the subsid- key decision-makers for decisions on the allocation of resourc- iaries included in the consolidated financial statements. es to the segments and for assessing their performance. The information about the internal and external accounting The qualitative and quantitative thresholds defined in IFRS 8 system is based on the same base data and is agreed in the are met by this segment reporting. The business areas are "Finance and Controlling" and "Risk Management" divisions reported as independent businesses. for the reports.
The basis of segment reporting is the profit centre accounting Reciprocal checks, ongoing reconciliations or validation checks for the Corporate and Retail Customers business areas and between the Accounting, Controlling, Risk Controlling, and the overall bank report for the Financial Markets (formerly Reporting teams are therefore guaranteed. The criterion for Institutional Clients and Banks) business area. For the leasing the separation of business areas is primarily designed to segment and the cable cars segment, the corresponding ensure responsibility for looking after customers. Changes reporting package has been used for reporting. in this responsibility can also lead to changes in attribution to a segment during the course of a year. These effects were, Profit centre accounting is used to provide the markets with where insignificant, not corrected in the comparison with an overall view of the earnings situation of the sales unit and last year. thereby to strengthen enterprise on location. The market environment has become even more competitive. It is there- fore also necessary to raise awareness and consider the costs at a decentralised level. At BTV, a distinction is made between profit centre and service centre, whereby the profit centres can be assigned services and income directly, while the service centres perform the services for the profit centres. The oper- ating expenses are calculated based on direct personnel, material and occupancy expenditure as well as overhead personnel, material and occupancy expenditure.
56 BTV Interim Report as at 30/09/2020 In 2020, the following business areas have been defined Corporate Customer segment within BTV: The Corporate Customer segment is the largest in terms of The Corporate Customers segment is responsible for small, earnings. Operating interest income forms its main revenue medium and large corporate customers, and chartered component. Compared to 30/09/2019, interest income accountants and auditors. The Retail Customer segment is increased by EUR +6.3 million to EUR 89.6 million. Loan loss responsible for the market segments retail customers, provisions in the credit business had a negative impact on this freelance professionals and micro-companies. The Financial segment's profit amounting to EUR –12.3 million. The segment's Markets business area mainly comprises treasury and trading net commission income recorded an increase of EUR +2.0 mil- activities. BTV Leasing brings together all leasing operations of lion to EUR 17.6 million. Operating expenses were down slightly BTV. The cable cars segment includes Silvretta Montafon by EUR –0.5 million, at EUR 31.9 million. Income from financial Holding GmbH and Mayrhofner Bergbahnen Aktienge- transactions resulted in a balance of EUR 0.4 million. New sellschaft, which contain all of the two companies' tourism business provided for an increase of segment loans of activities. The profit or loss of these segments also include EUR +375 million to EUR 6,806 million. Segment liabilities transactions between segments, particularly between the increased from EUR 2,882 million to EUR 3,653 million. In total, corporate customer segment and leasing and the funiculars. the profit for the period before tax reached EUR 63.4 million, Services are transferred at market prices. Alongside these five EUR –3.2 million below the previous year's figure. reporting segments, under the "Other segments/consolida- tions/misc." heading results from service areas across BTV are Retail Customers segment reported, such as Finance and Controlling, Legal and Invest- The Retail Customers business contributed EUR +0.7 million ments, Marketing, Communications, Executive Board matters, more to the interest income at BTV compared to 30/09/2019 Group Auditing etc. In addition, it is mainly the effects of with interest revenue of EUR 29.3 million. Loan loss provisions consolidation and fully consolidated companies below the in the lending business amounted to EUR 0.2 million in the first thresholds (ALPENLÄNDISCHE GARANTIE - GESELLSCHAFT three quarters of 2020. Net commission income increased by m.b.H., Wilhelm-Greil-Straße 4 GmbH and TiMe Holding EUR +1.8 million to EUR 25.8 million. The typically high GmbH) that are allocated to this segment. resources invested in staff and premises in the retail sector resulted in operating expenses of EUR 47.0 million. Other The results of the five reporting segments are detailed above. operating income remained roughly at the same level as last year at EUR 0.5 million. Overall, the Retail Customers segment achieved profit for the period before tax of EUR 8.9 million, compared to EUR 7.0 million in the previous year.
