Foresight Business Report 2014

FORESIGHT BUSINESS REPORT 2014

ADDRESSES BUSINESS REPORT 2014 KEY INDICATORS 2014 Bank für Tirol und Vorarlberg AG FORESIGHT BUSINESS REPORT 2014

ADDRESSES BUSINESS REPORT 2014 KEY INDICATORS 2014 Bank für Tirol und Vorarlberg AG The BTV Group at a glance Shareholder structure Nuremberg

Stuttgart Bavaria INCOME 2014 2013* Change in % BTV SHAREHOLDER STRUCTURE BY SIZE OF HOLDING BTV BTV headquarters Baden- in € million VIER Munich Württemberg Memmingen Net interest income 182.3 180.2 +1.1 % LÄNDER Ravensburg Vienna Loan-loss provisions in the credit business –29.0 –46.9 –38.1 % BANK Innsbruck Head Office Business area Service centre Credit management Human resources Garmisch- Stadtforum 1 Corporate clients T +43/(0)5 05 333-2101 T +43/(0)5 05 333-1361 T +43/(0)5 05 333-1464 Net commission income 43.7 45.3 –3.4 % 37.53% CABO Beteiligungs 13.59% BKS Bank AG, Klagenfurt *) Partenkirchen Winterthur Staad 6020 Innsbruck T +43/(0)5 05 333-1301 [email protected] F +43/(0)5 05 333-1377 F +43/(0)5 05 333-1465 Kitzbühel GmbH, Vienna T +43/(0)5 05 333-0 F +43/(0)5 05 333-1302 [email protected] [email protected] Operating expenses –139.6 –96.0 +45.4 % Dornbirn Innsbruck F +43/(0)5 05 333-1180 [email protected] Finance & controlling Other operating income/expenditure 30.0 –2.3 >–100 % Switzerland VBG Tyrol [email protected] T +43/(0)5 05 333-1430 Marketing and Legal and corporate Annual net profit before tax 89.8 86.3 +4.0 % 13.22% Oberbank AG, Linz *) www.btv.at Business area F +43/(0)5 05 333-1434 Communications investments Institutional clients [email protected] T +43/(0)5 05 333-1403 T +43/(0)5 05 333-1501 Group net profit for the year 76.1 68.5 +11.0 % Lienz Business area and banks F +43/(0)5 05 333-1408 F +43/(0)5 05 333-1508 13.60% Generali 3 Banken Holding AG, Vienna *) Retail clients T +43/(0)5 05 333-1204 Corporate audit [email protected] [email protected] T +43/(0)5 05 333-1111 F +43/(0)5 05 333-1206 T +43/(0)5 05 333-1534 BALANCE SHEET 31.12.2014 31.12.2013* Change in % 19.42 % Widely spread shareholdings F +43/(0)5 05 333-1181 [email protected] F +43/(0)5 05 333-1540 in € million Alto Adige [email protected] [email protected] Total assets 9,598 9,592 +0.1 % 0.36 % BTV Private Foundation 2.28% Wüstenrot Wohnungswirtschaft *) Trentino Loans and advances to clients after loan loss provisions 6,187 6,197 –0.2 % reg. Gen.mbH, Salzburg Addresses Primary funds 6,919 6,702 +3.2 % *) Shareholders who form part of the syndicate agreement. Vorarlberg Tiroler Oberland Tiroler Unterland Innsbruck Stadt Innsbruck Land/ Vienna Germany Switzerland BTV Leasing – of which savings deposits 1,176 1,176 +0.0 % and Außerfern East Tyrol – of which securitised debt including subordinated capital 1,392 1,282 +8.5 % Equity 1,004 933 +7.7 % Bludenz Ehrwald Kirchbichl Innsbruck-DEZ Seefeld Albertinaplatz Bavaria Staad BTV Stadtforum BTV Leasing Managed deposits 12,156 11,532 +5.4 % Werdenbergerstraße 14 Kirchplatz 21 a Corporate clients Amraser-See-Straße 56 a Klosterstraße 397 Corporate clients Hauptstrasse 19 6020 Innsbruck Deutschland GmbH BTV SHAREHOLDER STRUCTURE BY VOTING RIGHTS 6700 Bludenz 6632 Ehrwald E3 Wirtschaftspark 6020 Innsbruck 6100 Seefeld Tegetthoffstraße 7 Garmisch-Partenkirchen 9422 Staad T +43/(0)5 05 333-2028 Geschäftsstelle München T +43/(0)5 05 333-0 T +43/(0)5 05 333-0 Kirchbichl T +43/(0)5 05 333-0 T +43/(0)5 05 333-0 1010 Wien Mohrenplatz 6 T +41/71/85 810-10 F +43/(0)5 05 333-8869 Neuhauser Straße 5 EQUITY UNDER CRR (BWG PREVIOUS YEAR) 31.12.2014 31.12.2013 Change in % F +43/(0)5 05 333-6630 F +43/(0)5 05 333-4785 Europastraße 8 F +43/(0)5 05 333-3923 F +43/(0)5 05 333-4253 T +43/(0)5 05 333-8723 82467 Garmisch- F +41/71/85 810-11 [email protected] 80331 München in € million [email protected] [email protected] 6322 Kirchbichl [email protected] [email protected] F +43/(0)5 05 333-8761 Partenkirchen (Retail clients) www.btv-leasing.com T +49/89/255 44 730-7542 T +43/(0)5 05 333-0 [email protected] T +49/8821/75 26 85-0 F +41/71/85 810-12 F +49/89/255 44 730-7541 Risk-adjusted assets 6,213 6,055 +2.6 % Bregenz Imst F +43/(0)5 05 333-5425 Innsbruck-Hötting* Völs F +49/8821/75 26 85-7344 (Corporate clients) Bregenz [email protected] 41.70 % CABO Beteiligungsgesellschaft 15.10 % BKS Bank AG, Klagenfurt *) Kaiserstraße 33 Dr.-Pfeiffenberger-Str. 18 [email protected] Schneeburggasse 7 Bahnhofstraße 38 a Albertinaplatz Key indicators for btv shares [email protected] Kaiserstraße 33 Equity 930 964 –3.5 % 6020 Innsbruck 6176 Völs GmbH, Vienna 6900 Bregenz 6460 Imst Retail clients 6900 Bregenz Augsburg – of which common equity (CET1) 796 n. a. n. a. T +43/(0)5 05 333-0 T +43/(0)5 05 333-0 Kitzbühel T +43/(0)5 05 333-0 Tegetthoffstraße 7 Memmingen T +43/(0)5 05 333-6006 Nagahama-Allee 75 F +43/(0)5 05 333-6025 F +43/(0)5 05 333-5125 Vorderstadt No. 9 Innsbruck-Mitterweg F +43/(0)5 05 333-3508 1010 Wien Flach Villa F +43/(0)5 05 333-8869 86153 Augsburg – of which total core capital (CET1 and AT1) 796 807 –1.4 % [email protected] [email protected] 6370 Kitzbühel Mitterweg 9 [email protected] T +43/(0)5 05 333-8744 Buxacher Straße 1 [email protected] T +49/821/59 980-7170 14.69 % Oberbank AG, Linz *) Common equity Tier 1 ratio 12.81 % n. a. n. a. T +43/(0)5 05 333-0 6020 Innsbruck F +43/(0)5 05 333-8763 87700 Memmingen F +49/821/59 980-7166 Bregenz Vorkloster Landeck F +43/(0)5 05 333-5673 T +43/(0)5 05 333-0 Lienz [email protected] T +49/8331/92 77-8 Albertinaplatz Vienna [email protected] Core capital ratio 12.81 % 13.33 % –0.52 %-pp Mariahilfstraße 45 a Malser Straße 34 [email protected] F +43/(0)5 05 333-4025 Südtiroler Platz 2 F +49/8331/92 77-7044 Tegetthoffstraße 7 Equity ratio 14.97 % 15.93 % –0.96 %-pp 6900 Bregenz 6500 Landeck [email protected] 9900 Lienz [email protected] 1010 Wien Nuremberg ~ 15.12% Generali 3 Banken Holding AG, Vienna *) T +43/(0)5 05 333-0 T +43/(0)5 05 333-0 Kufstein T +43/(0)5 05 333-0 T +43/(0)5 05 333-8818 (from 5 January 2015) F +43/(0)5 05 333-6117 F +43/(0)5 05 333-5035 Oberer Stadtplatz 4 Innsbruck- F +43/(0)5 05 333-4832 Munich F +43/(0)5 05 333-8869 Gleißbühlstraße 2 [email protected] [email protected] 6330 Kufstein Olympisches Dorf [email protected] Neuhauser Straße 5 [email protected] 90402 Nuremberg COMPANY KEY FIGURES 31.12.2014 31.12.2013* Change in 10.46 % Widely spread shareholdings 2.53 % Wüstenrot Wohnungswirtschaft T +43/(0)5 05 333-0 Schützenstraße 49 80331 München T +49/911/23 42 08-7650 Dornbirn Reutte F +43/(0)5 05 333-5325 6020 Innsbruck T +49/89/255 44 730-8 in percentage points percentage *) BTV Leasing Schweiz AG F +49/911/23 42 08-7644 reg. Gen.mbH, Salzburg Klostergasse 8 Untermarkt 23 [email protected] T +43/(0)5 05 333-0 F +49/89/255 44 730-7568 0.40 % BTV Private Foundation Staad [email protected] points 6850 Dornbirn 6600 Reutte F +43/(0)5 05 333-3750 [email protected] Hauptstrasse 19 T +43/(0)5 05 333-0 T +43/(0)5 05 333-0 Mayrhofen [email protected] 9422 Staad Ravensburg /Weingarten Return on equity before tax (RoE) 9.27 % 9.50 % –0.23 pp *) Shareholders who form part of the syndicate agreement. F +43/(0)5 05 333-6360 F +43/(0)5 05 333-4675 Hauptstraße 440 Augsburg T +41/71/85 810-74 Franz-Beer-Straße 111 Return on Equity after tax 7.86 % 7.54 % +0.32 pp [email protected] [email protected] 6290 Mayrhofen Innsbruck-Sonnpark Nagahama-Allee 75 F +41/71/85 810-12 88250 Weingarten T +43/(0)5 05 333-0 Amraser Straße 54 86153 Augsburg [email protected] T +49/751/56 116-7231 Cost/income ratio 54.4 % 42.8 % +11.6 pp Feldkirch Sölden F +43/(0)5 05 333-4915 6020 Innsbruck T +49/821/59 980-8 F +49/751/56 116-7244 Risk/earnings ratio 15.9 % 26.0 % –10.1 pp Bahnhofstraße 8 Dorfstraße 31 [email protected] T +43/(0)5 05 333-0 F +49/821/59 980-7144 Winterthur [email protected] 6800 Feldkirch 6450 Sölden F +43/(0)5 05 333-3654 [email protected] Zürcherstrasse 46 T +43/(0)5 05 333-0 T +43/(0)5 05 333-0 Schwaz [email protected] 8400 Winterthur Stuttgart F +43/(0)5 05 333-5225 RESOURCES 31.12.2014 31.12.2013 Change F +43/(0)5 05 333-6513 Innsbrucker Straße 5 Nuremberg T +41/52/20 40 450 Industriestraße 4 [email protected] [email protected] 6130 Schwaz Innsbruck-Stadtforum (from 5 January 2015) F +41/71/85 810-12 70565 Stuttgart (Vaihingen) Number figure IMPORTANT DATES FOR BTV SHAREHOLDERS T +43/(0)5 05 333-0 Stadtforum 1 Gleißbühlstraße 2 [email protected] T +49/711/78 78 03-7450 Götzis Telfs F +43/(0)5 05 333-4345 6020 Innsbruck 90402 Nuremberg F +49/711/78 78 03-7468 Weighted average number of employees 1,195 793 +402 Annual General Meeting 13 May 2014, 10.00 am, Stadtforum 1, Innsbruck Im Buch 6 Anton-Auer-Straße 2 [email protected] T +43/(0)5 05 333-0 T +49/911/23 42 08-0 [email protected] Number of branches 38 37 +1 The dividend will be published on the BTV homepage and in the gazette of 6840 Götzis 6410 Telfs F +43/(0)5 05 333-1662 F +49/911/23 42 08-7644 T +43/(0)5 05 333-0 T +43/(0)5 05 333-0 St. Johann in Tirol [email protected] [email protected] the Wiener Zeitung the day after the Annual General Meeting. F +43/(0)5 05 333-6725 F +43/(0)5 05 333-4445 Dechant-Wieshofer-Str. 7 [email protected] [email protected] 6380 St. Johann in Tirol Innsbruck-Wilten Baden-Württemberg KEY INDICATORS FOR BTV SHARES 31.12.2014 31.12.2013* Ex-dividend date 22.05.2015 T +43/(0)5 05 333-0 Leopoldstraße 31 a Payment of dividend 26.05.2015 Wolfurt F +43/(0)5 05 333-5525 6020 Innsbruck Ravensburg /Weingarten Unterlinden 23 [email protected] Franz-Beer-Straße 111 Number of ordinary no par value shares 22,500,000 22,500,000 Interim report as at 31 March 2015 Published on 22 May 2015 (www.btv.at) 6922 Wolfurt Hall in Tirol 88250 Weingarten T +43/(0)5 05 333-0 Wörgl Stadtgraben 19 T +49/751/56 116-0 Number of preference shares 2,500,000 2,500,000 Interim Financial Report up to 30 June 2015 Published on 21 August 2015 (www.btv.at) F +43/(0)5 05 333-6225 Bahnhofstraße 18 6060 Hall in Tirol F +49/751/56 116-7244 Top price of ordinary/preference share in € 21.90/18.00 19.50/16.60 Interim report as at 30 September 2015 Published on 27 November 2015 (www.btv.at) [email protected] 6300 Wörgl T +43/(0)5 05 333-0 [email protected] T +43/(0)5 05 333-0 F +43/(0)5 05 333-3250 Bottom price of ordinary/preference share in € 19.50/16.50 17.30/15.45 F +43/(0)5 05 333-5435 [email protected] Stuttgart [email protected] Industriestraße 4 Closing price of ordinary/preference share in € 21.35/18.00 19.50/16.50 70565 Stuttgart (Vaihingen) Market capitalisation in € million 525 480 T +49/711/787 803-8 * Only BTV service area F +49/711/787 803-7468 IFRS EPS in € 3.04 2.74 [email protected] P/E ratio, ordinary share 7.0 7.1 P/E ratio, preference share 5.9 6.0 * In 2013 adjusted to the changed consolidation scope. Explanation: n.s. = not shown The BTV Group at a glance Shareholder structure Nuremberg

Stuttgart Bavaria INCOME 2014 2013* Change in % BTV SHAREHOLDER STRUCTURE BY SIZE OF HOLDING BTV BTV headquarters Baden- in € million VIER Munich Württemberg Memmingen Net interest income 182.3 180.2 +1.1 % LÄNDER Ravensburg Vienna Loan-loss provisions in the credit business –29.0 –46.9 –38.1 % BANK Innsbruck Head Office Business area Service centre Credit management Human resources Garmisch- Stadtforum 1 Corporate clients T +43/(0)5 05 333-2101 T +43/(0)5 05 333-1361 T +43/(0)5 05 333-1464 Net commission income 43.7 45.3 –3.4 % 37.53% CABO Beteiligungs 13.59% BKS Bank AG, Klagenfurt *) Partenkirchen Winterthur Staad 6020 Innsbruck T +43/(0)5 05 333-1301 [email protected] F +43/(0)5 05 333-1377 F +43/(0)5 05 333-1465 Kitzbühel GmbH, Vienna T +43/(0)5 05 333-0 F +43/(0)5 05 333-1302 [email protected] [email protected] Operating expenses –139.6 –96.0 +45.4 % Dornbirn Innsbruck F +43/(0)5 05 333-1180 [email protected] Finance & controlling Other operating income/expenditure 30.0 –2.3 >–100 % Switzerland VBG Tyrol [email protected] T +43/(0)5 05 333-1430 Marketing and Legal and corporate Annual net profit before tax 89.8 86.3 +4.0 % 13.22% Oberbank AG, Linz *) www.btv.at Business area F +43/(0)5 05 333-1434 Communications investments Institutional clients [email protected] T +43/(0)5 05 333-1403 T +43/(0)5 05 333-1501 Group net profit for the year 76.1 68.5 +11.0 % Lienz Business area and banks F +43/(0)5 05 333-1408 F +43/(0)5 05 333-1508 13.60% Generali 3 Banken Holding AG, Vienna *) Retail clients T +43/(0)5 05 333-1204 Corporate audit [email protected] [email protected] T +43/(0)5 05 333-1111 F +43/(0)5 05 333-1206 T +43/(0)5 05 333-1534 BALANCE SHEET 31.12.2014 31.12.2013* Change in % 19.42 % Widely spread shareholdings F +43/(0)5 05 333-1181 [email protected] F +43/(0)5 05 333-1540 in € million Alto Adige [email protected] [email protected] Total assets 9,598 9,592 +0.1 % 0.36 % BTV Private Foundation 2.28% Wüstenrot Wohnungswirtschaft *) Trentino Loans and advances to clients after loan loss provisions 6,187 6,197 –0.2 % reg. Gen.mbH, Salzburg Addresses Primary funds 6,919 6,702 +3.2 % *) Shareholders who form part of the syndicate agreement. Vorarlberg Tiroler Oberland Tiroler Unterland Innsbruck Stadt Innsbruck Land/ Vienna Germany Switzerland BTV Leasing – of which savings deposits 1,176 1,176 +0.0 % and Außerfern East Tyrol – of which securitised debt including subordinated capital 1,392 1,282 +8.5 % Equity 1,004 933 +7.7 % Bludenz Ehrwald Kirchbichl Innsbruck-DEZ Seefeld Albertinaplatz Bavaria Staad BTV Stadtforum BTV Leasing Managed deposits 12,156 11,532 +5.4 % Werdenbergerstraße 14 Kirchplatz 21 a Corporate clients Amraser-See-Straße 56 a Klosterstraße 397 Corporate clients Hauptstrasse 19 6020 Innsbruck Deutschland GmbH BTV SHAREHOLDER STRUCTURE BY VOTING RIGHTS 6700 Bludenz 6632 Ehrwald E3 Wirtschaftspark 6020 Innsbruck 6100 Seefeld Tegetthoffstraße 7 Garmisch-Partenkirchen 9422 Staad T +43/(0)5 05 333-2028 Geschäftsstelle München T +43/(0)5 05 333-0 T +43/(0)5 05 333-0 Kirchbichl T +43/(0)5 05 333-0 T +43/(0)5 05 333-0 1010 Wien Mohrenplatz 6 T +41/71/85 810-10 F +43/(0)5 05 333-8869 Neuhauser Straße 5 EQUITY UNDER CRR (BWG PREVIOUS YEAR) 31.12.2014 31.12.2013 Change in % F +43/(0)5 05 333-6630 F +43/(0)5 05 333-4785 Europastraße 8 F +43/(0)5 05 333-3923 F +43/(0)5 05 333-4253 T +43/(0)5 05 333-8723 82467 Garmisch- F +41/71/85 810-11 [email protected] 80331 München in € million [email protected] [email protected] 6322 Kirchbichl [email protected] [email protected] F +43/(0)5 05 333-8761 Partenkirchen (Retail clients) www.btv-leasing.com T +49/89/255 44 730-7542 T +43/(0)5 05 333-0 [email protected] T +49/8821/75 26 85-0 F +41/71/85 810-12 F +49/89/255 44 730-7541 Risk-adjusted assets 6,213 6,055 +2.6 % Bregenz Imst F +43/(0)5 05 333-5425 Innsbruck-Hötting* Völs F +49/8821/75 26 85-7344 (Corporate clients) Bregenz [email protected] 41.70 % CABO Beteiligungsgesellschaft 15.10 % BKS Bank AG, Klagenfurt *) Kaiserstraße 33 Dr.-Pfeiffenberger-Str. 18 [email protected] Schneeburggasse 7 Bahnhofstraße 38 a Albertinaplatz Key indicators for btv shares [email protected] Kaiserstraße 33 Equity 930 964 –3.5 % 6020 Innsbruck 6176 Völs GmbH, Vienna 6900 Bregenz 6460 Imst Retail clients 6900 Bregenz Augsburg – of which common equity (CET1) 796 n. a. n. a. T +43/(0)5 05 333-0 T +43/(0)5 05 333-0 Kitzbühel T +43/(0)5 05 333-0 Tegetthoffstraße 7 Memmingen T +43/(0)5 05 333-6006 Nagahama-Allee 75 F +43/(0)5 05 333-6025 F +43/(0)5 05 333-5125 Vorderstadt No. 9 Innsbruck-Mitterweg F +43/(0)5 05 333-3508 1010 Wien Flach Villa F +43/(0)5 05 333-8869 86153 Augsburg – of which total core capital (CET1 and AT1) 796 807 –1.4 % [email protected] [email protected] 6370 Kitzbühel Mitterweg 9 [email protected] T +43/(0)5 05 333-8744 Buxacher Straße 1 [email protected] T +49/821/59 980-7170 14.69 % Oberbank AG, Linz *) Common equity Tier 1 ratio 12.81 % n. a. n. a. T +43/(0)5 05 333-0 6020 Innsbruck F +43/(0)5 05 333-8763 87700 Memmingen F +49/821/59 980-7166 Bregenz Vorkloster Landeck F +43/(0)5 05 333-5673 T +43/(0)5 05 333-0 Lienz [email protected] T +49/8331/92 77-8 Albertinaplatz Vienna [email protected] Core capital ratio 12.81 % 13.33 % –0.52 %-pp Mariahilfstraße 45 a Malser Straße 34 [email protected] F +43/(0)5 05 333-4025 Südtiroler Platz 2 F +49/8331/92 77-7044 Tegetthoffstraße 7 Equity ratio 14.97 % 15.93 % –0.96 %-pp 6900 Bregenz 6500 Landeck [email protected] 9900 Lienz [email protected] 1010 Wien Nuremberg ~ 15.12% Generali 3 Banken Holding AG, Vienna *) T +43/(0)5 05 333-0 T +43/(0)5 05 333-0 Kufstein T +43/(0)5 05 333-0 T +43/(0)5 05 333-8818 (from 5 January 2015) F +43/(0)5 05 333-6117 F +43/(0)5 05 333-5035 Oberer Stadtplatz 4 Innsbruck- F +43/(0)5 05 333-4832 Munich F +43/(0)5 05 333-8869 Gleißbühlstraße 2 [email protected] [email protected] 6330 Kufstein Olympisches Dorf [email protected] Neuhauser Straße 5 [email protected] 90402 Nuremberg COMPANY KEY FIGURES 31.12.2014 31.12.2013* Change in 10.46 % Widely spread shareholdings 2.53 % Wüstenrot Wohnungswirtschaft T +43/(0)5 05 333-0 Schützenstraße 49 80331 München T +49/911/23 42 08-7650 Dornbirn Reutte F +43/(0)5 05 333-5325 6020 Innsbruck T +49/89/255 44 730-8 in percentage points percentage *) BTV Leasing Schweiz AG F +49/911/23 42 08-7644 reg. Gen.mbH, Salzburg Klostergasse 8 Untermarkt 23 [email protected] T +43/(0)5 05 333-0 F +49/89/255 44 730-7568 0.40 % BTV Private Foundation Staad [email protected] points 6850 Dornbirn 6600 Reutte F +43/(0)5 05 333-3750 [email protected] Hauptstrasse 19 T +43/(0)5 05 333-0 T +43/(0)5 05 333-0 Mayrhofen [email protected] 9422 Staad Ravensburg /Weingarten Return on equity before tax (RoE) 9.27 % 9.50 % –0.23 pp *) Shareholders who form part of the syndicate agreement. F +43/(0)5 05 333-6360 F +43/(0)5 05 333-4675 Hauptstraße 440 Augsburg T +41/71/85 810-74 Franz-Beer-Straße 111 Return on Equity after tax 7.86 % 7.54 % +0.32 pp [email protected] [email protected] 6290 Mayrhofen Innsbruck-Sonnpark Nagahama-Allee 75 F +41/71/85 810-12 88250 Weingarten T +43/(0)5 05 333-0 Amraser Straße 54 86153 Augsburg [email protected] T +49/751/56 116-7231 Cost/income ratio 54.4 % 42.8 % +11.6 pp Feldkirch Sölden F +43/(0)5 05 333-4915 6020 Innsbruck T +49/821/59 980-8 F +49/751/56 116-7244 Risk/earnings ratio 15.9 % 26.0 % –10.1 pp Bahnhofstraße 8 Dorfstraße 31 [email protected] T +43/(0)5 05 333-0 F +49/821/59 980-7144 Winterthur [email protected] 6800 Feldkirch 6450 Sölden F +43/(0)5 05 333-3654 [email protected] Zürcherstrasse 46 T +43/(0)5 05 333-0 T +43/(0)5 05 333-0 Schwaz [email protected] 8400 Winterthur Stuttgart F +43/(0)5 05 333-5225 RESOURCES 31.12.2014 31.12.2013 Change F +43/(0)5 05 333-6513 Innsbrucker Straße 5 Nuremberg T +41/52/20 40 450 Industriestraße 4 [email protected] [email protected] 6130 Schwaz Innsbruck-Stadtforum (from 5 January 2015) F +41/71/85 810-12 70565 Stuttgart (Vaihingen) Number figure IMPORTANT DATES FOR BTV SHAREHOLDERS T +43/(0)5 05 333-0 Stadtforum 1 Gleißbühlstraße 2 [email protected] T +49/711/78 78 03-7450 Götzis Telfs F +43/(0)5 05 333-4345 6020 Innsbruck 90402 Nuremberg F +49/711/78 78 03-7468 Weighted average number of employees 1,195 793 +402 Annual General Meeting 13 May 2014, 10.00 am, Stadtforum 1, Innsbruck Im Buch 6 Anton-Auer-Straße 2 [email protected] T +43/(0)5 05 333-0 T +49/911/23 42 08-0 [email protected] Number of branches 38 37 +1 The dividend will be published on the BTV homepage and in the gazette of 6840 Götzis 6410 Telfs F +43/(0)5 05 333-1662 F +49/911/23 42 08-7644 T +43/(0)5 05 333-0 T +43/(0)5 05 333-0 St. Johann in Tirol [email protected] [email protected] the Wiener Zeitung the day after the Annual General Meeting. F +43/(0)5 05 333-6725 F +43/(0)5 05 333-4445 Dechant-Wieshofer-Str. 7 [email protected] [email protected] 6380 St. Johann in Tirol Innsbruck-Wilten Baden-Württemberg KEY INDICATORS FOR BTV SHARES 31.12.2014 31.12.2013* Ex-dividend date 22.05.2015 T +43/(0)5 05 333-0 Leopoldstraße 31 a Payment of dividend 26.05.2015 Wolfurt F +43/(0)5 05 333-5525 6020 Innsbruck Ravensburg /Weingarten Unterlinden 23 [email protected] Franz-Beer-Straße 111 Number of ordinary no par value shares 22,500,000 22,500,000 Interim report as at 31 March 2015 Published on 22 May 2015 (www.btv.at) 6922 Wolfurt Hall in Tirol 88250 Weingarten T +43/(0)5 05 333-0 Wörgl Stadtgraben 19 T +49/751/56 116-0 Number of preference shares 2,500,000 2,500,000 Interim Financial Report up to 30 June 2015 Published on 21 August 2015 (www.btv.at) F +43/(0)5 05 333-6225 Bahnhofstraße 18 6060 Hall in Tirol F +49/751/56 116-7244 Top price of ordinary/preference share in € 21.90/18.00 19.50/16.60 Interim report as at 30 September 2015 Published on 27 November 2015 (www.btv.at) [email protected] 6300 Wörgl T +43/(0)5 05 333-0 [email protected] T +43/(0)5 05 333-0 F +43/(0)5 05 333-3250 Bottom price of ordinary/preference share in € 19.50/16.50 17.30/15.45 F +43/(0)5 05 333-5435 [email protected] Stuttgart [email protected] Industriestraße 4 Closing price of ordinary/preference share in € 21.35/18.00 19.50/16.50 70565 Stuttgart (Vaihingen) Market capitalisation in € million 525 480 T +49/711/787 803-8 * Only BTV service area F +49/711/787 803-7468 IFRS EPS in € 3.04 2.74 [email protected] P/E ratio, ordinary share 7.0 7.1 P/E ratio, preference share 5.9 6.0 * In 2013 adjusted to the changed consolidation scope. Explanation: n.s. = not shown Foresight Group Management report GROUP FINANCIAL STATEMENTS

