The Foundation for a Successful Future

The foundation for a successful

Annual Report 2015 Report Annual future.

Europaplatz 1a, 4020 Linz Tel. +43 (0) 732/6596-0 Fax +43 (0) 732/6596-22739 Annual Report 2015 E-Mail: [email protected]

Raiffeisen Landesbank Raiffeisen Landesbank Oberösterreich Oberösterreich

www.rlbooe.at www.rlbooe.at Annual Report 2015 2 Annual Report 2015 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 3

Contents

General information

Foreword by Heinrich Schaller______5 The Managing Board of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft ______8 Foreword by Jakob Auer______10 The Supervisory Board of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft______12 2015 in retrospect______26 Sustainability management and corporate social responsibility______28

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft Group

Group management report______44 IFRS consolidated financial statements 2015______62

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Management Report 2015 of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft ______164 Annual financial statements 2015 of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft ______184

Statement of the Managing Board______206 Report of the Supervisory Board______207

Raiffeisen Banking Group Upper Austria

Results 2015 (consolidated)______208

Glossary ______213 Imprint ______214 4 Annual Report 2015

General information

Foreword by Heinrich Schaller______5 The Managing Board of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft _ 8 Foreword by Jakob Auer______10 The Supervisory Board of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft______12 2015 in retrospect______26 Sustainability management and corporate social responsibility______28 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 5

Foreword by Heinrich Schaller

Successful strategy for strengths and customer focus

Developing through our own strengths Raiffeisen Oberösterreich and cooperation

Raiffeisenlandesbank Oberösterreich uses its capacity for Through working together with the Raiffeisen banks in Upper change to benefit its customers. A series of strategic mea- Austria, the Raiffeisenlandesbank Oberösterreich emphasises sures that have been introduced and implemented since 2012 cooperation instead of consolidation. The new ways of co- have shown encouraging results. In particular, they provide operating are already showing excellent results. The aim of a solid foundation for consistent growth in future. Raiffeisen- this cooperation is to produce efficiency savings in the various landesbank Oberösterreich develops these through its own departments that should form the basis of Raiffeisen Oberös- internal strengths and not through external capital increases. terreich maintaining or strengthening its position as a clear market leader. Outperforming our high standards Constantly working on efficiency savings The European Central Bank (ECB) sets particularly high standards for the leading banks in Europe. In addition to the reg- Raiffeisenlandesbank Oberösterreich has also put in place a ulatory capital requirements, these institutions are bound to number of measures over the past year aimed at continuously comply with a SREP ratio and from 2016 they will also be sub- increasing efficiency. For example, in 2015, PRIVAT BANK ject to an additional national capital buffer. As the fourth-larg- and bankdirekt.at were integrated into Raiffeisenlandesbank est bank in Austria, Raiffeisenlandesbank Oberösterreich Oberösterreich and since then have been managed as their wants to exceed every high standard placed on it by the Euro- own business areas. This way, it is possible to avoid unnec- pean Union as a “significant” bank. This will be done in main- essary duplication while maintaining high levels of service. taining the overall high quality of service provision. Working on improving efforts, organisation and processes is not a one-off at Raiffeisenlandesbank Oberösterreich but a Creative force through a strong capital position constant.

As a ECB-audited bank with a strong capital position, Raif- Further strengthening Tier 1 capital ratio feisenlandesbank Oberösterreich is a reliable, safe and strong partner for its customers. A further objective is to continue to Sustainable customer relationships and responsible handling increase efficiency and results in order to take our customer of resources helped produce excellent annual results for Raif- focus to the next level and develop and maintain a solid foun- feisenlandesbank Oberösterreich in 2015. As was the case in dation for our existing strong independence. previous years, operational business development remained positive and stable. 6 Annual Report 2015

Heinrich Schaller Raiffeisenlandesbank Oberösterreich proved itself to be strong, resilient and healthy during the bank check of the most important financial institutions in the euro zone. It is committed to showing its strength and stability in the future, meeting the highest international standards and, in particular, intensively supporting and advising clients. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 7

Foreword by Heinrich Schaller

The key results in 2015 in summary

The Group's Tier 1 capital ratio increased to 13.8 per cent Annual profit rose to EUR 318.4 million (+ 2.6 percentage points) ¬¬ The Raiffeisenlandesbank Oberösterreich Group's pre-tax Raiffeisenlandesbank Oberösterreich significantly improved its profit for the year rose to EUR 318.4 million (2014: EUR 40.7 equity capital base in 2015. million). For example, the probability of capitalised com- ¬¬ In the regulatory-relevant CRR group (banking group), we panies defaulting significantly improved in 2015, which led achieved a CET1 ratio (Common Equity Tier 1 = core Tier 1 to reversals in portfolio value adjustments from IFRS. Fur- capital) of 13.8 per cent (+ 2.6 percentage points) with Tier thermore, the results for companies accounted for under 1 capital of EUR 3.2 billion. the equity method improved by EUR 47.1 million compared ¬¬ In terms of the Austrian Commercial Code, Raiffeisenlandes- to 2014. Gains/losses on remeasurement of designated fi- bank Oberösterreich had, with Tier 1 capital of EUR 2.6 nancial instruments due to interest rate and spread effects billion, a CET1 ratio of 12.9 per cent. This represents an also had a positive impact on the result. increase of 1.3%. ¬¬ As such, both Raiffeisenlandesbank Oberösterreich AG, in Increases in the operating profit and accordance with the Austrian Commercial Code, as well as Group comprehensive income CRR (banking group), in accordance with IFRS, were clearly ¬¬ Raiffeisenlandesbank Oberösterreich Group reported an over the 8.5 per cent Tier 1 capital ratios required starting operating profit of EUR 281.5 million in 2015 according to in 2019 under Basel III capital requirements. They were also IFRS (+4.4 per cent) as well as comprehensive income of clearly over the ratio calculated using the required SREP EUR 213.2 million (2014: EUR 94.8 million). ratio and the additional capital buffer (from 2016). ¬¬ In 2015, Raiffeisenlandesbank Oberösterreich AG reported an operating profit of EUR 269.6 million (–6.1 per cent), Total assets of EUR 37.3 billion in accordance with the Austrian Commercial Code, and ¬¬ The Raiffeisenlandesbank Oberösterreich Group’s total a result from ordinary operations of EUR 135.6 million assets fell to EUR 37.3 billion from the figure of EUR 38.6 (+49.0 per cent), which took into account the integration billion recorded in 2014. This can be traced particularly to of the PRIVAT BANK Group into Raiffeisenlandesbank a fall in money market financing. This refers to short-term, Oberösterreich. high-volume financing deals for money market clients. ¬¬ According to the Austrian Commercial Code, Raiffeisen- landesbank Oberösterreich had total assets of EUR 30.3 billion (2014: EUR 30.5 billion). For short-term financing, we continued to be conscious of capital resources and cost efficiency.

Heinrich Schaller Chairman of the Managing Board of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft 8 Annual Report 2015

Reinhard Schwendtbauer Stefan Sandberger Heinrich Schaller Michaela Keplinger-Mitterlehner Georg Starzer Markus Vockenhuber Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 9

Managing Board

Scope of responsibilities of the Managing Board

Heinrich Schaller Michaela Keplinger-Mitterlehner

Office of the Managing Board Treasury Financial Markets Public Relations and Media Product management/Sales management Retail and Private Banking/Group marketing Legal Office Raiffeisenlandesbank Oberösterreich branches Corporate Governance & Compliance PRIVAT BANK Public Affairs bankdirekt.at Strategy Raiffeisen Banking Group Upper Austria KEPLER-FONDS KAG Corporate customers Raiffeisen banks Management of Raiffeisen banks Human resources management Stefan Sandberger Group accounting and controlling Product responsibility Treasury Group audit Cash Management products Organisation Operations GRZ IT Center GmbH Raiffeisen Software GmbH

Reinhard Schwendtbauer

Tax Office Collateral Investment management REAL-TREUHAND Management GmbH

Georg Starzer

Corporates Market Product management and Corporates Sales Factoring Raiffeisen-IMPULS-Leasing RVM Raiffeisen-Versicherungsmakler

Markus Vockenhuber

Overall bank risk management Financing Management

Level 2 (Division) Level 2 (Subsidiaries) Staff unit 10 Annual Report 2015

Jakob Auer Raiffeisen Banking Group Upper Austria stands with its strong client focus for stability, reliability and expertise, as well as integrity in dealing, quality advice and security. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 11

Foreword by President Jakob Auer

The basis of our success at Raiffeisen Oberösterreich is working closely together

2015 was not an easy year. The whole banking sector was the “Raiffeisen Banking Group Upper Austria 2020” project faced with a number of major challenges, such as continued has proven to be a key factor for success in the whole Raif- weak economic growth, increased expense in the area of feisen sector in Upper Austria. The results so far, our consis- controlling as well as excessive bureaucratic demands, and tency in implementing the necessary measures and our drive last but not least, changing customer behaviour as a result to develop this project, are all strong proof that we in Upper of digitisation. This makes it all the more encouraging that Austria are all pulling in unison. We appreciate that we can Raiffeisenlandesbank Oberösterreich and the Upper Austrian only achieve our full strength through working together. This Raiffeisen banks were able to achieve such good results in clear process primarily strengthens the trust that our cus- this turbulent year marked by frequent upheaval. Making a tomers have in us. It should be expected of us as the market profit is never an end in itself at Raiffeisen. As the most import- leader in Upper Austria that we can develop perspectives for ant financial services provider, based on our strong customer the future and bring them to fruition in a determined fashion. focus, our reliability and competence as well as our serious outlook and the sense of security that comes with it, we are Carrying on the path to success not only responsible for the economic growth of our customers but also actively contribute towards the sustainable suc- I would like to give particular thanks to our customers, who cess of our region. have placed their trust in Raiffeisen Oberösterreich as their banking partner. A special thank you also to the members of Developing perspectives for the future the Managing Board of Raiffeisenlandesbank Oberösterreich, through common goals and especially to Chairman Heinrich Schaller for his openness, his focus on teamwork and his clear decisions based Good results don't just materialise out of nowhere. An open on his foresight and expertise. I would also like to thank the dialogue, clear strategies, common goals and a willingness to members of the Supervisory Board at Raiffeisenlandesbank change are essential in order to create the right conditions to Oberösterreich, the managers and all employees at Raiffeisen meet the challenges of the future. The close collaboration in Oberösterreich for their commitment to customer satisfaction.

Jakob Auer President of the Supervisory Board 12 Annual Report 2015

Supervisory Board of the Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Jakob Auer Christian Hofer Chairman Chairman of the Supervisory Board, Registered Honorary Consul of the Republic of Poland, National Assembly, members Director of the Upper Austrian Chamber of Chairman of the Austrian Farmers’ Federation, Commerce, retired Deputy Advocate General of the Austrian Raiffeisen Association, Walter Lederhilger (since 28 May 2015, Chairman of the South Wels Raiffeisenbank, previously non-registered member), Councillor Agriculturist of the Chamber of Agriculture, Chairman of the Supervisory Board of Raiffeisenbank Kremsmünster, Chairman of the VLV (Association of Agricultural Refinement Producers), Agriculturalist Walter Mayr Director of Raiffeisenbank Region Freistadt, Volkmar Angermeier Chairman of the Association of Managing Partners of Upper Austrian Raiffeisen banks Deputy Vice-President of the Supervisory Board, Chairman Chairman of Raiffeisenbank Region Eferding, Robert Oberfrank (since 28 May 2015, Deputy Chairman of the Upper Austrian previously non-registered member), Greengrocers’ Cooperative (“EFKO”), Deputy Chairman of Raiffeisenbank Inneres Agriculturist Salzkammergut and Chairman of the Bad Ischl branch, Josef Kinzl Regional Director of the Upper Austrian Chamber of Commerce in Gmunden Vice-President of the Supervisory Board, Chairman of Raiffeisenbank Region Schärding, Gottfried Pauzenberger (until 28 May 2015) Official expert Mayor of Kalham, Chairman of Raiffeisenbank Region Grieskirchen, Agriculturist Eduard Pesendorfer Director of the Upper Austria Regional Administrative Office, retired Deputy Chairman of Raiffeisenbank Salzkammergut, Chairman of the Traunkirchen branch

Josef Pfoser Chairman of the Raiffeisenbank Region Rohrbach, Registered Cornelia Altreiter-Windsteiger Master Builder and Carpenter, (since 28 May 2015), District Governor of Steyr-Land Managing Director of the Company of Resch members Rudolf Binder Brothers Building Construction GmbH Director, Raiffeisen Association, Upper Austria Gertrude Schatzdorfer Roman Braun Managing Partner of Schatzdorfer Geratebau GmbH & Co KG Chairman of Raiffeisenbank Region Schwanenstadt, Agricultural Advisor for Maschinenring Johann Stockinger Oberösterreich Chairman of the Association of Chairpeople of Annemarie Brunner Upper Austrian Raiffeisenbanken, Member of the State Parliament, Agriculturist Chairman of Raiffeisenbank Region Gallneukirchen, Agriculturist Alois Buchberger (until 28 May 2015) Chairman of Raiffeisenbank Ennstal, Josef Stockinger Agriculturist Chairman of the Managing Board of OÖ Versicherung AG Manfred Denkmayr Chairman of the Supervisory Board, Raiffeisenbank Anita Straßmayr Mattigtal, Barrister-at-Law Councillor of the Chamber of Agriculture, District Representative in the Farmer’s Federation, Karl Dietachmair Deputy Chairwoman of the Supervisory Board of Director, Manager of Raiffeisenbank Region Sierning Raiffeisenbank Bad Wimsbach-Neydharting, Agriculturist, Karl Fröschl Chairwoman of the Functionary Advisory Body of Director, Manager of Raiffeisenbank Perg the Austrian Raiffeisen Association Hannes Herndl (until 28 May 2015) President of the Chamber of Agriculture, retired, State Chairman of the Upper Austrian Farmer's Federation, retired, Chairman of Raiffeisenbank Windischgarsten, Agriculturist Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 13

Supervisory Board

Klaus Ahammer, MBA Helmut Feilmair Non- Director of Raiffeisenbank Salzkammergut Staff Council Chairman of the Staff Council registered Representa- Johann Moser Gerald Stutz members Director, Executive Manager of Raiffeisenbank tives Deputy Chairman of the Staff Council Region Ried i. I. Dorina Meißl Franz Penz (until 28 May 2015) Dietmar Felber (until 7 January 2016) Draper Harald John (since 7 January 2016) Josef Gokl Karin Hetzmannseder Christoph Huber Albert Ruhmer Authorised representative Hermann Schwarz Authorised representative Richard Seiser

Josef Nickerl State Com- Permanent Secretary, State Commissioner to the missioners Financial Markets, Supervisory Authority Regina Reitböck Deputy State Commissioner to the Federal Ministry of Finance

Honorary Gerhard Ritzberger presidents Helmut Angermeier

14 Annual Report 2015

RESPONSIBILITY “As the most important financial services provider in Upper Austria, we have a particular responsibility towards our customers, which we meet with our sustainable strategies as well as modern economic and financial services. We don't just focus on the next quarter's results but on sustainable future-oriented development.”

Heinrich Schaller Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 15

Sustainability and CSR 16 Annual Report 2015

PROXIMITY TO CUSTOMERS “We don't just rely on technical knowledge when working with our customers in a consultancy capacity. Raiffeisenlandesbank Oberösterreich has made proximity to customers and customer focus the most important principle of its business strategy. This is demonstrated in the stability of our relationship with customers.”

Michaela Keplinger-Mitterlehner Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 17

Sustainability and CSR 18 Annual Report 2015

INNOVATION “Raiffeisenlandesbank Oberösterreich is a pioneer in the development and sale of modern banking technology. Innovation and digitisation for us don't mean a way to replace personal contact with our customers, but should serve as an additional, forward-looking means of communicating based on our customer focus.”

Stefan Sandberger Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 19 20 Annual Report 2015 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 21

Sustainability and CSR

PARTNERSHIP “Our extensive investment portfolio isn't just about yielding good returns. As the parent company of a number of subsidiaries as well as a strong key shareholder in Upper Austria, we are closely linked to the real economy and make a significant contribution towards securing jobs and the economic success of the whole region.”

Reinhard Schwendtbauer 22 Annual Report 2015 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 23

COMMITMENT “With its strengths – a sound financial base, a particular customer focus and a global network – Raiffeisenlandesbank Oberösterreich has proven itself to be a stable and reliable partner for its customers.”

Georg Starzer 24 Annual Report 2015 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 25

SUSTAINABILITY: “Economic globalisation as well as new national and international regulations bring a number of changes for Raiffeisenlandesbank Oberösterreich and its customers. In the interests of the financial success of our customers, we embrace these changes with technical competence, open dialogue, and last but not least a strategic vision.”

Markus Vockenhuber 26 Annual Report 2015

2015 in retrospect

On course for growth in southern Germany

Raiffeisenlandesbank Oberösterreich has been active in southern Germany since 1991 and currently operates eight branches in Bavaria and Baden-Württemberg. The commitment to this dynamic economic region is due to be expanded in the near future with increased activity in Stuttgart and Karlsruhe. An additional sign that the company is on the right path was the transfer in autumn 2015 of the registered office of the branch in southern Germany from Passau to Munich, the second most important financial centre in Germany.

Sports day

Marcel Koller, successful manager of the Austrian national football team, paid Raiffeisenlandesbank Oberös- terreich a visit on 4 December 2015 as part of our initiative “Business as a Partner to Sport”. Koller spoke of the “Austrian way” in football and how important reliable long-term partners are for success. A demonstration of innovative leadership

Contactless payment was introduced with the Raif- feisen bank card in 2013 and since 2015, it has also Study reveals high level of customer been possible to use your smartphone at NFC (Near satisfaction Field Communication)-enabled terminals to make payments quickly, easily and safely. This technology was The customer satisfaction survey carried out by Raiff- trialled in Linz during the summer. The technology was eisen Oberösterreich in 2015 shows that efficiency also rolled out across the whole Raiffeisen Oberösterreich is a sure-fire way to guarantee a high level of customer network from October 2015 onwards. A total of 2.1 mil- focus. Around 24,500 respondents gave Raiffeisen lion NFC payments were made by Raiffeisen Banking Oberösterreich top marks for the quality of advice and Group Upper Austria customers in 2015. customer-friendliness.

Commitment on many fronts

In 2015, Raiffeisenlandesbank Oberösterreich also supported a number of initiatives in the areas of integration, development aid, environmental protection etc. The Raiffeisen Banking Group Upper Austria also launched a major fund-raising campaign for the victims of the major earthquake in Nepal alongside the charity Caritas

Upper Austria. A total of EUR 200,000 was raised both Franz Kehrer, Director of Caritas in Upper Austria, and Heinrich Schaller, from company employees and customers. CEO of Raiffeisenlandesbank Oberösterreich Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 27

2015 in retrospect

Success for fund subsidiary KEPLER-FONDS

2015 was a successful year for the investment company of Raiffeisenlandesbank Oberösterreich. KEPLER FONDS KAG was recognised by the analysts at FERI Eu- rorating Services for the third year running out of more than 200 fund providers. In the “Fund Compass” rating from CAPITAL, the respected German finance magazine, KEPLER-FONDS AG came fifth among the top 100 most important investment companies in Germany.

New award for our family-friendly policies Raiffeisenlandesbank Oberösterreich CEO Heinrich Schaller and Austrian national football team manager Marcel Koller For a number of years now, Raiffeisenlandesbank Oberösterreich has had a wide range of measures in place to improve the work-life balance of its employees. Efficient structures created In 2015, Raiffeisenlandesbank Oberösterreich and its by Raiffeisen Software GmbH subsidiaries were given a seal of approval by the Fed- eral Ministry of Family and Youth for the third time for In 2015, both major Raiffeisen IT companies RACON their family-friendly policies. Software GmbH (Linz) and Raiffeisen Software Solu- tion and Service GmbH (Vienna) merged to form Raif- feisen Software GmbH. The core owners of this major software company are eight Raiffeisen state banks. Raiffeisenlandesbank Oberösterreich holds 25.5 per cent of the company, which is headquartered in Linz.

Traditional World Savings Day

The 90th World Savings Day was celebrated in 2015. This is a special tradition at Raiffeisen Oberösterreich. Sophie Karmasin, Minister of Family and Youth, The Raiffeisen Banking Group Upper Austria used this as well as Raiffeisenlandesbank Oberösterreich HR managers

day at the end of October as an opportunity to empha- Judith Brandstetter (left) and Johanna Stanek (right) Schlossko Harald sise the personal relationship it has with its customers and to thank them for the confidence they have shown. Realignment of PRIVAT BANK

Raiffeisenlandesbank Oberösterreich stands for customer focus, efficiency and exploiting synergies. With this strategy in mind, PRIVAT BANK and bankdirekt.at were reorganised in autumn 2015 as independent business areas of Raiffeisenlandesbank Oberösterreich. Raiffeisenlandesbank Oberösterreich President of the Supervisory Board Jakob Auer and Raiffeisenlandesbank Oberösterreich CEO This focus of this realignment is on sustainability and Heinrich Schaller with the Sumsi Bee mascot continuity. 28 Annual Report 2015

Sustainability management and corporate social responsibility

As a strong regional bank, Raiffeisenlandesbank Oberösterreich is aware of its so- cio-political responsibility and sees itself as a partner to the individuals who want to help shape positive development in the region on a sustainable basis. Through its activities, Raiffeisenlandesbank Oberösterreich is also committed to the values of its founder Friedrich Wilhelm Raiffeisen, and therefore places the well-being of other people at the centre and acts based on the values of solidarity, subsidiarity and sustainability.

1. Activities in the areas of sustainability and CSR______29 2. Sustainability rating______30 3. Stakeholder management______30 4. Efficient for nature and the environment______33 5. Sustainable finance products______34 6. Responsibility for employees______36 7. Commitment______38 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 29

Sustainability and CSR

1. Activities in the areas of Sustainability and CSR

Raiffeisenlandesbank Oberösterreich continued to develop to comply with the legal requirements of the Energy Efficiency the area of “Sustainability and Corporate Social Responsibil- Act. A special information page was set up on the Raiffeisen- ity (CSR)” in 2015. Stakeholder management was analysed landesbank Oberösterreich website at www.rlbooe.at/nach- and redesigned. The aim here is to hold a stakeholder dia- haltigkeit in order to comply with transparency requirements logue in the future to expand the development of the sus- and to be able to report on the latest developments in the area tainability management system. A decision was also taken to of sustainability management. incorporate an energy management system within the Group

Memberships

In order to ensure continued advances in the areas of sustainability and CSR, Raiffeisenlandesbank Oberösterreich has been playing an active part in sharing information in sustainability networks. The bank takes part in the following networks:

RAIFFEISEN CLIMATE PROTECTION INITIATIVE (RKI) COMPANIES FOR FAMILIES

The RKI was launched in 2007. It is a Promoting a good work/life balance is platform for 23 member companies UNTERNEHMEN one of the most important sociopoliti- from the Austrian Raiffeisen sector FÜR FAMILIEN cal issues of our time. This is why the that promotes the exchange of shared knowledge and ex- Federal Ministry of Family and Youth has set up the “Compa- perience in the fields of sustainability and CSR, coordinates nies for families” network to create a platform for companies joint activities, and raises awareness of climate protection. As and municipalities who show an interest in family-friendly HR a member, Raiffeisenlandesbank Oberösterreich represents and community policies. As the fourth-largest bank in Austria, the Upper Austrian Raiffeisen banks and actively participates Raiffeisenlandesbank Oberösterreich is aware of its respon- through work groups and exchange of knowledge and expe- sibility and wants to contribute towards the “Companies for rience to shape the activities of the Raiffeisen Climate Protec- Families” network as a supporting partner. tion Initiative. www.unternehmen-fuer-familien.at www.raiffeisen-klimaschutz.at

RESPACT – AUSTRIAN BUSINESS COUNCIL FOR SUSTAINABLE DEVELOPMENT CSR DIALOGUE FORUM

Since 2007 respACT has been the lead- The CSR Dialogue Forum developed ing platform for companies in the area – as one of the more recent sustain- of CSR and sustainable development in ability platforms – from an initiative of Austria. The name respACT stands for “responsible action” Upper Austrian entrepreneurs. The vision of the association and comes from the purpose of the association, which is to is to develop an interdisciplinary platform for CSR as a centre support – from the smallest to the largest company – the aim of competence for companies in Austria and neighbouring re- of achieving self-defined ecological and social objectives. As gions. The initiative works, among others, in cooperation with a member, Raiffeisenlandesbank Oberösterreich benefits from international certification partners on an international CSR and the information provided, as well as participation in various sustainability quality seal. As a charter member, Raiffeisen- events. landesbank Oberösterreich supports the initiative, in particular, to build and develop the organisational structure. www.respact.at www.csr-dialogforum.at 30 Annual Report 2015

2. Sustainability rating

Raiffeisenlandesbank Oberösterreich has been rated by the measures that have been taken and the new method of re- international ratings agency oekom research AG in the area porting on the Raiffeisenlandesbank Oberösterreich website. of sustainability efforts. An extensive rating process was set The final rating is expected in early 2016. up by oekom research AG in autumn 2015 that rates the

3. Stakeholder management

Analysing and rating its own stakeholders and engaging in di- Oberösterreich not only takes into account the interests of alogue with those groups are central cornerstones of a holistic shareholders, such as in a typical shareholder approach, but sustainability management system. In its activities Raiffeisen- also takes care to create a future-oriented restructuring, con- landesbank Oberösterreich AG is committed to the values of sidering all relevant interest groups. Since the middle of 2013, its founder Friedrich Wilhelm Raiffeisen. It therefore places Raiffeisenlandesbank Oberösterreich AG has also been occu- the wellbeing of other people at the centre of its vision and pied with stakeholder management in the context of building acts based on the values of solidarity, subsidiarity and sus- up its own sustainability management system. The individual tainability. Based on this understanding, Raiffeisenlandesbank stakeholders have been analysed as part of this process.

The process The analysis is carried out with the help of the internal sustainability network. This network is comprised of representatives A road map was devised for the development of a Group-wide of the various specialist departments in the Raiffeisenlandes- sustainability strategy that follows the international standard bank Oberösterreich AG Group and is brought together as ISO 26000 and the Austrian standard ONR 192500, which an expert panel to analyse and prepare specific topics. The is derived from it. Raiffeisenlandesbank Oberösterreich AG network also serves as a point of contact for department-spe- intends to use this to gain a better understanding of its stake- cific topics. As a consequence, partial strategies can be de- holder groups and the effects that its decisions and activi- veloped and projects initiated with them. ties have on them. Based on this understanding, and with the knowledge of how relationships between Raiffeisenland- A detailed definition of each individual stakeholder was then esbank Oberösterreich AG and the individual stakeholders are made as a conclusion to this analysis, which served as a formed, the expectations of stakeholders should be ascer- basis and an explanation for the valuation analysis of the tained and managed systematically. stakeholders.

1. Identification

As a first step, potential shareholders were recorded and ar- ranged into groups as necessary. Based on the following six questions it was analysed whether the stakeholders actually belong to an interest group or stakeholder group and how intensive the relationship is: ¬¬ Who do they have legal or contractual obligations towards? ¬¬ Who could be positively or negatively affected by the decisions taken by or the activities performed by the organisation? ¬¬ Who has an interest in the decisions or the activities of the organisation? ¬¬ Who can influence the decisions or the activities of the organisation? ¬¬ Who would be disadvantaged by being excluded? ¬¬ Who is affected within the value chain? Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 31

Sustainability and CSR

2. A brief summary of our stakeholders

Internal RAIFFEISEN SECTOR SUPERVISORY BOARD IN UPPER AUSTRIA MEMBERS stakeholders EMPLOYEES Board members and directors of the 42 members of the Supervisory Around 5,000 employees (total of all 94 Upper Austrian Raiffeisen banks Board of Raiffeisenlandesbank fully-consolidated companies in Oberösterreich financial year 2013)

GROUP RAIFFEISEN CO-OWNERS SUBSIDIARIES SECTOR AUSTRIA Owners of the 94 Upper Austrian Raiffeisenlandesbank Oberösterreich All independent Raiffeisen banks, Raiffeisen banks subsidiaries who serve the special Raiffeisen state banks, RZB, RBI customer and product groups or and the corresponding specialised provide services to them institutions (Raiffeisen Bausparkasse, Raiffeisen Capital Management etc.) and investments (AGRANA etc.)

External SUPERVISORY AND CUSTOMERS MONITORING BODY RATINGS AGENCIES stakeholders all private customers, private legally assigned but also voluntary Agencies such as Moody‘s (credit banking customers and corporate auditory and supervisory bodies rating), oekom research (sustainability customers of Raiffeisenlandesbank (e.g. EBA, OeNB, FMA and auditors) rating), etc. Oberösterreich

ADVOCACY GROUPS COMPETITORS EQUITY INVESTMENTS

Advocacy groups which represent the All banks that do not belong to the in contrast to the internal stakeholder Raiffeisenlandesbank Oberösterreich Raiffeisen sector Austria group “Subsidiaries” – all investments (e.g. WK, IV, etc.) or the interests of its held by Raiffeisenlandesbank Oberös- members towards the Raiffeisenland- terreich with a holding of under 50% esbank Oberösterreich (e.g. AK)

SUPPLIERS PUBLIC CONSULTANCY FIRMS

Suppliers of Raiffeisenlandesbank Public as an influential abstract entity contracted consultancy firms Oberösterreich

CAPITAL MARKET POLITICS MEDIA

Capital market in its entirety with all its Political systems in the domestic mar- Media that cover the activities of the participants kets Austria and southern Germany Raiffeisenlandesbank Oberösterreich Group

EDUCATION & RESEARCH SPONSOREES NGOS/NPOS

Education and research institutions Institutions and projects funded in ac- Non-profit organisations and NGOs in schools, universities and technical cordance with the sponsoring strategy that predominantly focus on the colleges in place financial sector

PUBLIC ADMINISTRATION RESIDENTS

Public administration as an important Local residents who are directly point of contact for Raiffeisenlandes- affected by the activities of Raiffeisen- bank Oberösterreich landesbank Oberösterreich 32 Annual Report 2015

3. The valuation to estimate the interest in and the influence on the Raiffeisen- landesbank Oberösterreich AG on a scale between 0 (very As a second step, an online survey was created to assess the low) and 10 (very high) for each stakeholder. The results were stakeholders identified. Senior management were requested transferred over to the following stakeholder matrix:

STAKEHOLDER MATRIX OF RAIFFEISENLANDESBANK OBERÖSTERREICH AG

10 Dialogue through consultation Partnership-based dialogue

Upper Austrian Raiffeisen banks Supervisory and monitoring bodies

Customers Supervisory Board members Capital market Ratings agencies Staff Raiffeisen sector Austria Media Politics Group subsidiaries Public Equity investments Co-owners 5 Competitors Advocacy groups Consultancy firms Suppliers Public administration Education & research NGOs/NPOs Sponsorees Local residents

Dialogue through observation

Influence on Raiffeisenlandesbank on Influence Oberösterreich Dialogue through information

0 Shares in Raiffeisenlandesbank Oberösterreich 5 10 ¬¬ Internal stakeholders External stakeholders

Based on the results from the previous steps the sustainability network was asked to submit proposals for future activities. These are then checked for plausibility and feasibility in the following section. INTERNAL Public Administration STAKEHOLDERS

4. The result Advocacy groups Raiffeisen sector Austria The result serves as the basis for optimis- Public ing the individual dialogue strategies and Supervisory Compe- Group the activities derived from them. It also NGOs/ Board members titors subsidiaries provides the foundation for a planned NPOs Supervisory & Upper Austrian materiality analysis, an additional step monitoring Raiffeisen banks towards the development of a Group- Invest- bodies ments wide sustainability strategy. Staff Co-owners

Suppl- customers Spon- iers sorees Ratings agencies Inner circle Politics Capital high level of influence on Raiffeisenlandesbank Oberösterreich markets Consultancy companies Media Middle circle medium level of influence on Raiffeisenlandesbank Oberösterreich Education & Research EXTERNAL Local residents Low circle STAKEHOLDERS low level of influence on Raiffeisenlandesbank Oberösterreich Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 33

Sustainability and CSR

4. Efficient for nature and the environment

Energy Efficiency Act systematically records the greenhouse gas emissions directly and indirectly caused by the activities of the company. A indi- On 1 January 2015 the En- vidual report was also produced for each federal state, as was ergy Efficiency Act (EEffG) the case with the Value Creation Report 2013. came into force in Austria. This law aims to increase This shows Raiffeisenlandesbank Oberösterreich and the energy efficiency across Upper Austrian Raiffeisen banks that environmental responsi- Austria by 20 per cent, to bility has already been assumed, but there is still potential for increase the share in re- improvement from both ecological and economical perspec- newable energy sources, to tives. The majority of emissions are produced as the result of improve the reliability of their energy consumption, and the Transport department also has supply, and to reduce green- further potential for reducing its carbon footprint. The prem- house gas emissions. We also ises are already largely heated in an eco-friendly way. Further expect a positive stimulus for the information is available at www.rlbooe.at/oekobilanz2014. economy. ÖBB Green Points Large companies must either carry out an energy audit every four years or introduce a certified energy management sys- Raiffeisenlandesbank Oberösterreich is also campaigning tem. The Managing Board of Raiffeisenlandesbank Oberös- for nature conservation measures as part of the ÖBB “Green terreich has decided to introduce an energy management Points” project. The Raiffeisenlandesbank Oberösterreich system for the whole Group to be able to record energy con- Group managed to save a total of 166.5 tonnes of CO2 emis- sumption precisely and to realise any savings potential. An sions in 2014 through the use of rail travel, which corresponds energy policy was adopted across the Group at the end of to 1,067,170 “green points”. In 2015, Raiffeisenlandesbank 2015 and all the work in establishing an energy management Oberösterreich then invested these in the most popular of the system was completed. It was certified according to interna- eight projects available for selection as part of the “Austria tional standard ISO 50001 at the beginning of February 2016.

Life cycle assessment

The series of CSR reports for Raiffeisen Banking Group Austria was resumed this year with the Life Cycle Assessment 2014. The study was created by the Austrian Federal Environ- ment Agency on behalf of the sustainability management department of Raiffeisen Zentralbank Österreich AG. The report

Raiffeisenlandesbank Oberösterreich CEO Heinrich Schaller and General Director of ÖBB Christian Kern being awarded the Green Points certificate and the wild bees' nest. ÖBB

in Bloom” initiative. The “Blossoming landscapes” bee conservation project works towards creating a sustainable intact ecosystem, actively contributes towards protecting the most important pollinators and gives them a new home. Bees' nests from this project were offered to customers, and one bees' nest was placed on the roof of Raiffeisenlandesbank Oberösterreich. 34 Annual Report 2015

5. Sustainable finance products

Sustainable investing with KEPLER FONDS KAG value-oriented portfolios are managed based on a clearly structured approach, combing conventional fundamental KEPLER is one of the pioneers in sustainability funds in ratings and ethical criteria. Institutional investors and private Austria. At the end of 2015, EUR 877 million in sustainable cli- investors have put their trust in KEPLER Ethical Funds since ent deposits was being managed. Last year alone, more than 2000. EUR 530 million flowed from institutional investors and private investors into ethical portfolios. Three sustainable funds are The strict investment process of KEPLER Ethical Funds en- offered to private investors. The total volume administered is sures that the fund only invests in socially and ecologically around EUR 13.3 billion. This makes KEPLER the fourth-big- responsible companies and countries. Only those companies gest domestic fund company among the 24 domestic fund with the best social and ecological ratings in their sector are companies. taken into consideration (i.e. best-in-class approach). The respected ratings agency oekom research AG is responsible KEPLER SRI VOLUMES (IN EUR MILLION) for what is known as the corporate responsibility rating. Addi- tionally, traditional financial analysis is involved in the creation of the investment universe. This analysis subjects companies 900 and countries to a detailed fundamental rating process. This 800 ensures that only financially strong, sustainable companies 700 TOTAL Mutual funds are held in the portfolios. 600

500 OEKOM RESEARCH 400 300 “Best-in-class criteria” sus- 200 tainability rating Selection criteria 100 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 KEPLER FUND MANAGMENT KEPLER ETHICS KEPLER Ethical Funds combine social, ecological and eco- ADVISORY BODY

nomic aspects. Investors in these funds assume respon- Investment according to sustainability universe and KE- Discussion, dialogue & sibility and play an active role in ensuring a liveable future. PLER investment process exchange of experiences Ethics and returns are not a contradiction in this regard. These COMMITMENT PROCESS

KEPLER ETHICAL FUNDS MEET NATIONAL AND Dialogue with bond issuers INTERNATIONAL QUALITY STANDARDS: regarding breaches of exclusion criteria or barriers to investment (“Positive”

commitment) The Eurosif transparency logo indicates that KEPLER-FONDS KAG is recognised Gradient as a provider of sustainable funds C 49,5 C 71,5 C 85 C 2 C 30 C 17 M The35 M 50,5 wholeM 60 M 0 processM 38 M 31 is supported by an ethics committee which across Europe. K 31 K 44,5 K 53 K 47 K 98 K 94 Y 26meetsY 37 Y 44 twiceY 0 Y 3,5a yearY 0 (in spring and in autumn). The ethics committee is tasked with discussing new ethical approaches and KEPLER Ethical Funds also bear the their impact on the investment and contributing new ideas. Austrian eco-label for sustainable financial Flat products. It is awarded by the Austrian

C 49,5TheC 71,5 KEPLER-FONDSC 85 C 2 C 30 C 17 KAG also engages in in-depth discus- Ministry of Agriculture and is a guarantee M 35 M 50,5 M 60 M 0 M 38 M 31 K 31 K 44,5 K 53 K 47 K 98 K 94 for sustainable products and services. Y 26sionsY 37 Y with44 Y 0 companies,Y 3,5 Y 0 known as the “commitment process”.

“Negative” commitment takes place if an exclusion criterion With the “Principles for Responsible Invest- is breached. On a quarterly basis, oekom research AG re- ment of the United Nations” (UNPRI), Grey ports an investment universe that also contains companies KEPLER-FONDS KAG commits to N 64,5 N 76 N 100 N 6 N 49 N 33,5 compliance with environmental, social that have recently breached an exclusion criterion. KEPLER and corporate governance issues (inter- then contacts the company in question in writing. The in- national code: ESG) in all its activities. fringement is explained and it is pointed out that shares and

Black & White Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 35

Sustainability and CSR

bonds will ultimately be sold. Any response from the company This is an important foundation for generating an income for is forwarded to oekom research. The maximum time period themselves. between the notification of a breach and the actual sale is four months. A “positive” commitment results in the compa- The donation made by Raiffeisen Oberösterreich for each stu- nies becoming motivated to improve themselves as an entity dent account went directly to Caritas, who are carrying out worth investing in. This process is carried out on a half-yearly this project. The goats were purchased on site at markets basis. As part of the process, a list of companies is created in Africa. A total of 78 students decided to take part in this with whom a positive commitment should be made. A list of scheme. items where there is potential for improvement is sent to each company by oekom research AG. Industry projects and projects in the field of renewable energy In 2015 Raiffeisenlandesbank Oberösterreich continued its support of SOS Kindersdorf, with a contribution of EUR 5,000. Raiffeisenlandesbank Oberösterreich has a professional team Flyers printed according to the Austrian eco-label's guidelines with extensive, long-standing experience in the financing of were used as were Christmas cards for customers which were complex structured industry projects and projects in the area designed by the children at SOS Kinderdorf. of renewable energy. A number of industrialised nations are faced with the challenge of adapting their energy policy in New student account = Goats for Burundi an era of weak economic growth to meet the prescribed climate protection objectives. In 2015 in Paris, a comprehensive Instead of vouchers or presents, if you opened a student ac- global climate protection agreement was signed which aims to count at Raiffeisen Oberösterreich from the beginning of Sep- keep global warming to under 2 degrees Celsius – if possible tember to the end of November, you received goats – at least to under 1.5 degrees Celsius. In the near future, this means in spirit. The animals were given to families in the small African that the efforts to change how energy is produced must be country of Burundi, where they are helping make the lives of stepped up and more projects aimed at producing renew- many people more secure. This project was carried out jointly able energy must be implemented. Despite the oil price being with Caritas. very low – at least for now – reducing our dependency on fossil fuels such as oil and coal is still essential. Likewise, the key political decisions must be taken, particularly in Germany, where there are calls for nuclear energy to be phased out. The related need for investments requires efficient solutions in financing.

Raiffeisen Oberösterreich donated 30 euros for every new student account opened and put one of the core principles of cooperative banks into practice: helping people to help themselves. The 30 euros helped to fund the purchase of a goat, appropriate training for the future owner as well as veterinary costs. After successfully completing the 50-day training programme, the participants in Burundi each received two goats. wind farm/Robert Leitner of Pretul Artist's impression 36 Annual Report 2015

Raiffeisenlandesbank Oberösterreich therefore provides fi- Austrian advertising industry. Companies subject themselves nancing solutions for projects and investments in biogas/bio- to quality criteria based on these guidelines – which are not mass, hydropower and photovoltaics in the domestic market legally binding – which have been defined by the Austrian ad- and supports clients abroad. In the last few years, a number vertising industry for the “Ethics and Morals” department and of financing arrangements for project developments in the which exceed current legal requirements. energy sector have been made in the European Union and Turkey, and also through the financing of exports. In 2016, Raiffeisenlandesbank Oberösterreich was awarded the eth- Raiffeisenlandesbank Oberösterreich will join forces with the ical seal of approval after being considered by the Austrian European Investment Bank (EIB) to finance the Pretul wind Advertising Council. This seal is a clear sign that a company is farm belonging to the Austrian Federal Forestry Company in compliant with ethical principles in all its advertising activities. the Fischbacher Alps in the state of Steiermark. An innovative It is awarded for a period of two years. structure was designed with the EIB that can also be used to support similar projects of its kind in the future. The Austrian Advertising Council awards companies in this way who The Austrian Advertising Council ethical seal of approval ¬¬ support the ethical and moral principles of the Code of Ethics of the Austrian advertising industry (FOR advertising Raiffeisenlandesbank Ober- ethics); österreich is well aware of its ¬¬ share the collective social and ethical beliefs of the com- responsibility to society as a munications industry (FOR self-regulation); partner to people in the re- ¬¬ and in this way, advocate FOR freedom of advertising and gion. As a consequence we AGAINST advertising bans (FOR freedom of advertising) place a great emphasis on social responsibility, including in our marketing activities. Further information on the ethical seal of approval and the Code of Ethics of the Austrian advertising industry can be In this context, Raiffeisenlandesbank Oberösterreich has found online at www.werberat.at. committed itself to complying with the Code of Ethics of the

6. Responsibility for employees

Work/life balance audit

The work/life balance audit – as part of an audit process – assists companies in developing individual family-friendly measures that are customised to meet the needs of their employees. After an positive assessment by an external auditor, the company is awarded with a government quality label by the Federal Ministry of Family and Youth. Studies show that companies that introduce family-friendly initiatives see increased levels of motivation, loyalty and dedication as well as lower sickness and staff turnover rates and shorter periods of parenting leave.

Raiffeisenlandesbank Oberösterreich took part in the work/ life balance audit for the first time in 2009 and was awarded the basic certification. In the subsequent few years, measures were adopted in the areas of health management, dependant relatives and childcare. These successful measures were taken into account when the company was recertified in 2012. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 37

Sustainability and CSR

In the years after that the focus turned to topics like family-ori- Employee survey 2015 ented leadership, the working world of the future, workshops for those returning to the workplace as well as part-time work Banks have been faced with a challenging environment for and management. Likewise, talks were conducted with female several years now. Stringent regulations and supervisory red employees with special attention given to the topics of “child tape as a result of the economic and financial crisis, increased care provision for school-age children” and “dependant rela- taxes, the low interest-rate environment and the sluggish tives” as part of the “Work and Family” information platform economy. So far, the Raiffeisenlandesbank Oberösterreich created by Raiffeisen Oberösterreich. has dealt well with all of this, as well as additional external influences. However, this environment continues to pose chal- The actions taken were reviewed again in 2015. The upgrad- lenges. The commitment shown by our employees has been ing of our certification in 2015 was not just a recognition of the extremely strong in the past few years. This special willingness good work already done but also an incentive and motivation to get involved will also be needed in the challenging years to carry on towards reconciling the demands of work and fam- ahead of us. ily life in the interests of employees and customers alike. The employee survey 2015 was carried out externally by the Jaksch & Partner GmbH institute for statistical analysis. Em- ployees were asked a total of 206 questions about job satisfaction, internal cooperation and management as well as workplace health impacts. Further goals were then set based on the results of the survey, and individual measures were developed between management and staff.

Careers – best recruiter

The 500 largest employers in Austria were tested on the quality of their recruiting process for the sixth time as best part of the “BEST RECRUIT- recruiter ERS AUSTRIA” study and 15 |16 aut the best companies were rewarded. Raiffeisenlandes- bank Oberösterreich impressed with its sustainable recruit- ment process and was awarded the silver certification. We managed to move up to fourth place in the list of the top Aus- trian banks.

Kununu

Raiffeisenlandesbank Ober- österreich welcomes feed- back from competitors as well as employees, and because of this, in March 2015 it was given the accolade of “Open Company” by the company assessment platform Kununu. 38 Annual Report 2015

7. Commitment

Raiffeisenlandesbank Oberösterreich CEO Heinrich Schaller, host Barbara Guwak, Infineon Technologies Austria AG CEO Sabine Herlitschka, Simone Schmiedtbauer, CEO T-Mobile Austria, Andreas Bierwirth and host Richard Hübner

EUROPEAN FORUM ALPBACH

The income gap is growing and posing a threat to economic growth. At the same time, differences in wealth provide a boost to the economy. Experts from the fields of economics, politics and science came together to discuss this as part of the economic discussions at the European Forum Alpbach 2015. A discussion of the topic “Equality – Location Dependent” discussed the conflict between urban and rural areas.

Raiffeisenlandesbank Oberösterreich Deputy CEO Michaela Keplinger-Mitterlehner and BezirksRundschau chief editor Thomas Winkler at the awards ceremony honouring committed teachers foto-reiter.com | A. Reiter Pia Odorizzi Pia TEACH FOR LIFE UPPER AUSTRIA STATE EXHIBITION 2015 DIAKONIEWERK GALLNEUKIRCHEN, With the “Teach for Life” initiative, the BezirksRundschau HAUS BETHANIEN newspaper honours those teachers who go the extra mile every day to bring the best out of our children and who The history of social democracy was documented and have made a special contribution. Raiffeisenlandesbank staged for visitors in the time-honoured fashion. It also Oberösterreich has supported this important initiative for went into the history of social initiatives and institutions a number of years. such as the Diakoniewerk charitable organisation as well as how culture shapes the solidarity and help we give to people in difficult circumstances. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 39

Sustainability and CSR Otto SaxingerOtto

HÖHENRAUSCH 2015

The art festival Höhenrausch took place from the end of

May to mid-October. It is one of the best-loved cultural Hartlauer events in Austria and also beyond Austria’s borders. This year, the mysterious world of birds was unveiled. HARTLAUER FOTOGALERIE

The Hartlauer Fotogalerie offers a new platform for photography enthusiasts. Four exhibitions a year, each with its special theme, should stir people's interest in modern yet timelessly beautiful photography from both inside and outside Upper Austria. Litzlbauer

KLASSIK AM DOM

Klassik am Dom celebrated its fifth year in 2015 by once c_zoe_m_riess again inviting some of the world's biggest stars for three extraordinary concert evenings on the stage in front of LINZFEST the New Cathedral in Linz. 3,300 guests enjoyed the evenings beneath the unique backdrop of the New Cathedral Austrian musicians took centre stage at LINZFEST, which with Paolo Conte and Max Raabe and, as part of the was held under the slogan of “The Sound of Austria”. “Klassik am Dom” gala, with Angelika Kirchschlager, Mi- Alongside the varied music programme, a wide array of chael Schade and Theresa Grabner. cultural activities was put on for children of all ages.

LENTOS KUNSTMUSEUM LINZ

The theme of death and decay brought a new approach and a revolutionary new aesthetic to western fashion in the 1980s. The “LOVE & LOSS – fashion and transience” exhibition delved deeper into the topic. Raiffeisenlandes- bank Oberösterreich has been a partner of the art mu- seum Lentos since it opened. Exhibition curator Ursula Guttmann, Raiffeisenlandesbank Oberösterreich Deputy CEO Michaela Keplinger-Mitterlehner, artistic director Stella Rollig and Deputy Mayor Bernhard Baier Lentos Kunstmuseum Linz/APA-Fotoservice/Hartl Kunstmuseum Lentos 40 Annual Report 2015

A Citroën C4 Cactus for the overall winner Martin Laber (second from left), awarded by France Car Managing Director Andreas Parlic (left), Raiffeisenlandesbank Oberösterreich Deputy CEO Michaela The winners of the Raiffeisen Security Prize Keplinger-Mitterlehner, Kepler-Fonds KAG Managing Director Andreas Lassner-Klein, OÖN Chief Editor Dietmar Mascher 20TH RAIFFEISEN SECURITY PRIZE CLOSING EVENT OF THE As part of Raiffeisenlandesbank Oberösterreich’s 20th OÖN STOCK MARKET GAME 2014 awarding of the Raiffeisen Security Prize, 11 people from Upper Austria were rewarded for showing cour- In the 13th OÖN stock market game, which was held in age in helping crimes to be solved successfully. In the cooperation with Raiffeisen Oberösterreich, participants presence of Minister of the Interior Johanna Mikl-Leit- had eight weeks to show their stock market savvy and ner, the prize winners were congratulated for their gain experience. Each of the roughly 15,000 people who bravery and courage. The awarding of the Raiffeisen took part was able to invest their pretend start-up capital Security Prize was the highlight of the Raiffeisen Secu- on the international stock markets completely risk-free! rity Day, which represented the start of the wide-rang- ing “Safety starts at home” campaign.

Raiffeisenlandesbank Oberösterreich CEO Heinrich Schaller, Vice-Chancellor Reinhold Mitterlehner, MP Michael Strugl and Federa- tion of Austrian Industries chief economist Christian Helmenstein

Star conductor Franz Welser-Möst and the Cleveland Orchestra VICE-CHANCELLOR IN TALKS

THE CLEVELAND ORCHESTRA Reinhold Mitterlehner appeared in his position at Vice-Chancellor of Austria for the first time before around The Upper Austria-born star conductor Franz Wels- 1,300 guests at the RaiffeisenForum for a discussion with er-Möst enjoys a high level of recognition worldwide for Minister for Economy in the State Government of Upper his work with the Cleveland Orchestra. Works by Oliv- Austria Michael Strugl, Chief Economist at the Federa- ier Messiaen, Wolfgang Amadeus Mozart and Richard tion of Austrian Industries Christian Helmenstein as well Strauss were played at the concert held on 23 October as Raiffeisenlandesbank Oberösterreich CEO Heinrich 2015 at the Brucknerhaus. Schaller.

10TH STUDENT OLYMPICS

14,000 fourth-grade students from primary schools across Upper Austria began the 10th Student Olym- pics, whose motto in 2015 was “70 years of the Second Republic”. On 23 April, the top 20 teams met at Raif- feisenlandesbank Oberösterreich in Linz for the final. The winners this year were the team from Volksschule Aschach an der Donau. The regional finalists at the Student Olympics Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 41

Sustainability and CSR

The START scholarship winners in Upper Austria

START SCHOLARSHIP PROGRAMME

The programme was created in Upper Austria two years ago. At the beginning of the third year of the successful “START Upper Austria” initiative, 11 additional young people with immigrant backgrounds were invited to take part in the development programme and given the support they need to prepare them for the school-leaving Matura exams. Nineteen talented and socially involved young people are currently being supported. Five scholarship winners have already passed their Matura with the help of START Upper Austria. Raiffeisenlandesbank Oberösterreich sponsors the programme alongside the state of Upper Austria.

The dedicated employees of Raiffeisenlandesbank Oberösterreich making a donation.

EMPLOYEES SUPPORT ULF INITIATIVE FOR REFUGEES

Some of the refugees who were temporarily housed in two Linz schools during the summer were lacking even the most basic things. This prompted the Independent State Volunteer Centre, a platform for voluntary social engagement, to launch a collection drive. Employees of

Raiffeisenlandesbank Oberösterreich CEO Heinrich Schaller handing the Raiffeisenlandesbank Oberösterreich Group took a over a computer. very active role. A total of 18 large boxes and 25 travel bags filled with donated goods were handed out. THE “COMPUTERS FOR CLASSROOMS” CAMPAIGN

As part of the “Computers for classrooms” campaign, Raiffeisenlandesbank Oberösterreich offered 200 used, but fully-functioning PCs free of charge to partner primary schools in the Union of Upper Austrian Schools. 42 Annual Report 2015 EHC Liwest Black Wings Linz Wings Black Liwest EHC

Austria's golden girl Lui “Susi” Jia © Harald Dostal / 2015

LINZ FROSCHBERG TABLE TENNIS

SkiMS Raiffeisenlandesbank Oberösterreich has been a successful partner of the Linz Froschberg table tennis tournament for many years. The women, with four-time Olympian Liu Jia, have walked away with the Champions League trophy on two occasions. Picture / Johannes Kienesberger Johannes / Picture LASK

Raiffeisenlandesbank Oberösterreich CEO Heinrich Schaller handing the winner's cheque to champion Anastasia Pavlyuchenkova. SPORT Cityfoto/RolandPelzl

Investing in young people isn't just so that we are seen CELEBRATING 25 YEARS OF THE as being socially responsible. It is essential for the GENERALI LADIES LINZ future prospects of society. In sport, both the health benefits as well as the social benefits are key. Raif- The WTA international tennis tournament was held feisenlandesbank Oberösterreich is a partner to the at the Gugl for the 25th time in 2015. In mid-October, Raiffeisen Junior Wings Academy, which is currently spectators at the TipsArena were treated to top-level in the process of being set up. Soon the ideal condi- international women's tennis. A number of top stars tions will be in place for the most promising youngsters took part in some exciting matches. As a partner of from the junior section of the two-time Austrian cham- many years, Raiffeisen Oberösterreich was also in at- pions LIWEST Black Wings Linz to become the Aus- tendance this year with its own Raiffeisen Oberöster- trian ice hockey stars of the future. A strong emphasis reich Day, which among other things, gives youngsters will be placed on education as well as sports training. the opportunity to meet the pros and have a go for themselves. Raiffeisenlandesbank Oberösterreich also supports other sports clubs in Upper Austria in their successful work with young people, such as for example the Basket Swans Gmunden, the Upper Austria Football Association, LASK Linz, SV Ried, HC Linz AG, Linz AG, Froschberg table tennis and the Upper Austria ski pool. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 43

Sustainability and CSR

Awarding the most sustainable industrial companies in Austria Kronen Zeitung/Chris Koller Zeitung/Chris Kronen

Raiffeisenlandesbank Oberösterreich CEO Heinrich Schaller awarding the crystal Pegasus to Michael Teufelberger. OÖN/Volker Weihbold OÖN/Volker CORONA

PEGASUS – THE BUSINESS PRIZE OF THE Every year the Federation of Austrian Industries in Upper UPPER AUSTRIA NEWS SERVICE Austria awards a prize in the categories of improving Upper Austria as a place to do business and CSR. For The Pegasus award is now 21 years old and has become several years, Raiffeisenlandesbank Oberösterreich has a firm fixture in the business calendar. The best com- been a valuable partner and has helped to put Upper panies in the country have been honoured. Raiffeisen- Austria's top companies into the spotlight. landesbank Oberösterreich CEO Heinrich Schaller sang the praises of Michael Teufelberger, who received the Pegasus in crystal for his life's work.

Jakob Auer, Max Hiegelsberger, Michaela Keplinger-Mitterlehner and Franz Fischler

AGRICULTURE FORUM 2015

The new Chairman of Young Economy Upper Austria Bernhard Austria has been a member of the European Union since Aichinger (right) and his team JR PHOTOGRAPHY 1995. Alongside the core aspects such as peace and freedom, Austria has also benefited economically, ac- LONG NIGHT OF YOUNG ENTREPRENEURS cording to calculations made by the Austrian Institute for Economic Research (WIFO). More growth, more jobs, Raiffeisenlandesbank Oberösterreich and Young Econ- lower unemployment and lower inflation. Agriculture has omy Upper Austria invited young entrepreneurs to at- also been able to grasp the opportunities available de- tend the Long Night event at the Raiffeisen Forum. At the spite massive cutbacks and a long-term structural trans- event, the entrepreneurs and company founders of the formation. The first Austrian EU Commissioner, Franz future were able to develop their business skills and their Fischler, discussed this topic with a high-quality panel at knowledge by attending informative lectures. the Raiffeisen Agriculture Forum.

UPPER AUSTRIAN CRAFT PRIZE

The 26th awarding of the Upper Austrian Craft Prize took place to honour outstanding workmanship. Top quality, innovation and technical skills were shown in all areas of handicraft.

The winners of the Upper Austrian Craft Prize 2015 Wolfgang Kunasz-Herzig/eventfoto.at Wolfgang 44 Annual Report 2015

Group management report 2015 Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

1. Business development and the economic situation______45

2. Report on the company’s prospective trends and risks ______55

3. Research and development______58

4. Main aspects of the internal control and risk management system ______59

Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 45

Group management report 2015 _ Business development and the economic situation

1. Business development and the economic situation

1.1. Economic background 2015 Austria also benefited from the general structural conditions 2015 was another turbulent financial year. Defining events that that stimulated the economy (price of oil, ECB policy). Never- characterised international developments included the fall in theless economic growth in Austria was unable to keep up oil prices as well as the extremely lax monetary policy by the with the eurozone average for 2014/15. Investment activity by European Central Bank (ECB), while a tighter money market companies only recovered very hesitantly from the second policy was implemented in the USA. There were also consid- quarter of 2015, while private consumption continued to stag- erable signs of weakness in China and other emerging na- nate. Analysts expect Austria to catch up with the average tions, along with a range of ongoing geopolitical tensions. The eurozone growth levels once again for 2016. The private con- crisis in Greece dominated the first six months of the year in sumption stimulated by the income tax reforms and the ad- Europe. This was then followed by the issue of refugees as a ditional expenses for asylum seekers will be critical with this. particularly dominant topic. Industry in Upper Austria which is highly focused around Global economic growth turned out to be somewhat weaker exports recorded a significant upturn in 2015, and was well in 2015 than it had been in the previous year. Although perfor- above the national average of 1.7 per cent with growth in pro- mance improved in the industrialised nations and in particular duction of 6.3 per cent in the first three quarters. The service the USA, the emerging nations suffered from cyclical weak- sector was also on course for growth. Production in the con- ness coupled with far-reaching structural problems. Brazil and struction sector on the other hand fell by around 4 per cent in Russia slipped into a deep recession which was accompanied the first three quarters in 2015 compared to 2014. The labour by high inflationary pressure. The slowdown in the Chinese market proved to be comparatively strong with growth in em- economy continued as the government and central bank im- ployment above the Austrian average. Upper Austria still has plemented stimulus measures in an attempt to counteract this. the second lowest unemployment rate of all the federal states. Analysts in the state expect growth of 2 per cent for the 2016 The USA once again acted as the engine for the global econ- financial year, which is slightly above the national average, al- omy in 2015. Figures from the labour market in particular were though this relies above all on increases in consumption levels consistently very positive. The upturn managed to be consol- and higher demand for investment. idated, which ultimately resulted in implementation of a long discussed reversal in interest rates by the Federal Reserve. The global economy slowed down again somewhat at the end Private consumption experienced particularly strong growth of 2015. The USA recorded a dip in the economy in the fourth in the USA, while the export sector suffered from the strong quarter with 0.7 per cent growth in GDP, although this is not dollar and the oil industry from the low prices. expected to persist. Figures from the emerging nations remain weak: there is still no end in sight to the recessions in Brazil and The eurozone lost some of its steam once again in the sec- Russia, and growth in China in the fourth quarter was a moder- ond half of the year compared with the first half. Growth was ate 6.8 per cent. The eurozone recorded growth in GDP of 0.3 based almost exclusively on private consumption, while any per cent in the fourth quarter of 2015, with Spain once again propensity to make investments remained restrained. How- recording the strongest growth at 0.8 per cent. Germany was ever, early indicators in the middle of the year pointed to more exactly at the average level at 0.3 per cent, while France (0.2 robust economic activity towards the end of the year: numer- per cent) and Italy (0.1 per cent) lag further behind. Austrian ous framework conditions such as favourable financing condi- GDP grew by 0.3 per cent in the fourth quarter of 2015, as had tions, a weak euro as a result of the lax ECB policy, low costs also been the case in the second and third quarters. This re- for raw materials (particularly for crude oil) and significant im- sults in economic growth of 0.9 per cent for the full year 2015. provements in the labour market should help to support the Investments as well as private consumption and government economy. spending provided support towards year end, although there was a trade deficit. Inflation in the eurozone was very low to negative as a result of the low cost of raw materials. The ECB attempted to fix 1.2. Business development medium-term inflation expectations at its goal of close to (but below) 2 per cent with an extremely expansionary monetary Raiffeisenlandesbank Oberösterreich saw the tasks required policy (lowest interest rates and quantitative easing). due to the turbulent 2015 financial year, which involved 46 Annual Report 2015

historically low interest rates accompanied by a slowdown in The cautious risk policy was continued in 2015 in order to the economy, as an opportunity and adapted well to the on- allow the organisation to fulfil its responsibility as a reliable and going changes in the structural conditions with a strategy of strong partner to customers. Comprehensive ongoing con- continuous renewal and sustainable consolidation. Against a trols are provided here via a central early warning mechanism. backdrop of restrained economic growth and subdued sen- Attention was also paid to continuous improvements in the risk timent among companies and the wider population, it either situation for certain financing transactions. initiated, continued or implemented a large number of action plans and projects in 2015 with a view to actively managing its Raiffeisen Oberösterreich is responding to the requirements costs and risk, providing the basis for the best possible level of the future with the “Raiffeisen Banking Group Upper Austria of support for its customers. 2020” project, which was first launched around three years ago. Clear objectives and actions have been defined with As Austria’s fourth largest bank, Raiffeisenlandesbank this with the aim of handling the market more effectively, with Oberösterreich also intends in future to outperform on the high strategies also developed aimed at optimising the processing standards imposed on a “significant” bank by the European and legal tasks in the entire Raiffeisen sector in Upper Austria. Central Bank. Particular attention is paid here to compliance The intensive process has been characterised by openness, with all new statutory regulations, and in laying the foundations mutual trust and above all a readiness to embrace change for compliance with the statutory requirements that will be im- since the project launch. For instance 27 service packages posed on banks in Austria and the rest of the European Union have been jointly developed by representatives from the in future, such as in relation to equity/own funds and risk man- Upper Austrian Raiffeisen banks and Raiffeisenlandesbank agement. Raiffeisenlandesbank Oberösterreich is also ready Oberösterreich in the areas of “customers and markets”, “staff to make the appropriate contributions for the deposit guaran- and management”, “processing and production” and “bank tee and the European resolution funds. management and regulation”. The focus with all of these is on improving efficiency in the various areas, which represent Yet the legal and regulatory framework has not just changed the basis for not only maintaining the bank’s position as the for banks: increasing changes have also been determined in clear market leader in Upper Austria but also being able to customer behaviour and needs. This will only intensify over the extend this. next few years as a result of increased digitisation. Raiffeisen- landesbank Oberösterreich has therefore positioned itself as a Group structure modern advisory bank that also sets its future course with the development of the extensive range of the innovative bank- As a superordinated banking institute, starting with financial ing technology available, with the aim of ensuring even more year 2007, Raiffeisenlandesbank Oberösterreich has been convenient processing of banking transactions for custom- obliged to prepare and publish consolidated financial state- ers. Targeted action in the interests of customers also means ments in accordance with the IAS Regulation (EC) 1606/2002, clear alignment with the Corporate Banking (corporate and abiding by the regulations of the International Financial Re- institutional customers), Retail Banking (private and commer- porting Standards (IFRSs). In addition, disclosures and notes cial customers), Private Banking (affluent private customers) are required in accordance with the regulations of the Austrian and Raiffeisen banks (Investor Relations) customer groups. Banking Act and the Austrian Commercial Code. The group The broad positioning in various business areas in particular management report has been prepared in accordance with ensures stable development. It ensures that Raiffeisenland- section 267 of the Austrian Commercial Code. esbank Oberösterreich is also able to offset any external influences effectively. Raiffeisenlandesbank Oberösterreich also As of 31 December 2015, the consolidated companies, in- sees itself as a hub within the Raiffeisen Banking Group Upper cluding the Raiffeisenlandesbank Oberösterreich as the par- Austria which also has an international network of high-perfor- ent company, consisted of 154 (previous year: 154) corporate mance partner banks at its disposal. subsidiaries that were fully consolidated into the Group and seven (previous year: seven) companies that were accounted Actions aimed at achieving ongoing efficiency improvements for under the equity method. The fully consolidated compa- play a role in increasing the focus on the customer. PRIVAT nies consist of two credit institutions, 97 are financial institu- BANK AG and bankdirekt.at AG were merged into Raiffeisen- tions by virtue of business activities, 19 financial institutions landesbank Oberösterreich in 2015 and established as sep- by virtue of holding functions, one financial holding company, arate divisions. This enabled duplications and thereby costs three providers of ancillary services and 32 other companies. to be avoided in administrative tasks. The merger of software Please refer to the basis of consolidation section in the Notes company RACON (Linz) and Raiffeisen Solution (RSO, Vienna) for details. with Raiffeisen Software GmbH (RSG) also created new and modern structures. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 47

Group management report 2015 _ Business development and the economic situation

Effects of the Basel III implementation Equity Investments segment

The new European supervisory provisions for banks (Basel The Investments segment is divided into four investment port- III implementation in the form of the Capital Requirements folios from an organisational perspective: “Banks & Financial Regulation (CRR), Capital Requirements Directive (CRD) and Institutions”, “Outsourcing & banking-related investments”, resulting EBA standards) mean that reports required by the su- “Property” and “Opportunity & Partner Capital”. Overall, the pervisory authorities must be submitted at consolidated level Equity Investments segment generated pre-tax profit for the in accordance with the provisions of IFRS. However, the group year of EUR 122.6 million in the 2015 financial year (previous of entities to be included in these consolidated reports is de- year: EUR 18.9 million). For a quantitative representation, ref- termined by the CRR. Essentially, this group of entities only erence is made, on the one hand, to the table on sub-groups includes banks, financial institutions, financial institutions on contained in the segment reporting table and, on the other, to the basis of business activity or holding entity function, finan- the relevant facts and figures in the Notes for information on cial holding entities and providers of ancillary services, but it those companies accounted for through at equity methods. does not include any other entities that are also included in the IFRS consolidated financial statements of Raiffeisenlandes- The Banks and Financial Institutions portfolio encompasses bank Oberösterreich. Raiffeisenlandesbank Oberösterreich's equity investments in banks and other financial institutions (leasing, factoring, asset Business development in the segments management entities). These strategic investments in financial institutions significantly strengthens Raiffeisenlandesbank In the Raiffeisenlandesbank Oberösterreich Group, segment Oberösterreich's market position and makes it possible to reporting distinguishes between the following four segments: provide comprehensive customer assistance in existing and ¬¬ Corporates & Retail new markets. ¬¬ Financial Markets ¬¬ Equity investments Investments in IT, services (insurance, etc.) and tourism are ¬¬ Corporate Center associated with the portfolio “Outsourcing & Banking-related Investments”. Banking-related services represent an import- For a qualitative description of the individual segments, please ant add-on to conventional banking services for Raiffeisen- refer to the section on “accounting policies” as well as to the landesbank Oberösterreich and its customers. These services segment reporting in the Notes for details on performance are provided by subsidiaries. Among other benefits, the GRZ results. IT Group – which comprises GRZ IT Center GmbH, and PRO- GRAMMIERFABRIK GmbH, delivered a positive contribution Corporates & Retail segment to the segment result.