BTV Interim Report as at 30/09/2020 57 Financial Markets segment Cable cars segment The profit for the Financial Markets segment fell substantially The cable cars segment comprises the consolidated financial compared to the same period in the previous year. Interest statements of Mayrhofner Bergbahnen Aktiengesellschaft and income fell by EUR –1.3 million to EUR 1.9 million. Income Silvretta Montafon Holding GmbH. The business of both from financial transactions, including trading income, showed companies is dominated by tourism; the profit or loss is a marked decrease of EUR –7.7 million to EUR 1.7 million. therefore subject to strong seasonal fluctuations. Interest The loan-loss provisions in the credit business had a negative earnings until 30/09/2020 were EUR –1.9 million. The difficult impact on the profit for the segment. Compared to the economic situation in the tourism sector caused by the previous year, these gained EUR +11.8 million to EUR 10.3 mil- COVID-19 pandemic caused other operating income, which lion. Operating expenses for the segment remained stable mainly includes revenue, to fall by EUR –9.4 million compared compared to last year, totalling EUR 3.3 million. In total, to the previous year to EUR 74.0 million. This also had a signifi- the profit before tax for the period was down EUR –20.9 mil- cant impact on Silvretta Montafon Holding GmbH, with its lion to EUR –13.4 million. average of 457 employees in the reporting period, and Mayrhofner Bergbahnen Aktiengesellschaft, which employed Leasing segment an average of 168 employees during the reporting period. The development of BTV Leasing was stable during the As a result of the temporary closures, the operating expenses reporting period. Customer cash volumes increased by of the two companies decreased by EUR –8.9 million to EUR +10 million to EUR 1,022 million. At EUR 11.3 million, EUR 51.7 million. On the whole, the segment achieved profit interest income remained at a similar level to the previous before tax of EUR 20.0 million, which is EUR –0.5 million lower year. Risk provisions in the credit business fell by EUR –5.4 mil- than in the previous year. lion to EUR –4.6 million compared to the previous year. At EUR 0.4 million, net commission income stood at the same level as the previous year. Operating expenses record- ed a stable development compared to the level of the third quarter of 2019 at EUR 5.0 million. Other operating profit decreased by EUR –0.9 million to EUR 3.0 million. Earnings before tax for the period fell by EUR –5.9 million to EUR 5.3 million.
58 BTV Interim Report as at 30/09/2020 Other seg- Segments ments/ Cor- that consoli- Group Segment reporting porate Retail Financial Cable must be dation/ balance in EUR thousand Year clients clients markets Leasing cars reported misc. sheet/P&L Net interest income incl. 09/2020 89,628 29,268 1,876 11,325 –1,855 130,242 –9,022 121,220 at-equity profit (loss) 09/2019 83,289 28,522 3,186 11,132 –1,642 124,488 16,653 141,141 Loan loss provisions in the 09/2020 –12,317 248 –10,346 –4,572 0 –26,987 0 –26,987 credit business 09/2019 –1,357 1,012 1,493 867 0 2,014 0 2,014 Net commission income 09/2020 17,573 25,849 0 374 –478 43,317 –2,935 40,382 09/2019 15,543 24,069 0 332 –545 39,399 –3,069 36,330 Operating expenses 09/2020 –31,882 –46,983 –3,263 –4,938 –51,741 –138,807 –1,827 –140,633 09/2019 –31,378 –47,085 –3,217 –5,071 –60,669 –147,420 1,661 –145,759 Other operating 09/2020 0 537 0 2,985 74,011 77,533 –3,382 74,151 income 09/2019 0 435 0 3,870 83,453 87,758 –8,014 79,744 Profit (loss) from financial 09/2020 358 0 –1,689 100 37 –1,195 –53 –1,248 transactions and trading 09/2019 486 0 5,989 43 –138 6,380 4,379 10,759 result Profit (loss) for the peri- 09/2020 63,360 8,920 –13,422 5,272 19,974 84,104 –17,219 66,885 od before tax 09/2019 66,583 6,953 7,451 11,173 20,460 112,619 11,610 124,229 Segment loans 09/2020 6,806,196 1,360,313 4,014,916 1,021,797 21,514 13,224,735 –626,335 12,598,400 09/2019 6,430,788 1,384,724 2,780,009 1,011,948 21,356 11,628,825 –531,002 11,097,823 Segment liabilities 09/2020 3,653,078 4,183,584 2,603,114 965,193 92,894 11,497,863 41,726 11,539,589 09/2019 2,881,526 3,879,405 2,371,219 967,685 104,975 10,204,810 –144,823 10,059,987
BTV Interim Report as at 30/09/2020 59 Segment reporting: Explanatory notes the consolidation effects, essentially the stability tax and rental The net interest income is allocated according to the market operations under "Other segments/consolidation/misc." interest method. Sales figures are included under Corporate The segment loans include the entries for "Loans to central Customers and Retail Customers for management reasons, banks", "Loans and advances to banks", "Loans and advances to among other items. Income from companies valued at equity customers", "Other financial assets" of the valuation categories is allocated to the "Other segments/consolidation/misc." "Amortised costs", "Fair value on balance sheet", "Fair value segment. Net commission income is determined by the through profit and loss", and "Fair value option", as well as assignment of the internal divisional accounting (including all guarantees and liabilities. The "Other segments/consolidation/ manual entries being assigned to commission). Costs are misc." item includes risk provisions, since the internal control allocated to the correct segment on the basis of origin. considers the liabilities as net figures in contrast to the balance The expenses of BTV Leasing GmbH or respectively Silvretta sheet. The postings resulting from consolidation are also found Montafon Holding GmbH and Mayrhofner Bergbahnen here. The segment liabilities are allocated to the entries Aktiengesellschaft are directly allocatable according to the "Liabilities to banks", "Liabilities to customers", and "Other individual reporting packages. Costs not directly allocatable financial liabilities" of the valuation categories "Amortised costs" are shown under "Other segments/consolidation/misc." Other and "Fair value option” as well as "Other financial liabilities from operating income includes, among other things, earnings from leasing liabilities". Consolidating entries are also included in the Silvretta Montafon Holding GmbH and Mayrhofner Bergbahnen "Other segments/consolidation/misc." column. and, in addition to The success of each segment is measured by the net profit for the period before tax for this segment.