Contents

FORESIGHT

Contents 01 BTV head office and market chiefs 06 Letter from the Board 02 Milestones 2014 08 Foresight Introducing the BTV management 04

Group roup History and strategy 12 Northern Italy 20 G Retail clients 14 Southern Germany 20 Corporate clients 16 BTV Leasing 21 Institutional clients and banks 18 The BTV brand 22 Vienna 19 Switzerland 19

Management report

Economic environment 24 Report on the internal control system

Business trends 26 for the financial reporting process 40 reportent Compliance and money laundering 37 Shares and shareholder structure 42 m BTV employees 38 Outlook 44 Manage

Group financial statements ents Group financial statements 2014 47 Report from independent auditors 153 Balance sheet 50 Report from the supervisory board 155 m state Statement of comprehensive income 51 BTV Group - a 5-year overview 157 l ia Statement of change in equity 52 3 Banks shareholder structure 159

Cash flow statement 53 Overview of 3 Banken Group – inan c BTV Group: notes 2014 54 Group information 160 Accounting and valuation principles 54 Imprint 161 roup f roup Statement by the statutory representatives G according to the Stock Exchange Act 152

BTV Business Report 2014 |01 Foresight

We have reached the end of two extremely successful decades. But this is only the beginning.

Peter Gaugg and Matthias Moncher jointly signed This has been a success. It was bound to be, as BTV has off their first BTV balance sheet about 20 years ago. always been able to act independently and autono- „We had ambitious goals. We wanted to continue the mously, quickly and flexibly as regards our corporate growth path of our mentor Dr Gerhard Moser clients. Defending BTV‘s independence will also († 2013), who sat on the BTV Board for 33 years.“ remain the ultimate objective in the next 110 years. As only then can we offer customised financial solutions. It was a time of change in an increasingly close-knit And only then will our business model remain as it Europe. And in terms of its opportunities. There is: customer commitment, enterprise and stability of was a spirit of optimism. Europe became the major value. There has not been a single change in strategy domestic market, Austria joined the EU in 1995 since BTV was founded in 1904. BTV has always been a and the EU introduced the euro in 2002. And what corporate and asset management bank. BTV still holds about BTV? It followed the needs of its customers its regionality in high esteem: this is where we are at that were carrying out their business increasingly home, this is where we know our way around, this is internationally. In 2004 BTV opened its first foreign where we invest. branch in Switzerland and at the same time started to look after Italian customers. This was then fol- Continuity, regionality and a strong focus on custom- lowed by a move into Southern Germany in 2005. ers have a uniting effect. And on the Board. Thus, there Today the „expansion markets“ belong to BTV, has only been one change at the top of the company as do Tyrol and Vorarlberg. This is why the brand in the last 53 years. After 20 years the time was right name has also been changed to BTV VIER LÄNDER again to consider a rigorously planned succession. The BANK: our heart has been beating for a long time opportunity could not have been better: our dream not only in Tyrol and Vorarlberg, but also in Vienna, successors of Gerhard Burtscher, Mario Pabst and Switzerland, Southern Germany and Northern Italy. Michael Perger will join the Board on 1 January 2016. Gerhard Burtscher has worked at BTV for 26 years The question is whether we can expand prudently. and has already been a Board member for one and a We can if we remain true to ourselves. Despite or half years. Mario Pabst has been with the company even because of its progressive thinking, BTV has for 25 years and Michael Perger 18 years. The three remained the same after 110 years: the best net- new Board members will uphold BTV‘s core pillars: worked principal bank for small to medium-sized, independence, enterprise, refreshing conservatism export-oriented corporate clients and discerning and complete customer focus. retail clients in the most attractive economic area of Europe. BTV has done its utmost to look after BTV‘s opportunities are becoming greater than our customers as equals, to be a genuine „sparring ever before, because customers never used to scru- partner“ and thus exceed expectations. A service tinise a bank‘s security and stability so rigorously. provider lives by the quality of its service. BTV nev- They never used to be interested so fervently in our er wanted to differentiate based on the best price business model. BTV constantly benefits from this and become a mass supplier, rather it wanted to re- change in customer requirements. main a premium bank. To bridge the gap between meeting sophisticated demands and providing a We are grateful. For what was and what will be. reliable, local service. To enthrall our customers and 110 years of BTV, over 7,500 satisfied corporate clients grow their number by word of mouth. and 110,000 discerning retail clients are more than a good basis.

Together, we say THANK YOU,

Mag. Matthias Moncher Peter Gaugg Gerhard Burtscher FORESIGHT GROUP MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS FORESIGHT

Photographs of the Board and management (next page) taken by Nicoló Degiorgis. Born in Bolzano in 1985, this photographer has been exhibiting his work in FO.KU.S at the BTV Stadtforum since 2012. In 2014 Degiorgis published the books entitled Oasis Hotel and Hidden Islam, for which he has been awarded several prizes. www.nicolodegiorgis.com

BTV BUSINESS REPORT 2014 02|03 Introducing the BTV management The BTV management comprises the marketing managers for retail and corporate clients in all BTV markets and the managers of internal divisions. After the Board, the BTV management is the level of management that essentially promotes the implementation of the overall banking strategy and so reinforces the BTV brand as a model for its teams.

01 02 03 04 05 06 07 08 09 10 11 12 13 14

01 Member of the BTV 06 Service centre 10 Institutional clients and 12 Credit management Board of Directors Michael Draschl banks division Mag. Robert Walcher Mag. Matthias Moncher Mag. Rainer Gschnitzer 07 Corporate audit 13 Northern Italy Private 02 Spokesman for the BTV Richard Altstätter 11 Marketing & Mag. Manuele Lussu Board of Directors Communications Peter Gaugg 08 Legal and corporate invest- Mag. Matthias Ampferer 14 Corporate clients division ments Mag. (FH) Karl Silly 03 Member of the BTV Dr Stefan Heidinger Board of Directors Gerhard Burtscher 09 Human resources Mag. Ursula Randolf 04 Representative of Board members*/ Retail clients division Michael Perger

05 Representative of Board members*/ Finance & controlling Mario Pabst

* as from 28.11.2014 15 18 17 16 15 16

Josef Sebesta private Vienna Pagitz Martina Mag. Vienna corporate Dr Hansjörg Müller corporate Southern Germany Kofler Peter Mag. Private Kitzbühel-München

19 21 20 19

Michael Falkner Michael corporate serfern and Oberland Tiroler Aus Stephan Haas corporate UnterlandTiroler Mag. Markus Scherer Switzerland 20 21

- 22 25 24 23 22

Thomas Gapp corporate Innsbruck Bernd Scheidweiler Private Vorarlberg and Tyrol Mag. Nardin Stefan Private Vorarlberg and Tyrol Mag. Michael Gebhard Vorarlberg corporate 23 24 25 29 28 27 26

26 Wilfried Suitner Wilfried 3 Brokers Insurance Banks Mag. Elmar Schlattinger C3 Logistik Johannes Wukowitsch Leasing BTV Gerd Schwab Leasing BTV 27 BTV BUSINESS REPORT 2014 REPORT BUSINESS BTV GROUP FINANCIAL STATEMENTS 28 MANAGEMENT REPORT 29 FORESIGHT GROUP 04|05

GROUP BTV head office and market chiefs

BTV Stadtforum Headquarters

Retail clients Corporate clients Institutional clients Michael Perger Mag. (FH) Karl Silly and banks Mag. Rainer Gschnitzer

– branch business – Direct supervision – Client account management Harald Gapp corporate financing Mag. Bettina Lussu – productive investment Mag. Martin Krismer Mag. Martin Mausser – Direct supervision payment – Asset management transactions Dr Jürgen Brockhoff rudolf Oberleiter – Direct supervision interest, currency and liquidity management helmut Pfurtscheller

Service centre Finance & controlling Corporate audit Michael Draschl Mario Pabst Richard Altstätter

– Securities service Sabine Dadak-Nedl – Payment and commerce Christine Schurl

Credit management Marketing and Human resources Mag. Robert Walcher Communications Mag. Ursula Randolf Mag. Matthias Ampferer – Germany and Switzerland – Human resources support Corporate clients Friedrich Braito Christoph Meister – Austria and South Tyrol Corporate clients MMMag. Johannes Öfner – Retail clients Mag. Martin Schwabl – Reorganisation management Mag. Paul Jäger

Legal and corporate Compliance and Money Obmann investments laundering prevention Central works council Dr Stefan Heidinger Mag. Martin Rohner Harald Gapp Manfred Unterwurzacher

BTV Leasing 3 Banks Insurance Brokers Gerd Schwab Wilfried Suitner Johannes Wukowitsch

06 foresight Group Management report Group financial statements

BTV‘s Markets

Tyrol and Vorarlberg Private Mag. Stefan Nardin Bernd Scheidweiler

– Innsbruck central – Bludenz Expert team Claudia Kaufmann patrik Lauermann – Innsbruck West – Lake Constance – Productive Investment Expert Team Mag. Eva-Maria Ringler Christof Kogler Dr Peter Strele – Innsbruck East – Rhine Valley – Professions Innsbruck norbert Peer Mag. Carmen Kresser-Wolf edi Plattner – Hall – Montfort – Mobile housing construction Tyrol Kurt Moser hubert Kotz Ludwig Grolich – Unterinntal and Zillertal – Mobile housing construction Vorarlberg – Co-support Stadtforum foresight robert Lang Manfred Angermann Mag. Kerstin Schuchter – St. Johann Markus Lanzinger – Seefeld and Garmisch-Partenkirchen stefan Glas – Tyrolean Oberland Wilfried Gabl – Ausserfern urs Schmid

Innsbruck corporate Tiroler Oberland and Tiroler Unterland corporate Thomas Gapp AuSSerfern corporate Stephan Haas Michael Falkner

– Key accounts and special financing – Imst – Co-support – Property, tourism and South Tyrol – Reutte Mag. Günter Mader Mag. Christoph Wenzl andreas Wilhelm – SMEs

Vorarlberg corporate Vienna private Vienna corporate Mag. Michael Gebhard Josef Sebesta Mag. Martina Pagitz

– Co-support – Productive Investment Expert Team – Key accounts and special financing evelin Stöckler – Liberal professions, Vienna – Real estate and project financing – SMEs and tourism Jürgen Jungmayer – Small and medium-sized companies 1 Mag. Benno Wagner Walter Tacha – Key accounts and special financing – Small and medium-sized companies 2 Mag. Philipp Schöflinger Mag. Nina Steinacher, M.BC.

Kitzbühel-München Private Southern Germany corporate Mag. Peter Kofler Dr Hansjörg Müller

– Kitzbühel – Munich Mag. Michael Sommer – Augsburg – Munich – Memmingen – Augsburg tobias Bott – Ravensburg andreas Kleiner – Stuttgart stefan Fischer

Northern Italy Private Switzerland private Switzerland corporate Mag. Manuele Lussu Mag. Markus Scherer Mag. Markus Scherer

– Support for productive investment Italy – Staad – Staad – Co-support Italy – Co-support – East Tyrol Private Mag. (FH) Markus Hämmerle Manfred Steurer

BTV Business Report 2014 06 |07 Milestones 2014

For 110 years, BTV has proved that this region is the best breeding ground for long-term, successful business activity. In 2014 BTV invested in new sites in Bludenz, Dornbirn, Winterthur, Memmingen and Nuremberg, which will open in 2015 and 2016. BTV has been serving its customers in Garmisch-Partenkirchen since the autumn.

Only someone going his own way cannot be overtaken by anyone: BTV‘s employees followed this motto in 2014 too and made a strong impact.

Institutional clients and banks Retail clients • Tyrol sent out an invitation: BTV invited Austrian • BTV is now also in Garmisch-Partenkirchen: and international banking partners to a networking BTV investment experts now also serve their and specialist event in Stubaital in Tyrol. customers in Garmisch-Partenkirchen. • Networking by institutional clients: For the first • Top asset management: The asset managers time, BTV brought institutional clients together increased the managed volume (Strategic and as part of a networking and specialist event at Premium asset management) by 28%. BTV Vienna. • Dynamic Strategy asset management in CHF: • Actively dealing with the German capital With the Dynamic Strategy asset management market: The Institutional Clients and Banks division in CHF, customers used Swiss francs as a crisis-proof increased its presence among German banking currency. partners to place BTV issues and promissory notes. • Subordinate BTV loans: Customers made a • Strong network for partners: BTV maintains long-term investment in BTV at attractive terms. contacts with over 900 banking partners across • Excellent: For the Austrian Dachfonds Award, the globe. 3 Banken-Generali KAG was awarded again for its asset management.* • ‚firstfive‘ award: BTV ranked once again amongst the top five asset managers in the balanced risk class (12 and 60 months).* • Clients make provisions: BTV was pleased to announce numerous new orders for its retirement planning products. • Well insured: With its partner Generali, BTV offered a highly flexible, lifelong pension plan – the Generali LifePlan. • Home construction/3-Banken Wohnbaubank AG: More than €140 million flowed into the creation of new housing space. foresight Group Management report Group financial statements foresight

Corporate clients Leasing • Number 1 export bank: For export fund financing, • No. 1 leasing partner in Tyrol: Thanks to its financing BTV clearly ranked as number 1 among banks in volume, BTV Leasing ranks no. 1 in Tyrol and no. 8 in Western Austria. Austria. • Securing foreign trade as a success factor: Export- • Plus for financing: BTV Leasing exceeded €700 mil- oriented small to medium-sized clients ordered lion in lease financing as a cash value. about 30% more letters of credit. This was mainly • Record for new business: For the first time BTV observed in trade with Asia. Leasing exceeded the €200 million mark for gross • Growth in primary deposits: During the year BTV new business. posted a rise in total premiums for corporate cli- • Also coming soon in Nuremberg: BTV Leasing ent business of around 10%. Germany is preparing a new site in Nuremberg. • New funding guidelines: The new funding • Capacity leasing completely on track: More and guidelines came into force on 1 July 2014. Experts more customers would like to structure lease provide information on the comprehensive inno- financing as flexibly as possible and the relevant vations by means of brochures, newsletters and demand accordingly. It is not only funicular mainly in numerous personal customer meetings. railway companies that are therefore placing their • SEPA-fit: On 1 August 2014 BTV successfully trust in BTV capacity leasing. switched some 7,500 corporate clients over to SEPA. • LfA global loan: By underwriting the LfA global loan, BTV has ensured a favourable means of refinancing, which will benefit Bavarian SMEs. • Professional liquidity management: More and more corporate clients are entrusting their liquidity management to BTV.

* Awards and successes in the past do not guarantee success or continued growth in the future. More information at: www.btv.at/auszeichnungen. BTV Business Report 2014 08|09 Promoting talent • Talent management: In order to promote BTV talents, the bank is offering an integrated training and development programme. • 16th BTV Marketing Trophy: Who has the greatest marketing talent in the country? BTV will find out. • Dr Moser Going Europe foundation: A total of 94 commercial high school pupils are already looking forward to being sponsored for training in another European country.

BTV and culture: Ton Halle FO.KU.S Photo Art in the Stadtforum • First Epiphany concert in Vorarlberg: For the first • Pentti Sammallahti: FO.KU.S showcased a time, BTV organised an Epiphany concert in Ländle. retrospective of the work of the internationally The East Tyrolean Musikbanda Franui delighted the renowned photographic artist from Finland – audience. At the same time, Stefan Dohr (cornet), photographs taken over nearly 50 years and in Guy Braunstein (violin) and Ohad Ben-Ari (piano) numerous countries. played at the Ton Halle in Innsbruck with • Jim Rakete: The „Stand der Dinge“ exhibition was a festive programme of chamber music. originally developed by the German photogra- • Toninton 2014: The Ensemble Mo’ Blow, the Julian pher of the famous for the German Film Museum. & Roman Wasserfuhr Quartet and the Trio Jou- FO.KU.S paid homage to film-makers. bran delighted music fans at BTV Stadtforum. • Elfie Semotan: FO.KU.S provided a deep insight • Jeunesse Austria: Cellist Kian Soltani and pianist into the multifaceted creation of the renowned Ardita Statovci gave a virtuoso performance of Austrian photographer. Romantic and modern works. • Jörn Vanhöfen: The German photographer • BTV autumn concert: One of the world‘s great- captures modern ruins of our time. Fascinatingly est double bassists Avishai Cohen played at the beautiful and alarmingly inescapable. Ton Halle. He was accompanied by the fantastic • Nilbar Güres: The photographs, videos and video pianist Nitai Hershkovits. installations of the Istanbul-born artist address the violence and clichés of a patriarchal society.

10 foresight Group Management report GROUP FINANCIAL STATEMENTS

Group

History and strategy Retail clients Corporate clients Institutional clients and banks Vienna Switzerland Northern Italy Southern Germany BTV Leasing The BTV brand roup G

BTV Business Report 2014 10 |11 History and strategy Bank for Tyrol and Vorarlberg. And Southern Germany. And Vienna. And Switzerland. And Northern Italy.