The Corporates & Retail segment comprises the Corporates The Real Estate portfolio brings together all the equity invest- Market division (the main units in which are Corporates 1, Cor- ments in the real estate sector (real estate service providers, porates 2, Corporates 3, Institutions, International Finance, investment-property companies, housing development en- Real Estate Projects, Industry Projects, Correspondent Bank- tities, etc.) The activities associated with this portfolio lie in ing and Southern Germany) and the Retail division, which in structuring investment models and in optimisation measures turn comprises the branches of Raiffeisenlandesbank Oberös- to ensure sustainable earnings and dividend potential. terreich, PRIVAT BANK and bankdirekt.at. In fiscal 2015, this segment contributed EUR 82.2 million pre-tax profit for the The performance of the equity-accounted Beteiligungs- und year (previous year: EUR –8.3 million). Wohnungsanlagen Group (Beteiligungs- und Wohnungsanla- gen GmbH and WAG Wohnungsanlagen GmbH) was in line Financial Markets segment with forecasts, the contribution to earnings remaining static.

The Financial Markets segment – in which the trade and ser- The Venture and Partner Capital portfolio comprises equity in- vice results from customer transactions in foreign exchanges, vestments in industrial and foodstuffs sectors, complemented securities and derivatives are grouped, and which also con- by equities/securities issued by various private equity entities. tains revenues from the central interest rate and liquidity man- The main focus with respect to venture and partner capital lies agement from the banking and trading books – reached a in strengthening the capital base for rapidly expanding com- positive contribution to pre-tax profit for the year of EUR 152.6 panies in order to ensure sustainable earnings potential and million in 2015 (previous year: EUR 79.6 million). thus the opportunity for participation in rising corporate value. Support to companies with equity occurs in particular through the execution of corporate acquisitions, corporate succession and expansion financing. 48 Annual Report 2015

In 2015, voestalpine AG was able to compete successfully 2015 2014 CHANGE in an economic environment that became increasingly diffi- IN EUR M IN EUR M IN EUR M IN % cult over the course of the year. At the start of the new year (2015/16), the global decline in prices for both oil and a number Interest and interest-related income/expenses 417.1 424.2 –7.1 –1.7 of other raw materials, as well as in the field of steel commodi- Share of profit or loss of ties, reached new levels. Currently, the situation is being further equity-accounted investments 51.2 4.1 47.1 – exacerbated by increasing uncertainty about future economic Net interest income 468.3 428.3 40.0 9.3 development in China. Voestalpine is unable to escape these Loan loss allowances – 61.1 –180.8 119.7 –66.2 trends entirely, but the negative effects remain manageable Net interest income after due to many years of consistent focus on premium products. loan loss allowances 407.2 247.5 159.7 64.5 This encouraging performance reaffirms the fact that con- Net fee and commission sistent internationalisation and the extension of a value chain income 127.8 126.1 1.7 1.3 based on premium products in sophisticated areas of technol- Net trading income 7.7 15.5 –7.8 –50.3 ogy can, even under challenging conditions, provide for high Net income/loss from levels of stability in terms of company development. designated financial instruments 61.7 – 97.1 158.8 – Net income from investments 36.3 49.0 –12.7 – During fiscal 2015, AMAG Austria Metall AG was able to in- Other net finance costs 105.7 –32.6 138.3 – crease both sales and EBITDA compared to the previous year General administrative by around 11 per cent each. The recycled cast alloys and expenses –431.4 –402.4 –29.0 7.2 rolled products produced at the Ranshofen facility produced General administrative a significant increase in earnings and more than compensated expenses OÖ Wohnbau –38.5 –36.6 –1.9 5.2 for the aluminium price-related decline in earnings for the 20 General administrative per cent share in the Canadian smelter Alouette. Construc- expenses VIVATIS/efko –263.8 –252.1 –11.7 4.6 tion on the site expansion project “AMAG 2014” was success- Other net operating income 95.0 83.6 11.4 13.6 fully completed in 2015. During 2015, the new plant produced Other net operating income around 18,000 tons of high-quality rolled products. OÖ Wohnbau 50.1 45.6 4.5 9.9 Other net operating income Sales revenue and earnings generated by the companies in VIVATIS/efko 266.3 261.6 4.7 1.8 the foodstuffs division – consisting of the VIVATIS Holding Pre-tax profit for the year 318.4 40.7 277.7 – AG Group and the efko Frischfrucht und Delikatessen GmbH Taxes on income and earnings –14.3 –4.3 –10.0 – Group – were affected by a competitive market environment After-tax profit for the year 304.1 36.4 267.7 – and margins that remained static or in some cases contracted. Despite the challenging market conditions, a modest increase Operating profit 281.5 269.6 11.9 4.4 in sales revenue is expected in the coming years. shares and other variable-yield securities, designated and de- Corporate Center segment rivative financial instruments as well as from investments in affiliated companies, investments and other income related to The Corporate Center segment comprises income and ex- interest. Interest expenses result from Amounts owed to cus- penses that, based on substance, cannot be attributed to any tomers or banks, securitised liabilities, subordinated capital other segment. One-off items that would distort the various and other interest-like expenses. segment earnings and are not allocated to individual market segments in the internal management reporting are also The share of profit or loss of equity-accounted investments reported in this segment, if required. In 2015, this segment reflects a EUR 47.1 million higher result of EUR 51.2 mil- showed a negative pre-tax profit for the year of EUR –39.0 lion (previous year: EUR 4.1 million) compared to last year. million (previous year: EUR 49.5 million). This is partly due to a positive earnings trend, particularly of voestalpine AG. The RZB Group provided a positive contri- Income statement bution to Raiffeisenlandesbank Oberösterreich's annual pre- tax profit for the year from current results compared to the Despite low interest rates, net interest income excluding the previous year. However, the depreciation on this investment share of profit or loss of equity-accounted investments fell in the amount of EUR –61.4 million (previous year: EUR 0 only slightly by EUR –7.1 million, or –1.7 per cent, to EUR 417.1 Million) also affected this asset. Similarly, the depreciation million (previous year: EUR 424.2 million). Besides interest of the Oberösterreichische Landesbank AG in the amount income from loans and advances to customers and banks of EUR –35.5 million (previous year: EUR –39.6 million) is in- as well as fixed income securities, this reflects income from cluded here as well. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 49

Group management report 2015 _ Business development and the economic situation

Loan loss allowances declined by EUR 119.7 million or –66.2 credit institutions for the stabilisation fee in the amount of EUR per cent to EUR –61.1 million (previous year: EUR –180.8 mil- –35.9 million are likewise shown in other operating result (pre- lion) compared with the previous year. This includes, among vious year: EUR –35.5 million), as well as starting 2015 the other things, additional loan loss allowances in the amount of first ever contribution to the settlement fund and the deposit EUR –12.4 million (previous year: EUR –15.5 million) in connec- guarantee in the amount of EUR –14.4 million. tion with the debt moratorium on HETA ASSET RESOLUTION AG (HETA) in the SALZBURGER LANDES-HYPOTHEKEN- In 2015, pre-tax profit for the year amounted to EUR 318.4 BANK AKTIENGESELLSCHAFT. In addition, liquidations re- million (previous year: EUR 40.7 million). Taxes on income and sulted in particular from changes in default probabilities in earnings rose by EUR –10.0 million compared to the previous IFRS portfolio allowances. year and are reported at EUR –14.3 million (previous year: EUR 4.3 million). This increase is mainly due to changes in deferred Income from fee and commission income and expenses rose taxes. slightly by 1.3 per cent to EUR 127.8 million (previous year: EUR 126.1 million). Overall, after-tax profit for the year rose by EUR 267.7 million and in the just concluded fiscal year of 2015 at EUR 304.1 mil- The other financial results, consisting of net trading income, lion (previous year: EUR 36.4 million). Similarly, operating profit net income from investments and net income/loss from desig- in 2015 was increased by 4.4 per cent to EUR 281.5 million nated financial instruments, amounted to EUR –105.7 million in (previous year: EUR 269.6 million). the financial year 2015 (previous year: EUR –32.6 million). The decline in net trading income is largely due to interest and cur- Statement of comprehensive income rency-related transactions. Net income/loss from designated 2015 2014 financial instruments in the amount of EUR 61.7 million (previ- IN EUR M ous year: EUR –97.1 million) mainly results from the expansion After-tax profit for the year 304.1 36.4 of liquidity spreads related to own issues and a narrowing of Change in value of AfS reserves –101.9 243.4 credit spreads on asset positions. Net income from invest- Share of other comprehensive income of ments in fiscal 2015 amounted to EUR 36.3 million (previous equity-accounted investments –21.5 –106.1 year: EUR 49.0 million). The largest single effect can be put Actuarial gains and losses 10.8 –23.2 down to the sales proceeds from Raiffeisen Bausparkasse Additional other profit or loss –1.0 –0.5 Gesellschaft mbH and shares of Valida Holding AG in the RZB Taxes recognised in respect of this amount 22.7 –55.2 Group amounting to EUR 33.7 million. Total other comprehensive income –90.9 58.4

Comprehensive income 213.2 94.8 Personnel expenses, other administrative expenses, depreciation and amortisation are recognised in the income statement under “general administrative expenses”. The general adminis- Other results in 2015 are reported at EUR –90.9 million (previ- trative expenses of the “OÖ Wohnbau” companies rose slightly ous year: EUR 58.4 million). This development is mainly due to in fiscal 2015 by 5.2 per cent to EUR –38.5 million (previous changes in valuation and recycling effects of investments and year: EUR –36.6 million). The general administrative expenses securities in the category “assets available for sale”. of the companies in the food sector – consisting of the “VIVA- TIS Holding AG” Group and the “efko Frischfrucht und Delika- The change in actuarial gains and losses is largely due to tessen GmbH” Group – rose at a year-on-year rate of 4.6 per changes to parameters. cent to EUR –263.8 million (previous year: EUR –252.1 million). The other Group companies saw a 7.2 per cent increase, to The remaining other results – consisting of valuation changes EUR –431.4 million (previous year: EUR –402.4 million). from a hedge on a net investment in foreign operations and foreign exchange differences amounted EUR –1.0 million in Other net operating income largely consists of the gross profit 2015 (previous year: EUR 0.5 million). (sales revenue less cost of sales) earned by non-bank Group companies. The “OÖ Wohnbau” companies generated a 9.9 The deferred taxes included in other results decreased to EUR per cent increase of EUR 50.1 million (previous year: EUR 45.6 22.7 million mainly due to valuation changes in the AFS re- million) over that of the previous year from other operating serve (previous year: EUR –55.2 million). profit. The companies of the food sector (VIVATIS / efko) saw a rise in other operating income of 1.8 per cent to EUR 266.3 In total, a comprehensive income of EUR 213.2 million was million (previous year: EUR 261.6 million) while the other group generated in 2015 (previous year: EUR 94.8 million). companies rose by 13.6 per cent to EUR 95.0 million (previous year: EUR 83.6 million). Expenses of the in IFRS consolidated 50 Annual Report 2015

Changes in the balance sheet 31 DEC. 2015 31 DEC. 2014 Change EQUITY AND LIABILITIES IN EUR M IN % IN EUR M IN % IN EUR M IN % The consolidated total assets of Raiffeisenlandesbank Oberösterreich fell as of 31 December 2015 by –3.3 per cent Amounts owed and show a value of EUR 37,299 million (previous year: EUR to banks 11,214 30.1 11,305 29.3 –91 –0.8 38,574 million). (of which to Raiffeisen banks) (4,730) (12.7) (4,603) (11.9) (127) (2.8) 31 DEC. 2015 31 DEC. 2014 Change Amounts owed ASSETS IN EUR M IN % IN EUR M IN % IN EUR M IN % to customers 10,628 28.5 10,516 27.3 112 1.1 Trading liabilities 1,872 5.0 2,202 5.7 –330 –15.0 Loans and Liabilities evienced advances to banks 6,855 18.4 6,779 17.6 76 1.1 by certificates 7,619 20.4 8,642 22.4 –1,023 –11.8 (of which to Raiffeisen banks) (1,094) (2.9) (1,124) (2.9) (–30) (–2.7) Other Assets 795 2.2 806 2.1 –11 –1.4 Loans and Subordinated advances capital 1,432 3.8 1,537 4.0 –105 –6.8 to customers 18,731 50.2 19,167 49.7 –436 –2.3 Equity 3,739 10.0 3,566 9.2 173 4.9 Trading assets 2,469 6.6 2,951 7.7 –482 –16.3 Total 37,299 100.0 38,574 100.0 –1,275 –3.3 Financial assets 5,671 15.2 6,174 16.0 –503 – 8.1 Companies accounted for using the equity method 1,786 4.8 1,800 4.7 –14 –0.8 Compared to the preceding year, amounts owed to banks Other Assets 1,787 4.8 1,703 4.4 84 4.9 changed only slightly by EUR –91 million or –0.8 per cent to a Total 37,299 100.0 38,574 100.0 –1,275 –3.3 level of EUR 11,214 million (previous year: EUR 11,305 million). EUR 4,730 million (previous year: EUR 4,603 million) of this are amounts owed to Upper Austrian Raiffeisen banks. Loans and advances to banks rose slightly in the course of 2015 by EUR 76 million or 1.1 per cent to EUR 6,855 million Amounts owed to customers, however, were increased by (previous year: EUR 6,779 million), while loans and advances EUR 112 million or 1.1 per cent to EUR 10,628 million (previ- to customers fell by EUR –436 million or –2.3 per cent to EUR ous year: EUR 10,516 million). 18,731 million (previous year: EUR 19,167 million). With respect to loans and advances to banks, EUR 1,094 million (previous Trading liabilities – consisting of interest rate/foreign exchange/ year: EUR 1,124 million). of this relates to refinancing to Upper equity/index-related and other business – show as of 31 De- Austrian Raiffeisen banks. cember 2015 a carrying amount of EUR 1,872 million (Previous year: EUR 2,202 million). This amounts to a decrease of EUR Trading assets – consisting of bonds and other fixed-income –330 million or –15.0 per cent. securities and positive fair values of derivative transactions – show a carrying amount of EUR 2,469 million as of 31 Decem- Liabilities evidenced by certificates declined as of 31 Decem- ber 2015 (previous year: EUR 2,951 million). This corresponds ber 2015 by EUR –1,023 million or –11.8 per cent to EUR 7,619 to a decrease of EUR –482 million or –16.3 per cent compared million (previous year: EUR 8,642 million). These consist of with the previous year. previously issued bonds in the amount of EUR 2,731 million (previous year: EUR 3,693 million) listed and unlisted deposit/ Financial assets fell by EUR –503 million or –8.1 per cent to municipal bonds of EUR 355 million (previous year: EUR 348 EUR 5,671 million compared to 31 December 2014 (previous million) and other securitised liabilities at EUR 4,533 million year: EUR 6,174 million). This decrease resulted primarily from (previous year: EUR 4,601 million). Of the securitised liabili- retirements and sales. ties, EUR 1,466 million (previous year: EUR 1,472 million) on covered bonds. The carrying amount of equity-accounted investments reported as of 31 December 2015 was EUR 1,786 million (Pre- Other assets – consisting of provisions, current and deferred vious year: EUR 1,800 million). Please refer to the section tax liabilities and other liabilities – declined slightly to EUR 795 Companies accounted for using the equity method in the million (previous year: EUR 806 million). Notes for details. Subordinated capital reported lower by EUR –105 million or Other items – consisting of cash and cash equivalents, intan- –6.8 per cent with a value of EUR 1,432 million as of 31 De- gible assets, property and equipment, investment property, cember 2015 (previous year: EUR 1,537 million). current and deferred tax assets and other assets – rose at a year-on-year rate of 4.9 per cent or EUR 84 million to EUR 1,787 million (previous year: EUR 1,703 million). Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 51

Group management report 2015 _ Business development and the economic situation

The breakdown of equity as at the last two balance sheet date branch is located in Prague, where support is provided to af- was as follows: fluent private customers as well as corporate customers with a wide range of professional financial services based on the 31 DEC. 2015 31 DEC. 2014 IN EUR M established high focus on the customer.

Share capital 276.5 276.5 In addition to its branch locations, Raiffeisenlandesbank Participation capital 1.0 1.0 Oberösterreich is also represented abroad by companies Capital reserves 972.1 972.1 in the IMPULS-LEASING Group. After providing services in Aggregate net income 2345.4 2,165.0 Southern Germany and the Czech Republic through subsid- Non-controlling interests 144.4 151.7 iaries for roughly two decades, the IMPULS-LEASING Group Total 3,739.4 3,566.3 has had leasing companies in Romania and Croatia since 2006 and in Poland and Slovakia since 2007. These companies focus on financing of vehicles as well as machinery and For details, please refer to the statement of changes in equity technical equipment. The focus is on servicing corporate cus- and the “Equity” section in the Notes. tomers. PULSE-LEASING Group has six branches in southern Germany, and is represented in Eastern European countries 1.3. Report on the bank offices, branch at 26 branch locations. In addition, there are also long-stand- offices and subsidiaries ing partnerships with producers and retailers. The companies have now achieved good market positions in all markets. Branches For a quantitative description by geographic region, see the The Raiffeisenlandesbank Oberösterreich Group has a total of section, “country-by-country reporting” in the Notes. 52 (previous year: 58) branches as at 31 December 2015. This decrease is due to the fact that the two banking subsidiaries, 1.4. Financial and non-financial performance PRIVATE BANK AG of Raiffeisenlandesbank Oberösterreich indicators and bankdirekt.at AG, were integrated into the Raiffeisenland- esbank Oberösterreich and positioned as separate business The key figures used in international comparisons and for in- areas. The financial services on offer, as well as flexibility in ternal controls are as follows: consultancy and management, are adapted on an ongoing basis to the current needs of our customers. Along with the Profitability – key figures constant further development of technological abilities in customer service, for example, we also offer customer appoint- ¬¬ In 2015, Group return on equity – calculated as the per- ments outside of regular banking hours. centage ratio of consolidated net profit before tax and average shareholders' equity – stood at 8.7 per cent (previous Branches and Subsidiaries abroad year: 1.1 per cent). ¬¬ The consolidated return on assets for 2015 – calculated Raiffeisenlandesbank Oberösterreich has been operating its as the percentage ratio of consolidated net income before own southern Germany office since 1991. At the end of 2015, taxes to the Group's average total assets – stood at 0.8 per Raiffeisenlandesbank Oberösterreich had a total of eight lo- cent (previous year: 0.2 per cent). cations throughout Bavaria and Baden-Württemberg, i.e. in ¬¬ The consolidated return on assets pursuant to § 64 para. Augsburg, Passau, Nuremberg, Munich, Regensburg, Wurz- 19 BWG for 2015 – calculated as the percentage ratio of burg, Ulm and Heilbronn. This makes Raiffeisenlandesbank consolidated net income after tax to the consolidated bal- Oberösterreich by far the strongest Austrian bank active in ance sheet total – stood at 0.8 per cent (previous year: 0.1 this dynamic business region of Southern Germany. The main per cent). focus for support activities is on customers from industry, medium-sized enterprises and affluent private customers. The Key liquidity figures registered head office for Raiffeisenlandesbank Oberösterre- ich’s Southern Germany branch was relocated from Passau ¬¬ The LCR (Liquidity Coverage Ratio) as of 31 December to Munich on 1 October 2015. This will also further intensify 2015 is at the level of a chief financial holding (CRR of the the existing close collaboration with development agencies Raiffeisenbankengruppe OÖ Group eGen) at 98 per cent and banks. (previous year: 104 per cent) and therefore clearly exceeds the 60 per cent required as of 31 December 2015. In addition, Raiffeisenlandesbank Oberösterreich also has a branch in the Czech Republic. The head office for the Czech 52 Annual Report 2015

Key equity and solvency figures CRR regulation defines the implementation of transitional provisions of CRR for Austria. These statutory regulations mean Consolidated capital and reserves at the level of a chief finan- that banks will have to comply with significantly higher equity cial holding (CRR Circle Raiffeisenbankengruppe OÖ Group ratios and tighter liquidity requirements. Raiffeisenlandesbank eGen) as per capital requirements regulations (CRR) are as Oberösterreich has undertaken various projects in this regard follows: over the past few years and is well prepared for the changes.

At the close of 2015, common Tier 1 capital (CET 1) and Tier Institutional protection scheme 1 capital (T 1) amounted to EUR 3,164.6 million (31 December 2014: EUR 2,827.8 million). These regulatory changes have also given rise to the need for additional adjustments in decentralised banking groups. The Supplementary capital (T 2) as of 31 December 2015 is reported existing institutional protection scheme (IPS) for Upper Austria at EUR 680.1 million (31 December 2014: EUR 873.6 million). had to be modified in line with the new requirements under Eu- ropean law. An IPS is a liability or indemnity agreement – cre- Total capital (TC) as of 31 December 2015 stood at EUR ated by means of a contractual agreement or through articles 3,844.7 million (31 December 2014: EUR 3,701.4 million). of association, statutes or charters – that provides protection for member banks in a decentralised banking group. Such an The total amount at risk (risk-weighted assets, RWA) was re- agreement sets out the terms on which the member banks duced by EUR –2,275.2 million compared to the previous year stand together and provide mutual solidarity. Pursuant to Ar- and is reported as of 31 December 2015 at EUR 22,894.1 ticle 49 CRR, in the determining their capital and reserves million (31 December 2014: EUR 25,169.3 million). The essen- credit, institutions must deduct their positions in equity in- tial effects for reducing the risk-weighted assets (RWA) at the struments of other credit institutions, except where exempted reporting time of 31 December 2015 were achieved through under Article 49 (3) CRR in conjunction with Article 113 (7) active and central control of the risk-weighted assets (RWA) CRR through an IPS formed with them. Raiffeisenlandesbank per claim class and through implementing actions in relation Oberösterreich is a member of the regional state IPS, whose to techniques used to reduce credit risks. members also include all Raiffeisen banks in Upper Austria, as well as the Raiffeisen-Kredit-Garantiegesellschaft m.b.H. As at the end of the 2015 financial year the Common Equity Raiffeisen-Einlagensicherung OÖ reg. Gen. m.b.H. acts as the Tier 1 capital and Tier 1 capital ratio stated was 13.8 per cent trustee and manages the assets of the scheme. (2014: 11.2 per cent) with a total return on assets of 16.8 per cent (2014: 14.7 per cent). The ratios are calculated on the In addition, Raiffeisenlandesbank Oberösterreich is a mem- total risk-weighted assets in accordance with Article 92 CRR. ber of the federal IPS, whose members also include Raiffeisen Zentralbank Österreich AG (RZB), all Austrian Raiffeisenland- A capital conservation buffer was introduced effective 1 Janu- esbanks, Raiffeisen Wohnbaubank AG, Raiffeisen-Holding ary 2016 in accordance with section 23 of the Austrian Bank- Niederösterreich-Wien reg. Gen. m.b.H., Zveza Bank and ing Act (BWG), and this must be maintained in the form of Raiffeisen Bausparkasse GmbH. In this case, Österreichische Common Equity Tier 1 capital. In accordance with the transi- Einlagensicherung eGen has assumed the role of trustee. tional provision in section 103q (11) BWG the capital conser- Under Article 113 (7) of the CRR, and subject to consent from vation buffer for the coming year will be 0.625 per cent. This the relevant regulatory authorities, banks may give a risk will be increased to 2.50 per cent by 2019 using the straight- weighting of 0 per cent to risk exposures in respect of coun- line method. terparties with whom the bank has signed an IPS, although this does not apply to risk exposures that make up items of Similarly, a capital buffer ratio for systemic vulnerability (sys- CET 1 capital, additional Tier 1 capital or Tier 2 capital as temic risk buffer) was imposed on the Raiffeisenlandesbank specified by the CRR. Oberösterreich at the consolidated level of the Raiffeisenban- kengruppe OÖ Group eGen as chief financial holding as per The Austrian Financial Market Authority (FMA) has issued a § 7 capital buffer Regulation (KP-V) of the FMA, which accord- decision approving both IPSs of which Raiffeisenlandesbank ing to § 10 KP-V as of 1 Jan. 2016 is equal to 0.25 per cent Oberösterreich is a member and allowing the exemptions and by 2018 will rise to 1 per cent. under Articles 49 (3) and 113 (7) of the CRR.

Capital Requirements Regulation Human resources management

As of 1 January 2014, Regulation (EU) No. 575/2013 (Cap- Well-trained and committed employees contribute substan- ital Requirements Regulation, CRR) and Directive (EU) No. tially to securing and expanding the long-term success of 36/2013 (Capital Requirement Directive, CRD IV) went into the Raiffeisen Banking Group Oberösterreich. During finan- force to implement Basel III. In addition, the supplementary cial year 2015, the fully consolidated companies employed an Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 53

Group management report 2015 _ Business development and the economic situation

average workforce of 5,420 (previous year: 5,338). Of these, at Raiffeisenlandesbank Oberösterreich, results in Raiffeisen 2,539 (previous year: 2,560) employees worked for the com- Oberösterreich combining its strengths in the interests of its pany in the foodstuffs sector (VIVATIS/efko). customers. This healthy, strong structure enables an extraordinary focus on the customer and highly dynamic assistance Strong positioning with the career portal enteryourfuture.at to customers with creative financial services.

Qualified and committed employees are the most important Successful through the practise of subsidiarity and solidarity capital at Raiffeisenlandesbank Oberösterreich. Raiffeisen- landesbank Oberösterreich has adopted a professional em- The Raiffeisen banking group in Upper Austria is a strong ployer branding approach involving ensuring a presence on community. The Raiffeisenbanks in Upper Austria, as owners online job platforms as well as at various trade shows with of Raiffeisenlandesbank Oberösterreich, are also able to ex- the objective of addressing potential new employees and ercise their proprietary rights over the registered cooperative positioning itself as an attractive employer. Virtual employer society Raiffeisenbankengruppe OÖ Verbund eingetragene branding is absolutely essential nowadays. Particular attention Genossenschaft. The decisive factor here is the founding idea is focused therefore on the career portal enteryourfuture.at, of co-operation at Raiffeisen: every co-operative company has which provides for a transparent and prompt application pro- a voice, regardless of its size. Raiffeisen Oberösterreich relies cess and provides clear and useful information to applicants. on the subsidiarity principle: the superordinated co-operative enteryourfuture.at is revised on a continuous basis and rep- society should not take over what the local Raiffeisen banks resents an innovative way of recruiting new employees. can do on their own. As a public limited company (Aktienge- sellschaft), Raiffeisenlandesbank Oberösterreich therefore as- Manifold educational and training opportunities sumes responsibility for more extensive global functions, but also sees itself as a coordinating hub within the cooperative net- Raiffeisenlandesbank Oberösterreich also offers a wealth of work. It advises the Raiffeisen banks in operational, organisa- different options and opportunities in the training it provides tional and legal affairs, supports them in their sales work, and for young employees. These options include training based provides a training and further education system. on a job rotation programme, training combined with the higher education entrance qualification, trainee programmes Bundling our strengths and e-learning modules. One successful example of our forward-looking internal human resources policies is the Raif- Our focus on the requirements and needs of our customers feisen Oberösterreich Academy, which uses individually is unique. It is the theme that runs from local roots through to designed training programmes to prepare tomorrow’s man- global customer support. This networked approach is made agers for rewarding responsibilities. Training and professional possible by the state-of-the-art structure at Raiffeisen Oberös- development is offered at the state-of-the-art Raiffeisen Train- terreich. The cooperative network can step in and become ing Centre, which opened in 2012 in the BlumauTower. In addi- proactive where the Raiffeisenbanks need assistance, so that tion, the online teaching platform Raiffeisen@Learning is used customers can be offered the best possible support with all extensively for internal training and professional development. their projects. This means that regional strengths and direct relationships with the customer remain intact and are main- Work/life balance tained. Furthermore, the collaboration within the network ensures that Raiffeisen will have a secure future as a growing Raiffeisenlandesbank Oberösterreich also emphasises the organisation and powerful force in Upper Austria. importance of a work-life balance and is a certified family-friendly organisation, offering its own kindergarten and tod- Sustainability and Corporate Social Responsibility (CSR) dler group/crèche known as “Sumsi's Learning Garden” in which the working languages are both German and English. In 2015, a comprehensive sustainability strategy was devel- The bank also offers a special summer kindergarten which is oped at Raiffeisenlandesbank Oberösterreich, with further ac- being continuously expanded because of the huge demand tions agreed in the areas of sustainability and Corporate Social for places. Additional features of the family-friendly approach Responsibility (CSR): at Raiffeisenlandesbank Oberösterreich include flexible work- ¬¬ the 2015 financial year was characterised in full by energy ing hours and measures taken to support those returning from efficiency. The Managing Board at Raiffeisenlandesbank parental leave. Oberösterreich has decided to introduce an energy management system for the entire Group in order to allow pre- Cooperation within the Raiffeisen association cise monitoring of energy consumption and to exploit new providing strength potentials for savings. Final certification of the system in accordance with ISO 50001 was completed in February 2016. Close cooperation between the Raiffeisen banks in Upper ¬¬ Stakeholder management was restructured at Raiffeisen- Austria, whose skills are available locally, and the specialists landesbank Oberösterreich in 2015. Up until now it was not 54 Annual Report 2015

only the interests of the shareholders that were taken into 1.5. Events of particular significance after the account, in line with a traditional shareholder approach, balance sheet date but rather all interest groups associated with Raiffeisen were addressed within the scope of a sustainable future There were no events of particular significance after direction for the company. Efforts are also being focused 31 December 2015. The consolidated financial statements on the issue of stakeholder management as part of the were compiled on 5 April 2016 and presented to the Super- activities involved in establishing a separate sustainability visory Board. management system. The individual stakeholders have for instance undergone analysis and stakeholder management has been concentrated on sustainable dialogue with the stakeholders. ¬¬ Sustainable business activity is a central theme at Raiff- eisen. Raiffeisen Oberösterreich strives for instance to ensure that important resources are handled carefully and that the environment is protected. Following the creation of the Value creation report 2013 last year the Ecobalance 2014 was also created based on a proposal from the Raiff- eisen climate protection initiative. The majority of emissions arise from power consumption, and there is potential for improvement here. The transportation area also demon- strates further potential for protecting the environment. In- teriors are already largely heated using green power. ¬¬ Raiffeisenlandesbank Oberösterreich took part in the work/life balance audit for the first time in 2009 and was awarded the basic certification. In the years after that the focus turned to topics like family-oriented leadership, the working world of the future, workshops for those returning to the workplace as well as part-time work and management. The actions taken were reviewed again in 2015. The recertification in 2015 is not only a recognition of past achievements, but also a stimulus and inducement to continue to pursue the successful development of a work-life balance favourable to the interest of both employees and customers.

Raiffeisenlandesbank Oberösterreich was rated by the international ratings agency oekom research AG over the last few months in the area of sustainability efforts. The comprehensive rating process which began in autumn 2015 involved in particular an examination of the new transparent sustainability reporting on the Raiffeisenlandesbank Oberösterreich website and the introduction of a Group-wide energy management system. Raiffeisenlandesbank Oberösterreich’s sustainability activities received the positive score of PRIME status (rating score C) in the latest rating by oekom research AG in early 2016. This makes the bank an attractive partner for other banks and purchasers of bonds focused on sustainability on the international capital markets. A wide range of actions has been defined for 2016 aimed at further development in the areas of sustainability and CSR. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 55

Group Management Report 2015 _ Anticipated Development and Future Risks

2. Outlook and risks

2.1. Expected development of the The economies of the central European EU countries, such economic environment as Poland, Hungary, the Czech Republic and Slovakia, are performing well. The IMF even revised the growth outlook for The restrained global economic performance will also persist these countries slightly upwards once again in January 2016. in 2016. The International Monetary Fund (IMF) is forecasting Russia and Ukraine are currently in a deep recession because growth in real global GDP of 3.4 per cent, but the forecast by of their military conflict and the economic sanctions associ- the World Bank is 2.9 per cent. ated with this.

A series of early indicators improved in the eurozone over the The USA remains the engine of the global economy with very course of 2015, meaning that the forecasts for growth in GDP solid growth, based primarily on private consumption. While have been continuously revised slightly upwards for 2016, leading indicators from the manufacturing sector worsened most recently by the IMF in January 2016. The reasons for this at 2015 year-end, the service sector which is more signifi- include the numerous factors stimulating the economy such cant in terms of the overall economy should make up for any as the low oil prices, the extremely expansionary monetary weakness here. Consumer confidence also remains high, with policy of the European Central Bank (ECB), the weaker euro the labour market in an optimum position and no fiscal policy as a result of this, EU investment programmes and a decrease slowing things down, while lower energy prices are fuelling the in fiscal braking effects. Nevertheless the eurozone economy economy. Despite the dynamic economy, the expansionary ran out of steam towards the end of 2015, primarily as a result monetary policy is only being tightened very slowly because – of widespread weakness in the emerging nations. Early and thanks also to the low commodity prices – there is still no risk sentiment indicators remain at a high level at the start of 2016, of inflation in sight. although these have been falling somewhat recently. Domes- tic consumption will provide the main stimulus for growth once The IMF and World Bank are forecasting growth of between again in 2016 as a result of the restrained performance of the 4.3 per cent and 4.8 per cent in the emerging nations in 2016. global economy. The inflation rate in the euro zone may re- It is becoming increasingly difficult to provide a blanket eval- main significantly below the ECB target of almost but below uation for the emerging nations. While oil-importing countries 2 per cent, and justify its extremely loose monetary policy. like India profit powerfully from lower oil prices, this affects This results both from internal (continued under-utilisation of oil-exporting countries such as Venezuela and Russia, which production capacity) and external factors (moderate prices for are struggling with deep recessions in conjunction with very raw materials, particularly low price of oil). high inflation. Brazil is also in recession while South Africa is barely growing at all, since fundamental structural prob- Increased economic dynamism is expected in Austria from lems are increasingly having a negative impact on economic 2016 onwards following the very weak performance over the performance. China is continuing to undergo a slowdown in past three years. Two special factors should bring some short- growth, which is partly cyclical and partly the result of a de- term stimulus: the relief on incomes as a result of the tax re- liberate strategy. forms along with the expenditure for asylum seekers should boost consumption, which could thereby become the most 2.2. Expected development of the group important driver of growth following four years of stagnation. Leading indicators also provide some hope of a recovery in Customer behaviour characterised by further digitisation and fixed asset investments in the near future. Performance in the the changes associated with this will certainly be one of the construction sector is expected to remain fairly slow and for- major challenges for the future. Raiffeisenlandesbank Oberös- eign trade is also not expected to contribute to growth for the terreich is adjusting to the major upheaval that this means for time being. The rate of inflation will also remain well below the the banking industry by positioning itself as a pioneer in in- European average in 2016, as a result of the higher prices in novation and modern advisory bank that also sets its future the service sector. course with intensive personal support as well as the development of the extensive range of the innovative banking tech- Upper Austria, as an exporting state with strong connections nology available. Raiffeisenlandesbank Oberösterreich is also with German industry, profits on one hand from the stronger revising sections of its business model in order to keep up with performance of its neighbour to the north, and on the other the global changes in the internet age. Solutions are being hand continues to feel the effects of weaker global demand. In developed for instance related to how an innovative and suc- all, the Department of Statistics for the State of Upper Austria cessful bank branch concept may look in the future as part of estimates economic growth in the state for 2016 at 2 per cent the innovative development of the “Raiffeisen Banking Group or slightly above the national average of 1.6-1.9 per cent. Upper Austria 2020” project. 56 Annual Report 2015

Intensive work is also taking place in parallel on the “Digital Austria. Numerous domestic and international awards (includ- regional bank” project. This is based on an “aggregated busi- ing winning the “FERI Euro Rating Awards 2016” as best all- ness model” whereby the fixed and digital channels no longer round provider in Austria) serve to verify the high quality of its co-exist separately, but are in fact intertwined. The physical product portfolio. KEPLER is a recognised specialist in man- proximity of the branch remains important and is retained aging bond funds, ethical funds, dynamic mixed funds and based around the relevant need. The support and service defensively oriented equity funds. approaches will change, however, and digital channels will increasingly be selected for these which are independent of Given the challenging market environment, the budgets for location and time. This concept benefits customers in that the VIVATIS Holding AG Group and the efko Frischfrucht und they receive active support with differing services and sup- Delikatessen GmbH Group are based on a modest increase port and care concepts. Raiffeisenlandesbank Oberösterreich in sales revenue from the foodstuffs sector in 2016. These benefits from increases in productivity and efficiency based on groups aim to generate organic growth, notably by increasing process harmonisation and simplification. the innovation rate and by attracting new customers. Selective acquisitions in the core segments also form part of the cor- Based on the Bank's strengths – such as efficient, targeted li- porate strategy. Capital investment of approximately EUR 26 quidity planning and control, comprehensive risk management million is planned for the foodstuffs division in 2016. combined with detailed control – and the close collaboration with the Raiffeisenbanks in Upper Austria, Raiffeisenlandes- The OÖ Wohnbau Group has planned a construction volume bank Oberösterreich is doing everything it can to enable it to of EUR 77 million for 2016. In the housing management busi- continue to justify the confidence of customers in the future ness, the group plans to expand its portfolio of approximately and to provide comprehensive support for businesses, insti- 40,000 management units by adding units that it constructs tutions and retail customers in their various projects. Numer- itself and by acquiring other housing management portfolios. ous actions for the future will be implemented above all with the “Raiffeisen Banking Group Upper Austria 2020” project, In its outlook for the fiscal year ending on 31 March 2016, the in order to secure stability and sustainable qualitative growth. voestalpine AG is anticipating stable growth (results incl. one- time effects above previous year, adjusted earnings below The forward-looking measures and the outlook for the key previous year), thanks to its strong position in the industrial subsidiaries and equity-accounted investments are also segments, automotive, rail infrastructure and aircraft manu- positive: facturing, which together constitute some 50 per cent of the group’s segment portfolio, as well as largely stable growth in SALZBURGER LANDES-HYPOTHEKENBANK AKTIENGE- the areas of machine engineering and consumer goods. SELLSCHAFT (Hypo Salzburg) will continue to be a reliable partner for its customers in the future. It has a stable owner- According to the most recent forecasts, AMAG Austria Metall ship structure and possesses the successful business model AG will experience the growth in demand for aluminium prod- of a regional bank. The emphasis is on a systematic commit- ucts to continue in 2016 as well. Global growth for primary ment to meeting customer needs and keeping a consistent aluminium is expected to be 5.0 per cent, for rolled aluminium focus on target groups by providing attractive products as well products roughly 5.2 per cent. This continued high level of de- as the responsible handling of costs and risks. Hypo Salzburg mand offers a sound basis for positive business trend in 2016. has sound capital adequacy and has made sufficient provision Construction of new cold-rolling mill as part of the AMAG 2020 in terms of liquidity to ensure that it can achieve qualitative strategy project, including a finalising and annealing facility, growth in its customer business. will begin in the spring of 2016, with operations planned for the first half of 2017. This will bring production capacity in the IMPULS-LEASING Group (ILG) predicts that there will be a rolling segment up to over 300,000 tons. With this expansion stable trend in new business in 2016 in its home markets in Ranshofen, AMAG is not only on its way to becoming the of Austria and southern Germany and in Central and East- most up-to-date facility in the European aluminium industry, ern Europe (CEE). It will retain its conservative business pol- but also an all-in-one provider for specialty products in the icy strategy in terms of income and risk. As part of efficiency areas of automotive, aerospace, sport articles, electronics enhancement measures, interfaces with Raiffeisenlandes- and packaging. The future development of aluminium prices bank Oberösterreich are being continuously evaluated and is a significant influencing factor with respect to AMAG Group optimised. earnings. Owing to recent volatility in aluminium prices, AMAG has not yet released its forecast for 2016. KEPLER-FONDS KAG, with a customer-volume of over 13 billion euros, is one of the TOP 5 investment companies in Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 57

Group Management Report 2015 _ Anticipated Development and Future Risks

2.3. Significant risks and uncertainties The overall risk strategy approved by the Managing Board ensures that the risks assumed by the Bank are consistent with Raiffeisenlandesbank Oberösterreich Group’s long-term suc- the corporate strategy. The Managing Board and the Supervi- cess has largely been due to active risk management. In order sory Board are kept regularly informed. to realise its goal, risk management has been implemented at Raiffeisenlandesbank Oberösterreich, as the dominant com- For more detailed information on all the risks in the Raiffeisen- pany in the group, making it possible to identify and measure landesbank Oberösterreich Group and on the objectives and all risks within the group (credit risk, market risk, investment methods used in the risk management system, please refer to risk, liquidity risk, macro-economic risk and operational risk) the comprehensive risk report in the Notes. and for management to actively control them. 58 Annual Report 2015

3. Research and development

Raiffeisenlandesbank Oberösterreich is considered a pioneer Two holdings in the IT sector play a significant role in shaping in the development of innovative bank technology. The first the whole of Raiffeisen’s Austrian sector. Together, they ser- electronic banking (ELBA) solution for Raiffeisen corporate vice the whole range of software and infrastructure issues, customers in Upper Austria was developed in 1988. Private primarily for financial service providers. customers became able to complete their banking transactions from home online in 1997 with the market launch of the Raiffeisen Software GmbH was formed in 2015 through the Raiffeisen ELBA internet solution. In addition to Raiffeisen fusion of RACON Software GmbH and Raiffeisen Solution ELBA mobil, the Raiffeisen ELBA app is the mobile all-rounder Software and Service GmbH. This brought together two soft- available today as the online baking solution specifically cus- ware development companies in the Raiffeisen sector that had tomised for smartphones, and which provides a comprehen- operated for years in parallel into a new, integrated, innovative sive account overview, financial statuses, transfer options and and broadly based analytical and software unit that is pro- much more. Raiffeisenlandesbank Oberösterreich also leads fessionally involved in topics such as software engineering, the way in projects across Austria related to the digitisation of process models and standardisation. Numerous research bank and business processes. projects draw on external networks and institutional partnerships, such as that with the Johannes Kepler University in Linz Raiffeisenlandesbank Oberösterreich is continuously improv- and the Software Park in Hagenburg. The advances brought ing its services for its customers and is taking the lead with about through this research have been demonstrated in, for numerous progressive developments in customer care for example, the software harmonisation that was successfully companies, private customers, and institutions. While con- carried out in 2015 (Project: “One IT”) in the Raiffeisen Banking tactless payments have been possible using Raiffeisen bank Group Styria; additional states will follow in 2016. cards since 2013, a new phase of payment transactions was started in 2015. Since June 2015 Raiffeisen Oberösterreich The GRZ IT Center GmbH serving as a full-service provider of customers have been able to make quick and easy payments IT infrastructure was able to solidify its position as one of the globally at all NFC (near field communication) enabled point- leading bank data centres in Austria, not least through its long- of-sale terminals using their digital bank card and an Android term constructive partnerships with the Raiffeisen Banking smartphone. A field test was carried out for this in Linz to- Groups Tirol and Carinthia, the Raiffeisen Association Salz- gether with the Passage Shopping Centre and the Linzer City burg eGen, with all the Raiffeisen banks in the federal state of Ring. The digital banking card has been available to all Upper Salzburg and the DREI-BANKEN-EDV Association m.b.H, the Austrian Raiffeisen customers since October 2015. In addition, data centre and software company of the 3-bank group. As two of the Raiffeisenlandesbank’s ATMs have been equipped part of the “Open IT Centre Initiative,” an additional partnership with NFC technology. Contactless withdrawals can already was established in 2015 with the Raiffeisen Infomatik Center be made from these using the digital bank card. This addi- Steiermark GmbH. A strategic technical perspective is applied tional function will be installed in stages in additional Raiffeisen at GRZ to topics such as systems engineering and IT security Oberösterreich self-service terminals from January 2017. professionally managed by in-house teams.

That is why Raiffeisenlandesbank Oberösterreich is playing In the VIVATIS Holding AG Group, a group innovation man- a leading role in the “IT for Raiffeisen Austria” project. The agement system was installed back in 2013 to safeguard and harmonisation of IT systems for Raiffeisen banks in Austria is support the further development of the group's market posi- a ground-breaking project. Once implemented, it will not only tion. One of the key areas of management focus in the food- deliver numerous synergies and corresponding cost savings, stuffs division is on continuous improvement in recipes and but will also spawn a range of technical innovations. processing technologies as well as on ongoing development of new products and services. As part of its training and professional development activities, Raiffeisenlandesbank Oberösterreich is investing in e-learning, The development of innovative products, the continuous im- blended-learning modules and web-based training opportu- provement and enhancement in the productivity of produc- nities. Raiffeisenlandesbank Oberösterreich has developed its tion facilities and technologies as well as all production-related own e-learning platform and serves as a competence centre service areas are the focus of the “efko Frischfrucht und De- in this regard for Raiffeisen Österreich. likatessen GmbH” Group. Through targeted investments, efko is seeking to secure its competitive strength in the market. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 59

Group Management Report 2015 _Research and Development _ Main aspects of the internal control and risk management system

4. Main aspects of the internal control and risk management system

Raiffeisenlandesbank Oberösterreich perceives an account- The Fit & Proper Policy represents the written definition of the ing-related internal control system to consist in the procedure strategy for the selection of and procedure for assessing the drafted and put in place by the Managing Board and those suitability of members of the board of supervisors, executive persons tasked with supervising the company and other per- management and employees in key functions and complies sons in order to achieve the following goals: with the professional values and long-term interests of Raiff- ¬¬ effectiveness and economic viability of the accounting pro- eisenlandesbank Oberösterreich. The principles for the remu- cess (this also includes protecting the assets from losses neration policy in accordance with section 39b BWG or Article caused by damage and misappropriation), 92 et seq CRD are adhered to as applicable. ¬¬ reliability in the financial reporting and ¬¬ compliance with the statutory regulations that apply to Risk evaluation accounting. The risk assessment is a dynamic and iterative process for Balanced and complete financial reporting is an important identifying and assessing risks. Risks which represent ob- goal for Raiffeisenlandesbank Oberösterreich and its board structions towards achieving certain objectives must be iden- members. The goal of this internal control system is to sup- tified in good time, with appropriate actions introduced. The port management in such a way that it guarantees effective responsibilities for assessing and controlling the risks in ac- and constantly improving internal controls in the context of cordance with section 39 BWG or CRR/CRD as well as the accounting. The bases for preparing consolidated annual fi- CEBS/EBA standards are regulated at Raiffeisenlandesbank nancial statements are pertinent Austrian laws, in particular Oberösterreich. The requisite functional separation is ensured the Austrian Commercial Code and the Banking Act in which with this. the rules are set forth for consolidated annual financial statements. The standards of accounting for consolidated finan- The Risk Management division is responsible for the devel- cial statement consist in the International Financial Reporting opment and deployment of risk measurement procedures Standards (IFRS) as they are to be applied within the EU. and IT systems at Raiffeisenlandesbank Oberösterreich; it develops the results and risk information necessary to carry out Control environment active risk control and relays accounting-relevant information accordingly. The structure of the internal control systems is determined via the control environment. The control environment is deter- Major risks related to Group accounting procedures are evalu- mined through awareness on the part of the managers and ated and monitored by the Managing Board. This is important executives of good corporate governance. The Managing to avoid misstatements, for example where complex account- Board of Raiffeisenlandesbank Oberösterreich bears overall ing principles are involved. It is also important that there are responsibility for the design and effectiveness of the internal uniform principles for measurement, especially measurement control system. The general control environment includes the of the essential financial instruments used in the Group. middle management level (heads of organisational units) in addition to the Managing Board. Control measures

The Code of Conduct as a binding set of rules governing day- Principles and procedures for complying with company deci- to-day business operations represents the corporate princi- sions are set up and published in order to provide safeguards ples that serve as the basis of business conduct at Raiffeisen against risks and to achieve the corporate objectives. The ef- and the values of the Raiffeisenlandesbank Oberösterreich fectiveness, traceability and efficiency of the internal control and those companies associated with it in the Group (Raif- system essentially depend on the balanced mixture and proper feisenlandesbank Oberösterreich Group) The internal control documentation of the different control activities. Specific system is geared to the magnitude and nature of the business control and monitoring activities have been set out for this. transacted (complexity, diversification, risk potential) in the RLB Oberösterreich Group and to the statutory provisions to Individual Financial Statements be applied. The current version of the Code of Conduct was last amended on 29 December 2015 and was published on Separate financial statements are prepared on a decentralised the Raiffeisenlandesbank Oberösterreich website. basis in the respective Group units according to the guidelines issued by Raiffeisenlandesbank Oberosterreich. Those 60 Annual Report 2015

employees and managers with responsibility for accounting are also submitted to the Supervisory Board. They are pub- in the Group units are responsible for a complete presentation lished in the annual report, on the company’s own website and proper evaluation of all transactions made known to them. and in the official gazette of the Wiener Zeitung; finally, they are entered into the Company Register. Appropriate control measures are applied in ongoing business processes to ensure that potential misstatements or de- Monitoring viations in financial reporting are prevented or identified and corrected. Control measures range from the review of peri- The entire Raiffeisenlandesbank Oberösterreich Group has odic results by management and the specified reconciliation at its disposal effective and reliable control, information and of accounts on through to analysis of ongoing processes in communication systems that encompass all key business ac- accounting. tivities and, in particular, that are consistent with the organisational and internal control requirements for IT and with the Group consolidation need for an appropriate audit trail. These systems and organisational structures are continuously evaluated and improved. Standardised forms that are uniform throughout the Group form the basis for the consolidated financial statements. Ac- Raiffeisenlandesbank Oberösterreich’s Internal Auditing unit counting and measurement standards are defined and ex- is responsible for the internal auditing function. Group-wide, plained by Raiffeisenlandesbank Oberösterreich, and are auditing-specific policies apply for all auditing activities, and binding for the preparation of statement data. these policies are minimum standards for internal auditing according to Austrian financial market oversight as well as inter- The financial statement data submitted by the Group units is national best practices. first reviewed by employees in Group accounting responsible for that unit and appropriate controls are performed by the Group auditing performs independent and regular checks for managers responsible. compliance with internal guidelines within the Group units of Raiffeisenlandesbank Oberosterreich. The head of the Inter- The transmission of financial statement data, which are au- nal Auditing area reports directly to the Managing Boards of dited by an external auditor, is done primarily through direct Raiffeisenlandesbank Oberösterreich. entry into the IDL Konsis consolidation system. The IT system is protected with respect to IT security through the restrictions on the issuance of authorisations. The financial statements data received from the Group units is first checked in the group accounting system by the employee responsible for the Group unit concerned. The IT system is protected with respect to IT security through the restrictions on the issuance of authorisations.

Information and communication

Functioning information and communications channels are in place and are supported, logged and utilised through appropriate IT applications so that information can be identified, collected, processed in a timely manner and relayed to the relevant levels within the company.

The consolidated results are presented in the form of a consolidated financial statement in the annual business report. This consolidated financial statement is reviewed by an external auditor. In addition, a Group management report is also prepared in which a verbal clarification of the consolidated results is provided in accordance with statute.

The consolidated financial statements, together with the management report, are discussed in the Supervisory Board’s accounting committee. The consolidated financial statements Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 61

Group Management Report 2015 _Main aspects of the internal control and risk management system

Linz, 5 April 2016 Raiffeisenlandesbank Oberösterreich Aktiengesellschaft Europaplatz 1a, 4020 Linz

THE MANAGING BOARD

Heinrich Schaller Michaela Keplinger-Mitterlehner Chief Executive and Chairman of the Managing Board Deputy Chief Executive

Stefan Sandberger Reinhard Schwendtbauer Member of the Managing Board Member of the Managing Board

Georg Starzer Markus Vockenhuber Member of the Managing Board Member of the Managing Board 62 Annual Report 2015

IFRS Consolidated Financial Statements 2015, Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Income statement ______63 Statement of comprehensive income ______64 Balance sheet ______65 Statement of changes in equity ______66 Cash flow statement ______67 Notes to the consolidated financial statements ______68 The company ______68 Basis of presentation of the consolidated financial statements in accordance with IFRS ______68 Accounting policies ______79 Segment reporting ______89 Income statement disclosures ______92 Balance sheet disclosures ______100 Risk report ______130 Other disclosures ______146 Disclosures required under Austrian accounting standards ______154 Events after the balance sheet date ______158 Members of the boards of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft ______158 Audit certificates ______160 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 63

IFRS consolidated financial statements _ Income statement

Income statement

IN EUR ’000 NOTE 2015 2014

Interest and interest-related income 861,985 933,503 Interest and interest-related expenses –444,901 –509,327 Share of profit or loss of equity-accounted investments 51,219 4,074

Net interest income (1) 468,303 428,250 Loan loss allowances (2) –61,087 –180,744 Net interest income after loan loss allowances 407,216 247,506

Fee and commission income 180,981 169,579 Fee and commission expenses – 53,138 –43,531

Net fee and commission income (3) 127,843 126,048 Net trading income (4) 7,722 15,546 Net income/loss from designated financial instruments (5) 61,665 – 97,129 Net income from investments (6) 36,290 48,958 Other net finance costs 105,677 –32,625

General administrative expenses (7) –733,715 –690,983 Other net operating income (8) 411,399 390,776 Pre-tax profit for the year 318,420 40,722

Taxes on income and earnings (9) –14,307 –4,353 After-tax profit for the year 304,113 36,369 of which attributable to equity holders of the parent 300,325 43,388 of which attributable to non-controlling interests 3,788 –7,019 64 Annual Report 2015

Statement of comprehensive income

IN EUR ’000 NOTE 2015 2014

After-tax profit for the year 304,113 36,369

Items that cannot be reclassified to profit or loss Actuarial gains and losses on defined benefit plans (29) 8,102 –17,412 Amounts recognised in other comprehensive income 10,787 –23,159 Taxes recognised in respect of this amount –2,685 5,747 Share of other comprehensive income of equity-accounted investments (17) –10,742 –4,994 Amounts recognised in other comprehensive income –10,708 –4,994 Taxes recognised in respect of this amount –34 0

Items that can be reclassified to profit or loss Gain or loss on remeasurement of AfS securities (29) –76,515 182,510 Amounts recognised in other comprehensive income –52,905 249,558 Amounts reclassified to profit or loss –49,007 –6,202 Taxes recognised in respect of this amount 25,397 –60,846 Gain or loss from the hedging of net investments (29) –873 366 Amounts recognised in other comprehensive income –1,164 488 Amounts reclassified to profit or loss 0 0 Taxes recognised in respect of this amount 291 –122 Currency differences (29) 128 –970 Amounts recognised in other comprehensive income 128 –970 Amounts reclassified to profit or loss 0 0 Taxes recognised in respect of this amount 0 0 Share of other comprehensive income of equity-accounted investments (17) –10,982 –101,127 Amounts recognised in other comprehensive income –10,762 –101,127 Amounts reclassified to profit or loss 0 0 Taxes recognised in respect of this amount –220 0 Total other comprehensive income –90,882 58,373

Comprehensive income 213,231 94,742 of which attributable to equity holders of the parent 210,214 97,9 50 of which attributable to non-controlling interests 3,017 –3,208 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 65

IFRS consolidated financial statements _ Statement of comprehensive income _ Balance sheet

Balance sheet

ASSETS

IN EUR ’000 NOTE 31 DEC. 2015 31 DEC. 2014

Cash and cash equivalents (10), (11) 90,221 89,086 Loans and advances to banks (10), (12), (14) 6,854,907 6,779,138 Loans and advances to customers (10), (13), (14) 18,731,309 19,166,752 Trading assets (10), (15) 2,468,794 2,951,476 Financial assets (10), (16) 5,670,627 6,173,604 Companies accounted for using the equity method (17) 1,786,116 1,800,077 Intangible assets (18), (21) 44,636 47,9 0 0 Property and equipment (19), (21) 419,042 405,852 Investment property (19), (21) 746,402 759,767 Current tax assets (9) 8,800 5,536 Deferred tax assets (9) 35,672 26,762 Other assets (20) 442,046 368,228

Total 37,298,572 38,574,178

EQUITY AND LIABILITIES

IN EUR ’000 NOTE 31 DEC. 2015 31 DEC. 2014

Amounts owed to banks (10), (22) 11,214,173 11,304,925 Amounts owed to customers (10), (23) 10,628,115 10,516,033 Trading liabilities (10), (24) 1,871,532 2,202,349 Liabilities evidenced by certificates (10), (25) 7,618,48 4 8,642,403 Provisions (14), (26) 241,247 259,352 Current tax liabilities (9) 5,682 5,948 Deferred tax liabilities (9) 53,547 61,690 Other liabilities (27) 495,048 478,716 Subordinated capital (10), (28) 1,431,348 1,536,491 Equity (29) 3,739,396 3,566,271 of which attributable to equity holders of the parent 3,595,010 3,414,530 of which attributable to non-controlling interests 144,386 151,741

Total 37,298,572 38,574,178 66 Annual Report 2015

Statement of changes in equity

PARTICI- NON-CON- SUBSCRIBED PATION CAPITAL RETAINED SUB- TROLLING

IN EUR ’000 CAPITAL CAPITAL RESERVES EARNINGS TOTAL INTERESTS TOTAL

Equity 1 Jan. 2015 276,476 1,032 972,095 2,164,927 3,414,530 151,741 3,566,271 Comprehensive income 0 0 0 210,214 210,214 3,017 213,231 After-tax profit for the year 0 0 0 300,325 300,325 3,788 304,113 Total other comprehensive income 0 0 0 – 90,111 – 90,111 –771 –90,882 Dividends 0 0 0 –24,265 –24,265 –1,093 –25,358 Change in basis of consolidation 0 0 0 0 0 445 445 Shareholding changes, restructuring 0 0 0 –6,486 –6,486 –10,101 –16,587 Capital increases 0 0 0 0 0 360 360 Other changes in capital 0 0 0 1,017 1,017 17 1,034

Equity 31 Dec. 2015 276,476 1,032 972,095 2,345,407 3,595,010 144,386 3,739,396

PARTICI- NON-CON- SUBSCRIBED PATION CAPITAL RETAINED SUB- TROLLING

IN EUR ’000 CAPITAL CAPITAL RESERVES EARNINGS TOTAL INTERESTS TOTAL

Equity 1 Jan. 2014 276,476 1,032 972,095 2,139,984 3,389,587 151,416 3,541,003 Comprehensive income 0 0 0 97,9 50 97,9 50 –3,208 94,742 After-tax profit for the year 0 0 0 43,388 43,388 –7,019 36,369 Total other comprehensive income 0 0 0 54,562 54,562 3,811 58,373 Dividends 0 0 0 –28,702 –28,702 –2,782 –31,484 Change in basis of consolidation 0 0 0 0 0 10,777 10,777 Shareholding changes, restructuring 0 0 0 447 447 156 603 Capital increases 0 0 0 0 0 0 0 Other changes in capital 0 0 0 –44,752 –44,752 –4,618 –49,370

Equity 31 Dec. 2014 276,476 1,032 972,095 2,164,927 3,414,530 151,741 3,566,271 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 67

IFRS consolidated financial statements _ Statement of changes in equity _ Cash flow statement

Cash flow statement

IN EUR ’000 2015 2014

After-tax profit for the year 304,113 36,369 Non-cash items included in the profit for the year and reconciliation to cash flow from operating activities: Depreciation and impairment losses on property and equipment and on investment property, amortisation and impairment losses on intangible assets, impairment losses on financial assets and trading securities, reversals of impairment losses 120,478 8,536 Reversal of/additions to reserves and risk provisions 114,511 244,380 Gain or loss on disposal of property, equipment, financial assets, trading securities, intangible assets and investment property –33,913 –38,676 Dividends received –114,655 –112,285 Interest received –838,529 – 908,121 Interest paid 479,754 529,928 Share of profit or loss of equity-accounted investments –12,043 64,468 Effects from initial consolidation and deconsolidation –19,187 –43,801 Other adjustments due to non-cash items –34,432 291,245 Subtotal –33,903 72,043

Change in assets and liabilities from operating activities after adjusting for non-cash items: Loans and advances to banks and customers 251,297 –178,261 Trading assets –13,958 –16,841 Other assets –45,905 –12,357 Amounts owed to banks and customers 124,957 9,643 Trading liabilities 30,981 20,907 Liabilities evidenced by certificates – 858,274 –313,003 Other liabilities – 87,78 5 –50,728 Dividends received 114,655 112,285 Interest received 838,529 908,121 Interest paid –479,754 –529,928 Taxes paid on income – 6,168 –3,324 Cash flow from operating activities –165,328 18,557

Cash proceeds from the sale of: Financial assets and shares in companies 1,059,443 1,959,203 Property and equipment, investment property and intangible assets 49,151 50,753 Payments to acquire: Financial assets and shares in companies –727,153 –1,838,826 Property and equipment, investment property and intangible assets –123,648 –128,661 Acquisition of subsidiaries (net of acquired cash and cash equivalents) 0 –33 Disposal of subsidiaries (net of sold cash and cash equivalents) 6,017 0 Cash flow from investing activities 263,810 42,436

Capital increase 360 0 Receipt/repayment of subordinated capital –72,349 –31,442 Purchase of non-controlling interests 0 0 Dividends –25,358 –31,484 Cash flow from financing activities –97,347 –62,926

Cash at the end of the previous period 89,086 91,019 Cash flow from operating activities –165,328 18,557 Cash flow from investing activities 263,810 42,436 Cash flow from financing activities – 97,3 47 –62,926 Cash and cash equivalents at the end of the period 90,221 89,086

Cash and cash equivalents comprise cash in hand and balances at central banks re-payable on demand. 68 Annual Report 2015

Notes to the consolidated financial statements

The company

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft Banking Group Oberösterreich held over 50 per cent of the (hereinafter: Raiffeisenlandesbank Oberösterreich) acts as a shares of RLB Holding registered liability cooperative, making regional central institution of the Raiffeisen Banking Group it the uppermost parent company. The Upper Austrian Raiff- Upper Austria and is recorded in the Commercial Register eisen banks make up the most important owner groups of the at the District Court in Linz under the number FN247579m. two co-operatives. The individual Raiffeisen banks are sup- The registered office is situated at Europaplatz 1a, 4020 Linz, ported by Raiffeisenlandesbank Oberosterreich in its role as Austria. the regional central institution for all banking matters.