60 BTV Interim Report as at 30/09/2020 Declaration by the statutory representatives pursuant to Section 125 BörseG (Stock Exchange Act) 2018
We confirm that, to the best of our knowledge, the abridged interim group financial statements drawn up in accordance with the relevant accounting standards convey as faithful a picture as possible of the asset, financial and profit position of the BTV group, and that the six-monthly report paints as faithful a picture as possible of the asset, financial and profit position of the BTV group with reference to the important occurrences during the first nine months of the financial year and their effects on the abridged interim group financial statements with respect to the main risks and uncertainties to which the group is exposed.
Execution of an audit and/or an examination of the interim report by an auditor has been waived.
Innsbruck, November 2020
The Executive Board
Michael Perger Gerhard Burtscher Mario Pabst Dr Markus Perschl Member of the Executive Chair of the Executive Board Member of the Executive Member of the Executive Board Board Board since 01/07/2020
Member of the Executive Chair of the Executive Board Member of the Executive Member of the Executive Board, responsible for retail with responsibility for corpo- Board with responsibility for Board with responsibility customer business; 3 Banken rate customer business, retail the back office; the areas of for the back office; the areas Insurance Brokers Group; customer business* and credit management, finance of service centre**; effec- Group audit; compliance and institutional clients and banks; and controlling; risk manage- tiveness and efficiency**; anti-money laundering. leasing; the areas of human ment; legal and corporate property and procure- resources; legal and corporate investments**; service ment**; 3 Banken Insurance investments**; marketing, centre**; effectiveness and Brokers Group*; Group Group audit; compliance and efficiency**; property and audit; compliance and anti-money laundering. procurement**; taxes; Group anti-money laundering. audit; compliance and anti-money laundering.
* Transfer from Mr Perger to the respective Board member ** Transfer from Mr Pabst to the respective Board member
BTV Interim Report as at 30/09/2020 61 Imprint
Bank für Tirol und Vorarlberg Aktiengesellschaft Media owner (publisher) Stadtforum 1 Bank für Tirol und Vorarlberg Aktiengesellschaft 6020 Innsbruck Stadtforum 1 6020 Innsbruck Tel. +43 505 333 – 0 SWIFT/BIC: BTVAAT22 Further details pursuant to Article 25 Mediengesetz (Austrian Sort code: 16000 Media Act) can be found at www.btv.at/impressum. Data processing register: 0018902 Commercial register no.: 32.942w Principle objective Tax ID: ATU31712304 Display and presentation of the company and information [email protected] about the key products and services of Bank für Tirol und www.btv.at Vorarlberg Aktiengesellschaft.
Note Contents Any personal expressions (e.g. he/she, him/her) included in BTV this interim report apply equally to women and men. Group Finance and Controlling MMag. Daniel Stöckl-Leitner Due to rounding differences, the BTV Interim Report may include figures that differ slightly in the tables and charts. Design BTV Board Office – Graphics This report contains forward-looking statements relating to the future performance of BTV. These statements reflect Final version estimates which have been made on the basis of all informa- 12/11/2020 tion available to us on the reporting date. Should the assump- tions underlying such forward-looking statements prove incorrect, or should risks materialise to an extent not anticipat- ed, actual results may vary from those expected at present.
62 BTV Interim Report as at 30/09/2020 Bank für Tirol und Vorarlberg Aktiengesellschaft Stadtforum 1 6020 Innsbruck Austria
T +43 505 333 − 0 Email: [email protected] Interim Report
A pilot provides safe passage. All our employees wear a little BTV pilot's flag on their lapel. A meaningful symbol: We guide you on your route to success. www.btv.at
63 BTV Interim Report as at 30/09/2020