Over 110 years, BTV has grown from the regional bank to become BTV VIER LÄNDER BANK.

The history of the Bank für Tirol und Vorarlberg AG Economic boom began on the 8th of April 1904. On this day, the impe- After the Second World War, gradual economic rially and royally appointed Allgemeine Verkehrsbank stabilisation created the financial foundations in Vienna received approval to set up a stock corpo- for reconstruction. By granting credit to regional ration from the Austrian interior ministry. The bank companies, BTV specifically boosted the domes- bought the two banking houses „Payr & Sonvico“ tic economy which was then experiencing the in Innsbruck and „Ludwig Brettauer sel. Erben“ in „golden“ decades. In 1952, new associates joined Bregenz. The first directors of the new company were BTV in the form of the Bank for Upper Austria and the former company directors Salzburg and the Bank for Carinthia and Styria. Hans Sonvico and Ferdinand Today, Oberbank, BKS Bank and BTV together form „With a consistent, customer- Brettauer. Entry into the com- the 3 Bank Group. It stands for a voluntary union focused strategy, BTV has succeeded mercial register on the 18th of oriented towards democratic principles, which is in overcoming all of the crises in the August 1904 was then only a more than ever considered an important partner global and financial economy.“ formality – the ‚Bank für Tirol of the domestic economy. For all three banks, und Vorarlberg‘ was born. BTV this cooperation is a central component of their experienced strong business expansion in its early autonomy and independence. years. Numerous branch openings in North and South Tyrol and in Vorarlberg were the visible signs True customer proximity of growth. BTV‘s reputation among the population The BTV branch network was greatly expanded and in economic circles grew from year to year – BTV under the two executive boards of Dr Gerhard Moser quickly established a firm place for itself. and Dr Otto Kaspar in the 1970s and 1980s of the 20th century. With this step, BTV successfully made The wonder of the Inn its endeavour „to be close to the customer“ and At the end of the First World War, the European „to expand into the regions“ a reality. The personal borders were redrawn and South Tyrol given to Ita- relationship between the customer and employees ly: whereupon BTV had to close its South Tyrolean was and is a central success factor for BTV. Since 1986, branches in 1922. Like Germany, Austria suffered BTV has been the only Austrian regional bank to be from galloping inflation which had fatal effects for quoted on the Vienna Stock Exchange - ‚a giant leap the Tyrolean and Vorarlberg economy. The popula- for the alpine inhabitants‘, in the eyes of the Tyrolean tion stormed the banks to remove their savings artist Paul Flora, who has captured this important deposits. Unlike most of their competitors, BTV was event for BTV in his pictures. able to pay the savings deposits to its customers immediately and survive these difficult times. BTV‘s European perspectives company philosophy, which still applies today – of Both BTV directors Peter Gaugg and Mag. Matthias not making any risky speculations on financial Moncher have been giving the bank new impetus markets – has proven itself. Due to its conserva- since the latter half of the 1990s. Since 2014, as the tive business policy, BTV was the only regional third member of the board, Gerhard Burtscher has joint stock bank to survive the economic crisis and reinforced the proven management duo. Gerhard even emerged stronger from the 20th century due Burtscher is responsible along with Peter Gaugg for to the targeted takeover of domestic banks. The the client business, whilst Mag. Matthias Moncher Austrian press recently hailed BTV as the ‚Wonder concentrates on the market consequences. BTV is a from the Inn‘. market leader in corporate and private client business in its key markets of Tyrol and Vorarlberg. However, as one of the highest revenue banks of Austria, BTV also utilises the opportunities provided by contemporary

12 ucts, B ucts, prod banking of range wide its as well As advice. and solutions competent tailored the value clients BTV‘s clients. its impresses commitment average above- and performance BTV‘s – services financial other or financing investment, involves it Whether O basis. asset agood expand further and reinforce to technology masters and hand in outgoings its has profits, generates BTV rarer. ever which is advantage becoming an extraordinary become has autonomy this years, past in sector banking the in mergers the of Because autonomy. long-term its securing thus performances, average B spirit, entrepreneurial With basis. ongoing an on developed are innovations customer-friendly desires, and needs their on ing Build strategy. its of heart the at are clients BTV‘s clients BTV‘s focus: In Italy. Northern and S Baden-Wuerttemberg, Bavaria, Vienna, ing inT not beat- only is heart today BTV‘s Thus, profitable. and its commitment countries inallfour issustainable in 2011,BT Countries), of Four Bank (the introduced which was BTV is also the official representative in the German German the in representative official the also is BTV transactions. international for BTV to available are partners banking 900 Over insurance. or leasing as such services bank-related other provide also With its new brand name B name itsnewWith brand in2006. Baden-Württemberg and market inBavaria onto the launched successfully was in Switzerland. BTV Bodensee am in Staad branch foreign itsfirst opened in2004,its100thyear and of existence,to it Vienna, anexpansion company In1989the Europe. underwent ffering tailored solutions tailored ffering T yrol and Vorarlberg, but also passionately in but Vorarlberg, and yrol V subsidiaries, holdings and cooperations V is demonstrating apledge: namely, that V isdemonstrating T LÄND V IER T V focuses on above- on V focuses witzerland ER B ANK - - B A clients. corporate export-oriented our by ciated appre much very is that –aservice Vorarlberg and T in Commerce of Chamber tria-Liechtenstein Chamber of Commerce and the S from this, especially in times like these. like times in especially this, from benefit clients BTV‘s autonomy. BTV‘s secure to but profit maximise to not is sustainably, and prudently we fulfil which task, Our business. make not business, in remain to wants BTV needs. their discover to also but them inform to only not clients, approach actively therefore employees BTV BTV. to dear and near is what is –that way possible best the in desires and needs their Fulfilling clients. vate companies and demanding pri medium-sized family-owned comprises primarily structure customer The possession. tant impor most BTV‘s constitute with their specialist expertise, who, employees qualified highly the from foremost and first and customer the to tailored individually are which solutions from apparent is money. This dling for the region. region. the for T oday as then: a bank from the region region the from abank then: as oday T pproaching and listening to clients to listening and pproaching V is a regional service provider specialised in han in specialised provider service aregional V is - - witzerland- Switzerland and Northern Italy.“ Switzerland Northern and G Southern also in Vienna, T in beats not only heart „BTV‘s yrol and Vorarlberg and yrol today, but A B yrol yrol T us eport 2014 Report V Business G - roup finan - - Managem c l ia ermany, state ent report foresight

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Group Retail clients

The search for lucrative investments which are, at the same time, stable in value presents a challenge in times of extremely low interest rates. BTV provides its customers with lasting solutions.

The Bank für Tirol und Vorarlberg AG has expanded Good performance for BTV asset management in the past decade beyond the borders of its core Despite a turbulent market environment, which was markets of Tyrol and Vorarlberg and evolved into marked by geopolitical conflicts and the monetary the BTV VIER LÄNDER BANK. The needs remain policy of central banks, BTV asset management was the same: highest quality, closeness to customers, able to achieve a pleasant performance in individual confidence and the responsible handling of clients‘ mandates. The responsible concept, which is under- money determine the BTV strategies. Cross-border pinned by transparent components and a high degree opportunities must be utilised and the regional of flexibility, also resulted in a substantial net inflow. anchoring ensures optimal solutions as well as Also in 2014, BTV asset management ranked amongst short and swift decision-making procedures. BTV‘s the top five asset managers in the balanced risk class independence and autonomy provide a consid- (12 and 60 months).* erable benefit: the account managers only offer solutions which meet with clients‘ benefits and are Attractive mortgage bonds comprehensible. As in previous years, an attractive mortgage bond was again set up in 2014. The funds from the pro- Tried-and-tested principles lead to success – ceeds of the issue are continuing to flow to mort- BTV strategic investment gage clients who are creating new living spaces. There is no patent formula – just as every individual Thus, BTV is supporting young families and the is different, the same applies to investments. Just as regional economy. every person has different personal circumstances, expectations and estimations of risk, they have one Intelligent investment products in the low interest element in common: you always need to follow rate environment a certain strategy to invest successfully. The BTV The extremely low interest rates require creative investment strategy is in line investment products to invest profitably and se- with the needs and require- curely. The creation of money market floaters with „Highest quality, closeness to ments of clients and provides a lower interest limits enables investors to benefit customers, confidence and the wide range of investment forms, from increases in the interest rate while having a responsible handling of clients‘ money from flexible savings products minimum coupon in case of stagnating interest determine the BTV strategies.“ and custody accounts to asset rates. With the subordinate BTV loans, customers management. That‘s because benefit from the higher return and make long-term the correct combination must initially be found by investments in BTV. With the Dynamic Strategy customers and account managers and then consist- asset management in Swiss francs, customers can ently implemented. Continuous active management take advantage of the Swiss franc as a crisis-proof ensures success. currency. In addition, customers can diversify according to currency and location (BTV Switzerland).

With the BTV fund plan, customers can decide on the strategy for building up their assets – they invest monthly in the asset management‘s philosophy.

14 * B provide hubs transport and stations petrol centres, ATM New shopping in sites customers. the for there much very are managers account the times, ing open bank the of Independent consultations. for S clients for time –more transactions payment in security and individuality service, More considerably. customers our for risk the therefore and liability currency foreign the reduce to clients many with made were Agreements effective. prove to tinued con currencies foreign in financing with clients of support combined The levels. high pleasingly at business financing construction residential new retain to able was 2014, In BTV clients. their with together concepts financing individual out work advisors residential construction Specialised, financing construction Residential managers. investment BTV the as well as Board bank‘s the with dialogue and views of exchange knowledgeable and lively of possibility the offered B events, small regional numerous at and Here Innsbruck. and Bregenz in symposiums Investors‘ BTV two the shaped perspectives ferent T symposium Investors‘ BTV payment possible with an ATM an with possible card. payment contact-free makes and protection counterfeit es increas investment this time, same Atthe card. one only using accounts several access can area service BTV the in way, customers this In achip. as well as discernibility easier for designs new with furnished were BTV by issued cards the of All Austria. in unique is This included. cards and accounts of ber num and type the select freely to possible it makes packages account of realignment The it. need they More information at: www.btv.at/auszeichnungen. at: information More future. the in growth continued or success guarantee not do past the in successes and Awards op-quality speakers and speakers exciting dif from topics op-quality ince 2014,ince B T V customers with money directly thereV where with customers money directly T V has reserved afternoons exclusively exclusively afternoons reserved V has T V clients were were V clients - - - - - and Bregenz, 500 interested BTV customers took part. took part. customers Bregenz, 500interestedand BTV Investors‘ inInnsbruck symposium At second the BTV Management Brockhoff. Jürgen Asset of BTV Head and G Institute ofMaxPlanck the director G researcher S economic renowned the public: the from questions events critical markets answered and financial inthe on provided information and following reflected The campaign from a position of strength in all markets. all in strength of aposition from campaign amarketing run will BTV events. networking and specialist gional re as as well markets financial to trends on the international events top from underlined is expertise widespread This Italy. –A markets its of For 2015For B B with 2015: on investing Focus erhard Burtscher, psychologist and executive Burtscher, psychologist and erhard T V plans to step up expertise in all four four all in expertise up step to V plans tephan S tephan ustria, S ustria, chulmeister, B witzerland, G witzerland, - T V T much there for the customers.“ the for there much account the arevery managers times, of bankopening the „Independent V chairman V chairman erd G erd ermany and and ermany igerenzer, B T eport 2014 Report V Business G roup finan Managem c l ia state ent report foresight G m 14 14 roup ents

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Group Corporate clients

The BTV VIER LÄNDER BANK focuses on professional support of medium-sized, export-oriented and owner-managed businesses in Austria, Switzerland, Southern Germany and South Tyrol.

Influenced by a strategy of sustained profitable and regional training programmes for its corporate growth, during the course of the last 10 years a customer advisors. Through the continuous further considered expansion from Innsbruck towards the training of BTV staff it is possible for them to recog- neighbouring countries was pushed forward and, nise current developments and opportunities at an as a result, our already available expertise in cross- early stage and to provide active input. This turns the border business was further strengthened and contact people at BTV into genuine „sparring part- expanded locally. ners“ for operative and strategic decisions in SMEs. In this context, the best possible, understandable and Independent and autonomous financial partner outcome-oriented advice and support for medium- in four countries sized industrial, commercial and tourism businesses BTV has always stood for independence and have the highest priority for BTV corporate customer autonomy. The balanced and stable shareholder advisors and experts. In addition to advising on typical structure enables BTV decision-makers to make all finance and investment instruments, we are on hand important decisions locally, for the benefit of their with help and advice to answer any questions whatso- clients, without external influence. The relationship ever regarding possibilities for enterprise investment, with our corporate clients, the understanding of foreign trade deals, company succession planning, their business models and prompt decisions are a company pension scheme, cross-border operations, key part of the strategy. tailored structuring of financing and investment instruments, interest and currency hedging as well as As a universal bank, BTV supports its small to medi- cash management and leasing arrangements. um-sized corporate clients in all the financial transactions relevant to them in the strongest economic area Thanks to the cooperation with large national and of Europe. From Innsbruck to Bregenz, Zurich, Stutt- international companies as well as with institution- gart, Munich, Vienna and to South Tyrol, BTV uses a al market participants, new services can be con- wide network of partners - accountants, local business tinuously developed and implemented. Based on promotion agencies, national funding agencies in the this principle of a linked-up consultancy approach, field of investment and foreign BTV VIER LÄNDER BANK has for a number of years „BTV successfully switched 7,500 trade, chambers of commerce provided its customers with an ideal platform to corporate clients over to SEPA.“ and banking partners. BTV bring the most diverse and partly complex top- advisors and experts also make ics - from financing, interest rate and currency risk their sector-specific know-how to asset and receivables management - in line with available to corporate customers for consultancy the relevant strategies of the companies concerned services such as market analyses, market building and and the current situation in the financial markets. expansion, as well as for the professional support of businesses for urgent funding or setting up coopera- Payment transactions development tions. As the Tyrol and Vorarlberg representative for Every week 80,000 corporate client transactions the German Chamber of Commerce in Austria (DHK) are processed in BTV‘s sphere of influence. BTV and the Switzerland-Austria-Liechtenstein Chamber was able to post a 10% increase in the expansion of Commerce (HKSÖL), international networks can market of Southern Germany alone in 2014. be utilised in the interests of BTV clients. SEPA-fit Highly qualified, experienced staff During the changeover to SEPA, BTV was able to BTV not only invests in the specialised further successfully switch 7,500 corporate clients seam- education of experts, but also in the sector-specific lessly over to SEPA on 1 August 2014.

16 I things. other amongst subsidies (interest) of form the –in conditions certain under Austria in funds provide etc.) ERP-Fonds treuhand, Hotel Österreichische GmbH, Wirtschaftsservice (Austria institutions other and ‚Land‘ Government, investment. enterprise for applying when guidance the possible and best active particular support in companies medium-sized to small offering B years, many For enterprise for private Support each of the federal Länder in which B which in Länder federal the of each as well as (KfW) agency funding government man G the by both loans funding these of awarding the with accredited is BTV loans. fixed-interest low-cost of awarding the through mainly agencies Austrian and German subsidy systems. subsidy German and Austrian the in experience of awealth and years many have experts BTV Germany. in projects funding sponsor (Lf n G Förderbank Bayern and L-Bank) and is happy to to happy is L-Bank) and and Bayern A Förderbank ermany, the funding occurs through funding funding through occurs funding the ermany, T V LÄ IER N D B ER T AN V operates V operates K has been been K has er - - B For decades, B decades, For continually adjusted by B by adjusted continually inbanks international are trade in correspondent network and the international spectrum performance broad The companies. oriented to export- and support valuespecial on service B finance. export of area the in again rose SMEs for loans fund export of number The years. previous in than year last popular more much was particular in instrument hedging credit of letter The clients. corporate their of needs the with line in employees lively foreign trade, B trade, foreign lively T business. import and export the in instruments ing hedg and financing of deployment professional Tyrol Vorarlberg. and in businesses medium-sized to financing export in V BTV why reason the also is This markets. and tries indus of range awide of requirements the with iar hrough the support of many companies, with a with companies, many of support the hrough T T LÄ IER V export solutions V export V experts have many years of experience in the the in experience of years many have V experts N D B ER T V AN LÄ IER K has the largest market share share market largest the K has T V staff are thoroughly famil thoroughly are V staff T N V D is what B what is this know-how: special and market the of solution using knowledge considerable optimal the finding and clients corporate U are in industry, trade or tourism. tourism. or trade industry, in are they whether of Regardless customers. B ER nderstanding thenderstanding business model of AN rose again.“ again.“ rose „ T K has placed placed K has T he number of export fund loans loans fund export of number he V advisors home in on for their their for on in home V advisors B T - eport 2014 Report V Business G roup finan - - Managem c l ia state ent report foresight G m 16 16 roup ents

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Group Institutional clients and banks division

A strong network of national and international bank partners creates a solid basis for the client business.

The extension of networks to international banking partners was also a central concern of the BTV Institutional Clients and Banks division in 2014. In the same vein, the business area once again invited bank partners to a networking and specialist event in Vienna and Tyrol. BTV maintains contacts with over 900 bank partners across the globe.

Maintaining networks: BTV sets great store by this, BTV clients therefore have the possibility of ben- not least for the benefit of its customers. efiting from financial services from many markets – whether in payment transactions, financing or interest and currency hedging. These contacts and networks with foreign partner banks are also help- ful for clients who are expanding into new market areas and are wanting to benefit from BTV‘s experience and know-how.

Within the framework of the overall management of the bank, the business area, Institutional Clients and Banks, is primarily responsible for the optional liquidity management. Due to the demanding market environ- „Great flexibility due to a ment, intensive contacts strong network of partners.“ with monetary trading partners are the basis for sound liquidity management. The management of Institutional Clients and Banks thereby underpins the activities of the business area. Serving their customers for 25 years: the employees of BTV Vienna. Owing to the merger of the money market business, the management of institutional clients and bank supervision on 1 January 2014, synergies are consistently used and the sales focus further strengthened. Also in 2014, we managed to further increase the active visits to (potential) clients and money market trading partners and therefore raise the number of bank partners and clients. With this sales-oriented strategy, the business area provides the BTV client and internal business with even more flexibility.

In line with the market area of BTV in four countries – Austria, Germany, Switzerland and Italy – the focus of bank support lies in these markets. Via these four countries, BTV maintains relationships with banking partners in each of all the regions which are or can be significant for clients of BTV. 10 years of BTV in Switzerland. BTV would like to thank its customers for their confidence in us. 18 B A Local contact. of point asingle via solutions international from benefit also customers BTV Italy, S tria, which encompasses area, market A cross-border BTV‘s to Thanks requirements. their meet to grow packages service the lives; clients‘ their of phases various the by guided are staff BTV solutions. tailored and decisions rapid independence, BTV‘s from benefit –customers impressive are employees the of competence specialist the and commitment personal The competitors. its from Vienna BTV ate differenti what are proximity client true and advice first-class Its capital. federal the of heart the at clients corporate and retail for alocation manages 2014. in BTV anniversary 25th its marked therefore 1989. It since Vienna in represented been has BTV • A Branch: Vienna B competence client Corporate market. Vienna the on BTV of profile every in feature advice individual sound, and products of selection independent An funds. client with dealings our in priority of amatter are objectives investment recommendations: dimensions and B the for crucial is requirements client of edge knowl Comprehensive priority. top are continuity and discretion Innovation, requirements. client‘s the on solely is focus the where solutions to leads independence BTV‘s culture. aservice and ment T Vienna: in and large company business, in Vienna B Vienna in business, company large and medium-sized traditional the to addition In panies. com medium-sized supporting and advising on is focus the too here where market, key the of dle bun service entire the offers BTV Vienna, In bank. acommercial as business client corporate the in B T know-how. expert its with impresses and aircraft of financing the as well as sales, and purchases pany com and property of financing the in specialised corporate client business. client corporate concerning issues all for solutions optimum the find to client the with liaise will employees BTV ises, prem client‘s the at directly or there From market. ogether with the B the with ogether T T T V operates the traditional private bank business business bank private traditional the V operates V has over 110 years of experience and tradition tradition and 110 over V has experience of years V Leasing offer one-stop solutions for the Vienna Vienna the for solutions one-stop offer V Leasing lbertinaplatz outhern G outhern ustrian private bank private ustrian

hey are distinguished by great commit great by distinguished are hey ermany, S T V advisors, the experts from from experts the V advisors, witzerland and N witzerland T V has V has orthern orthern T - V - us ------• S Branch: S settlement on S on settlement operational Itcomprises the for solutions companies. of to successful small medium-sizedrequirements targeted way to iscoordinatedclients the inavery T Optimum finance solutions needs. clients‘ tailored to tiveperfectly which are solutions financial philosophy which and contributes to innova - expertise T clients. private worth growth-oriented and companies high and net export many A and S from banking specialists Experienced segment. client managed retail corporate and client S I assistance Comprehensive export of the client. profile tive to which management isadjusted investment the ac- discreet and to aspecific, isattached importance Inso doing of agreatdeal it. request customers BTV where hours bankopening normal the also outside inSwitzerland clients private and adviseBTV‘s experts team of experienced asset and securities management A corporate offering. client cessions off BTV the round of company- suc support active the and instruments payment transfer compatible flexible four-country very profits, liquidity of management available active The funding. growth export and well asinvestment, In S Comprehensive offer activities. business future-oriented and vative inno of success the for crucial is which value added B of clients the offer cross-border partially are which solutions Integrated clients. A in those S the above and –over expertise countries‘ four E licence. bank afull with 2004 since Switzerland of country banking the in present been 2014: has it B are specialised solutions. in cross-border which partners network of offering service broad a with trade international in companies supports n representing the Chamber of Commerce for for Commerce of Chamber the n representing mployees who act in an entrepreneurial way with with way entrepreneurial an in act who mployees witzerland, A witzerland, wiss Banking Business they are also familiar with with familiar also are they Business Banking wiss he performance spectrum of B spectrum performance he of his combination across-border ensures transfer T witzerland V marked its 10th anniversary in S in anniversary 10th its V marked taad am Bodensee am taad witzerland, B witzerland,

ustria, G ustria, ustria especially advise owner-managed, owner-managed, advise especially ustria ustria and Liechtenstein, B Liechtenstein, and ustria witzerland, A witzerland, T V concentrates on the actively V concentrates actively the on ermany and I and ermany ustria and G and ustria taly – enthuse their their –enthuse taly T V S T V in S V in taad for corporate for taad witzerland in in witzerland witzerland, G witzerland, ermany as ermany witzerland witzerland T V also V also B T eport 2014 Report V Business G roup finan - - er Managem c l ia state ent report foresight G m 18 18 roup ents

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Group Northern Italy Southern Germany Headquarters: Branches: • Innsbruck (BTV Stadtforum) • Augsburg • Munich • Lienz • Garmisch-Partenkirchen • Ravensburg/Weingarten • Memmingen • Stuttgart

A high degree of expertise and short distances – BTV was launched onto the market in Bavaria and this is how BTV convinces its Italian customers too. Baden-Württemberg in 2006. In Germany too, BTV Customer service takes place from the Stadtforum is a medium-sized bank for small to medium-sized in Innsbruck and from BTV Lienz. firms and operates in both the corporate client and retail client segments. BTV employees know what Service at the highest level medium-sized firms need: quick decisions, compe- The focus on client service lies in the high-quality tent point of contact, straightforward handling and investment consultancy and asset management. reliability, even in turbulent times. With their special know-how and experience, BTV investment experts are in a position to develop Safe money investment specially tailored solutions for the respective re- In the private client business, BTV also offers service quirements and objectives of the client. bundles for exacting requirements. Thanks to tailored investment strategies, demanding customers are very Diversification through different legal systems well cared for. The high level of expertise of BTV‘s In the past few years, the lowest interest level led asset management is proven not only by robust fund to an increased need for the distribution of assets. performance in accordance with the creed of ‚invest- In addition to the diversification in various asset ing, not speculating‘ but also by numerous internation- classes, BTV clients increas- al awards as well.* As a traditional bank, ingly also rely on country BTV feels bound by the values and „Four countries, one bank. This is distribution due to the ethos of the sound banking industry as invaluable to BTV clients, especially economic and financial they were established. Therefore, BTV in payment transactions.“ challenges of individual quite consciously dispenses with invest- countries. They thereby use ment banking and proprietary trading. the chance to divide their assets up amongst several countries - each having a robust legal system. Medium-sized bank for medium-sized companies BTV‘s interest is focused on client requirements. Thus, Top consultancy in your mother tongue BTV employees not only possess special know-how A special advantage of BTV in client support is the and understanding of business models, they also main- fact that their investment experts are multilingual. tain genuine close relationships with their customers: This is especially welcomed and valued by the Ital- the concept of mobile sales means that BTV advisors ian clients – in conjunction with the excellent advi- visit clients at their premises. The branch network is sory competence and flexibility of BTV advisors. therefore concentrated on locations with good transport links in selected conurbations.