As at 31 December 2015, the registered co-operative society Since the 2007 financial year, Raiffeisenlandesbank Oberos- Raiffeisenbankengruppe OÖ Verbund eGen (hereinafter: RBG terreich, as the highest-level bank in the Group, has been sub- OÖ Verbund eGen) held 98.92 per cent of the ordinary shares ject to the mandatory requirement specified in IAS Regulation in Raiffeisenlandesbank Oberosterreich. The RLB Holding (EC) 1606/2002 to prepare consolidated financial statements registrierte Genossenschaft m.b.H. Oberösterreich (hereinaf- in accordance with the International Financial Reporting Stan- ter: RLB Holding reg. Gen.) owns 1.08 per cent of the ordinary dards (IFRS). Further disclosures are also required in accor- shares in Raiffeisenlandesbank Oberösterreich. As of 31 De- dance with the regulations under the Austrian Banking Act cember 2015, the registered cooperative society Raiffeisen (BWG) and the Austrian Commercial Code (UGB).

Basis of presentation of the consolidated financial statements in accordance with IFRS

Basic principles has also taken into account the additional disclosures required in accordance with the regulations under the Austrian Banking These consolidated financial statements for the 2015 finan- Act (BWG) and the Austrian Commercial Code (UGB). cial year, as well as the comparative figures from 2014, have been prepared in compliance with the International Financial Unless noted otherwise, the figures in these financial state- Reporting Standards (IFRSs) as published by the International ments are stated in thousands of euros. Minor discrepancies Accounting Standards Board (IASB) and international ac- may arise in calculations because of rounding in the individual counting and financial reporting standards based on the IAS items in the financial statements. Regulation (EC) 1606/2002 as adopted by the EU. The Bank Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 69

IFRS consolidated financial statements _ Notes _ Basis of presentation

First-time adoption of new and revised standards period starting on or after 1 January 2015. The accounting and interpretations policies applied are, with the exception of the amendments and changes listed here, the same as those of the previous The following new or amended standards and interpreta- financial year. tions must be taken into account for the first time in preparing IFRS financial statements relating to an annual reporting

TO BE APPLIED IN FINANCIAL YEARS ALREADY ADOPTED STANDARD/INTERPRETATION FROM BY THE EU

IFRIC 21 (Levies) 17 June 2014 Yes Improvements to IFRSs 2011-2013 (December 2013) 1 Jan. 2015 Yes

IFRIC 21 (Levies) Improvements to IFRSs 2011-2013 The purpose of this interpretation is to clarify how and when On 19 December 2014, the EU formally adopted the changes entities will need, in the future, to account in their IFRS financial introduced under the 2011-2013 cycle of the annual improve- statements for levies imposed by public authorities. The inter- ments project. The improvement cycle included changes and pretation covers levy liabilities accounted for in accordance clarifications relating to various standards. With regard to IFRS with IAS 37 Provisions, Contingent Liabilities and Contingent 1 First-time Adoption, the improvements included clarification Assets, and also levies for which the timing and amount are relating to the definition of IFRSs applicable at the end of a known. IFRIC 21 identifies as the obligating event for the rec- reporting period. The change to IFRS 3 Business Combina- ognition of a liability the activity that triggers the payment tions provided for the exclusion of joint arrangements from under the relevant legislation. In the EU, IFRIC 21 came into its scope. Adjustments to IFRS 13 Fair Value Measurement force for financial years beginning on or after 17 June 2014, addressed the scope of the portfolio exception. The interrela- although earlier application was permitted. The provisions in tionship between IAS 40 and IFRS 3 in connection with the ac- IFRIC 21 are relevant in the Raiffeisenlandesbank Oberoster- quisition of investment property was clarified in more detail in reich Group, particularly in connection with the preparation of the changes to IAS 40. The changes were to come into force interim financial statements, because levies will now generally for financial years beginning on or after 1 January 2015. These need to be recognised at an earlier point. changes and adjustments do not have any material impact on the consolidated financial statements of Raiffeisenlandesbank Oberosterreich. 70 Annual Report 2015

IFRSs not yet subject to mandatory application However, they had not yet come into force for the financial year beginning 1 January 2015 and have therefore not been The following new or amended standards and interpretations applied in these consolidated financial statements: had already been published as at the balance sheet date.

TO BE APPLIED IN FINANCIAL YEARS ALREADY ADOPTED STANDARD/INTERPRETATION FROM BY THE EU

Amendment to IAS 19 – Defined benefit plans: employee contributions 1 Feb. 2015 Yes Improvements to IFRSs 2010–2012 (December 2013) 1 Feb. 2015 Yes Amendments to IAS 1 – Disclosure Initiative 1 Jan. 2016 Yes Amendments to IAS 27 – Equity Method in Separate Financial Statements 1 Jan. 2016 Yes Amendments to IFRS 11 – Accounting for Acquisitions of Interests in Joint Operations 1 Jan. 2016 Yes Amendments to IAS 16 and IAS 38 – Clarification of Acceptable Methods of Depreciation and Amortisation 1 Jan. 2016 Yes Amendments to IAS 16 and IAS 41 – Agriculture: bearer plants 1 Jan. 2016 Yes Improvements to IFRSs 2012–2014 (September 2014) 1 Jan. 2016 Yes Amendments to IFRS 10, IFRS 12 and IAS 28 – Investment Entities: 1 Jan. 2016 No IFRS 14 (“Regulatory Deferral Accounts”) 1 Jan. 2016 No IFRS 9 (“Financial instruments”) 1 Jan. 2018 No IFRS 15 (Revenue from Contracts with Customers) 1 Jan. 2018 No Amendments to IFRS 10 and IAS 28 – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred indefinitely No

Amendment to IAS 19 – Defined benefit plans: employee in the balance sheet is only necessary if the segment assets contributions are regularly reported to the relevant level of the organisation. The amendments to IAS 19 clarify how businesses need to The clarifications in respect of IAS 24 extend the definition of account for employee contributions, or contributions made by related parties to include parties that provide corporate man- third parties, to defined benefit plans. If employees (or third agement services for the reporting entity. The changes were parties) make contributions to pension commitments, this re- to be applied for the first time for financial years beginning on duces the cost to the employer. The amendment to IAS 19.93 or after 1 February 2015. The 2010-2012 cycle of the annual now makes it clear that the treatment of these contributions improvements project is not expected to have any significant depends on whether these contributions are linked to the pe- implications for the consolidated financial statements of Raif- riod of service or not. The changes apply for financial years feisenlandesbank Oberosterreich. beginning on or after 1 February 2015 and must also be applied retrospectively. These changes do not have any impact IAS 1 – Disclosure Initiative on the consolidated financial statements of Raiffeisenlandes- In December 2014, the IASB published amendments to IAS bank Oberosterreich. 1 as part of an initiative to improve financial reports in terms of presentation and disclosures. These amendments clarify Improvements to IFRSs 2010-2012 that the principle of materiality should be applied to financial The 2010-2012 cycle of the annual improvements project statements as a whole. This principle also applies specifi- comprises changes to seven different standards: IFRS 2 cally where an IFRS requires a list of minimum disclosures. Share-based Payment, IFRS 3 Business Combinations, IFRS Disclosures relating to the aggregation and disaggregaton of 8 Operating Segments, IFRS 13 Fair Value Measurement, IAS items in the balance sheet and statement of comprehensive 16 Property, Plant and Equipment, IAS 24 Related Party Dis- income also form part of the amendments. In addition, the closures and IAS 38 Intangible Assets. The amendments to model structure for the notes to the financial statements has IFRS 3 address the accounting treatment of contingent con- been removed, making it easier for entities to adopt a struc- sideration in a business combination; the changes apply to ture more specific to their own requirements. The changes are transactions in which the date of acquisition is on or after to be applied in financial years beginning on or after 1 January 1 February 2015. The changes to IFRS 8 require an entity to 2016. Earlier application is permitted. The principle of material- disclose the judgements made by management in connec- ity has been consistently taken into account in the preparation tion with the aggregation of segments and clarify that a rec- of the present consolidated financial statements for Raiffeisen- onciliation of segment assets to the corresponding amounts landesbank Oberosterreich, which is why the changes are not Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 71

IFRS consolidated financial statements _ Notes _ Basis of presentation

expected to have any material impact on future consolidated There are minor adjustments to IFRS 5 concerning changes in financial statements. methods of disposal and to IFRS 7 in connection with its ap- plicability to servicing contracts. Clarifications in IAS 19 relate IAS 27 – Equity Method in Separate Financial to the currency of the bonds used in estimating the discount Statements rate; the wording in IAS 34 is also clarified. The changes come In August 2014, the IASB published amendments to IAS 27 into force for financial years beginning on or after 1 January relating to the application of the equity method in separate 2016, but earlier application is permitted. These changes are financial statements. As a result of these amendments, en- not expected to have any material impact on the consolidated tities are allowed to account for investments in subsidiaries, financial statements of Raiffeisenlandesbank Oberosterreich. associates and joint ventures using the equity method in their separate financial statements. The changes come into force IFRS 10, IFRS 12 and IAS 28 – Investment Entities: for financial years beginning on or after 1 January 2016. Earlier Applying the Consolidation Exception application is permitted. The amendments to IFRS 10, IFRS 12 and IAS 28 published in December 2014 clarify the issue of applying the consolidation IFRS 11 – Accounting for Acquisitions of Interests in Joint exception if the parent satisfies the criteria for definition as an Operations investment entity. Investment entities (such as certain invest- The amendments to IFRS 11 published in May 2014 clarify that ment funds) may then instead recognise their investments in the acquisition of an interest in a joint operation that consti- certain subsidiaries at fair value through profit or loss. Adop- tutes a business as defined in IFRS 3 should be accounted for tion by the EU is scheduled for the second half of 2016. These in accordance with the principles for the accounting treatment changes are not expected to have any material impact on the of business combinations specified in IFRS 3 and other IFRSs consolidated financial statements of Raiffeisenlandesbank provided that these principles do not conflict with the guid- Oberosterreich. ance in IFRS 11. The changes apply prospectively to acquisitions that take place in reporting periods beginning on or after IFRS 14 Regulatory Deferral Accounts 1 January 2016. Voluntary earlier application of the amend- The interim IFRS 14 is specifically intended only for users ments is permitted. These amendments could only have im- adopting IFRSs for the first time. Subject to some limitations, plications for the Raiffeisenlandesbank Oberosterreich Group the standard permits users to retain regulatory deferral ac- if a transaction of this nature were to take place in the future. count balances that they have already recognised in application of their previous financial reporting standards, even after IAS 16 and IAS 38 – Clarification of Acceptable Methods the transition to IFRS. This standard is only conceived as an of Depreciation and Amortisation interim solution until the IASB completes its comprehensive The amendments to IAS 16 and IAS 38 were published in May long-term project on rate-regulated activities. The European 2014 and apply for financial years starting on or after 1 Jan- Commission has decided not to initiate the endorsement pro- uary 2016. The changes particularly relate to revenue-based cess for IFRS 14, but instead to wait for publication of the methods of depreciation and amortisation. Such methods definitive standard. have been prohibited for property, plant and equipment, and severely restricted for intangible assets. These changes do not IFRS 9 Financial Instruments have any impact on the Raiffeisenlandesbank Oberosterreich IFRS 9 was published in July 2014 and is subject to mandatory Group because the Group does not use any revenue-based application from the 2018 financial year. IFRS 9 replaces the methods of depreciation or amortisation. existing guidelines in IAS 39 Financial Instruments: Recog- nition and Measurement. IFRS 9 contains revised guidelines IAS 16 and IAS 41 – Agriculture: Bearer Plants for classifying and measuring financial instruments, deter- As a result of amendments published in June 2014, bearer mining impairment losses for expected loan defaults, and for plants now fall within the scope of IAS 16. They must there- accounting for hedges. For the most part, the guidelines for fore be accounted for in the same way as property, plant and recognising and derocognising financial instruments have equipment. The changes come into force on 1 January 2016, been carried across from IAS 39. although they can be applied earlier on a voluntary basis. It is not anticipated that these changes will have any material Under IFRS 9, the classification of financial assets is based impact on the consolidated financial statements of Raiffeisen- on the characteristics of the contractual cash flows and on landesbank Oberosterreich. the basic principles of the business model used to manage the financial assets concerned. Depending on the character- Improvements to IFRSs 2012-2014 istics, assets are classified as “at fair value through profit or The changes published in September 2014 as part of the loss”, “at fair value through other comprehensive income” or IASB's annual improvements project affect various standards. “at amortised cost”. 72 Annual Report 2015

The IAS 39 rules governing the classification and measure- is first required, although this is scheduled for the second half ment of financial liabilities remain largely unchanged. However, of 2016. The effects of the new standard on the consolidated changes in the fair value of liabilities designated at fair value financial statements of Raiffeisenlandesbank Oberosterreich through profit or loss attributable to changes in the entity's are currently being assessed. own credit risk must be recognised in other comprehensive income unless this results in an accounting mismatch in the IFRS 10 and IAS 28 – Sale or Contribution of Assets income statement. between an Investor and its Associate or Joint Venture The changes are intended to clarify the issue of the account- The rules on impairment under IAS 39 are replaced under IFRS ing treatment of a sale or contribution of assets between an 9 by the expected credit loss model. In this model, as soon as investor and its associate or joint venture. In the future, the a financial asset is recognised for the first time, a loss allow- entire gain or loss from such a transaction should only be rec- ance is also recognised based on any credit loss expected ognised if the sold asset constitutes a business as defined at that time to be likely. This approach applies to financial as- in IFRS 3. If the sold asset does not constitute a business, sets classified as “at fair value through other comprehensive gains or losses should only be recognised on a pro rata basis. income” or “at amortised cost”, to lease receivables, trade re- The European Financial Reporting Advisory Group (EFRAG) ceivables, contract asset items under IFRS 15 and off-balance- has suspended the EU endorsement process for this change sheet credit risks. until further notice because a conflict with IAS 28.32 has been identified. The fundamental hedge accounting methodology under IAS 39 has not been substantially changed in IFRS 9. However, the accounting treatment of hedges is to be harmonised to a greater extent with risk management.

The new rules in IFRS 9 could have a significant impact on the recognition and measurement of financial instruments. The Raiffeisenlandesbank Oberosterreich Group has initiated a project (IFRS 9 implementation project) to determine the extent of the implications from these changes. Currently, it is not yet possible to make a definitive assessment of the impact on future financial statements.

IFRS 15 Revenue from Contracts with Customers In May 2014, the IASB published the new standard on revenue recognition, the objective of which is to harmonise the rules under IFRS and US GAAP and to enhance transparency and comparability. Almost all contracts with customers fall within the scope of this standard. The most notable exceptions are leases, financial instruments and insurance contracts. Under IFRS 15, the transfer of substantially all the risks and rewards is no longer the critical factor for revenue recognition. The new rules specify that revenue is recognised when the customer acquires control over the agreed goods and services and can obtain benefits from them. The revenue is measured in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the disclosure requirements have been expanded to include a range of quantitative and qualitative information intended to help the reader of the consolidated financial statements understand the nature, amount, timing and uncertainty of revenue and cash flows from contracts with customers. IFRS 15 supersedes IAS 11, IAS 18 and a series of interpretations. Initial application of the standard has been specified for financial years beginning on or after 1 January 2018, but earlier application is permitted. However, adoption by the EU Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 73

IFRS consolidated financial statements _ Notes _ Basis of presentation

Consolidation methods financial statements from the point in time at which the control begins and until the point in time that the control ends. The starting point for preparing the consolidated balance sheet and the group income statement is the sum of the Associates are companies on which the group exercises a separate financial statements of the subsidiaries included in significant influence on business and financial policy but has the consolidated financial statements. The separate financial no control or joint leadership in relation to this. There is usu- statements of the fully consolidated subsidiaries are prepared ally a significant influence when the shareholding is between in accordance with IFRS provisions and are based on the uni- 20 per cent and 50 per cent. In individual cases, there may form accounting policies applied throughout the Group. The still be significant influence even if the shareholding is lower; balance sheet date of the fully consolidated companies is this may arise through representation on the relevant entity’s 31 December with the exception of 43 companies that have a executive board or supervisory board. Material investments in balance sheet date of 30 September, one entity with 31 Oc- associates are recognised using the equity method and re- tober as a balance sheet date and one leasing company with ported in a separate balance sheet item. The proportionate 30 November as its balance sheet date. The selection of a profit and losses from companies reported under the equity date for these companies that differs from that of the par- method are also shown separately in the income statement. ent company guarantees that the financial statements can be When applying the equity method, the same basic approach prepared and audited without delay. Three subsidiaries pre- is used in accounting for acquisitions as is used for a fully con- pare their annual financial statements with reporting dates of solidated company. Equity carrying amounts are, when there 28 February, 30 June and 31 August respectively, and prepare are indications that there could be impairment in the sense of interim financial statements in accordance with IFRS for the IAS 39, subjected to an impairment test according to IAS 36. periods ending 30 September or 31 December. The analysis is usually done by applying a valuation method based on future financial surplus funds and/or based on share The Group accounts for business combinations using the ac- prices, if they are available. If there is a disposal of the asso- quisition method in accordance with IFRS 3 if the Group has ciate then it is derecognised via the group income statement. acquired control. The net assets measured at fair value are offset against the consideration paid or, if necessary, against the Structured companies are companies which are structured in fair value of the interest already held and the value of non-con- such a way that voting or similar rights are not pivotal in the trolling interests on the date control is obtained. decision as to who controls the company. This is the case for instance if voting rights only relate to administrative tasks Under IFRS 3.19, the non-controlling interests component can and the relevant activities are controlled through contractual be measured at fair value (full goodwill) or at the proportion- agreements. Project companies and leasing property com- ate share of the non-controlling interests in the recognised panies with restricted areas of activity and public funds are amounts of the acquiree's identifiable net assets (partial good- viewed as structured entities in particular. Disclosures on will). Generally, the Group uses the partial goodwill method. structured companies in accordance with IFRS 12 also take In other words, the non-controlling interests are measured in the type of business relationship between these and the the amount of the proportionate share of the identifiable net Group into consideration. assets. Transaction costs are recognised immediately as expense, unless they are associated with the issue of bonds Intercompany profits are eliminated if they are not of minor or equity instruments. Any positive difference is recognised significance for the items of the income statement. Banking as goodwill. As the Group uses the partial goodwill method, transactions between the individual companies of the group goodwill is only reported for the proportionate share of the are performed according to market conditions. Group and not for the share attributable to the non-controlling interests. Goodwill is not amortised but rather is subject to an In the course of the debt consolidation, loans and advances annual impairment test in accordance with IAS 36. Any profit within the group are set off against internal liabilities. Expenses from an acquisition at a price below the value of the net assets and income resulting from transactions between companies is recognised directly in the group income statement. in the full basis of consolidation are eliminated in the course of the expense and income consolidation. Subsidiaries are entities controlled by the Group in accordance with IFRS 10. The Group controls an entity if the Group is exposed, or has rights, to variable returns from its involve- ment with the entity and has the ability to affect those returns through its power over the entity. The consolidated financial statements of subsidiaries are included in the consolidated 74 Annual Report 2015

Basis of consolidation method. Of the 161 entities, 123 are based in Austria and 38 abroad. Of the fully consolidated entities, two are banks, 97 The basis of consolidation was determined in accordance with are financial institutions based on business activities, 19 are the provisions of IAS 10, taking the principle of materiality into financial institutions based on their function as holding com- consideration. Materiality is determined according to criteria panies, one is a finance holding company, three are providers applied uniformly throughout the Group, focusing on the effect of ancillary services and 32 are other miscellaneous entities. of the inclusion or non-inclusion of a subsidiary on the presen- The dividends and capital repayments from fully consolidated tation of the Group’s financial position and financial perfor- banks or banks accounted for using the equity method are mance. A total of 111 subsidiaries were not fully consolidated restricted under banking standards and regulatory require- and 47 associates were not accounted for using the equity ments, especially because of the need to comply with min- method because of their minor significance for the presenta- imum capital ratios. tion of financial position and financial performance. The following list shows the material subsidiaries and associ- The basis of consolidation for the IFRS consolidated finan- ates. An overview of all investments of the Raiffeisenlandes- cial statements of Raiffeisenlandesbank Oberösterreich for bank Oberösterreich Group (information according to section the year ended 31 December 2015 comprised 154 fully con- 265 (2) of the Austrian Commercial Code) has been prepared solidated entities (including Raiffeisenlandesbank Oberös- separately. This list is available at the headquarters of the par- terreich). Seven other entities were included using the equity ent company.

ATTRIBUTED SHARE OF REPORTING ADDED NAME CAPITAL (%) COUNTRY DATE IN 2015

Fully consolidated entities Raiffeisenlandesbank Oberösterreich Aktiengesellschaft Group parent Austria 31 Dec. activ factoring AG 100.00% Germany 31 Dec. Am Ölberg Liegenschaftsverwertungs GmbH 100.00% Austria 30 Sept. Bauen und Wohnen Beteiligungs GmbH 99.97% Austria 31 Dec. BHG Beteiligungsmanagement und Holding GmbH 100.00% Austria 28 Feb. Burgenländische Tierkörperverwertungsgesellschaft m.b.H. & Co KG 85.50% Austria 31 Dec. DAILY SERVICE Tiefkühllogistik Gesellschaft m.b.H. & Co.KG 95.00% Austria 31 Dec. DAILY Tiefkühlhaus ErrichtungsgmbH 100.00% Austria 30 Sept. EFIS s.r.o. 100.00% Czech Republic 31 Dec. efko Frischfrucht und Delikatessen GmbH 51.00% Austria 31 Dec. Eurolease finance d.o.o. 100.00% Slovenia 31 Dec. EUROPASTEG Errichtungs- und Betriebs GmbH1 47.0 9% Austria 30 Sept. Eurotherme Bad Schallerbach Hotelerrichtungsgesellschaft m.b.H. 51.00% Austria 31 Dec. Finance & Consulting GmbH 100.00% Austria 31 Dec. Franz Reiter Ges.m.b.H. & Co. OG. 100.00% Austria 31 Dec. Gesellschaft zur Förderung agrarischer Interessen in Oberösterreich GmbH 95.00% Austria 31 Dec. Gesellschaft zur Förderung des Wohnbaus GmbH 59.65% Austria 30 Sept. GMS GOURMET GmbH 95.00% Austria 31 Dec. GOURMET Beteiligungs GmbH 95.00% Austria 31 Dec. Grundstücksverwaltung Steyr GmbH 95.00% Austria 31 Dec. Grundstücksverwaltung Villach-Süd GmbH 51.49% Austria 31 Dec. GRZ IT Center GmbH 87.24% Austria 31 Dec. H. Loidl Wurstproduktions- und vertriebsgesellschaft m. b. H. & Co KG 95.00% Austria 31 Dec. Heimo Loidl + Johann Loidl Gesellschaft m.b.H. 95.00% Austria 31 Dec. HYPO Beteiligung Gesellschaft m.b.H. 59.65% Austria 30 Sept. HYPO Grund- und Bau-Leasing Gesellschaft m.b.H. 59.65% Austria 30 Sept. Hypo Holding GmbH 85.63% Austria 31 Dec. HYPO-IMPULS-Alpha Immobilien GmbH 51.00% Austria 31 Dec. HYPO-IMPULS Immobilien GmbH 51.00% Austria 31 Dec. HYPO IMPULS Immobilien Leasing GmbH 92.33% Austria 30 Sept. HYPO IMPULS Immobilien Rif GmbH 92.33% Austria 30 Sept. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 75

IFRS consolidated financial statements _ Notes _ Basis of presentation

ATTRIBUTED SHARE OF REPORTING ADDED NAME CAPITAL (%) COUNTRY DATE IN 2015

HYPO IMPULS Mobilien Leasing GmbH 100.00% Austria 30 Sept. HYPO IMPULS Vital Leasing GmbH 92.33% Austria 30 Sept. HYPO Liegenschaftsverwertungs Gesellschaft m.b.H. 59.65% Austria 30 Sept. HYPO Salzburg IMPULS Leasing GmbH 92.33% Austria 30 Sept. IL 1 Raiffeisen-IMPULS-Mobilienleasing Gesellschaft m.b.H. 100.00% Austria 30 Sept. IMMOBILIEN Invest Real-Treuhand Portfoliomanagement GmbH & Co OG 99.75% Austria 31 Dec. X IMPULS Bilina s.r.o. 100.00% Czech Republic 31 Dec. IMPULS-DELTA d.o.o. 100.00% Croatia 31 Dec. IMPULS-Immobilien GmbH & Co. Objekt Eitorf KG 51.00% Germany 31 Dec. IMPULS-Immobilien GmbH & Co. Objekt Gersthofen KG 81.00% Germany 31 Dec. IMPULS-Immobilien GmbH & Co. Objekt Gilching KG 100.00% Germany 31 Dec. IMPULS-Immobilien GmbH & Co. Objekt Karlstein KG2 5.10% Germany 31 Dec. IMPULS-Immobilien GmbH & Co. Objekt Laupheim KG2 5.10% Germany 31 Dec. IMPULS-Immobilien GmbH & Co. Objekt Offingen KG2 5.40% Germany 31 Dec. IMPULS-Leasing-AUSTRIA s.r.o. 100.00% Czech Republic 31 Dec. IMPULS-LEASING d.o.o. 100.00% Croatia 31 Dec. IMPULS-Leasing GmbH & Co. Objekt Hengersberg KG 100.00% Germany 31 Dec. IMPULS-Leasing GmbH & Co. Objekt Schkeuditz KG 94.90% Germany 31 Dec. IMPULS-LEASING International GmbH 100.00% Austria 31 Dec. IMPULS-LEASING Polska Sp.z o.o. 100.00% Poland 31 Dec. IMPULS-Leasing-Real-Estate s.r.o. 100.00% Czech Republic 31 Dec. IMPULS-LEASING Romania IFN S.A. 90.00% Romania 31 Dec. IMPULS-LEASING Services SRL 90.00% Romania 31 Dec. IMPULS-LEASING Slovakia s.r.o. 100.00% Slovakia 31 Dec. IMPULS Malvazinky s.r.o. 100.00% Czech Republic 31 Dec. IMPULS Milovice s.r.o. 100.00% Czech Republic 31 Dec. IMPULS Modletice s.r.o. 100.00% Czech Republic 31 Dec. IMPULS Plzen s.r.o. 100.00% Czech Republic 31 Dec. IMPULS – Praha spol. s r.o. 100.00% Czech Republic 31 Dec. IMPULS Rakovnik s.r.o. 100.00% Czech Republic 31 Dec. IMPULS Sterboholy s.r.o. 100.00% Czech Republic 31 Dec. IMPULS Teplice s.r.o. 100.00% Czech Republic 31 Dec. IMPULS Trnavka s.r.o. 100.00% Slovakia 31 Dec. INCOM Private Equity GmbH 100.00% Germany 31 Dec. INPROX CSP Kft. 100.00% Hungary 31 Dec. Invest Holding GmbH 100.00% Austria 31 Dec. IVH Unternehmensbeteiligungs GmbH & Co OG 100.00% Austria 31 Oct. Kapsch Financial Services GmbH 74.00% Austria 30 Sept. KARNERTA GmbH 95.00% Austria 31 Dec. KEPLER-FONDS Kapitalanlagegesellschaft m.b.H. 64.00% Austria 31 Dec. LABA-IMPULS-Gebäudeleasing Gesellschaft m.b.H. 100.00% Austria 31 Dec. LABA-IMPULS-Gebäudeleasing GmbH & Co KG 100.00% Austria 31 Dec. LABA-IMPULS-IT-Leasing GmbH & Co KG 100.00% Austria 31 Dec. LANDHOF GesmbH & Co KG 95.00% Austria 31 Dec. LKW-Zentrum Radfeld Liegenschaftsverwaltung GmbH 100.00% Austria 30 Sept. machland obst- und gemüsedelikatessen gmbh 51.98% Austria 31 Dec. MARESI Austria GmbH 88.07% Austria 31 Dec. MARESI Trademark GmbH & Co KG 95.00% Austria 31 Dec. MH53 GmbH & Co OG 100.00% Austria 31 Dec. Oberösterreichische Kfz-Leasing Gesellschaft m.b.H. 50.69% Austria 31 Dec. OÖ HYPO-IMPULS Leasing GmbH 51.00% Austria 31 Dec. O.Ö. Kommunal-Immobilienleasing GmbH 3 40.00% Austria 31 Dec. 76 Annual Report 2015

ATTRIBUTED SHARE OF REPORTING ADDED NAME CAPITAL (%) COUNTRY DATE IN 2015

O.Ö. Kommunalgebäude-Leasing Gesellschaft m.b.H.3 40.00% Austria 31 Dec. OÖ Wohnbau gemeinnützige Wohnbau und Beteiligung GmbH 83.56% Austria 31 Dec. OÖ Wohnbau Gesellschaft für den Wohnungsbau gemeinnützige GmbH 83.29% Austria 31 Dec. Privatstiftung der Raiffeisenlandesbank Oberösterreich Aktiengesellschaft 4 n/a Austria 31 Dec. Projekt Blumau Tower Immobilien GmbH 100.00% Austria 30 Nov. Projekt Eberstalzell Immobilien GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Alpha Immobilien GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Bautenleasing Gesellschaft m.b.H. 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Beta Immobilien GmbH 51.00% Austria 30 Sept. Raiffeisen-IMPULS-Delta Immobilien GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Delta Mobilienleasing GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Epsilon Immobilien GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Eta Immobilien GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS Finance & Lease GmbH 100.00% Germany 31 Dec. Raiffeisen-IMPULS-Fuhrparkmanagement GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS Fuhrparkmanagement GmbH & Co. KG 100.00% Germany 31 Dec. Raiffeisen-IMPULS-Gamma Immobilien GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Immobilien GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Immobilien GmbH & Co. Objekt Gunzenhausen KG2 5.10% Germany 31 Dec. Raiffeisen-IMPULS-Immobilien GmbH & Co. Objekt Hilpoltstein KG 100.00% Germany 31 Dec. Raiffeisen-IMPULS-Immobilienleasing GmbH 75.00% Austria 31 Dec. Raiffeisen-IMPULS-Immobilienvermögensverwaltung GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS Kfz und Mobilien GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Leasing Gesellschaft m.b.H. 100.00% Austria 31 Dec. Raiffeisen-IMPULS-Leasing GmbH & Co KG 100.00% Germany 31 Dec. Raiffeisen-IMPULS-Leasing Schönau GmbH 100.00% Germany 31 Dec. Raiffeisen-IMPULS-Liegenschaftsverwaltung Gesellschaft m.b.H. 75.00% Austria 31 Dec. Raiffeisen-IMPULS-Mobilienleasing GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-My Immobilien GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Projekt Atzbach GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Projekt Gänserndorf GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Projekt Graz-Webling GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Projekt Hörsching GmbH 100.00% Austria 30 Sept. X Raiffeisen-IMPULS-Projekt Kittsee GmbH 95.00% Austria 31 Dec. Raiffeisen-IMPULS-Projekt Lehen GmbH 95.00% Austria 31 Dec. Raiffeisen-IMPULS-Projekt Ort GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Projekt Straßwalchen GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Projekt Traunviertel GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Projekt Urstein GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Projekt Wien-Nord GmbH 100.00% Austria 31 Dec. Raiffeisen-IMPULS-Projekt Wolfsberg GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Rankweil Immobilien GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Realitätenleasing GmbH 100.00% Austria 30 Sept. Raiffeisen-IMPULS-Rho Immobilien GmbH 100.00% Austria 31 Dec. Raiffeisen-IMPULS-Rho Immobilien GmbH & Co KG 100.00% Austria 31 Dec. Raiffeisen-IMPULS-Vermietungsgesellschaft m.b.H. 100.00% Austria 31 Dec. Raiffeisen-IMPULS-Zeta Immobilien GmbH 60.00% Austria 30 Sept. Raiffeisen OÖ Immobilien- und Projektentwicklungs GmbH 100.00% Austria 31 Dec. X RB Prag Beteiligungs GmbH 100.00% Austria 31 Dec. RealBestand Immobilien GmbH & Co KG (formerly IB-RT IMMOBILIEN Beteiligungs Real-Treuhand Portfoliomanagement GmbH & Co KG) 100.00% Austria 31 Dec. RealRendite Immobilien GmbH 100.00% Austria 31 Dec. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 77

IFRS consolidated financial statements _ Notes _ Basis of presentation

ATTRIBUTED SHARE OF REPORTING ADDED NAME CAPITAL (%) COUNTRY DATE IN 2015

Real-Treuhand Bau- und Facilitymanagement GmbH 100.00% Austria 31 Dec. X REAL-TREUHAND Management GmbH 100.00% Austria 31 Dec. Real-Treuhand Projekt- und Bauträger GmbH 100.00% Austria 31 Dec. X RLB OÖ Alu Invest GmbH 100.00% Austria 31 Dec. RLB OÖ Sektorholding GmbH 100.00% Austria 31 Dec. RLB OÖ Unternehmensbeteiligungs GmbH 100.00% Austria 31 Dec. RLB OÖ Unternehmensholding GmbH 100.00% Austria 31 Dec. RVD Raiffeisen-Versicherungsdienst Gesellschaft m.b.H. 75.00% Austria 31 Dec. RVM Raiffeisen-Versicherungsmakler GmbH 100.00% Austria 30 June X SALZBURGER LANDES-HYPOTHEKENBANK AKTIENGESELLSCHAFT 59.65% Austria 31 Dec. Select Versicherungsberatung GmbH 93.25% Austria 31 Aug. X SENNA Nahrungsmittel GmbH & Co KG 95.00% Austria 31 Dec. Steirische Tierkörperverwertungsgesellschaft m.b.H. & Co KG 95.00% Austria 31 Dec. TKV Oberösterreich GmbH 95.00% Austria 31 Dec. VIVATIS Beteiligungs-GmbH 95.00% Austria 31 Dec. X VIVATIS Capital Invest GmbH 95.00% Austria 31 Dec. VIVATIS Capital Services eGen 95.00% Austria 31 Dec. VIVATIS Holding AG 95.00% Austria 31 Dec. vivo Leasing GmbH & Co KG 75.00% Austria 31 Dec. WDL Infrastruktur GmbH 51.00% Austria 30 Sept.

Entities accounted for using the equity method AMAG Austria Metall AG 16.50% Austria 31 Dec. Beteiligungs- und Wohnungsanlagen GmbH 46.00% Austria 31 Dec. Oberösterreichische Landesbank Aktiengesellschaft 41.61% Austria 31 Dec. Österreichische Salinen Aktiengesellschaft 41.25% Austria 30 June Raiffeisen Zentralbank Österreich Aktiengesellschaft 14.64% Austria 31 Dec. Raiffeisenbank a.s. 25.00% Czech Republic 31 Dec. Raiffeisenlandesbank Oberösterreich Invest GmbH & Co OG 49.00% Austria 30 Sept.

1 Control based on majority voting rights 2 Control based on general partnership with majority voting rights 3 Control based on majority of members of the executive board and agreement binding voting rights 4 Control based on the right to appoint members to the foundation’s management board

Changes in the basis of consolidation and their effects

The number of fully consolidated companies reported under the equity method developed during the financial year as follows:

FULLY CONSOLIDATED EQUITY METHOD 2015 2014 2015 2014

As at 1 Jan. 154 154 7 9 Included for the first time during the reporting year 8 5 – – Merged in the reporting year 2 3 – – Deconsolidated during the reporting year 6 2 – 2 As at 31 Dec. 154 154 7 7 78 Annual Report 2015

In the 2015 financial year, the following eight fully consolidated Gesellschaft m.b.H. was deconsolidated in the second half companies were included in the basis of consolidation for the of 2015. The assignment of shares in RACON Software first time – see also the relevant first-time consolidation indi- Gesellschaft m.b.H. and the transfer of the entire assets of cator in the consolidated group list above. Six of the newly Raiffeisen Software Solution und Service GmbH to RACON included companies are subsidiaries that were previously Software Gesellschaft m.b.H. as a result of a capital increase deemed to be of minor significance. Two entities were newly as part of the merger led to a reduction in the overall percent- established in the year under review. age shareholding held by Raiffeisenlandesbank Oberösterre- ¬¬ IMMOBILIEN Invest Real-Treuhand Portfoliomanagement ich and a loss of control. The name of the absorbing company GmbH & Co OG RACON Software Gesellschaft m.b.H. was changed during ¬¬ Raiffeisen-IMPULS-Projekt Hörsching GmbH the course of the merger to Raiffeisen Software GmbH. ¬¬ Raiffeisen OÖ Immobilien- und Projektentwicklungs GmbH ¬¬ Real-Treuhand Bau- und Facilitymanagement GmbH At the time of the deconsolidation, the assets and liabilities ¬¬ Real-Treuhand Projekt- und Bauträger GmbH of these companies that were previously fully consolidated ¬¬ RVM Raiffeisen-Versicherungsmakler GmbH amounted to a total of EUR 72,880 thousand and EUR 68,912 ¬¬ Select Versicherungsberatung GmbH thousand respectively. ¬¬ VIVATIS Beteiligungs-GmbH Foreign currency translation At the time of their initial consolidation, the assets and liabilities of these companies amounted to a total of EUR 150,323 thou- The consolidated financial statements are presented in euros, sand and EUR 116,937 thousand respectively. reflecting the national currency. Financial statements of fully consolidated companies whose functional currency differs Further changes compared with the position as at 31 De- from the group currency are translated into euros employing cember 2014 arose as a consequence of the disposal and the modified current rate method in accordance with IAS 21. associated deconsolidation of the following previously fully Generally, the national currency is the same as the functional consolidated companies: currency. ¬¬ INPROX Tabor, s.r.o. ¬¬ INPROX Plzen s.r.o. When the modified closing rate method is applied, equity is ¬¬ Raiffeisen-IMPULS-Jota Immobilien GmbH translated at historical rates while all other assets and liabilities ¬¬ SANCTOR Grundstücks-Vermietungsgesellschaft mbH are translated using the relevant closing rates (middle rates of & Co. Objekt Germering KG the European Central Bank (ECB) as at the Group balance ¬¬ SEKUNDA-spolecnost pro správu nemovitostí, s.r.o. sheet date). The items on the income statement are translated using the average currency exchange rates of the ECB. Cur- Changes to the basis of consolidation also resulted from rency differences resulting from the translation of the equity the merger of bankdirekt.at AG and PRIVAT BANK AG der components using historical rates and the translation of the Raiffeisenlandesbank Oberösterreich into Raiffeisenlandes- income statement using average rates compared to a trans- bank Oberösterreich Aktiengesellschaft. In addition, the lation using closing rates are recognised in the statement of previously fully consolidated subsidiary RACON Software comprehensive income.

The following exchange rates were used in the consolidation for currency translation:

2015 2014 RATES IN CURRENCY PER EURO CLOSING RATE AVERAGE RATE CLOSING RATE AVERAGE RATE

Croatian kuna (HRK) 7.6 38 0 7.6211 7.658 0 7.6 342 Polish zloty (PLN) 4.2639 4.1909 4.2732 4.1909 Czech koruna CZK 27.023 0 27.3 0 53 27.7350 27.5418 Romanian leu (RON) 4.5240 4.4440 4.4828 4.4410 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 79

IFRS consolidated financial statements _ Notes _ Accounting policies

Accounting policies

Financial instruments A financial asset (or part of a financial asset or part of a group of similar financial assets) is derecognised when the contrac- A financial instrument is any contract that gives rise to a fi- tually agreed rights to cash flows from the financial asset have nancial asset of one entity and a financial liability or equity expired or have been transferred, and the Group has trans- instrument of another entity. In accordance with IAS 39, all ferred substantially all the risks and rewards associated with financial assets and liabilities including all derivative financial the ownership of the asset. instruments must be included in the balance sheet. A distinction is made between the following categories: A financial liability is derecognised when the obligation associ- ¬¬ Financial assets or liabilities that are assessed at fair value ated with the liability has been settled, revoked or has expired. with an effect on income; and this category is subdivided into: The fair value of financial instruments traded in an active –– Financial instruments held for trading market is measured by reference to the prices quoted in the –– Designated financial instruments market (Level 1 of the fair value hierarchy). Essentially, stock ¬¬ Financial assets available for sale exchange prices or external data sources (quotes from trad- ¬¬ Held-to-maturity investments ers and brokers in liquid markets) are used for these finan- ¬¬ Loans and receivables cial instruments. If there is no active market or market prices ¬¬ Financial liabilities at amortised cost can only be obtained for the financial instruments on a limited basis, the fair value is determined using quoted prices from A financial instrument is first recognised in the balance sheet individual traders or by using recognised valuation techniques when Raiffeisenlandesbank Oberösterreich acquires a con- based on observable market data (Level 2 of the fair value tractual right and/or incurs obligations in connection with the hierarchy). Should there be neither listed prices nor sufficient financial instrument concerned. Purchases and sales of finan- observable market data available for determining the fair value cial instruments are generally accounted for on the trade date. of financial instruments, then the measurement parameters The trade date is the date on which the entity enters into the that are not observable in the market are estimated using ap- obligation to buy or sell a financial instrument. The classifica- propriate assumptions (Level 3 of the fair value hierarchy). tion of a financial instrument on initial recognition depends on the characteristics of the instrument concerned as well as on the purpose and intention of management in acquiring the instrument. 80 Annual Report 2015

Valuation techniques and input factors for determining fair values

VALUATION LEVEL INSTRUMENT TYPES TECHNIQUE INPUT FACTORS

Cash flows already fixed or determined via forward rates; yield curve; risk premiums on the basis of internal calculations for credit risk of counterparties. * Loans and Non-observable input factors are credit spreads of designated loans which advances to fluctuate within a range from 6 to 29 basis points – capital-weighted mean is III banks NPV-oriented 9 basis points. Cash flows already fixed or determined via forward rates; yield curve; risk premiums on the basis of internal calculations for credit risk of counterparties. * Loans and Non-observable input factors are credit spreads of designated loans which advances to fluctuate within a range (mean lowest and highest quantile) from 12 to 367 basis III customers NPV-oriented points – capital-weighted mean, taking into account collateral, is 37 basis points. Market-value- I Derivatives Exchange-traded oriented Stock market price Cash flows already fixed or determined using forward rates; observable yield II Derivatives Over the counter NPV-oriented curve; observable credit spreads of counterparties and own credit spread Market-value- I Financial assets Listed securities oriented Stock market prices; prices quoted by market participants Prices quoted by market participants for equivalent financial instruments; cash Market-value- flows already fixed or determined using forward rates; observable yield curve; II Financial assets Non-listed securities oriented credit spreads of comparable observable instruments Expected inflows derived from internal calculations; yield curve; credit risk of counterparties * The non-observable input factors are credit spreads for corporates. These range within a band of 41 to 982 basis points for financial assets measured at fair value – III Financial assets Non-listed securities NPV-oriented the capital-weighted mean is 133 basis points. Market-value- I Financial assets Shares oriented Stock market price Risk-free base rate: interest rate structure of German government bonds using the Svensson method Market price premium: based on the recommendation of the Business Valuation Shares in non-consoli- Working Group of the Professional Committee for Business Management and dated subsidiaries, Organisation other equity invest- Income- Beta: based on an analysis of the beta factors of peer group entities ments and profit capitalisation- Small stock premium: additional risk premium of a maximum 3 per cent III Financial assets participation rights oriented Growth factor: maximum 2 per cent growth rate Shares in non-consoli- This valuation technique is used for holding companies and their equity invest- dated subsidiaries, ments. other equity invest- The hidden reserves in the equity investments are added to the net asset value of ments and profit the parent company. In the case of real estate (project) companies, the company III Financial assets participation rights Net asset value valuation is generally determined using an expert market value report. Cash flows already fixed or determined using forward rates; observable yield Amounts owed curve; observable liquidity costs (differentiation by maturity and collateral/seniority) II to banks NPV-oriented which also include own credit risk Cash flows already fixed or determined using forward rates; observable yield Amounts owed curve; observable liquidity costs (differentiation by maturity and collateral/seniority) II to customers NPV-oriented which also include own credit risk Liabilities Cash flows already fixed or determined using forward rates; observable yield evidenced by curve; observable liquidity costs (differentiation by maturity and collateral/seniority) II certificates NPV-oriented which also include own credit risk Cash flows already fixed or determined using forward rates; observable yield Subordinated curve; observable liquidity costs (differentiation by maturity and collateral/seniority) II capital NPV-oriented which also include own credit risk

*The risk premiums are determined depending on the average probability of default (PD, through-the-cycle) for each rating and original maturity and on the loss given default (LGD). The probabilities of default and migration for corporate and retail customers are determined every quarter and are based on the Group’s own default data since 2004. The maturity component of the imputed risk cost rates is mapped through matrix multiplication of the migration matrices produced. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 81

IFRS consolidated financial statements _ Notes _ Accounting policies

Financial instruments held for trading The following balance sheet items contain financial instruments designated at fair value through profit or loss: The financial instruments held for trading category comprises trading securities and derivative financial instruments. They ¬¬ Loans and advances to banks are measured at fair value. A credit value adjustment (CVA) ¬¬ Loans and advances to customers and debt value adjustment (DVA) are determined as part of the ¬¬ Financial assets inclusion of credit risk in the mark-to-model measurement of ¬¬ Amounts owed to banks derivatives. The main factors used in determining the CVA and ¬¬ Amounts owed to customers DVA are the term to maturity, counterparty default risk, own ¬¬ Liabilities evidenced by certificates default risk and collateral. ¬¬ Subordinated capital

The financial instruments in this category are used to take ad- These financial instruments are assessed at fair value. Unre- vantage of short-term price fluctuations on the market or are alised and realised profits and losses are recorded with effect purchased for economic hedging purposes. on the income statement as net income/loss from designated financial instruments. Interest income or expenses from des- If there are positive market values including deferred interest ignated financial instruments are recognised under net interest (“dirty price”), the financial instruments are included in the income. trading assets. If there are negative fair values then they are recorded under the balance sheet item of “trading liabilities”. Available-for-sale (AfS) financial assets Interest and dividend income, refinancing costs, provisions and changes in value of dealing securities are recorded as This category covers non-derivative financial instruments such part of the net trading income with effect on the income state- as bonds and other fixed-income securities, shares and other ment. Changes in the value of derivatives effect the income variable-yield securities. Equity instruments are classified in statement and are shown in the net income/loss from desig- this category if they are neither held for trading nor classified nated financial instruments. Interest relating to such financial as at fair value through profit or loss. For debt capital instru- instruments is included in interest income or interest expenses ments that are classified as available for sale, the intention is to from designated and derivative financial instruments under net hold them for an indefinite period. However, they can be sold if interest income. market conditions change or liquidity is needed.

Financial instruments designated at fair value Financial assets in this category are evaluated in accordance with IAS 39 at fair value. They are recognised under financial Financial instruments designated at fair value (designated fi- assets on the balance sheet. Changes in fair value are shown nancial instruments) are financial assets and liabilities that, on without effect on the income statement. Interest income from initial recognition, are classified or designated as measured available-for-sale debt securities and other fixed-income se- at fair value through profit or loss (fair value option). Financial curities is recognised using the effective interest rate method. instruments can only be classified in this way if Changes in fair value recognised in other comprehensive in- ¬¬ the classification eliminates or substantially reduces mis- come are reclassified to profit or loss when the financial asset matches in recognition or measurement, in question is derecognised. In the case of impairment, the ¬¬ a portfolio of financial assets and/or financial liabilities and difference between the fair value and cost (less any repay- its performance are managed and measured on a fair value ments and amortisation) is also recognised in profit or loss. basis in accordance with a documented risk management If the reasons for impairment no longer apply, a reversal of or investment strategy, the impairment loss is recognised in profit or loss, provided ¬¬ a contract contains an embedded derivative requiring that the instrument concerned is a debt instrument. However, bifurcation. any increases in fair value that go beyond the amount of the reversal of the impairment loss are recorded with no effect on the income statement. If an equity instrument is held, the impairment is not retracted with effect on the income statement. Increases in value in later periods are therefore accounted for with no effect on the income statement. If the fair value of an equity instrument cannot be reliably determined, the instrument is recognised at cost net of any impairment losses. 82 Annual Report 2015

Held-to-maturity investments (HtM) Loan loss allowances

This category contains non-derivative financial assets that The recognition of loan loss allowances is triggered primarily if have fixed or determinable payments and a fixed term, that losses from payment defaults are incurred as a result of finan- are quoted on an active market and that Raiffeisenlandesbank cial difficulties on the part of the debtor or if payments are sig- Oberösterreich intends and has the ability to hold to maturity. nificantly in arrears, i.e. more than 90 days past due. Within the The category does not include financial assets that, on ini- internal risk management system, ongoing monitoring of the tial recognition, are measured and designated as at fair value counterparty and the specific case involved is used to deter- through profitable loss or classified as available for sale. Fi- mine whether relevant circumstances exist for the recognition nancial assets in this category are measured at amortised of allowances. In the case of significant customer exposures cost using the effective interest method. Impairment losses in the lending business, each individual case is analysed as as defined by IAS 39 are recognised in profit or loss. Financial the basis for recognising specific loan loss allowances or pro- investments assigned to this category are reported under fi- visions for contingent liabilities and lending commitments. The nancial assets on the balance sheet. calculation for the amount of the loan loss allowance takes into account the discounted cash inflows expected from interest Held-to-maturity investments can only be sold in the excep- payments and repayments of principal together with any in- tional cases specifically listed in IAS 39, otherwise penalty pro- flows that can be obtained from the recovery of collateral. A visions known as the “tainting rule” must be observed. Under standardised method is used for customer exposures that are the IAS 39 provisions, no more than an insignificant amount not deemed to be significant. of held-to-maturity investments may be sold before the investments reach maturity. A portfolio loan loss allowance is recognised for potential losses on loans and advances that cannot be individually as- Loans and receivables signed. The calculation of this portfolio loan loss allowance takes into account statistical data derived from past experi- Financial instruments in the loans and receivables category ence of losses. Exposures are grouped by asset and rating are non-derivative financial assets with fixed or determinable class, each class having similar default risk characteristics. payments that are not quoted on any active market. The category does not include financial assets that, on initial recog- Financial liabilities measured at amortised cost nition, are measured and designated as at fair value through profit or loss or classified as available for sale. If financial instruments on the liabilities side are neither held for trading nor designated at fair value, they are measured at Financial assets classified as loans and receivables are mea- amortised cost. The issued securities included in financial lia- sured at amortised cost. Securities classified in this category bilities are measured using the effective interest rate method. are measured using the effective interest method. They are Financial liabilities are mainly reported under amounts owed mainly recorded under the balance sheet items loans and ad- to banks, amounts owed to customers, liabilities evidenced vances to banks and loans and advances to customers. Secu- by certificates or subordinated capital on the balance sheet. rities classified as loans and receivables are recognised under financial assets on the balance sheet Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 83

IFRS consolidated financial statements _ Notes _ Accounting policies

Presentation of the balance sheet items by measurement basis and category

MAIN MEASUREMENT BASIS ASSETS FAIR VALUE AMORTISED COST OTHER IAS 39 CATEGORY

Cash and cash equivalents x Nominal Loans and receivables Loans and advances to banks x Loans and receivables Loans and advances to banks x Fair value option Loans and advances to customers x Loans and receivables Loans and advances to customers x Fair value option Trading assets x Held for trading Designated financial assets x Fair value option Financial assets classified as available for sale (AfS) x At cost Available for sale Financial assets classified as held-to-maturity (HtM) x Held to maturity Financial assets classified as loans and receivables x Loans and receivables

MAIN MEASUREMENT BASIS EQUITY AND LIABILITIES FAIR VALUE AMORTISED COST OTHER IAS 39 CATEGORY

Amounts owed to banks x Financial liabilities Amounts owed to banks x Fair value option Amounts owed to customers x Financial liabilities Amounts owed to customers x Fair value option Trading liabilities x Held for trading Liabilities evidenced by certificates x Financial liabilities Liabilities evidenced by certificates x Fair value option Subordinated capital x Financial liabilities Subordinated capital x Fair value option

Balance sheetHedge accounting of the derivative alone (recognised in profit or loss) and in a mark-to-market measurement of the derivative and hedged item (under the exercise of the fair value option) as a result of At Raiffeisenlandesbank Oberösterreich, fair value hedge ac- spread changes in the hedged item. counting is applied in accordance with the provisions of IAS 39. In such hedging arrangements, the change in the fair value Hedging instruments subject to fair value hedge accounting of a recognised hedged item (underlying transaction) that can are recognised in the balance sheet under trading assets or be attributed to a particular risk is offset by a countervailing trading liabilities, as in the case of other derivatives. hedging instrument (generally a derivative). The recognition of a fair value hedge means that one-sided effects on profit or Hedged items subject to fair value hedge accounting are in- loss from economically hedged risks can be avoided. A key cluded mainly in the following balance sheet items: requirement is that the hedges must be effective and this effectiveness must be demonstrable and documented both pro- ¬¬ Loans and advances to customers spectively and retrospectively. ¬¬ Financial assets ¬¬ Amounts owed to banks The main area of application in the Group is the hedging of ¬¬ Amounts owed to customers underlying transactions with fixed interest rate risks by the ¬¬ Liabilities evidenced by certificates use of countervailing derivative financial instruments in which the key parameters are otherwise largely identical (e.g. is- The gains and losses arising from fair value hedge accounting sues with fixed coupons and receiver swaps). The objective are reported in the income statement under net income from is to reduce the volatility of results that could occur without investments. hedge accounting both in a mark-to-market measurement 84 Annual Report 2015

In addition, Raiffeisenlandesbank Oberösterreich hedges the is a lease that is not a finance lease. The critical factor in de- foreign currency risk arising from net investments in foreign termining whether a lease is a finance lease or an operating operations, applying the relevant provisions on such hedges lease is the substance of the transaction rather than the form of net investments in accordance with IAS 39 in conjunction at the inception of the lease. Changes to a lease may mean with IFRIC 16. The hedged item in this case is the net invest- that lease has to be reclassified. ment in a foreign operation; the Group normally uses financial liabilities as the hedging instrument. The effective portion In accordance with IAS 17, the lessor in a finance lease rec- of the hedge is recognised in other comprehensive income ognises the present value of the future lease payments and whereas the ineffective portion is reported under net trading any residual value as receivables due from the lessee. Under income in profit or loss. a finance lease, the lessee reports the assets under the relevant item of property and equipment and recognises a corre- Offsetting financial assets and financial liabilities sponding lease liability on the other side of the balance sheet.

Financial assets and financial liabilities are only offset and re- In the case of operating leases, the lease payments are rec- ported as a net amount in the balance sheet if the Group has ognised in profit or loss by both the lessee and the lessor. The a legally enforceable right of set-off and intends either to settle lessor recognises the lease asset on its balance sheet at cost on a net basis or to realise the financial asset and settle the less depreciation. financial liability simultaneously. The legally enforceable right of set-off must not depend on a future event and must be en- The Group companies are lessors and, to a minor degree, forceable in the normal course of business and in the event of also lessees. default, insolvency or bankruptcy. Intangible assets Repurchase transactions Purchased intangible assets are measured at cost on initial In a 'genuine' repurchase transaction (repo), the Group sells recognition. In subsequent measurement, a distinction is assets to a counterparty, at the same time agreeing to buy made between intangible assets with finite and those with in- them back on a certain date and at a certain price. These as- definite useful lives. sets remain on the balance sheet and are evaluated according to the rules of the various balance sheet items. A liability in the Intangible assets with a finite useful life are subject to straight- amount of the price received is posted. line amortisation over the useful life concerned. In addition, an impairment test is carried out if there are indications of any im- In a reverse repo transaction, the Group buys assets, at the pairment. The amortisation period and method are reviewed same time agreeing to sell them back in the future. A receiv- at the end of each financial year as a minimum and adjusted able is recognised in the amount of the price paid. Interest if necessary. Amortisation of intangible assets with finite use- expenses from repo transactions and interest income from ful lives is recognised in the income statement under general reverse repo transactions are recognised over the period of administrative expenses. the transaction and reported under net interest income. Intangible assets with indefinite useful lives are subjected to an In a non-genuine repo, the seller has an obligation to buy the impairment test annually and whenever there is otherwise an assets back but it does not have the right to demand them indication of impairment. In the impairment test, the carrying back. The buyer alone decides whether it wants to sell the amount of the intangible asset is compared with the recov- assets back or not. In a non-genuine repo, the assets are not erable amount. The recoverable amount of an asset is the reported on the seller's balance sheet, but on the balance higher of fair value less costs to sell and value in use. If the sheet of the buyer. carrying amount of an intangible asset or a cash-generating unit exceeds the recoverable amount, the asset is impaired Leases and must be written down to the recoverable amount. In addition, a review is carried out once a year to establish whether The group differentiates between finance leases and operat- the classification of the useful life as indefinite is still justified ing leases. Under IFRSs, a lease is classified as a finance lease or whether an appropriate adjustment must be made. Any if it transfers substantially all the risks and rewards incidental to impairment loss is recognised in the income statement under the ownership of the asset to the lessee. An operating lease general administrative expenses. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 85

IFRS consolidated financial statements _ Notes _ Accounting policies

With the exception of goodwill, all intangible assets have finite Inventories useful lives. The amortisation of intangible assets is based on the following useful lives: Inventories are reported under other assets. They are reported IMPAIRMENT/ at the lower of cost and net realisable value. AMORTISATION YEARS METHOD Provisions Goodwill unlimited Impairment test Brand 15 Straight line All social provisions (provisions for pensions, severance ob- Customer base 3 – 15 Straight line ligations and long-service awards) are determined in accor- Other intangible assets 1 – 33 Straight line dance with IAS 19 Employee Benefits using the projected unit credit method.

Property and equipment, and investment property The Raiffeisenlandesbank Oberösterreich Group has made commitments to a group of employees relating to retirement Property and equipment, together with investment property, pensions, occupational disability pensions and pensions for is measured at cost and reduced by depreciation. The follow- surviving dependants. Defined benefit pension plans guaran- ing useful lives are usually taken as the basis for straight-line tee the employees a specific retirement benefit that depends depreciation: on years of employment and a certain percentage of remu- YEARS neration. If employees become permanently disabled, they are entitled to an invalidity pension under the Austrian General Movable assets 1 – 25 Social Security Act (Allgemeines Sozialversicherungsgesetz – Immovable assets 3 – 65 ASVG) provided that they meet the criteria in section 271/1 Investment property 5 – 65 of this Act. A surviving dependants' pension is paid if an employee or pension beneficiary dies. For some of the beneficia- If impairment is identified, an impairment loss is recognised ries, the obligations have been transferred to a pension fund. to reduce the carrying amount to the higher of fair value less In the case of the obligations funded through a pension fund, costs to sell and value in use in accordance with IAS 36. If the the amount of the entitlement is determined once at the time reasons for the impairment no longer exist, the impairment of retirement; after that, no further contributions need to be loss is reversed up to a maximum of the carrying amount that paid. would have applied, taking into account depreciation, if the impairment loss had not been recognised. In one subsidiary, employees have been compensated for pension commitments originally made. These employees are Property that is held for rental and leasing or for capital appre- entitled to an “ASVG equivalent”, which will be paid to the em- ciation is reported as investment property. If part of the prop- ployees or their surviving dependants for a limited period: em- erty is owner-occupied, it is only classified as an investment ployees are entitled to an invalidity and retirement pension; in property if the part used by the owner is insignificant. Build- the event of death, the surviving dependants are also entitled ings under construction that have the same expected purpose to a pension. The ASVG equivalent is paid after retirement and as investment property are treated as investment property. after the period covered by the severance package until an Investment property is also recognised at amortised cost in ASVG pension has been awarded and is paid. accordance with the relevant option in IAS 40. The pension provisions include provisions for additional pen- Standard industry valuation reports and present value cal- sion allowances. The beneficiaries receive, in the event of culations are prepared for investment property classified as invalidity or upon retirement and after the end of the period Level 3. Depending on the use of the investment property, covered by the severance package, a family allowance and/ the fair value is determined using the income capitalisation or supplementary insurance covering an allowance. The pre- approach, the replacement cost approach or the sales com- condition for payment is that the employee has a right to one parison approach. The main input factors are income and ex- or both of these allowances at the time of retirement. penses attributable to the property, condition and location of the property, similar assets and interest rates, depending on Employees of Austrian companies whose employment began which valuation method is considered appropriate. before 1 January 2003 have a right to a severance payment if 86 Annual Report 2015

the employer ends the employment and when they retire. This of money is material, then provisions of this nature are dis- right depends on the number of years they worked for the counted and recognised at present value. company and their final salary. Defined contribution plans In Austria, employees receive anniversary bonuses (long-service awards) after a certain number of years of employment. Pursuant to IAS 19, a distinction needs to be made between defined contribution plans and defined benefit plans, the latter The calculations are based on a notional pensionable age requiring provisions for pensions and severance payments. of 60 for women and 65 for men and take into account the For a group of employees certain payments are transferred statutory transitional provisions pursuant to the Austrian Bud- to a pension fund that manages the funds and makes the get Accompanying Act (Budgetbegleitgesetz) of 2003 as well pension payments. For employees whose employment com- as individual contractual provisions. The pensionable age for menced after 31 December 2002, a defined contribution sys- women has also been set in compliance with the Austrian tem is used to cover severance payment entitlements. Federal Constitutional Act on Differing Age Limits (Bundesver- fassungsgesetz Altersgrenzen – BVG Altersgrenzen) (Federal In such defined contribution plans, specified payments are Law Gazette 1992/832). made to an independent institution (pension fund, employee pension fund) and the company only guarantees the contri- The actuarial calculation of pension obligations for the qual- butions, not the amount of the benefits to be paid out sub- ifying period are based on a discount rate of 1.75 per cent sequently. These payments are recognised as personnel p.a. (previous year: 1.75 per cent p.a.) and a pension-relevant expenses in profit or loss. salary increase of 1.75 per cent to 3.0 per cent p.a. (previous year: 2.0 per cent to 3.0 per cent p.a.). The parameters for Taxes on income the benefits period are a discount rate of 1.75 per cent p.a. (previous year: 1.75 per cent p.a.) and an expected pension Taxes on income are accounted for in accordance with IAS increase of 1.75 per cent to 2.0 per cent p.a. (previous year: 12. Deferred taxes based on country-specific tax rates are 2.0 per cent to 3.0 per cent p.a.). calculated for temporary differences between the amounts recognised in the consolidated financial statements and those A discount rate of 1.75 per cent p.a. (previous year: 1.75 per in the tax base and that will reverse in subsequent periods. cent p.a.) and an average, sector-specific salary increase of Deferred tax assets are recognised for loss carryforwards if 2.75 per cent to 4.0 per cent p.a. (previous year: 3.0 per cent it is probable that there will be taxable profits in the future in to 4.0 per cent p.a.) have also been used for the actuarial cal- a similar amount in the same company or in the same corpo- culation of severance obligations and long-service awards. rate group. Calculations also take into account annual employee turnover rates (related to period of service) based on internal statistics In 2005, Raiffeisenlandesbank Oberösterreich, acting as head for early termination of employment in addition to invalidity of the group, formed a corporate group with various financially rates, mortality rates and factors resulting from the termina- affiliated entities within the meaning of section 9 of the Aus- tion of employment on attaining retirement age. trian Corporation Tax Act (Körperschaftsteuergesetz – KStG).

Defined benefit plans give rise to actuarial risks in the Group. Deferred tax assets and deferred tax liabilities are reported in These risks include longevity risk, currency risk, interest rate the Group on a net basis if there is a legally enforceable right risk, market risk and investment risk. of set-off in relation to the taxes and the taxes relate to taxable items within the same tax unit or corporate group. Future tax In accordance with IAS 19, actuarial gains and losses on pen- obligations from offsetting of losses from foreign subsidiaries sion and severance provisions are recognised immediately in are recognised without discounting in the consolidated finan- other comprehensive income; actuarial gains and losses on cial statements. the provisions for long-service awards are recognised immediately in profit or loss as personnel expenses. The net inter- Fiduciary transactions est expense and service cost are recognised in profit or loss under personnel expenses Business operations based on the administration or place- ment of assets for third party account are not reported on the Further provisions are recognised for contingent liabilities to balance sheet. Commission payments from these operations third parties in the amount of anticipated utilisation if it is likely are included under net fee and commission income. that the liability will materialise. If the effect from the time value Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 87

IFRS consolidated financial statements _ Notes _ Accounting policies

Net interest income profit or loss can be found in the statement of comprehensive income and in a separate disclosure in the Notes. The gain or Interest and interest-related income includes interest income loss arising from hedge accounting are also reported in this from loans and advances to customers and banks, as well item in the income statement. as bonds and interest-dependent derivatives. It also includes current income from shares, profit participation rights, fund Credit-quality-related falls in the prices of securities classified units/shares as well as from affiliated companies and other as available-for-sale financial assets, held-to-maturity invest- equity investments that are neither fully consolidated nor ac- ments or loans and receivables, and that also represent a counted for using the equity method. The share of profit or default event within the meaning of IAS 39, are recognised loss from companies accounted for using the equity method in profit or loss. Triggering events include substantial finan- are also reported in a separate item within net interest income. cial difficulties of the issuer, significant worsening of ratings and payment defaults in relation to interest or principal. In the Interest expenses arise mainly in relation to amounts owed case of equity instruments, an impairment loss is recognised to customers and banks, liabilities evidenced by certificates, in profit or loss if an equity price falls permanently or signifi- subordinated capital and interest-dependent derivatives. cantly below cost.

Interest income and expenses are subject to accrual account- Net income/loss from designated financial instruments ing; dividends are recognised as soon as legal entitlement arises. Unrealised and realised gains and losses from financial instruments designated at fair value recognised on the balance Negative interest in connection with financial liabilities is re- sheet under financial assets are not reported under net in- ported as a separate item in interest income. Negative interest come from investments but in a separate item on the income in connection with financial assets is reported as a separate statement (net income/loss from designated financial instru- item in interest expenses. ments). The latter item also includes the net gains and losses from remeasurement and disposal of all other designated fi- Loan loss allowances nancial instruments and derivatives.

This item on the income statement is used to report the rec- General administrative expenses ognition and reversal of loan loss allowances and provisions relating to the lending business. Direct impairment losses and The general administrative expenses include personnel and subsequent receipts in respect of loans and advances that other administrative expenses as well as depreciation and im- have already been written off are also included in this item. pairment of property and equipment and investment property and amortisation and impairment of intangible assets. Net fee and commission income Management judgement and estimates Net fee and commission income is the balance of income and expenses in connection with the service business, recognised When applying the accounting policies in the consolidated in the periods to which the income and expenses apply. Fee financial statements, the management exercises judgement, and commission income and expenses arise mainly from pay- keeping in mind the objective of the financial statements to ment transactions, foreign exchange, notes/coins business, provide meaningful information about the company’s finan- precious metal transactions, securities business, loan pro- cial position and financial performance as well as about any cessing and guarantee business. changes in the net assets and financial position of the business. Assumptions and estimates also take into account, in Net income from investments particular, market-related input factors, statistical data, empirical values and expert opinions. Net income from investments comprises gains and losses on remeasurement and disposal recognised in profit or loss in re- Key areas in which management judgement and estimates are lation to securities classified as held-to-maturity investments, applied are described below. available-for-sale (AfS) financial assets or loans and receivables. This item also includes net gains and losses on the Fair value of financial instruments remeasurement or disposal of affiliated companies and other equity investments that are neither fully consolidated nor ac- If the fair value of recognised financial assets and financial counted for using the equity method. Information on the gains liabilities cannot be determined based on the data from an and losses on available-for-sale financial assets recycled to active market there are various alternative methods that can 88 Annual Report 2015

be used. If there is no observable data from which to derive Leasing parameters for a valuation technique, the fair value is determined on the basis of estimates. The extent to which substantially all the risks and rewards incidental to ownership of a lease asset lie with the lessor or Equity investments and participation rights are generally clas- lessee provides the basis for classifying leases. This requires sified as available-for-sale financial assets and must therefore an estimate of the extent to which the transfer of the risks and be measured at fair value. If there are no observable market rewards is significant. This may change if changes are made prices, the income capitalisation approach or other suitable to the lease and an adjustment may be required. Detailed ex- forms of business valuation are used based on the data avail- planations are provided in the “Leases” section. able (e.g. net-asset-value or sum-of-the-parts methods). If the fair value cannot be reliably determined then the instrument is Recognition and measurement of deferred taxes recognised at cost. There is not generally any intention to sell these equity investments. If there are indications that the cost Deferred taxes are recognised and measured on the basis of may be impaired then an expected value is determined and an current assessments and legislation. Deviations from the ex- impairment loss recognised as necessary. pected future results from business operations or changes to tax law may impact the tax position and result in a change to Recognition of loan loss allowances the deferred taxes. More detailed explanations are provided in the “Income taxes” section. Financial assets not measured at fair value through profit or loss are subjected to an impairment test at each balance Recognition of contingent liabilities and sheet date to determine whether an impairment loss needs to contingent tax items be recognised in profit or loss. In particular, an assessment is carried out to establish whether there is objective evidence of The use of estimated values is important when determining impairment as a result of a loss event that has occurred after the need for provisions for contingent liabilities and contingent initial recognition. In the course of determining the impairment tax items. The Group measures these potential losses – to the loss, it is also necessary to estimate the amount and timing of extent that they are probable and can be estimated – in ac- future cash flows. In addition, a review is carried out to deter- cordance with IAS 37 Provisions, Contingent Liabilities and mine whether there is any requirement to recognise a provi- Contingent Assets or IAS 12 Income Taxes. Significant esti- sion for off-balance-sheet obligations in the lending business. mates are required regarding the amounts to be recognised for provisions. The final liabilities may ultimately differ from these Provisions for pensions, severance payments and estimates. Further disclosures are provided in the Provisions long-service awards section.

The actuarial measurement is largely based on assumptions Useful lives of non-current assets about discount rates and future changes in personnel costs. Estimates of demographic trends are also necessary. Appro- The useful lives for property and equipment are determined priate quantitative sensitivity analyses are presented in the on the basis of assumptions, estimates and empirical values Notes. relating to the useful lives of non-current assets. Further descriptions are available in the “Property and equipment, and Impairment of debt instruments and equity securities investment property” section.

Ongoing reviews are used as the basis for deciding whether Actual useful lives may be different from the estimates. there are any indicators of impairment. If there is an indicator of potential impairment in accordance with IAS 39.59, then an impairment test must be carried out. In accordance with IAS 39.61, a significant or permanent decrease in the fair value below cost is also objective evidence of impairment for equity instruments. Significant impairment is generally assumed if the price of an equity instrument falls to more than 20 per cent below cost. If the price of equity securities is continuously and permanently below the cost over twelve months then this is taken as a permanent indicator of impairment. Additional disclosures are provided in the Financial instruments section. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 89

IFRS consolidated financial statements _ Notes _ Segment reporting

Segment reporting

Segment reporting in accordance with IFRS 8 is based on the most important fully consolidated subsidiaries, this seg- the segment approach in the internal management accounts ment also includes associates and other equity investments submitted to the Managing Board. This generally follows the that are accounted for using the equity method and measured requirements in IFRSs and the accounting policies specified at fair value or, if fair value cannot be reliably determined, at in the standards. There are no differences compared with cost. The Equity Investments segment is sub-divided into four the Group's accounting policies. As part of the reporting sys- equity investment portfolios from an organisational perspec- tem to the Managing Board, the segment information is reg- tive. These are Banks & Financial Institutions, Outsourcing & ularly presented to the members of the Managing Board to Bank-related Equity Investments, Real Estate and Venture & help them make decisions, manage the Bank and allocate Partner Capital. resources. The entire Managing Board is the chief operating decision maker within the meaning of IFRS 8. However, reporting and management within the Equity Invest- ments segment is generally on the basis of an individual entity The earnings for each segment also include earnings from and/or sub-group approach. As part of the expansion of the transactions with other segments. The services exchanged basis of consolidation at 31 December 2013 in order to com- between the segments are generally measured on an arm's- ply with supervisory provisions (CRR basis of consolidation), a length basis; the segments treat each other like external ser- sub-group structure was introduced with regard to the related vice providers. reporting purposes, consisting of the sub-groups Hypo Salz- burg, IMPULS-LEASING Group, VIVATIS/efko and the Upper Segment reporting is divided into the four segments de- Austrian property development companies (OÖ Wohnbau). scribed below. The additional subsidiaries not included in sub-groups are also allocated to the Equity Investments segment. Corporates & Retail Aside from the sub-groups, the entities accounted for using The Corporates & Retail segment comprises the Corpo- the equity method also shape the Equity Investments segment. rates Market division (the main units in which are Corporates These entities are, in particular, the main equity investments in the 1, Corporates 2, Corporates 3, Institutions, International Fi- RZB Group, RLB OÖ Invest GmbH & Co OG (voestalpine AG), nance, Real Estate Projects, Industry Projects, Correspon- Raiffeisenbank Prag, Oberösterreichische Landesbank AG dent Banking and Southern Germany) and the Retail division, (Hypo OÖ) and AMAG Austria Metall AG. For quantitative in- which in turn comprises the branches of Raiffeisenlandesbank formation on the subgroups, please refer to the relevant ta- Oberösterreich, PRIVAT BANK and bankdirekt.at. bles within this segment reporting section. For quantitative information on the entities accounted for using the equity Financial Markets method, please refer to the related figures and disclosures in the Notes. The Financial Markets segment brings together the trading and service earnings from customer business involving foreign Corporate Center exchange, securities and derivatives. The earnings from the central interest rate and liquidity management activities in the This segment comprises income and expenses not assigned banking and trading books are also included in this segment. to any other segment. One-off items that would distort the various segment earnings and are not allocated to individual Equity investments market segments in the internal management reporting are also reported in this segment, if required. The Equity Investments segment includes all direct and indirect holdings of Raiffeisenlandesbank Oberösterreich. Aside from 90 Annual Report 2015

Reporting by segment 2015

CORPORATES FINANCIAL EQUITY CORPORATE

IN EUR ’000 & RETAIL MARKETS INVESTMENTS CENTER TOTAL

Interest and interest-related income/expenses 208,266 124,839 77,879 6,100 417,0 8 4 Share of profit or loss of equity-accounted investments 0 0 51,219 0 51,219 Loan loss allowances –62,029 0 942 0 –61,087 Net interest income after loan loss allowances 146,237 124,839 130,040 6,100 407,216 Net fee and commission income 62,208 25,672 36,660 3,303 127,8 4 3 Net trading income 3,023 3,890 809 0 7,722 Net income/loss from designated financial instruments 0 60,679 986 0 61,665 Net income from investments –824 –9,087 46,201 0 36,290 General administrative expenses –108,620 –43,388 –527,427 –54,280 –733,715 Other net operating income –19,819 –10,036 435,364 5,890 411,399

Pre-tax profit for the year 82,205 152,569 122,633 –38,987 318,420

Until 31 December 2014, PRIVAT BANK AG and bankdirekt.at AG were subsidiaries of Raiffeisenlandesbank Oberösterreich and therefore included in the Equity Investments segment with a contribution to earnings in 2014 of approximately EUR 7.9 million. Based on a merger agreement dated 28 May 2015, both companies were merged into Raiffeisenlandesbank OÖ AG retroactively with effect from 1 January 2015. From the 2015 financial year, the customer business of these former subsidiaries is presented as part of the Corporates & Retail segment. From 2015, the maturity transformation earnings at PRIVAT BANK AG are included in the Financial Markets segment.

Reporting by segment 2014

CORPORATES FINANCIAL EQUITY CORPORATE

IN EUR ’000 & RETAIL MARKETS INVESTMENTS CENTER TOTAL

Interest and interest-related income/expenses 188,608 146,782 84,982 3,804 424,176 Share of profit or loss of equity-accounted investments 0 0 4,074 0 4,074 Loan loss allowances –145,772 0 –34,972 0 –180,744 Net interest income after loan loss allowances 42,836 146,782 54,084 3,804 247,506 Net fee and commission income 53,297 20,394 46,320 6,037 126,048 Net trading income 1,785 14,101 –340 0 15,546 Net income/loss from designated financial instruments –5,361 –90,417 –1,351 0 – 97,129 Net income from investments –1,468 36,592 13,834 0 48,958 General administrative expenses –83,312 –38,656 –510,299 –58,716 –690,983 Other net operating income –16,085 – 9,184 416,655 –610 390,776

Pre-tax profit for the year –8,308 79,612 18,903 –49,485 40,722

The negative contribution to the pre-tax profit for the year by the Corporates & Retail segment in the 2014 financial year was attributable among other things to an increase in the portfolio loan loss allowance and to the considerably higher stability levy for banks. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 91

IFRS consolidated financial statements _ Notes _ Segment reporting

Further details on the Equity Investments segment for the 2015 financial year

SUB-GROUP IMPULS-LEASING

IN EUR ’000 HYPO SALZBURG GROUP VIVATIS/EFKO OÖ WOHNBAU

Interest and interest-related income/expenses 43,479 41,155 8,764 –3,940 Share of profit or loss of equity-accounted investments 0 0 0 0 Loan loss allowances 1,155 –3,508 0 0 Net interest income after loan loss allowances 44,634 37,647 8,764 –3,940 Net fee and commission income 15,031 –292 –277 –88 Net trading income 345 85 0 0 Net income/loss from designated financial instruments 2,546 0 350 0 Net income from investments 1,473 3,929 –2,293 0 General administrative expenses –44,830 – 64,744 –263,780 –38,457 Other net operating income –9,331 46,108 266,251 50,054

Pre-tax profit for the year 9,868 22,733 9,015 7,569

The earnings of the VIVATIS/efko Group are presented excluding expenses relating to the servicing of profit-sharing rights amounting to EUR 6.6 million ( previous year: EUR 0). As regards the impact from a repositioning project, please refer to the description in the disclosures under “General administrative expenses”.

Further details on the Equity Investments segment for the 2014 financial year

SUB-GROUP IMPULS-LEASING

IN EUR ’000 HYPO SALZBURG GROUP VIVATIS/EFKO OÖ WOHNBAU

Interest and interest-related income/expenses 43,750 41,858 2,102 –4,251 Share of profit or loss of equity-accounted investments –3,426 0 0 0 Loan loss allowances –19,152 –9,459 0 0 Net interest income after loan loss allowances 21,172 32,399 2,102 –4,251 Net fee and commission income 14,768 –753 –281 –23 Net trading income –1,100 581 0 0 Net income/loss from designated financial instruments –143 0 –666 0 Net income from investments –833 –3,549 171 8 General administrative expenses –44,391 –62,823 –251,999 –36,592 Other net operating income –2,390 48,597 261,528 45,617

Pre-tax profit for the year –12,917 14,452 10,855 4,759

The negative earnings of the Hypo Salzburg sub-group in the 2014 financial year were in connection with the developments arising from the debt moratorium for HETA ASSET RESOLUTION AG. 92 Annual Report 2015

Income statement disclosures

1. Net interest income

IN EUR ’000 2015 2014

Interest income From financial instruments in the category loans and receivables 425,457 464,657* From financial instruments classified as available for sale 75,107 79,898 From financial instruments in the category held to maturity 11,331 14,546 From financial liabilities measured at amortised cost 1,822 0 Subtotal 513,717 559,101 From designated and derivative financial instruments 211,863 227,28 8* From lease financing 82,411 88,420 Total interest income 807,991 874,809

Current income From shares and other variable-yield securities 16,356 18,373 From investments in affiliated companies 17,70 5 14,643 From other investments 19,235 12,994 Current income 53,296 46,010

Other interest-related income 698 12,684

Interest and interest-related income 861,985 933,503

Interest expenses For financial liabilities measured at amortised cost –221,047 –251,679* For financial assets measured at amortised cost –1,725 0 For designated and derivative financial liabilities –220,365 –253,500* For designated financial assets –50 0 Total interest expenses –443,187 –505,179

Other interest-related expenses –1,714 –4,148

Interest and interest–related expenses –444,901 –509,327

Share of profit or loss of equity-accounted investments 51,219 4,074

Net interest income 468,303 428,250

* From the 2015 financial year, the Hypo Salzburg sub-group has reported all interest income and interest expenses from designated and derivative financial instruments separately. The figures for the previous year have been restated accordingly.

The interest income includes interest income from value adjusted loans and advances to customers and credit institutions amounting to EUR 18,471 thousand (previous year: 21,997 thousand). Interest income in respect of significant loans and advances to customers and banks for which loan loss allowances have been recognised is recognised using the discount rate applied in discounting the future cash flows in the procedure for determining the impairment loss. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 93

IFRS consolidated financial statements _ Notes _ Income statement disclosures

2. Loan loss allowances

IN EUR ’000 2015 2014

Addition to loan loss allowances –235,513 –346,392 Reversal of loan loss allowances 185,041 156,649 Direct impairment losses –19,275 –3,282 Amounts received against loans and advances written off 8,660 12,281

Total –61,087 –180,744

3. Net fee and commission income

IN EUR ’000 2015 2014

Fee and commission income From payment transactions 31,085 30,635 From funding transactions 32,053 40,963 From securities business 96,053 76,518 From foreign exchange, currency and precious metals transactions 3,860 3,854 From other service business 17,9 3 0 17,609 Fee and commission expenses From payment transactions –3,446 –3,478 From funding transactions –10,526 –13,844 From securities business –36,239 –23,129 From foreign exchange, currency and precious metals transactions –12 –14 From other service business –2,915 –3,066

Fee and commission income 180,981 169,579 Fee and commission expenses –53,138 –43,531

Net fee and commission income 127,843 126,048

4. Net trading income

IN EUR ’000 2015 2014

Interest-rate-related business 3,374 11,585 Currency-related business –1,646 2,523 Other business 5,994 1,438

Total 7,722 15,546

5. Net income/loss from designated financial instruments

IN EUR ’000 2015 2014

Net gain or loss on designated financial instruments and derivatives 61,665 – 97,129 of which on designated hedged items 155,021 –235,528 of which on derivatives –93,356 138,399 94 Annual Report 2015

6. Net income from investments

IN EUR ’000 2015 2014

Securities classified as held to maturity Gain or loss on remeasurement 0 0 Gain or loss on disposal 0 0 Securities classified as loans and receivables Gain or loss on remeasurement –612 –2,172 Gain or loss on disposal 704 2,422 Securities classified as available for sale Gain or loss on remeasurement –2,504 –10,309 Gain or loss on disposal –2,275 31,188 Shares in companies classified as available for sale Gain or loss on remeasurement –14,959 –23,272 Gain or loss on disposal 37,3 46 2,129 Gain or loss arising from hedge accounting Gains and losses arising on hedging transactions –39,597 208,364 Valuation from underlying transactions 39,000 –203,193 Gain or loss from initial consolidation and deconsolidation 19,187 43,801

Total 36,290 48,958

The remeasurement losses equate to the impairment losses recognised in profit or loss. The carrying amount of equity instruments measured at cost that were sold during the reporting period amounted to EUR 8,172 thousand (previous year: EUR 57,414 thousand). The resulting gain or loss on disposal was a gain of EUR 3,612 thousand (previous year: gain of EUR 2,401 thousand).

The gain or loss from initial consolidation and deconsolidation came to a total gain of EUR 19,187 thousand. The table showing the individual additions and disposals is in the section “Basis of presentation of the consolidated financial statements in accordance with IFRS”. The single greatest impact came from the addition of RVM Raiffeisen-Versicherungsmakler GmbH, which accounted for an amount of EUR 17,590 thousand.

In May 2015, the sale of the shares in Raiffeisen Bausparkasse Gesellschaft m.b.H. and the shares in Valida Holding AG to the RZB Group was agreed. In the interim consolidated financial statements for the period ended 30 June 2015, these shares were reported on the balance sheet under assets held for sale in accordance with IFRS 5 with a total carrying amount of EUR 45,474 thousand. The reason for this presentation was that the necessary approvals under regulatory requirements and competition law had not yet been received. The shares were transferred in the second half of 2015. The gains or losses on disposal from these transactions amounting to a net gain of EUR 33,707 are reported under shares in companies classified as available for sale. In the 2015 financial year, the current income from these equity investments amounted to EUR 984 thousand and was reported in the income statement under interest and interest–related income. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 95

IFRS consolidated financial statements _ Notes _ Income statement disclosures

7. General administrative expenses

IN EUR ’000 2015 2014

Personnel expenses Wages and salaries –284,383 –269,961 Compulsory social security contributions –71,717 –68,439 Voluntary social security contributions –4,384 –4,909 Expenses for severance payments and pensions –15,953 –15,573 Administrative expenses Rent and leasing expenses –21,962 –20,841 Expenses for office space (operation, maintenance) –74,540 – 69,168 IT and communications –46,757 –27,207 Legal and consulting expenses –24,350 –28,589 Advertising and representation expenses –29,501 –29,081 Other administrative expenses –72,461 –78,469 Depreciation and impairment losses on property and equipment and on investment property, amortisation and impairment losses on intangible assets Property and equipment –65,094 –53,684 Investment property –16,661 –16,231 Goodwill 0 –2,500 Other intangible assets –5,952 –6,331

Total –733,715 –690,983

Breakdown of expenses for defined contribution plans covering severance and pension payments:

IN EUR ’000 2015 2014

Pension fund –3,514 –3,759 Employee pension fund –2,048 –1,865

Total –5,562 –5,624

In the 2015 financial year the “general administrative expenses” included about EUR 263.8 million (previous year: EUR 252.0 million) – from companies in the foodstuff sector (“VIVATIS Holding AG” Group and “efko Frischfrucht und Delikatessen GmbH” Group). The companies are in the food and beverage sector and, as their business is unrelated to banking, they are mainly reported in the income statement under other operating income and general administrative expenses. In the 2015 financial year, a focusing strategy was put in place for an existing repositioning project in the foodstuffs sector. A restructuring provision of EUR 4.0 million was recognised for the resulting constructive obligation. A review of residual values and useful lives was also carried out in connection with this project and this resulted in the recognition of impairment losses of EUR 8.3 million on property and equipment. The residual values in this case were determined on the basis of expert valuation reports and offers to buy, resulting in total residual values of approximately EUR 4.0 million. The above amounts are assigned to the Equity Investments segment.

The “General administrative expenses” from the OÖ Wohnbau companies were around EUR 38.5 million in the 2015 financial year (previous year: EUR 36.6 million). 96 Annual Report 2015

8. Other net operating income

IN EUR ’000 2015 2014

Other operating income Income from non-banking activities 995,761 969,124 Miscellaneous operating income 108,257 95,905 Other operating expenses Expenses from non-banking activities –526,459 –506,685 Other tax and fees –39,231 –39,719 Miscellaneous operating expenses –126,929 –127,8 49

Total 411,399 390,776

From the investment property, by far the largest portion – i.e. EUR 732.4 million (previous year: EUR 713.2 million) – was from companies in the foodstuff sector (“VIVATIS Holding AG” Group and “efko Frischfrucht und Delikatessen GmbH” Group). The related cost of sales of these companies amounts to EUR 470.2 million (previous year: EUR 457.1 million) and is reported under “expenses from non-banking activities”.

In total, the “other operating income” of the companies in the “VIVATIS Holding AG” Group and the “efko Frischfrucht und De- likatessen GmbH” Group amounts to about EUR 266.3 million (previous year: EUR 261.5 million). The companies are in the food and beverage sector and, as their business is unrelated to banking, they are mainly reported in the income statement under other operating income and general administrative expenses.

The Upper Austrian residential building companies (OÖ Wohnbau) contribute about EUR 50.1 million to the “Other operating income” (previous year: EUR 45.6 million). Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 97

IFRS consolidated financial statements _ Notes _ Income statement disclosures

9. Taxes on income and earnings

Taxes on income by cause:

IN EUR ’000 2015 2014

Current taxes on income –9,875 –10,395 Actual ongoing tax expenditure for the current year –26,414 5,286 Tax adjustments from the previous year –943 –1,376 Consideration of tax losses from earlier periods 17,482 –14,305 Deferred taxes –4,432 6,042 Formation/reversal of temporary differences –7,8 0 0 19,872 Effects of tax rate changes 100 –24 Change in the usability of losses carried forward 3,268 –13,806

Total –14,307 –4,353

Taxes on income by origin:

IN EUR ’000 2015 2014

Current taxes on income –9,875 –10,395 of which in Austria –6,676 –7,8 39 of which foreign – 3,199 –2,556 Deferred taxes –4,432 6,042

Total –14,307 –4,353

The following reconciliation shows the relationship between the profit for the year and the effective tax expense:

IN EUR ’000 2015 2014

Pre-tax profit for the year 318,420 40,722 Income tax expense expected for the financial year at the statutory tax rate (25 per cent) –79,605 –10,181 Tax increases/reductions due to tax-exempt income from equity investments 19,464 26,336 Tax reductions due to at-equity profit from companies reported under the equity method 3,011 –16,117 Tax reductions due to other tax-exempt income 10,342 1,943 Tax increase due to non-deductible expenses –3,221 –4,224 Tax credit/charge from previous years –943 –1,376 Effect from different foreign tax rates 218 197 Change in the usability of losses carried forward 19,705 –13,806 Other 16,722 12,875

Effective tax expense –14,307 –4,353 98 Annual Report 2015

Changes in tax assets

IN EUR ’000 2015 2014

Current tax assets 8,800 5,536 Deferred tax assets 35,672 26,762

Total 44,472 32,298

Of the current tax assets, assets in the amount of EUR 6,586 thousand (previous year: EUR 5,536 thousand) are due within one year.

Changes in tax liabilities

IN EUR ’000 2015 2014

Current tax liabilities 5,682 5,948 Deferred tax liabilities 53,547 61,690

Total 59,229 67,638

Of the current tax liabilities, liabilities in the amount of EUR 1,653 thousand (previous year: EUR 4,809 thousand) are due within one year. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 99

IFRS consolidated financial statements _ Notes _ Income statement disclosures

Temporary differences between the carrying amounts in the IFRS consolidated financial statements and those in the tax base had the following impact on the deferred taxes recognised on the balance sheet:

DEFERRED DEFERRED TAX RECOGNISED TAX ASSETS LIABILITIES IN PROFIT OR LOSS

IN EUR ’000 2015 2015 2015

Financial assets classified as available for sale 38,023 110,354 23,938 Financial assets classified as held-to-maturity 775 10,711 310 Securities classified as loans and receivables 11 7,221 1,117 Designated financial instruments and derivatives 180,103 179,216 –17,9 9 5 Leases 386,526 384,458 3,152 Social provisions 19,075 456 337 Loan loss allowances 13,315 25 –15,262 Other provisions 2,404 1,714 –737 Tax losses carried forward, not yet utilised 43,916 0 1,399 Other temporary differences 12,441 20,309 –691 Netting of deferred taxes –660,917 –660,917 0

Total 35,672 53,547 –4,432

DEFERRED DEFERRED TAX RECOGNISED TAX ASSETS LIABILITIES IN PROFIT OR LOSS

IN EUR ’000 2014 2014 2014

Financial assets classified as available for sale 20,477 143,576 –6,293 Financial assets classified as held-to-maturity 930 10,970 –425 Securities classified as loans and receivables 24 8,338 1,045 Designated financial instruments and derivatives 242,205 222,718 34,523 Leases 405,282 405,385 10,509 Social provisions 22,067 13 824 Loan loss allowances 29,130 0 3,900 Other provisions 1,047 243 –2,628 Tax losses carried forward, not yet utilised 42,490 0 –30,914 Other temporary differences 15,569 22,906 –4,499 Netting of deferred taxes –752,459 –752,459 0

Total 26,762 61,690 6,042

For tax losses carried forward in the amount of EUR 60,595 thousand (previous year: EUR 121,578 thousand), no deferred tax assets were recognised, as a tax benefit does not currently appear to be recoverable within a reasonable period of time. Most of the tax losses carried forward can be carried forward without time limit.

The deferred tax assets include amounts totalling EUR 29,616 thousand (previous year: EUR 14,720 thousand) relating to as yet unused sevenths of tax write-downs of equity investments to going-concern value in accordance with section 12 (3) no. 2 KStG. An amount of EUR 8,534 thousand (previous year: EUR 22,774 thousand) has not been recognised as a deferred tax asset in respect of as yet unused sevenths of tax write-downs of equity investments to going-concern value, as a tax benefit does not currently appear to be recoverable within a reasonable period of time.

No deferred tax liabilities have been recognised for temporary differences relating to shares in subsidiaries amounting to EUR 916,878 thousand (previous year: EUR 952,728 thousand) and shares in associates amounting to EUR 877,340 thousand (previous year: EUR 887,878 thousand) held by Group companies, since the temporary differences are not likely to be reversed in the foreseeable future.

Dividends paid by Raiffeisenlandesbank Oberösterreich to owners did not result in any income tax consequences. 100 Annual Report 2015

Notes to the balance sheet

10. Financial instruments disclosure

Categories of financial assets and financial liabilities as at 31 December 2015:

FINANCIAL FINANCIAL FINANCIAL CARRYING INSTRUMENTS DESIGNATED ASSETS AVAIL- INVESTMENTS AMOUNT FAIR VALUE ASSETS HELD FOR FINANCIAL ABLE FOR S HELD-TO- LOANS AND TOTAL TOTAL

IN EUR ’000 TRADING INSTRUMENTS ALE (AFS) MATURITY RECEIVABLES 31 Dec. 2015 31 Dec. 2015

Cash and cash equivalents 0 0 0 0 90,221 90,221 90,221 Loans and advances to banks 0 16,052 0 0 6,838,855 6,854,907 6,838,638 Loans and advances to customers 0 851,829 0 0 17,879,48 0 18,731,309 19,074,014 Trading assets 2,468,794 0 0 0 0 2,468,794 2,468,794 Financial assets 0 558,520 4,058,309 411,015 642,783 5,670,627 5,705,598

Carrying amount total 31 Dec. 2015 2,468,794 1,426,401 4,058,309 411,015 25,451,339 33,815,858 34,177,265

The fair value carrying amounts in the category “Financial assets available for sale (AfS)” contain equity instruments to the amount of EUR 220,286 thousand that are valued at the cost of purchase because their fair value cannot be reliably determined.

The amount of the change in fair value of designated loans and receivables with an increase in the portfolio that was due to changes in ratings in 2015 was EUR 14,071 thousand (aggregate amount of EUR 10,127 thousand with a reduction in the portfolio). This figure was obtained by applying the changes in credit spread due to rating changes. The credit exposure for these designated loans and receivables as at 31 December 2015 was EUR 867,881 thousand.

FINANCIAL FINANCIAL CARRYING INSTRUMENTS DESIGNATED LIABILITIES AMOUNT FAIR VALUE EQUITY AND LIABILITIES HELD FOR FINANCIAL STATED AT TOTAL TOTAL

IN EUR ’000 TRADING INSTRUMENTS AMORTISED COST 31 Dec. 2015 31 Dec. 2015

Amounts owed to banks 0 1,225,568 9,988,605 11,214,173 11,270,670 Amounts owed to customers 0 937,236 9,690,879 10,628,115 10,686,015 Trading liabilities 1,871,532 0 0 1,871,532 1,871,532 Liabilities evidenced by certificates 0 3,781,825 3,836,659 7,618,48 4 7,6 31,4 47 Subordinated capital 0 843,018 588,330 1,431,348 1,440,755

Carrying amount total 31 Dec. 2015 1,871,532 6,787,647 24,104,473 32,763,652 32,900,419

In the 2015 financial year Raiffeisenlandesbank Oberösterreich was given a Baa2 rating (previous year: Baa1) by Moody’s. Of the fair value changes in designated financial liabilities in the 2015 financial year, a EUR 14,441 thousand reduction in the portfolio (aggregate amount of EUR 112,113 thousand reduction in the portfolio) was attributable to changes in credit risk. In order to calculate the fair value change caused by creditworthiness, the fair value at the balance sheet date is compared with a fair value which is determined using historic premiums on the yield curves caused by credit risk on the one hand at the start of the transaction and at the balance sheet date from the previous year on the other. The business data and yield curves from the balance sheet date are used. The carrying amount of these designated loans and receivables as at 31 December 2015 was EUR 6,787,647 thousand.

The carrying amount of designated financial liabilities as at 31 December 2015 was EUR 357,430 thousand higher than the repayment sum contractually agreed on. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 101

IFRS Consolidated Statements_Notes_Balance sheet disclosures

Categories of financial assets and financial liabilities as at 31 December 2014:

FINANCIAL FINANCIAL FINANCIAL CARRYING INSTRUMENTS DESIGNATED ASSETS AVAIL- INVESTMENTS AMOUNT FAIR VALUE ASSETS HELD FOR FINANCIAL ABLE FOR HELD-TO- LOANS AND TOTAL TOTAL

IN EUR ’000 TRADING INSTRUMENTS SALE (AFS) MATURITY RECEIVABLES 31 Dec. 2014 31 Dec. 2014

Cash and cash equivalents 0 0 0 0 89,086 89,086 89,086 Loans and advances to banks 0 14,730 0 0 6,764,408 6,779,138 6,773,186 Loans and advances to customers 0 853,060 0 0 18,313,692 19,166,752 19,533,615 Trading assets 2,951,476 0 0 0 0 2,951,476 2,951,476 Financial assets 0 748,579 4,223,902 489,115 712,008 6,173,604 6,229,495

Carrying amount total 31 Dec. 2014 2,951,476 1,616,369 4,223,902 489,115 25,879,194 35,160,056 35,576,858

The fair value carrying amounts in the category “Financial assets available for sale (AfS)” contain equity instruments to the amount of EUR 269,106 thousand that are valued at the cost of purchase because their fair value cannot be reliably determined.

The amount of the change in fair value of designated loans and receivables with a reduction in the portfolio that was due to changes in ratings in 2014 was EUR 6,312 thousand (aggregate amount of EUR 20,490 thousand with a reduction in the portfolio). This figure was obtained by applying the changes in credit spread due to rating changes. The credit exposure for these designated loans and receivables as at 31 December 2014 was EUR 867,790 thousand.

FINANCIAL FINANCIAL CARRYING INSTRUMENTS DESIGNATED LIABILITIES AMOUNT FAIR VALUE EQUITY AND LIABILITIES HELD FOR FINANCIAL STATED AT TOTAL TOTAL

IN EUR ’000 TRADING INSTRUMENTS AMORTISED COST 31 Dec. 2014 31 Dec. 2014

Amounts owed to banks 0 1,433,814 9,871,111 11,304,925 11,402,041 Amounts owed to customers 0 1,005,629 9,510,404 10,516,033 10,587,19 6 Trading liabilities 2,202,349 0 0 2,202,349 2,202,349 Liabilities evidenced by certificates 0 4,578,404 4,063,999 8,642,403 8,674,115 Subordinated capital 0 995,082 541,409 1,536,491 1,552,026

Carrying amount total 31 Dec. 2014 2,202,349 8,012,929 23,986,923 34,202,201 34,417,727

In the 2014 financial year Raiffeisenlandesbank Oberösterreich was given an Baa1 rating (previous year: A2) by Moody’s. Of the fair value changes in designated financial liabilities in the 2014 financial year, a EUR 56,129 thousand increase in the portfolio (aggregate amount of EUR 98,969 thousand reduction in the portfolio) is attributable to changes in credit risk. In order to calculate the fair value change caused by creditworthiness, the fair value at the balance sheet date is compared with a fair value which is determined using historic premiums on the yield curves caused by credit risk on the one hand at the start of the transaction and at the balance sheet date from the previous year on the other. The business data and yield curves from the balance sheet date are used. The carrying amount of these designated loans and receivables as at 31 Dec. 2014 was EUR 8,012,929 thousand.

The carrying amount of designated financial liabilities as at 31 Dec. 2014 was EUR 535,800 thousand higher than the repayment sum contractually agreed on. 102 Annual Report 2015

Breakdown of the fair value of financial instruments in 2015:

FINANCIAL THEREOF MEASURE- THEREOF MEASURE- INSTRUMENTS THEREOF MARKET MENT METHODS MENT METHODS MEASURED PRICES LISTED IN BASED ON NOT BASED ON AT FAIR VALUE ACTIVE MARKETS MARKET DATA MARKET DATA

IN EUR ’000 31 DEC. 2015 (LEVEL I) (LEVEL II) (LEVEL III)

Financial instruments held for trading 2,468,794 27,24 3 2,441,551 0 Designated financial instruments 1,426,401 329,053 70,216 1,027,132 Financial assets available for sale (AfS) 3,838,023 3,041,488 390,830 405,705 Total financial assets measured at fair value 7,733,218 3,397,784 2,902,597 1,432,837 Financial instruments held for trading 1,871,532 0 1,871,532 0 Designated financial instruments 6,787,6 47 0 6,787,6 47 0 Total financial liabilities measured at fair value 8,659,179 0 8,659,179 0

Reclassifications between Level I and Level II 2015: RECLASSIFICATIONS FROM RECLASSIFICATIONS FROM

IN EUR ’000 LEVEL I TO LEVEL II LEVEL II TO LEVEL I

Financial instruments held for trading 0 0 Designated financial instruments 0 6,285 Financial assets available for sale (AfS) 2,938 15,460 Total financial assets measured at fair value 2,938 21,745 Financial instruments held for trading 0 0 Designated financial instruments 0 0 Total financial liabilities measured at fair value 0 0

The reclassifications from Level I to Level II were the result of the elimination of prices for identical assets listed on active exchanges. The reclassifications from Level II to Level I were the result of the appearance of prices listed on active exchanges that previously did not exist.

The calculation of translation reserves in 2015 of financial instruments measured at fair value in Level III:

FINANCIAL ASSETS DESIGNATED

IN EUR ’000 AVAILABLE FOR SALE (AFS) FINANCIAL ASSETS

As at 1 Jan. 498,820 1,046,747 Purchases 0 119,718 Divestments –3,213 –156,286 Change in the consolidated companies –15,139 15,897 Effective results –3,650 1,056 Effect-neutral results – 35,180 0 Revalued at fair value 5,928 0 Reclassification to Level III 1,610 0 Reclassification from Level III –43,471 0 As at 31 Dec. 405,705 1,027,132 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 103

IFRS Consolidated Statements_Notes_Balance sheet disclosures

Reclassification from Level II to Level III took place in the 2015 financial year, which is to be attributed to a change in the input factors which are significant for the valuation. The reclassification from Level III in the 2015 financial year involved an investment that was valued based on a previous transaction. The amount of gains and losses effectively recognised from recurring measurements of the fair value in Level III of the assets and liabilities found in the portfolio on the reporting date amounts to EUR –746 thousand.

Effective results from financial assets are essentially recognised in the income statement in the following items: ¬¬ Net income/loss from designated financial instruments ¬¬ Net income from investments

Effect-neutral results are recognised in the statement of comprehensive income and thus in the equity item “Aggregate net income”. This does not include impairments, disposal results and currency valuations from monetary financial instruments (debt instruments) which are recognised in Net income from investments.

Sensitivity analysis 2015

CARRYING AMOUNT CORRESPONDS WITH FAIR-VALUE GAIN FAIR VALUE (LEVEL III) –100 BASIS POINTS

IN EUR ’000 IN %

Loans and advances 8 67,8 82 2.77 Securities 376,679 12.48 Equity investments 176,191 48.14

CARRYING AMOUNT CORRESPONDS WITH FAIR VALUE LOSS FAIR VALUE (LEVEL III) +100 BASIS POINTS

IN EUR ’000 IN %

Loans and advances 8 67,8 82 5.93 Securities 376,679 9.25 Equity investments 176,191 33.09

Credit spreads of by 100 basis points in each case are varied for all fixed-interest securities and loans and advances at fair value for the sensitivity analysis. New fair values were established based on this shift in credit spreads, either as an addition or a deduction in the discount curve in the valuation. The difference to the fair value originally established is shown in the table above in % values.

The sensitivity analysis for non-fixed interest securities and holdings was likewise conducted based upon a shift in interest rates of +100 basis points or -100 basis points respectively. In the case of real estate values, the capitalisation interest rate was varied in accordance with the Net Asset Value Method, while in the case of the remaining investments, the risk-free base interest rate or, in the case of the investments valued according to the DCF Method, the WACC was changed. The remaining valuation parameters remained constant in this process (e.g. no consideration was taken of the countervailing or dampening financing advantage generated from fixed interest rate agreements). No sensitivity analysis was conducted for non-significant investments and non-fixed interest securities. The carrying amount or fair value respectively of these assets (amounting to EUR 12,085 thousand) is not included in the above table. 104 Annual Report 2015

Breakdown of the fair value of financial instruments not measured at fair value in 2015:

THEREOF THEREOF THEREOF MEASUREMENT MEASUREMENT MARKET PRICES METHODS METHODS CARRYING LISTED IN ACTIVE BASED ON NOT BASED ON AMOUNTS AS AT FAIR VALUE MARKETS MARKET DATA MARKET DATA

IN EUR ’000 31 DEC. 2015 31.12.2015 (LEVEL I) (LEVEL II) (LEVEL III)

Financial investments held-to-maturity (HtM) 411,015 426,891 415,999 10,892 0 Loans and receivables 25,361,118 25,706,649 0 608,976 25,097,673 Total financial assets not measured at fair value 25,772,133 26,133,540 415,999 619,868 25,097,673 Financial liabilities stated at amortised cost 24,104,473 24,241,240 0 24,241,240 0 Total financial liabilities not measured at fair value 24,104,473 24,241,240 0 24,241,240 0

Breakdown of the fair value of financial instruments in 2014:

THEREOF THEREOF FINANCIAL MEASUREMENT MEASUREMENT INSTRUMENTS THEREOF MARKET METHODS METHODS MEASURED PRICES LISTED BASED ON NOT BASED ON AT FAIR VALUE IN ACTIVE MARKETS MARKET DATA MARKET DATA

IN EUR ’000 31 DEC. 2014 (LEVEL I) (LEVEL II) (LEVEL III)

Financial instruments held for trading 2,951,476 50,635 2,900,841 0 Designated financial instruments 1,616,369 456,455 113,167 1,046,747 Financial assets available for sale (AfS) 3,954,796 2,954,429 501,547 498,820 Total financial assets measured at fair value 8,522,641 3,461,519 3,515,555 1,545,567 Financial instruments held for trading 2,202,349 0 2,202,349 0 Designated financial instruments 8,012,929 0 8,012,929 0 Total financial liabilities measured at fair value 10,215,278 0 10,215,278 0

Reclassifications between Level I and Level II 2014: RECLASSIFICATIONS FROM RECLASSIFICATIONS FROM

IN EUR ’000 LEVEL I TO LEVEL II LEVEL II TO LEVEL I

Financial instruments held for trading 23 0 Designated financial instruments 0 0 Financial assets available for sale (AfS) 3,432 3,116 Total financial assets measured at fair value 3,455 3,116 Financial instruments held for trading 0 0 Designated financial instruments 6,352 0 Total financial liabilities measured at fair value 6,352 0

Reclassifications between Level I and Level II take place at Raiffeisenlandesbank Oberösterreich as soon as there is a change in the input factors that are relevant for the classification in the measurement hierarchy. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 105

IFRS Consolidated Statements_Notes_Balance sheet disclosures

The calculation of translation reserves in 2014 of financial instruments measured at fair value in Level III:

FINANCIAL ASSETS DESIGNATED

IN EUR ’000 AVAILABLE FOR SALE (AFS) FINANCIAL ASSETS

As at 1 Jan. 119,431 1,134,699 Purchases 105 97,40 4 Divestments –3,700 –228,109 Change in the consolidated companies 0 0 Effective results –19,623 42,753 Effect-neutral results 83,613 0 Revalued at fair value 275,509 0 Reclassification to Level III 43,485 0 Reclassification from Level III 0 0 As at 31 Dec. 498,820 1,046,747

The reclassification to Level III in the 2014 financial year es- Effective results from financial assets are essentially rec- sentially results from the valuation of an investment which was ognised in the income statement in the following items: previously valued based on a previous transaction, and has ¬¬ Net income/loss from designated financial instruments been revalued in accordance with the earning power method ¬¬ Net income from investments effective at 31 Dec. 2014. The amount of gains and losses effectively recorded from recurring measurements of the fair Effect-neutral results are recognised in the statement of com- value in Level III of the assets and liabilities found in the port- prehensive income and thus in the equity item “Aggregate net folio on the reporting date amounts to EUR 30,078 thousand. income”. This does not include impairments, disposal results and currency valuations from monetary financial instruments (debt instruments) which are recognised in Net income from investments. 106 Annual Report 2015

Sensitivity analysis 2014

CARRYING AMOUNT CORRESPONDS WITH FAIR-VALUE GAIN FAIR VALUE (LEVEL III) –100 BASIS POINTS

IN EUR ’000 IN %

Loans and advances 8 67,79 0 2.91 Securities 383,984 10.20 Equity investments 167,9 3 0 25.71

CARRYING AMOUNT CORRESPONDS WITH FAIR VALUE LOSS FAIR VALUE (LEVEL III) +100 BASIS POINTS

IN EUR ’000 IN %

Loans and advances 8 67,79 0 5.26 Securities 383,984 8.22 Equity investments 167,9 3 0 16.73

In the case of fixed-interest securities and investments, the discount rate underlying the company valuation (e.g. earning power method) was also varied by 100 basis points. No sensitivity analysis was carried out for insignificant investments or profit participation rights (based on the earning power method) or for investments assessed at NAV (net asset value). The carrying amount or fair value respectively of these assets (amounting to EUR 125,683 thousand) is not included in the above table. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 107

IFRS Consolidated Statements_Notes_Balance sheet disclosures

Breakdown of the fair value of financial instruments not measured at fair value in 2014:

THEREOF THEREOF THEREOF MARKET PRICES MEASUREMENT MEASUREMENT LISTED IN METHODS METHODS CARRYING ACTIVE BASED ON NOT BASED ON AMOUNTS AS AT FAIR VALUE MARKETS MARKET DATA MARKET DATA

IN EUR ’000 31 DEC. 2014 31 DEC. 2014 (LEVEL I) (LEVEL II) (LEVEL III)

Financial investments held-to-maturity (HtM) 489,115 513,796 466,400 47,39 6 0 Loans and receivables 25,790,108 26,182,229 0 690,538 25,491,691 Total financial assets not measured at fair value 26,279,223 26,696,025 466,400 737,934 25,491,691 Financial liabilities stated at amortised cost 23,986,923 24,202,449 0 24,202,449 0 Total financial liabilities not measured at fair value 23,986,923 24,202,449 0 24,202,449 0

Reclassifications of financial assets

In financial year 2008, securities in the category “financial assets available for sale (AfS)” in the amount of EUR 125,421 thousand were reclassified to the category “loans and receivables”. The carrying amount of the reclassified securities as at 31 Dec. 2015 was EUR 10,092 thousand (previous year:

In financial year 2015, interest income on the reclassified securities to the amount of EUR 534 thousand (previous year: EUR 516 thousand) and impairments of EUR 0 thousand (previous year: EUR 0 thousand) were reported in the income statement. If no reclassification had been carried out, fair value changes in the amount of EUR –247 thousand (previous year: EUR 104 thousand) would have been recognised in the AfS reserve with no effect on the income statement in financial year 2015. 108 Annual Report 2015

The following derivative financial instruments existed on the 2015 balance sheet date:

NOMINAL AMOUNT FAIR VALUE TERM TO MATURITY OVER 1 YEAR OVER

IN EUR ’000 UP TO 1 YEAR TO 5 YEARS 5 YEARS TOTAL POSITIVE NEGATIVE

Interest rate-dependent futures OTC products Forward rate agreements 0 0 0 0 0 0 Interest rate swaps 4,488,281 12,293,640 15,246,893 32,028,814 2,377,308 1,830,578 Interest rate options – purchases 46,430 328,721 244,387 619,538 12,989 697 Interest rate options – sales 38,714 277,48 3 1,150,349 1,466,546 2,505 16,248 Other interest rate swaps 0 0 0 0 0 0 Exchange-traded products Interest rate futures 39,189 0 0 39,189 0 0 Interest rate options – purchases 0 0 0 0 0 0 Interest rate options – sales 0 0 0 0 0 0 Total 4,612,614 12,899,844 16,641,629 34,154,087 2,392,802 1,847,523

Foreign exchange-dependent futures OTC products Spot exchange and forward transactions 695,883 76,064 0 771,947 14,360 7,741 Currency and interest rate swaps involving several currencies 1,672,135 172,356 13,555 1,858,046 21,578 14,316 Foreign exchange options – purchases 37,313 3,946 0 41,259 1,705 0 Foreign exchange options – sales 37,313 3,946 0 41,259 0 1,714 Other foreign exchange contracts 0 0 0 0 0 0 Exchange-traded products Foreign exchange futures 0 0 0 0 0 0 Foreign exchange options 0 0 0 0 0 0 Total 2,442,644 256,312 13,555 2,712,511 37,643 23,771

Other futures OTC products Structured shares/index products 0 0 0 0 0 0 Shares options – purchases 5,000 14,595 0 19,595 3,715 0 Shares options – sales 0 1,000 0 1,000 0 237 Credit derivatives 0 10,000 0 10,000 0 1 Precious metal transactions 0 0 0 0 0 0 Commodity options – purchases 0 0 0 0 0 0 Commodity options – sales 0 0 0 0 0 0 Other business 0 0 0 0 0 0 Exchange-traded products Shares futures 0 0 0 0 0 0 Shares options 0 0 0 0 0 0 Other futures 0 0 0 0 0 0 Other options 0 0 0 0 0 0 Total 5,000 25,595 0 30,595 3,715 238

Total OTC products 7,021,069 13,181,751 16,655,184 36,858,004 2,434,160 1,871,532 Total exchange-traded products 39,189 0 0 39,189 0 0

Total 7,060,258 13,181,751 16,655,184 36,897,193 2,434,160 1,871,532 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 109

IFRS Consolidated Statements_Notes_Balance sheet disclosures

The following derivative financial instruments existed on the 2014 balance sheet date:

NOMINAL AMOUNT FAIR VALUE TERM TO MATURITY OVER 1 YEAR OVER

IN EUR ’000 UP TO 1 YEAR TO 5 YEARS 5 YEARS TOTAL POSITIVE NEGATIVE

Interest rate-dependent futures OTC products Forward rate agreements 0 0 0 0 0 0 Interest rate swaps 3,096,273 13,398,721 16,824,994 33,319,988 2,824,489 2,134,299 Interest rate options – purchases 234,028 1,127,40 3 522,119 1,883,550 23,676 1,029 Interest rate options – sales 47,76 8 654,288 1,048,619 1,750,675 2,879 37,594 Other interest rate swaps 0 0 0 0 0 0 Exchange-traded products Interest rate futures 91,521 0 0 91,521 0 0 Interest rate options – purchases 0 0 0 0 0 0 Interest rate options – sales 0 0 0 0 0 0 Total 3,469,590 15,180,412 18,395,732 37,045,734 2,851,044 2,172,922

Foreign exchange-dependent futures OTC products Spot exchange and forward transactions 339,613 57,118 0 396,731 13,982 4,153 Currency and interest rate swaps involving several currencies 1,434,190 132,754 7,0 0 6 1,573,950 22,534 23,506 Foreign exchange options - purchases 40,741 3,555 0 44,296 1,587 0 Foreign exchange options – sales 40,741 3,555 0 44,296 0 1,590 Other foreign exchange contracts 0 0 0 0 0 0 Exchange-traded products Foreign exchange futures 0 0 0 0 0 0 Foreign exchange options 0 0 0 0 0 0 Total 1,855,285 196,982 7,006 2,059,273 38,103 29,249

Other futures OTC products Structured shares/index products 0 0 0 0 0 0 Shares options – purchases 0 20,734 0 20,734 3,578 0 Shares options – sales 0 1,000 0 1,000 0 172 Credit derivatives 0 10,000 0 10,000 0 6 Precious metal transactions 0 0 0 0 0 0 Commodity options – purchases 0 0 0 0 0 0 Commodity options – sales 0 0 0 0 0 0 Other business 0 0 0 0 0 0 Exchange-traded products Shares futures 0 0 0 0 0 0 Shares options 0 0 0 0 0 0 Other futures 0 0 0 0 0 0 Other options 0 0 0 0 0 0 Total 0 31,734 0 31,734 3,578 178

Total OTC products 5,233,354 15,409,128 18,402,738 39,045,220 2,892,725 2,202,349 Total exchange-traded products 91,521 0 0 91,521 0 0

Total 5,324,875 15,409,128 18,402,738 39,136,741 2,892,725 2,202,349 110 Annual Report 2015

Possible effects of netting agreements

The following tables contain information on the offsetting effects on the consolidated balance sheet and the financial implications of a set-off in the case of instruments which are subject to a framework netting agreement or similar agreement as well as to cash collateral.

Assets

UNRECOGNISED AMOUNTS OFFSETTING FINANCIAL ASSETS EFFECT OF (GROSS) = RECOGNISED FRAMEWORK

IN EUR ’000 FINANCIAL ASSETS (NET) AGREEMENTS CASH COLLATERAL NET AMOUNT

Loans and advances to banks 6,854,907 –650,068 0 6,204,839 Positive fair values generated from derivative financial instruments 2,434,160 –1,340,098 –564,273 529,789

Total 31 Dec. 2015 9,289,067 –1,990,166 –564,273 6,734,628

UNRECOGNISED AMOUNTS OFFSETTING FINANCIAL ASSETS EFFECT OF (GROSS) = RECOGNISED FRAMEWORK

IN EUR ’000 FINANCIAL ASSETS (NET) AGREEMENTS CASH COLLATERAL NET AMOUNT

Loans and advances to banks 6,779,138 –693,512 0 6,085,626 Positive fair values generated from derivative financial instruments 2,892,725 –1,589,504 –669,293 633,928

Total 31 Dec. 2014 9,671,863 –2,283,016 –669,293 6,719,554

Liabilities

UNRECOGNISED AMOUNTS FINANCIAL LIABILITIES OFFSETTING (GROSS) = RECOGNISED EFFECT OF FINANCIAL FRAMEWORK

IN EUR ’000 LIABILITIES (NET) AGREEMENTS CASH COLLATERAL NET AMOUNT

Amounts owed to banks 11,214,173 –650,068 0 10,564,105 Negative market values from derivative financial instruments 1,871,532 –1,340,098 – 478,195 53,239

Total 31 Dec. 2015 13,085,705 –1,990,166 –478,195 10,617,344

UNRECOGNISED AMOUNTS FINANCIAL LIABILITIES OFFSETTING (GROSS) = RECOGNISED EFFECT OF FINANCIAL FRAMEWORK

IN EUR ’000 LIABILITIES (NET) AGREEMENTS CASH COLLATERAL NET AMOUNT

Amounts owed to banks 11,304,925 –693,512 0 10,611,413 Negative market values from derivative financial instruments 2,202,349 –1,589,504 –510,519 102,326

Total 31 Dec. 2014 13,507,274 –2,283,016 –510,519 10,713,739 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 111

IFRS Consolidated Statements_Notes_Balance sheet disclosures

The column “Effect of offsetting framework agreements” shows the amounts which are subject to a valid framework netting agreement, but that are not set off due to non-fulfilment of the conditions. Offsetting framework agreements are of particular relevance for counter-parties with several returns from derivatives. In the event of a counter-party defaulting, these agreements lead to a net settlement being made for all contracts.

The “Cash collateral” column contains the amounts of cash collateral received or given – with reference to the total for assets and liabilities. These collateral instruments are allotted according to how the market values of derivatives develop (positively or negatively).

11. Cash and cash equivalents

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Cash in hand 37,664 34,586 Balances at central banks 52,557 54,500

Total 90,221 89,086

12. Loans and advances to banks

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Loans and advances payable on demand 3,409,395 3,453,848 Money market transactions 2,069,055 1,933,013 Loans to banks 1,055,478 970,463 Purchased loans and advances 320,979 421,814

Total 6,854,907 6,779,138

In Austria 5,794,326 5,521,128 Abroad 1,060,581 1,258,010

Total 6,854,907 6,779,138

13. Loans and advances to customers

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Money-market transactions 1,048,269 1,262,205 Loan transactions 14,503,288 14,777,387 Mortgage loans 201,951 233,534 Covering loans 518,636 436,096 Purchased loans and advances 405,997 373,194 Lease financing 2,022,237 2,039,374 Other 30,931 44,962

Total 18,731,309 19,166,752

In Austria 12,395,581 12,525,046 Abroad 6,335,728 6,641,706

Total 18,731,309 19,166,752 112 Annual Report 2015

14. Loan loss allowances

Loan loss allowances 2015

CHANGE IN BASIS OF AS AT CONSOLI- CURRENCY ALLO- AS AT

IN EUR ’000 1 JAN. 2015 DATION DIFFERENCES CATIONS REVERSALS UTILISED 31 DEC. 2015

Loans and advances to banks 913 0 0 164 0 –783 294 of which in Austria 0 0 0 0 0 0 0 of which foreign 913 0 0 164 0 –783 294 Loans and advances to customers 929,927 0 –33 184,368 –63,893 –260,579 789,790 of which in Austria 641,166 0 0 121,935 –40,910 –193,571 528,620 of which foreign 288,761 0 –33 62,433 –22,983 – 67,0 0 8 261,170 Revaluations in the portfolio 93,491 0 19 18,964 –75,698 0 36,776 Subtotal 1,024,331 0 –14 203,496 –139,591 –261,362 826,860 Provision for credit risks 34,764 0 0 29,772 –21,876 – 4,114 38,546 Risks for off-balance-sheet transactions 27,28 5 0 0 2,245 –23,574 0 5,956

Total 1,086,380 0 –14 235,513 –185,041 –265,476 871,362

Loan loss allowances 2014 CHANGE IN BASIS OF AS AT CONSOLI- CURRENCY ALLO- AS AT

IN EUR ’000 1 JAN. 2014 DATION DIFFERENCES CATIONS REVERSALS UTILISED 31 DEC. 2014

Loans and advances to banks 896 0 0 29 –12 0 913 of which in Austria 0 0 0 0 0 0 0 of which foreign 896 0 0 29 –12 0 913 Loans and advances to customers 978,194 –22,363 –450 248,289 –66,515 –207,228 929,927 of which in Austria 639,661 0 0 154,647 –35,840 –117,3 02 641,166 of which foreign 338,533 –22,363 –450 93,642 –30,675 –89,926 288,761 Revaluations in the portfolio 80,664 –183 –28 58,158 – 45,120 0 93,491 Subtotal 1,059,754 –22,546 –478 306,476 –111,647 –207,228 1,024,331 Provision for credit risks 46,845 0 0 21,019 –31,809 –1,291 34,764 Risks for off-balance-sheet transactions 21,581 0 0 18,897 –13,193 0 27,28 5

Total 1,128,180 –22,546 –478 346,392 –156,649 –208,519 1,086,380

The following loan loss allowance developments took place in connection with the debt moratorium of the HETA ASSET RE- SOLUTION AG (“HETA”) for the SALZBURGER LANDES-HYPOTHEKENBANK AKTIENGESELLSCHAFT, which is fully consolidated in the IFRS Group of Raiffeisenlandesbank Oberösterreich, in the 2015 financial year:

In a decision dated 1 March 2015 the Financial Market Authority (“FMA”) in its role as a settlement authority in accordance with Section 3 (1) Restructuring and Settlement Act (BaSAG) ordered that the due dates of all debt instruments issued by HETA ASSET RESOLUTION AG (“HETA”) and the liabilities arising from these must be deferred until 31 May 2016 with immediate effect in accordance with the settlement conditions under Section 49 BaSAG (“HETA Moratorium”). Debt instruments issued by the Pfandbriefbank (Österreich) AG amounting to EUR 1.2 billion are affected by this moratorium.

On 2/7 April 2015, the “Agreement covering the fulfilment and settlement of joint and several liability in accordance with section 2, Mortgage Lending Institutions Law, together with the settlement of claims for reconciliation within their internal relationship” was concluded between the mortgage lending agency of the Austrian Landes-Hypothekenbanken, the Pfandbrief (Österreich) AG, together with the individual member institutions, and the state of Carinthia. On the basis of this agreement, the SALZ- BURGER LANDES-HYPOTHEKENBANK AKTIENGESELLSCHAFT is obliged, taking into consideration the per head share of its associated guarantors, to make available financial means amounting to up to EUR 155.0 million to the Pfandbrief (Österreich) Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 113

IFRS Consolidated Statements_Notes_Balance sheet disclosures

AG so as to enable it to meet the liabilities which are due stemming from the HETA issues. In return, the Pfandbriefbank (Öster- reich) AG relinquishes all current and future receivables, securities and other rights arising from or in connection with concrete HETA financing to the joint and several debtors making payments. As at 31 December 2015, financial means amounting to EUR 84.0 million were called upon by the Pfandbrief (Österreich) AG, of which EUR 42.0 million are covered from its own share.

On 21 January 2016, the Reconciliation Payments Fund of Carinthia (KAF) submitted an offer in accordance with section 2a of the Financial Markets Stability Law (“FinStaG”) for the purchase of the debt instruments of the HETA. The debt instruments are being bought at a rate of 75.00 per cent. The period of the offer came to an end on 11 March 2016. On 16 March 2016, the result of the tendering process was published. The majority of creditors required could not be established.

Due to the receivables in existence as at 31 December 2015 due to HETA and non-utilised lines of credit respectively due to the Pfandbriefbank (Österreich) AG (in utilising loan and advance due to the HETA), provisions have been created from its own share amounting to EUR 27.9 million (previous year: EUR 15.5 million) (value adjustments amounting to EUR 15.2 million and provisions for credit risks amounting to EUR 12.7 million).

In calculating the loan loss allowances, the listings of assets were taken into account derived from the published information relating to creditors and investors of the HETA as well as any possible payments from the deficit guarantee funds of the state of Carinthia. The amount of an outward flow of funds and the collectability of potential claims against HETA and the state of Carinthia are fraught with uncertainties.

15. Trading assets

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Bonds and other fixed-income securities Municipal bonds that can be refinanced 3,310 29,724 Other public-sector debt instruments 1,116 1,132 Bonds and debt securities from other issuers 30,208 27,895 Positive market value from derivative transactions Interest rate transactions 2,392,802 2,851,044 Currency exchange transactions 37,6 4 3 38,103 Stock and index related business 3,715 3,578

Total 2,468,794 2,951,476

The (positive) fair value of derivative financial instruments that were employed under fair value hedge accounting as hedging transactions amounted to EUR 218,757 thousand as at 31 December 2014 (previous year: EUR 273,060 thousand). 114 Annual Report 2015

16. Financial assets

Designated financial assets

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Bonds and other fixed-income securities Municipal bonds that can be refinanced 165,885 267,20 6 Other public-sector debt instruments 0 7,9 3 0 Bonds and debt securities from other issuers 362,248 436,860 Shares and other variable-yield securities Shares 0 5,671 Other variable yield securities 30,387 30,912

Total 558,520 748,579

Financial assets classified as available for sale (AfS)

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Bonds and other fixed-income securities Municipal bonds that can be refinanced 1,502,085 1,479,148 Bonds and debt securities from other issuers 1,799,517 1,858,599 Shares and other variable-yield securities Shares 22,626 26,172 Investment fund units/shares 3,313 4,246 Other variable yield securities 383,536 401,929 Shares in companies Investments in affiliated companies 155,817 162,138 Other investments 191,415 291,670

Total 4,058,309 4,223,902

Financial assets classified as held-to-maturity (HtM)

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Bonds and other fixed-income securities Municipal bonds that can be refinanced 195,644 192,365 Bonds and debt securities from other issuers 215,371 296,750

Total 411,015 489,115

Financial assets classified as loans and receivables

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Bonds and other fixed-income securities Bonds and debt securities from other issuers 642,783 712,008

Total 642,783 712,008 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 115

IFRS Consolidated Statements_Notes_Balance sheet disclosures

17. Companies accounted for using the equity method

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Banks 1,067,602 1,124,899 Non-banks 718,514 675,178

Total 1,786,116 1,800,077

Banks reported under the equity method as at 31 December 2015 include the share in the RZB Group of about 14.64 per cent. The CEO of Raiffeisenlandesbank Oberösterreich – Heinrich Schaller – is a member of the supervisory boards of both RZB and RBI. RZB has for its part around 60.7 per cent of the shares in the stock exchange-listed Raiffeisen Bank International AG (RBI) as at 31 December 2015.