Utilising networks In 110 years as an independent financial partner, BTV has always committed itself to medium-sized companies; this strategy has never changed. BTV‘s aspiration is and remains to develop further with entrepreneurial, export and growth-oriented companies. BTV‘s solutions go beyond traditional banking business: BTV employees see themselves as genuine sparring and network partners. As an integrated financing partner, BTV VIER LÄNDER BANK also offers leasing solutions via its own leasing company in Germany.

* Awards and successes in the past do not guarantee success or continued growth in the future. More information at: www.btv.at/auszeichnungen. 20 B B B B borders Crossing matters. all in decisions right the make to you help experts Leasing BTV sheet. balance and taxation in benefits as wellreplacement cycle, as the additional side the object, leased the of use the as such factors, several on depends financing leasing optimum The customer. particular the with agreed are which ants vari financing enable leasing shift-use or leasing capacity as such Models solutions. individual and flexible offers also it models; leasing standardised the to addition in and financing investment of field the in know-how specialist of level ahigh features Leasing BTV total. sheet balance the increase not does it as equity preserve which investments bles ena Leasing projects. investment facilitates so and scope financial the increases goods investment of Leasing assets. company the in liquidity up binds U company. any in asset avaluable is liquidity Free A business. of volume total the and customers of number the in increase the in reflected is This years. past in expanded greatly has Leasing BTV solutions. tailored with them assisting and support individual clients its offering been has it 1988, in founded was it Since Innsbruck. in tered T für Bank the experience. of single contact partner are possible. are partner contact single national solutions a from single source and with a inter countries, in four competence of its Because property. commercial to field leasing aviation the via solutions special in cars and tion cable plants - produc machines, from range extends product The market. respective the of features particular T T T sset management in a different way adifferent in management sset sing this for the pure ownership of a commodity acommodity of ownership pure the for this sing T V Leasing G V Leasing years 25 than more and competence four-country the to –thanks solutions tailored offers V Leasing V Leasing advisors are acquainted with the the with acquainted are advisors V Leasing V Leasing irol und Vorarlberg AG headquar –is Vorarlberg und irol mb – a fully owned subsidiary of of subsidiary owned H –afully - - - - N S in office registered with AG (2003) Schweiz Leasing BTV affiliates 100% two the founding -by region the with identification and market the to closeness - roots regional of principle the fulfilled has BTV Germany Southern and in Switzerland Affiliates A Munich, Ravensburg, Winterthur, in Staad, office, the In Tyrol Augsburg. in office registered with With the opening in N in opening the With Switzerland. and Germany of markets attractive the in expand to continued company The €217 million. (2013) 2014 €185 in rose million from to business new gross of volume total the market, the of dling han consistent to Thanks costs. risk low habitually –with base customer the extend further to possible was it guidelines, strategic to firm holding to Due 2014 in year successful A very competence. specialist and provide with customers their personaldedication further success factor of B of factor success A further Using synergies countries. all in trend risk low-key avery as time same the at was this lion; mil (2013) million €750 to €700 from rose markets O million. (2013)million €32 to €11 from rose business new gross Switzerland, In million. (2013) million €93 to €85 from business new gross its increase to managed Germany Leasing BTV Baden-Württemberg. and Bavaria in markets major the all in locally represented – both for the clients and also for B for also and clients the for – both bundles, which represent clear added valueservice lucrative business and connections comprehensive T BANK. LÄNDER VIER BTV the with cooperation the Leasing itself. Leasing taad and B and taad he mutual support, especially in sales, results in in results sales, in especially support, mutual he ugsburg, S ugsburg, uremberg, B uremberg, verall, the total cash value in external leases in all all in leases external in value cash total the verall, T tuttgart, Vienna and, from 2015, in also from and, Vienna tuttgart, V Leasing Deutschland G Deutschland V Leasing T V Leasing staff are now available to to available now are staff V Leasing uremberg, B uremberg, T V Leasing consists of of consists V Leasing ness with new customers in2014.“ ness withnew customers „B T T T V and B V and V Leasing is now now is V Leasing V Leasing- also increased itsbusi mb (2006) H (2006) T V B T eport 2014 Report V Business G roup finan - - Managem c l ia state ent report foresight G m 20 20 roup ents

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Group The BTV brand

In times of excess, customers make decisions based on relevance and satisfaction. As a branded company, BTV sells customer satisfaction.

BTV VIER LÄNDER BANK has its roots in Tyrol and Vorarlberg. It has been serving customers in Vienna since 1989, in Switzerland since 2004 and in Southern „It is our aim to be the best connect- Germany and Northern ed entrepreneurial bank in the most Italy since 2006. BTV has attractive economic area of Europe.“ been adding value and connecting people for 110 years. BTV employees see themselves as partners for medium-sized firms, not least to assist them with succession regulations. Going forward, more atten- tion should be paid to in whose hands entrepreneurs place their life‘s work. BTV has been managed on an extremely consistent and rigorous basis since it was founded in 1904, always prudently and with the goal of making the values maintained for more than 110 years tangible also for future generations.

Brand as a means to store performance BTV employees convey these values long before the The firm footing is what allows us to climb so well: initial contact with the customer because brands work. complete focus on the customer benefit also guides An initial conversation is not the beginning, but rather the brand. the first high point in the customer relationship. Not missing any opportunity to bring about a customer benefit by offering non-standard services and there- BTV customers assess the quality and are prepared fore creating a corresponding feeling of worth for the to pay a reasonable price for it. customer inspires confidence in the BTV brand. Quality management Relevance rules the world The quality factor has played a major role at the A lack of imagination on the part of so many sales Bank für Tirol und Vorarlberg since it was founded. staff today results in the attitude of always being In the last 20 years several in-house initiatives have able to sell at the cheapest price and thus becom- been set up on this topic, which are still valid. We ing number one. BTV VIER LÄNDER BANK has set take into account that the desire for simplicity, itself the goal of adding value, which is relevant personal care and intensive advice in the case of for customers, for its 110,000 retail clients and complex affairs is stronger than ever for our cus- over 7,500 corporate clients, in the most attractive tomers. The customer‘s accessibility to the advisor economic area of Europe, through its services and is an important matter for us. The presence of our jointly with its network partners: acting with an en- employees plays an equally major role as friendli- trepreneurial spirit, connecting people, transferring ness at the counter or being put through quickly performance advantages, living an identity in four on the telephone. BTV places value on details. countries. What this means in everyday life is that This can already be experienced on entering the each employee will have to bundle this aspiration branch and continues in many further details – for in their overall ability in their day-to-day actions. A example, offering coffee – which, in brief, makes a service is like a prototype: as a service company, we noticeable difference. We aspire to offer quality at must prove ourselves again each time. the highest level. This is because customer satisfaction only arises through continuous quality.

22 foresight Group Management report GROUP FINANCIAL STATEMENTS

Management report

Business trends Compliance and money laundering Characteristics of the internal control and risk management system Shares and shareholder structure Outlook ent reportent m Manage

BTV Business Report 2014 22 |23 Management report and notes on BTV Group business development in 2014

Economic environment Interest rates 2014 represented a turbulent period for the global The ECB decided on various measures to ease mon- economy. Geopolitical crises and concern about a etary policy in 2014. For one thing, it lowered the base weakening of the global economic climate damp- rate in June and September by 10 basis points each ened investor sentiment, while positive economic time, reaching the record low of 0.05%. It also intro- indicators in the US and an extreme expansionary duced a negative deposit rate and reduced this during central bank policy supported economic devel- the previous year to -0.2%. In June the ECB also de- opment and gave new impetus to the financial cided on a series of conditional long-term refinancing markets. operations (LTROs) totalling €400 billion. Consequent- ly, the purchase of Pfandbriefen (covered bonds) and Although the slight recovery in the eurozone asset-backed securities was announced in October. As continued last year, the currency union suffered these measures had not made any clear impact by the severely, however, from the consequences of the year-end, however, the ECB had a broadly conceived Ukraine crisis and existing structural problems such programme to purchase government bonds in view. as high rates of unemployment. In December, the The ECB‘s extreme expansionary monetary policy led failed presidential elections in Greece also came as to a sharp fall in yields on government bonds in both a surprise, as a result of which the political risk took the peripheral and the core countries of Europe. The centre stage again. The European Central Bank‘s yield on 10-year German Bunds reached its all-time extreme expansionary monetary policy, which low of 0.54% at the end of December. was eased on several occasions in 2014, supported the fragile upturn and mainly resulted in a definite The US Federal Reserve continued on its taper- weakening of the common currency in the second ing path last year and ended the monthly bond half. Combined with a low oil price, slightly positive purchase programme in October. It also held out and higher-than-expected growth was therefore on the prospect of an initial base rate hike, which observed in the eurozone towards the year-end. is expected from mid-2015. Increased uncertainty Germany was the main driver. Rising private on the markets in the meantime resulted, however, consumption, greater corporate investment and in sharp fluctuations in the yield on 10-year US attractive exports and imports resulted in a definite government bonds, which lost just under 80 basis increase in GDP in the fourth quarter of 2014. The points during the year and fell to 2.17%. Swiss economy also stabilised in 2014, while Austria displayed a slight weakness. Currency markets In the first half of 2014, we saw a strong euro that The US economic climate was also robust in 2014. fluctuated between USD 1.35 and USD 1.40. The Positive leading and sentiment indicators, produc- divergent central bank policies adopted by the ECB tion and trade data, and an ongoing improvement and the Fed resulted in a definite weakening of the in the labour market clearly hinted that this trend common currency as from July. At the year-end, the will also continue in 2015. Economic growth slowed euro was listed at USD 1.21, thus reaching its lowest down and bottomed out in the emerging coun- level for more than two years. tries. These countries suffered in part from capital outflows, a weak economic climate in China and the low oil price.

24 foresight Group Management report Group financial statements

The EUR/CHF exchange rate came considerably ber was clearly in the black compared with the begin- close, mainly in the second half of the year, to the ning of the year. Geopolitical conflicts, concern about Swiss National Bank‘s exchange rate floor of 1.20. a slowdown in the global economy and speculation The main reason for this included the excellent regarding the turnaround in US interest rates resulted Swiss economic data, concern about a slowdown again and again in short-term corrections during the in the global economy and the ECB‘s extreme mon- year. The markets in developed countries were mainly etary easing. The SNB therefore introduced nega- supported, however, by the sustained monetary easing tive interest rates to defend the exchange rate floor of the main central banks, as a result of which major of EUR/CHF 1.20. By the end of the year, the euro share indices such as the S&P 500, Dow Jones and was listed at 1.20 to the Swiss franc and therefore Dax reached new all-time highs. Stock exchanges in about roughly 2% less than at the start of the year. emerging countries performed extremely positively The Japanese yen performed sideways to the euro until September. The falling oil price, the presidential (closing rate: 144.85), although was subjected to election in Brazil and the geopolitical conflicts resulted, substantial fluctuations during the year. The reason however, in a definite correction towards the year-end, for this was the extreme expansionary monetary which is why the MSCI Emerging policy adopted by both central banks (ECB and Markets Index lost about 2%. Bank of Japan). Almost all major financial centres showed a positive Equity markets performance. The Euro Stoxx 50 lagged and gained Equity markets in developed countries performed in +1.2%, the Swiss SMI represented the strongest a very pleasing way throughout 2014. The US stock European market with +9.5%, the US Dow Jones exchanges posted the best performance, while the gained +7.5% and the Japanese Nikkei rose by +7.1%. Swiss SMI represented the strongest European equity Vienna‘s ATX index was down by a not inconsider- market during the year. In the second quarter, the able 15.2%. Japanese market was able to offset most of the losses ent reportent

incurred in the first half owing to the extremely relaxed BTV‘s ordinary shares rose by 9.5% to €21.35 in 2014 m monetary policy adopted by the BoJ and on 31 Decem- and preference shares by 9.1% to €18.00. Manage

BTV Business Report 2014 24 |25 Business trends Detailed explanations about risk management as well as descriptions of the relevant risks and uncertainties IFRS Group financial statements to which the company is exposed can be found in the The BTV Group financial statements have been risk report starting on page 90. drawn up according to IFRS regulations as well as the interpretations by the International Financial Analysis of business performance Reporting Interpretations Committee (IFRIC) as The business activity of the BTV Group is analysed exempting consolidated financial statements as below having taken into account the financial and defined by section 59a of the Austrian Banking Act non-financial performance indicators which are (BWG) in conjunction with section 245a of the Aus- most important for business activity: trian Commercial Code (UGB). In establishing the present financial statements, all standards which Profit trend were required for this financial year were applied. Thanks to the Bank für Tirol und Vorarlberg‘s sus- An overview of the standards and the balancing tained and essentially conservative business policy, principles is provided in the Annex, from page 54 the bank managed to end 2014 - the seventh year onwards. Various new and revised standards ap- of the ongoing financial and economic crisis - with plied in 2014 (see pp. 63 et seq.). a further profit increase. BTV focuses on a bank‘s core business: placing customers and their needs The statement of comprehensive income and the and demands centre stage. It is because of this fact balance sheet were affected by changes in the con- that, even in such difficult times, BTV continues to solidation scope. The main effects are commented enjoy customers‘ confidence and consequently on below in the individual items. VoMoNoSi Beteili- could achieve stable results, which are based on gungs AG (to date consolidated at equity, holds a customer business. Despite the challenging envi- participation in Silvretta Montafon Bergbahnen AG), ronment and the weak economic situation, annual TiMe Holding GmbH (holds a participation in Moser net profit before tax rose by €3.5 million to €89.8 Holding AG) and retroactively BTV Beteiligungshold- million, or 4.0%, compared with the previous year. ing GmbH and BTV 2000 Beteiligungsverwaltungsge- sellschaft m.b.H. (the former is a holding company, BTV‘s interest-earning business also failed to the latter holds various participations in BTV) are now escape the impact of low interest rates, which included in the full consolidation scope. In addition, therefore posted a drop of €4.5 million, or 2.9%, ALPENLÄNDISCHE GARANTIE-GESELLSCHAFT in earnings. In sum, net interest income increased M.B.H. is run as a proportionally consolidated com- by €2.1 million, or 1.1%, to €182.3 million owing to pany (to date consolidated at equity). Please refer to higher income from holdings valued at equity. Pru- pp. 54 et seq. for more detailed information. dent decision-making behaviour and close custom-

26 foresight Group Management report Group financial statements er support are the reasons for BTV‘s improved risk Breakdown of changes in profit in thousands structure and the associated lower risk costs, which in 2014 of euros were clearly reduced in 2014 from €46.9 million in Net interest income +2,055 the previous year to €29.0 million in the reporting Loan-loss provisions in the credit business +17,843 year. The „Operating expenses“ (+€43.6 million) Net commission income –1,550 and „Other operating profit“ (+€32.2 million) items Trading income –236 rose sharply owing to the inclusion of the Silvretta Operating expenses –43,571 Montafon Group in the full consolidation scope, Other operating profit +32,228 which is why a direct comparison of the years is Income from financial assets –3,275 only given to a limited extent here. This change Annual net profit before tax +3,494 was also the cause of the increased cost-income Group net profit for the year +7,558 ratio by 11.6 percentage points to 54.4% compared with the previous year. The total profit arising from financial assets amounted to €1.7 million, compared with €5.0 million in the previous year. ent reportent m Manage

BTV Business Report 2014 26 |27 Change in operating income 2010-2014

Amounts in € million 1.0 0.8 0.6 3.2 200.0 45.3 43.7 2.8 42.5 42.3 43.3 180.2 182.3 150.0 164.6 164.3 146.6

100.0

50.0

0.0 2010 2011 2012 2013 2014 Net interest income Net commission income Trading income

Net interest income Risk provisions Interest income rose to €182.3 million, which corre- Loss provisions for credit business represent the bal- sponds to growth of 1.1%. In the existing uncertain ance of inflows and releases of loss provisions, includ- environment, with companies‘ ongoing reluctance ing direct write-downs on receivables. To these are to invest, customer receivables increased slightly in added proceeds from receivables which had already the corporate client segment; on the other hand, been written down. Loss provisions fell by 38.1% to receivables from retail clients fell by €74 million as €29.0 million in the reporting year. This trend resulted an annual average. The ongoing low interest rates mainly from an improvement in the credit risk port- were a key factor in the earnings development, folio. This resulted in a significantly lower provision which resulted in a downward interest rate struc- requirement when forming portfolio reserves. The ture result and therefore in a drop in earnings for share of the two worst risk categories fell from 4.2% this item. Interest income includes income from to 3.4%, while the share of the non-performing credit businesses valued at equity, which clearly rose risk volume - the non-performing exposure ratio (NPE year-on-year by €6.5 million to €34.2 million and ratio) - dropped from 3.0% to 2.7%. In relation to total made a significant contribution to the results. customer receivables, the non-performing loans ratio (NPL ratio) fell from 4.1% to 3.8%.

28 foresight Group Management report Group financial statements

Net commission income precious metals (down €0.2 million to €2.9 million), In particular, the drop in transaction fees in the whereas there was an upturn in income from lending securities business, which could not be fully offset (up €0.4 million to €6.1 million) and in income from by higher asset management earnings, reduced other business (up €0.1 million to €1.9 million). All in securities income by €1.1 million, or 4.9%, which - at all, net commission income posted a result of €43.7 €20.5 million, or 47% - represented the lion‘s share of commission income. There was also a downward trend for payment transactions (down €0.8 million to €12.3 million) and for currency, foreign exchange and

Change in net commission income 2010-2014

Amounts in € million 50.0

7.5 40.0 6.9 6.9 8.0 6.3 3.1 3.2 2.9 3.5 4.3 13.1 12.3 30.0 13.5 14.1 12.6

20.0 21.6 20.5 19.7 18.6 18.5

10.0

0.0 2010 2011 2012 2013 2014

Securities Payment transactions Currency, foreign exchange Credit and other business and precious metal businesses

Trading income Trading income dipped. This was €0.2 million less than the previous year, at €0.8 million. The cause of ent reportent

this was the drop in earnings from hedging business. m At €0.9 million, income from foreign exchange and currency transactions was at the previous year‘s level, while income from securities transactions posted Manage growth of €0.1 million to €0.5 million.

BTV Business Report 2014 28 |29 Operating expenses Expenditure on materials rose by €10.7 million Compared with the previous year, operating expenses year-on-year. Here too, the lion‘s share (€9.5 mil- rose by €43.6 million, or 45.4%, to €139.6 million. lion) was attributable to the change in the group of A significant share amounting to €34.3 million was consolidated companies. Without this particular- attributable to the inclusion of VoMoNoSi Beteili- ity, the main driver was the increase in data centre gungs AG in the group of consolidated companies. costs, which were up by €0.4 million. In percentage terms, the biggest increase was posted in deprecia- The detailed breakdown shows, in absolute terms, tion. Here too, the growth mainly results from the the biggest growth in staff costs, which rose by change in the consolidation scope, as €9.6 million €23.0 million to €83.4 million and so proportion- out of €9.9 million is based on this effect compared ally represent the main expenditure item. As from with the previous year. The number of BTV branch April 2014, the banking industry pay settlement offices increased from 37 to 38 compared with the increased collective agreement salaries by 2.2%. previous year. During the reporting period, the number of staff employed by the BTV Group increased by 402 per- Please refer to the back cover of this business sons/year, of whom 397 persons/year are allotted report for the existing BTV branches. to VoMoNoSi Beteiligungs AG. The lion‘s share of the increase (€16.5 million) was attributable to the Given that no independent and planned research inclusion of this company in the group of consoli- was carried out, in order to uncover new scientific dated BTV companies. or technical knowledge, nor any development in preparation for commercial production, as in the For the social capital parameters, there were modi- previous year there were therefore no research and fications to all three factors compared with the pre- development activities carried out in the meaning vious year. Owing to the falling interest rates on the of section 243 (3) line 3 of the Austrian Commercial capital market, the actuarial interest rate dropped Code (UGB). by 1.35% to 2.15%. The calculation parameter for the collective agreement fell from 2.75% to 2.48%, while the career trend parameter rose from 0.50% to 0.70%.

Change in operating expenses 2010-2014

Amounts in € million 140.0 16.8 120.0 39.5

100.0 6.8 6.7 7.2 6.6 80.0 28.8 26.4 26.6 26.7 83.4 60.0 57.8 61.0 59.5 60.4 40.0

20.0

0.0 2010 2011 2012 2013 2014

Staff costs Material costs Depreciation

30 foresight Group Management report Group financial statements

Other operating profit Taxes on earnings and profit The result for other operating profit improved by Besides the ongoing effect of corporation tax, the €32.2 million to €30.0 million. Here too, the increase in amounts recorded at ‚Taxes on income and profit‘ the reporting year can be attributed to the inclusion of relate primarily to the latent taxes to be paid on accru- VoMoNoSi Beteiligungs AG in the group of consoli- als and prepayment adjustments, in accordance with dated companies, which contributed earnings of €41.2 IFRS. Tax expenses for 2014 for the BTV Group are million. Furthermore, this item included the Austrian calculated at €4.1 million, or 22.9%, less at €13.7 mil- stability tax for BTV AG (up €3.4 million to €7.3 million. The effective tax rate was thus 15.2% compared lion) and the allocation to reserves for the Neu deposit with 20.6% in the previous year. protection fund totalling €7.7 million. Annual pre-tax profit and group net profit for the year Income from financial assets The focus on customers and the consistent imple- In 2014 the income from financial assets was €3.3 mil- mentation of the risk strategy resulted in 2014 in an lion down on the previous year. The main reason for increase in annual pre-tax profit by €3.5 million (4.0%) this change were the special effects that arose owing to €89.8 million compared with the previous year. to capital gains on the disposal of participations. All in After tax, annual profit was calculated at €76.1 million, all, the profit arising from financial assets amounted to which signified an improvement of €7.6 million, or €1.7 million in the reporting year. 11.0%, compared with the previous year.

Change in annual net profits pre-tax 2010-2014

Amounts in € million

90.0 89.8 86.3

70.1 reportent 60.0 m 61.8 64.7 Manage 30.0

0.0 2010 2011 2012 2013 2014

Annual net profits pre-tax

BTV Business Report 2014 30 |31 Earnings per share For the financial year 2014, the Board of Directors The significantly higher group net profit for the year will propose an unchanged dividend (from previ- resulted in an increased profit per share of 11%. This ous year) of €0.30 per share at the annual general increased from €2.74 in the previous year to €3.04. meeting.

Change in earnings per share 2010 - 2014

Values in € 3.00 3.04 2.74 2.44 2.00 2.16 1.98

1.00

0.0 2010 2011 2012 2013 2014

Earnings per share

32 foresight Group Management report Group financial statements

Balance sheet performance Changes to significant balance sheet in € million In particular, in the ever strained economic envi- items in 2014 ronment, BTV remained faithful to its approach of Total assets +6 placing customers and their needs at the heart of Loans to clients –18 its actions and also continuing to act - with respect Loans to Credit Institutions –48 to low interest rates - true to the motto „investing Financial assets including holdings +1 instead of speculating“. BTV‘s cautious handling of Liabilities to credit institutions –358 money was therefore also reflected in the changes Primary investments including +216 on the balance sheet. supplementary capital Equity +72

Change in assets ers. Loans to foreign customers rose by €38 million Total assets stabilised and at 31 December 2014 in 2014, while loans to domestic customers fell by were €9,598 million, up €6 million, or 0.1%, above €56 million. the year-end 2013. Risk provisions dipped by 3.8% to €199 million in The reduced credit at central banks (down €44 2014. There were mainly million) was the main reason for the drop in cash smaller appropriations to the portfolio reserve and reserves. This item fell to €173 million. a slightly higher consumption of risk provisions compared with previous years, which resulted Loans to credit institutions also fell. These dropped in this decline. For risk management objectives, from €322 million to €274 million in 2014. This cor- methods and declarations regarding existing de- responded to a fall of just under 15%. fault and market risks, please see the detailed risk report starting on page 90. The economy was also unable to pick up speed deci- sively during 2014. Brief positive prospects followed Financial assets and interests, including trading assets sometimes severe setbacks. The modest demand for remained almost unchanged compared with the previ- credit was also due to the uncertain environment. ous year, at €1 million. The growth in holdings valued Despite these difficult circumstances, BTV managed at equity totalling €51 million was confronted with a to maintain the „Loans to clients“ item at the previ- decline mainly in fixed-rate securities. ous year‘s level of €6,387 million. In detail, they fell by €18 million, or 0.3%. In the corporate client business,

incl. BTV Leasing, the volume expanded by just under reportent €97 million. Loans to retail clients in contrast fell by m €74 million in this period. Growth regions are still

BTV‘s expansion markets. This is also reflected in the Manage distribution of loans to domestic and foreign custom-

Change in balance sheet assets 2010-2014

Amounts in € million 186 254 247 325 9,000 221 2,611 2,456 2,612 2,490 2,472

6,000 6,387 6,405 6,387 6,214 5,940

3,000

235 282 467 322 274 0.0 2010 2011 2012 2013 2014

Loans Loans to customers Financial assets including holdings Other Assets

BTV Business Report 2014 32 |33 Change in liabilities Conversely, liabilities to banks fell to €1,395 million Primary funds formed the basis of the refinancing: (down 20.4%) at the year-end. Owing to the low As at 31 December 2014, BTV‘s clients invested in interest rate, many customers switched to securities primary funds to the tune of €6,919 million. The investments, particularly in BTV Asset Management. pleasing increase of €216 million, or +3.2%, versus All in all, the volume of deposits rose as a result by year-end 2013 primarily resulted from an increase €407 million to €5,236 million. Managed client de- in securitised liabilities totalling €138 million and in posits totalled €12,155 million, which corresponds to liabilities to customers (savings and account depos- an increase of €624 million (up 5.4%). its) by €107 million to €5,527 million. This mainly included customer account deposits, which grew, Balance sheet equity (including group net profit while savings deposits remained unchanged over- for the year) increased by €72 million, or 7.7%, to all. The basic strategic principle of BTV, refinancing €1,004 million. This increase primarily resulted from customer credit business using primary funds, is the profit of the financial year 2014 (€76.1 million). still intact even in times of low interest rates. At 89.4%, the loan deposit ratio (ratio of customer loans by loan loss provisions to primary funds) improved from 92.3% in the previous year.

Change in balance sheet liabilities 2010-2014

Amounts in € million 10,500

1,101 1,137 1,284 924 986 1,188 1,282 1,392 1,287 1,255 7,000 5,373 5,395 5,420 5,527 4,881

3,500

1,795 1,601 1,812 1,753 1,395 0.0 2010 2011 2012 2013 2014

Liabilities KI Liabilities Clients Securitised liabilities and subordinated capital Equity and other liabilities

34 foresight Group Management report Group financial statements

Consolidated equity ing to the Capital Requirements Regulation (CRR) In accordance with Regulation (EU) No 575/2013 amounted to €930.1 million as at 31 December 2014. (CRR), in conjunction with the CRR accompanying Common Equity Tier 1 (CET1) stood at €796.1 million regulation of the Austrian Financial Market Author- at the year-end. Risk-weighted assets (RWA) rose by ity (FMA), subject to application of the transitional €157 million to €6,213 million, mainly as a result of the provisions, the qualifying consolidated equity accord- application of the CRR transitional provisions.

Change in capital 2010 - 2014

Amounts in € million 1,000 995 964 930 935 853

667

333

0 2010 2011 2012 2013 2014

Qualifying equity

In accordance with Regulation (EU) No 575/2013 as at 31 December 2014. This value corresponds (CRR), in conjunction with the CRR accompanying to the core capital ratio. The total capital ratio was regulation of the FMA, subject to application of the 14.97%. transitional provisions, the CET1 ratio was 12.81% ent reportent

Change in core capital ratio 2010 - 2014 m

Values in % 14.00 % Manage 13.33 % 12.81 % 12.45 % 10.50 % 11.22 %

8.89 % 7.00 %

3.50 %

0.00 % 2010 2011 2012 2013 2014

Core capital ratio

Sections 22 and 23 BWG formed the calculation of the transitional provisions. The equity calcula- basis until 2013, as from 2014: Regulation (EU) No tion for 2014 included retained earnings totalling 575/2013 (CRR), in conjunction with the CRR accom- €19,465 thousand following approval by the panying regulation of the FMA, subject to application Supervisory Board on 27 March 2015.

BTV Business Report 2014 34 |35 Key indicators in the group of consolidated companies. The risk/ The return on equity (RoE) on the basis of the pre-tax earnings ratio was 15.9% (previous year: 26.0%). annual net profit was 9.27% at the end of the year - 23 The significant improvement resulted from the basis points below the previous year‘s value. After tax, lower risk costs. the value rose by 32 basis points to 7.86% owing to the lower tax ratio. At 89.4%, the loan deposit ratio (ratio Key Indicators in % of customer loans by loan loss provisions to primary funds) improved from 92.3% in the previous year. At RoE before tax 9.27 % 109.9%, the liquidity coverage ratio (LCR) now already RoE after tax 7.86 % exceeds the provisions following complete introduc- Loan Deposit Ratio 89.4 % tion of the CRR (target figure >100%). At 8.15%, the LCR (Liquidity Coverage Ratio) 109.9 % leverage ratio also significantly exceeds the required Leverage Ratio 8.15 % minimum figure of 3%. The cost-income ratio for the Cost/income ratio 54.4 % reporting year 2014 was 54.4%. The growth of 11.6% Risk/earnings ratio 15.9 % points compared with the previous year is attributable Common equity Tier 1 ratio according to CRR 12.81 % mainly to the inclusion of VoMoNoSi Beteiligungs AG Equity ratio according to CRR 14.97 %

Change in cost/income ratio 2010 - 2014 Values in % 60.0 %

54.4 %

47.2 % 45.6 % 40.0 % 44.2 % 42.8 %

20.0 %

0.0 % 2010 2011 2012 2013 2014 Cost/income ratio

Events after the financial statement date On 1 March 2015 the Austrian government decided On 15 January 2015 the Swiss National Bank re- not to make any further tax money available to moved its exchange rate floor of 1.20 francs to the HETA ASSET RESOLUTION AG (HETA) as the succes- euro. At the same time, it cut the interest rate for sor company to Hypo Alpe-Adria-Bank International credit on current accounts that exceed a specific ex- AG (HAA). Consequently, the Austrian Financial empt amount by 0.5 percentage points to -0.75%. It Market Authority (FMA) took over control of the moved the target range for the three-month Libor company in accordance with the Banking Restruc- further into negative territory to between -1.25% turing and Resolution Act (BaSAG) and, as an initial and -0.25%. It had previously been between -0.75% measure, mandated that HETA should not make and +0.25%. any interest or redemption payments on most of its liabilities until 31 May 2016. The moratorium is Overall, as at 31 December 2014, BTV‘s CHF expo- being used to reassess the assets and liabilities and sure was around CHF 1.2 billion; compared with the to work out a strategy for the final company. BTV is previous year, the volume dropped by CHF 0.2 billion. not affected by this as it does not have any receiva- Of this volume, CHF 0.5 billion was apportioned to bles or other financial instruments in its books the branch in Staad. Furthermore, CHF 0.1 billion was vis-à-vis HETA or the federal state of Carinthia. On 5 assigned to cross-border workers who are paid in January 2015 BTV opened a new branch in Nurem- Swiss francs. Based on the currency effect, total assets berg in the market area of Germany. Otherwise increased by around €120 million; additional adjust- between the end of the financial year and the crea- ments to the tune of €1-2 million are expected. tion and approval of the financial statement by the auditors, there were no significant events relating to the business. 36 foresight Group Management report Group financial statements

Compliance and money laundering

Compliance Money laundering At the Bank für Tirol und Vorarlberg Aktiengesells- BTV‘s goal is to prevent any form of money launder- chaft (BTV), employees undertake on joining to ing or the financing of terrorism within its business comply with the provisions of BTV‘s compliance activities. For this purpose, various procedures and code. These rules are based on the Standard Com- systems are set up within BTV in order to uncover pliance Code of the Austrian banking industry, the unusual transactions and business cases, and to regulations of the Emittenten-Compliance-Verord- pass these on to the money laundering reporting nung [Issuers Compliance Ordinance] (ECV 2007) authority if money laundering is suspected. The and the Compliance Regulations of the Securities daily embargo examination which is also supported Supervision Act (WAG 2007). The objective of these by the system, as well as the examination of exist- regulations is not only the prevention of insider ing and new business relationships with politically trading, market manipulation or avoidance of con- prominent persons (PEP) were carried out according flicts of interest, but the prevention or minimisation to the legal regulations. of all compliance-relevant risks, which could result from the non-compliance with laws, regulations, Over 140 employees received training during the non-statutory recommendations or internal guide- reporting period on the issues of money launder- lines. Internal procedures and measures for compli- ing and the financing of terrorism, with a focus on ance with these rules, which are regularly checked creating understanding of risky transactions and and documented, have been defined by company business cases, as well as the individual employee‘s compliance officers, with no infringements being responsibility for preventing money laundering and ascertained during the reporting period. financing of terrorism.

A compliance e-learning tool was developed during the reporting year. All BTV employees have successfully completed the compliance e-learning ent reportent

in the form of a test. In addition, more than 130 em- m ployees in the branches and divisions participated in classroom training in 2014 in order to ensure full compliance with the regulations of the Compliance Manage Rules and the MiFID.

BTV Business Report 2014 36 |37 BTV bank employees

The success of a service provider depends to a considerable extent on the performances of its employees. BTV therefore consistently invests in its employees.

The following statements focus on BTV Bank and ZukEr project and full-time trainers Leasing employees and therefore on BTV‘s core Investing in the training and further education of business as they are not comparable to the non- BTV employees is a central concern of BTV. The banking service areas. Education and further train- decision for the ZukEr (future-success) project ing are of great importance to BTV – regardless of and therefore for full-time trainers underpins this whether this involves new or long-serving em- endeavour. In 2014 the project team, together with ployees. Because of this, BTV offers a large number personnel management, focused on analysing and of workshops, seminars and training sessions to restructuring training in the retail client business. aid employees in their personal and professional The team focused on the scope and sales orienta- development to help them to be successful. tion of the content and on the correct timing of the training for successful application of what has been BTV talent management learned in practice. BTV initiated BTV talent management two years ago. It provides selected employees with a platform to Strategy training broaden their potential, to try out new tasks and lastly In 2014 all BTV managers completed strategy training to take on more responsibility. In the last two years as the basis for the upcoming strategy work and in line the talent group has focused with their responsibility as managers. This ensured on „Fit for BTV“ and „Fit for the intensive involvement with BTV‘s business model „Entrepreneurial, responsible and customer“. Its goal? To increase (customer benefits, adding value) for a deep under- competent employees are key to understanding of the entire standing of the strategy process and to reflect on the the company‘s success.“ bank and heighten awareness of success factors in the implementation. customer needs. In addition to personal development, more than half of the talent Company group insurance scheme also decided on career progression at BTV. Owing to a change in the legal framework conditions, new employees can opt to pay contributions In December 2014 BTV started the next round of the into a company group insurance scheme instead talent management with 35 new talented individuals of to the pension fund. Employees will have the and a kick-off event. This was the final event for the option to change from age 55. BTV informed its talent generation 2013/2014. Around 80 participants employees in meetings on the changes and took discussed the subsequent regulations at BTV with out company group insurance. Board spokesman Peter Gaugg, followed by a practical exchange with customers and experts. The generation changeover was marked with a symbolic torch handover on Bergisel.

38 foresight Group Management report Group financial statements

CHANGE IN EMPLOYEES (Bank and Leasing) 31.12.2012 31.12.2013 31.12.2014

White collar 803.58 788.17 813.05 of which managers 98.00 106.00 114.00 Average age (in years) 38.83 39.20 39.26 Average length of service (in years) 12.53 12.57 12.51 Part-time working ratio (%) 16.51 15.83 17.48 Turnover rate (%) 14.70 14.43 12.78 Health rate* (%) 50.48 51.29 51.84 Female quota (%) 44.57 44.71 45.04 Average number of training days per employee 5.31 4.82 7.03 Investment in training per employee (in euro) 848.90 746.25 1,031.13 Employees in talent management 62 62 35 Applications 1,077 1,005 1,218 Accepted 91 89 115

* Sickness days per employee ≤ 3

Employees by country 2012–2014

Amounts in € million 800 22.00 26.00 780 23.00 60.17 46.26 760 52.29 ent reportent

740 m

720 731.32 730.88

700 712.88 Manage

680

660

640 2012 2013 2014

Austria Germany Switzerland

BTV Business Report 2014 38 |39 Reporting on the significant features of the internal control and risk management system with regard to the accounting process.

As required by section 243a para 2 of the Austrian Control environment Commercial Code (UGB), the most important In addition to compliance with legal provisions in characteristics of BTV‘s internal control and risk Austria, Germany and Switzerland, the principles of management system with regard to the account- conduct defined by BTV are given priority. Em- ing process are cited below. phasis is also placed on observing BTV‘s corporate governance principles and on the implementation BTV‘s Board of Directors is responsible for the of its standards. implementation and organisation of an internal control and risk management system correspond- For the overall control environment, descriptions ing to the requirements of the group, in relation of jobs with their associated competences and to the accounting process. This report provides an allocated areas of responsibility exist for the entire overview of how the internal controls are regulated department, with corresponding training pyramids in relation to the accounting process. for the optimal further development of employee expertise. In this way, it is also possible for innova- The following explanations follow an opinion for tions to be included in the accounting process the Austrian Financial Reporting and Auditing in a proper and timely fashion. The department Committee (AFRAC) on drawing up the manage- employees have the necessary knowledge and ment report required by Sections 243, 243a and experience at their disposal to work in accordance 267 of the Commercial Code (UGB) of June 2009 with their remits. and also the tasks of the Audit Committee as laid In order to comply with the prescribed legal provi- down in Section 63a of the Banking Act (BWG). sions and relevant accounting standards, within The description of the significant characteristics is BTV, accounting processes (IFRS, UGB), in particular structured pursuant to the framework concept of key processes, are supported by numerous guide- the Committee of Sponsoring Organisations of the lines, manuals, working aids and written instruc- Treadway Commission (COSO). tions in the Finance and Controlling departments. These are regularly checked and updated where Accounting (bookkeeping and presentation of necessary. the accounts) and its associated processes, as well as the associated risk management, fall within Risk assessment the Finance and Controlling area (Reporting and A catalogue of risks has been developed cover- Presentation of the Accounts Groups and Tax and ing the most significant typical company business Accounting, as well as Risk Controlling Group). processes in accounting, with the identification of Regular and legally prescribed checks are carried the most important risk areas. These are monitored out by the Internal Audit department. with controls on an ongoing basis or reviewed and, where necessary, evaluated. Internal controls may The primary tasks of the internal control system provide an adequate degree of certainty of meet- and of the risk management system are to inspect ing these objectives, but no absolute guarantee. all accounting-related processes and to identify, The possibility of mistakes when performing activi- analyse and constantly monitor the risks affecting ties, or errors when estimating or applying scope the correctness and reliability of the bookkeeping, for discretion evidently exists. and where necessary, to adopt measures to ensure that the company‘s goals can be achieved.

40 foresight Group Management report Group financial statements

Because of this, it is not possible to provide an un- Information and communication limited guarantee that errors in the annual financial Timely and comprehensive reports on the most statements will be detected or prevented. In order significant accounting processes and group activi- to minimise the risk of a misjudgement, selective ties are drawn up for the Board of Directors (in the use is made of external experts and publicly acces- form of monthly financial reports), for the Super- sible sources are taken into account. visory Board and Audit Committee, as well as for the BTV shareholders (quarterly financial reporting) Control measures with explanations as needed. These activities include systemic controls, which have been defined by BTV and the IT provid- Supervisory measures ers (SAP, GAD, GEOS Nostro, Finanz-Logistik AG, The supervision of the accounting process was PriBaSys AG with the Finnova programme), as well guaranteed on the one hand, by the functional as manual controls such as plausibility checks, the internal control system which is regularly updated four-eyes principle (partly with the involvement of (IKS), and on the other, by the independent internal the regional manager or the section manager) or auditing department of BTV (which reports directly job rotation within the division. As a supplemen- to BTV‘s Board of Directors). tary safeguard of security within the systems, sensitive activities within BTV are protected through The head of department, as well as the responsible restrictive management of IT authorisations. These team leaders, carry out a supporting supervisory and comprehensive control measures are backed up oversight function for the accounting processes. by internal handbooks, working aids, checklists, process descriptions and job descriptions with Additional supervisory measures to guarantee their associated areas of responsibility. In addition the reliability and correctness of the accounting reconciliations and plausibility checks are per- process and its associated reporting are executed formed on the data between the Accounting and by the legally designated auditors of the group ent reportent

Presentation of the Accounts Groups and Tax and annual financial statements and the mandatorily m Accounting on the one hand, and Risk Controlling appointed Audit Committee. on the other. This guarantees the accuracy and compliance of the data used in the risk reports and Manage legal publications.

BTV Business Report 2014 40 |41 Shares and shareholder structure

BTV is autonomous and independent.

The share capital of the Bank für Tirol und Vorarlberg The shareholders Oberbank AG, BKS Bank AG, Gen- Aktiengesellschaft (BTV) amounts to €50.0 million erali 3 Banken Holding AG and Wüstenrot Wohnung- and is divided into 22.5 million no par value ordinary swirtschaft reg. Gen.m.b.H. form a syndicate, with the shares, and into 2.5 million no par value, non-voting purpose of preserving the autonomy of BTV, it being preference shares, with a minimum dividend of 6% in the interests of the syndicate partners for BTV to of the proportional amount of share capital, paid continue to develop as an earnings- and profit-oriented in arrears. company. In order to realise this objective, the syndicate partners have agreed on joint exercise of their corporate rights associated with their shareholdings and of their pre-emptive rights.

BTV shareholder structure by size of holding

37.53% CABO Beteiligungs 13.59% BKS Bank AG, Klagenfurt *) GmbH, Vienna

13.22% Oberbank AG, Linz *)

13.60% Generali 3 Banken Holding AG, Vienna *)

19.42 % Widely spread shareholdings 2.28% Wüstenrot Wohnungswirtschaft reg. Gen.mbH, Salzburg *) 0.36 % BTV Private Foundation

*) Shareholders who form part of the syndicate agreement.

42 foresight Group Management report Group financial statements

Under the form of the BTV Private Foundation BTV BTV is permitted to purchase its own shares for employees have a stake in the company. The Board the purposes of securities trading, as well as for its of Directors, the Foundation‘s Advisory Board and own employees, managers, members of the Board its auditors constitute the executive bodies of the of Directors as well as the Supervisory Board by 14 BTV Private Foundation. The exclusive purpose of November 2016, with the proviso that the trading BTV Privatstiftung is to pass on, directly and in full, portfolio of shares acquired for this purpose may income from holdings in BTV or affiliated group not exceed 5% of the share capital at the end of companies. This provides a collective opportunity any day. On the basis of these decisions, shares for active involvement by the staff of BTV both in may only be purchased if the equivalent per share shaping the company and in its success. does not differ either positively or negatively by more than 20% from the average of the official BTV share price on the Vienna stock exchange during the three trading sessions preceding the purchase.