RBI has adjusted its strategy in individual markets. In doing this, it reacted to changed operating conditions arising, for example, from the political crisis in Russia and the Ukraine. In 2015, the European Bank for Recovery and Development (EBRD) intervened to become a 30 per cent shareholder in the RBI subsidiary Raiffeisen Bank Aval JSC (RBA), a leading universal bank in the Ukraine. In connection with the ZUNO BANK AG direct bank operating in the Czech Republic and Slovakia, the RBI is checking whether any further internal and external steps need to be taken, such as the purchase of Zuno in its entirety, full incorporation into other RBI Group units or a partial sale. Solutions are also being developed for subsidiary banks in other countries, such as Poland. No direct risks stemming from these countries exist for Raiffeisenlandesbank Oberösterreich. In the evaluation and further development of Raiffeisen Zentral Bank AG, events in these countries did, however, continue to give rise to risks and uncertainties.

Due to negative factors (in particular, current political events in Poland and the risks linked to this and uncertainties associated with the planned sale of the Polish subsidiary bank as well as damped-down future expectations with regard to interest rate and economic development), the holding in the RZB as at 31 December 2015 was subjected to an impairment test. A value in use based on the present value of the cash flow to be expected (discounted cash flow procedure) of the companies in the Group was set as the value to be attained. The five year plans of the operating units of the RZB Group used for the period subjected to detailed investigation is based on the planning that was approved by the respective management and was valid at the time the impairment test was conducted. The discounting of the cash flow that can be achieved with the valuation object is undertaken with the aid of a risk-adequate capitalisation interest rate. For the RBI AG, the most significant asset of the RZB, a capital costs rate of 11.03 per cent was used. This resulted in a need to adjust the value from EUR –61,389 thousand (previous year: EUR 0 thousand) to an IFRS carrying amount as of 31 December 2015 of EUR 729,047 thousand (previous year: EUR 787,198 thousand).

Any change in the discount interest rate of the RBI by plus or minus 100 basis points would result in a fall or rise of the established company value of the RZB Group by –10.1 per cent or +12.8 per cent respectively.

Among other banks that are accounted for under the equity method is the 42 per cent stake in the Oberösterreichische Landes- bank AG Group (Hypo Oberösterreich), which is held by the fully consolidated Hypo Holding GmbH. Raiffeisenlandesbank Oberösterreich sees itself as a long-term strategic partner to the regional bank that is headquartered in Linz and in which the province of Upper Austria has a majority holding. At 31 December 2015, the investment in the Hypo Oberösterreich was subjected to an impairment test. The triggers for the impairment were in particular the effects having an impact on valuation linked to the debt moratorium for HETA ASSET RESOLUTION AG, together with dampened future expectations with regard to the current trends for interest rates and the economy.

A value in use based on the present value of the cash flow to be expected (discounted cash flow procedure) was determined as the value to be attained. The three year planning to which reference was made for the period for detailed investigation is based on the planning that was approved by the Management and that was valid at the time the impairment test was conducted. The discounting of the cash flow that can be achieved with the valuation object is undertaken with the aid of a risk-adequate capitalisation interest rate. For the Hypo Oberösterreich, reference was made to a capital cost rate of 7.39 per cent. This resulted in a need to adjust the value from EUR –35,545 thousand (previous year: EUR –39.578 thousand) to an IFRS carrying amount as of 31 December 2015 of EUR 114,995 thousand (previous year: EUR 132,910 thousand). 116 Annual Report 2015

Any change in the discount interest rate used by plus or minus 100 basis points would result in a fall or rise of the established company value of Hypo Oberösterreich by –9.4 per cent or +12.6 per cent respectively.

As regards non-bank holdings, the participation in Raiffeisenlandesbank Oberösterreich Invest GmbH & Co OG is worth particular mention. According to the financial statements as of 30 September 2015, they also own 13.27 per cent of the shares in the voestalpine AG group and have, as the largest individual shareholder, the opportunity to exercise a considerable influence on the financial and business policies of the most important steel company in Austria. The price per share as at 31 Dec. 2015 amounted to EUR 28.35. In his function as Managing Director of RLB OÖ Invest GmbH & Co OG and Deputy Chairman of the Supervisory Board, the CEO of Raiffeisenlandesbank Oberösterreich, Heinrich Schaller, is an active participant in the strategic decisions made at voestalpine AG.

He also has a significant influence on Aluminiumkonzern AMAG Austria Metall AG because Raiffeisenlandesbank Oberöster- reich still holds 16.5 per cent and remains the second largest single shareholder. In addition, Raiffeisenlandesbank Oberös- terreich concluded a holding agreement in early 2015 with B&C Industrieholding GmbH. The Chief Executive and Chairman of the Managing Board of Raiffeisenlandesbank Oberösterreich, Heinrich Schaller, is also involved in making decisions within the AMAG Austria Metall AG as a further Deputy Chair of the Supervisory Board as well as a member of all the committees of the Supervisory Board (exception: Remuneration Committee). There are also standard banking relations in place with AMAG Austria Metall AG. The price per share as at 31 December 2015 amounted to EUR 32.00.

Two of the companies have a balance sheet date that is different from that of Raiffeisenlandesbank Oberösterreich. Both in the application of the equity method and also for the list below, Raiffeisenlandesbank Oberösterreich Invest GmbH & Co OG was considered with values as at its reporting date of 30 September. The data for Österreichische Salinen AG (reporting date 30 June) is based on an interim report as at 31 December.

A list of the companies that reported under the equity method can be found under the heading “Basis of consolidation”. The following table shows the financial data on the companies reported under the equity method. Operating income was included as earnings for banks. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 117

IFRS Consolidated Statements_Notes_Balance sheet disclosures

Companies accounted for using the equity method at 31 December 2015 OTHER RAIFFEISEN- COMPANIES OBERÖSTER- RAIFFEISEN LANDESBANK ACCOUNTED REICHISCHE ZENTRALBANK RAIFFEISEN- OBERÖSTER- FOR USING AMAG AUSTRIA LANDES- ÖSTERREICH BANK A.S., REICH INVEST THE EQUITY

IN EUR ’000 METALL AG BANKEN AG AG PRAGUE GMBH & CO OG METHOD

Assets 1,102,530 8,9 37,73 3 138,425,830 9,115,384 651,945 974,975 Liabilities 459,083 8,546,547 129,129,704 8,212,605 17,392 755,718 Equity 643,447 391,186 9,296,126 902,779 634,553 219,257 Earnings 913,331 100,425 5,332,903 342,178 0 240,441 Result 42,697 35,869 465,354 92,962 88,657 12,410 Total other comprehensive income 19,177 1,179 –141,981 27,16 4 –19,335 –1,685 Comprehensive income 61,874 37,0 48 323,373 120,126 69,322 10,725

Net assets (owners) 643,447 391,275 5,3 87,9 67 831,194 634,543 – Proportionate net assets 106,169 190,121 788,626 207,79 9 473,623 – Adjustments** 34,536 –75,126 –59,579 15,760 26,109 – Carrying amount in Raiffeisenlandes- bank Oberösterreich* 140,705 114,995 729,047 223,559 499,732 78,078

Market value (Stock Market value)* 186,165 – – – 518,315 – Dividends received* 6,982 427 0 9,689 18,246 3,832

Companies accounted for using the equity method at 31 Dec. 2014 OTHER RAIFFEISEN- COMPANIES OBERÖSTER- RAIFFEISEN LANDESBANK ACCOUNTED REICHISCHE ZENTRALBANK RAIFFEISEN- OBERÖSTER- FOR USING AMAG AUSTRIA LANDES- ÖSTERREICH BANK A.S., REICH INVEST THE EQUITY

IN EUR ’000 METALL AG BANKEN AG AG*** PRAGUE GMBH & CO OG METHOD

Assets 1,092,501 9,400,500 144,804,791 8,149,577 602,219 1,003,188 Liabilities 468,611 9,045,582 135,597,301 7,324,927 16,552 787,0 8 6 Equity 623,890 354,918 9,207,49 0 824,650 585,667 216,103 Earnings 822,956 71,562 5,732,455 316,722 0 233,014 Result 59,212 5,998 –556,403 74,397 71,583 19,516 Total other comprehensive income 1,400 8,869 –1,223,478 –7,620 9 0 Comprehensive income 60,612 14,867 –1,779,881 66,777 71,593 19,516

Net assets (owners) 623,890 354,986 5,327,545 754,902 585,667 – Proportionate net assets 102,942 172,488 779,782 188,726 4 37,142 – Adjustments** 34,536 –39,578 7,416 16,067 23,893 – Carrying amount in Raiffeisenlandes- bank Oberösterreich* 137,478 132,910 787,19 8 204,792 461,035 76,664

Market value (Stock Market value)* 160,010 – – – 599,688 – Dividends received* 3,491 427 35,708 7,8 8 5 17,3 46 4,095

* with Raiffeisenlandesbank Oberösterreich Invest GmbH & Co OG: values presented include shares in voestalpine AG directly held in the Group ** at RLB OÖ Invest GmbH & Co OG: adjustments from consideration of shares held directly *** Certain financial data for the 2014 financial year have been updated based on restatement in the consolidated statements of the RZB Group

The following table is a summary of the financial data on the associated companies not reported under the equity method. The figures are a sum of the information contained in the various most recent financial statements. Operating income was included as earnings for banks.

IN EUR ’000 2014/2015 2013/2014

Assets 1,478,552 1,456,958 Liabilities 1,118,580 984,689 Earnings 813,720 778,255 Result 8,700 2,433 118 Annual Report 2015

18. Intangible assets

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Customer base 194 388 Brand 18,606 20,751 Goodwill 13,622 13,622 Other intangible assets 12,214 13,139

Total 44,636 47,900

IAS 36.90 requires that those cash-generating units to which a figure for good will is allocated must be subjected to an impairment test every year and whenever there is cause to suspect any impairment. Under the terms of this regulation, Raiffeisen- landesbank Oberösterreich carries out an annual impairment test in the fourth quarter or in January for the goodwill of the “IMPULS-LEASING International” Group, which were distributed across individual countries, as well as for goodwill capitalised in the 2012 financial year on the first-time consolidation of the “TKV Oberösterreich GmbH”. Under the impairment test, with due regard to the item being valued, the most suitable method to establish the value in use is employed.

The discounted cash flow method is applied as the impairment test for the goodwill-bearing, cash-generating unit of “TKV Oberösterreich GmbH”. For this, the assets and liabilities attributed to the cash-generating unit including the attributable goodwill are compared with the company value (value in use). In determining the value in use of the goodwill-bearing cash-generating units of “TKV Oberösterreich GmbH”, a distinction is made between the detailed forecast for the reporting period and a period thereafter when the figure is carried forward. The reporting period for the detailed forecast covers a period of three years and is based on the current medium-term budgeting. The free cash flows were determined indirectly with inclusion of the working capital change. The cash flows beyond the period for the detailed planning are determined with a perpetual annuity. The perpetual annuity was determined, as in the previous year, based on a sustainable growth rate of 1 per cent to the last year of the detailed planning period.

To measure the cash-generating unit “TKV Oberösterreich GmbH”, a WACC of 7.15 per cent (before taxes) is applied in accordance with the Capital Asset Pricing Model (CAPM). Any change in the discount interest rate to which reference is made by plus or minus 100 basis points would result in a fall or rise of the established value in use of EUR –5.4 million or EUR +8.4 million respectively.

Goodwill as of 31 December 2015 derived from “TKV Oberösterreich GmbH” still has value. The goodwill was written down by around EUR 2.5 million to the value in use in the 2014 financial year on account of a significant decline in sales prices for significant product segments that took place as a result of the general fall in prices on the energy markets.

The earning power method is applied as the impairment test for the goodwill-bearing, cash-generating unit “IMPULS-LEASING International”. For this the value of the company (value in use) determined at amortised cost is compared with the equity plus goodwill allocated to the cash-generating unit.

In determining the value in use of the goodwill-bearing units of “IMPULS-LEASING International”, a distinction is made between the detailed forecast for the reporting period and a period thereafter when the figure is carried forward. The reporting period for the detailed forecast covers a period of five years and is based on the current medium-term budgeting, which is then discounted back in the course of the impairment test to the reporting date as at 31 December 2015. In contrast, the continuing value is based on the figures for the fifth planning year of the medium-range planning and is determined using the present value of the perpetual annuity without taking possible growth rates into account. The sum of the present values arising from the detailed forecast and the continuing value give the value in use, which is then compared with the equity plus the goodwill of the goodwill-bearing, cash-generating unit to test for any impairment. The medium-term planning used as the basis for this calculation is based on data from the past taking future market developments into account. Internal expectations from within the group are supplemented by external market expectations. To measure the goodwill-bearing, cash-generating units of the “IMPULS-Leasing International” Group, the following equity cost rates are applied in accordance with the Capital Asset Pricing Model (CAPM) at 12.79 per cent for Romania.

The goodwill of “IMPULS-LEASING International” Group still has value. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 119

IFRS Consolidated Statements_Notes_Balance sheet disclosures

19. Property and equipment, and investment property

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Property and equipment Land and buildings used for bank operations 237,260 239,176 Other property and equipment 179,157 164,377 Property under construction 2,625 2,299 Investment property Investment property 666,623 664,853 Property under construction 79,779 94,914

Total 1,165,444 1,165,619

The fair value of investment property amounted to EUR 257,130 thousand (previous year: EUR 253,052 thousand) with a carrying amount of EUR 219,594 thousand (previous year: EUR 226,175). The reports were compiled by the Gesellschaft Real-Treu- hand Immobilien Vertriebs GmbH. Rental income from investment property in the 2015 financial year amounted to EUR 48.0 million (previous year: EUR 40.4 million), while expenses directly associated with this amounted to EUR 20.9 million. (previous year: EUR 20.6 million).

As of 31 Dec. 2015, no contractual obligations were in place for real estate held as financial investments (previous year: EUR 2,100 thousand)

From the investment property, by far the largest portion – i.e. EUR 498.4 million (previous year: EUR 490.6 million) – stems form the “OÖ Wohnbau” business. Access to this investment property is subject to legal restrictions as a result of the Austrian Public House Building Act (WGG).

The special provisions of the WGG must be taken into account when determining the fair value of the investment property derived from the “OÖ Wohnbau” companies. In accordance with section 13, WGG, only economic rents can be agreed on the part of the “OÖ Wohnbau” companies. Furthermore, in the event of a sale of any real estate occurring, the earnings from the sale are covered by the purchase and production costs. It can be concluded from this that the fair value of the real estate essentially corresponds to the billable purchase and production costs – and hence the carrying amounts – and that no hidden reserves are contained in this. No statement of fair value can accordingly be awarded to the investment property of the “OÖ Wohnbau” companies.

20. Other assets

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Receivables from non-bank activities 141,022 132,489 Prepaid expenses 20,223 20,088 Inventories 141,188 53,660 Other assets 139,613 161,991

Total 442,046 368,228

Inventories essentially consist of real estate projects which have not yet been concluded as well as inventories from the companies in the foodstuff sector (“VIVATIS Holding AG” Group and “efko Frischfrucht und Delikatessen GmbH” Group). Material expenditure in this regard in the 2015 financial year amounted to EUR 506.8 million (previous year: EUR 486.0 million).

The proportion of “Other assets” attributable to the “OÖ Wohnbau” companies amounted to EUR 52.5 million (previous year: EUR 36.7 million). 120 Annual Report 2015

21. Schedule of changes in non-current assets

Schedule of changes in non-current assets 2015

CARRYING PURCHASE AND PRODUCTION COSTS PURCHASE AND PRODUCTION COSTS APPRECIATION AND DEPRECIATION AMOUNT OF WHICH OF WHICH NON-SCHEDULED SCHEDULED CHANGE IN DEPRECIATION DEPRECIATION IN CHANGE IN AS AT BASIS OF CURRENCY RECLASSIFI- AS AT ACCUMULATED IN THE FINANCIAL THE FINANCIAL BASIS OF AS AT

IN EUR ’000 1 JAN. 2015 CONSOLIDATION DIFFERENCES ADDITIONS DISPOSALS CATIONS 31 DEC. 2015 DEPRECIATION YEAR YEAR CONSOLIDATION 31 DEC. 2015

Intangible assets 123,636 2,714 10 2,932 2,262 0 127,030 80,086 242 5,710 2,308 44,636 Goodwill 32,474 0 0 0 0 0 32,474 18,852 0 0 0 13,622 Other intangible assets 91,162 2,714 10 2,932 2,262 0 94,556 61,234 242 5,710 2,308 31,014 Property and equipment 927,603 43,512 138 77,930 47,176 172 1,002,179 558,103 8,850 56,244 25,034 419,042 Land and buildings used for operations 4 47,223 14,888 –13 6,356 2,173 613 466,894 226,758 8,263 11,935 2,876 237,260 Other property and equipment 478,081 28,624 151 68,488 44,788 2,104 532,660 331,345 587 44,309 22,158 179,157 Property under construction 2,299 0 0 3,086 215 –2,545 2,625 0 0 0 0 2,625 Investment property 920,691 –12,925 177 42,788 40,085 –172 910,474 165,855 0 16,661 –1,783 746,402 Investment property 824,537 –12,933 177 15,469 39,827 42,588 830,011 165,171 0 16,162 –1,783 666,623 Property under construction 96,154 8 0 27,319 258 –42,760 80,463 684 0 499 0 79,779

Total 1,971,930 33,301 325 123,650 89,523 0 2,039,683 804,044 9,092 78,615 25,559 1,210,080

Schedule of changes in non-current assets 2014

CARRYING PURCHASE AND PRODUCTION COSTS PURCHASE AND PRODUCTION COSTS APPRECIATION AND DEPRECIATION AMOUNT OF WHICH OF WHICH NON-SCHEDULED SCHEDULED CHANGE IN DEPRECIATION IN DEPRECIATION IN CHANGE IN AS AT BASIS OF CURRENCY RECLASSIFI- AS AT ACCUMULATED THE FINANCIAL THE FINANCIAL BASIS OF AS AT

IN EUR ’000 1 JAN. 2014 CONSOLIDATION DIFFERENCES ADDITIONS DISPOSALS CATIONS 31 DEC. 2014 DEPRECIATION YEAR YEAR CONSOLIDATION 31 DEC. 2014

Intangible assets 124,124 169 –157 3,602 4,102 0 123,636 75,488 2,500 6,331 248 47,900 Goodwill 32,474 0 0 0 0 0 32,474 18,852 2,500 0 0 13,622 Other intangible assets 91,650 169 –157 3,602 4,102 0 91,162 56,636 0 6,331 248 34,278 Property and equipment 897,151 3,164 –697 95,156 67,171 0 927,603 521,116 39 53,606 635 405,852 Land and buildings used for operations 429,619 1,292 –512 14,766 3,447 5,505 4 47,223 208,052 0 12,227 –5 239,176 Other property and equipment 458,061 1,872 –185 77,3 0 8 63,724 4,749 478,081 313,064 39 41,379 640 164,377 Property under construction 9,471 0 0 3,082 0 –10,254 2,299 0 0 0 0 2,299 Investment property 373,331 540,097 –88 49,982 42,631 0 920,691 95,882 0 16,270 65,042 759,767 Investment property 278,388 540,097 –88 14,575 40,692 32,257 824,537 94,642 0 15,786 65,042 664,853 Property under construction 94,943 0 0 35,407 1,939 –32,257 96,154 1,240 0 484 0 94,914

Total 1,394,606 543,430 –942 148,740 113,904 0 1,971,930 692,486 2,539 76,207 65,925 1,213,519 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 121

IFRS Consolidated Statements_Notes_Balance sheet disclosures

IN EUR ’000 1 JAN. 2015 CONSOLIDATION DIFFERENCES ADDITIONS DISPOSALS CATIONS 31 DEC. 2015 DEPRECIATION YEAR YEAR CONSOLIDATION 31 DEC. 2015

Total 1,971,930 33,301 325 123,650 89,523 0 2,039,683 804,044 9,092 78,615 25,559 1,210,080

IN EUR ’000 1 JAN. 2014 CONSOLIDATION DIFFERENCES ADDITIONS DISPOSALS CATIONS 31 DEC. 2014 DEPRECIATION YEAR YEAR CONSOLIDATION 31 DEC. 2014

Total 1,394,606 543,430 –942 148,740 113,904 0 1,971,930 692,486 2,539 76,207 65,925 1,213,519 122 Annual Report 2015

22. Amounts owed to banks

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Liabilities payable on demand 3,811,819 3,601,607 Money market transactions 3,892,850 3,886,277 Long-term financing 3,247,810 3,533,598 Other 261,694 283,443

Total 11,214,173 11,304,925

In Austria 8,508,882 8,130,969 Abroad 2,705,291 3,173,956

Total 11,214,173 11,304,925

23. Amounts owed to customers

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Demand deposits 4,827,28 4 4,571,852 Term deposits 4,188,535 4,160,350 Savings deposits 1,442,900 1,574,341 Other 169,396 209,490

Total 10,628,115 10,516,033

In Austria 7,8 02,245 7,455,701 Abroad 2,825,870 3,060,332

Total 10,628,115 10,516,033

24. Trading liabilities

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Interest rate transactions 1,8 47,523 2,172,922 Currency exchange transactions 23,771 29,249 Stock and index related business 237 172 Other transactions 1 6

Total 1,871,532 2,202,349

The (negative) fair value of derivative financial instruments that were employed under fair value hedge accounting as hedging transactions amounted to EUR 120,965 thousand as at 31 December 2015 (previous year: EUR 141,278 thousand).

25. Liabilities evidenced by certificates

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Bonds issued 2,730,944 3,693,441 Listed mortgage bonds/municipal bonds 86,829 90,134 Non-listed mortgage bonds/municipal bonds 268,323 258,026 Other securitised liabilities 4,532,388 4,600,802

Total 7,618,484 8,642,403 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 123

IFRS Consolidated Statements_Notes_Balance sheet disclosures

26. Provisions

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Provisions for personal expenses 159,502 173,783 of which severance provisions 88,937 95,968 of which pension provisions 52,657 59,509 of which bonus fund provisions 17,9 0 8 18,306 Other provisions 81,745 85,569

Total 241,247 259,352

Severance provisions

Changes in severance obligations

IN EUR ’000 2015 2014

Present value (DBO) 1 Jan. 95,968 78,052 Change in basis of consolidation –5,456 607 Current service cost 3,998 3,624 Past service cost 0 –65 Interest cost 1,603 2,468 Payments –1,681 –4,084 Actuarial profit/loss –5,426 15,366 of which adjustments based on past experience –1,127 224 of which changes in demographic assumptions –83 –157 of which changes in financial assumptions –4,216 15,299

Present value (DBO) 31 Dec. 89,006 95,968

Change in plan assets

IN EUR ’000 2015 2014

Fair value 1 Jan. 0 0 Change in basis of consolidation 69 0 Interest income 0 0 Contributions 0 0 Payments 0 0 Other profits/losses 0 0

Fair value 31 Dec. 69 0

Reconciliation of severance provisions

IN EUR ’000 2015 2014

Present Value (DBO) of the severance obligations as at 31 Dec. 89,006 95,968 Fair value of plan assets as at 31 Dec. 69 0

Net obligations 31 Dec. (= provisions) 88,937 95,968 124 Annual Report 2015

Pension provisions

Changes in pension provisions

IN EUR ’000 2015 2014

Present value (DBO) 1 Jan. 61,081 54,821 Change in basis of consolidation 0 299 Current service cost 589 487 Past service cost 0 0 Interest cost 1,038 1,758 Payments – 3,741 – 4,147 Actuarial profit/loss –5,345 7,863 of which adjustments based on past experience –675 62 of which changes in demographic assumptions 0 0 of which changes in financial assumptions –4,670 7,8 01 Other change 960 0

Present value (DBO) 31 Dec. 54,582 61,081

Change in plan assets

IN EUR ’000 2015 2014

Fair value 1 Jan. 1,572 1,480 Interest income 30 49 Contributions 75 71 Payments 0 -98 Other profits/losses 16 70 Other change 232 0

Fair value 31 Dec. 1,925 1,572

Change in pension provisions

IN EUR ’000 2015 2014

Present Value (DBO) of the pension obligations as at 31 Dec. 54,582 61,081 Fair value of plan assets as at 31 Dec. 1,925 1,572

Net obligations 31 Dec. (= provisions) 52,657 59,509

The fair value of the claims for reimbursement reported amounted at 31 Dec. 2015 to EUR 1,564 thousand (previous year: EUR 1,510 thousand).

Classification of pension obligations by beneficiaries

IN EUR ’000 2015 2014

Present Value (DBO) of the pension obligations as at 31 Dec. 54,582 61,081 of which obligations to active beneficiary employees 8,793 11,079 of which obligations to retired beneficiary employees with vested claims 169 88 of which obligations to pensioners 45,620 49,914 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 125

IFRS Consolidated Statements_Notes_Balance sheet disclosures

Investment of plan assets for severance and pension obligations

IN % 2015 2014

Bonds and other fixed-income securities 45.8 48.3 Shares and other variable-yield securities 21.2 33.2 Other 33.0 18.5

Total 100.0 100.0

The plan assets are overwhelmingly invested in an active market. The plan assets do not include own financial instruments or other assets used by the Raiffeisenlandesbank Oberösterreich Group.

For 2016, defined benefit payments (adjusted for the payments made from the plan assets) amounting to EUR 137 thousand are scheduled in the plan.

Sensitivities

The following sensitivity analysis shows a change in the present value of the liability (DBO) as of 31 December 2015 when one of each of the actuarial parameters is changed that are considered to be essential. The calculations for the sensitivity analysis is analogous to the calculation of provisions pursuant to IAS 19 – Employee Benefits – using the projected unit credit method.

CHANGE IN THE EFFECT CHANGE IN THE EFFECT PARAMETER OF ON DBO IN % PARAMETER OF ON DBO IN %

Severance provisions Interest rate + 1.0% –10.7 –1.0% 12.8 Increasing the bases for assessment + 0.5% 6.0 –0.5% –5.5 Fluctuation + 0.5% –2.9 –0.5% 1.0 Pension provisions Interest rate + 1.0% –10.2 –1.0% 12.5 Increasing the bases for assessment + 0.5% 0.6 –0.5% –0.6 Increase in future pensions + 0.5% 5.0 –0.5% –4.5 Mortality table/Life expectancy + 1 year 6.0

Weighted residual maturity of the financial liabilities

IN YEARS 2015

Severance obligations 12 Pension obligations 12

Changes in staff anniversary provisions

IN EUR ’000 2015 2014

Present value (DBO) 1 Jan. 18,306 14,600 Change in basis of consolidation –1,199 394 Current service cost 1,631 1,299 Past service cost 0 0 Interest cost 304 471 Payments –1,013 –918 Actuarial profit/loss –121 2,460

Present value (DBO) 31 Dec. (= provisions) 17,908 18,306 126 Annual Report 2015

Changes in other provisions

LOAN LOSS ALLOWANCES OTHER PROVISIONS

IN EUR ’000 2015 2014 2015 2014

As at 1 Jan. 62,049 68,426 23,520 13,650 Allocations 32,017 39,916 24,101 10,216 Reversals –45,450 –45,002 –2,280 –647 Utilised – 4,114 –1,291 –8,098 –14,783 Change in basis of consolidation 0 0 0 15,084

As at 31 Dec. 44,502 62,049 37,243 23,520

The maturities of the remaining provisions are anticipated to be as follows:

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Total of other provisions 37,24 3 23,520 up to 1 year 29,957 15,756 from 1 to 5 years 4,453 3,804 over 5 years 2,833 3,960

The other provisions contain a provision in the fully consolidated SALZBURGER LANDES-HYPOTHEKENBANK AG for legal risk associated with business development with the state of Salzburg amounting to EUR 5.5 million (previous year: EUR 0.0 million). In terms of provisions associated with the debt moratorium for HETA ASSET RESOLUTION AG (“HETA”), we would refer to the descriptions under “Loan loss allowances” in the Appendices.

27. Other liabilities

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Liabilities from non-bank activities 143,333 117,467 Deferred income 13,238 12,452 Other liabilities 338,477 348,797

Total 495,048 478,716

28. Subordinated capital

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Supplementary capital and subordinated liabilities 1,414,048 1,519,191 Profit-sharing rights 17,3 0 0 17,3 0 0

Total 1,431,348 1,536,491 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 127

IFRS Consolidated Statements_Notes_Balance sheet disclosures

29. Equity

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Share capital 276,476 276,476 Participation capital 1,032 1,032 Capital reserves 972,095 972,095 Aggregate net income 2,345,407 2,164,927 Non-controlling interests 144,386 151,741

Total 3,739,396 3,566,271

In accordance with its articles, Raiffeisenlandesbank Oberösterreich Aktiengesellschaft’s share capital as at 31 December 2015 was EUR 276,476 thousand (previous year: EUR 276,476 thousand). It consists of 1,933,965 ordinary shares (previous year: 1,933,965 ordinary shares). The ordinary shares consist of ones in the name of holder without a nominal value (individual share certificates). Sales of name shares require the written approval of the Managing Board and of the Supervisory Board.

Capital reserves amounting to EUR 410,859 thousand were set aside in conjunction with the transfer of bank business from the former Raiffeisenlandesbank Oberösterreich reg. Gen.m.b.H. to Raiffeisenlandesbank Oberösterreich Aktiengesellschaft in financial year 2004, and EUR 136,987 thousand resulting from a premium for a new issue of preferred shares in 2007. In connection with an additional payment in accordance with section 229 (2) line 5 of the Austrian Commercial Code, capital reserves increased by EUR 149,992 thousand in financial year 2008. The increase in share capital in the form of ordinary shares in 2013 led to the capital reserves rising in value by EUR 274,257 thousand.

In the first half of 2015, dividends of EUR 23,374 thousand were paid on the ordinary shares and EUR 892 thousand on the participation capital of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft, in accordance with the decision made at the annual general meeting on 28 May 2015 concerning the use of the profit from 2014. This means that the planned dividend for each ordinary share will be EUR 12.09. The recommendation of the Managing Board as to the use of the profit for 2015 will be to pay dividends of EUR 36,206 thousand on ordinary shares and EUR 892 thousand on the participation capital. This means that the planned dividend for each ordinary share will be EUR 18.72.

In addition to the reinvested profit from the previous financial years, the item headed “Accumulated profits” contains the share of changes in equity recognised with no effect on the income statement and the share of the current net profit for the year that is attributable to the shareholders of the parent company.

Changes in AfS reserves

IN EUR ’000 2015 2014

As at 1 Jan. 295,180 112,670 Change in basis of consolidation 0 0 Changes in the valuation of AfS securities –52,905 249,558 Amounts transferred into the income statement –49,007 –6,202 of which through impairment loss of AfS assets –378 336 of which through sale of AfS assets –49,502 –7,577 of which from reclassified AfS assets 873 1,039 Taxes recognised in respect of this amount 25,397 –60,846

As at 31 Dec. 218,665 295,180

The AfS provisions reflect changes in valuation recorded under equity with no effect on the consolidated income statement of financial instruments in the category “Financial assets available for sale (AfS)” in accordance with IAS 39. 128 Annual Report 2015

Hedging of net investments in a foreign business

IN EUR ’000 2015 2014

As at 1 Jan. 1,380 1,014 Gain or loss from the hedging of net investments –1,164 488 Taxes recognised in respect of this amount 291 –122

As at 31 Dec. 507 1,380

Exchange rate hedging transactions for investments in economically independent entities are recorded as hedging of net investments, in accordance with IAS 39.102. Hedge positions represent refinancing in foreign currency.

Changes in foreign currency translation reserves

IN EUR ’000 2015 2014

As at 1 Jan. –1,919 –949 Gain or loss from foreign currency translation 128 –970

As at 31 Dec. –1,791 –1,919

Changes in the reserves of actuarial gains/losses on defined benefit plans

IN EUR ’000 2015 2014

As at 1 Jan. –23,948 –6,536 Change in basis of consolidation 1,350 0 Changes in the valuation of reserves of actuarial gains/losses on defined benefit plans 10,787 –23,159 Taxes recognised in respect of this amount –2,685 5,747

As at 31 Dec. –14,496 –23,948

Significant non-controlling interests

NON- AFTER-TAX TOTAL OTHER CONTROLLING PROFIT FOR COMPREHENSIVE TOTAL INTERESTS EQUITY THE YEAR INCOME RESULT COUNTRY OF REGIS- COMPANY TRATION 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 IN % IN % IN EUR ’000 IN EUR ’000 IN EUR ’000 IN EUR ’000 IN EUR ’000 IN EUR ’000 IN EUR ’000 IN EUR ’000

Hypo Holding subgroup Austria 14.37 20.63 92,026 103,664 –1,270 –11,929 –123 3,983 –1,393 –7,946 OÖ Wohnbau gemeinnützige Wohnbau subgroup Austria 16.44 16.44 12,631 11,310 1,211 744 26 0 1,237 744 Gesellschaft zur Förderung agrarischer Interessen in Oberösterreich GmbH Austria 5.00 5.00 3,569 4,556 –35 445 –858 751 –893 1,196 Other 36,160 32,211 3,882 3,721 184 –923 4,066 2,798

144,386 151,741 3,788 –7,019 –771 3,811 3,017 –3,208

Due to an option on non-controlling interests in Hypo Holding GmbH, which is presented according to the “anticipated acquisition method”, in the 2015 financial year, an increase in the holding of shares in the Hypo Holding GmbH has been secured of about 6.3 per cent and therewith a corresponding reduction in non-controlling interests. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 129

IFRS Consolidated Statements_Notes_Balance sheet disclosures

Companies with substantial non-controlling interests in 2015

GESELLSCHAFT ZUR FÖRDERUNG AGRARISCHER OÖ WOHNBAU HYPO HOLDING INTERESSEN IN GEMEINNÜTZIGE WOHNBAU

IN EUR ’000 SUBGROUP OBERÖSTERREICH GMBH SUBGROUP

Assets 4,596,624 375,726 601,232 Liabilities and provisions 4,329,419 212,448 524,352 Equity 267,205 163,278 76,880

Earnings 31,338 663,720 75,037

After-tax profit for the year –7,0 59 –2,334 7,56 0 Total other comprehensive income 55 –17,311 163 Comprehensive income –7,004 –19,645 7,723

Dividends paid to non-controlling shareholders 0 95 31

Cash flow from operating activities –96,294 13,792 14,937 Cash flow from investing activities 106,374 –13,643 –14,554 Cash flow from financing activities 0 –180 –381

Change in cash levels 10,080 –31 2

Companies with substantial non-controlling interests in 2014

GESELLSCHAFT ZUR FÖRDERUNG AGRARISCHER OÖ WOHNBAU HYPO HOLDING INTERESSEN IN GEMEINNÜTZIGE WOHNBAU

IN EUR ’000 SUBGROUP OBERÖSTERREICH GMBH SUBGROUP

Assets 4,926,009 404,587 579,101 Liabilities and provisions 4,651,856 221,484 509,562 Equity 274,153 183,103 69,539

Earnings 90,808 648,075 64,727

After-tax profit for the year –53,854 6,568 4,718 Total other comprehensive income 9,037 15,584 –161 Comprehensive income –44,817 22,152 4,557

Dividends paid to non-controlling shareholders 999 144 31

Cash flow from operating activities 102,508 8,678 24,990 Cash flow from investing activities –102,427 –8,348 –24,608 Cash flow from financing activities –3,010 –278 –381

Change in cash levels –2,929 52 0 130 Annual Report 2015

Risk report

Summary Risk Controlling analyses all risks and examines adherence to the defined risk limits by means of ongoing variance analyses. Raiffeisenlandesbank Oberösterreich Group’s long-term suc- Internal/Group Auditing assesses the effectiveness of working cess has largely been due to active risk management. In order procedures, processes and internal controls. to achieve this target, Raiffeisenlandesbank Oberösterreich, as the dominant group company, has implemented risk man- Modifications and enhancements of risk management are agement with structures that facilitate the identification and continuously documented in the Risk Management Manual. measurement of all risks in the group in accordance with sections 39, 39a, Austrian Banking Act (BWG) and the Bank Risk The supervisory Group of the Raiffeisenlandesbank Oberös- Management Regulation (KI-RMV) (credit risks, market risks, terreich publishes detailed information with regard to risk equity risks, liquidity risks, macroeconomic risks, and opera- management in accordance with Section 8 of the CRR. The tional risks) and their active managerial counteraction. information is published on the internet site of the Raiffeisen- landesbank Oberösterreich in the “Facts and Figures” domain. The risk policy that has been sanctioned by the Raiffeisen- landesbank Oberösterreich Managing Board serves as a Risk management organisation guideline for the other group companies. The Managing Board of Raiffeisenlandesbank Oberösterre- The Managing Board and all employees act in accordance ich bears responsibility for all risk management activities. The with these risk policy principles and make decisions on the Managing Board approves the risk policy in accordance with basis of these guidelines. Risk management is organised in the business strategies, the risk principles, procedures and such a way that conflicts of interest both on a personal level methods of risk measurement and the risk limits. The Chief and at the organisation units level are avoided. Risk Officer (Managing Board member) is responsible for controlling all the quantifiable risks, including in particular credit For the main types of risks, the Raiffeisenlandesbank Oberös- risk, market risk, equity risk, liquidity risk, macroeconomic risk terreich strives to operate a risk management system on a and operational risks that Raiffeisenlandesbank Oberösterre- level which at least corresponds to that of institutions of a sim- ich is exposed to and for developing and implementing the ilar structure and size (best practice principle) and is primarily overall risk strategy. aimed at the continuation of the company as a going concern (going concern principle). An organisational separation between front and back offices has been implemented. The Raiffeisenlandesbank Oberösterreich in general only aims its work at areas of the business in which it has the requi- The Overall Bank Risk Management organisational unit is re- site expertise in the assessment of the specific risks. Before sponsible for the identification and measurement of risks in it moves into new areas of business or products, the group cooperation with the organisational units charged with the always carries out an adequate analysis of the risks posed by tasks. that specific business. Risk Management is also responsible for the development and The Managing Board and the Supervisory Board of Raiff- provision of risk measurement methods and IT systems and eisenlandesbank Oberösterreich are informed promptly of the provides the result and risk information required for active risk bank’s risk situation by means of comprehensive, objective management. reports. All the quantifiable risks (credit risks, market risks, equity risks, liquidity risks, macroeconomic risks, and oper- The Committee for Product Approval ensures that the risks ational risks) to which Raiffeisenlandesbank Oberösterreich have been adequately portrayed for new products as well, is exposed are monitored and coordinated with the group’s and that they have been handled in accordance with the overall strategy. regulations. During the approval process, the committee not only reviews the risk measurement but also market topics, All the quantifiable risks are monitored on the basis of the legal admissibility, supervisory stipulations and general ques- group-wide risk-bearing capacity. The aim of the risk early tions about carrying out business. The result of the approval identification and risk monitoring systems is to ensure the process must be recorded in writing by the responsible or- qualified and timely identification of all major risks. ganisational units. New products /product variants must be submitted to the Managing Board of Raiffeisenlandesbank Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 131

IFRS Consolidated Statements_Notes_Risk report

Oberösterreich for approval before the first transaction is com- A report on the credit risk is given to the Managing Board once pleted – together with all necessary statements and opinions. each quarter, or as needed. For the purposes of the group’s The Country Risk Committee is responsible for managing the risk reporting, it takes into account all elements of credit risk country risk. Business transactions that result in a country related to loans and advances, such as individual debtor de- risk/country exposure may only be carried out when the re- fault risk, country and sector risks. sulting country risk/country exposure is within the approved limit. The industry distribution of the credit portfolio is checked for concentration risks four times a year. The maximum exposure The further development of the existing risk management sys- of individual borrowers or groups of associated customers is tem (identification, measurement, control) is the responsibility only permitted up to the upper limit for large-volume invest- of the Risk Management business area in coordination with ments. The prerequisites are business policy and strategic the Chief Risk Officer, the Managing Board and the employees interests of the Raiffeisenlandesbank Oberösterreich Group responsible for assessing operating risk. along with the an investment grade credit rating for the borrower. The credit volume in foreign currency is also limited. Legally independent group units and their boards are responsible for the risk policy of their business unit and only enter into The principles of the customers’ credit ratings are incorpo- risks if they are in harmony with the established risk policy of rated in the “Rating Standards” and “Collateral Standards” Raiffeisenlandesbank Oberösterreich. manuals. These regulations provide a compact representation of the standards valid for Raiffeisenlandesbank Oberösterre- To assess the group risks, the Risk Management organisa- ich. They are oriented on international standards (Basel) and tional unit identifies and measures the risks in cooperation on supervisory recommendations. with the group members. Business-related manifestations in the risk measurement procedure are coordinated with the In order to measure the credit risk, the bank carries out its own Risk Management organisational unit. A high degree of stan- internal ratings and classifies financing transactions into credit dardisation has the purpose of ensuring a comparable con- rating and risk classes. The risk class of a borrower accord- solidation of the group risks. ingly comprises two dimensions – recording and assessing their financial situation and measuring the collateral provided. Risk management for the subgroup Gesellschaft zur Förderung agrarischer Interessen in Oberösterreich GmbH is Both hard and soft facts are employed as creditworthiness decentralised among the individual group companies. In ad- criteria. In corporate customer business, soft facts are also dition to credit risk, the subgroup is confronted with purchas- defined systematically during discussions with the company ing and sales related price risks. These result from the global and then adjudged. supply and demand situation in the commodities markets and the industry-related intensity of competition. Rating systems are differentiated according to the customer segments Corporates, Retail Customers, Projects, Banks, Credit risk States, Federal States/Municipalities, Insurance Companies and Funds. The credit risk constitutes the risk to the bank that a loss will occur as a result of the non-fulfilment of the contractual ob- A scoring system is used to automatically classify small vol- ligations of customers or contractual partners. Credit risk is ume business with employed retail customers. mainly generated by the loans and advances to customers and banks and from securities from the banking book. The rating roadmap was thoroughly revised in the non-retail area. The new Regular and Large Corporates as well as Proj- A credit value adjustment (CVA) and debt value adjustment ect Finance rating models were introduced in April 2015. In- (DVA) were determined as part of the inclusion of credit risk troduction of the new low-default models Financial Institutions, in the mark-to-model measurement of derivatives. The main Insurances, Collective Investment Undertakings, Local and factors used in determining the CVA and DVA were the term Regional Governments and Sovereigns followed in June 2015. to maturity, counter-party default risk and collateralisation. Further developments planned relate to the scoring models in the Retail division and the SME models. In terms of the risk associated with the debt moratorium for HETA ASSET RESOLUTION AG (“HETA”) and the related pro- This credit rating system is constantly being validated and visions established in the Group for this purpose, we refer to developed. the descriptions regarding loan loss allowances. 132 Annual Report 2015

The following rating classes are used for internal rating in the Raiffeisenlandesbank Oberösterreich Group:

10 POINT SCALE SUBCLASSES TEXT

0.5 0.5 risk-free 1.0 1.0 outstanding creditworthiness 1.5 1.5 very good creditworthiness 2 + 2.0 good creditworthiness 2.0 2 – 2.5 average creditworthiness 2.5 3 + 3.0 satisfactory creditworthiness 3.0 3 – mediocre creditworthiness 3.5 3.5 poor creditworthiness 4 + 4.0 very poor creditworthiness 4.0 4.5 4.5 in danger of default 5.0 5.0 5.1 default criteria reached 5.2

Individual rating classes are defined and delineated by means of calculations which assess statistical default probabilities. The descriptions in words are simply for illustrative purposes. The above reconciliation to external ratings reflects the bank’s internal experience to date, on the basis of default probabilities.

Credit value at risk Market risks

The overall risk of all assets exhibiting counter-party default Market risks take the form of changes in interest rates, risk is assessed on a monthly basis. Risk may arise due to spreads, currency and exchange rates relating to securities, credit default, deterioration in creditworthiness or a reduc- interest rates and foreign exchange items. tion in the intrinsic value of collateral and it is communicated through the key figures expected loss and unexpected loss. The basis for all business is a balanced Risk/Reward ratio.

The expected loss represents the most probable value de- The strict division of labour between front, middle and back crease of a given portfolio. This specified decrease in value office and risk controlling ensures that risks can be described should be expected each year. This loss is covered by the comprehensively, transparently and objectively to the Manag- calculated risk costs. ing Board and supervisory authorities.

The unexpected loss represents a portfolio’s possible loss New products and markets are evaluated in an approval pro- beyond the expected loss. Thus, it communicates possible cess and then authorised by the Managing Board. negative deviation from the expected loss. The unexpected loss is covered by the equity and is the maximum loss that can The trades and the market price risk are limited by an exten- possibly arise within a single year, and which – with a certain sive limit system. All trading positions are valued every day at amount of probability – will not be exceeded. Raiffeisenland- market prices. esbank Oberösterreich calculates unexpected loss at probabilities of 95 per cent and 99.9 per cent. For risk management purposes, the securities in the trading book are handled separately; they are included in the report The calculation is carried out by the credit manager software on market risk. from the Risk-Metrics company. The risks/opportunities from loan defaults or changes in creditworthiness are determined The market risks are measured every day with the value- using a market valuation model. The market data required for at-risk index for the trading and banking books. This indicates the portfolio value distribution (interest rates, credit spreads a possible loss which, with 99 per cent probability, will not be and sector indices) are updated every month. exceeded during a one-month holding period. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 133

IFRS Consolidated Statements_Notes_Risk report

The market risks are managed using a limit system based The following table shows the results of the stress test as at on the value at risk. All market risk activities are assigned a 31 December 2015: risk limit which is included in full in the risk-bearing capacity 31 DEC. 2015 31 DEC. 2014 analysis. IN EUR ’000 + 200 BP –200 BP + 200 BP –200 BP

In addition to value-at-risk, stop-loss limits and scenario anal- EUR –297,020 259,835 – 335,174 328,191 yses are used to limit risk. USD –1,689 1,952 –2,052 2,416 GBP 896 –940 2,001 –2,140 The other fully consolidated group companies minimise their CHF –1,051 1,110 –4,249 4,854 market risks through maturity-matched funding via Raiffeisen- JPY –898 1,180 –465 485 landesbank Oberösterreich. CZK –13,115 15,539 –11,020 13,404 Other The following table shows the value-at-risk figures for the Raif- currencies 556 –559 –382 477 feisenlandesbank Oberösterreich Group (confidence level 99 per cent, holding period one month) as at 31 December 2015. The stress test shows the change in present value when the yield curve is shifted in parallel by one and two percentage RAIFFEISENLANDESBANK 31 DEC. 2015 31 DEC. 2014 points respectively. OBERÖSTERREICH GROUP IN EUR ’000 IN EUR ’000

Total 95,699 100,210 Interest 80,411 83,936 Spread 59,592 46,732 Currency 714 693 Shares 2,830 2,895 Volatility 2,939 1,392

The whole Value-at-Risk as at 31 December 2015 has fallen when compared with 31 December 2014 by EUR 4.5 million to EUR 95.7 million.

In addition, stress tests are conducted to take account of risks in the event of extreme market movements. The crisis scenarios include the simulation of large fluctuations in the risk factors and are designed to highlight potential losses which are not covered by the value-at-risk model. The stress scenarios comprise both the extreme market fluctuations which have actually occurred in the past and also a series of standardised shock scenarios involving interest rates, credit spreads, share prices, currency exchange rates and volatility.

A stress test with a 200 basis point interest rate shift was performed for the trading and banking book. 134 Annual Report 2015

Overall structure by balance sheet item

Maximum credit risk exposure pursuant to IFRS 7.36 a

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Cash and cash equivalents (credit balance at central banks) 52,557 54,500 Loans and advances to banks 6,854,907 6,779,138 Loans and advances to customers 18,731,309 19,166,752 Trading assets 2,468,794 2,951,476 Financial assets 4,886,846 5,255,112 Total 32,994,413 34,206,978

Contingent liabilities 3,217,79 6 3,424,218 Credit risks 3,916,035 4,594,948 Total 7,133,831 8,019,166

Total maximum credit exposure 40,128,244 42,226,144

Collateral for overall structure

The stated collateral values correspond to the values determined within internal risk management. They reflect a conservative estimate of receipts in the event of any necessary non-performing loan workout.

Collateral values pursuant to IFRS 7.36 b

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Loans and advances to banks 1,573,149 1,582,149 Loans and advances to customers 10,312,565 9,878,994 Trading assets 2,019,928 2,074,056 Financial assets 823,131 9 97,29 5 Total 14,728,773 14,532,494

Contingent liabilities* 1,414,964 1,605,632 Credit risks 942,536 920,595 Total 2,357,500 2,526,227

Total collateral values 17,086,273 17,058,721

As at 31 December 2015, the total collateral values consisted of 44.9 per cent* (previous year: 44.6 per cent*) collateral on immovable goods (i.e. mortgages, rankings).

* Taking into consideration shares held as collateral in housing loans from Oberösterreichische Landesbank Aktiengesellschaft Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 135

IFRS Consolidated Statements_Notes_Risk report

Industry structure/Concentration risk

Maximum credit risk exposure by industry

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Banks in Austria 7,581,4 3 6 7,385,293 Public households and non-profit organisations 3,822,677 3,504,113 Private households 2,979,631 2,9 97,749 Banks in the EU, excluding Austria 2,558,516 2,932,014 Construction and supplementary construction trade 2,320,278 2,354,394 Commercial and other real estate projects 2,298,602 2,480,047 Real estate project operators 2,271,201 2,621,113 Engine and plant construction 1,584,299 1,516,827 Banks other 1,229,261 1,502,618 Transport and warehousing 1,146,297 1,002,514 Metal production and processing 1,072,988 1,056,731 Motor vehicles 1,043,085 1,125,952 Residential building management 874,187 736,161 Consumer goods 848,480 830,464 Plastics, chemical products 702,703 757,6 0 8 Foodstuffs 674,107 664,407 Electronic/electrical 644,252 664,327 Other economic services 643,374 659,061 Tourism, accommodation, gastronomy 610,625 619,041 Energy supplies 600,334 685,861 Financial and insurance services 551,282 507,522 Subtotal 36,057,615 36,603,817 Other sectors 4,070,629 5,622,327

TOTAL 40,128,244 42,226,144

In the CRR scope of finance holding (Raiffeisenbankengruppe OÖ Verbund eGen) there were 24 major loans* (22 the previous year)(without loans to Group members) as at 31 December 2015. Of these, 13 (previous year: 10) major loans were to the commercial sector, 3 (previous year: 4) major loans to the banking sector and 8 (previous year: 8) major loans to the public sector.

* Value (before application of exemptions and deduction of collateral) greater than 10 per cent of equity eligible for inclusion for major loans according to CRR

Geographic distribution of the loans and advances to customers

Austria: 66.2% (previous year: 65.3%)

Germany: 19.1% (previous year: 20.2%)

Czech Republic: 4.7% (previous year: 4.2%)

Croatia: 1.9% (previous year: 1.8%)

Romania: 1.4% (previous year: 1.4%)

Hungary: 1.4% (previous year: 1.4%)

Slovakia: 1.2% (previous year: 1.1%)

Poland: 1.2% (previous year: 1.1%)

Others: 2.9% (previous year: 3.5%) 136 Annual Report 2015

Disclosures on government bonds from selected European countries

DESIGNATED FINANCIAL ASSETS FINANCIAL AVAILABLE FOR FINANCIAL ASSETS CARRYING AMOUNTS INSTRUMENTS SALE (AFS) “HELD-TO-MATURITY” TOTAL

IN EUR M 12/2015 12/2014 12/2015 12/2014 12/2015 12/2014 12/2015 12/2014

Spain 0 0 11.7 0 0 0 11.7 0 Greece 0 0 0 0 0 0 0 0 Ireland 0 0 12.3 12.5 50.0 49.9 62.3 62.4 Italy 89.9 87.2 0 0 0 0 89.9 87.2 Ukraine 0 0 0 0.8 0 0 0 0.8 Portugal 0 0 0 0 15.0 15.1 15.0 15.1

Total 89.9 87.2 24.0 13.3 65.0 65.0 178.9 165.5

The government bonds listed in the category “financial assets available for sale” as of 31 December 2015 contained a total positive AfS reserve of about EUR 2.4 million (previous year: EUR 2.6 million). The fair values of the government bonds listed in the category “financial assets held to maturity” was about EUR 1.8 million (previous year: EUR 4.3 million) above their carrying amounts as at 31 December 2015. Beyond that we held no credit default swaps (CDS) in connection with the aforementioned countries.

Rating structure for credit risk exposure which is neither overdue nor impaired

The quality of the financial assets which are neither overdue nor impaired are depicted as follows on the basis of the internal rating classification:

Very low / low risk: Rating classes 0.5 to 1.5 Normal risk: Rating classes 2 + to 3 + Increased risk: Rating classes 3 and poorer

VERY LOW OR LOW RISK NORMAL RISK INCREASED RISK

IN EUR ’000 12/2015 12/2014 12/2015 12/2014 12/2015 12/2014

Cash and cash equivalents 52,557 54,500 0 0 0 0 Loans and advances to banks 5,678,373 6,056,733 1,169,882 689,976 5,499 30,867 Loans and advances to customers 4,697,615 5,183,445 10,010,078 9,213,344 2,626,133 3,243,067 Trading assets 2,370,232 1,781,413 91,703 1,156,297 6,859 13,766 Financial assets 4,623,976 4,047,649 236,258 1,146,480 25,696 58,405 Contingent liabilities 1,010,541 1,063,466 1,933,288 2,000,106 204,416 301,078 Credit risks 1,417,18 4 1,613,970 2,026,724 2,437,239 394,730 457,328

Total 19,850,478 19,801,176 15,467,933 16,643,442 3,263,333 4,104,511

The shifts within the individual credit ratings are influenced by the conversion to new IRB rating models which has already taken place to some extent. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 137

IFRS Consolidated Statements_Notes_Risk report

Structure of overdue or impaired credit risk exposure

Carrying amounts of overdue or impaired financial assets:

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Loans and advances to banks 1,153 1,562 Loans and advances to customers 1,397,483 1,526,896 Financial assets 916 2,578 Contingent liabilities 69,551 59,568 Credit risks 77,397 86,411

Total 1,546,500 1,677,015

Collateral relating to overdue or impaired credit risk exposure

The following value-based collateral applies to the overdue or impaired financial assets:

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Loans and advances to customers 889,453 885,380 Contingent liabilities 19,886 24,473 Credit risks 34,206 10,051

Total collateral values 943,545 919,904

Collateral values for impaired credit risk exposures are reviewed without delay - and correspond to a conservative estimate of the proceeds that could be expected over the long term from recovery of the collateral.

As at 31 Dec. 2015, 45.5 per cent (previous year: 53.9 per cent) of the total collateral values relating to overdue or impaired credit exposure consisted of collateral on immovable goods (e.g. mortgages, rankings).

Appropriated collateral

Collateral taken into possession by the Raiffeisenlandesbank Oberösterreich Group or related companies is sold in an orderly and proper manner and the proceeds from the sale applied to the repayment of the loan or advance concerned. Appropriated collateral is not generally used in the bank's own operations. These acquired securities generally take the form of commercial property. Other types of property collateral may also be prepossessed. The principal objective is to dispose of these properties within an appropriate time-frame. In cases where the disposal of a property proves difficult, alternative uses will be considered, especially letting the property. The carrying amount of these assets at 31 December 2015 amounted to EUR 2,478 thousand (previous year: EUR 8,247 thousand) and was broken down as follows:

31 DEC. 2015 31 DEC. 2014 CARRYING CARRYING AMOUNT AMOUNT IN EUR '000 NUMBER IN EUR '000 NUMBER

Undeveloped land 204 1 146 1 Residential buildings 618 1 603 1 Commercial properties 0 0 6,411 1 Mixed use buildings 1,656 1 1,087 1

Total of collateral taken into possession 2,478 3 8,247 4

Of which taken into possession in 2015 Mixed use buildings 1,656 1 138 Annual Report 2015

Age structure of overdue credit risk exposure

The financial assets which were overdue but not impaired as at the reporting date had the following age structure:

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

up to 30 days 536,868 565,763 31 to 60 days 80,619 89,251 61 to 90 days 10,833 13,715 over 90 days 39,012 32,367

Total 667,332 701,096

The ageing structure is accounted for on the basis of individual accounts without consideration of the materiality thresholds, as in accordance with Article 178 CRR.

Impaired credit risk exposure

The financial assets that were determined to be impaired on the reporting date exhibit the following structure:*

LOANS AND ADVANCES LOANS AND ADVANCES EVENTUAL- TO BANKS TO CUSTOMERS LIABILITIES CREDIT RISKS

IN EUR ’000 12/2015 12/2014 12/2015 12/2014 12/2015 12/2014 12/2015 12/2014

Gross value 294 922 1,521,094 1,757,28 0 77,129 67,527 108,364 97,716 Loan loss allowances –294 –913 –789,790 –929,927 –7,578 –7,9 59 –30,967 –11,305 Carrying amount 0 9 731,304 827,353 69,551 59,568 77,397 86,411

Collateral 0 0 471,619 476,452 19,886 24,473 34,206 10,051

* Amounts without portfolio value adjustment

Loan loss allowances are recognised primarily if a debtor is experiencing economic or financial difficulties, fails to make interest payments or repayments of principal, or other circumstances arise that indicate a probability of default based on regulatory standards. Within the internal risk management system, ongoing monitoring of the counter-party and the specific case involved is used to determine whether relevant circumstances exist. In the case of significant customer exposures in the lending business, each individual case is analysed as the basis for recognising specific loan loss allowances or provisions for contingent liabilities and lending commitments. The calculation for the amount of the loan loss allowance takes into account the discounted cash inflows expected from interest payments and repayments of principal together with any inflows that can be obtained from the recovery of collateral. A standardised method is used for customer exposures that are not deemed to be significant. A portfolio loan loss allowance is recognised for potential losses on loans and advances that cannot be individually assigned. This portfolio loan loss allowance takes into account probabilities of default.

Raiffeisenlandesbank Oberösterreich’s definition of default includes payments overdue by more than 90 days in addition to insolvency, pending insolvency, legal cases, deferments, restructuring, significant loan risk modifications, debt waivers, direct impairment losses, creditworthiness-related interest exemptions, repayments with an expected financial loss, and moratoria/ payment stoppage/withdrawal of licence for banks. Customers with a default on their record are assigned a credit rating of 5.0, 5.1 or 5.2 (corresponds to Moody’s Ca and C ratings or Standard & Poor’s CC, C and D ratings). The new definition of default is also the basis for calculating the non-performing loans ratio (NPL ratio). The loans and advances owed to the HETA have been omitted from the calculation.

The NPL ratio among the loans and advances to customers amounted to 8.40 per cent as at 31 December 2015 (previous year: 9.32 per cent). Coverage Ratio I amounted as at 31 December 2015 to 47.60 per cent (previous year: 49.36 per cent), Coverage Ratio II was at 81.48 per cent (previous year: 79.21 per cent).

Credit-rating-related impairment of securities in the category “financial assets available for sale (AfS),” “financial assets held to maturity” and “loans and receivables” are recognised as valuation allowances. In 2015, these valuation allowances on debt capital Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 139

IFRS Consolidated Statements_Notes_Risk report

securities came to EUR 805 thousand (previous year: EUR 3,194 thousand). The carrying amount of these securities which have already been amortised was EUR 916 thousand as at 31 December 2015 (previous year: EUR 2,565 thousand). Triggering events include substantial financial difficulties of the issuer, significant worsening of ratings and the default of interest payments or repayments. The reversal of allowances on previous years’ impaired debt portfolio amounted to EUR 0 in 2015 (previous year: EUR 0).

Credit risk also results from the debtor default risk of the subgroup “Gesellschaft zur Förderung agrarischer Interessen in Oberösterreich GmbH”. From the perspective of the group as a whole, however, its debtor portfolios are of minor significance and are also partially covered by credit insurance.

Forbearance

Financial assets that were subjected to forbearance-relevant measures as at the reporting date were structured as follows:

PERFORMING

IN EUR ’000 1 Jan. 2015 ABSORPTION 2015 DISPOSAL 2015 31 DEC. 2015

Loans and advances to customers 266,886 147,672 –170,720 243,838 Credit risks 13,232 36,981 –1,880 48,333 Total 280,118 184,653 –172,600 292,171 Loan loss allowances 0 0 0 0

NON-PERFORMING

IN EUR ’000 1 Jan. 2015 ABSORPTION 2015 DISPOSAL 2015 31 DEC. 2015

Loans and advances to customers 569,090 245,812 –201,103 613,799 Credit risks 58,498 33,434 – 37,152 54,780 Total 627,588 279,246 –238,255 668,579 Loan loss allowances 604,321 210,445 –215,536 599,230

“Forbearance” refers to measures that are characterised by an of a liquidity shortage, of not being able to acquire enough alteration of conditions included in the credit agreement to the liquidity at the terms expected (structural liquidity risk). borrower’s advantage (e.g., deferments) or the refinancing of the loan because the borrower can no longer fulfill the exist- Ensuring that there is sufficient liquidity takes top priority at ing conditions due to financial hardship. A borrower’s financial Raiffeisenlandesbank Oberösterreich as the central institution hardship and alterations to the credit agreement do not nec- for the Raiffeisen Banking Group Upper Austria. Liquidity has essarily result in losses for the lending institution in every case. to be safeguarded at all times.

The designation refers to financial instruments that have for- Liquidity and liquidity risk at Raiffeisenlandesbank Oberöster- bearance measures applied to them in accordance with Im- reich is managed in a control loop between the Asset Liability plementation Regulation (EU) 680/2014. This is primarily a Management, Market Risk Control and Raiffeisen Bank Busi- matter of deferring interest or instalment payments or of bridge ness Administration departments. The Asset Liability Manage- financing. Should the lending institution experience losses as ment department is responsible for liquidity control with this, a result of forbearance measures, appropriate value adjust- while the Market Risk Control department is responsible for ment measures in accordance with IAS 39 will be undertaken. liquidity risk management. The Asset/Liability Management Committee represents a crucial element in overall bank control Other changes to credit agreements that are not related to the as a cross-divisional body with responsibility for tasks related borrower’s experience of financial hardship will not be consid- to asset/liability management and liquidity management. ered forbearance measures. The Upper Austrian Raiffeisen banks are integrated into the Liquidity risk liquidity management system via the liquidity management agreement with the Aid Association of the Raiffeisen Banking The liquidity risk encompasses the risk of not being able to Group Upper Austria with the participation of Raiffeisenlandes- fulfil one’s payment obligations by the due date or, in the case bank Oberösterreich. The objective of this agreement is to 140 Annual Report 2015

secure the supply of liquidity in Upper Austria. Every Raiffeisen The following are also the key pillars for managing liquidity and bank plans and manages its own liquidity, the Raiffeisenland- liquidity risk at Raiffeisenlandesbank Oberösterreich: esbank plans and manages the liquidity for the sector as the central institution for the Raiffeisen Banking Group Upper ¬¬ Operational liquidity is also measured, in addition to the Austria. Communication with the Raiffeisen banks takes place aforementioned O-LFT, against the LCR (Liquidity Cover- via the Raiffeisen Bank Business Administration department. age Ratio) as well as a survival period. A liquidity committee is also set up which is made up of rep- ¬¬ The structural liquidity is also measured against the NSFR. resentatives from the Raiffeisenlandesbank, the Raiffeisen ¬¬ Funding risk gauges the loss of assets related to increased banks and the association of Raiffeisen banks, and which liquidity costs associated with closing liquidity gaps as a deals with current topics and/or develops countermeasures result of a price increase for funding, which will not – with when the liquidity position is strained. 99.9 per cent certainty – be exceeded within 250 trading days. In Raiffeisenlandesbank Oberösterreich, in addition to the uni- ¬¬ Raiffeisenlandesbank Oberösterreich has a broad basis of form sector liquidity emergency plan defined for the Austrian funding. It proceeds in accordance with the principles of Raiffeisen sector, Raiffeisenlandesbank Group Oberösterreich diversification and balance. also has its own liquidity emergency plan, which governs pro- ¬¬ A quantitative liquidity emergency plan is prepared on a cesses, responsibilities and actions in the event of a liquidity weekly basis. crisis. LCR (Liquidity Coverage Ratio) at 31 December 2015 was at Liquidity and liquidity risk are managed under a standardised Group level at 98 per cent and therefore significantly exceeded model which, besides normal circumstances, also encom- the 60 per cent level required as at 31 December 2015. passes stress scenarios arising from reputational risk, systemic risk, a non-performing loan or a crisis involving several In terms of its Long Term Issue Ratings, Raiffeisenlandesbank risks. To this end the following key figures are determined with Oberösterreich has been rated by Moody’s at Baa2 from associated limits: 01 July 2015.

¬¬ The operational liquidity maturity transformation ratio (ab- breviated in German to “O-LFT”) for operational liquidity for up to 18 months is formed from the ratios of assets to liabilities accumulated from the beginning over the maturity band. ¬¬ For the structural liquidity maturity transformation (“S-LFT”), the key figure is formed by taking the ratios of assets to liabilities calculated by going backwards from the end of the maturity band. ¬¬ The GBS (German abbreviation for the gap between the ratio total and total assets) ratio is formed by taking the ratios of the net positions per maturity band to total assets and shows any excessive funding risks. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 141

IFRS Consolidated Statements_Notes_Risk report

The following table summarises the maturities of the non-discounted liabilities including the respective interest payments and depicts the earliest possible utilisation of guarantees and credit approvals:

PAYMENT ON DEMAND/ 31 DEC. 2015 WITHOUT A UP TO 3 MONTHS 1 TO 5 MORE THAN

IN EUR ’000 TERM 3 MONTHS TO 1 YEAR YEARS 5 YEARS TOTAL

Amounts owed to banks 4,148,135 1,051,175 839,154 3,630,619 1,820,019 11,489,102 Amounts owed to customers 5,006,780 1,382,667 1,029,959 1,331,369 2,096,783 10,847,558 Liabilities evidenced by certificates 365 749,701 962,812 3,515,788 3,066,861 8,295,527 Trading liabilities 0 136,580 224,442 1,190,167 2,530,920 4,082,109 Subordinated capital 0 5,445 78,555 1,054,159 490,618 1,628,777 Total 9,155,280 3,325,568 3,134,922 10,722,102 10,005,201 36,343,073

Contingent liabilities 3,217,79 6 0 0 0 0 3,217,79 6 Credit risks 3,916,035 0 0 0 0 3,916,035

PAYMENT ON DEMAND/ 31 DEC. 2014 WITHOUT A UP TO 3 MONTHS 1 TO 5 MORE THAN

IN EUR ’000 TERM 3 MONTHS TO 1 YEAR YEARS 5 YEARS TOTAL

Amounts owed to banks 3,943,515 1,074,262 968,990 3,628,214 2,015,589 11,630,570 Amounts owed to customers 4,686,206 1,261,724 1,368,045 1,396,271 2,202,531 10,914,777 Liabilities evidenced by certificates 10,000 499,400 1,172,842 4,236,934 3,335,643 9,254,819 Trading liabilities 0 157,623 280,461 1,377,239 2,567,135 4,382,458 Subordinated capital 0 5,007 203,970 9 87,9 6 0 486,934 1,683,871 Total 8,639,721 2,998,016 3,994,308 11,626,618 10,607,832 37,866,495

Contingent liabilities 3,424,218 0 0 0 0 3,424,218 Credit risks 4,594,948 0 0 0 0 4,594,948

From the gap analysis below it can be seen that there is only a low liquidity risk in the individual maturity periods. There is a large amount of potential collateral available for tender transactions with the ECB and the Swiss National Bank for ongoing liquidity equalisation as well as for other repurchase transactions. The process structure for the liquidity buffer does not feature any essential concentration of expiring securities within the next three years. The vast majority of securities held as a liquidity buffer have a residual term of more than five years.

GAP IN EUR MILLION* 31 Dec. 2015 31 Dec. 2014 1,200

800

400

0 assets Excess position) (long

–400

–800

–1,200 Excess liabilities position) (short up to 1 year 1 to 3 years 3 to 5 years 5 to 7 years 7 to 10 years over 10 years

* Items without fixed capital commitment are analysed in light of more realistically described historical developments and are modelled as at 31 December 2015; values as at 31 December 2014 are also described using this new method. 142 Annual Report 2015

Investment portfolio risk the evaluation of strategic positioning in the form of SWOT analyses (Strengths/Weaknesses/Opportunities/Threats). Investment portfolio risk covers potential losses caused by dividends not paid, adjustments, disposal losses, regulatory The Raiffeisenlandesbank Oberösterreich Group has a broadly funding obligations, strategic financial restructuring responsi- diversified investment portfolio. The investment rating is a cen- bilities, and the reduction of hidden reserves. tral component when measuring equity risk in the risk-bearing capacity analysis. The equity risk is determined on the basis of In the course of acquiring a new investment, the assessment expert assessments that take into account the current rating made by investment risk management is supported as much classification of the respective investment company. as possible by due diligence performed by external experts. In addition, the organisational unit Financing Management Proj- The bases for the determination of equity risk are the risk fac- ects & Structured Financing provides a risk evaluation state- tors (= haircuts) that are derived from the rating classification ment regarding the proposed acquisition. of the respective investment company, and the exposure value of the investment. The investment portfolio risk results from The operative business activities of the investments is closely the respective exposure and the haircuts applied to it. monitored by sending members of the board at Raiffeisen- landesbank Oberösterreich to Managing Boards, Supervisory The following table presents the carrying amount of equity Boards, and other committees. investments held by the Raiffeisenlandesbank Oberösterreich Group as at 31 December 2015 and 31 December 2014, or- Periodic controlling of investments includes the analysis and ganised by risk classes: testing of financial statement and planning figures, as well as

VERY LOW OR LOW RISK NORMAL RISK INCREASED RISK

IN EUR ’000 12/2015 12/2014 12/2015 12/2014 12/2015 12/2014

Banks 1,079,066 1,189,202 12,848 12,025 1,557 5,675 Non-banks 553,257 617,70 5 871,293 831,902 51,854 56,365

Total 1,632,323 1,806,907 884,141 843,927 53,411 62,040

On a quarterly basis, the risk potentials determined by expert evaluations (in problematic and extreme cases) and risk coverage from investment companies are used in the risk-bearing capacity analyses conducted periodically at the overall bank level. The Risk Controlling organisational unit produces a quarterly report on equity risk.

Macroeconomic risk IT systems to limit this type of risk as far as possible. A high degree of security is attained by means of limit systems, com- Macroeconomic risk measures the effects of a slight or se- petence regulations, a risk-adequate internal control system, vere recession on the risk situation at Raiffeisenlandesbank a comprehensive security manual as a behaviour code and Oberösterreich. To this end, a statistics-based macroeco- directive, as well as scheduled and unscheduled audits by In- nomic model analyses the correlation between macroeco- ternal Auditing. The operative management of this type of risk nomic factors (GDP, real wages index) and the probability involves risk discussions and analyses with managers (early of default. The simulated economic downturn in the model warning system). And the systematic recording of errors in a is used to determine the additional risk based on the CVaR database for analysis (ex-post analysis). figures. Other risk Operational risk Raiffeisenlandesbank Oberösterreich takes into account Raiffeisenlandesbank Oberösterreich defines operational risk other, non-quantifiable risks in terms of risk-bearing capacity as the risk of loss caused by the inappropriateness or failure of by means of a risk buffer. These include: strategic risk, rep- internal processes, people or systems, or caused by external utation risk, equity risk, systemic risk, income and business events. Raiffeisenlandesbank Oberösterreich uses the basis in- risk, risk of excessive indebtedness, remaining risk from tech- dicator approach to quantify operational risk. Raiffeisenlandes- niques used to reduce credit risks, risks from money launder- bank Oberösterreich uses both organisational measures and ing and the financing of terrorism. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 143

IFRS Consolidated Statements_Notes_Risk report

Risk-bearing capacity analysis With this comparison, the Raiffeisenlandesbank Oberöster- reich Group is able to guarantee that it can cover extremely The risk-bearing capacity analysis compares the aggregated unexpected losses from its own funds without major negative overall bank risk of the group, organised by credit risks, mar- effects. Economic capital is the measurement of risk used to ket risks, equity risks, refinancing risks (as a measurement calculate extremely unexpected losses. It is defined as the parameter for liquidity risk), macroeconomic risks, operational minimum amount of capital necessary to cover unexpected risks and other risks (= strategic risks, reputation risks, eq- losses with a probability of 99.9 per cent within one year. uity capital risks, and profit risks) to risk coverage (= operating profit, hidden reserves, reserves, and equity capital). This comparison of the group risks with the available coverage depicts the risk-bearing capacity.

The following table shows the economic capital for the Raiffeisenlandesbank Oberösterreich Group (confidence level 99.9 per cent, holding period one month) as at 31 December 2015, compared to the previous year.

Details regarding risk capital

CORPORATES FINANCIAL EQUITY CORPORATE TYPE OF RISK SEGMENT & RETAIL MARKETS INVESTMENTS CENTER TOTAL IN EUR M 12/2015 12/2014 12/2015 12/2014 12/2015 12/2014 12/2015 12/2014 12/2015 12/2014

Market risk 1 469.4 469.4 44.7 38.9 514.1 508.3 Credit risk 2 1,144.3 1,385.6 128.2 144.9 171.6 262.7 43.2 35.1 1,487.3 1,828.3 Investment portfolio risk 914.7 931.3 914.7 931.3 Refinancing risk 5.4 0.0 5.4 0.0 Operational risk 33.8 43.3 23.5 23.2 38.9 29.6 2.5 1.8 98.7 97.9 Macroeconomic risks 221.3 299.4 7.2 16.3 31.8 52.9 2.3 3.6 262.6 372.2 Others risks/buffers 3 3.4 4.4 2.4 2.4 3.9 3.0 0.3 0.2 10.0 10.0

Total 1,402.8 1,732.7 636.1 656.2 1,205.6 1,318.4 48.3 40.7 3,292.8 3.7478,0

The assignment of risk capital and equity requirements follow asset allocation as it is done in the IFRS consolidated financial statements of Raiffeisenlandesbank Oberösterreich.

1) Market risks are incurred in the Financial Markets and Investments segments. Reason: The SALZBURGER LANDES-HYPOTHEKENBANK AKTIENGESELLSCHAFT is included in its entirety in the Investments section of the IFRS statements. 2) Credit risks are also incurred in the Corporate Centre, because financing is also allocated to this segment in the IFRS statements. 3) Operational risks and the risk buffer were distributed aliquot to income.

Procedures and methods for supervisory monitoring and risk types. These consider the impact on the P&L as well as evaluation. on the capital resources, and also present the impact on the risk utilisation. There is no requirement from the authority responsible to publish the result of the bank’s own procedure for evaluating the Impact on the P&L suitability of the internal capital. Raiffeisenlandesbank Oberös- terreich significantly overachieves at all times the SREP ratio The resulting risk parameters are determined based on stipulated by the authority. The business model, governance stressed macroeconomic conditions and an aggregated view and risk management are all assessed within the SREP proof potential losses covering all types of risk is presented. The cess. Assessment of risks and liquidity or funding respectively impact on the P&L is considered and the resulting capital re- are also undertaken. sources are ascertained for the end of the stress test period. The analysis is based on a stress test covering multiple peri- Stress tests ods, in which hypothetical market developments are simulated with a significant economic downturn. The risk parameters Integrated stress tests covering all risk types are also carried used include interest rates and exchange rates, as well as out in addition to the isolated stress tests for the individual changes to the probabilities of default in the credit portfolio. 144 Annual Report 2015

Impact on the risk-bearing capacity of uniform and common risk assessment in accordance with Raiffeisen deposit guarantee (ÖRE) regulations. Based on the The objective is to analyse the risk-bearing capacity under organisational structure of the Raiffeisen Banking Group (RBG stress conditions for all types of risk and the risk coverage. Ö), the development of the IPS was designed in two stages The stressed credit risk or investment risk is determined by (Federal- and State-wide IPS). Raiffeisenlandesbank Oberös- simulating deteriorations in the ratings of individual borrow- terreich is a member of both the Federal and the State IPS. ers that are in an industry that is significant to Raiffeisenland- esbank Oberösterreich. A negative trend for the interest rate The risk council that has been established monitors and curve or the credit spread is assumed in the Market Risk area. manages the development of the entire L-IPS and of the in- Three defined scenarios (problem, reputational risk and sys- dividual members within the institutional guarantee system at temic crisis) are simulated with the refinancing risk resulting state level. The institutional guarantee system is represented from this then defined. Default on the part of the biggest bor- at state level by the Chief Executive of Raiffeisenlandesbank rowers is also simulated with an illustration of the operational Oberösterreich AG, Heinrich Schaller. Approval for the insti- harm. tutional guarantee system was obtained from the FMA by a decision dated 3 November 2014. EBA or SSM-SREP stress test Aid association of the Raiffeisen Banking Group Upper The impact on the P&L and therefore on the capital ratios is Austria Raiffeisen-Kredit-Garantiegesellschaft m.b.H. also considered within the scope of the EBA or SSM-SREP stress test. The time frame is 3 years and is implemented in Together, the Upper Austrian Raiffeisen banks have es- accordance with the methods stipulated by the authority. tablished a joint aid association with Raiffeisenlandesbank Oberösterreich AG (Hilfsgemeinschaft der RBG Oberöster- Institutional protection scheme reich und Raiffeisen-Kredit-Garantiegesellschaft m.b.H.), which ensures that in case of economic problems the distressed Raiffeisen Banking Group Upper Austria institutions receive help through adequate measures.

The Austrian Raiffeisen Banking Group (RBG Ö) is the larg- To ensure the security of the money our customers have en- est banking group in Austria with about 504 locally operating trusted in us, we have also created additional institutions: Raiffeisen branches, eight regional Raiffeisen headquarters, and Raiffeisen Zentralbank Österreich AG as central institution Raiffeisen Customer Guarantee Association Austria in Vienna. Some 1.7 million Austrians are members and thus (Raiffeisen-Kundengarantiegemeinschaft Österreich, owners of Raiffeisen banks. RKÖ)

The Raiffeisen Banking Group Upper Austria (RBG OÖ) is This association, whose members comprise participating made up of a central institution, Raiffeisenlandesbank Oberös- Raiffeisen banks and Raiffeisenlandesbanks, Raiffeisen Zentr- terreich AG, and 94 Raiffeisen banks with a total of 442 bank albank Österreich AG (RZB) and Raiffeisen Bank International branches. AG (RBI), guarantees all customer deposits and securities issues of participating banks, regardless of the individual About 310,000 Upper Austrians are co-owners of the Upper amounts involved, up to the joint financial risk-bearing capac- Austrian Raiffeisen banks. ity of the participating banks. The structure of the Customer Guarantee Association has two tiers: first, the Raiffeisen Cus- As credit institutions within the network of a co-operative so- tomer Guarantee Fund Upper Austria at state level, and then ciety the Raiffeisen banks are bound to the principles of sub- the Raiffeisen Customer Guarantee Association Austria at fed- sidiarity, solidarity, and regionalism. eral level. Thus, the Customer Guarantee Association guarantees protection for customers that goes beyond the legal Based on Articles 49 (3) and 113 (7) CRR all Raiffeisen banks deposit guarantee. in the Raiffeisen Banking Group Upper Austria have signed an agreement to set up an institutional guarantee scheme to- Deposit guarantee NEW gether with Raiffeisenlandesbank Oberösterreich AG, the Aid Association of the Raiffeisen Banking Group Upper Austria The new Austrian Deposit Guarantee and Investor Compen- as well as Raiffeisen-Kredit-Garantiegesellschaft mbH. This sation Act (ESAEG), which implements a European Directive, institutional guarantee scheme is aimed at guaranteeing mem- came into force in mid-August. All member institutions of bers’ holdings and securing their liquidity and solvency in RBG Upper Austria are joint members of the “Austrian Raiff- order to avoid bankruptcy. There is an early detection system eisen-Einlagensicherung eGen” via the Upper Austrian state in place to fulfil these tasks which requires the basic principle deposit guarantee. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 145

IFRS Consolidated Statements_Notes_Risk report

The Act anticipates the establishment of a deposit guaran- For the purposes of the stress test associated with the recov- tee fund that is stocked by annual contributions from banks. ery plan under the BaSAG, the bank’s recovery potential was The target volume to be reached by 2024 is 0.8 per cent of ascertained in six different scenarios, with systemic, reputa- covered deposits. If these funds are not sufficient, the banks tional and also combined crises considered in the character- may be required to provide an additional 0.5 per cent of the istics of rapid and slow. covered deposits annually. So that crises can be identified at an early stage, early warning The amount of the protection for the customer does not indicators are set out in a comprehensive framework concept change as a result of the new Act: deposits continue to be aimed at ensuring that there is adequate time for implement- guaranteed at up to EUR 100,000 per customer and bank. ing suitable countermeasures. The set of indicators selected The dispelling of some of the assumptions held to date has, meets the minimum requirements for qualitative and quantita- however, led to the scope of customer protection being ex- tive indicators in accordance with the EBA Guidelines. Addi- panded, with major corporations, deposits in a foreign cur- tional indicators were also selected by the organisation itself, rency as well as deposits from managing directors, members meaning monitoring of a total set of 22 indicators is undertaken of the supervisory authority and auditors of the bank now also and regular reports are submitted to the Managing Board. being protected. Raiffeisenlandesbank Oberösterreich AG is obliged by statute The guaranteed deposits should be reimbursed within seven to make an annual contribution to the Single Resolution Fund working days as of 1 January 2024 (gradual reduction in the (“SRF”) at the European level. The contribution to the resolu- periods by then). tion fund is stipulated by the supervisory authority responsible in accordance with the deposits not guaranteed in association The Austrian deposit guarantee system is currently broken with the bank’s risk profile. If the funds available are not suf- down into sectors and should be retained in this form until ficient for the purposes of covering losses, costs and other 2018. A new uniform system (run by the Economic Chambers) expenses associated with utilising the fund as a resolution is then due to be set up as of 2019. mechanism, extraordinary contributions are collected in order to cover the additional expenses. Deposit guarantee outlook The scope of application extends to all banks operating within The European Commission is planning an EU-wide deposit the eurozone. Non-euro states are able to participate in the guarantee that should be implemented in full by 2024. By this SRF on a voluntary basis. time, all of the existing national deposit guarantee systems should have been transferred to this EU deposit guarantee in Hypo-Haftungsgesellschaft m.b.H. stages. This is still a proposal from the European Commission which requires agreement from the European Council and the Raiffeisenlandesbank Oberösterreich holds a minority interest European Parliament for it to be implemented. in Oberösterreichische Landesbank AG (Hypo OÖ) and a majority interest in SALZBURGER LANDESHYPOTHEKENBANK Bank Recovery and Resolution Act (BaSAG) AG (Hypo Salzburg), which belongs to the protection scheme “Hypo Haftungsgesellschaft m.b.H.” under the framework of The Banking Recovery and Resolution Directive (BRRD) came the association of mortgage banks, as required by law. Fur- into force with effect from 1 January 2015 with the establish- thermore, Hypo Oberösterreich and Hypo Salzburg are also ment of a Europe-wide banking union by the European Union. affected because of their membership in the Pfandbriefstelle Following on from this EU Directive (BRRD), the Banking In- by the FMA mandate of 1 March 2015, which imposed a debt tervention and Bank Restructuring Act (BIRG) in Austria was moratorium on HETA ASSET RESOLUTION AG (“HETA”) that repealed and replaced by the Bank Recovery and Resolution will be in force until 31 May 2016. The moratorium imposed Act (BaSAG) which implemented the BRRD into Austrian law by the financial supervisory authority also affects the liabilities with effect from 1 January 2015. This Act requires every bank of HETA owed to the Pfandbriefstelle (the bond division of the domiciled in Austria, and that is not part of a group which is association of Austrian state mortgage banks). An agreement subject to consolidated supervision, to create a recovery plan was entered into between the mortgage lending agency of the in accordance with the requirements defined in the BaSAG Austrian Landes-Hypothekenbanken, Pfandbriefbank (Öster- and to update this on an annual basis. As the EU parent com- reich) AG, the individual member banks and the federal state pany, the RBG OÖ Verbund eGen created the 2015 group re- of Carinthia with the aim of securing the provision of liquid- covery plan based on the new legal position, and this includes ity. Corresponding payments were made by Hypo Salzburg the specifics related to Raiffeisenlandesbank Oberösterreich. amounting to EUR 84.0 million (half on own account and half for the account of the guarantors) for the purposes of imple- A resolution plan must be created by the resolution authority menting this agreement. Payments are still outstanding until and reviewed at least once per year and updated as necessary. the moratorium expires. 146 Annual Report 2015

Other information

Breakdown of remaining maturities

Breakdown of remaining maturities as at 31 Dec. 2015

PAYMENT ON DEMAND/ WITHOUT A UP TO 3 MONTHS 1 TO 5 MORE THAN

IN EUR ’000 TERM 3 MONTHS TO 1 YEAR YEARS 5 YEARS TOTAL

Cash and cash equivalents 90,221 0 0 0 0 90,221 Loans and advances to banks 3,396,842 755,047 507,20 3 1,501,949 693,866 6,854,907 Loans and advances to customers 1,820,401 2,015,868 3,071,101 6,646,509 5,177,4 3 0 18,731,309 Trading assets 207,152 20,391 53,335 581,603 1,606,313 2,468,794 Financial assets 787,249 91,624 251,354 1,570,013 2,970,387 5,670,627 Companies accounted for using the equity method 1,786,116 0 0 0 0 1,786,116 Amounts owed to banks 4,188,672 1,021,513 787,6 35 3,471,119 1,745,234 11,214,173 Amounts owed to customers 4,858,109 1,504,296 975,863 1,181,128 2,108,719 10,628,115 Trading liabilities 111,549 14,552 18,884 369,824 1,356,723 1,871,532 Liabilities evidenced by certificates 65,756 749,378 836,264 3,219,764 2,747,322 7,618,48 4 Subordinated capital 21,397 25,358 19,786 1,002,795 362,012 1,431,348

Breakdown of remaining maturities as at 31 Dec. 2014

PAYMENT ON DEMAND/ WITHOUT A UP TO 3 MONTHS 1 TO 5 MORE THAN

IN EUR ’000 TERM 3 MONTHS TO 1 YEAR YEARS 5 YEARS TOTAL

Cash and cash equivalents 89,086 0 0 0 0 89,086 Loans and advances to banks 3,436,390 1,008,250 626,142 995,394 712,962 6,779,138 Loans and advances to customers 1,878,355 2,308,114 3,101,689 6,564,975 5,313,619 19,166,752 Trading assets 223,445 20,308 43,548 664,188 1,999,987 2,951,476 Financial assets 930,131 235,606 260,809 1,642,487 3,104,571 6,173,604 Companies accounted for using the equity method 1,800,077 0 0 0 0 1,800,077 Amounts owed to banks 3,992,837 1,038,858 910,032 3,417,559 1,945,639 11,304,925 Amounts owed to customers 4,599,508 1,333,401 1,238,948 1,228,930 2,115,246 10,516,033 Trading liabilities 118,918 15,576 31,983 386,656 1,649,216 2,202,349 Liabilities evidenced by certificates 93,833 498,349 1,065,135 3,907,394 3,077,692 8,642,403 Subordinated capital 20,024 5,003 160,589 893,657 457,218 1,536,491

Information regarding associated companies and persons

The ultimate parent company is a cooperative registered as of “Members of the Management in Key Positions” covers the Raiffeisenbankengruppe OÖ Verbund which is not, aside from Managing Board and Supervisory Board members of Raiff- its function as a holding company, operationally active. eisenlandesbank Oberösterreich. The category of “Other associated companies and persons” shows details of close fam- The “Subsidiaries (non-consolidated)” category contains all ily members of the Management in key positions (incl. their subsidiaries which are not fully consolidated for reasons of companies). No joint enterprises in which the Raiffeisenlandes- significance. The “Associated Companies” category shows bank Oberösterreich is a partner company are in existence at details regarding companies with significant influence, incl. the the reported reference dates. companies reported under the equity method. The category Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 147

IFRS Consolidated Statements_Notes_Other information

Information regarding associated companies and persons as at 31 December 2015

PARENT SUBSIDIARIES ASSOCIATED

IN EUR ’000 COMPANY (NON-CONSOLIDATED) COMPANIES

Loans and advances to banks 0 0 4,438,100 of which loan loss allowances 0 0 1,721 Loans and advances to customers 0 406,712 752,496 of which loan loss allowances 0 8,614 2,946 Trading assets 0 37,140 363,741 Financial assets 0 224,743 677,10 6 Companies accounted for using the equity method 0 0 1,786,116 Other assets 0 18,729 15,708 Amounts owed to banks 0 0 1,359,461 Amounts owed to customers 74 103,037 153,999 Trading liabilities 0 1,701 74,487 Provisions 0 496 2,484 Other liabilities 0 2,496 2,591

Guarantees given 0 17,941 445,386 Guarantees received 0 0 527,9 67

Net interest income 0 29,965 95,181 Additions to loan loss allowances 0 1,271 2,728

Information regarding associated companies and persons as at 31 Dec. 2014

PARENT SUBSIDIARIES ASSOCIATED

IN EUR ’000 COMPANY (NON-CONSOLIDATED) COMPANIES

Loans and advances to banks 0 0 4,331,278 of which loan loss allowances 0 0 0 Loans and advances to customers 0 554,119 793,378 of which loan loss allowances 0 16,670 2,595 Trading assets 0 43,373 428,442 Financial assets 0 250,625 663,399 Companies accounted for using the equity method 0 0 1,800,077 Other assets 0 30,489 49,391 Amounts owed to banks 0 0 1,343,446 Amounts owed to customers 81 136,182 112,217 Trading liabilities 0 1,920 93,141 Provisions 0 1,124 198 Other liabilities 0 4,707 509

Guarantees given 0 21,599 357,0 01 Guarantees received 0 0 346,098

Net interest income 2 77,3 6 4 88,515 Additions to loan loss allowances 0 9,282 4,427

As at 31 December 2015 EUR 23,488 thousand (previous year: EUR 23,482 thousand) were pledged to companies reported under the equity method. 148 Annual Report 2015

Standard market conditions are applied in business relationships with related companies.

Advances, credits and liabilities towards members of the Managing Board exist as at 31 December 2015 amounting to EUR 378 thousand (previous year: EUR 599 thousand), towards members of the Supervisory Board EUR 834 thousand (previous year: EUR 934 thousand). Loans to members of the Managing Board and the Supervisory Board are granted on standard banking industry terms. Repayments are made as agreed. Liabilities towards member of the Managing Board and the Supervisory Board exist amounting to EUR 2,570 thousand (previous year: EUR 2,362 thousand).

As at 31 December 2015 advances, loans and liabilities amounting to EUR 6,707 thousand exist towards associated persons and companies (previous year: EUR 3,333 thousand) and liabilities amounting to EUR 1,240 thousand (previous year: EUR 1,014 thousand).

Remuneration of the Managing Board and the Supervisory Board

Expenses for the remuneration of members of the Managing Board of Raiffeisenlandesbank Oberösterreich were broken down out during the financial year as follows:

IN EUR ’000 2015 2014

Ongoing payments 3,698 3,791 Post-employment benefits 1,742 1,788 Other long-term benefits due 18 44

Total 5,458 5,623

In 2015, remuneration (including reimbursements for travel expenses) of EUR 632 thousand (previous year: EUR 543 thousand) were paid to members of the Supervisory Board. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 149

IFRS Consolidated Statements_Notes_Other information

Non-consolidated structured companies

The following describes all relevant Group business activities with non-consolidated structured companies:

Mutual funds The Group founds structured units to fulfil various customer requirements related to investments in specific assets.

Carrying amounts of assets and debts of Raiffeisenlandesbank Oberösterreich to non-consolidated structured companies.

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Assets 5,062 15,519 Loans and advances to customers 1,589 7,0 49 Trading assets 1,594 5,880 Financial assets 1,879 2,590

Liabilities 211,453 148,847 Amounts owed to customers 133,390 87,20 9 Liabilities evidenced by certificates 72,592 60,559 Trading liabilities 3,413 63 Subordinated capital 2,058 1,016

Scope of non-consolidated structured companies

The type of business activities in a structured unit determine their scope. For mutual funds for which transactions exist, they are reported as assets administered by the fund. Due to fluctuations in fund assets, an average is reported on the basis of daily asset levels.

IN EUR ’000 2015 2014

Scope 4,088,151 3,533,866

Maximum exposure of companies in terms of losses from shares in non-consolidated structured companies

The maximum possible risk of loss is determined by the carrying amounts presented in the statement of financial position (balance sheet).

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Loans and advances to customers 1,589 7,0 49 Trading assets 1,594 5,880 Financial assets 1,879 2,590 150 Annual Report 2015

Contingent liabilities

As at the balance sheet date, the following off-balance-sheet obligations existed:

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Contingent liabilities 3,217,79 6 3,424,218 of which endorsed bills sold 0 0 of which other indemnity agreements 3,215,140 3,420,966 of which other contingent liabilities 2,656 3,252 Credit risks 3,916,035 4,594,948 of which loan approvals/stand-by facilities 3,916,035 4,594,948

Furthermore, a joint and several liability in accordance with Art. 2, Mortgage Lending Institutions Law is in place in the fully consolidated SALZBURGER LANDES-HYPOTHEKENBANK AG for the liabilities borne by the Pfandbriefbank (Österreich) AG.

Collateral In addition, receivables with a carrying amount of EUR 450,000 thousand (previous year: EUR 150,000 thousand) As at 31 December 2015, securities to the amount of EUR and securities with a carrying amount of EUR 288,185 thou- 11,231 thousand (previous year: EUR 11,449) were held as sand (previous year: EUR 358,244 thousand) were pledged as cover assets for trust fund deposits of EUR 14,787 thousand collateral at banks and exchanges. (previous year: EUR 16,696). Securities to the amount of EUR 59,049 thousand (previous year: EUR 64,301 thousand) were An amount of EUR 629,075 thousand (previous year: EUR held as cover for mortgage bonds, municipal bonds and cov- 687,315 thousand) had been lodged with banks and custom- ered bonds, together with loans and advances to customers ers under collateral agreements. Loans and advances were amounting to EUR 1,985,254 thousand (previous year: EUR assigned to banks amounting to EUR 2,285,276 thousand 1,759,022 thousand). Loans and advances to customers and (previous year: EUR 2,015,016). banks amounting to EUR 390,346 thousand (previous year: EUR 296,750 thousand) were used as collateral for third-party The related contractual provisions are customary in the obligations. industry. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 151

IFRS Consolidated Statements_Notes_Other information

Transfers of financial assets

31 DEC. 2015 31 DEC. 2014 CARRYING AMOUNT CARRYING AMOUNT CARRYING AMOUNT CARRYING AMOUNT OF TRANSFERRED OF AFFILIATED OF TRANSFERRED OF AFFILIATED

IN EUR ’000 ASSETS LIABILITIES ASSETS LIABILITIES

Repurchase transactions Designated financial instruments 0 0 6,059 6,128 Financial assets available for sale (AfS) 0 0 66,831 67,597 Financial assets “held-to-maturity” 0 0 9,340 9,447

Total 0 0 82,230 83,172

Liabilities stemming from repurchase transactions amounting to of EUR 0 thousand (previous year: EUR 83,172 thousand), which are valued at amortised cost, represent the obligation to return the securities for cash received.

The following table shows the fair values of transferred financial assets and affiliated liabilities.

31 DEC. 2015 31 DEC. 2014 FAIR VALUE OF FAIR VALUE OF FAIR VALUE OF FAIR VALUE OF TRANSFERRED AFFILIATED TRANSFERRED AFFILIATED

IN EUR ’000 ASSETS LIABILITIES ASSETS LIABILITIES

Repurchase transactions Designated financial instruments 0 0 6,059 6,129 Financial assets available for sale (AfS) 0 0 66,831 67,6 0 3 Financial assets “held-to-maturity” 0 0 11,766 9,448

Total 0 0 84,656 83,180 152 Annual Report 2015

Leasing

Lease financing (lessor)

Receivables from lease financing (finance leases) were as follows:

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Investment (gross) 2,181,614 2,345,452 Minimum lease payments 2,049,936 2,168,976 up to 1 year 585,958 670,278 1-5 years 1,069,329 1,064,822 over 5 years 394,649 433,876 Non-guaranteed residual values 131,678 176,476 Unrealised net financial income 188,528 227,751 up to 1 year 61,981 63,537 1-5 years 86,871 103,605 over 5 years 39,676 60,609

Investment (net) 1,993,086 2,117,701

Valuation allowances for uncollectible, outstanding minimum lease payments amounted to EUR 64,226 thousand (previous year: EUR 65,056).

The breakdown of assets leased out under finance leases was as follows:

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Vehicle leasing 750,863 863,659 Real estate leasing 617,478 695,324 Equipment leasing 624,745 558,718

Total 1,993,086 2,117,701

Lease financing (lessee)

The assets and future minimum lease payments below refer to finance lease agreements in which group companies are the lessees:

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Minimum lease payments 20,538 26,970 up to 1 year 4,055 4,566 1-5 years 11,790 15,084 over 5 years 4,693 7,320 Interest portion 537 1,088

Investment (net) 20,001 25,882

The breakdown of assets leased out under finance leases was as follows:

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Real estate leasing 17,0 87 19,510 Equipment leasing 2,914 4,250 Other forms of leasing 0 2,122

Total 20,001 25,882 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 153

IFRS Consolidated Statements_Notes_Other information

Operating leases (lessor)

The future minimum lease payments shown below refer to non-cancellable operating leases where the group companies are the lessors:

IN EUR ’000 31 DEC. 2015 31 DEC. 2014 up to 1 year 34,164 32,431 1-5 years 93,585 86,546 over 5 years 91,730 108,944

Total 219,479 227,921

Other operating revenues from operating leases amounted to EUR 32,055 thousand for the financial year 2015 (previous year: 27,528 thousand).

Operating leases (lessor)

The future minimum lease payments shown below refer to non-cancellable operating leases where the Raiffeisenlandesbank Oberösterreich is the lessor:

IN EUR ’000 31 DEC. 2015 31 DEC. 2014 up to 1 year 3,884 3,848 1-5 years 7,6 42 6,817 over 5 years 636 582

Total 12,162 11,247 154 Annual Report 2015

Disclosures required under Austrian accounting standards

Foreign currency volumes

The following volumes of assets and liabilities included in the consolidated financial statements are denominated in foreign currency:

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Assets 1,923,231 2,267,6 8 0 Equity and liabilities 1,891,819 2,143,949

Securities admitted for trading pursuant to section 64 of the Austrian Banking Act (BWG)

LISTED NON-LISTED

IN EUR ’000 31 DEC. 2015 31 DEC. 2014 31 DEC. 2015 31 DEC. 2014

Bonds and other fixed-income securities 1,917,174 2,178,952 0 0 Shares and other variable-yield securities 61,031 83,529 0 0

Of the bonds and other fixed-income securities admitted to trading, EUR 1,847,972 thousand (previous year: EUR 2,102,383 thousand) can be allocated to the fixed assets.

Of the shares and other variable-yield securities admitted to trading, EUR 29,280 thousand (previous year: EUR 43,787 thousand) can be allocated to the fixed assets.

Volume of securities trading book in accordance with Article 92 of the Capital Requirements Regulation (CRR)

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Securities 34,992 60,494 Other financial instruments 3,123,086 1,856,343

Total 3,158,078 1,916,837

Regulatory consolidated equity requirements pursuant to section 64 (1) (16 et seq.) of the Austrian Banking Act

As of 1 January 2014, Regulation (EU) No. 575/2013 (Capital Requirements Regulation, CRR) and Directive (EU) No. 36/2013 (Capital Requirement Directive, CRD IV) came into force in implementing Basel III. In addition, the supplementary CRR regulation defines the implementation of transitional provisions of CRR for Austria. These statutory regulations mean that banks will have to comply with significantly higher equity ratios and tighter liquidity requirements. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 155

IFRS consolidated financial statements_Notes_Information required under Austrian accounting standards

Consolidated capital at the level of the uppermost finance holding (Raiffeisen Banking Group Upper Austria eGen., a registered co-operative society) breaks down as follows according to CRR:

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Capital instruments and the premium linked to them 1,018,857 1,018,857 Retained earnings 2,427,6 8 8 2,214,077 Accumulated other net gains/losses –75,371 –2,296 Other reserves 4,406 4,406 Eligible minority Common Equity Tier (CET) 1 minority holdings (incl. transitional regulations) 96,469 110,405 Common Equity Tier (CET) 1 capital prior to regulatory adjustments (corrections and deductions) 3,472,049 3,345,449

Prudential filters correction –98,770 –90,236 Intangible assets deduction (incl. goodwill) – 58,179 –65,291 Deductions for deferred taxes –4,921 –6,329 Deduction of core Tier 1 capital instruments from companies in the financial sector –36,376 –128,204 Items to be deducted from the items of additional Tier 1 capital, exceeding the additional Tier 1 capital –38,024 –33,888 Other transition adjustments to common Tier 1 capital –71,172 –193,655 Common Tier 1 capital (CET 1) 3,164,607 2,827,846 Additional Tier 1 capital (AT 1) – – Tier 1 capital (Tier 1 = CET 1 + AT 1) 3,164,607 2,827,846

Grandfathering of capital instruments of Tier 2 capital and subordinated loans 26,233 44,800 Eligible minority Common Equity Tier 2 minority holdings (incl. transitional regulations) 662,995 861,549 Tier 2 capital (T 2) before regulatory adjustments 689,228 906,349 Deductions as well as other transitional adjustments of Tier 2 capital – 9,169 –32,764 Tier 2 capital (T 2) 680,059 873,585

Total capital (TC = T 1 + T 2) 3,844,666 3,701,431

The overall risk value (risk-weighted assets, RWA) is divided up as follows:

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Capital requirements for credit, counter-party, or dilution risk 21,412,643 23,493,875 Capital requirements for item, foreign currency, and commodity risks 116,445 259,006 Capital requirements for operational risks 1,234,220 1,223,177 Capital requirements for adjustments to credit evaluation (CVA) 130,796 193,245

Risk-weighted assets 22,894,104 25,169,303

The capital ratios (phrase in) according to CRR are as follows and are calculated against the total risk value in accordance with Article 92 CRR.

IN % 31 DEC. 2015 31 DEC. 2014

Common Tier 1 capital ratio (CET-1 ratio) 13.82 11.24 Tier 1 capital ratio 13.82 11.24 Total capital ratio (TC ratio) 16.79 14.71

Raiffeisenlandesbank Oberösterreich will be in a stable equity and equity capital situation respectively for the next few years – during which the regulatory ratios under Basel III will be exceeded significantly while the SREP ratio prescribed by the ECB will be complied with – enabling the bank to continue providing close support to its customers over the long term.

A capital conservation buffer was introduced effective 1 January 2016 in accordance with section 23 of the Austrian Banking Act (BWG), and this must be maintained in the form of Common Equity Tier 1 capital. In accordance with the transitional provision in section 103q (11) BWG the capital conservation buffer for the coming year will be 0.625 per cent. This will be increased to 2.50 per cent by 2019 using the straight-line method. 156 Annual Report 2015

In the same way as with the Raiffeisenlandesbank Oberösterreich at the consolidated level, the Raiffeisen Banking Group Upper Austria Verbund eGen, as the highest financial holding as defined by Art. 7 of the Regulation on Capital Buffering (KP-V) of the FMA, had a capital buffer imposed for systemic vulnerability (system risk buffer), amounting, in accordance with Art. 10, KP-V, of 0.25 per cent from 01 Jan. 2016 and which will rise to 1 per cent up to 2018.

Within the framework of equity management, the main focus lies on securing adequate capital resources for the group and ensuring compliance with regulatory capital requirements for the Group.

Equity capital is a crucial factor in managing a bank. The minimum value is prescribed by Regulation (EU) No. 575/2013 (Cap- ital Requirements Regulation, CRR) in combination with Directive (EU) No. 36/2013 (Capital Requirements Directive, CRD IV). Accordingly, banks and banking groups must currently back at least 8 per cent of their risk-weighted assets (RWA) with capital. As a securitisation of RWA with Tier 1 capital, they are currently required to set aside at least 6 per cent.

For its internal management, Raiffeisenlandesbank Oberösterreich applies target values that cover all risk types (including from the trading book, currency risk and operational risk). At the same time, Raiffeisenlandesbank Oberösterreich has also set target ratios that are sufficiently above the legally required Tier 1 capital so as to avoid any regulatory limitations in its managerial decision-making process.

The main focus of attention in this process is on Tier 1 capital. At the same time, the risk-bearing capacity is determined on the basis of regulatory and economic criteria. It is equal to the maximum losses that the bank or the group could incur without falling below the minimum capital requirements. Because there are constraints on capital eligibility, internal management also focuses on the composition of the equity instruments.

In accordance with section 8 of the Capital Requirements Regulations (CRR), this information is published on Raiffeisenlandes- bank Oberösterreich’s website (www.rlbooe.at).

Average number of employees pursuant to section 266 of the Austrian Commercial Code (UGB) 2015 2014

Salaried employees 3,663 3,539 of which VIVATIS/efko 802 781 Other employees 1,757 1,799 of which VIVATIS/efko 1,737 1,779

Total 5,420 5,338

of which VIVATIS/efko 2,539 2,560

Auditors’ fees pursuant to section 266 of the Austrian Commercial Code (UGB)

2015 2014 KPMG AUSTRIA GMBH KPMG AUSTRIA GMBH WIRTSCHAFTSPRÜFUNGS- WIRTSCHAFTSPRÜFUNGS- UND STEUERBERATUNGS- ÖSTERREICHISCHER UND STEUERBERATUNGS- ÖSTERREICHISCHER

IN EUR ’000 GESELLSCHAFT* RAIFFEISENVERBAND GESELLSCHAFT* RAIFFEISENVERBAND

Audit of the financial statements 1,503 735 1,600 632 Other attestation services 73 58 34 88 Tax consultancy services 90 0 275 0 Other services 80 0 98 28

* incl. network companies

In accordance with section 237 (14) of the Austrian Commercial Code, the fee for auditing the financial statements of subsidiary companies is published in the notes to the consolidated financial statements. This is the cumulative fee for auditing the group's financial statement (gross amounts) and those of the subsidiaries. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 157

IFRS consolidated financial statements_Notes_Information required under Austrian accounting standards

Additional information on maturities as required by Subordinated liabilities section 64 of the Austrian Banking Act In the case of subordinated liabilities, the subordination is al- In 2016, bonds and other fixed-income securities held by the ways agreed separately in writing pursuant to section 51 para. 9 bank to the amount of EUR 119,345 thousand (2015: EUR of the Austrian Banking Act. 224,319 thousand), along with bond issues of EUR 701,523 thousand (2015: 975,916 thousand). Expenses for subordinated liabilities

The total amount for expenses for subordinated liabilities in the 2015 financial year totalled EUR 55,650 thousand (previous year: EUR 52,486).

Art. 64 (1) (18) of the Austrian Banking Act (BWG) (Country-by-Country Reporting)

Information with regard to the states of registration for the fully consolidated companies can be gained from the section dealing with consolidated companies.

Breakdown of remaining maturities as at 31 Dec. 2015

NET INTEREST OPERATING PRE-TAX PROFIT TAXES ON INCOME INCOME INCOME FOR THE YEAR AND EARNINGS EMPLOYEES- IN EUR ’000 IN EUR ’000 IN EUR ’000 IN EUR ’000 NUMBER

Austria 400,043 926,143 3 07,517 –10,509 4,913 Czech Republic 3,719 6,039 1,100 –326 47 Germany 41,291 45,777 1,666 –2,169 200 Croatia 3,498 13,341 1,816 –416 38 Hungary 26 –388 –404 –55 0 Poland 5,737 7,232 908 –394 78 Romania 9,490 12,040 5,277 –569 96 Slovenia 30 46 13 –12 0 Slovakia 4,470 5,038 528 142 48

Total 468,303 1,015,267 318,420 –14,307 5,420

Breakdown of remaining maturities as at 31 Dec. 2014

NET INTEREST OPERATING PRE-TAX PROFIT TAXES ON INCOME INCOME INCOME FOR THE YEAR AND EARNINGS EMPLOYEES- IN EUR ’000 IN EUR ’000 IN EUR ’000 IN EUR ’000 NUMBER

Austria 356,540 873,791 26,392 296 4,830 Czech Republic 3,636 6,177 1,101 –146 51 Germany 45,524 43,488 6,412 –3,085 204 Croatia 3,288 13,557 952 –320 37 Hungary 92 271 219 –2 0 Poland 5,395 5,862 –456 211 74 Romania 9,257 12,333 5,382 –766 96 Slovenia 30 60 21 –4 0 Slovakia 4,488 5,081 699 –537 46

Total 428,250 960,620 40,722 –4,353 5,338

Return on assets pursuant to section 64 (1)(19) of the Austrian Banking Act (BWG)

As at 31 December 2015, the return on assets (ratio of after-tax profit for the year to total assets) was 0.82 per cent (previous year: 0.09 per cent). 158 Annual Report 2015

Events after the balance sheet date

The consolidated financial statements were compiled on 5 April 2016 and presented to the Supervisory Board. There were no further events of particular significance after the reporting date.

The members of the boards of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Chairman of the Managing Board Heinrich Schaller, Chief Executive

Deputy Chairwoman of the Managing Board Michaela Keplinger-Mitterlehner, Deputy Chief Executive Officer

Members of the Managing Board Stefan Sandberger, Member of the Managing Board Reinhard Schwendtbauer, Member of the Managing Board Georg Starzer, Member of the Managing Board Markus Vockenhuber, Member of the Managing Board

Information on the members of the Raiffeisenlandesbank Oberösterreich Supervisory Board can be found on pages 12 and 13. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 159

IFRS consolidated financial statements _ Notes _ Events after the balance sheet date _ Boards

Linz, 5 April 2016 Raiffeisenlandesbank Oberösterreich Aktiengesellschaft Europaplatz 1a, 4020 Linz

THE MANAGING BOARD

Heinrich Schaller Michaela Keplinger-Mitterlehner Chief Executive and Chairman of the Managing Board Deputy Chief Executive

Stefan Sandberger Reinhard Schwendtbauer Member of the Managing Board Member of the Managing Board

Georg Starzer Markus Vockenhuber Member of the Managing Board Member of the Managing Board 160 Annual Report 2015

Audit Certificate

Report on the consolidated financial statements

I have audited the attached consolidated financial statements of

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft, Linz,

consisting of the consolidated balance sheet as at 31 De- the application of the international standards on auditing. cember 2015, the consolidated statement of comprehen- These standards require that I abide by the professional stan- sive income, the group cash flow statement and the group dards and plan and perform the audit in such a manner that I statement of changes in equity for the financial year ending can form a reasonable opinion as to whether the consolidated 31 December 2015, plus the disclosures to the consolidated financial statements are free of material misstatement. An financial statements. audit includes the implementation of auditing actions to obtain auditing proof in respect of the amounts and other details Responsibility of the legal representatives of the given in the consolidated financial statements. The choice of consolidated financial statements auditing actions is left to the professional discretion of the auditor of the annual financial statements, taking into account his The legal representatives of the company are responsible for assessment of the risk of material misstatements occurring, the Group accounting and for compiling consolidated financial whether due to intended or unintended errors. In assessing statements in accordance with the International Financial Re- this risk, the auditor of the consolidated financial statements porting Standards (IFRSs) as they are applied in the EU as well takes into account the internal control system, insofar as it is as with additional requirements stipulated in sections 245a of important for compiling the consolidated financial statements the Austrian Commercial Code and 59a of the Austrian Bank- and presenting a true and fair view of the assets, financial ing Act. This responsibility includes an internal control system, position and earnings of the company, in order to determine to the extent that the legal representatives consider neces- suitable auditing actions taking account of the framework sary for the preparation of the consolidated statements and to conditions, not however to submit an auditing opinion about present as true a picture as possible of the group's net assets, the effectiveness of the company’s internal control system. financial position and profit situation so that these consoli- The audit also included my evaluation of the adequacy of the dated statements are free from material misrepresentations, applied accounting and valuation methods and the essential whether due to intentional or unintentional mistakes. estimates made by the legal representatives of the company as well as an assessment of the overall tenor of the consoli- Responsibility of the auditor dated financial statements.

My responsibility lies in the submission of an audit opinion on I believe that I have obtained sufficient and suitable auditing these consolidated financial statements on the basis of our proof, so that my audit provides a reasonable basis for my inspection. I conducted my audit in accordance with the Aus- opinion. trian principles of orderly accounting. These principles require Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 161

Audit Certificate

Auditor’s opinion Statement concerning the Group management report

The results of my audit gave no reason for objection. On the According to the Austrian legal regulations, the group man- basis of the knowledge gained during the audit, in my judge- agement report is to be audited as to whether it is consistent ment the consolidated financial statements comply with the with the consolidated financial statements and whether or not legal regulations and present a true and fair view of the group’s other details given in the group management report give a mis- assets and financial position as at 31 December 2015 and leading impression of the group’s financial position. The audit the group’s earnings and cash flow in the financial year from certificate must also include a statement as to whether the 1 January 2015 to 31 December 2015, in accordance with group management report is consistent with the consolidated section 245a of the Austrian Commercial Code (UGB) and the financial statements and whether or not the details according special statutory provisions of the International Financial Re- to section 243a (2) of the Austrian Commercial Code apply. porting Standards (IFRSs), as they are applied in the EU. In my opinion, the group management report is consistent with the consolidated financial statements. The details according to section 243a (2) of the Austrian Commercial Code apply.

Vienna, 5 April 2016

As auditor for Österreichischer Raiffeisenverband:

Michael Laminger Chartered Accountant and Auditor 162 Annual Report 2015

Audit certificate

Report on the consolidated financial statements

We have examined the attached consolidated financial statements of

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft, Linz,

consisting of the consolidated balance sheet as at 31 De- the professional code of conduct and to plan and carry out the cember 2015, the consolidated statement of comprehen- audit so that there is adequate certainty that the consolidated sive income, the group cash flow statement and the group financial statements are free from material misrepresentations. statement of changes in equity for the financial year ending 31 December 2015, plus the disclosures to the consolidated An audit includes the implementation of auditing actions to ob- financial statements. In terms of our responsibility and liability tain auditing proof in respect of the amounts and other details as auditors to the company and to third parties, section 275 given in the consolidated financial statements. The choice of of the Austrian Commercial Code shall apply. auditing actions is left to the professional discretion of the auditor of the annual financial statements, taking into account his Responsibility of the legal representatives of the assessment of the risk of material misstatements occurring, consolidated financial statements whether due to intended or unintended errors. In assessing this risk, the auditor of the consolidated financial statements The legal representatives of the company are responsible for takes into account the internal control system, insofar as it is the Group accounting and for compiling consolidated finan- important for compiling the consolidated financial statements cial statements that present a true and fair view of the assets, and presenting a true and fair view of the assets, financial financial position and earnings of the company in accordance position and earnings of the company, in order to determine with the International Financial Reporting Standards (IFRSs) as suitable auditing actions taking account of the framework they are applied in the EU as well as with additional require- conditions, not however to submit an auditing opinion about ments stipulated in sections 245a of the Austrian Commercial the effectiveness of the company’s internal control system. Code and 59a of the Austrian Banking Act. The audit also included my evaluation of the adequacy of the applied accounting and valuation methods and the essential Responsibility of the auditor estimates made by the legal representatives of the company as well as an assessment of the overall tenor of the consoli- My responsibility lies in the submission of an audit opinion on dated financial statements. these consolidated financial statements on the basis of our inspection. I conducted my audit in accordance with the Aus- We believe that we have obtained sufficient and suitable au- trian principles of orderly accounting. These principles require diting proof, so that my audit provides a reasonable basis for the application of the international standards on auditing (ISA). my opinion. According to these principles we are required to comply with Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 163

Audit Certificate

Auditor’s opinion Statement concerning the Group management report

The results of our audit gave no reason for objection. On the According to the Austrian legal regulations, the group man- basis of the knowledge gained during the audit, in our judge- agement report is to be audited as to whether it is consistent ment the consolidated financial statements comply with the with the consolidated financial statements and whether or not legal regulations and present a true and fair view of the group’s other details given in the group management report give a mis- assets and financial position as at 31 December 2015 and leading impression of the group’s financial position. The audit the group’s earnings and cash flow in the financial year from certificate must also include a statement as to whether the 1 January 2015 to 31 December 2015, in accordance with group management report is consistent with the consolidated the special statutory provisions of the International Financial financial statements and whether or not the details according Reporting Standards (IFRSs), as they are applied in the EU. to section 243a of the Austrian Commercial Code apply.

In our opinion, the group management report is consistent with the onsolidated financial statements. The details according to section 243a of the Austrian Commercial Code apply.

Linz, 5 April 2016

KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft

Martha Kloibmüller Chartered Accountant and Auditor 164 Annual Report 2015

Management Report 2015 of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

1. Business development and the economic situation______165 2. Report on the company’s prospective trends and risks ______172 3. Research and development ______179 4. Reporting on the most important aspects of the internal control and risk management system with regard to the accounting process______180 5. Miscellaneous______182 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 165

Management Report 2015 _ Business development and the economic situation

1. Business development and the economic situation

1.1. Economic background 2015 Austria also benefited from the general structural conditions 2015 was another turbulent financial year. Defining events that that stimulated the economy (price of oil, ECB policy). Never- characterised international developments included the fall in theless economic growth in Austria was unable to keep up oil prices as well as the extremely lax monetary policy by the with the eurozone average for 2014/15. Investment activity by European Central Bank (ECB), while a tighter money market companies only recovered very hesitantly from the second policy was implemented in the USA. There were also consid- quarter of 2015, while private consumption continued to stag- erable signs of weakness in China and other emerging na- nate. Analysts expect Austria to catch up with the average tions, along with a range of ongoing geopolitical tensions. The eurozone growth levels once again for 2016. The private con- crisis in Greece dominated the first six months of the year in sumption stimulated by the income tax reforms and the ad- Europe. This was then followed by the issue of refugees as a ditional expenses for asylum seekers will be critical with this. particularly dominant topic. Industry in Upper Austria which is highly focused around Global economic growth turned out to be somewhat weaker exports recorded a significant upturn in 2015, and was well in 2015 than it had been in the previous year. Although perfor- above the national average of 1.7 per cent with growth in pro- mance improved in the industrialised nations and in particular duction of 6.3 per cent in the first three quarters. The ser- the USA, the emerging nations suffered from cyclical weak- vice sector also grew, while production in the construction ness coupled with far-reaching structural problems. Brazil and industry fell by around 4 per cent in the first three quarters of Russia slipped into a deep recession which was accompanied 2015 compared with 2014. The labour market proved to be by high inflationary pressure. The slowdown in the Chinese comparatively strong with growth in employment above the economy continued as the government and central bank im- Austrian average. Upper Austria still has the second lowest plemented stimulus measures in an attempt to counteract this. unemployment rate of all the federal states. Analysts in the state expect growth of 2 per cent for the 2016 financial year, The USA once again acted as the engine for the global econ- which is slightly above the national average, although this re- omy in 2015. Figures from the labour market in particular were lies above all on increases in consumption levels and higher consistently very positive. The upturn managed to be consol- demand for investment. idated, which ultimately resulted in implementation of a long discussed reversal in interest rates by the Federal Reserve. The global economy slowed down again somewhat at the end Private consumption experienced particularly strong growth of 2015. The USA recorded a dip in the economy in the fourth in the USA, while the export sector suffered from the strong quarter with 0.7 per cent growth in GDP, although this is not dollar and the oil industry from the low prices. expected to persist. Figures from the emerging nations remain weak: there is still no end in sight to the recessions in Brazil The eurozone lost some of its steam once again in the sec- and Russia, and growth in China in the fourth quarter was a ond half of the year compared with the first half. Growth was moderate 6.8 per cent. The eurozone recorded growth in GDP based almost exclusively on private consumption, while any of 0.3 per cent in the fourth quarter of 2015, with Spain once propensity to make investments remained restrained. How- again recording the strongest growth at 0.8 per cent. Ger- ever, early indicators in the middle of the year pointed to more many was exactly at the average level at 0.3 per cent, while robust economic activity towards the end of the year: numer- France (0.2 per cent) and Italy (0.1 per cent) lag further behind. ous framework conditions such as favourable financing condi- Austrian GDP grew by 0.3 per cent in the fourth quarter of tions, a weak euro as a result of the lax ECB policy, low costs 2015, as had also been the case in the second and third quar- for raw materials (particularly for crude oil) and significant im- ters. This results in economic growth of 0.9 per cent for the provements in the labour market should help to support the full year 2015. Investments as well as private consumption and economy. government spending provided support towards year end, although there was a trade deficit. Inflation in the eurozone was very low to negative as a result of the low cost of raw materials. The ECB attempted to fix 1.2. Business development medium-term inflation expectations at its goal of close to (but below) 2 per cent with an extremely expansionary monetary Raiffeisenlandesbank Oberösterreich saw the tasks required policy (lowest interest rates and quantitative easing). due to the turbulent 2015 financial year, which involved 166 Annual Report 2015

historically low interest rates accompanied by a slowdown in The cautious risk policy was continued in 2015 in order to the economy, as an opportunity and adapted well to the on- allow the organisation to fulfil its responsibility as a reliable and going changes in the structural conditions with a strategy of strong partner to customers. Comprehensive ongoing con- continuous renewal and sustainable consolidation. Against a trols are provided here via a central early warning mechanism. backdrop of restrained economic growth and subdued sen- Attention was also paid to continuous improvements in the risk timent among companies and the wider population, it either situation for certain financing transactions. initiated, continued or implemented a large number of action plans and projects in 2015 with a view to actively managing its Raiffeisen Oberösterreich is responding to the requirements costs and risk, providing the basis for the best possible level of the future with the “Raiffeisen Banking Group Upper of support for its customers. Austria 2020” project, which was first launched around three years ago. Clear objectives and actions have been defined As Austria’s fourth largest bank, Raiffeisenlandesbank with this with the aim of handling the market more effec- Oberösterreich also intends in future to outperform on the high tively, with strategies also developed aimed at optimising the standards imposed on a “significant” bank by the European processing and legal tasks in the entire Raiffeisen sector in Central Bank. Particular attention is paid here to compliance Upper Austria. The intensive process has been character- with all new statutory regulations, and in laying the foundations ised by openness, mutual trust and above all a readiness to for compliance with the statutory requirements that will be im- embrace change since the project launch. For instance 27 posed on banks in Austria and the rest of the European Union service packages have been jointly developed by represen- in future, such as in relation to equity/own funds and risk man- tatives from the Upper Austrian Raiffeisen banks and Raif- agement. Raiffeisenlandesbank Oberösterreich is also ready feisenlandesbank Oberösterreich in the areas of “customers to make the appropriate contributions for the deposit guaran- and markets”, “staff and management”, “processing and pro- tee and the European resolution funds. duction” and “bank management and regulation”. The focus with all of these is on improving efficiency in the various areas, Yet the legal and regulatory framework has not just changed which represent the basis for not only maintaining the bank’s for banks: increasing changes have also been determined in position as the clear market leader in Upper Austria but also customer behaviour and needs. This will only intensify over the being able to extend this. next few years as a result of increased digitisation. Raiffeisen- landesbank Oberösterreich has therefore positioned itself as a Source of funds/capital structure modern advisory bank that also sets its future course with the development of the extensive range of the innovative bank- 31 DEC. 2015 31 DEC. 2014 CHANGE ing technology available, with the aim of ensuring even more IN EUR M IN % IN EUR M IN % IN EUR M IN % convenient processing of banking transactions for custom- Amounts owed ers. Targeted action in the interests of customers also means to banks 11,277 37.2 12,565 41.1 –1,288 –10.3 clear alignment with the Corporate Banking (corporate and Savings and giro deposits 8,950 29.6 7,3 8 4 24.2 1,566 21.2 institutional customers), Retail Banking (private and commer- Own issues 6,991 23.1 7,619 25.0 –628 –8.2 cial customers), Private Banking (affluent private customers) Equity 2,684 8.9 2,595 8.5 89 3.4 and Raiffeisen banks (Investor Relations) customer groups. Other liabilities 365 1.2 380 1.2 –15 –3.9 The broad positioning in various business areas in particular ensures stable development. It ensures that Raiffeisenland- Total equity esbank Oberösterreich is also able to offset any external in- and liabilities 30,267 100.0 30,543 100.0 –276 –0.9 fluences effectively. Raiffeisenlandesbank Oberösterreich also sees itself as a hub within the Raiffeisen Banking Group Upper Austria which also has an international network of high-performance partner banks at its disposal. Amounts owed to banks fell year-on-year by EUR –1,288 million to EUR 11,277 million (31 December 2014: EUR 12,565 Actions aimed at achieving ongoing efficiency improvements million). This fall is overwhelmingly due to the merger of both play a role in increasing the focus on the customer. PRIVAT bank subsidiaries PRIVAT BANK AG and bankdirekt.at AG BANK AG and bankdirekt.at AG were merged into Raiffeisen- into Raiffeisenlandesbank Oberösterreich. Amounts owed to landesbank Oberösterreich in 2015 and established as sep- banks are comprised as follows as at 31 December 2015: arate divisions. This enabled duplications and thereby costs ¬¬ Amounts owed to Upper Austrian Raiffeisen banks: EUR to be avoided in administrative tasks. The merger of software 4,671 million. company RACON (Linz) and Raiffeisen Solution (RSO, Vienna) ¬¬ Amounts owed to banks in the Raiffeisen Banking Group with Raiffeisen Software GmbH (RSG) also created new and (RBG) of Austria, not including Upper Austrian Raiffeisen modern structures. banks: EUR 563 million. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 167

Management Report 2015 _ Business development and the economic situation

¬¬ Amounts owed to mortgage banks (e. g. Oberöster- Loans and advances to customers rose year-on-year by EUR reichische Landesbank Aktiengesellschaft and SALZ- 378 million or 2.3 per cent to EUR 16,645 million as at the 2015 BURGER LANDES-HYPOTHEKENBANK AKTIEN- reporting date (31 December 2014: EUR 16,267 million). GESELLSCHAFT): EUR 1,128 million. ¬¬ Amounts owed to development agencies and banks (e. g. Raiffeisenlandesbank Oberösterreich has enough liquidity to Österreichische Kontrollbank, European Investment Bank): be able to continue actively and aggressively supporting its EUR 2,611 million. customers with their successful projects. ¬¬ Other amounts owed to banks: EUR 2,304 million. ¬¬ Investment finance provided increased negligibly by 0.1 per cent in 2015 and remained at a high level. Customer deposits (savings and giro deposits) and own is- ¬¬ Loans and advances to banks fell during the course of sues increased year-on-year by EUR 938 million, or 6.3 per 2015 by EUR –327 million or –4.5 per cent to EUR 7,004 cent, to EUR 15,941 million (31 December 2014: EUR 15,003 million (31 December 2014: EUR 7,331 million). EUR 1,094 million): million (31 December 2014: EUR 1,230 million) of this re- ¬¬ Customer deposits, comprising savings deposits of EUR lates to refinancing to Upper Austrian Raiffeisen banks. The 866 million (31 December 2014: EUR 869 million), as well total includes loans and advances to Raiffeisen Zentral- as fixed-term deposits and deposits repayable on demand bank AG in the amount of EUR 3,106 million (31 December of EUR 8,084 million (31 December 2014: EUR 6,515 mil- 2014: EUR 3,142 million). This fall is also essentially due lion) amounted to EUR 8,950 million as at the 2015 re- to the loss of the amounts owed to the bank subsidiaries porting date (31 December 2014: EUR 7,384 million). The PRIVAT BANK AG and bankdirekt.at AG with their merger merger of both bank subsidiaries PRIVAT BANK AG and into Raiffeisenlandesbank Oberösterreich. bankdirekt.at AG into Raiffeisenlandesbank Oberösterreich resulted in the latter directly acquiring all existing customer High level of liquidity and credit quality in the securities deposits in the former subsidiaries, which accounts for the portfolio majority of the increase. ¬¬ Issuing volumes fell on the previous year by EUR –628 mil- The volume of securities held by Raiffeisenlandesbank lion or –8.2 per cent and amounted to a total of EUR 6,991 Oberösterreich fell by EUR –229 million or –4.7 per cent in million as at 31 December 2015 (31 December 2014: EUR 2015 to EUR 4,629 million (31 December 2014: EUR 4,858 7,619 million). Of this amount EUR 1,009 million (31 De- million), although these remain at a high level. These securities cember 2014: EUR 1,003 million) is attributable to covered were subdivided as at the 2015 reporting date into public-sec- bonds. The securities sales to retail customers performed tor debt instruments and similar securities at EUR 1,097 mil- largely to plan in 2015. However, there was a heavy fall lion (31 December 2014: EUR 1,079 million), bonds and other in demand from international institutional customers in re- fixed-income securities at EUR 1,561 million (31 December sponse to the HETA moratorium, which in combination with 2014: EUR 1,776 million) and shares and other variable-yield scheduled repayments resulted in a fall in issuing volumes. securities (e.g. pension funds) at EUR 1,971 million) (31 De- cember 2014: EUR 2,003 million). As an additional liquidity Equity capital rose year-on-year by EUR 89 million or 3.4 per reserve, Raiffeisenlandesbank Oberösterreich holds a large cent and is stated at EUR 2,684 million (31 December 2014: portfolio of unrestricted loan collateral instruments which EUR 2,595 million) as at the 2015 reporting date. has been provided to the Österreichische Nationalbank as collateral. Application of funds/assets structure As in previous years, all securities held as fixed assets were 31 DEC. 2015 31 DEC. 2014 CHANGE measured according to the strict lower of cost or market IN EUR M IN % IN EUR M IN % IN EUR M IN % principle. Loans and advances Equity investments and shares in affiliated companies fell by to customers 16,645 55.0 16,267 53.2 378 2.3 EUR –107 million or –5.9 per cent to EUR 1,696 million com- Loans and advances to banks 7,0 0 4 23.1 7,3 31 24.0 –327 –4.5 pared with the previous year (31 December 2014: EUR 1,803 Securities 4,629 15.3 4,858 15.9 –229 –4.7 million). This fall is attributable in particular to changes in share- Investments and holdings, value adjustments and internal group restructuring. shares in affiliated companies 1,696 5.6 1,803 5.9 –107 –5.9 Other assets, consisting of cash and cash on hand and bal- Other assets 293 1.0 284 1.0 9 3.1 ances at central banks, intangible fixed assets, property and