BTV Shareholder structure by VOTING RIGHTS

41.70 % CABO Beteiligungsgesellschaft 15.10 % BKS Bank AG, Klagenfurt *) GmbH, Vienna

14.69 % Oberbank AG, Linz *) ent reportent m

15.12% Generali 3 Banken Holding AG, Wien *) Manage

10.46 % Widely spread shareholdings 2.53 % Wüstenrot Wohnungswirtschaft reg. Gen.mbH, Salzburg *) 0.40 % BTV Private Foundation

*) Shareholders who form part of the syndicate agreement.

BTV Business Report 2014 42 |43 Outlook

It must be assumed that there will be a slight Although the major central banks have been pur- upturn in the global economic climate in 2015. The suing an extreme expansionary monetary policy eurozone remains fragile but could benefit from for several years, this has not yet, however, resulted the weak euro, the ECB‘s policy of monetary easing in a significant increase in prices. In the US high and the low oil price. However, the main chal- price inflation is gradually moving in the desired lenges will continue to be the low rate of inflation direction, while concerns about a price collapse and high unemployment rates. At the same time, predominate in the eurozone. The main reason the US, which grew solid in 2014, will also be the for the low inflation is the ongoing overcapacity growth engine of the global economy in 2015. The in the producing sector as the major industrial improved situation in the labour market and the and emerging countries do not yet exploit their low oil price should further stimulate consumption, full growth potential. The major central banks which forms the main pillar of US growth. (Fed, ECB, BoJ, PBoC) will therefore continue to be concerned about not stifling the global economic Japan remains fragile too. Major structural reforms recovery. Consequently, we are not expecting any such as liberalisation of the labour market are still rash changes to the abundant liquidity supply and called for and will be decisive for the future devel- a rejection of the low interest rate policy. Quite opment of the Japanese economy. the opposite: the European Central Bank and the Swedish Riksbank have already announced that The world‘s second largest national economy - Chi- they are also resorting to unconventional methods na - could see significantly weaker gains compared to counteract deflation and kick-start the economy. with previous years. Chinese leaders are expected Only in the US are we expecting a normalisation of to decide on infrastructure and other stimulus monetary policy and the first interest rate cut from programmes in order to peg growth at 7%. mid-2015.

Economic development in the emerging countries This environment facilitates BTV to continue its could remain robust despite the current difficult successful growth strategy, whose cornerstones environment. It seems as though the Emerging are the market development of the expansion Markets have reached the relative low point of markets of Vienna, Bavaria, Baden-Württemberg, the growth dynamic and now find themselves in Eastern Switzerland as well as South Tyrol and a slight process of recovery. The Asian countries Veneto (from Innsbruck). In Tyrol and Vorarlberg, in particular, which are largely oil importers, could BTV is already the market leader in the main target benefit from the low prices. Many of the emerging groups. Here, this position must be consolidated countries also reacted to the high capital outflows and further market shares must be gained. In the in previous years and improved their current ac- client business area which is important to BTV, the counts. The first interest rate hike in the US should emphasis is on organic increases to client loans, not have an overly significant impact on these primary funds and investment volumes. There will countries. Those countries with ongoing high cur- be no change to the strategically pursued principle rent account deficits, high price inflation and weak of entirely refinancing customer loans by means of currencies could, however, suffer again from the primary funds. tightening of monetary policy.

44 foresight Group Management report Group financial statements

The sustained low interest rates will continue to Owing to the expiry of the director‘s mandate of burden the structural result also in the current year Mr Peter Gaugg and Mag. Matthias Moncher on and this development cannot be offset in full by the 31 December 2015, the Supervisory Board unani- customer business recognised on the balance sheet, mously decided in the session on 28 November 2014 which is growing moderately in the planning. In the to extend the appointment term of Mr Gerhard commission business, the focus is mainly continuing Burtscher until 31 December 2019 and to appoint the expansion of the securities business. Owing to the him as spokesperson of the Board of Directors from loss of special factors, a slight decrease will be record- 1 January 2016 and to appoint Mr Mario Pabst and ed in staff expenses and an increase will be reported in Mr Michael Perger as representatives of members of other operating income. The costs for the risk profiling the Board of Directors as from 28 November 2014 are also expected to be slightly negative in comparison to 31 December 2015 and as members of the Board with 2014. In sum, these factors are supposed to lead, of Directors from 1 January 2016 for an appointment if the conditions described come to the fore in 2015, term of three years. to the annual profit before tax to be at least at the same level as in the current reporting year. Innsbruck, 16 March 2015

The Board of Directors

Peter Gaugg Mag. Matthias Moncher Gerhard Burtscher Board Spokesperson Member of the Board Member of the Board

Spokesperson for the Board of Member of the Board of Directors Member of the Board, responsi- reportent Directors with responsibility for with responsibility for risk, pro- ble for private client business in m corporate client business in cess, IT and cost management; Tyrol, Vorarlberg, Vienna and italian

Vorarlberg, Innsbruck, South Tyrol The departments for finance clients; Corporate client business Manage and Vienna; Corporate and private and controlling, legal matters and in Tiroler Oberland and Unter- customer business Southern investments and group audit; land; Corporate and private Germany; Corporate audit, Human Compliance and money customer business in Switzer- resources, Marketing & Communi- laundering. land; Institutional Clients and cations divisions; Compliance and Banks, Corporate audit; Compli- money laundering. ance and money laundering.

| BTV Business Report 2014 44 45

Foresight Group Management report GROUP FINANCIAL STATEMENTS

Group financial statements

Group financial statements 2014 Balance sheet Statement of comprehensive income Statement of change in equity Cash flow statement BTV Group: notes 2014

Report from independent auditors Report from the supervisory board ents m state l ia inan c roup f roup G

BTV Business Report 2014 |47 Group final accounts 2014 under International Financial Reporting Standards (IFRS)

Group final accounts as at 31 December 2014

50 | Balance Sheet 50 | Balance Sheet - Liabilities 51 | Statement of comprehensive - Assets income

Board of Directors/Auditors/Supervisory Board

152 | statements by the 153 | Report from independent 155 | Report from the statutory representatives auditors supervisory board

BTV Group - a 5-year overview

157 | BTV Group - a 5-year overview

3 Banken Group

159 | 3 Banken Group 160| overview of 3 Banken shareholder structure Group – Group information

48 foresight Group Management report Group financial statements

52 | Statement of 53 | Cash flow statement 131 | Miscellaneous and supplemen- Changes to Equity tary Notes to the Balance Sheet - Assets

77 | Notes to the Balance Sheet - Other and supplementary notes

131 | Other Notes 36 132 | Notes relating to offsetting of financial instruments 36a 133 Notes pursuant to section 64 BWG 36b 133 | Comfort letters 36c 134 information on shares in other companies 37 135 | Notes on transactions with closely related persons 38 135 | Emoluments and loans to members of the Board of Directors and Supervisory Board 38a 136 | Loans and liabilities to affiliated non-consolidated companies and stakeholdings 38b 136 | Loans and liabilities to associated companies and stakeholdings 38c 136 | Shares in at-equity valued companies 38d 137 Shares in at-equity valued companies 38e 137 | Acquisition costs carried over or companies valued at fair value 38f 138 | Total volume of not yet unwound derivative financial products 39 141 | Fair Value Hierarchy of Financial Instruments 40 144 | Fair Value of financial instruments which are not valued at the fair market value 41 146 | Fair Value hierarchy of financial instruments which are not valued at the fair market value 42 147 | Life to maturity breakdown 43 149 | Organs of BTV AG 44 150 | Representation of share Group financial statements financial Group holdings 45

BTV Business Report 2014 48 |49 Balance Sheet at 31 December 2014

Assets 31.12.2014 31.12.2013* 31.12.2013 Change Change in % in thousands of euros adjusted absolute

Cash reserve 1 [Reference to Notes] 173,002 229,545 229,545 –56,543 –24.6 % Loans to Credit Institutions 2 273,979 321,850 321,850 –47,871 –14.9 % Loans to Customers 3 6,386,508 6,404,543 6,404,543 –18,035 –0.3 % Risk provisions 4 –199,274 –207,146 –207,146 +7,872 –3.8 % Trading assets 5 38,433 27,208 27,208 +11,225 +41.3 % Financial assets – at fair value through 142,208 155,223 155,223 –13,015 –8.4 % profit or loss 6 Financial assets – available for sale 7 1,263,076 1,206,697 1,251,189 +56,379 +4.7 % Financial assets – held to maturity 8 741,772 846,262 846,262 –104,490 –12.3 % Shares in at-equity valued companies 9 426,931 376,204 333,672 +50,727 +13.5 % Intangible fixed assets 10a 5,543 51 51 +5,492 >+100 % Property, plant and equipment 10b 165,818 85,364 85,364 +80,454 +94.2 % Properties held as financial investments10c 52,807 46,754 46,754 +6,053 +12.9 % Current tax refunds 11 87 154 1 –67 –43.5 % Latent tax refunds 11a 17,008 4,947 223 +12,061 >+100 % Other Assets 12 109,804 94,146 93,786 +15,658 +16.6 %

Total assets 9,597,702 9,591,802 9,588,525 +5,900 +0.1 %

Liabilities 31.12.2014 31.12.2013* 31.12.2013 Change Change in % in thousands of euros adjusted absolute

Liabilities to Credit Institutions 13 1,394,692 1,752,704 1,752,704 –358,012 –20.4 % Liabilities to customers 14 5,527,031 5,419,758 5,427,569 +107,273 +2.0 % Securitised debt 15 1,012,571 874,491 880,491 +138,080 +15.8 % Trading Liabilities 16 15,806 21,443 21,443 –5,637 –26.3 % Reserves 17 127,366 69,611 69,601 +57,755 +83.0 % Current tax owed 18 1,732 9,877 9,878 –8,145 –82.5 % Deferred tax owed 18a 5,184 2,593 5,152 +2,591 +99.9 % Other Liabilities 19 129,973 100,782 100,781 +29,191 +29.0 % Subordinated capital 20 378,952 407,841 407,841 –28,889 –7.1 % Equity 21 1,004,395 932,702 913,065 +71,693 +7.7 % attributable to non-controlling interests 541 0 0 +541 >+100 % attributable to the owners of the parent company 1,003,854 932,702 913,065 +71,152 +7.6 %

Total liabilities 9,597,702 9,591,802 9,588,525 +5,900 +0.1 %

* In 2013 adjusted to the changed consolidation scope. 50 foresight Group Management report Group financial statements

Combined profit and loss account as at 31 December 2014

Profit and loss account in €000s 2014 2013* 2013 Change Change in % adjusted absolute Interest and similar income 208,803 243,107 241,811 –34,304 –14.1 % Interest and similar expenses –60,754 –90,583 –90,626 +29,829 –32.9 % Income from at-equity valued companies 34,219 27,689 24,524 +6,530 +23.6 % Net interest income 22 182,268 180,213 175,709 +2,055 +1.1 %

Loan loss provisions for credit transactions 23 –29,041 –46,884 –46,884 +17,843 –38.1 % Commission income 48,825 51,254 51,254 –2,429 –4.7 % Commission expenses –5,096 –5,975 –5,975 +879 –14.7 % Net commission income 24 43,729 45,279 45,279 –1,550 –3.4 %

Trading income 25 765 1,001 1,001 –236 –23.6 % Operating expenses 26 –139,608 –96,037 –96,027 –43,571 +45.4 % Other operating profit 27 29,956 –2,272 –2,272 +32,228 >+100 % Income from financial assets – at fair value 209 2,518 2,518 –2,309 –91.7 % through profit or loss 28 Profit arising from financial assets – available 1,904 2,479 2,815 –575 –23.2 % for sale 29 Profit arising from financial assets – held –414 –23 –23 –391 >–100 % to maturity 30 Annual net profit before tax 89,768 86,274 82,116 +3,494 +4.0 %

Taxes on earnings and profit 31 –13,687 –17,751 –17,748 +4,064 –22.9 %

Group net profit for the year 76,081 68,523 64,368 +7,558 +11.0 % Non-controlling interests 211 0 0 +211 >+100 % Owners of the parent company 75,870 68,523 64,368 +7,347 +10.7 %

other comprehensive income in €000s 2014 2013* 2013 adjusted Group net profit for the year 76,081 68,523 64,368 Revaluation from performance-oriented pension plans –16,292 –2,724 –2,724 Changes in at-equity valued companies recognised directly in equity –658 –2,787 –2,787 Profits/losses with regard to deferred taxes, applied directly against equity 4,073 679 679 Total headings which could subsequently not be allocated into profit or loss –12,877 –4,832 –4,832 Unrealised profit/loss on assets retained for disposal (AfS reserve) 15,253 –3,873 25,264 Changes in at-equity valued companies recognised directly in equity 2,594 –4,040 –3,201 Unrealised profits/losses from adjustments due to currency conversions 242 –196 –196 Profits/losses with regard to deferred taxes, applied directly against equity –2,698 1,126 –6,159 Total of the items which can subsequently be allocated to profit or loss 15,391 –6,983 15,708 Sum other comprehensive income 2,514 –11,815 10,876

Overall profit for the financial year 78,595 56,708 75,244 statements financial Group Non-controlling interests 211 0 0 Owners of the parent company 78,384 56,708 75,244

* In 2013 adjusted to the changed consolidation scope. BTV Business Report 2014 50 |51 Statement of change in equity

Statement of change in equity Sub- Reserves Retained AfS Actuarial Equity Minority Equity in thousands of euros scribed earnings reserve profit/loss excl. interests capital minority interests

Equity at 31 December 2012 50,000 60,935 647,147 99,745 –12,302 845,524 0 845,524 Capital increases 0 0 0 0 0 0 0 Overall profit for the financial year Revenue 0 0 64,368 0 0 64,368 0 64,368 Other income 0 0 –11,664 25,264 –2,724 10,876 0 10,876 Distributions 0 0 –7,500 0 0 –7,500 –7,500 Own shares 0 –228 0 0 0 –228 –228 Other changes with a neutral effect 0 0 +25 0 0 +25 +25 on results Equity at 31 December 2013 50,000 60,707 692,376 125,008 –15,026 913,065 0 913,065

Statement of change in equity Sub- Reserves Retained AfS Actuarial Equity Minority Equity in thousands of euros scribed earnings reserve profit/loss excl. interests capital minority interests

Equity at 31 December 2013 50,000 60,707 692,376 125,008 –15,026 913,065 0 913,065 Consolidation effects 0 0 48,773 –29,137 0 19,636 0 19,636 Equity at 31 December 2013 50,000 60,707 741,149 95,871 –15,026 932,702 0 932,702 adjusted Capital increases 0 0 0 0 0 0 0 0 Overall profit for the financial year Revenue 0 0 75,870 0 0 75,870 211 76,081 Other income 0 0 3,553 15,253 –16,292 2,514 0 2,514 Distributions 0 0 –7,500 0 0 –7,500 0 –7,500 Own shares 0 426 0 0 0 426 0 426 Other changes with a neutral effect 0 0 –158 0 0 –158 330 172 on results Equity at 31 December 2014 50,000 61,133 812,914 111,124 –31,318 1,003,854 541 1,004,395

By including the subgroup BTV Beteiligungsholding €29,137 thousand in the reporting year 2013. Overall, GmbH in the group of consolidated companies of equity increased by €19,636 thousand in the reporting BTV AG, the available-for-sale reserve decreased by year 2013 owing to consolidation effects.

KEY FIGURES 31.12.2014 31.12.2013*

Earnings per Share in € 32 3.04 2.74 RoE before tax 9.27 % 9.50 % RoE after tax 7.86 % 7.54 % Cost/income ratio 54.4 % 42.8 % Risk/earnings ratio 15.9 % 26.0 %

* In 2013 adjusted to the changed consolidation scope. 52 foresight Group Management report Group financial statements

Cash flow statement as of 31 December 2014

Cash flow statement in thousands of euros 31.12.2014 31.12.2013

Annual Profit 76,081 68,523 Non-cash items in annual profit and reconciliations to the cash flow from operating activities: – Depreciation/revaluation of fixed assets/financial assets/other working capital 26,540 10,305 – Increase/reduction in reserves and provisions for risks 38,498 50,757 – Profits/losses from sale of financial and fixed assets –12,698 –6,140 – Adjustments for other non-cash items –30,606 –37,752 Sub-total 97,815 85,694

Changes to assets and liabilities from operating activities after correction for non-cash items: – Loans to credit institutions 53,706 192,441 – Loans to customers –159,949 –69,936 – Trading assets –7,687 –2,980 – Other working capital –30,610 –98,772 – Other assets from operating activities 15,085 11,138 – Liabilities to credit institutions –224,000 –33,796 – Liabilities to customers 92,738 30,511 – Securitised liabilities 106,226 132,565 – Other liabilities from operating activities –3,792 –18,237 Operating cash flow –60,468 228,628

Funds inflow from sales of – Fixed assets and intangible assets 1,318 496 – Financial assets 227,893 138,449 Funds outflow through investment in – fixed assets –22,848 –7,744 – Financial assets –154,076 –204,240 Investment cash flow 52,287 –73,039

Dividend payments –10,417 –7,500 Subordinated liabilities and other financing activities –37,946 –27,612 Financing cash flow –48,363 –35,112

Cash position at the end of the previous period 229,545 109,068

Operating cash flow –60,467 228,628 Investment cash flow 52,287 –73,039 Financing cash flow –48,363 –35,112 Cash position at the end of the period 173,002 229,545

Interest received 186,648 240,819 statements financial Group Dividends received 36,391 29,977 Interest paid –60,158 –90,583 Payment of tax on income –18,632 –24,726

The payment instruments include the cash reserve bal- activity includes a cash flow of €18,086 thousand from ance sheet items comprising cash in hand and credit the acquisition of associated companies. balances at central banks. Cash flow from investment BTV Business Report 2014 52 |53 BTV Group: notes 2014

Accounting and valuation principles the consolidation of capital in the context of the The Group accounts of the ‚Bank für Tirol und acquisition method is performed by offsetting the Vorarlberg AG (BTV AG)‘ have been drawn up ac- consideration against the proportionally identified cording to IFRS regulations and the interpretations assets and liabilities. The assets and liabilities of the by the International Financial Reporting Interpreta- subsidiaries are stated at their respective fair market tions Committee (IFRIC) as these are to be applied values at the time of acquisition. As part of the con- in the European Union. In establishing the present sideration, shares of other associates are valued with financial statements, all standards which were their share in the identified assets and liabilities. The required for this financial year were applied. difference between the acquisition costs and the net asset recorded at fair value is capitalised as good- The Bank für Tirol und Vorarlberg AG is an ‚Ak- will. The capitalised goodwill is subject to an annual tiengesellschaft‘ (public limited company) head- impairment test pursuant to the provisions of IFRS 3, quartered in Austria. The company‘s registered in connection with IAS 36 and IAS 38. Subsidiaries of office is Stadtforum in 6020 Innsbruck. The main lesser significance for the asset, financial and income activities of the company and its subsidiaries situation of the group are not fully consolidated. include asset management, corporate and retail banking, the holding of participations and the The scope of full consolidation changed in 2014. operation of funicular railways and other tour- Due to the resolution of the vote trust agreement, ism firms. The segment reporting contains more MPR Holding GmbH gained control over VoMoNoSi detailed information on this. Beteiligungs AG as at 1 January 2014. TiMe Holding GmbH was established on 24 March 2014 and is a The accounting and valuation methods applied wholly owned subsidiary of MPR Holding GmbH. uniformly across the group comply with the Its purpose is to hold the participation in Moser standards for European balance sheets, so that the Holding AG. informative value of these group financial statements equates to those pursuant to the provisions The new European supervisory provisions for credit of the Austrian Commercial Code (UGB), in conjunc- institutions - Basel III implementation in the form of tion with the provisions of the Austrian Banking Act the Capital Requirements Regulation (CRR), Capital (BWG). The additional information required pursu- Requirements Directive (CRD) and the EBA stand- ant to Austrian legislation is included in the Annex. ards based on them - result in a situation whereby, for supervisory purposes, reporting should take The approval to publish the group financial state- place on a consolidated basis in accordance with ments was given by the Board of Directors to the IFRS, while the consolidation scope is governed Supervisory Board on 16 March 2015. The approval by the CRR. Owing to the change for supervisory for publication of the group financial statements by purposes, in the reporting year 2014 all relevant the Supervisory Board is planned for 27 March 2015. companies of the consolidation scope under the CRR that had not hitherto been included in the Principles of consolidation and scope of consolidation IFRS group - regardless of the current assessment All significant subsidiaries which are controlled by of their materiality for balance sheet purposes - BTV under IFRS 10 are consolidated in the group were also included in the consolidation scope as at financial statements, pursuant to IFRS 10. The Group 31 December 2014. Owing to this modification, in controls a company if it is exposed to fluctuating the reporting period 2014 BTV Beteiligungshold- returns on its commitment to the company or pos- ing GmbH and in further consequence BTV 2000 sesses rights thereon and has the ability to influence Beteiligungsverwaltungsgesellschaft m.b.H. were these returns using its power of control over the retroactively included in the group of consolidated company. In accordance with the principles of IFRS 3, companies in accordance with the procedure

54 foresight Group Management report Group financial statements

under IFRS 10, in order to achieve in future the for sale“, „Holdings in companies valued at equity“, greatest possible harmony between the IFRS group „Latent tax refunds“ and „Deferred tax owed“ items figures published for participants in the capital and in interest income are shown in the details. market and the IFRS figures determined under There were no material changes in the other items. supervisory law for the CRR group. In doing so, the reporting year 2013 was also adjusted retroactively. In addition to BTV, the full scope of consolidation Material changes in the „Financial assets - available includes the following holdings:

fully consolidated companies Share in % Voting rights in %

BTV Leasing Gesellschaft m.b.H., Innsbruck 100.00 % 100.00 % BTV Real-Leasing Gesellschaft m.b.H., Vienna 100.00 % 100.00 % BTV Real-Leasing I Gesellschaft m.b.H., Innsbruck 100.00 % 100.00 % BTV Real-Leasing II Gesellschaft m.b.H., Innsbruck 100.00 % 100.00 % BTV Real-Leasing III Nachfolge GmbH & Co KG, Innsbruck 100.00 % 100.00 % BTV Real-Leasing IV Gesellschaft m.b.H., Innsbruck 100.00 % 100.00 % BTV Real-Leasing V Gesellschaft m.b.H., Innsbruck 100.00 % 100.00 % BTV Anlagenleasing 1 GmbH, Innsbruck 100.00 % 100.00 % BTV Anlagenleasing 2 GmbH, Innsbruck 100.00 % 100.00 % BTV Anlagenleasing 3 Gesellschaft m.b.H., Innsbruck 100.00 % 100.00 % BTV Anlagenleasing 4 GmbH, Innsbruck 100.00 % 100.00 % BTV Leasing Deutschland GmbH, Augsburg 100.00 % 100.00 % BTV Leasing Schweiz AG, Staad 99.99 % 99.99 % BTV Hybrid I GmbH, Innsbruck 100.00 % 100.00 % BTV Hybrid II GmbH, Innsbruck 100.00 % 100.00 % MPR Holding GmbH, Innsbruck 100.00 % 100.00 % TiMe Holding GmbH, Innsbruck 100.00 % 100.00 % VoMoNoSi Beteiligungs AG, Innsbruck 100.00 % 100.00 % Silvretta Montafon Bergbahnen AG, Gaschurn 100.00 % 100.00 % Silvretta Montafon Gastronomie GmbH, Gaschurn 100.00 % 100.00 % Silvretta Skischule GmbH, Gaschurn 100.00 % 100.00 % Silvretta Verwaltungs GmbH, Gaschurn 100.00 % 100.00 % Silvretta Montafon Sporthotel GmbH & Co. KG, Gaschurn 100.00 % 100.00 % HJB Projektgesellschaft mbH, St. Gallenkirch 100.00 % 100.00 % Josefsheim Projektentwicklungsgesellschaft mbH, St. Gallenkirch 100.00 % 100.00 % Silvretta Sportservice GmbH, Schruns 51.00 % 51.00 % Process Engineering SMT GmbH, Dornbirn (in liquidation) 51.00 % 51.00 % Skischule Silvretta Montafon St. Gallenkirch GmbH, St. Gallenkirch 50.00 % 50.00 % BTV Beteiligungsholding GmbH, Innsbruck 100.00 % 100.00 % BTV 2000 Beteiligungsverwaltungsgesellschaft m.b.H., Innsbruck 100.00 % 100.00 % Group financial statements financial Group

In the reporting year, Silvretta Montafon Infrastruktur AG as the acquiring company and so no longer appears GmbH merged with Silvretta Montafon Bergbahnen in the group of consolidated companies.

BTV Business Report 2014 54 |55 Leasing companies and the companies of the Silvretta With the circular resolution to shareholders on Montafon Bergbahnen Group were included in the 13 January 2014, Process Engineering SMT GmbH business report as at 30 September 2014, in accord- resolved to distribute €70 thousand of dividends to ance with their divergent financial year. The balance shareholders. Of this, €34 thousand was allocated sheet date of the leasing companies and the compa- to minority interests. Skischule Silvretta Montafon nies of the Silvretta Montafon Bergbahnen Group St. Gallenkirch GmbH only began operating in the is 30 September, with the exception of Skischule 2013/2014 financial year. Silvretta Montafon St. Gallenkirch GmbH, which is 31 May. BTV Beteiligungsholding GmbH‘s account- Significant holdings over which BTV has a major influ- ing year ends on 30 November. The companies of ence are recorded by the equity method. As a rule, a Silvretta Montafon have a divergent accounting date stake of between 20% and 50% is considered to be a due to their seasonal activity. Owing to the structural significant influence („associated companies“). situation in the group organisation, there is a different According to the equity method, holdings in associat- reporting date for both the leasing companies and BTV ed companies are included in the financial statements Beteiligungsholding GmbH. at acquisition cost plus any changes in the group‘s share of the net assets of the associated company The remaining fully consolidated companies were con- after the initial consolidation. solidated using the reporting date of 31 December. There were also changes in associated companies As at 31 December 2014 the Group did not disclose as at 31 December 2014. Moser Holding AG is in- any direct minority interests owing to the acquisi- cluded at equity in the consolidated financial state- tion of the remaining minority interests in VoMoN- ments for the first time. The purchase of 24.99% oSi Beteiligungs AG in March 2014. MPR Holding of shares in Moser Holding AG closed on 27 March GmbH held 100% of the shares in VoMoNoSi 2014. The share purchase agreement had already Beteiligungs AG as at 31 December 2014. There are been signed on 16 July 2013. Moser Holding AG has only indirect minority interests, which are the re- a divergent financial year with a year-end date of sult of the holding in Silvretta Sportservice GmbH, 30 June and is included in the business report as of Process Engineering SMT GmbH and Skischule 30 September 2014. Silvretta Montafon St. Gallenkirch GmbH. Silvretta Montafon Bergbahnen AG holds 51% of the shares VoMoNoSi Beteiligungs AG was included in the in Silvretta Sportservice GmbH, based in Schruns, scope of full consolidation and as such no longer 51% of the shares in Process Engineering SMT appears under the companies reported at-equity. GmbH, based in Dornbirn and 50% of the shares in Skischule Silvretta Montafon St. Gallenkirch GmbH In addition, the at-equity holding in Oberbank AG based in St. Gallenkirch. The result for the period was increased by 3.04% owing to the inclusion that is allocated to the indirect minority interests is of BTV Beteiligungsholding GmbH and BTV 2000 €211 thousand. Beteiligungsverwaltungsgesellschaft m.b.H. in the group of consolidated companies. At the annual general meeting of 2 December 2013, Silvretta Sportservice GmbH resolved to The following holdings were included using the distribute dividends of €700 thousand, of which equity method: €343 thousand was allocated to minority interests. at equity consolidated companies Share in % Voting rights in %

BKS Bank AG, Klagenfurt 18.89 % 19.57 % Oberbank AG, Linz 16.99 % 18.51 % Drei-Banken Versicherungs-Aktiengesellschaft, Linz 20.00 % 20.00 % Moser Holding AG, Innsbruck 24.99 % 24.99 %

56 foresight Group Management report Group financial statements

The holdings in Oberbank AG and BKS Bank AG group are eliminated except where they are insig- have been included in the group financial state- nificant. An interim net profit elimination has been ments for the following reasons, despite the fact waived, since material interim net profit figures that they are below the 20% holding threshold: were not available.

For the holding in the Oberbank AG, there is a The ALPENLÄNDISCHE GARANTIE GESELLSCHAFT syndication contract between BTV, the BKS Bank M.B.H. is classed as joint operations after IFRS 11 AG and the Wüstenrot Wohnungswirtschaft reg. came into effect on 1 January 2014. The company Gen.m.b.H. For the holding in the BKS Bank AG, ALPENLÄNDISCHE GARANTIE-GESELLSCHAFT there is a syndication contract between BTV, the M.B.H. has a concession under Section 1 para. 1, Oberbank AG and the Generali 3 Banken Hold- line 8, of the Austrian Banking Act (BWG). Its exclu- ing AG. The purpose of each of these syndication sive corporate object is the granting of guarantees, contracts is the maintenance of the independ- sureties and other liabilities for lending businesses ence of the bank. In this way, for both of the cited of the 3 Banken Group. The 3 Banken Group is pri- companies, there is the possibility of exercising a marily the only source for payment flows that con- significant influence. tribute to the continued activities of the arrangement and is therefore classed as joint operations in The associated companies are each taken into accordance with IFRS 11.B29-32. The proportional account with the reporting date 30 September assets and liabilities of ALPENLÄNDISCHE GARAN- in order to enable the year-end accounts to be TIE-GESELLSCHAFT M.B.H. are considered on the prepared close to the end of the year. Receivables reporting date of 31 December. and liabilities, expenses and income internal to the

proportionally consolidated companies Share in % Voting rights in %

ALPENLÄNDISCHE GARANTIE-GESELLSCHAFT M.B.H. 25.00 % 25.00 %

Structured entities tured entities, provided that the business connec- Structured entities are companies that have been tion to these entities does not constitute ordinary designed in such a way that voting or similar rights business activity. In the reporting year 2014 there are not the dominating factor when assessing were no material contractual or non-contractual control. For example, this is the case if voting rights relationships with structured companies. BTV is only relate to administrative tasks and the rights regarded as the sponsor of a structured entity if for managing the essential activities are controlled market operators associate the entity with the on the basis of contractual principles. In the BTV Group, mainly by using the name BTV in the firm or Group, mainly project and leasing companies with on business documents in companies for which the limited areas of activity, as well as public invest- BTV Group acts as broker. BTV did not maintain any ment funds, third-party financial companies and material business connections in the 2014 financial securitisation companies, are regarded as struc- year and in this sense did not act as a sponsor. Group financial statements financial Group

BTV Business Report 2014 56 |57 Valuation principles adjustment of individual values, this item also Spot transactions in financial assets were recorded includes adjustments to the portfolio, which at or closed out on the settlement day. the balance sheet date formed losses to the loan portfolio, which had already occurred, but had not BTV‘s consolidated financial statements are drawn yet been identified, whose amount is based on the up in euros (€), as the functional currency of the probability of default and the losses to the loan group. Unless otherwise indicated, all amounts are portfolio which have not been provided for else- indicated in €‘000). Rounding differences are pos- where. In determining the portfolio impairment, sible in the following tables. the economic environment and current events are considered. Currency conversion Assets and liabilities denominated in foreign Trading assets currencies as well as non-completed foreign cur- Under trading assets are shown the financial assets rency cash transactions are converted at the ECB held for trade. These assets are mainly used to gain reference rate on the balance sheet date. Forward profits from short-term price movements or trad- currency transactions are converted at current ing margins. Trading assets are valued at fair value forward rates valid for their maturity. The conver- and impact the P&L. The Trading Assets position sion of the annual financial statements of the Swiss also includes positive market values of deriva- branches is performed according to the functional tives which are classified in the fair value option. conversion method. Conversion differences of the Valuation is also carried out at fair value where this previous years‘ results are taken to equity. Along- affects earnings. side financial instruments in the functional currency there are primarily financial instruments in Swiss Financial assets - at fair value through profit or loss francs, US dollars and Japanese yen. For securities and structured products with embedded derivatives which would otherwise require Cash reserves separation the Fair Value option is applied follow- Petty cash and the credit with central bank are ing IAS 39. All realised and unrealised valuation included in the cash reserves. gains from the fair value option are shown in the income statement in the position „Income from Receivables financial assets - at fair value through profit or loss“. Loans to credit institutions and customers with Interest and dividend income from the fair value fixed or determinable payment are balanced with option is shown under net interest income. the carried over acquisition costs. Where direct write-downs have been made, these have reduced Financial assets - available for sale the receivables. Value adjustments are shown Securities which are assigned to the available-for- openly as loan loss provisions. sale portfolio, and holdings in non-consolidated companies are shown in the item „Financial Assets Risk provisions – available for sale“. Changes in the fair value of The particular risks of the banking business are securities in the available-for-sale portfolio, which recognised by BTV through the creation of value arise from valuation, are held in the capital, with no adjustments and reserves as appropriate. For cred- effect on the P&L until the asset is transferred out. itworthiness risks group-wide standard assessment The relevant actual value of investments in equity criteria are applied and provided for by provision instruments (e.g. shares in limited companies) is of securities. The total amount of risk provisions is, determined on the basis of a stock exchange price when it relates to balance sheet receivables, shown or on the basis of recognised valuation models. explicitly as a reduction on the asset side of the As far as these asset values are overall of minor balance sheet, after the loans to credit institutions relevance for the asset, finance and income situa- and loans to customers. Risk provisions for off-bal- tion of the Group, they will be valued at purchasing ance sheet transactions (in particular completion costs (at cost). guarantees) are held in the item „reserves“. Loan Exceptional depreciation based on impairments loss provision for receivables includes individual are taken into the P&L under the item „Income adjustments for receivables for which an impair- from financial assets - available for sale“. ment has already been applied. In addition to the

58 foresight Group Management report Group financial statements

Financial assets – held to maturity To the extent that hedge accounting is applied at BTV, This balance sheet item includes the bonds and as defined in IAS 39, it is used to cover the income other fixed interest securities which are intended from interest rates and the market risk. As measures to be held until their maturity date, provided that to minimise interest rate change risk and to reduce the they have a maturity date. These elements are market risk mainly fair value hedges are applied. The assigned to the held-to-maturity portfolio. The fair value hedge transactions are offset by swapping valuation is according to the carried over acquisi- fixed interest deals in transactions linked to the money tion costs, whereby any obligations or discount is markets. In particular, this applies to the portion of resolved on the basis of the effective interest rate own issues as well as securities in the AfS portfolio. For method up to maturity. the fair value hedge accounting mainly interest rate swaps are used. Shares in at-equity valued companies This item records the holdings in those associated If the fair value option under IAS 39 is applied, then companies which are included according to the the derivative financial instruments are being used to equity method. avoid or remove valuation mismatches between initial value and the valuation of assets and liabilities. Deriva- Impairment tives are valued using fair value with a P&L impact. Impairments under IAS 39 are based on the incurred loss model. There is an impairment under Financial guarantees the incurred loss model and therefore a loss under The accounting for financial guarantees follow IAS IAS 39.59 if objective information is available that, 39. For their presentation in the balance sheet the since the asset was acquired, one or more loss net principle is applied. This method nets off the events have occurred which, owing to their influ- premium cash value and the commitment cash ence on future payment flows, have the effect of value from the financial guarantee. a sustained or ongoing decline in the fair value to below the acquisition cost. The loss events men- Intangible fixed assets tioned in IAS 39.58 are accepted for debt financing This item includes rental leases, industrial property instruments. In the case of equity instruments, a rights and other rights. The valuation is done at significant or sustained decline in the fair value to acquisition costs, reduced by regular depreciation. below the acquisition cost is accepted if the fair The scheduled depreciation applied is straight value of the equity instrument is 20% below the line based on the estimated useful life. The ex- historical acquisition value. The reference is the pected useful life and the depreciation method are last annual balance sheet or the last interim report. checked at the end of each financial year and all Any currency fluctuations in the securities price are changes in estimates are prospectively considered. disregarded. A sustained decrease in value of an The amortisation of intangible assets is basically equity instrument is also accepted if in the previ- performed via a useful life of between 3 and 20 ous nine-month period the fair value of a financial years or 40 years for long-term lease rights and instrument is permanently below the historical other rights of use. In the event of an impairment acquisition cost. If the price is quoted above the under IAS 36, impairment losses are recognised. acquisition cost again at any time within the nine- If the reason for an earlier recognised impairment month period, a new period will begin for the loss has lapsed, an allocation will be made to the impairment test. Any currency fluctuations in the amortised acquisition or production cost, except in securities price should be disregarded. If there are the case of goodwill. no longer grounds for an impairment, a reversal is recognised in profit or loss in the case of debt Property, plant and equipment financing instruments, whereas the reversal is rec- Fixed assets - land and buildings, as well as produc- ognised directly in equity for equity instruments. tion and business fittings are presented at acquisition or production cost, minus scheduled linear

Derivatives depreciation corresponding to the expected useful statements financial Group Financial derivatives are shown in the balance life. The useful life for buildings is between 33 1/3 sheet at their fair values, and any changes in value and 40 years, and for production and business fit- are immediately taken to the P&L. tings between 4 and 10 years.

BTV Business Report 2014 58 |59 In the non-banking sector, the measurement of Current assets scheduled depreciation is based on a Group-wide Other current assets in the non-banking sector useful life of between 3 and 50 years. are recorded in other assets and basically include inventories, accounts receivable and other receiva- Assets written off in full will be recorded under bles and assets of the Silvretta Montafon Group. acquisition and production cost and accumulated depreciation until they are decommissioned. In the Inventories are valued at acquisition or production case of asset disposals, the acquisition or produc- cost, whichever is the lower, less discounts and tion cost and accumulated depreciation are de- deductibles, similar price reductions and the net ducted. Earnings on asset disposals (sale proceeds realisable value. The acquisition cost is calculated less carrying amount) are recorded under other on a sliding average cost basis. Inventory risks operating income or other operating expenses. arising from the duration of storage or reduced ap- Assets are capitalised at the acquisition or produc- plicability are taken into account through depreciation cost. Acquisition and production incidental tion. Lower values on the reporting date owing to costs and expansion investment are capitalised; reduced sales proceeds are taken into account. however, maintenance expenses in the period in which they have arisen are recognised as an Accounts receivable are assigned to the category expense. Borrowing costs that can be directly loans and receivables and recorded on the balance apportioned to the acquisition or production of a sheet under IAS 39 at acquisition cost less impair- qualified asset are included in the acquisition or ments for anticipated irrecoverable components. production cost. Other receivables and assets are recorded at the nominal amount or acquisition cost - where appropri- Properties held as financial investments ate, less necessary impairments - if the fair value is Land and buildings as well as fittings in rented proper- correspondingly lower. ties, which the BTV Group holds as long-term financial investments for the purpose of achieving rental income and capital value increases are accounted for at the purchase and production costs, reduced by scheduled linear depreciations corresponding to their expected length of use. For buildings, the useful life is 50 years, for fittings in rented property, the useful life is determined according to the duration of rental. The corresponding rental contracts are shown in the P&L item „Other business revenues“.

Leasing The leasing agreements which exist within the BTV Group are mainly classified as ‚Finance leases“, according which all the risks and benefits linked to the lease capital are transferred to the lessee. According to IAS 17 the lessor shows a receivable against the lessee to the value of the cash value of the contractually agreed payments and taking into account any residual value. In the case of ‚Operating lease‘ agreements (in which case the risks and benefits linked to the property remain with the lessor) the object of the lease is shown by the lessor under the heading „Properties held as financial investments“ and depreciation is applied using the rules for the relevant class of asset. Lease payments are collected on the P&L according to the transfer of use.

60 foresight Group Management report Group financial statements

Liabilities Other liabilities Liabilities to customers or credit institutions as well Accounts payable for non-banking services are not as securitised debts are valued at their repayment interest-bearing and are recognised at the nominal or nominal value. Nominal value. The amount of value. the securitised liabilities is reduced by the acquisition cost of the issues held in the object. Tax claims and tax debts Claims and liabilities relating to income tax are Securitised debts and subordinate capital loans, presented in the items „Tax claims“ or „Tax debts“. which have been secured with derivative financial instruments in the context of interest risk control For the calculation of deferred taxes, the balance are either assigned to the fair-value-option valua- sheet-related temporary concept is applied, which tion category, or hedge accounting is applied. compares the valuations of assets and liabilities with the valuations which apply for taxation of the relevant All valuation gains from the fair value option are group company. Differences between these two shown in the income statement in the item „In- valuations lead to temporary differences, for which come from financial assets - at fair value through deferred tax claims or liabilities must be shown in the profit or loss“. balance sheet. Current income tax claims and liabilities are set at the tax values which are expected to be set- Trading liabilities tled with the respective tax authorities. In trading liabilities the negative market values of derivatives in the trading portfolio or from the fair Deferred tax assets on unused tax loss carry- value option are recorded. Valuation is carried out forwards are presented in the balance sheet when at fair value. it is likely that in the future, taxable profits of a corresponding amount will accrue. Deferred taxes Reserves and provisions are not discounted. The option of group taxation is Long-term reserves for staff (pension, redundancy, used by BTV in its capacity as the parent company. anniversary payments and death payment commitments) are shown as per IAS 19 using the projected Genuine repurchase agreements unit credit method. Future commitments are Genuine repurchase agreements are agreements valued on the basis of actuarial assessments, which whereby financial assets are transferred against not only take into account the pensions which are the payment of an amount and where it is agreed known at the date of balance sheet, but also the at the same time that the financial assets must be expected future rates of increase. returned to their owner at a later stage against the payment to the transferor of an amount defined in Other reserves are created as required by IAS 37, if advance. The financial assets in question continue the company has existing legal or factual liabilities, to remain in the balance sheet of the BTV Group. which result from historical transactions or events, These are valued using the relevant presentation for which it is likely that to meet the commitment rules for the respective balance sheet item. The an outflow of economically productive resources liquidity obtained from the pension transactions is required, and a realistic estimation of the value was classified as liabilities to credit institutions or of the liability is possible. Reserves are subject liabilities to customers. to annual review and recalculation. This includes uncertainties in estimation which may lead to Net interest income adjustments the following year. The net interest income includes revenue and expenses which represent compensation for the provision of capital. In addition in this heading there are also the income from shares and other bonds as well as other variable interest securities, so long as it is not income

and expenses from securities or derivatives, which are statements financial Group to be classified as trading assets or trading liabilities.

BTV Business Report 2014 60 |61 Also income from holdings and from stakes in associ- Other operating profit ated companies - provided they are not consolidated In other operating profit are shown all the revenues because of their smaller size - are also shown in this and costs of the BTV Group which are not attribut- heading. This item also includes income from at-equity able to current business activities. This includes valued companies. in particular the profits from the renting or sale of properties maintained as financial investments Interest income and expenses are delimited and re- and other fixed assets, cost of sales and revenues corded on an accrual basis. Income from investments for non-banking activities, such as insurance and is recorded when the legal claim to payment arises. revenue from funicular railways and tourism. Fur- thermore, in addition to expenses for other taxes Loan-loss provisions in the credit business and levies, this item also included expenses for The heading „Loan loss provision“ includes the increase in reserves as well as income from the increases to impairments and reserves or income liquidation of other reserves. from the cancellation of impairments and reserves as well as direct write-offs and later receipts of Profit arising from financial assets – at fair value already written-down liabilities in connection with through profit or loss credit transactions. Under this item is shown the income from the revaluation or sale of securities, derivatives, loans Net commission income and own issues in the fair value portfolio. The commission income is the balance of the revenues and expenses from services provisions. Profit arising from financial assets – available for sale Above all, these include income and expenses for Revenue from sales and impairments of securities services arising from payment handling, securities and holdings in the available-for-sale portfolio are transactions, credit transactions as well as from for- posted here. eign exchange, foreign cash and precious metals business, and other miscellaneous services. Profit arising from financial assets – held to maturity Under this heading is the income from sales and Trading income impairments of securities in the held-to-maturity This heading includes profits and losses realised from portfolio. the sale of securities, derivatives and other financial instruments from the trading portfolio, unrealised Taxes on earnings valuation gains and losses from the market valuation Current and deferred taxes on income are recorded of securities, derivatives and other financial instru- under this item. ments from the trading portfolio, interest income and dividend receipts from the trading portfolio as well as Discretionary decisions, assumptions and estimates refinancing costs for these financial assets. In drawing up the BTV group financial statements, values are determined on the basis of discretionary Operating expenses decisions, as well as through the use of assump- In the operating expenses are included staff costs, tions and estimates. The associated uncertainties material costs as well as scheduled depreciation of may lead in future reporting periods to additional fixed assets, amortisation of intangible assets and income or expenses or make it necessary to adjust of properties held as financial investments for the the book value in the balance sheet. The manage- reporting period. ment estimates and assumptions used are based on historical experience and other factors such as In the staff costs are included wages and salaries, planning and likely expectations and predictions of variable salary elements, legally required and future events, based on current assessments, and voluntary social costs, staff-related taxes and levies this is with the objective of providing meaningful as well as expenses (including changes to reserves) information on the asset, financial and earnings situ- for redundancies, pensions, anniversary payments ation of the company. and death benefits. Areas of application for assumptions and estimates lie Under material costs are, alongside IT costs, the office in the determination and balancing of loan loss provi- building costs and the costs for running the office, sions in the loan business, in impairment assumptions the costs for advertising and marketing and legal and for the available-for-sale or held-to-maturity portfolio consultancy costs and other administrative costs. and in the formation of long-term payroll reserves and

62 foresight Group Management report Group financial statements other reserves. Uncertainties in estimates also arise Use of modified/new IFRS/IAS standards in determining fair values on the basis of valuation The table below shows published or modified models for financial assets and liabilities, if no quoted standards and interpretations on the balance market price is available. Assumptions are also re- sheet date, which were applied for the first time quired in determining deferred tax assets, with regard during this reporting period. Material effects arise to the expected date of occurrence and the amount from the application of IFRS 11 in connection with of future taxable income as well as for future tax plan- ALPENLÄNDISCHEN GARANTIE-GESELLSCHAFT ning. The specification of the expected useful life of M.B.H., which is classified as a joint activity pursu- tangible assets is also based on an estimate. ant to the conditions of IFRS 11.