Total assets 30,267 100.0 30,543 100.0 –276 –0.9 equipment, other fixed assets and prepaid expenses, increased year-on-year by EUR 9 million or 3.1 per cent to EUR 293 million (31 December 2014: EUR 284 million). 168 Annual Report 2015

Results of operations Other expenses fell on the previous year by –4.6 per cent and amounted to EUR –62.3 million in 2015 (2014: EUR –65.3 mil- 2015 2014 CHANGE lion). This includes expenses for the resolution fund and de- IN EUR M IN % Ø BS IN EUR M IN % Ø BS IN % posit guarantee of EUR –12.2 million. Net interest income 263.6 0.87 258.4 0.85 2.0 Income from Total operating expenditure rose by 7.3 per cent compared securities and with 2014 and is stated at EUR –279.9 million for 2015 (2014: equity investments 120.1 0.40 132.3 0.43 –9.2 EUR –260.8 million). This results primarily from the increase in Other income 165.8 0.55 157.3 0.51 5.4 personnel expenses described above. Operating income 549.5 1.81 548.0 1.79 0.3 Personnel expenses –123.5 –0.41 –101.2 –0.33 22.0 The operating profit – calculated as the difference between Administrative operating income and operating expenses – stood at EUR expenses – 94.1 –0.31 –94.3 –0.31 –0.2 269.6 million in 2015 (2014: EUR 287.2 million). Other expenses –62.3 –0.20 –65.3 –0.21 –4.6 Operating expenses –279.9 –0.92 –260.8 –0.85 7.3 Profit (loss) from ordinary activities is stated at EUR 135.6 mil- Operating profit 269.6 0.89 287.2 0.94 – 6.1 lion for 2015 (2014: EUR 91.0 million). This increase is largely Profit from due to the merger profit amounting to EUR 36.4 million from ordinary activities 135.6 0.45 91.0 0.30 49.0 the integration of the bank subsidiaries PRIVAT BANK AG and Other taxes and taxes on income bankdirekt.at AG into Raiffeisenlandesbank Oberösterreich. and earnings –31.7 – 0.10 –38.9 – 0.13 –18.6 Other taxes and taxes on income fell by –18.6 per cent to EUR Profit for the year 103.9 0.34 52.1 0.17 99.5 –31.7 million (2014: EUR –38.9 million). This fall is attributable Ø Total assets 30,405 30,564 to effects from group taxation (positive distributions of the tax burden). The stability levy payable by banks (including special contribution) rose on 2014 by EUR 0.9 million to EUR –32.6 Net interest income increased in 2015 at EUR 263.6 million million. (2014: EUR 258.4 million) and therefore by 2.0 per cent. Overall, profit for the successful year 2015 amounted to EUR Income from securities and equity investments amounted to 103.9 million, almost double the level of net profit generated in EUR 120.1 million (2014: EUR 132.3 million). This fall of –9.2 2014 (2014: EUR 52.1 million). per cent is primarily attributable to the reduction in earnings from investments. 1.3. Branches and regional branch offices

Other income amounted to EUR 165.8 million (2014: EUR Branches 157.3 million), up by 5.4 per cent compared with the previous year’s figure. This increase is largely due to the higher net fee The financial services on offer, as well as flexibility in consul- and commission income for Raiffeisenlandesbank Oberöster- tancy and management, are adapted on an ongoing basis to reich and from the integration of both bank subsidiaries PRI- the current needs of our customers. Along with the constant VAT BANK AG and bankdirekt.at AG into Raiffeisenlandes- further development of technological abilities in customer ser- bank Oberösterreich. vice, for example, we also offer customer appointments outside of regular banking hours. In addition to its headquarters, Operating income continued at a very high level of EUR 549.5 Raiffeisenlandesbank Oberösterreich had 17 bank branches million in 2015 (2014: EUR 548.0 million), thereby resulting in in Upper Austria as of 31 December 2015 (previous year: 17). a slight increase. The bank branches had a total of 81,601 customers (previous year: 81,533*), which was a 26.7 per cent share of customers General administrative expenses in 2015 comprised EUR in the market area (previous year: 27.1 per cent*). Roughly 200 –123.5 million in personnel expenses (2014: EUR –101.2 mil- employees with appropriate skills and qualifications are avail- lion) and EUR –94.1 million (2014: EUR –94.3 million) in other able to provide comprehensive support for retail and business administrative expenses. The increase in personnel expenses customers. is overwhelmingly due to the integration of Raiffeisenlandes- bank Oberösterreich’s subsidiaries PRIVAT BANK AG and * The database for determining customers and products in sales and distribution bankdirekt.at AG along with sections of GDL Handels- und control has changed with harmonisation of the product catalogues and introduc- Dienstleistungs GmbH. tion of a “uniform product system”. The figures for the previous year have been adjusted as a result of this change for better comparison. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 169

Management Report 2015 _ Business development and the economic situation

International branches Key equity and solvency figures

Raiffeisenlandesbank Oberösterreich has been operating its The Common Equity Tier 1 capital (CET 1) and Tier 1 capital own southern Germany office since 1991. At the end of 2015, (T 1) of Raiffeisenlandesbank Oberösterreich in accordance Raiffeisenlandesbank Oberösterreich had a total of eight lo- with the Capital Requirements Regulation (CRR) at 2015 cations throughout Bavaria and Baden-Württemberg, i.e. in year-end was EUR 2,585.8 million (31 December 2014: EUR Augsburg, Passau, Nuremberg, Munich, Regensburg, Wurz- 2,481.8 million). burg, Ulm and Heilbronn. This makes Raiffeisenlandesbank Oberösterreich by far the strongest Austrian bank active in The supplementary capital (T 2) stated as at 31 December this dynamic business region of Southern Germany. The main 2015 was EUR 711.1 million (31 December 2014: EUR 853 focus for support activities is on customers from industry, me- million). dium-sized enterprises and affluent private customers. The registered head office for Raiffeisenlandesbank Oberösterre- The total equity capital (TC) fell as at 31 December 2015 to ich’s Southern Germany branch was relocated from Passau EUR 3,296.9 million (31 December 2014: EUR 3,334.8 million). to Munich on 1 October 2015. This will also further intensify the existing close collaboration with development agencies The total risk value (risk-weighted assets, RWA) fell on the pre- and banks. vious year by EUR –1,302.6 million and as at 31 December 2015 is stated at EUR 20,099.8 million (31 December 2014: Raiffeisenlandesbank Oberösterreich has also had a branch EUR 21,402.4 million). The essential effects for reducing the in the Czech Republic since 2015 as a result of the merger risk-weighted assets (RWA) at the reporting time of 31 Decem- of PRIVAT BANK AG der Raiffeisenlandesbank Oberösterre- ber 2015 were achieved through active and central control of ich into Raiffeisenlandesbank Oberösterreich. The head office the risk-weighted assets (RWA) per claim class and through for the Czech branch is located in Prague, where support is implementing actions in relation to techniques used to reduce provided to affluent private customers as well as corporate credit risks. customers with a wide range of professional financial services based on the established high focus on the customer. As at the end of the 2015 financial year, in accordance with CRR the Common Equity Tier 1 capital and Tier 1 capital ratio 1.4. Financial and non-financial performance stated was 12.9 per cent (2014: 11.6 per cent) with a total capi- indicators tal ratio stated of 16.4 per cent (2014: 15.6 per cent). The ratios are calculated on the total risk-weighted assets in accordance The key figures used in international comparisons and for in- with Article 92 CRR. ternal controls are as follows: A capital conservation buffer was introduced effective 1 Janu- Profitability – key figures ary 2016 in accordance with section 23 of the Austrian Bank- ing Act (BWG), and this must be maintained in the form of ¬¬ Return on equity for 2015, calculated as the ratio of pre-tax Common Equity Tier 1 capital. In accordance with the transi- profit for the year to average equity came to 3.8 per cent tional provision in section 103q (11) BWG the capital conser- (2014: 2.2 per cent). vation buffer for the coming year will be 0.625 per cent. This ¬¬ Return on assets for 2015, calculated as the ratio of pre-tax will be increased to 2.50 per cent by 2019 using the straight- profit for the year to average total assets came to 0.3 per line method. cent (2014: 0.2 per cent). ¬¬ Return on assets for 2015 in accordance with section 64 Capital Requirements Regulation (19) of the Austrian Banking Act, calculated as the ratio of profit for the year after taxes, also came to 0.3 per cent As of 1 January 2014, Regulation (EU) No. 575/2013 (Cap- (2014: 0.2 per cent). ital Requirements Regulation, CRR) and Directive (EU) No. 36/2013 (Capital Requirement Directive, CRD IV) went into Key liquidity figures force to implement Basel III. In addition, the supplementary CRR regulation defines the implementation of transitional pro- ¬¬ The Liquidity Coverage Ratio (LCR) as at 31 December 2015 visions of CRR for Austria. The statutory regulations mean that was 95 per cent at the individual bank level (31 December banks will have to comply with significantly higher equity ra- 2014: 95 per cent) and therefore significantly exceeded the tios and tighter liquidity requirements. Raiffeisenlandesbank 60 per cent level required as at 31 December 2015. Oberösterreich has however prepared itself well with various ¬¬ The survival period as at 31 December 2015 was greater projects in past years. than 90 days, and therefore significantly exceeded the minimum period of 30 days required in the CEBS guidelines. 170 Annual Report 2015

Institutional protection scheme Strong positioning with the career portal enteryourfuture.at

These regulatory changes have also given rise to the need Qualified and committed employees are the most important for additional adjustments in decentralised banking groups. capital at Raiffeisenlandesbank Oberösterreich. The Bank has The previously existing Institutional Protection Scheme (IPS) adopted a professional employer branding approach involv- for Upper Austria had to be adjusted to the particulars of newly ing ensuring a presence on online job platforms as well as promulgated European law. An IPS is a liability or indemnity at various trade shows with the objective of addressing po- agreement – created by means of a contractual agreement or tential new employees and positioning itself as an attractive through articles of association, statutes or charters – that pro- employer. Virtual employer branding is absolutely essential vides protection for member banks in a decentralised banking nowadays. Particular attention is focused therefore on the ca- group. Such an agreement sets out the terms on which the reer portal enteryourfuture.at, which provides for a transparent member banks stand together and provide mutual solidar- and prompt application process and provides clear and useful ity. Under Article 49 of the Capital Requirements Regulation information to applicants. enteryourfuture.at is revised on a (CRR) banks must, when determining their capital adequacy, continuous basis and represents an innovative way of recruit- deduct the equity instruments of other banks that they hold ing new employees. unless there is the exemption pursuant to Article 49 (3) of the CRR in connection with Article 113 (7) of the CRR based on Manifold educational and training opportunities an IPS signed with the banks concerned. Raiffeisenlandes- bank Oberösterreich is a member of the regional state IPS, Raiffeisenlandesbank Oberösterreich also offers a wealth of whose members also include all Raiffeisen banks in Upper different options and opportunities in the training it provides Austria, as well as the Raiffeisen-Kredit-Garantiegesellschaft for young employees. These options include training based m.b.H. Raiffeisen-Einlagensicherung OÖ reg. Gen. m.b.H acts on a job rotation programme, as well as training combined as the trustee and manages the assets of the scheme. In addi- with the higher education entrance qualification, trainee pro- tion, Raiffeisenlandesbank Oberösterreich is a member of the grammes and e-learning modules. One successful example federal IPS, whose members also include Raiffeisen Zentral- of our forward-looking internal human resources policies is bank Österreich AG (RZB), all Austrian Raiffeisenlandesbanks, the Raiffeisen Oberösterreich Academy, which uses individ- Raiffeisen Wohnbaubank AG, Raiffeisen-Holding Niederös- ually designed training programmes to prepare tomorrow’s terreich-Wien reg. Gen. m.b.H., Zveza Bank and Raiffeisen managers for rewarding responsibilities. Training and profes- Bausparkasse GmbH. In this case, Österreichische Einlagen- sional development is offered at the state-of-the-art Raiffeisen sicherung eGen has assumed the role of trustee. Under Article Training Centre, which opened in 2012 in the Blumau Tower. 113 (7) of the CRR, and subject to consent from the relevant In addition, the online teaching platform Raiffeisen@Learn- regulatory authorities, banks may give a risk weighting of 0 per ing is used extensively for internal training and professional cent to risk exposures in respect of counterparties with whom development. the bank has signed an IPS, although this does not apply to risk exposures that make up items of CET 1 capital, additional Work/life balance Tier 1 capital or Tier 2 capital as specified by the CRR. Raiffeisenlandesbank Oberösterreich also emphasises the The Austrian Financial Market Authority (FMA) has issued a importance of a work-life balance and is a certified fami- decision approving both IPSs of which Raiffeisenlandesbank ly-friendly organisation, offering its own kindergarten and tod- Oberösterreich is a member and allowing the exemptions dler group/crèche known as “Sumsi's Learning Garden" in under Articles 49 (3) and 113 (7) of the CRR. which the working languages are both German and English. The bank also offers a special summer kindergarten which is Human resources management being continuously expanded because of the huge demand for places. Additional features of the family-friendly approach In the 2015 financial year, Raiffeisenlandesbank Oberösterre- at Raiffeisenlandesbank Oberösterreich include flexible work- ich had on average a banking staff of 1,039 (2014: 918) and ing hours and measures taken to support those returning from thus offered a large number of top quality, attractive full and parental leave. part-time jobs (part-time ratio: 11.1 per cent). The average increase in the number of employees is overwhelmingly due to Cooperation within the Raiffeisen association the integration of Raiffeisenlandesbank Oberösterreich’s sub- providing strength sidiaries PRIVAT BANK AG and bankdirekt.at AG along with sections of GDL Handels- und Dienstleistungs GmbH during Close cooperation between the Raiffeisen banks in Upper the year. Austria, whose skills are available locally, and the specialists at Raiffeisenlandesbank Oberösterreich, results in Raiffeisen Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 171

Management Report 2015 _ Business development and the economic situation

Oberösterreich combining its strengths in the interests of its only the interests of the shareholders that were taken into customers. This healthy, strong structure enables an extraor- account, in line with a traditional shareholder approach, dinary focus on the customer and highly dynamic assistance but rather all interest groups associated with Raiffeisen to customers with creative financial services. were addressed within the scope of a sustainable future direction for the company. Efforts are also being focused Successful through the practise of subsidiarity and solidarity on the issue of stakeholder management as part of the activities involved in establishing a separate sustainability The Raiffeisen banking group in Upper Austria is a strong management system. The individual stakeholders have for community. The Raiffeisen banks in Upper Austria, as owners instance undergone analysis and stakeholder manage- of Raiffeisenlandesbank Oberösterreich, are also able to ex- ment has been concentrated on sustainable dialogue with ercise their proprietary rights over the registered cooperative the stakeholders. society Raiffeisenbankengruppe OÖ Verbund eingetragene ¬¬ Sustainable business activity is a central theme at Raiff- Genossenschaft. The decisive factor here is the founding idea eisen. Raiffeisen Oberösterreich strives for instance to en- of co-operation at Raiffeisen: every co-operative company has sure that important resources are handled carefully and a voice, regardless of its size. Raiffeisen Oberösterreich relies that the environment is protected. Following the creation on the subsidiarity principle: the superordinated co-operative of the Value creation report 2013 last year the Ecobalance society should not take over what the local Raiffeisen banks 2014 was also created based on a proposal from the Raif- can do on their own. As a public limited company (Aktienge- feisen climate protection initiative. The majority of emissions sellschaft), Raiffeisenlandesbank Oberösterreich therefore as- arise from power consumption, and there is potential for sumes responsibility for more extensive global functions, but improvement here. The transportation area also demon- also sees itself as a coordinating hub within the cooperative strates further potential for protecting the environment. In- network. It advises the Raiffeisen banks in operational, organ- teriors are already largely heated using green power. isational and legal affairs, supports them in their sales work, ¬¬ Raiffeisenlandesbank Oberösterreich took part in the and provides a training and further education system. “work/life balance” audit for the first time in 2009 and achieved basic certification. In subsequent years the focus Bundling our strengths was placed on issues such as family-oriented management, working environments of the future, return to work Our focus on the requirements and needs of our customers workshops as well as part time and management. The ac- is unique. It is the theme that runs from local roots through to tivities implemented were reviewed again in 2015. The 2015 global customer support. This networked approach is made recertification is not just a recognition of the performance possible by the state-of-the-art structure at Raiffeisen Oberös- so far, but also provides an incentive and motivation to con- terreich. The cooperative network can step in and become tinue the successful approach of balancing work and family proactive where the Raiffeisenbanks need assistance, so that life to the benefit of employees and customers. customers can be offered the best possible support with all their projects. This means that regional strengths and direct Raiffeisenlandesbank Oberösterreich was rated by the inter- relationships with the customer remain intact and are main- national ratings agency oekom research AG over the last few tained. Furthermore, the collaboration within the network en- months in the area of sustainability efforts. The comprehen- sures that Raiffeisen will have a secure future as a growing sive rating process which began in autumn 2015 involved in organisation and powerful force in Upper Austria. particular an examination of the new transparent sustainability reporting on the Raiffeisenlandesbank Oberösterreich web- Sustainability and Corporate Social Responsibility (CSR) site and the introduction of a Group-wide energy management system. Raiffeisenlandesbank Oberösterreich’s sustainability In 2015, a comprehensive sustainability strategy was devel- activities received the positive score of PRIME status (rating oped at Raiffeisenlandesbank Oberösterreich, with further ac- score C) in the latest rating by oekom research AG in early tions agreed in the areas of sustainability and Corporate Social 2016. This makes the bank an attractive partner for other Responsibility (CSR): banks and purchasers of bonds focused on sustainability on ¬¬ the 2015 financial year was characterised in full by energy the international capital markets. A wide range of actions has efficiency. The Managing Board at Raiffeisenlandesbank been defined for 2016 aimed at further development in the Oberösterreich has decided to introduce an energy man- areas of sustainability and CSR. agement system for the entire Group in order to allow pre- cise monitoring of energy consumption and to exploit new 1.5. Events of particular significance after the potentials for savings. Final certification of the system in balance sheet date accordance with ISO 50001 was completed in February 2016. There were no events of particular significance after 31 De- ¬¬ Stakeholder management was restructured at Raiffeisen- cember 2015. The annual financial statements were compiled landesbank Oberösterreich in 2015. Up until now it was not on 5 April 2016 and presented to the Supervisory Board. 172 Annual Report 2015

2. Outlook and risks

2.1. Expected development of the Austria expects economic growth of 2.0 per cent in 2016, just economic environment slightly above the Austrian average of 1.6–1.9 per cent.

The restrained global economic performance will also persist The economies of the central European EU countries, such in 2016. The International Monetary Fund (IMF) is forecasting as Poland, Hungary, the Czech Republic and Slovakia, are growth in real global GDP of 3.4 per cent, but the forecast by performing well. The IMF even revised the growth outlook for the World Bank is 2.9 per cent. these countries slightly upwards once again in January 2016. Russia and Ukraine are currently in a deep recession because A series of early indicators improved in the eurozone over the of their military conflict and the economic sanctions associ- course of 2015, meaning that the forecasts for growth in GDP ated with this. have been continuously revised slightly upwards for 2016, most recently by the IMF in January 2016. The reasons for this The USA remains the engine of the global economy with very include the numerous factors stimulating the economy such solid growth, based primarily on private consumption. While as the low oil prices, the extremely expansionary monetary leading indicators from the manufacturing sector worsened policy of the European Central Bank (ECB), the weaker euro at 2015 year-end, the service sector which is more signifi- as a result of this, EU investment programmes and a decrease cant in terms of the overall economy should make up for any in fiscal braking effects. Nevertheless the eurozone economy weakness here. Consumer confidence also remains high, with ran out of steam towards the end of 2015, primarily as a result the labour market in an optimum position and no fiscal policy of widespread weakness in the emerging nations. Early and slowing things down, while lower energy prices are fuelling the sentiment indicators remain at a high level at the start of 2016, economy. Despite the dynamic economy, the expansionary although these have been falling somewhat recently. Domes- monetary policy is only being tightened very slowly because – tic consumption will provide the main stimulus for growth once thanks also to the low commodity prices – there is still no risk again in 2016 as a result of the restrained performance of the of inflation in sight. global economy. The inflation rate in the euro zone may remain significantly below the ECB target of almost but below The IMF and World Bank are forecasting growth of between 2 per cent, and justify its extremely loose monetary policy. 4.3 and 4.8 per cent in the emerging nations in 2016. It is be- This results both from internal (continued under-utilisation of coming increasingly difficult to provide a blanket evaluation production capacity) and external factors (moderate prices for for the emerging nations. While oil-importing countries such raw materials, particularly low price of oil). as India profit significantly from lower oil prices, this affects oil-exporting countries such as Venezuela and Russia, which Increased economic dynamism is expected in Austria from are struggling with deep recessions in conjunction with very 2016 onwards following the very weak performance over the high inflation. Brazil is also in recession while South Africa is past three years. The relief on incomes as a result of the tax barely growing at all, since fundamental structural problems reforms along with the expenditure for asylum seekers should are increasingly having a negative impact on economic perfor- boost consumption, which could thereby become the most mance. China is continuing to undergo a slowdown in growth, important driver of growth following four years of stagnation. which is partly cyclical and partly the result of a deliberate Leading indicators also provide some hope of a recovery in strategy. fixed asset investments in the near future. Performance in the construction sector is expected to remain fairly slow and for- 2.2. Expected development of the company eign trade is also not expected to contribute to growth for the time being. The rate of inflation will also remain well below the Customer behaviour characterised by further digitisation and European average in 2016, as a result of the higher prices in the changes associated with this will certainly be one of the the service sector. major challenges for the future. Raiffeisenlandesbank Oberös- terreich is adjusting to the major upheaval that this means for Upper Austria, as an exporting state with strong connections the banking industry by positioning itself as a pioneer in in- with German industry, profits on one hand from the stron- novation and modern advisory bank that also sets its future ger performance of its neighbour to the north, and on the course with intensive personal support as well as the de- other hand continues to feel the effects of weaker global development of the extensive range of the innovative banking mand. Overall the statistics office for the federal state of Upper technology available. Raiffeisenlandesbank Oberösterreich is Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 173

Management Report 2015 _ Outlook and risks for the company

also revising sections of its business model in order to keep Based on the Bank's strengths – such as efficient, targeted li- up with the global changes in the internet age. Solutions are quidity planning and control, comprehensive risk management being developed for instance related to how an innovative and combined with detailed control – and the close collaboration successful bank branch concept may look in the future as with the Raiffeisenbanks in Upper Austria, Raiffeisenlandes- part of the innovative development of the “Raiffeisen Banking bank Oberösterreich is doing everything it can to enable it to Group Upper Austria 2020” project. Intensive work is also tak- continue to justify the confidence of customers in the future ing place in parallel on the “Digital regional bank” project. This and to provide comprehensive support for businesses, insti- is based on an “aggregated business model” whereby the tutions and retail customers in their various projects. Numer- fixed and digital channels no longer co-exist separately, but ous actions for the future will be implemented above all with are in fact intertwined. The physical proximity of the branch the “Raiffeisen Banking Group Upper Austria 2020” project, remains important and is retained based around the rele- in order to secure stability and sustainable qualitative growth. vant need. The support and service approaches will change, however, and digital channels will increasingly be selected for 2.3. Significant risks and uncertainties these which are independent of location and time. This concept benefits customers in that they receive active support The overall risk strategy approved by the Managing Board en- with differing services and support and care concepts. Raif- sures that the risks assumed by the Bank are consistent with feisenlandesbank Oberösterreich benefits from increases in the corporate strategy. The Managing Board and the Supervi- productivity and efficiency based on process harmonisation sory Board are kept regularly informed. and simplification.

The different types of risks are quantified and managed as follows:

STRATEGY AND PROCEDURE FOR MANAGING RISK

Ongoing quantitative controls using defined limits for risk and provisional profits and losses; daily calculation of the value at risk based on historical simulation as well as crisis tests; risk/earnings management via return on risk Market risks adjusted capital (RoRAC); Treasury Rulebook as central regulatory framework Quantitative controls by limiting the asset volume for each division, as well as via individual and industry-based limitations; monthly determination of the credit value at risk within the scope of the ICAAP (expected and unexpected loss, as well as stress tests); risk/earnings management via RoRAC; Risk Management Manual and Credit risk Finance Manual as central regulatory frameworks Risk calculation using haircuts based on current investment ratings for the relevant investment; risk/earnings management via RoRAC; early identification guidelines from the Austrian Raiffeisen deposit guarantee (ÖRE) as Investment portfolio risk central regulatory framework Quantitative controls of the structural liquidity risk using structural liquidity maturity transformation ratios and gaps with the total assets for normal and stress cases; refinancing risk using funding liquidity value at risk; operational liquidity risk through daily calculation of the liquidity coverage ratio (LCR) and the survival period as well as through the operational liquidity maturity transformation ratios; “Liquidity Liquidity risk Risk Management and Emergency Plan Manual” as central regulatory framework Operational risk (Self-)assessments as well as database for damage cases; risk assessment via basic indicator approach Quantification of the macroeconomic risks using stress scenarios for the credit risk based on the time series for Macroeconomic risk gross domestic product and the real wage index for Austria; risk/earnings management via RoRAC Risk buffer approach as well as an additional flat-rate amount for other non-quantifiable risks based on an expert Other risks estimate as part of the risk-bearing capacity analysis

Market risks comprehensively, transparently and objectively to the Manag- ing Board and supervisory authorities. Market risks take the form of changes in interest rates, spreads, currency and exchange rates relating to securities, New products and markets are evaluated in an approval pro- interest rates and foreign exchange items. cess and then authorised by the Managing Board.

The basis for all business is a balanced risk/reward ratio. The trades and the market price risk are limited by an extensive limit system. All trading positions are valued every day at The strict division of labour between front, middle and back market prices. office and risk controlling ensures that risks can be described 174 Annual Report 2015

The market risks are measured every day with the value-at- of the standards valid for Raiffeisenlandesbank Oberöster- risk index for the trading and banking books. This indicates a reich. They are oriented on international standards (Basel) and possible loss which, with 99 per cent probability, will not be on supervisory recommendations. exceeded during a one-month holding period. An organisational separation between front and back offices In addition to value-at-risk, stop-loss limits and scenario anal- has been implemented. yses are used to limit risk. In order to measure the credit risk, the bank carries out its own In addition, stress tests are conducted to take account of risks internal ratings and classifies financing transactions into credit in the event of extreme market movements. The crisis scenar- rating and risk classes. The risk class of a borrower accord- ios include the simulation of large fluctuations in the risk fac- ingly comprises two dimensions – recording and assessing tors and are designed to highlight potential losses which are their financial situation and measuring the collateral provided. not covered by the value at risk model. The stress scenarios comprise both the extreme market fluctuations which have Both hard and soft facts are employed as creditworthiness actually occurred in the past and also a series of standardised criteria. In corporate customer business, soft facts are also shock scenarios involving interest rates, credit spreads, share defined systematically during discussions with the company prices, currency exchange rates and volatility. and then adjudged.

The Raiffeisenlandesbank Oberösterreich Group also uses the Providing loan collateral for loans is a crucial strategy aimed principle of diversification on the basis of business partners, at reducing any potential credit risk. Recognised collateral is products, regions and sales channels to reduce its risks. In set out in the collateralisation standard with the associated addition, derivative transactions are conducted almost ex- valuation guidelines. The value of the collateral is calculated clusively with banks with which collateral agreements are in using uniform methods which include pre-defined deduc- place. Derivatives are used to hedge both against interest rate tions, expert opinions and standardised calculation formulas. risks at the micro-hedge and macro-hedge levels. Open de- The collateral is mapped and maintained in a central collateral rivative items are taxed and valued as assets. system.

Both the value at risk as well as standardised shock scenarios Rating systems are differentiated according to the customer are limited using limits. These risk management methods are segments Corporates, Retail Customers, Projects, Banks, also used in hedging. States, Federal States/Municipalities, Insurance Companies and Funds. A scoring system is used to automatically classify The total limit for these risks is decided on by the Managing low-volume retail business with employed private customers. Board after taking the risk-bearing capacity of the bank into consideration. The risk management system includes contin- The rating roadmap was thoroughly revised in the non-retail uous checks on compliance with these limits. area. The new Regular and Large Corporates as well as Proj- ect Finance rating models were introduced in April 2015. In- The market risk has been calculated in Front Arena/Risk Cube troduction of the new low-default models Financial Institutions, (previously KVaR+) since 21 November 2015. The weighted Insurances, Collective Investment Undertakings, Local and historical simulation is used as the value-at-risk model. Regional Governments and Sovereigns followed in June 2015. Further developments planned relate to the scoring models in The quality of the Front Arena/Risk Cube programme used or the Retail division and the SME models. of the methods for historical simulation used there is reviewed daily using back testing. Both the mark-to-market results ac- This credit rating system is constantly being validated and de- tually obtained (financial profit/loss) as well as the hypothetical veloped. A validation report is compiled for this every quarter results (portfolio value is kept constant one day; no impact with a summary of the validation results. The qualitative and on exogenous factors) are compared with the risks calculated quantitative validation form elements of the overall validation. and tested for significance. The qualitative validation focuses on reviewing and improving data quality and an analysis of compliance with the rating Credit risk standards. The quantitative validation involves an examination of the accuracy and the stability of the rating models. The principles of the customers’ credit ratings are incorpo- rated in the “Rating Standards” and “Collateral Standards” Business transactions that result in a country risk/country ex- manuals. These regulations provide a compact representation posure may only be carried out when the resulting country Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 175

Management Report 2015 _ Outlook and risks for the company

risk/country exposure is within the approved country risk and Investment portfolio risk country exposure limit. Equity risk describes the danger of potential future value re- Limitations on the industries are implemented at Raiffeisen- ductions for investments. The following types of risk are con- landesbank Oberösterreich using nominal limits based on the sidered under equity risk: bank’s exposure. The ICAAP credit risk for Raiffeisenlandes- ¬¬ Risk of dividend default bank Oberösterreich as well as economic industry analyses ¬¬ Risk of current value depreciation form the basis for deduction of the nominal limits. The current ¬¬ Rusk of impairment losses limit utilisation can be queried by the consultant in the system. ¬¬ Risk of additional regulatory contributions An assessment of the limited industries is also compiled and ¬¬ Risk of strategic (ethical) responsibility for sent out monthly. restructuring ¬¬ Risks resulting from the reduction of hidden reserves The overall risk of all assets exhibiting counterparty default risk is assessed on a monthly basis. Risk may arise due to credit The basis for the determination of equity risk are the risk fac- default, deterioration in creditworthiness or a reduction in the tors (= haircuts) that are derived from the rating classification intrinsic value of collateral, and it is communicated through the of the respective investment company, and the exposure value key figures expected loss and unexpected loss. of the investment. The investment portfolio risk results from the respective exposure and the haircuts applied to it. The expected loss represents the most probable value decrease of a given portfolio. This specified decrease in value Liquidity risk should be expected each year. This loss is covered by the calculated risk costs. The liquidity risk encompasses the risk of not being able to fulfil one’s payment obligations by the due date or, in the case The unexpected loss represents a portfolio’s possible loss of a liquidity shortage, of not being able to acquire enough beyond the expected loss. Thus, it communicates possible liquidity at the terms expected (structural liquidity risk). negative deviation from the expected loss. The unexpected loss is covered by the equity capital and is the maximum loss Ensuring that there is sufficient liquidity takes top priority at that can possibly arise within a single year, and which – with Raiffeisenlandesbank Oberösterreich as the central institution a certain amount of probability – will not be exceeded. Raif- for the Raiffeisen Banking Group Upper Austria. Liquidity has feisenlandesbank Oberösterreich calculates unexpected loss to be safeguarded at all times. at probabilities of 95 per cent and 99.9 per cent. Liquidity and liquidity risk at Raiffeisenlandesbank Oberöster- The calculation is carried out by the Credit Manager software reich is managed in a control loop between the Asset Liability from RiskMetrics. The risks/opportunities from loan defaults Management, Market Risk Control and Raiffeisen Bank Busi- or changes in creditworthiness are determined using a mar- ness Administration departments. The Asset Liability Manage- ket valuation model. The market data required for the portfolio ment department is responsible for liquidity control with this, value distribution (interest rates, credit spreads and sector in- while the Market Risk Control department is responsible for dices) are updated every month. liquidity risk management. The Asset/Liability Management Committee represents a crucial element in overall bank control The CVA risk represents the risk of a negative change in the as a cross-divisional body with responsibility for tasks related fair value of OTC derivatives with an increase in the counter- to asset/liability management and liquidity management. party risk, and is accounted for by adjusting the fair value (credit-valuation adjustment) of a portfolio of transactions with The Upper Austrian Raiffeisen banks are integrated into the a counterparty. liquidity management system via the liquidity management agreement with the Aid association of the Raiffeisen Banking Structured presentation of the counterparty risk by Raiffeisen- Group Upper Austria with the participation of Raiffeisenland- landesbank Oberösterreich for internal risk controls for the esbank Oberösterreich. The objective of this agreement is to purposes of the minimum standards for credit business or for secure the supply of liquidity in Upper Austria. Every Raiffeisen general international standards (“ICAAP”). The structure and bank plans and manages its own liquidity, the Raiffeisenland- content of the Risk Report at Raiffeisenlandesbank Oberös- esbank plants and manages the liquidity for the sector as the terreich is also the standard for risk reports by the subsidiar- central institution for the Raiffeisen Banking Group Upper ies. The Risk Report is sent out each quarter. Austria. Communication with the Raiffeisen banks takes place via the Raiffeisen Bank Business Administration department. A liquidity committee is also set up which is made up of 176 Annual Report 2015

representatives from the Raiffeisenlandesbank, the Raiffeisen The following are also the key pillars for managing liquidity and banks and the association of Raiffeisen banks, and which liquidity risk at Raiffeisenlandesbank Oberösterreich: deals with current topics and/or develops countermeasures ¬¬ Operational liquidity is also measured, in addition to the when the liquidity position is under pressure. aforementioned O-LFT, against the LCR (Liquidity Cover- age Ratio) as well as a survival period. In addition to the harmonised sector liquidity emergency plan ¬¬ The structural liquidity is also measured against the NSFR. defined for the Austrian Raiffeisen sector, Raiffeisenlandes- ¬¬ Funding risk gauges the loss of assets related to increased bank Oberösterreich also has its own liquidity emergency liquidity costs associated with closing liquidity gaps as a plan, which governs the processes, responsibilities and ac- result of a price increase for funding, which will not – with tions in the event of a liquidity crisis. 99.9 per cent certainty – be exceeded within 250 trading days. Liquidity management and liquidity risk are managed under ¬¬ Raiffeisenlandesbank Oberösterreich has a broad basis of a standardised model which, besides normal circumstances, funding. It proceeds in accordance with the principles of also encompasses stress scenarios arising from reputational diversification and balance. risk, systemic risk, a non-performing loan or a crisis involving ¬¬ A quantitative liquidity emergency plan is prepared on a several risks. To this end the following key figures are deter- weekly basis. mined with associated limits: ¬¬ The operational liquidity maturity transformation ratio (ab- From the gap analysis below it can be seen that there is only breviated in German to “O-LFT”) for operational liquidity a low liquidity risk in the individual maturity periods. There is a for up to 18 months is formed from the ratios of assets to large amount of potential collateral available for tender trans- liabilities accumulated from the beginning over the matu- actions with the ECB and the Swiss National Bank for ongoing rity band. liquidity equalisation as well as for other repurchase transac- ¬¬ For the structural liquidity maturity transformation (“S-LFT”), tions. The process structure for the liquidity buffer does not the key figure is formed by taking the ratios of assets to feature any essential concentration of expiring securities within liabilities calculated by going backwards from the end of the next three years. The vast majority of securities held as a the maturity band. liquidity buffer have a residual term of more than five years. ¬¬ The GBS (German abbreviation for the gap between the ratio total and total assets) ratio is formed by taking the ratios of the net positions per maturity band to total assets and shows any excessive funding risks.

LIQUIDITY GAPS RAIFFEISENLANDESBANK OBERÖSTERREICH IN MILLION EUR 1) 31 Dec. 2015 31 Dec. 2014 1,200

800

400 Excess assets assets Excess position) (long 0

–400

–800 up to 1 year 1 to 3 years 3 to 5 years 5 to 7 years 7 to 10 years over 10 years Excess liabilities position) (short

1) Items without fixed capital commitment are analysed in light of more realistically described historical developments and are modelled as at 31 December 2015; values as at 31 December 2014 are also described using this new method.

Operational risk Raiffeisenlandesbank Oberösterreich uses both organisational measures and IT systems to limit this type of risk Raiffeisenlandesbank Oberösterreich defines operational risk as far as possible. A high degree of security is attained by as the risk of loss caused by the inappropriateness or fail- means of limit systems, competence regulations, a risk-ade- ure of internal processes, people or systems, or caused by quate internal control system, a comprehensive security man- external events. Raiffeisenlandesbank Oberösterreich uses ual as a behaviour code and directive, as well as scheduled the basis indicator approach to quantify operational risk. and unscheduled audits by Internal Auditing. The operative Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 177

Management Report 2015 _ Outlook and risks for the company

management of this type of risk involves risk discussions and Impact on the P&L analyses with managers (early warning system). And the systematic recording of errors in a database for analysis (ex-post The resulting risk parameters are determined based on analysis). stressed macroeconomic conditions and an aggregated view of potential losses covering all types of risk is presented. The Macroeconomic risk impact on the P&L is considered and the resulting capital resources are ascertained for the end of the stress test period. Macroeconomic risk measures the effects of a slight or se- The analysis is based on a stress test covering multiple peri- vere recession on the risk situation at Raiffeisenlandesbank ods, in which hypothetical market developments are simulated Oberösterreich. To this end, a statistics-based macroeco- with a significant economic downturn. The risk parameters nomic model analyses the correlation between macroeco- used include interest rates and exchange rates, as well as nomic factors (GDP, real wages index) and the probability changes to the probabilities of default in the credit portfolio. of default. The simulated economic downturn in the model is used to determine the additional risk based on the CVaR Impact on the risk-bearing capacity figures. The objective is to analyse the risk-bearing capacity under Other risk stress conditions for all types of risk and the risk coverage. The stressed credit risk or investment risk is determined by simu- Raiffeisenlandesbank Oberösterreich takes into account lating deteriorations in the ratings of individual borrowers that other, non-quantifiable risks in terms of risk-bearing capacity are in an industry that is significant to Raiffeisenlandesbank by means of a risk buffer. These include: strategic risk, rep- Oberösterreich. A negative trend for the interest rate curve or utation risk, equity risk, systemic risk, income and business the credit spread is assumed in the Market Risk area. Three risk, risk of excessive indebtedness, remaining risk from tech- defined scenarios (problem, reputational risk and systemic cri- niques used to reduce credit risks, risks from money launder- sis) are simulated with the refinancing risk resulting from this ing and the financing of terrorism. then defined. Default on the part of the biggest borrowers is also simulated with an illustration of the operational harm. Risk-bearing capacity analysis EBA or SSM-SREP stress test A risk-bearing capacity analysis compares the potential group risk with the available risk coverage, in order to be certain that The impact on the P&L and therefore on the capital ratios is in the event of a problem (going concern – confidence level of also considered within the scope of the EBA or SSM-SREP 95 per cent), or even in the very unlikely case of an extreme stress test. The time frame is 3 years and is implemented in situation (gone concern – confidence level of 99.9 per cent), accordance with the methods stipulated by the authority. sufficient capital for risk coverage would be available. The risk-bearing capacity is calculated by comparing the group Raiffeisen Customer Guarantee Fund Upper Austria risk with the available coverage. One of the top priorities at Raiffeisen Banking Group Upper Procedures and methods for supervisory review Austria is to protect customer deposits. The Raiffeisen Cus- and evaluation tomer Guarantee Fund Upper Austria ensures that the deposits of our customers at Raiffeisen Oberösterreich are secure to There is no requirement from the authority responsible to pub- an extent well beyond statutory deposit protection. lish the result of the bank’s own procedure for evaluating the suitability of the internal capital. Raiffeisenlandesbank Oberös- All members of the Customer Guarantee Fund have under- terreich significantly overachieves at all times the SREP ratio taken to use their financial reserves to ensure that all deposits stipulated by the authority. and issues are honoured in a timely manner. The name Raiff- eisen Banking Group Upper Austria, backed by the financial Stress tests strength of the entire group, is therefore a byword for customer and co-owner security and confidence. Integrated stress tests covering all risk types are also carried out in addition to the isolated stress tests for the individual Even then, there is a further level of protection at federal level risk types. These consider the impact on the P&L as well as from the Raiffeisen Customer Guarantee Association Austria on the capital resources, and also present the impact on the (Raiffeisen-Kundengarantiegemeinschaft Österreich, RKÖ), risk utilisation. which protects customer deposits if the regional (state) protection proves to be inadequate. 178 Annual Report 2015

Raiffeisen Customer Guarantee Association Austria time all of the existing national deposit guarantee systems (Raiffeisen-Kundengarantiegemeinschaft Österreich, should have been transferred to this EU deposit guarantee in RKÖ) stages. This is still a proposal from the European Commission which requires agreement from the European Council and the This association, whose members comprise participating Raiff- European Parliament prior to implementation. eisen banks and Raiffeisenlandesbanks, Raiffeisen Zentral- bank Österreich AG (RZB) and Raiffeisen Bank International BaSAG AG (RBI), guarantees all customer deposits and securities issues of participating banks, regardless of the individual The Banking Recovery and Resolution Directive (BRRD) came amounts involved, up to the joint financial risk-bearing capac- into force effective 1 January 2015 with the establishment of a ity of the participating banks. The structure of the Customer Europe-wide banking union by the European Union. Following Guarantee Association has two tiers: first, the Raiffeisen Cus- on from this EU Directive (BRRD) the Banking Intervention and tomer Guarantee Fund Upper Austria at state level, and then Bank Restructuring Act (BIRG) in Austria was repealed and the Raiffeisen Customer Guarantee Association Austria at fed- replaced by the Bank Recovery and Resolution Act (BaSAG) eral level. Thus, the Customer Guarantee Association guar- which implemented the BRRD into Austrian law effective antees protection for customers that goes beyond the legal 1 January 2015. This Act requires every bank domiciled in deposit guarantee. Austria, and that is not part of a group which is subject to consolidated supervision, to create a recovery plan in accordance Deposit guarantee NEW with the requirements defined in the BaSAG and to update this on an annual basis. As the EU parent company the RBG OÖ The new Austrian Deposit Guarantee and Investor Compen- Verbund eGen created the 2015 group recovery plan based sation Act (ESAEG), which implements a European Directive, on the new legal position, and this includes the specifics re- came into force in mid-August 2015. All member institutions lated to Raiffeisenlandesbank Oberösterreich. A resolution of RBG Upper Austria are joint members of the “Austrian Raiff- plan must be created by the resolution authority and reviewed eisen-Einlagensicherung eGen” via the Upper Austrian state at least once per year and updated as necessary. deposit guarantee. For the purposes of the stress test associated with the recov- The Act anticipates the establishment of a deposit guaran- ery plan under the BaSAG, the bank’s recovery potential was tee fund that is stocked by annual contributions from banks. ascertained in six different scenarios, with systemic, reputa- The target volume to be reached by 2024 is 0.8 per cent of tional and also combined crises considered in the characteris- covered deposits. If these funds are not sufficient, the banks tics rapid and slow. So that crises can be identified at an early may be required to provide an additional 0.5 per cent of the stage, early warning indicators are set out in a comprehensive covered deposits annually. framework concept aimed at ensuring that there is adequate time for implementing suitable countermeasures. The set of The amount of the protection for the customer does not indicators selected meets the minimum requirements for qual- change as a result of the new Act: deposits continue to be itative and quantitative indicators in accordance with the EBA guaranteed at up to EUR 100,000 per customer and bank. Guidelines. Additional indicators were selected by the organi- However, the scope of the customer protection has widened sation itself, meaning monitoring of a total set of 22 indicators. as a result of the inapplicability of a few existing exceptions. Major corporations, deposits in a foreign currency as well as Raiffeisenlandesbank Oberösterreich is obliged by statute to deposits from managing directors, members of the supervi- make an annual contribution to the Single Resolution Fund sory authority and auditors of the bank are now also protected. (“SRF”) at the European level. The contribution to the resolution fund is stipulated by the supervisory authority responsible The guaranteed deposits should be reimbursed within seven in accordance with the deposits not guaranteed in association working days as of 1 January 2024 (gradual reduction in the with the bank’s risk profile. If the funds available are not suf- periods by then). ficient for the purposes of covering losses, costs and other expenses associated with utilising the fund as a resolution The Austrian deposit guarantee system is currently broken mechanism, extraordinary contributions are collected in order down into sectors and should be retained in this form until to cover the additional expenses. 2018. A new uniform system (run by the Economic Chambers) is then due to be set up as of 2019. The scope of application extends to all banks operating within the eurozone. Non-euro states are able to participate in the Deposit guarantee outlook SRF on a voluntary basis.

The European Commission is planning an EU-wide deposit guarantee that should be implemented in full by 2024. By this Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 179

Management Report 2015 _ Outlook and risks for the company _ Research and development

Hypo Haftungsgesellschaft m.b.H. by the financial supervisory authority also affects the liabilities of HETA owed to the Pfandbriefstelle (the bond division of the Raiffeisenlandesbank Oberösterreich holds a minority interest association of Austrian state mortgage banks). An agreement in Oberösterreichische Landesbank AG (Hypo OÖ) and a ma- was entered into between the mortgage lending agency of the jority interest in SALZBURGER LANDES-HYPOTHEKENBANK Austrian Landes-Hypothekenbanken, Pfandbriefbank (Öster- AG (Hypo Salzburg), which belongs to the protection scheme reich) AG, the individual member banks and the federal state “Hypo Haftungsgesellschaft m.b.H.” under the framework of of Carinthia with the aim of securing the provision of liquid- the association of mortgage banks, as required by law. Fur- ity. Corresponding payments were made by Hypo Salzburg thermore, Hypo Oberösterreich and Hypo Salzburg are also amounting to EUR 84.0 million (half on own account and half affected because of their membership in the Pfandbriefstelle for the account of the guarantors) for the purposes of imple- by the FMA mandate of 1 March 2015, which imposed a debt menting this agreement. Payments are still outstanding until moratorium on HETA ASSET RESOLUTION AG (“HETA”) that the moratorium expires. will be in force until 31 May 2016. The moratorium imposed

3. Research and development

Raiffeisenlandesbank Oberösterreich is considered a pioneer smartphone. A field test was carried out for this in Linz to- in the development of innovative bank technology. The first gether with the Passage Shopping Centre and the Linzer City electronic banking (ELBA) solution for Raiffeisen corporate Ring. The digital banking card has been available to all Upper customers in Upper Austria was developed in 1988. Private Austrian Raiffeisen customers since October 2015. Two ATMs customers became able to complete their banking transac- from Raiffeisenlandesbank Oberösterreich have also been tions from home online in 1997 with the market launch of the equipped with NFC technology. Contactless withdrawals Raiffeisen ELBA internet solution. In addition to Raiffeisen can already be made from these using the digital bank card. ELBA mobil, the Raiffeisen ELBA app is the mobile all-rounder This additional function will be installed in stages in additional available today as the online baking solution specifically cus- Raiffeisen Oberösterreich self-service terminals from January tomised for smartphones, and which provides a comprehen- 2017. sive account overview, financial statuses, transfer options and much more. Raiffeisenlandesbank Oberösterreich also leads Raiffeisenlandesbank Oberösterreich also plays a leading role in the way in projects across Austria related to the digitisation of the project known as "One IT system for Raiffeisen Österreich". bank and business processes. The harmonisation of IT systems for Raiffeisen banks in Austria is a ground-breaking project. Once implemented, it will Raiffeisenlandesbank Oberösterreich is continuously improv- not only deliver numerous synergies and corresponding cost ing its services for its customers and is taking the lead with savings, but will also spawn a range of technical innovations. numerous progressive developments in customer care for companies, private customers, and institutions. While con- As part of its training and professional development activities, tactless payments have been possible using Raiffeisen bank Raiffeisenlandesbank Oberösterreich is investing in e-learning, cards since 2013, a new phase of payment transactions was blended-learning modules and web-based training opportu- started in 2015. Since June 2015 Raiffeisen Oberösterreich nities. Raiffeisenlandesbank Oberösterreich has developed its customers have been able to make quick and easy payments own e-learning platform and serves as a competence centre globally at all NFC (near field communication) enabled point- in this regard for Raiffeisen Österreich. of-sale terminals using their digital bank card and an Android 180 Annual Report 2015

4. Reporting on the most important aspects of the internal control and risk management system with regard to the accounting process

The accounting-related internal controls systems at Raif- The Fit & Proper Policy represents the written stipulation of feisenlandesbank Oberösterreich relate to the process drafted the strategy for selecting and the process of assessing the and executed by the Managing Board and those individuals suitability of the members of the Supervisory Board, the com- entrusted with monitoring the company and any other people, pany management and employees in key functions, and is with the aim of achieving the following objectives: in line with the professional values and long-term interests of ¬¬ effectiveness and economic viability of the accounting pro- Raiffeisenlandesbank Oberösterreich. The principles for the cess (this also includes protecting the assets from losses remuneration policy in accordance with section 39b BWG or caused by damage and misappropriation), Article 92 et seq CRD are adhered to as applicable. ¬¬ reliability in the financial reporting and ¬¬ compliance with the statutory regulations that apply to Risk assessment accounting. The risk assessment is a dynamic and iterative process for Balanced and complete financial reporting is an important identifying and assessing risks. Risks which represent ob- goal for Raiffeisenlandesbank Oberösterreich and its board structions towards achieving certain objectives must be iden- members. The goal of the internal control system is to sup- tified in good time, with appropriate actions introduced. The port management in such a way that it guarantees effective responsibilities for assessing and controlling the risks in ac- and constantly improving internal controls in the context of cordance with section 39 BWG or CRR/CRD as well as the accounting. The basis on which annual financial statements CEBS/EBA standards are regulated at Raiffeisenlandesbank are prepared is derived from the relevant Austrian legislation, Oberösterreich. The requisite functional separation is ensured primarily the Austrian Commercial Code (UGB) and the Aus- with this. trian Banking Act (BWG), which govern the composition of separate annual financial statements. The Risk Management division is also responsible for the development and provision of risk measurement methods and Control environment IT systems at Raiffeisenlandesbank Oberösterreich and provides the result and risk information required for active risk The structure of the internal control systems is determined management and forwards the accounting-related information via the control environment. The control environment is deter- accordingly. mined through awareness on the part of the managers and executives of good corporate governance. The Managing Major risks related to accounting procedures are assessed Board of Raiffeisenlandesbank Oberösterreich bears overall and monitored by the Managing Board. This is important to responsibility for the design and effectiveness of the internal avoid misstatements, for example where complex accounting control system. The general control environment includes the principles are involved. middle management level (heads of organisational units) in addition to the Managing Board. Control measures

As a binding legal framework in everyday business activ- Principles and procedures for complying with company deci- ities the Code of Conduct forms the cooperative principles sions are set up and published in order to provide safeguards at Raiffeisen and the value propositions of Raiffeisenlandes- against risks and to achieve the corporate objectives. The ef- bank Oberösterreich as the basis for business conduct. The fectiveness, traceability and efficiency of the internal control internal control system is geared towards the size and type system essentially depend on the balanced mixture and proper of business operated at Raiffeisenlandesbank Oberösterre- documentation of the different control activities. Specific con- ich (in terms of complexity, diversification, risk potential) and trol and monitoring activities have been set out for this. towards the regulations to be followed. The current version of the Code of Conduct was last amended on 29 December Appropriate control measures are applied in ongoing busi- 2015 and was published on the Raiffeisenlandesbank Oberös- ness processes to ensure that potential misstatements or de- terreich website. viations in financial reporting are prevented or identified and corrected. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 181

Management Report 2015 _ Features of the internal control and risk management system

Controlling measures range from examination of period results IT applications, so that information can be identified, recorded by management and the specific reconciliation of accounts and processed on time before being forwarded to the relevant and an analysis of ongoing accounting processes. levels within the company.

The annual financial statements are prepared by group ac- Monitoring counting with the help of the respective organisational units. The employees responsible for accounting and the manager The monitoring of the processes is the responsibility of the of the organisational unit for group accounting are responsible Managing Board and the relevant heads of the organisational for the complete disclosure and correct evaluation of all trans- units. The operational responsibility for ICS activities in the actions brought to their attention. Group is currently exercised by an ICS organisational unit set up for this purpose in 2015. Information and communication Raiffeisenlandesbank Oberösterreich’s Internal Auditing unit The basis for single financial statements are processes that are is responsible for the internal auditing function. Group-wide, standardised and uniform throughout the company. Balancing auditing-specific policies apply for all auditing activities, and and evaluation standards are defined by Raiffeisenlandesbank these policies are minimum standards for internal auditing ac- Oberösterreich and are binding for the preparation of state- cording to Austrian financial market oversight as well as inter- ment data. national best practices.

Functional information and communication channels are set up and are supported, recorded and processed using suitable 182 Annual Report 2015

5. Miscellaneous

Accounting Amendment Act 2014 and financial position as of the next financial year. Essential changes include for instance the change to the assessment There have been a number of changes to the accounting reg- and valuation rules for deferred taxes, the abolition of the ex- ulations from the 2016 financial year following the introduc- ception justified under tax law of the requirement to restate tion of the Austrian Accounting Amendment Act (RÄG) 2014. original values, the introduction of the “settlement amount” for Specifically the changes to the assessment and valuation the valuation of liabilities and provisions as well as the intro- rules have had an impact on the statement of the earnings duction of a discounting obligation for non-current provisions. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 183

Management Report 2015 _ Miscellaneous

Linz, 5 April 2016 Raiffeisenlandesbank Oberösterreich Aktiengesellschaft Europaplatz 1a, 4020 Linz

THE MANAGING BOARD

Heinrich Schaller Michaela Keplinger-Mitterlehner Chief Executive and Chairman of the Managing Board Deputy Chief Executive

Stefan Sandberger Reinhard Schwendtbauer Member of the Managing Board Member of the Managing Board

Georg Starzer Markus Vockenhuber Member of the Managing Board Member of the Managing Board 184 Annual Report 2015

Financial Statements 2015 of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Balance sheet as at 31 December 2015 ______185 Income Statement 2015 ______188 Notes to the 2015 Financial Statements ______190 1. Information concerning the reporting and valuation methods used in the balance sheet and the income statement______190 2. Balance sheet disclosures ______193 3. Income statement disclosures ______199 4. Other information ______200 Auditors' opinion ______202 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 185

Financial Statements 2015 _ Balance sheet

Balance sheet as at 31 December 2015

31 DEC. 2015 31 DEC. 2014

ASSETS IN EUR IN EUR IN EUR '000 IN EUR '000

1. Cash in hand and balances at central banks 37,924,156.87 45,656 2. Public-sector debt instruments and bills of exchange eligible for refinancing at the Austrian Central Bank: a) Public sector debt issues and similar securities 1,097,109,266.81 1,079,197 b) Bills of exchange eligible for refinancing at central banks 0.00 1,097,109,266.81 0 1,079,197 3. Loans and advances to banks: a) payable on demand 3,729,565,050.26 3,789,278 b) Other loans and advances 3,274,595,056.12 7,004,160,106.38 3,541,905 7,3 31,18 3 4. Loans and advances to customers 16,645,310,163.84 16,266,649 5. Bonds and other fixed-income securities: a) from public issuers 1,115,801.37 8,046 b) from other issuers 1,559,828,918.65 1,560,944,720.02 1,767,50 9 1,775,555 including: own debt securities 524,325.87 3,267 6. Shares and other variable-yield securities 1,970,427,408.78 2,002,868 7. Equity investments 126,950,605.31 161,085 including: in banks 4,787,462.34 6,648 8. Investments in affiliated companies 1,568,770,324.04 1,642,022 including: in banks 20,273,145.11 54,714 9. Intangible assets 12,441,219.82 6,000 10. Property and equipment 17,8 91,0 6 4.8 4 18,974 including: Land and buildings used by the bank in the course of its own operations 12,398,123.17 13,121 11. Own shares or interests and shares in companies with a controlling or majority holding 0.00 0 including: nominal value 0.00 0 12. Other assets 202,375,557.92 185,533 13. Subscribed capital (for which payment has been requested 0.00 0 but not yet paid) 14. Prepaid expenses 22,70 5,8 47.19 27,918

Total assets 30,267,010,441.82 30,542,640

1. Foreign assets 8,852,018,924.95 8,984,396 186 Annual Report 2015

31 DEC. 2015 31 DEC. 2014

EQUITY AND LIABILITIES IN EUR IN EUR IN EUR '000 IN EUR '000

1. Amounts owed to banks: a) Payable on demand 4,376,411,231.08 4,497,141 b) With fixed term or withdrawal date 6,900,576,722.13 11,276,987,953.21 8,068,236 12,565,377 2. Amounts owed to customers: a) savings deposits 865,710,815.54 868,877 including: aa) payment on demand 149,232,198.76 83,184 ab) with a fixed term or withdrawal date 716,478,616.78 785,693 b) other liabilities 8,084,483,653.98 8,950,194,469.52 6,515,173 7,3 8 4,0 50 including: ba) payable on demand 4,333,915,859.83 3,164,768 bb) with a fixed term or withdrawal date 3,750,567,794.15 3,350,404 3. Liabilities evidenced by certificates: a) debt securities 2,119,162,390.57 2,700,714 b) other liabilities evidenced by certificates 3,633,416,205.53 5,752,578,596.10 3,533,464 6,234,178 4. Other liabilities 151,769,635.21 189,886 5. Deferred income 19,999,600.64 21,909 6. Provisions: a) Provisions for severance payments 28,143,433.01 25,498 b) Provisions for pensions 17,921,058.22 18,496 c) Tax provisions 27,0 49,78 9.97 21,652 d) Other 119,783,651.86 192,8 97,9 3 3.0 6 101,244 166,891 6.A Fund for general bank risks 0.00 0 7. Supplementary capital according to Part 2 Title I Chapter 4 of EU Regulation No. 575/2013 1,238,471,683.34 1,384,955 8. Additional Tier 1 capital according to Part 2 Title I Chapter 3 of EU Regulation No. 575/2013 0.00 0 8.A Compulsory convertible bonds in accordance with Section 26 of the Austrian Banking Act 0.00 0 8.B Instruments without voting rights according to Section 26a of the Austrian Banking Act 0.00 0 9. Subscribed capital 277,507,626.25 277,50 8 10. Capital reserves: a) non-distributable 824,353,524.45 824,354 b) distributable 149,991,600.00 974,345,124.45 149,991 974,345 11. Retained earnings: a) legal reserve 0.00 0 b) reserves under articles of association 0.00 0 c) other retained earnings 1,050,655,846.09 1,050,655,846.09 983,119 983,119 12. Liability reserve pursuant to section 57 (5) of the Austrian Banking Act 336,820,421.78 326,256 13. Net income for the year 37,160,423.78 25,052 14. Untaxed reserves: a) valuation reserve due to special depreciation 7,621,128.39 9,115 b) other untaxed reserves 0.00 7,621,128.39 0 9,115 including: ba) investment tax credit under Section 10 of the Austrian Income Tax Act 1988 0.00 0 bb) Transfer reserves pursuant to Section 12 of the Austrian Income Tax Act 1988 0.00 0

Total equity and liabilities 30,267,010,441.82 30,542,640 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 187

Financial Statements 2015 _ Balance sheet

31 DEC. 2015 31 DEC. 2014

EQUITY AND LIABILITIES IN EUR IN EUR IN EUR '000 IN EUR '000

1. Contingent liabilities 3,251,877,3 6 4.3 8 3,370,152 including: a) Acceptances and endorsed bills sold 0.00 0 b) Liabilities from indemnity agreements and guarantees from the ordering of collateral 3,251,730,523.68 3,370,006 2. Credit risks 3,590,080,541.65 4,749,703 including: Liabilities from repurchase transactions 0.00 0 3. Liabilities from trust fund transactions 14,906,796.81 13,998 4. Eligible capital according to Part 2 of EU Regulation No. 575/2013 3,296,916,558.24 3,334,820 including: supplementary capital pursuant to Part 2 Title I Chapter 4 of EU Regulation No. 575/2013 711,073,936.93 852,983 5. Equity requirements according to Article 92 of Regulation (EU) No. 575/2013 20,099,827,991.34 21,402,370 including: a) equity requirements according to Article 92 (1) (a) of Regulation (EU) No. 575/2013 12.86% 11.60% b) equity requirements according to Article 92 (1) (b) of Regulation (EU) No. 575/2013 12.86% 11.60% c) equity requirements according to Article 92 (1) (c) of Regulation (EU) No. 575/2013 16.40% 15.58% 6. Foreign liabilities 6,002,029,095.84 6,662,198 188 Annual Report 2015

Income statement 2015

31 DEC. 2015 31 DEC. 2014

IN EUR IN EUR IN EUR '000 IN EUR '000

1. Interest and interest-related income 647,063,671.51 701,349 including: from fixed-interest securities 77,327,123.13 93,040 2. Interest and interest-related expenses –383,463,166.62 –442,969

I. NET INTEREST INCOME 263,600,504.89 258,380 3. Income from securities and investments: a) Income from shares, other equity interests and variable-yield securities 60,101,688.79 58,239 b) Income from investments 4,998,993.68 5,388 c) Income from investments in affiliated companies 55,001,891.86 120,102,574.33 68,651 132,278 4. Fee and commission income 129,8 37,173.0 6 116,082 5. Fee and commission expenses –38,264,964.78 –35,960 6. Income from/expenses in financial operations 6,792,767.02 9,261 7. Other operating income 67,372,816.58 67,9 8 5

II. OPERATING INCOME 549,440,871.10 548,026 8. General administrative expenses: a) personnel expenses –123,530,220.51 –101,206 including: aa) wages and salaries –94,099,530.00 –73,732 ab) expenses for statutory social contributions and mandatory contributions linked to remuneration –20,601,232.77 –16,564 ac) other social expenses –1,280,166.60 –1,178 ad) expenses for pension schemes and support – 5,274,646.12 –4,985 ae) allocations to the provisions for pensions 651,204.31 –429 af) expenses for severance payments and contributions to company employee pension funds –2,925,849.33 –4,318 b) other administrative expenses (administrative expenses) –93,994,215.63 –217,524,4 3 6.14 –94,260 –195,466 9. Valuation allowances for assets in asset items 9 and 10 –3,043,231.35 –1,931 10. Other operating expenses –59,306,600.57 –63,401

III. OPERATING EXPENSES –279,874,268.06 –260,799

IV. OPERATING PROFIT 269,566,603.04 287,227 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 189

Financial statements 2015 _ Income statement

31 DEC. 2015 31 DEC. 2014

IN EUR IN EUR IN EUR '000 IN EUR '000

IV. OPERATING PROFIT (carryover) 269,566,603.04 287,227 11./12. Balance from reversals/additions, or value adjustments to loans and certain securities and provisions for contingent liabilities and credit risks –134,979,961.36 –137,828 13./14. Balance from value adjustments or income from value adjustments to securities measured as financial assets, as well as to investments and shares in associated companies 973,421.31 –58,423 including: merger profit 36,435,857.11 0

V. PROFIT FROM ORDINARY ACTIVITIES 135,560,062.99 90,975 15. Extraordinary income 0.00 0 including: Withdrawals from the fund for general bank risks 0.00 0 16. Extraordinary expenses 0.00 0 including: Allocations to the fund for general bank risks 0.00 0 17. Extraordinary result 0.00 0 (subtotal from items 15 and 16) 18. Taxes on income 2,618,932.31 –5,631 19. Other taxes, unless reported under item 18 –34,286,822.25 –33,246

VI. PROFIT FOR THE YEAR 103,892,173.05 52,098 20. Movements in reserves –66,731,749.27 –27,0 47 including: allocation to the statutory reserve 0.00 0 reversal from the statutory reserve 0.00 0

VII. NET PROFIT FOR THE YEAR 37,160,423.78 25,052 21. Profit/loss carried forward 0.00 0

VIII. NET INCOME FOR THE YEAR 37,160,423.78 25,052 190 Annual Report 2015

Notes to the 2015 Financial Statements

1. Information concerning the reporting and valuation methods used in the balance sheet and the profit and loss account

These 2015 financial statements have been prepared in accor- 1.2. Securities dance with the provisions of the Austrian Banking Act (BWG) and the Austrian Commercial Code (UGB), insofar as they are Securities held as fixed assets, and also those held as current applicable to banks, as well as EU Regulation No. 575/2013 assets, are measured strictly at the lower of cost or market. If (CRR), insofar as this is relevant for these financial statements. bonds and other fixed-income securities held as fixed assets are purchased at a price that is more than the face value, in The balance sheet and the income statement are prepared accordance with section 56 (2) of the Austrian Banking Act the according to the breakdown of Appendix 2 to Section 43 (1) premium is amortised on a pro rata basis over the life of the and (2) of the Austrian Banking Act. security concerned.

The annual financial statements have been based on generally In the case of securities purchased at a price below face value, accepted accounting principles and on the standard require- the discount is not unwound on a pro rata basis. ment to provide a true and fair view of the net assets, financial position and results of operations of the company. Securities used as cover funds for trust money were re- garded as fixed assets and valued according to the strict The principle of complete disclosure of all assets, liabilities, lower of cost or market method pursuant to section 2 para 3 income and expenses has been observed. of the Austrian Trustees Securities Directive.

Assets and liabilities have been measured individually and Stock market prices or trader quotes observable on the mar- on the basis of the continued existence of the company as a ket are used as the basis for determining the value of secu- going concern. rities. If adequate market quotes are not available, prices are determined with internal valuation models in which premiums In accordance with the principle of prudence, only those gains or discounts are applied depending on credit rating, market- realised as at the balance sheet date have been reported. All ability and features of the issue. identifiable risks and impending losses have been recognised in the financial statements. Trading securities are measured on a "mark to market" basis.

PRIVAT BANK AG der Raiffeisenlandesbank Oberösterreich 1.3. Loan loss allowances and bankdirekt.at AG were merged into Raiffeisenlandesbank Oberösterreich Aktiengesellschaft as the acquiring company Loan loss allowances are recognised primarily if a debtor is in the financial year. The figures for the previous year 2014 experiencing economic or financial difficulties, fails to make show the values for Raiffeisenlandesbank Oberösterreich prior interest payments or repayments of principal, or other circum- to the merger and can therefore be compared without restric- stances arise that indicate a probability of default based on tion. The effects of the mergers are explained in point 2.4. regulatory standards. Within the internal risk management system, ongoing monitoring of the counterparty and the specific 1.1. Foreign currency translation case involved is used to determine whether relevant circumstances exist. In the case of significant customer exposures in Amounts denominated in foreign currency are translated at the lending business, each individual case is analysed as the the middle exchange rate published by the European Central basis for recognising specific loan loss allowances or provi- Bank (ECB) pursuant to section 58 (1) of the BWG. If there are sions for contingent liabilities and lending commitments. The no ECB reference rates, middle exchange rates from reference calculation for the amount of the loan loss allowances takes banks are used. into account the discounted cash inflows expected from interest payments and repayments of principal together with any inflows that can be obtained from the recovery of collateral. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 191

Notes to the financial statements 2015 _ Notes regarding accounting and valuation principles

A standardised method is used for customer exposures that and actuarial measurement methods, a discount rate of 2 per are not deemed to be significant. cent (previous year: 2 per cent) and an assumed rate of employment termination. 1.4. Special valuation pursuant to section 57 (1) of the Austrian Banking Act A provision is also recognised to cover long-service bonus obligations. The provision was calculated using accrual and A special valuation amounting to EUR 5,000 thousand was actuarial measurement methods applying a discount rate of 2 posted for the first time in the financial year pursuant to sec- per cent (previous year: 2 per cent). tion 57 (1) of the Austrian Banking Act. An employee turnover markdown in the amount of 5 per cent 1.5. Investments (previous year: 5 per cent) is applied to both the severance payment obligation and the long-service bonus provision. Equity investments and shares in affiliated companies are measured at cost. Write-downs are applied if an equity in- The calculations are based on an imputed pensionable age vestment is impaired and the impairment is likely to be of a of 60 for women (previous year: 60) and 65 for men (previous permanent nature due to sustained losses, a reduction in eq- year: 65) and factor in the transitional provisions as specified uity and/or a fall in discounted earnings. in the Austrian Budget Accompanying Act of 2003.

1.6. Property and equipment and intangible assets 1.11. Other provisions

Pursuant to section 55 (1) of the Austrian Banking Act in In application of the principle of prudence, other provisions conjunction with section 204 of the Austrian Commercial are recognised for all risks identifiable on the date the finan- Code, property and equipment, as well as intangible fixed cial statements are prepared and for present obligations, the assets, is carried at cost and reduced by depreciation. amount of which is contingent on a number of factors and Low-value assets are written off in full in the year of acquisition. cannot be reliably determined. These other provisions are rec- ognized in an amount dictated by prudent business practice. The useful economic lives used as the basis for depreciation are as follows: 20 to 50 years for immovable fixed assets, 2 1.12. Derivative financial instruments to 20 years for movable assets and 3 to 9 years for the intangible assets. The fair value is determined for derivatives. Fair value is defined as the price that would be received to sell an asset or If an item of property or equipment is expected to be perma- paid to transfer a liability in an orderly arm's-length transac- nently impaired, a write-down is recognised. tion between knowledgeable, willing and independent parties. Where stock exchange prices are available, these prices are 1.7. Liabilities used to determine fair value. Internal valuation models using current market parameters, in particular the discounted cash Liabilities are carried at the higher of the notional amount or flow method and option price models, are used for financial settlement amount. instruments if no market price is available.

1.8. Own issues A credit value adjustment (CVA) and debt value adjustment (DVA) were determined as part of the inclusion of credit risk Issue costs, add-on fees and commissions, premiums and in the mark-to-model measurement of derivatives. The main discounts are amortised/unwound on a pro rata basis over the factors used in determining the CVA and DVA were the term to maturity of the instrument concerned. maturity, counter-party default risk, own default risk and collateralisation, with consideration only taking place in the event 1.9. Pension provisions of a surplus with the CVA.

Defined benefit obligations are calculated using the Austrian Derivative financial instruments in the trading book are re- entry-age normal method based on the AVÖ 2008 P. Pagler & corded at their fair value, with effect on the income statement. Pagler mortality tables. A discount rate of 2 per cent was used The positive fair value of all trading book derivatives amounted to calculate the obligation (previous year: 2 per cent). to EUR 4,822 thousand (previous year: EUR 9,876 thousand).

1.10. Provisions for severance and similar obligations Banking book derivatives that are not used for interest-rate management or that do not form part of a hedge are generally A provision is recognised for severance obligations. The pro- recognised in profit or loss if the fair value is negative. vision as at the reporting date was calculated using accrual 192 Annual Report 2015

GAIN OR LOSS AGGREGATE ON REMEA- GAIN OR LOSS POSITIVE NEGATIVE SUREMENT ON REMEA- FAIR VALUES FAIR VALUES 2015 SUREMENT FUNCTIONAL UNIT IN EUR ‘000 IN EUR ‘000 IN EUR ‘000 IN EUR ‘000 DESCRIPTION

EURO fixed interest rate payer position – 14,309 2,112 –6,697 Item hedge against rising interest rates Interest-rate position hedge against a steeper EURO steepener position 44,523 67,948 1,255 – 9,186 yield curve Positioning in terms of steeper foreign currency Foreign exchange steepener – 2,759 1,920 5,982 yield curves Swap positions, effect of which offset by Quanto convergence swaps 24 659 381 4,360 reverse swaps Hedging of derivative positions using Derivative macro 875,680 859,140 6,657 19,150 derivatives Non-current derivative hedging of the foreign currency base interest rate components of the CCS FW Liqui Macro 579 537 –533 –533 underlying transaction investment book

For those derivative financial instruments in the banking book result of the measurement of derivative financial instruments that serve to manage interest rates, if there was a negative on the basis of the imparity principle without having the op- surplus for a functional unit per currency, then the change was tion to recognise equal and opposite effects in the underlying recognised as income at the fair value from the previous year. transactions. The effectiveness of each hedge is primarily assessed by providing evidence of harmonisation between the The functional units serve in Raiffeisenlandesbank Oberöster- key parameters of the underlying transaction and the hedge reich for the detailed output of basic transactions (e.g., loans (Critical Term Match), as well as via the cumulative dollar off- and bond issues) in the investment book and must therefore set method with micro-hedges with an essential CVA in the be observed in the aggregate portfolio. The reduction of inter- derivative. If there is a creditworthiness level of 4.0 or 4.5 for est-rate risk by means of derivative strategies at non-lucrative the collateral or underlying transaction with a micro-hedge, interest rate curve points enables holding open basic trans- then an individual review takes place as to whether this mi- actions on steep curve points with a high roll-down effect, cro-hedge needs to be released. A release takes place in any thereby yielding, at constant interest-rate risk utilisation, a sig- case where the creditworthiness level is 5.0 or above and a nificant optimisation of the chance-to-risk ratio for the entire provision for pending losses is thereby formed based on the position. The uncoupled total risk of functional units amounted imparity principle. The fair value of all derivatives used in mi- as at December 2015 to an interest basis point value of EUR cro-hedges amounted to EUR 176,290 thousand (previous +258 thousand and therefore countered the aggregate inter- year: EUR 255,639 thousand). est-rate risk in the investment book. The EUR fixed interest rate payer position BPV EUR +98 thousand and/or the EUR In addition, banking book derivative financial instruments are steepener position BPV EUR +154 thousand represent the used in order to safeguard the fixed interest risk of certain majority of opposed interest risk of the functional units; the re- global underlying transaction portfolios . Suitable hedging in- maining sub-portfolios are either completely or nearly closed. struments (mainly interest rate swaps) are used to hedge un- Derivatives were reclassified from the functional units in the derlying transactions both on the assets-side of the balance current financial year and these are now stated in micro valu- sheet (in particular, loans and bonds) and on the liabilities side ation units. The resulting negative effect on the income state- (mainly deposits and issues). To analyse the portfolio risk, the ment amounts to EUR 8,738 thousand. open item is presented using a weekly assessment for each portfolio and currency. When open risk gap thresholds are There were highly positive valuation effects for the interest exceeded in a portfolio within a maturity band, derivatives are control derivatives valued in the 2015 financial year as a result used as a corrective measure. Effectiveness is also measured of a steeper interest rate curve over the course of the year. by means of interest-rate hedging simulations for each maturity band. The accounting objective in turn is to reduce the In addition, derivative financial instruments in the banking earnings volatility that would occur as a result of the mea- book are assigned to micro-hedges. The main area of ap- surement of derivatives on the basis of the imparity principle. plication is the hedging of underlying transactions with fixed The negative fair value of derivatives used for the assets-side interest-rate risk by means of countervailing derivatives that portfolio of underlying transactions amounted to EUR 174,332 are largely identical in terms of key parameters (e. g. issue thousand (previous year: EUR 229,818 thousand); the positive with fixed coupons and receiver swap). The objective of such fair value of derivatives used for the liabilities-side portfolio of hedge accounting is to reduce the earnings volatility that, if underlying transactions amounted to EUR 377,141 thousand the micro-hedges were not recognised, would occur as a (previous year: EUR 473,748 thousand). Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 193

Notes to the financial statements 2015 _ Balance sheet disclosures

2. Balance sheet disclosures

2.1. Presentation of maturities

The maturity structure of both loans and advances to banks and non-banks and amounts owed to banks and non-banks not repayable on demand was as follows:

LOANS AND ADVANCES TO BANKS LOANS AND ADVANCES TO NON-BANKS CARRYING AMOUNT CARRYING AMOUNT CARRYING AMOUNT CARRYING AMOUNT 31 DEC. 2015 31 DEC. 2014 31 DEC. 2015 31 DEC. 2014 TERM TO MATURITY IN EUR ‘000 IN EUR ‘000 IN EUR ‘000 IN EUR ‘000 up to 3 months 572,860 1,099,356 1,944,082 2,139,230 more than 3 months to 1 year 494,234 651,375 2,831,187 2,677,986 more than 1 year to 5 years 1,510,243 1,019,556 5,774,625 5,536,584 more than 5 years 6 97,258 771,618 4,284,674 4,104,306

Total 3,274,595 3,541,905 14,834,568 14,458,106

AMOUNTS OWED TO BANKS AMOUNTS OWED TO NON-BANKS CARRYING AMOUNT CARRYING AMOUNT CARRYING AMOUNT CARRYING AMOUNT 31 DEC. 2015 31 DEC. 2014 31 DEC. 2015 31 DEC. 2014 TERM TO MATURITY IN EUR ‘000 IN EUR ‘000 IN EUR ‘000 IN EUR ‘000 up to 3 months 1,055,907 1,329,947 1,899,272 1,595,457 more than 3 months to 1 year 830,594 1,316,097 1,617,025 1,694,124 more than 1 year to 5 years 3,564,461 3,812,236 3,540,769 3,826,976 more than 5 years 1,449,613 1,609,956 3,108,129 3,184,451

Total 6,900,577 8,068,236 10,165,195 10,301,008

In 2016, bonds and other fixed-income securities held by Raiffeisenlandesbank Oberösterreich will mature to the amount of EUR 93,076 thousand (2015: EUR 188,275 thousand), along with bond issues of EUR 465,296 thousand (2015: EUR 687,120 thousand).

2.2. Securities and investments The shares and other variable-yield securities consist of fixed assets amounting to EUR 24,751 thousand (previous year: The securities admitted to trading shown in asset items 5 and EUR 35,805 thousand) and current assets amounting to EUR 6 consist of bonds and other fixed-income securities at EUR 30,620 thousand (previous year: EUR 38,499 thousand). 1,538,618 thousand (previous year: EUR 1,747,929 thousand) and shares and other variable-yield securities at EUR 55,371 Asset items are allocated to fixed assets because the pur- thousand (previous year: EUR 74,304 thousand). pose of the securities concerned is to generate higher returns through the long-term investment of liquid funds. The items do not include any unlisted shares, bonds, shares and other variable-yield securities, or any equity investments Securities held as current assets are acquired for the pur- or shares in affiliated companies that are admitted to trading. poses of trading, to generate capital gains and to provide a liquidity reserve. The securities admitted to trading in asset items 5 and 6 break down into bonds and other fixed-income securities held as Raiffeisenlandesbank Oberösterreich maintains a securities fixed assets amounting to EUR 1,512,725 thousand (previous trading book pursuant to Article 92 CRR. The trading book year: EUR 1,722,992 thousand) and bonds and other fixed-in- contained securities totalling EUR 34,992 thousand (previous come securities held as current assets with a value of EUR year: EUR 60,494 thousand) and other financial instruments 25,893 thousand (previous year: EUR 24,937 thousand). 194 Annual Report 2015

amounting to EUR 3,123,086 (previous year: EUR 1,856,343 In the context of ZUNO BANK AG direct bank operating in thousand). the Czech Republic and Slovakia, RBI is reviewing whether any further internal and external steps need to be taken, such Securities with a carrying amount of EUR 0 thousand (previ- as the purchase of Zuno in its entirety, full incorporation into ous year: EUR 73,498 thousand) were sold under repurchase other RBI Group units or a partial sale. Solutions are also agreements and an amount of EUR 0 thousand (previous year: being developed for subsidiary banks in other countries, such EUR 9,580 thousand). as Poland.

Raiffeisen Bank International AG (RBI) has adjusted its strategy No direct risks stemming from these countries exist for Raiff- in individual markets. In doing this, it reacted to changed oper- eisenlandesbank Oberösterreich. In the evaluation and fur- ating conditions arising, for example, from the political crisis in ther development of Raiffeisen Zentralbank AG – which Russia and Ukraine. In 2015, the European Bank for Recovery holds a 60.7 per cent share of Raiffeisen Bank International and Development (EBRD) intervened to become a 30 per cent AG – events in these countries continued to cause risks and shareholder in the RBI subsidiary Raiffeisen Bank Aval JSC uncertainties. (RBA), a leading universal bank in Ukraine.

2.3. Fixed assets

The changes in the fixed assets held by Raiffeisenlandesbank Oberösterreich were as follows:

ACQUISITION COST/ DEPRECIA- DEPRECIA- COST OF GOODS TION CARRYING AMOUNTS TION AS AT ADDITIONS DISPOSALS AS AT AS AT 1 JAN. OF IN THE IN THE 31 DEC. OF 31 DEC. OF IN THE BALANCE SHEET ITEMS THE FINAN- FINANCIAL FINANCIAL THE FINAN- THE PREVI- FINANCIAL 1 IN EUR '000 CIAL YEAR YEAR YEAR TOTAL CIAL YEAR OUS YEAR YEAR

Public-sector debt instruments and similar securities 1,061,549 198,385 141,869 46,351 1,071,714 1,024,176 3,757 Loans and advances to banks 9,934 2,222 2,222 13 9,922 9,922 0 Loans and advances to customers 331,713 9,884 50,709 31,904 258,984 299,876 735 Public-sector bonds and other fixed-income securities 7,50 0 0 7,50 0 0 0 6,911 0 Bonds and other fixed-income securities from other issuers 1,767,149 108,915 318,368 44,970 1,512,725 1,716,082 1,780 including: own bonds (0) (0) (0) (0) (0) (0) (0) Shares and other variable-yield securities 2,071,463 34,339 79,592 118,716 1,9 07,494 1,929,527 2,318 Equity investments 181,497 2,553 34,364 22,735 126,951 161,085 4,486 including: in banks (7,684) (2,515) (0) (5,411) (4,787) (6,648) (4,376) Investments in affiliated companies 1,705,435 679 35,136 102,208 1,568,770 1,642,022 38,795 including: in banks (54,714) (640) (35,081) (0) (20,273) (54,714) (0) Intangible assets 6,000 7,666 0 1,225 12,441 6,000 1,225 Property and equipment 78,346 1,206 1,206 60,455 17,8 91 18,974 1,818 including: Land and buildings used by the bank in the course of its own operations (56,387) (128) (826) (43,291) (12,398) (13,121) (563)

Total 7,220,586 365,850 670,967 428,577 6,486,891 6,814,574 54,914

1 including profits from merger Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 195

Notes to the financial statements 2015 _ Balance sheet disclosures

2.4. Equity and equity-related liabilities A presentation of the consolidation of equity pursuant to Sec- tion 64 (1) no. 17 of the Austrian Banking Act is given in the In the case of subordinated liabilities, the subordination is al- consolidated financial statements of Raiffeisenlandesbank ways agreed separately in writing pursuant to section 51 (9) Oberösterreich. of the Austrian Banking Act. In accordance with its articles, Raiffeisenlandesbank Oberösterreich Aktiengesellschaft’s 2.5. Supplementary information share capital as at 31 December 2015 was EUR 276,476 thousand (previous year: EUR 276,476 thousand). It consists In accordance with “Part 8 - Disclosure by institutions” of the of 1,933,965 ordinary shares (previous year: EUR 1,933,965 Capital Requirements Regulation (EU) No. 575/2013 (CRR), ordinary shares). Furthermore, participation capital amounting this information is published on Raiffeisenlandesbank Oberös- to EUR 1,032 thousand (previous year: EUR 1,032 thousand) terreich’s website (www.rlbooe.at) . has been issued. Balance sheet item Assets 4 includes trustee liabilities A hedge reserve for the “institutional guarantee system” in the amounting to EUR 299,509 thousand (previous year: EUR amount of EUR 19,637 thousand was formed in retained earn- 317,223 thousand), with trustee deposits included in Balance ings (previous year: EUR 7,887 thousand). sheet item Liabilities 1 at the same amount.

Pursuant to Section 64 (1) no. 16 of the Austrian Banking Act The balance sheet includes asset items denominated in for- (BWG), Tier 1 capital and additional capital broke down as eign currency amounting to EUR 1,682,601 (previous year: follows in the 2015 financial year. EUR 1,991,824 thousand) and liability items in a foreign currency amounting to EUR 1,688,203 thousand (previous year: 31 Dec. 2015 31 Dec. 2014 IN EUR '000 EUR 2,004,739 thousand).

Eligible capital instruments 1,100,829 1,100,829 Retained earnings 1,031,019 975,232 Other reserves 494,433 485,362 Deductions and transitional adjustments –40,438 –79,586 Common Equity Tier 1 capital 2,585,843 2,481,837 Supplementary capital 701,592 844,152 Deductions and transitional adjustments – supplementary capital 9,482 8,831 Eligible capital 3,296,917 3,334,820 Required equity 1,607,986 1,712,190 Equity surplus 1,688,931 1,622,630 Tier 1 capital ratio 12.86% 11.60% Common Equity Tier 1 capital ratio 12.86% 11.60% Total capital ratio 16.40% 15.58% Return on assets 0.34% 0.17%

A capital conservation buffer was introduced effective 1 Janu- ary 2016 in accordance with section 23 of the Austrian Bank- ing Act (BWG), and this must be maintained in the form of Common Equity Tier 1 capital. In accordance with the transitional provision in section 103q no. 11 BWG the capital conservation buffer for the coming year will be 0.625 per cent. This will be increased to 2.50 per cent by 2019 using the straight-line method. 196 Annual Report 2015

The following derivative financial instruments were held as at the 2015 reporting date:

NOMINAL AMOUNT FAIR VALUE 1 TERM TO MATURITY UP TO OVER 1 YEAR OVER

IN EUR '000 1 YEAR TO 5 YEARS 5 YEARS TOTAL POSITIVE NEGATIVE

Interest rate futures OTC products Forward rate agreements 17,575 26,000 0 43,575 0 3,031 Interest rate swaps 4,832,645 13,290,565 16,480,644 34,603,854 2,466,687 2,027,478 Interest rate options – purchases 43,430 328,721 244,386 616,537 12,989 697 Interest rate options – sales 41,714 284,305 1,152,584 1,478,603 2,505 16,276 Exchange-traded products Interest rate futures 39,189 0 0 39,189 0 0 Total 4,974,553 13,929,591 17,877,614 36,781,758 2,482,181 2,047,482

Foreign exchange-dependent futures OTC products Spot exchange and forward transactions 695,881 76,064 0 771,945 14,360 7,74 3 Currency and interest rate swaps involving several currencies 1,780,657 202,890 26,620 2,010,167 22,250 18,797 Foreign exchange options - purchases 37,313 3,946 0 41,259 1,705 0 Foreign exchange options – sales 37,313 3,946 0 41,259 0 1,714 Total 2,551,164 286,846 26,620 2,864,630 38,315 28,254

Other futures OTC products Credit derivatives 0 10,000 0 10,000 0 1 Shares options – purchases 5,000 14,595 0 19,595 3,715 0 Shares options – sales 0 18,924 0 18,924 0 3,419 Total 5,000 43,519 0 48,519 3,715 3,420

Total OTC products 7,491,528 14,259,956 17,904,234 39,655,718 2,524,211 2,079,156 Total exchange-traded products 39,189 0 0 39,189 0 0

Total 7,530,717 14,259,956 17,904,234 39,694,907 2,524,211 2,079,156

1including accrued interest and CVA/DVA Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 197

Notes to the financial statements 2015 _ Balance sheet disclosures

The following derivative financial instruments were held as at the 2014 reporting date:

NOMINAL AMOUNT FAIR VALUE 1 TERM TO MATURITY UP TO OVER 1 YEAR OVER

IN EUR '000 1 YEAR TO 5 YEARS 5 YEARS TOTAL POSITIVE NEGATIVE

Interest rate futures OTC products Forward rate agreements 21,717 34,000 0 55,717 0 4,470 Interest rate swaps 3,264,805 14,536,843 18,143,094 35,944,742 2,927,357 2,378,298 Interest rate options – purchases 234,028 1,124,403 522,119 1,880,550 23,676 1,029 Interest rate options – sales 47,76 8 660,288 1,055,582 1,763,638 2,879 37,616 Exchange-traded products Interest rate futures 91,521 0 0 91,521 0 0 Total 3,659,839 16,355,534 19,720,795 39,736,168 2,953,912 2,421,413

Foreign exchange-dependent futures OTC products Spot exchange and forward transactions 339,604 57,118 0 396,722 13,980 4,160 Currency and interest rate swaps involving several currencies 1,471,731 169,230 14,522 1,655,483 30,328 28,219 Foreign exchange options - purchases 40,741 3,555 0 44,296 1,587 0 Foreign exchange options – sales 40,741 3,555 0 44,296 0 1,590 Total 1,892,817 233,458 14,522 2,140,797 45,895 33,969

Other futures OTC products Credit derivatives 0 10,000 0 10,000 0 6 Shares options – purchases 0 20,734 0 20,734 3,578 0 Shares options – sales 0 19,575 0 19,575 0 3,299 Total 0 50,309 0 50,309 3,578 3,305

Total OTC products 5,461,135 16,639,301 19,735,317 41,835,753 3,003,385 2,458,687 Total exchange-traded products 91,521 0 0 91,521 0 0

Total 5,552,656 16,639,301 19,735,317 41,927,274 3,003,385 2,458,687

1including accrued interest and CVA/DVA 198 Annual Report 2015

The derivative financial instruments are recognised in the balance sheet with the following carrying amounts:

LOANS AND AMOUNTS 2015 ADVANCES OWED OTHER OTHER PREPAID DEFERRED PROVISIONS

IN EUR '000 TO BANKS TO BANKS ASSETS LIABILITIES EXPENSES INCOME DERIVATIVES

Carrying amounts of trading book/ banking book derivatives a) Interest rate contracts 233,427 151,406 24,755 24,069 5,324 12,604 66,031 b) Exchange-rate-related agreements 0 0 17,0 37 6,801 0 0 0

LOANS AND AMOUNTS 2014 ADVANCES OWED OTHER OTHER PREPAID DEFERRED PROVISIONS

IN EUR '000 TO BANKS TO BANKS ASSETS LIABILITIES EXPENSES INCOME DERIVATIVES

Carrying amounts of trading book/ banking book derivatives a) Interest rate contracts 255,335 165,139 21,177 25,284 9,798 14,169 62,055 b) Exchange-rate-related agreements 0 0 17,46 9 5,963 0 0 0

As at 31 December 2015, trust fund deposits amounting to 1,140,248 thousand) had been pledged as collateral for certain EUR 8,667 thousand (previous year: EUR 7,321 thousand) securities issues. In addition, liabilities with a carrying amount were backed by securities with a value of EUR 9,772 thousand of EUR 390,000 thousand (previous year: EUR 150,000 thou- (previous year: EUR 8,893 thousand) held as cover assets. sand) and securities with a carrying amount of EUR 260,825 thousand (previous year: EUR 312,640 thousand) had been Loans and advances to customers and banks amounting to furnished as collateral to banks and exchanges. An amount EUR 381,202 thousand (previous year: EUR 286,339 thou- of EUR 629,075 thousand (previous year: EUR 687,315 thousand) were used as collateral for third-party obligations. sand) had been lodged with banks and customers under collateral agreements. Loans and advances were assigned to As at the reporting date, covered securities with a car- banks amounting to EUR 2,272,963 thousand (previous year: rying amount of EUR 59,016 thousand (previous year: EUR 2,000,184 thousand). Raiffeisenlandesbank Oberösterre- EUR 64,263 thousand) and loans and advances to customers ich has entered into netting agreements with correspondent amounting to EUR 1,295,643 thousand (previous year: EUR banks. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 199

Notes to the financial statements 2015 _ Income statement disclosures

3. Income statement disclosures

3.1. Expenses for subordinated liabilities 3.4. Other operating expenses

The total amount for expenses for subordinated liabilities in the The other operating expenses reported in Item 10 of the in- 2015 financial year totalled EUR 52,005 thousand (previous come statement amounting to EUR 12,892 thousand (previous year: EUR 49,400 thousand). year: EUR 22,769 thousand) related to personnel expenses incurred outside the bank. This fall is attributable to the mergers 3.2. Interest income und interest expenses from neg- and reintegration and other restructuring activities in the cost ative interest allocations.

The negative interest included in the interest income and inter- 3.5. Tax savings est expenses is insignificant. As in the previous year, the change in untaxed reserves did not 3.3. Other operating income result in any material change in taxes on income.

The other operating income reported in Item 7 of the income statement amounting to EUR 12,896 thousand (previous year: EUR 22,884 thousand) related to cost allocations to non-bank subsidiaries. This fall is attributable to the mergers and reintegration and other restructuring activities in the cost allocations. 200 Annual Report 2015

4. Other information

4.1. Information on employees 4.5. Members of the Managing Board and the Supervisory Board An average of 1,039 employees worked in banking operations during the 2015 financial year (previous year: 918). In the 2015 financial year, the following were Members of the Managing Board and the Supervisory Board: 4.2. Advances and loans to members of the Managing Board and the Supervisory Board CEO and Chairman of the Managing Board Heinrich Schaller, Chief Executive and Chairman of the Man- Advances and loans to members of the Raiffeisenlandesbank aging Board Oberösterreich Managing Board and the Supervisory Board consisted of EUR 372 thousand (previous year: EUR 569 thou- Deputy Chairwoman of the Managing Board sand) to members of the Managing Board, and EUR 786 thou- Deputy Chief Executive Michaela Keplinger-Mitterlehner sand (previous year: EUR 846 thousand) to members of the Supervisory Board. Members of the Managing Board Stefan Sandberger, Member of the Managing Board Loans to members of the Managing Board and the Supervi- Reinhard Schwendtbauer, Member of the Managing Board sory Board are granted on standard banking industry terms. Georg Starzer, Member of the Managing Board Repayments are made as agreed. Markus Vockenhuber, Member of the Managing Board

4.3. Expenses for severance payments and pensions Information on the members of the Raiffeisenlandesbank The personnel expenses included severance expenses Oberösterreich Supervisory Board can be found on pages amounting to EUR 2,298 thousand (previous year: EUR 3,821 12 and 13. thousand) and contributions to occupational pension funds for employees amounting to EUR 628 thousand (previous year: EUR 497 thousand).

Expenses for severance payments (including provisions) and pensions (including provisions) in 2015 amounted to EUR 268 thousand (previous year: EUR 408 thousand) for members of the Managing Board and to EUR 3,439 thousand for other employees (previous year: EUR 5,759 thousand). There were also further pension provision expenses of EUR 1,795 thousand (previous year: EUR 1,322 thousand) for the Managing Board and EUR 2,047 thousand (previous year: EUR 2,244 thousand) for other employees.

4.4. Remuneration paid to the members of the Managing Board and the Supervisory Board

In 2015, the remuneration paid to members of the Manag- ing Board (including payments in kind and expenses in connection with pensions) totalled EUR 5,493 thousand (previous year: EUR 5,113 thousand).

Section 241 (4) of the Austrian Commercial Code was applied with regard to the expenses for former executive managers (severance and pension payments) (previous year: EUR 0 thousand).

In 2015, remuneration (including reimbursements for travel expenses) of EUR 632 thousand (previous year: EUR 543 thousand) were paid to members of the Supervisory Board. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 201

Notes to the financial statements 2015 _ Other information

Linz, 5 April 2016 Raiffeisenlandesbank Oberösterreich Aktiengesellschaft Europaplatz 1a, 4020 Linz

THE MANAGING BOARD

Heinrich Schaller Michaela Keplinger-Mitterlehner Chief Executive and Chairman of the Managing Board Deputy Chief Executive

Stefan Sandberger Reinhard Schwendtbauer Member of the Managing Board Member of the Managing Board

Georg Starzer Markus Vockenhuber Member of the Managing Board Member of the Managing Board 202 Annual Report 2015

Audit Certificate

Report on the annual financial statements

I examined the attached annual financial statements of

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft, Linz,

for the financial year from 1 January to 31 December 2015, My audit was conducted in accordance with the applicable taking the accounting into consideration. These financial Austrian legal regulations and fundamental auditing prin- statements include the balance sheet as at 31 December ciples. These standards require that I plan and perform the 2015, the income statement for the financial year ending on audit in such a manner that I can form a reasonable opin- 31 December 2015, and the Notes. ion as to whether the financial statements are free of material misstatement. Responsibility of the legal representatives of the consolidated financial statements and the accounts An audit includes the implementation of auditing actions to obtain auditing proof in respect of the amounts and other de- The legal representatives of the company are responsible for tails given in the annual financial statements. The choice of the accounts and also the compilation of the financial state- auditing actions is left to the obligatory discretion of the audi- ments, presenting a true and fair view of the assets, financial tor of the annual financial statements, taking into account his position and earnings of the company in compliance with Aus- assessment of the risk of material misstatements occurring, trian business and banking laws. This responsibility includes: whether due to intended or unintended errors. In assessing the design, implementation and maintenance of an internal this risk, the auditor of the annual financial statements takes control system, to the extent that this is necessary for the into account the internal control system, insofar as it is im- preparation of the annual statements, and to present as true portant for compiling the annual financial statements and pre- a picture as possible of the group's net assets, financial posi- senting a true and fair view of the assets, financial position tion and profit situation so that these financial statements are and earnings of the company, in order to determine suitable free from material misrepresentations, whether due to inten- auditing actions taking account of the framework conditions, tional or unintentional mistakes. This also includes choosing not however to submit an auditing opinion about the effec- and applying suitable accounting and valuation methods and tiveness of the company’s internal control system. The audit making estimates that appear appropriate under the existing also included an evaluation of the adequacy of the applied ac- circumstances. counting and valuation methods and the essential estimates made by the legal representatives of the company as well as Responsibility of the auditor of the consolidated an assessment of the overall tenor of the financial statements. financial statements and a description of the type and scope of the statutory audit I believe that I have obtained sufficient and suitable auditing proof, so that my audit provides a reasonable basis for my My responsibility lies in the submission of an audit opinion opinion. on these financial statements on the basis of my inspection. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 203

Audit Certificate

Auditor’s opinion Statement concerning the Management Report

The results of my audit gave no reason for objection. On the According to the Austrian legal regulations, the management basis of the knowledge gained during the audit, in our judge- report is to be audited as to whether it is consistent with the ment the financial statements comply with the legal regula- financial statements and whether or not other details given in tions and present a true and fair view of the company's assets the management report give a misleading impression of the and financial position as of 31 December 2015 and the com- company’s financial position. The auditor's opinion must also pany's earnings and cash flow in the financial year from 1 Jan- include a statement as to whether the management report is uary to 31 December 2015, in accordance with the Austrian consistent with the financial statements and whether or not principles of orderly accounting. the details according to section 243a (2) of the Austrian Com- mercial Code apply.

In my opinion, the management report is consistent with the financial statements. The details according to section 243a (2) of the Austrian Commercial Code apply.

Vienna, 5 April 2016

As auditor for Österreichischer Raiffeisenverband:

Michael Laminger Chartered Accountant and Auditor

The audit certificate refers to the complete financial statements. This annual report includes the section of the notes that is subject to statutory disclosure. 204 Annual Report 2015

Audit Certificate

Report on the annual financial statements

We examined the annual financial statements of

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft, Linz,

consisting of the balance sheet as at 31 December 2015, the and to plan and carry out the audit so that there is adequate consolidated statement of comprehensive income for the fi- certainty that the financial statements are free from material nancial year ending on this reporting date along with the misrepresentations. Notes. In terms of our responsibility and liability as auditors to the company and to third parties, section 275 of the Austrian An audit involves carrying out audit activities in order to obtain Commercial Code shall apply. audit evidence for the valuations and other information contained in the financial statements. The choice of auditing ac- Responsibility of the legal representatives tivities is left to the obligatory discretion of the banking auditor. for the financial statements This includes an assessment of the risks of material intentional or unintentional misrepresentations in the financial state- The legal representatives of the company are responsible for ments. In assessing these risks the banking auditor must take preparing and for appropriate overall presentation of these fi- into account the relevant internal control system implemented nancial statements in accordance with Austrian business and by the company for the preparation and appropriate overall banking laws, and for the internal controls which the legal rep- presentation of the financial statements, in order to plan audit resentatives consider to be required in order to allow annual activities that are appropriate under the given circumstances, financial statements to be prepared which are free from any but not with the objective of providing an assessment on the material misrepresentations, whether these are intentional or effectiveness of the company’s internal control system. An unintended. audit also includes an assessment on the accounting principles applied and the reasonableness of the estimated values Responsibility of the auditor ascertained by the legal representatives in the accounting system, along with an assessment of the overall presentation of Our responsibility is to provide an assessment of these finan- the financial statements. cial statements based on our audit. We completed our audit in accordance with the Austrian principles of orderly accounting. We are of the opinion that the audit evidence obtained by us These principles required the application of the International is adequate and appropriate for the purposes of serving as a Standards on Auditing (ISA). According to these principles we basis for our audit assessment. are required to comply with the professional code of conduct Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 205

Audit Certificate

Auditor’s opinion Statement concerning the Management Report

The results of our audit gave no reason for objection. In our According to the Austrian legal regulations, the management judgement the financial statements comply with the legal reg- report is to be audited as to whether it is consistent with the ulations and present a true and fair view of the company's financial statements and whether or not other details given in assets and financial position as of 31 December 2015 and the management report give a misleading impression of the the company's earnings and cash flow in the financial year, in company’s financial position. The auditor's opinion must also accordance with Austrian corporate law regulations and other include a statement as to whether the management report is special statutory provisions. consistent with the financial statements and whether or not the details according to section 243a of the Austrian Com- mercial Code apply.

In our opinion, the management report is consistent with the financial statements. The details according to section 243a of the Austrian Commercial Code apply.

Linz, 5 April 2016

KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft

Martha Kloibmüller Chartered Accountant and Auditor

The audit certificate refers to the complete financial statements. This annual report includes the section of the notes that is subject to statutory disclosure. 206 Annual Report 2015

Statement of the Managing Board

We confirm to the best of our knowledge that these consol- We confirm to the best of our knowledge that these finan- idated financial statements, prepared according to proper cial statements of the parent company, prepared according accounting standards, present a true and fair view of the to proper accounting standards, present a true and fair view group’s assets, financial position and earnings and that the of the company’s assets, financial position and earnings and Group management report presents the business develop- that the management report presents the business development, performance and position of the Group so as to give ment, performance and position of the company so as to give a true and fair view of its net assets, financial position and a true and fair view of its net assets, financial position and earnings, and the Group management report provides a de- earnings, and the management report provides a description scription of the principal risks and uncertainties to which the of the principal risks and uncertainties to which the company Group is exposed. is exposed.

Linz, 5 April 2016 Raiffeisenlandesbank Oberösterreich Aktiengesellschaft Europaplatz 1a, 4020 Linz

The Managing Board

Heinrich Schaller Michaela Keplinger-Mitterlehner Chief Executive and Chairman of the Managing Board Deputy Chief Executive

Stefan Sandberger Reinhard Schwendtbauer Member of the Managing Board Member of the Managing Board

Georg Starzer Markus Vockenhuber Member of the Managing Board Member of the Managing Board

The responsibilities of the individual Board members are shown on pages 8 and 9. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information 207

Statement of the Managing Board _ Report of the Supervisory Board

Report of the Supervisory Board pursuant to section 96 of the Austrian Stock Corporation Act (AktG)

The Supervisory Board of Raiffeisenlandesbank Oberöster- committee is therefore a recommendation that the Supervi- reich Aktiengesellschaft has fulfilled the tasks for which it is sory Board concur with the findings of the independent audi- responsible according to the law and the company articles tors and approve the annual financial statements for the year for the 2015 financial year. The Managing Board has reported ended 31 December 2015 pursuant to section 96 (4) of the regularly, promptly and comprehensively about important Austrian Stock Corporation Act (AktG), agree to the proposal business transactions and the situation and performance of of the Managing Board concerning the appropriation of earn- the bank and the group. ings and note with approval the consolidated financial statements for the year ended 31 December 2015, including the Seven committees (nomination, approval, information, audit- group management report. ing, risk, accounting, and personnel & remuneration committees) have effectively supported the entire Supervisory Board At a meeting held on 25 April 2016, the Supervisory Board in the completion of its work. itself also reviewed the annual financial statements and consolidated financial statements for the year ended 31 Decem- The Österreichischer Raiffeisenverband and KPMG Austria ber 2015 as well as the management report and the group AG have audited the bookkeeping system, the annual financial management report for the 2015 financial year. statements in accordance with the provisions of the Austrian Commercial Code (UGB) and Austrian Banking Act (BWG), The Supervisory Board agreed with the accounting commit- the consolidated financial statements according to the In- tee's audit findings and the Managing Board's recommen- ternational Financial Reporting Standards (IFRS) for the year dations regarding the appropriation of profit, approved the ended 31 December 2015 and the management report and 2015 annual financial statements for Raiffeisenlandesbank the group management report for the 2015 financial year. The Oberösterreich Aktiengesellschaft, which were thereby for- audits did not give cause for any reservations and all legal mally adopted pursuant to section 96 (4) of the AktG, and regulations were complied with in full. Consequently, the inde- noted with approval the consolidated financial statements for pendent auditors issued an unqualified audit opinion. the year ended 31 December 2015 including the group management report. The accounting committee has audited the annual financial statements and the consolidated financial statements for the The Supervisory Board would like to thank the Manag- year ended 31 December 2015, the management report and ing Board and all employees of the Raiffeisenlandesbank the group management report for the 2015 financial year. Oberösterreich Aktiengesellschaft and the whole group for The audit did not give cause for any reservations in any way their commitment and successful performance in the 2015 whatsoever. The outcome of the audit by the accounting financial year.

Linz, 25 April 2016

The Supervisory Board

Jakob Auer Chairman of the Supervisory Board 208 Annual Report 2015

Raiffeisen Banking Group Upper Austria Results 2015 (consolidated)

Report on business development 2015 ______209 Consolidated balance sheet as at 31 December 2015 ______211 Consolidated income statement 2015 ______212 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 209

Report on business performance

Report on business performance 2015

Raiffeisen Banking Group Upper Austria implements transformation that will intensify further over the next few years some important measures for the future as a result of increasing digitisation. In order to be able to meet current and, in particular, future customer requirements, the The Raiffeisen Banking Group Upper Austria consists of Raif- Raiffeisen Banking Group Upper Austria has positioned itself feisenlandesbank Oberösterreich AG and 94 independent as a modern advisory bank that in the future will draw on the Upper Austrian Raiffeisen banks with 414 bank branches. As latest banking technology to ensure the even more convenient the most important local supplier of financial services in Upper processing of banking transactions for customers. The famil- Austria, the Raiffeisen Banking Group Upper Austria is a re- iar business model also needs to be revised as a result of the liable and readily available partner that offers its customers global changes that have happened in the Internet age, while personalised support for targeted and customised financial still retaining the focus on customers, on personal consultancy and business services. expertise, and on our regional roots and responsibility as core brand values of the Raiffeisen Banking Group Upper Austria. Clear strategies for success “Digital regional bank” – the branch of the future With its clear strategies and targeted approach, the Raiffeisen Banking Group Upper Austria has adapted well to current Solutions are being developed as to how an innovative and framework conditions and continues to implement numer- successful bank branch concept may look in the future. This ous measures aimed at securing stability and durable qual- is being done as part of the innovative development of the itative growth. The success of this approach can be seen “Raiffeisen Banking Group Upper Austria 2020” project. In- from the very positive results from 2015. Another important tensive work is also taking place in parallel on the “Digital primary factor here has been the close cooperation between regional bank” project. This is based on an “aggregated busi- the Upper Austrian Raiffeisen banks, which offer their exper- ness model” whereby the fixed and digital channels no longer tise and services throughout Austria, and Raiffeisenlandes- co-exist separately, but are in fact intertwined. The physical bank Oberösterreich, which, as a coordinating entity, offers proximity of the branch is retained, based on the relevant need. creative financial services in Upper Austria as well as the rest The support and service approaches will change, however, in of the country. With its special network of expertise, the Raif- accordance with customer behaviour, and digital channels will feisen Banking Group Upper Austria has achieved a balance increasingly be selected for these that are independent of lo- between maintaining its local roots and providing global sup- cation and time. The Raiffeisen Banking Group Upper Austria port for customers. benefits from increases in productivity and efficiency here based on process harmonisation and simplification. Modern associate activities Continuing to win over customer confidence A regional approach, connectivity with the local area, subsid- in the future iarity and solidarity as well as the special focus on the customer are the most important principles that have made the As clear market leaders in Upper Austria, the Raiffeisenlandes- Raiffeisen Banking Group Upper Austria so successful. Its bank Oberösterreich and the Upper Austrian Raiffeisen banks enormous creative energy for customers and for Austria as have a lot of responsibility for the finances of companies, a business location also lies primarily in its strong, modern private customers and institutions in the state. The compre- associate work, which focuses on co-operative action. Taking hensive projects of the future are aimed at ensuring that the decisions together, and then also consistently implementing Raiffeisen Banking Group Upper Austria will continue to be these, is a strength throughout the entire Raiffeisen Banking able to live up to these expectations. Group Upper Austria. This is the only way to remain capable of meeting the constantly changing challenges of the global On average throughout the year, 3,584 people were employed economy, now and in future. by the Raiffeisen Banking Group Upper Austria.

Transformation through digitisation Balance sheet

It is not just the banking industry as a whole that is faced The consolidated total assets of the Raiffeisen Banking Group with ever broader legal and regulatory rules on a continuous Upper Austria were EUR 42.0 billion as at 31 December 2015. basis. Customer behaviour is also going through a massive This equated to a year-on-year decrease of EUR 0.3 billion or 210 Annual Report 2015

0.8 per cent. Of the total assets, assets worth EUR 27.8 billion EUR 2,555.5 million as at 31 December 2015. The banking (66.1 per cent) were accounted for by loans and advances to group was able, therefore, to report a capital surplus as at the customers. There was a slight increase over the previous year balance sheet date amounting to EUR 788.3 million. of 0.4 per cent. Income statement The proprietary possession of securities amounting in total to EUR 5.8 billion is held primarily in order to ensure liquidity and The 2015 income statement of the Raiffeisen Banking Group as security for central bank refinancing initiatives. Overall, at Upper Austria was very pleasing, given the general economic the end of the year, 13.8 per cent of total assets were invested conditions. Consolidated operating income amounted to EUR in securities. 1,069.2 million and total operating expenses to EUR 647.6 million. Operating profit of EUR 421.6 million was reported for The largest item on the liabilities side was the amounts owed 2015. to customers at EUR 24.9 billion or 59.2 per cent of the total assets. This equated to a year-on-year increase in this item of In 2015, Raiffeisen Banking Group Upper Austria achieved an EUR 0.8 billion or 3.1 per cent. Liabilities evidenced by certifi- operating profit of 1.00 per cent of the average total assets cates and subordinated liabilities amounted to EUR 6.7 billion and thereby a very good result that was above the average or 15.9 per cent of the total assets. These items contribute for Austrian banks. significantly towards long-term liquidity protection. Based on a rigorously implemented risk policy and a tightly At the end of 2015, the total equity eligible for inclusion under operated risk management system, the Raiffeisen Banking IPS (Institutional Protection Scheme) for Upper Austria accord- Group Upper Austria has kept risk under control and been ing to the CRR (Capital Requirements Regulations) amounted able to generate a profit from ordinary activities (POA) of EUR to EUR 3,343.8 million. The statutory capital requirement was 274.7 million or 0.65 per cent of the average total assets. Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 211

Consolidated balance sheet

Consolidated balance sheet as at 31 December 2015

ASSETS

IN EUR M 31 DEC. 2015 31 DEC. 2014

Cash in hand and balances at central banks 217.2 220.7 Public-sector debt instruments and bills of exchange eligible for refinancing at the central bank. 1,098.0 1,080.1 Loans and advances to banks 5,949.1 6,159.0 Loans and advances to customers 27,8 02.6 27,684.6 Bonds and other fixed-income securities 1,638.5 1,857.7 Shares and other variable-yield securities 3,051.1 2,998.3 Investments 151.6 184.8 Investments in affiliated companies 1,570.4 1,622.2 Intangible assets 13.7 7.1 Property and equipment 276.0 282.5 Other assets 256.2 243.0 Prepaid expenses 23.4 28.8

Total assets 42,047.8 42,368.8

EQUITY AND LIABILITIES

IN EUR M 31 DEC. 2015 31 DEC. 2014

Amounts owed to banks 6,661.4 7,282.3 Amounts owed to customers 24,879.6 24,124.9 a) of which savings deposits 10,096.3 10,410.2 b) of which term deposits 5,706.4 5,416.9 Liabilities evidenced by certificates 5,737.3 6,169.9 Other liabilities 209.9 251.5 Deferred income 20.6 23.1 Provisions 349.2 303.0 Tier 2 capital according to Part 2 Chapter 4 of EU Regulation No. 575/2013 944.6 1,123.8 Instruments without voting rights according to section 26a of the Austrian Banking Act 0.0 13.7 Subscribed capital 12.7 11.9 Retained earnings 2,582.8 2,419.2 Liability reserve pursuant to section 57 (5) of the Austrian Banking Act 532.2 530.9 Net income for the year 81.1 75.7 Untaxed reserves 36.4 38.9

Total equity and liabilities 42,047.8 42,368.8 212 Annual Report 2015

Consolidated income statement 2015

IN EUR M 2015 2014

NET INTEREST INCOME 556.3 554.6 Income from securities and equity investments 181.7 173.3 Fee and commission income 280.9 278.6 Fee and commission expenses –43.3 –42.7 Income from/expenses in financial operations 8.1 11.1 Other operating income 85.5 85.6 OPERATING INCOME 1,069.2 1,060.5 Personnel expenses –352.6 –325.9 Other administrative expenses –203.6 –205.3 Valuation allowances for assets in asset items 9 and 10 –19.6 –17.0 Other operating expenses –71.8 –69.2 OPERATING EXPENSES – 647.6 – 617.4 OPERATING PROFIT 421.6 443.1 Reversals/additions of value adjustments to liabilities –156.2 –163.8 Reversals/additions of value adjustments to securities and equity investments 9.3 – 50.1 PROFIT FROM ORDINARY ACTIVITIES 274.7 229.2

PROFIT FOR THE YEAR (prior to movements in reserves) 215.0 165.5 Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information 213

Consolidated Income Statement _ Glossary

Glossary

A CRD: The Capital Requirements Directive is the Futures: Futures are standardised, future trans- Options: The buyer of an option acquires the portion of the →Basel III regulations that must be actions which are traded on the stock market and right to purchase (call option) or sell (put option) Additional Tier 1 capital ( (AT1): Additional implemented into national law in each country. The have an obligation to be fulfilled. A particular price the underlying option object from a contract part- Tier 1 (AT1) describes supplementary Tier 1 capital Directive lays down rules for the internal corporate and point in time is agreed in advance at which the ner at a certain price and at a certain time agreed under →CRR. assessment of capital adequacy and mechanisms object that is traded (from the money, capital, pre- in advance, or during a particular period, i.e. it is a for supervisory cooperation. Like the →CRR, it is cious metals or foreign exchange market) must be conditional future. AfS: “Available for Sale” assets refers to a part of the “Single Rulebook” for European banking delivered or accepted. category of financial assets in accordance with IAS supervisory law. H OTC: Over The Counter describes transactions 39. This includes all non-derivative financial assets between financial market participants that are not that have been explicitly allocated to this catego- CRR: The Capital Requirements Regulation refers HtM: “Held to Maturity” refers to a category of finan- settled on the stock exchange. ry or have not been allocated to any of the other to a regulation of the EU that deals with the cen- cial assets according to IAS 39. It includes non-de- categories. tral capital and liquidity requirements according to rivative financial assets with fixed or determinable P →Basel III. It contains the quantitative requirements payments and with a fixed term that are quoted on AfS reserves: Financial assets in the “Available for the capital adequacy of banks and disclosure re- an active market and are being held, and are eligible PD: Probability of Default describes the likelihood for sale” (→AfS) category are principally assessed quirements. Like the →CRD, it is part of the “Single to be held, to maturity. that a receivable will go into default. at → fair value and have no effect on the income Rulebook” for European banking supervisory law. statement. Changes in fair value which are not due I R to → impairment are reflected directly in equity un- CVA: The Credit Value Adjustment is the difference der the AfS reserves. between the risk-free portfolio value and the true IASB: The International Accounting Standards Rating (external): Assessment of creditwor- portfolio value that takes into account the possibility Board is a private sector organisation that passes thiness of issuers and debt issues by international Associates: Companies on whose business of a counterparty’s default. international financial reporting standards →( IFRS). rating agencies (e.g. Moody’s, Standard & Poor’s). and financial policies significant influence can be The aim is to create high-quality, enforceable and exercised. D globally applicable accounting standards. Rating (internal): Assessment of creditworthiness of borrowers by banks. Austrian Banking Act: The Austrian Banking DBO: Defined Benefit Obligation is the obliga- IFRIC: Interpretations are passed by the Interna- Act (Bankwesengesetz, BWG) is the legal basis for tion to forecast future payments as part of perfor- tional Financial Reporting Interpretations Committee Risk-weighted assets (RWA): Risk-weight- the organisation and supervision of Austrian bank- mance-oriented planning. The cash value of the on important issues of →IFRS accounting. ed assets (RWA) refer to the total risk value ac- ing and, as a result, a special set of trading regula- obligations determines the total amount of social cording to CRR, including components from Article tions for the operation of banking businesses. provisions, taking into account any further fac- IFRS: International Financial Reporting Standards 92 (3) CRR. The most important components are tors (e.g. plan assets). (IFRS) is the general term for international account- risk-weighted exposure amounts for credit, coun- Austrian Commercial Code (UGB): On ing standards (IFRS, formerly IAS) and their interpre- terparty default and dilution risks; total exposure 1 January 2007, the Handelsgesetzbuch (HGB) DCF: Discounted Cash Flow describes a method tations (→ IFRIC, formerly SIC). amounts for risks related to items, foreign curren- was renamed Unternehmensgesetzbuch (UGB); for determining value that is based on the arithmeti- cies, wind-ups and commodities; risk positions for both are now generally known in English as the Aus- cal concept of discounting cash flows in order to Impairment: Impairment refers to the decrease operational risks, and risk positions for adjustment trian Commercial Code. The Austrian Commercial determine the capital value. in value of financial assets with effect on the income of credit scores. Code regulates the legal relationships of entrepre- statement and of (long term) intangible assets, neurs, contains stipulations about company struc- Derivatives: Derivatives are financial instruments property and equipment, and investment property, S tures and accounting standards. whose value changes as a result of changes to as long as the latter are valued at amortised cost. the underlying basic instrument (e.g. interest rate, Securities trading book: In accordance with B securities price, exchange rate and similar items). Interest-rate risk: The risk that the →fair val- the Austrian Banking Act, the securities trading They require no or minimal initial net investment, and ue or future cash flow of a financial instrument will book includes items that are held by a bank for Bank book: All items not allocated to the →secu- are settled at a later date (→forward transactions). fluctuatedue to changes in the market interest rate. the purpose of short-term resale, in order to exploit rities trading book. →swaps, →options and →futures are among the price and interest-rate fluctuations. best-known derivatives. Interest margin: The interest margin is calculat- Basel III: Basel III refers to the changes or sup- ed from the net interest income (→IFRS, →Austrian SREP: Supervisory Review and Evaluation Pro- plements to the framework created in 2004 for Dirty Price: The dirty price is the price of an inter- Commercial Code) for the financial year in relation to cess – this is the supervisory process for review and capital adequacy requirements for banks (Basel II) est-rate instrument including accumulated interest the average assets. monitoring by the →EBA. by the Basel Committee on Banking Supervision. claims (accrued interest). The reforms regulate both the capital base and li- IPS: An Institutional Protection Scheme is a liability Subsidiaries: Companies on whose business quidity And are in effect in the European Union as DVA: Debt Value Adjustment considers the effect or indemnity agreement – created by means of a and financial policies a controlling influence can be of 1 January 2014. of the bank’s own creditworthiness when perform- contractual agreement or through articles of asso- exercised. ing the fair value measurement of →derivatives and ciation, statutes or charters – that provides protec- C shows the difference between the risk-free value tion for member banks in a decentralised banking Swaps: Swaps are →derivatives in which future and the value when taking the own creditworthiness group. A distinction can be drawn between an insti- payment flows are exchanged. The most important Cash flow statement: Calculation and pre- risk into consideration. tutional protection system at the state level (L-IPS) examples are the exchange of interest obligations sentation of cash flows achieved and utilised from and federal level (B-IPS). (interest swap) and/or foreign currency items (for- operational transactions, investment and financing E eign currency swap). activities as well as reconciliation of cash and cash L equivalents at the beginning and end of the finan- EBA: The task of the European Banking Authority T cial year. is to develop effective and consistent regulations for LGD: Loss Given Default describes the ratio of the the supervision of the European banking sector. The loss on an exposure due to default. Tier 1 capital (T1): Tier 1 capital according CDS: A Credit Default Swap (CDS) is a credit deriv- overall objectives are to safeguard financial stability to CRR →describes core capital and includes → ative where the buyer pays a premium to the seller in the EU, protect integrity and ensure the proper Liquidity risk: The risk that a company has Common Equity Tier 1 capital (CET1) as well as → of the CDS and the seller agrees to compensate the functioning of the banking sector. difficulty in fulfilling its obligations resulting from its Additional Tier 1 capital (AT1). buyer in the event of certain credit events (e.g. loan financial liabilities. default) in respect to one or more particular assets. EFRAG: The European Financial Reporting Advi- Tier 1 capital ratio: The Tier 1 capital ratio re- sory Group was founded in 2001 with the objec- N sults from the →Tier 1 capital expressed as a per- Common Equity Tier 1 capital (CET 1): tive of providing professional expertise related to centage of →the total risk-weighted assets. Common Equity Tier 1 capital (CET1), according application of the IFRS in Europe to the European NPL: Non-performing loans are loans where it is to →CRR, includes certain capital instruments as Commission, participating in the process for setting assumed that the customer will not be able to pay Tier 2 capital: Under →CRR, supplementary well as associated premiums, retained earnings, standards on the →IASB and coordinating the de- the debt back to the bank in full. Various indicators capital is referred to as Tier 2 capital. accumulated other comprehensive income, other velopment of perspectives in relation to international are used to determine the exposure, such as that reserves, funds for general bank risks, and adjust- accounting standards in the EU. the customer has filed for bankruptcy or has not Total capital (TC): Total capital as defined by ments and corrections. made a payment in at least 90 days. →CRR includes →Tier 1 capital (T1) as well as Exchange rate risk: The risk that the →fair val- →Tier 2 capital (T2) after adjustments and correc- Common Equity Tier 1 capital ratio ue or future cash flow of a financial instrument will O tions. (CET-1-ratio): The Common Equity Tier 1 fluctuate due to exchange rate changes. Capital ratio is →Common Equity Tier 1 capital ex- OCI: Other Comprehensive Income takes into ac- Total capital ratio (TC ratio): The total capital pressed as a percentage of the →total risk-weight- F count all changes in value for assets and liabilities ratio is →total capital expressed as a percentage of ed assets. that are not covered via the income statement. the →total risk-weighted assets. Fair Value: The fair value is the amount at which Companies accounted for using the an asset was exchanged or a debt paid between Operating profit:Operating profit is the dif- V equity method: The equity method is used for competent, contractually willing and mutually inde- ference between operating income and operating balancing the accounts of → associates in consol- pendent business partners, at market conditions. expenses. At group level, it is calculated by deduct- VaR: Value at Risk is the potential future loss idated financial statements. Essentially, the propor- ing general administrative expenses from the sum which, with a certain probability (e.g. 99 per cent), tionate equity of companies accounted for under Forwards: Forwards are individually developed of net interest income, net fee and commission will not be exceeded within a certain time period. the equity method is shown in the consolidated futures which are not traded on the stock exchange income, net trading income, and other operating balance sheet and the proportionate profit in the and with an obligation to be fulfilled. income. W consolidated income statement. Fully consolidated companies: Fully con- Operational risk: Operational risk is the risk WACC: Der WACC (Weighted Average Cost of Credit risk: The risk that one party to a financial solidated companies include the parent company of losses caused by the inadequacies or failure of Capital) is an average total capital cost rate that instrument will cause a financial loss to another par- and important → subsidiaries that are presented in internal procedures, people, systems or external arises as a weighted average of the equity and bor- ty by not fulfilling an obligation. the consolidated financial statements as if they were events. rowed capital cost rate. one single company. Legal notice

Owner, editor and publisher: Raiffeisenlandesbank Oberösterreich Aktiengesellschaft Europaplatz 1a, 4020 Linz Tel. +43 (0) 732/6596-0 FN 247579 m, District Court, Linz DVR: 2110419 www.rlbooe.at/impressum

Responsible for content: Harald Wetzelsberger Michael Huber Otto Steininger Florian Brunner Christina Pramhas-Dietscher Carola Berer with contributions from virtually every department at Raiffeisenlandesbank Oberösterreich

Layout: Raiffeisenlandesbank Oberösterreich, Service Management Photos: Thomas Smetana, Linz; Foto Strobl, Linz, istockphoto Print: Trauner Verlag + Buchservice GmbH, 4020 Linz

©: 2016 Raiffeisenlandesbank Oberösterreich Aktiengesellschaft This annual financial report of Raiffeisenlandesbank Oberösterreich 2015 is an English translation.

If there are discrepancies, the German original shall apply. No liability is assumed for typographical or printing errors.

This document is a marketing communication that was prepared by the Raiffeisenlandesbank Oberösterreich AG exclusively for informational purposes. It was not prepared in compliance with legal regulations regarding the independence of investment research, nor is it subject to any prohibition on trade connected with the dissemination of investment research. This marketing communication represents neither investment advice, nor an offer or invitation to make an offer for the purchase or sale of financial instruments or investments. The information, analyses and forecasts contained herein are based on the knowledge and market assessment at the time of its preparation – subject to amendments and additions. Raiffeisen- landesbank Oberösterreich AG assumes no liability for the accuracy, timeliness or completeness of the contents, or for the accuracy of forecasts. The contents are non-binding and do not represent a recommendation to buy or sell. Because every investment decision requires an individual determination based on the investor’s personal characteristics (such as risk tolerance), this information is no substitute for the personalised advice and risk disclosure provided by a customer advisor in the course of a consultation. We expressly note that financial instruments and investments have major inherent risks. Performance is determined in accordance with the OeKB method, based on data from the custodian bank. We explicitly note that the composition of fund assets can change in accordance with legal regulations. Information about performance is related to the past and therefore does not represent a reliable indicator of future performance. Currency fluctuations in non-euro currencies can affect performance positively and negatively. Investments may result in tax obligations that depend on the customer’s personal circumstances and can be subject to changes in future. This information can therefore not replace the personalised support provided to an investor by a tax advisor. The limited tax obligations imposed by Austria on non-resident taxpayers does not imply freedom from taxation in the investor’s country of residence. Prospectuses and any endorsements of the issue of shares in Raiffeisenlandesbank Oberösterreich AG, which must be published in accordance with the KMG, are the responsibility of Raiffeisenlandesbank Oberösterreich AG. In the event of other share issues, the prospectus and any endorsements lie with the respective issuer of shares. Investment strategies for investment funds can focus primarily on investment funds, bank deposits and derivatives, or the emulation of an index. Funds may exhibit significant fluctuations in value (volatility). In the funds regulations approved by the Financial Supervisory Authority (FMA), issuers can be identified if they can be weighted as holding more than 35 per cent of fund assets. The current sales prospectus, as well as the Key Investor Information – Customer Information Document (KID) are available in German and English at the relevant capital investment company (KAG), payment authority, or tax representative in Austria. More information on risk and liability exclusion is available at www.boerse-live.at/Disclaimer; disclosure in accordance with section 48 of the Stock Exchange Act [Börsegesetz] at www.boerse-live.at/Offenlegung The foundation for a successful

Annual Report 2015 Report Annual future.

Europaplatz 1a, 4020 Linz Tel. +43 (0) 732/6596-0 Fax +43 (0) 732/6596-22739 Annual Report 2015 E-Mail: [email protected]

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