Disclosure pursuant to Part 8 of Regulation (EU) The first-time adoption of the other IFRS and IFRIC No 575/2013 (CRR) quoted had a minor impact on BTV AG‘s consoli- The disclosure of the BTV Group pursuant to Part 8 of dated financial statements as at 31 December 2014 Regulation (EU) No 575/2013 (CRR) can be found on as the changes were applicable only here and the Internet at www.btv.at in the menu item „Com- there. There were no changes to the accounting pany > Investor Relations > Publications / Financial policies and valuation methods. Reports > Information according to Offenlegungsver- ordnung [Disclosure Ordinance] (OffV) or pursuant to Part 8 of Regulation (EU) No 575/2013 (CRR)“.

Standard/Interpretation Name To be applied for Already financial years from adopted by EU IFRS 10 Consolidated Financial Statements 01.01.2014 YES IFRS 11 Joint Arrangements 01.01.2014 YES IFRS 12 Disclosures of Interests in Other Entities 01.01.2014 YES IAS 27 – Amendments Separate Financial Statements 01.01.2014 YES Amendments to IFRS 10, Investment Entities 01.01.2014 YES IFRS 11 and IFRS 12 Amendments to IFRS 10, Transition Guidance 01.01.2014 YES IFRS 12 and IAS 27 IAS 28 – Amendments Investments in Associates and Joint Ventures 01.01.2014 YES IAS 32 – Amendments Offsetting Financial Assets and Financial 01.01.2014 YES Liabilities IAS 36 – Amendments Recoverable Amount Disclosures for Non- 01.01.2014 YES Financial Assets IAS 39 – Amendments Novation of Derivatives and Continuation of 01.01.2014 YES Hedge Accounting Group financial statements financial Group

BTV Business Report 2014 62 |63 The next table shows newly published or modified application of which is not yet mandatory. These standards and interpretations on the balance sheet have not been applied to these consolidated finan- date which came into effect through the IASB or in cial statements. part through the EU endorsement procedure but

Standard/Interpretation Name To be applied for Already financial years from adopted by EU IFRIC 21 Levies 17.06.2014 YES IAS 19 Defined Benefit Plans: Employee Contributions 01.02.2015 YES Improvements to IFRSs 01.02.2015 YES (May 2012) Improvements to IFRSs 01.01.2015 YES (June 2011) IFRS 10, IFRS 12 and Investment Entities: Applying the 01.01.2016 NO IAS 28 Consolidation Exception IAS 1 Disclosure Initiative 01.01.2016 NO IFRS 10 and IAS 28 Sale or Contribution of Assets between 01.01.2016 NO an Investor and its Associate or Joint Venture IAS 27 Equity Method in Separate Financial 01.01.2016 NO Statements IAS 16 and IAS 41 Bearer Plants 01.01.2016 NO

Improvements to IFRSs 01.01.2016 NO (May 2012) IFRS 14 Regulatory Deferral Accounts 01.01.2016 NO

IAS 1 – Amendments Clarification of Acceptable Methods of 01.01.2016 NO Depreciation and Amortisation IFRS 11 Accounting for Acquisitions of Interests 01.01.2016 NO in Joint Operations IFRS 15 Revenue from Contracts with Customers 01.01.2017 NO IFRS 9 Financial Instruments 01.01.2018 NO

Insofar as BTV has already investigated the remain- ther investigated; a reliable statement regarding its ing standards and interpretations, no significant impact on future consolidated financial statements changes in terms or materiality are expected in fu- is not possible from today‘s perspective. There are ture consolidated financial statements. The impact no plans for early adoption of the new standards of IFRS 9 on the BTV Group is currently being fur- and interpretations.

64 foresight Group Management report Group financial statements

Balance sheet – Assets

1 Cash reserve in €‘000 31.12.2014 31.12.2013

Petty cash balance 28,924 41,426 Credit with central bank 144,078 188,119

Cash reserves 173,002 229,545

2 Loans to credit institutions in €‘000 31.12.2014 31.12.2013

Loans to domestic credit institutions 79,782 134,817 Loans to foreign credit institutions 194,197 187,033

Loans to Credit Institutions 273,979 321,850

3 loans to clients in €‘000 31.12.2014 31.12.2013

Loans to Austrian clients 4,250,336 4,306,350 Loans to foreign clients 2,136,172 2,098,193

Loans to clients 6,386,508 6,404,543

Loans to customers include finance-lease contracts to €78,318 thousand (previous year: €69,014 thou- with a net investment value in the amount of sand). The residual value of the total lease assets €695,641 thousand (previous year: €624,180 thou- are guaranteed both in the current and previous sand). The corresponding gross investment value financial years. On the balance sheet date, there of these leasing contracts amounts to €773,959 were value adjustments for unrecoverable leasing thousand (previous year: €693,194 thousand), the receivables in the amount of €10,286 thousand associated unrealised financial revenue amounted (previous year: €10,719 thousand).

3a Lifetime to maturity breakdown finance lease < 1 year 1 – 5 years > 5 years Total loans in €‘000

Gross investment value 205,322 360,431 208,206 773,959 Unrealised financial revenue 14,496 39,651 24,171 78,318 Net investment value 190,826 320,780 184,035 695,641 Group financial statements financial Group

BTV Business Report 2014 64 |65 4 risk provisions in €‘000 2014 2013

Opening balance of credit transactions at 1 January 207,146 194,492 – Releases –8,568 –6,893 + Allocation 28,279 45,220 – Application –40,289 –25,662 +/– Change in consolidation scope 12,700 0 (+/–) Changes arising from currency differences 6 –11 Loan-loss provision for credit transactions at 31 December 199,274 207,146

Opening balance commitments at 1 January 1,552 1,107 – Releases –1,379 –74 + Allocation 9,791 519 – Application 0 0 +/– Change in consolidation scope 28,693 0 (+/–) Changes arising from currency differences 0 0 Reserves Performance Guarantees at 31/12. 38,657 1,552

Overall Total Risk Provisions at 31/12. 237,931 208,698

4a Risk provisions Position 31 Appro- Releases Consump- Currency Consolida- Position 31 (Inventories) €000s December priation tion conversion tion-related December 2013 amendment 2014 Individual valuation adjustment 0 0 0 0 0 0 0 of loans to credit institutions Individual valuation adjustment 125,925 25,837 –8,516 –40,289 6 12,700 115,662 of loans to customers Portfolio valuation adjustments 80,311 2,442 0 0 0 0 82,753 pursuant to IAS 39 Counterparty risk 910 0 –52 0 0 0 859 Loan-loss provisions 207,146 28,279 –8,568 –40,289 6 12,700 199,274 in the credit business Reserves and provisions 1,552 9,791 –1,379 0 0 28,693 38,657 commitments

Total risk provisions 208,698 38,070 –9,947 –40,289 6 41,393 237,931

In the risk provisions, the consolidation-related ALPENLÄNDISCHEN GARANTIE-GESELLSCHAFT changes arise from the proportional consolidation of M.B.H. in the reporting year 2014.

5 trading assets in €‘000 31.12.2014 31.12.2013

Debenture bonds and other fixed-interest securities 7,122 0 Listed 7,122 0 Unlisted 0 0 Equities and other variable-interest securities 0 0 Positive market values arising from derivative transactions – Trading 6,516 6,023 Currency related trades 1,571 1,905 Interest related trades 4,832 4,118 Other trades 113 0 Positive market values arising from derivative transactions – Fair value option 24,795 21,185 Currency related trades 0 0 Interest related trades 24,795 21,185 Other trades 0 0

Trading assets 38,433 27,208

foresight Group Management report Group financial statements

6 financial assets – at fair value through profit or loss in €‘000 31.12.2014 31.12.2013

Debenture bonds and other fixed-interest securities 132,873 145,773 Listed 132,873 145,773 Unlisted 0 0 Equities and other variable-interest securities 9,335 9,450 Listed 9,207 9,149 Unlisted 128 301

Financial assets - at fair value through profit or loss 142,208 155,223

7 financial assets – available for sale in thousand € 31.12.2014 31.12.2013

Debenture bonds and other fixed-interest securities 1,104,186 980,290 Listed 1,082,969 975,154 Unlisted 21,217 5,136 Equities and other variable-interest securities 7,254 72,835 Listed 5,651 10,411 Unlisted 1,603 62,424 Other shareholdings 46,246 51,723 Listed 16,970 10,018 Unlisted 29,276 41,705 Other affiliated shareholdings 105,390 101,850

Financial assets - available for sale 1,263,076 1,206,697

By retroactively including the subgroup BTV Beteili- companies of BTV, total holdings decreased by gungsholding GmbH in the group of consolidated €44,491 thousand in 2013.

8 financial assets – held to maturity in €‘000 31.12.2014 31.12.2013

Debenture bonds and other fixed-interest securities 741,772 846,262 Listed 741,772 846,262 Unlisted 0 0

Financial assets – held to maturity 741,772 846,262 Group financial statements financial Group

BTV Business Report 2014 66|67 9 holdings in at-equity valued companies in €‘000 31.12.2014 31.12.2013

Credit institutions 409,623 372,188 Non-credit institutions 17,308 4,016

Shares in at-equity valued companies 426,931 376,204

The fair value of the shares in companies valued at By retroactively including the subgroup BTV Beteili- equity amounted to €379,665 thousand (previous gungsholding GmbH in the group of consolidated year: €349,090 thousand). companies of BTV, the total number of companies valued at equity increased by €42,531 thousand in In case of indicators which could possibly show a the reporting year 2013. possible reduction in value, the equity book value was subjected to an impairment test in accordance with IAS 36. The test was performed with the use of a valuation procedure on the basis of future financial surpluses. Currently, no need for a devaluation results from this.

10 Fixed Asset Overview – 31 December 2014 Acquis. value Change in Additions Disposals in thousands of euros 01.01.2014 consolidation scope Intangible fixed assets 7,522 11,151 56 –288 Land and buildings 97,332 102,858 1,127 –108 Production and business fittings 44,069 131,125 18,804 –3,907 Properties held as financial investments (IAS 40) 66,554 4,176 4,622 –1,514

Total 215,477 249,310 24,609 –5,818

Fixed Asset Overview – 31 December 2013 Acquis. value Change in Additions Disposals in thousands of euros 01.01.2013 consolidation scope Intangible fixed assets 7,467 0 55 0 Land and buildings 95,783 0 2,638 –1,084 Production and business fittings 47,274 0 4,951 –8,117 Properties held as financial investments (IAS 40) 68,947 0 417 –2,700

Total 219,471 0 8,061 –11,901

68 foresight Group Management report Group financial statements

Splitting Group changes to Acquis. value Accumulated Book value Change in Depreciation Book value transfers currency 31.12.2014 depreciation 31.12.2014 consolida- 31.12.2013 exchange rates tion scope 0 0 0 18,442 –12,899 5,543 –4,069 –1,646 51 2,433 0 0 203,642 –89,112 114,530 –60,733 –4,784 73,704 –2,414 0 55 187,733 –136,444 51,288 –98,911 –8,886 11,660 –19 0 142 73,960 –21,152 52,807 0 –1,447 46,754

0 0 197 483,776 –259,607 224,168 –163,713 –16,763 132,169

Splitting Group changes to Acquis. value Accumulated Book value Change in Depreciation Book value transfers currency 31.12.2013 depreciation 31.12.2013 consolida- 31.12.2012 exchange rates tion scope 0 0 0 7,522 –7,472 51 0 –38 34 –5 0 0 97,332 –23,628 73,704 0 –2,029 73,595 5 0 –44 44,069 –32,409 11,660 0 –3,370 10,202 0 0 –110 66,554 –19,800 46,754 0 –1,424 49,286

0 0 –154 215,477 –83,308 132,169 0 –6,862 133,118 Group financial statements financial Group

BTV Business Report 2014 68 |69 10a Intangible fixed assets in €000s 31.12.2014 31.12.2013

Intangible fixed assets 5,543 51

10b Property, plant and equipment in €000s 31.12.2014 31.12.2013

Land and buildings 114,530 73,704 Production and business fittings 51,288 11,660

Property, plant and equipment 165,818 85,364

The fair value of property, plant and equipment In the reporting period borrowing costs of €49 amounted to €167,889 thousand (previous year: thousand were capitalised (previous year: €0). An €86,158 thousand). interest rate of 1.34% or 2.10% was applied.

10c properties held as financial investments in €‘000 31.12.2014 31.12.2013

Properties held as financial investments 52,807 46,754

Properties held as financial investments - at fair val- The rental income in the reporting year amounted ue amounted to €59,174 thousand (previous year: to €3,395 thousand (previous year: €3,285 thou- €54,469 thousand). The determination of fair value sand), the expenses relating to achieving the rental was achieved by use of revenue value calculations income totalled including depreciation €2,636 for which the agreed rents provided the basis. thousand (previous year: €2,364 thousand).

10d remaining life to maturity breakdown < 1 year 1 – 5 years > 5 years Total operating lease contracts i in €‘000

Future minimum leasing payments 661 2,646 11,394 14,701

Under the item ‚Properties held as financial value amounts to €15,071 thousand (previous year: investments‘, book values from operating lease €14,929 thousand). For conditional rental payments contracts are included at a total of €14,630 thou- there was no income during the reporting year. sand (previous year: €14,648 thousand). The fair

70 foresight Group Management report Group financial statements

11 Tax refunds in €000s 31.12.2014 31.12.2013

Current tax refunds 87 154 Deferred tax refunds 17,008 4,947

Tax refunds 17,095 5,101

By retroactively including the subgroup BTV Beteili- companies of BTV, latent tax refunds from balanc- gungsholding GmbH in the group of consolidated ing effects increased by €4,724 thousand in 2013.

11a latent tax refunds in €‘000 31.12.2014 31.12.2013

Financial assets - at fair value through profit or loss 3,286 2,097 Financial assets - available for sale –17,789 –15,414 Financial assets – held to maturity 1,068 –775 Long-term payroll reserves 10,547 6,209 Hedge Accounting and Derivatives –2,630 –3,541 Portfolio impairments 20,688 20,078 Revaluation Finance Leasing and Other –941 –3,930 Latent tax refunds from losses carried forward 2,779 223 Other latent tax refunds and tax debts abroad 0 0

Deferred tax refunds 17,008 4,947

12 other assets in €‘000 31.12.2014 31.12.2013

Positive market values from derivatives trades 80,544 50,193 Other assets 29,260 43,953

Other assets 109,804 94,146 Group financial statements financial Group

BTV Business Report 2014 70 |71 Balance sheet – Liabilities

13 Liabilities to credit institutions in €‘000 31.12.2014 31.12.2013

Austrian credit institutions 732,408 679,439 Foreign credit institutions 662,284 1,073,265

Liabilities to credit institutions 1,394,692 1,752,704

14 Liabilities to clients in €‘000 31.12.2014 31.12.2013

Savings deposits Austrian 1,024,949 1,039,940 Foreign 151,308 135,843 Sub-total savings deposits 1,176,257 1,175,783

Other deposits Austrian 3,241,688 3,073,459 Foreign 1,109,086 1,170,516 Sub-total other deposits 4,350,774 4,243,975

Liabilities to clients 5,527,031 5,419,758

15 securitised liabilities in €‘000 31.12.2014 31.12.2013

Debentures 811,994 675,527 Domestic bonds 200,578 198,964

Securitised debt 1,012,572 874,491

of which fair value 424,874 395,711

The redemption amount for the securitised debts, BTV AG placed its own issues associated with loan se- for which the fair value option was exercised, totalled curity in the form of housing loans. As coverage funds, €420,186 thousand (previous year: €396,406 thou- these housing loans had no impact on the valuation of sand). The difference between the fair value of the BTV AG‘s covered bond issues. securitised liabilities for which the fair value option was chosen and their repayment amount totalled €4,688 thousand (previous year: €5,305 thousand).

72 foresight Group Management report Group financial statements

16 Trading liabilities in €‘000. 31.12.2014 31.12.2013

Negative market values arising from derivative transactions – Trading 4,786 8,969 Currency related trades 2,115 1,787 Interest related trades 2,671 7,182 Negative market values arising from derivative transactions – Fair value option 11,020 12,474 Currency related trades 0 0 Interest related trades 11,020 12,474

Trading liabilities 15,806 21,443

17 reserves in €‘000 31.12.2014 31.12.2013

Long-term payroll reserves 85,077 65,590 Other reserves and provisions 42,289 4,021

Reserves and provisions 127,366 69,611

Pensions reserves Severance pay provisions The benefits and entitlements are based on the For all employees in the BTV Group in Austria collective bargaining agreement regarding the whose working relationship began before 1 Janu- revision of pensions rights. The area of applica- ary 2003, there is in accordance with the regulation covers all BTV employees employed in Austria tions of the employment law or severance pay law who are covered by the collective bargaining for workers a claim for severance,which will be paid agreement for banks and bankers and who joined out in the case of respective reasons for termina- before 1 January 2002. The collective bargaining tion. For all other working relationships, the group agreement governs benefits and entitlements to companies pay contributions into the corporate occupational disability and accident insurance, old pension insurance fund according to the regula- age pension and early retirement pension, admin- tions of the BMSVG. istrative pension, social contributions and care allowance contribution. Furthermore, in accordance with the collective bargaining agreement for banks and bankers, there exist For the surviving dependants, regulations are a claim for two additional months‘ pay as severance included about pensions for surviving dependants payment if the working relationship lasted more than in the form of widow, widower and orphan pen- 5 years and was terminated by the employer or more sion, care allowance contribution, widow/widower than 15 years and is terminated due to an old-age settlement and quarter of the death. pension or a disability pension being taken. In contrast to the legal severance, this collective-bargaining claim In the calculation of the reserves, the entitlements exists as well for working relationships which began are also included in addition to the benefits. At after 31 December 2002 or will begin in the future. January 2000 entitlements to old age and early In addition, in accordance with the regulations of the retirement pension including benefits to surviving collective bargaining agreement for pension fund for dependents based on this were transferred over to permanent employees who joined after 31 December the VBV pension fund. 1996, there is an additional entitlement for 3 months‘ pay (20 years of service) or 4 months‘ pay (25 years of

The company pension scheme granted in the service) if the employer gives notice. statements financial Group Silvretta Montafon Bergbahnen Group is based on the benefits agreed in detail between the company For employees in Germany and in Switzerland, there and its employees. is no obligation to build up pension or severance reserves.

BTV Business Report 2014 72 |73 17a Staff reserves for benefits after termination of the Reserves for severance Total working relationship: performance-oriented plans in €‘000 pensions. reserves

Old-age pension severance reserves as at 1 January 2013 41,030 15,406 56,436

Income recorded for the period. Interest charge 1,338 576 1,914 Period of service cost 231 705 936 Included in the other results Actuarial Profit (–)/Loss (+) from changes to demographic assumptions Actuarial Profit (–)/Loss (+) from changes to financial assumptions 0 0 0

2,228 496 2,724 Other payments from these obligations –3,026 –1,199 –4,225

Old-age pension and severance reserves as at 31 December 2013 41,801 15,984 57,785

Income recorded for the period. Interest charge 1,260 587 1,847 Period of service cost 299 797 1,096 Included in the other results Actuarial Profit (–)/Loss (+) from changes to demographic assumptions Actuarial Profit (–)/Loss (+) from changes to financial assumptions 0 0 0 Actuarial Profit (–)/Loss (+) from changes to experience-related assumptions 7,820 2,797 10,617

5,521 225 5,746 Other payments from these obligations –2,939 –707 –3,646 Change in consolidation scope 750 1,149 1,899

Old-age pension and severance reserves as at 31 December 2014 54,512 20,832 75,344

74 foresight Group Management report Group financial statements

17b Other long-term personnel reserves in €‘000 Anniversary Other staff Total reserves reserves

Other long-term staff reserves as at 1 January 2013 4,933 2,570 7,503

Income recorded for the period. Interest charge 178 98 276 Period of service cost 332 0 332 Actuarial Profit (–)/Loss (+) –18 155 137 Other payments from these obligations –362 –81 –443

Other long-term personnel reserves as at 31 December 2013 5,063 2,742 7,805

Income recorded for the period. Interest charge 227 95 322 Period of service cost 354 0 354 Actuarial Profit (–)/Loss (+) from changes to demographic assumptions 0 0 0 Actuarial Profit (–)/Loss (+) from changes to financial assumptions 751 3,541 4,292 Actuarial Profit (–)/Loss (+) from changes to experience-related assumptions –237 –2,821 –3,058 Other payments from these obligations –292 –16 –308 Change in consolidation scope 326 0 326

Other long-term personnel reserves as at 31 December 2014 6,192 3,541 9,733

The expense contained in the profit and loss ac- Actuarial profit and loss for severance and old-age count for severance, pensions, anniversary pay- pensions are shown in the other result and are ments and other personnel reserves is shown in based entirely on adjustments and changes to personnel expenses, with the exception of interest actuarial assumptions according to experience. expense, which is presented in the interest results. Group financial statements financial Group

BTV Business Report 2014 74 |75 17c Overview long-term personnel 31.12.2014 31.12.2013 31.12.2012 31.12.2011 31.12.2010 reserves 2010–2014 in thousands of euros Pension reserves 54,512 41,801 41,030 40,088 39,044 Redundancy reserves 20,832 15,984 15,406 15,223 14,790 Anniversary reserves 6,192 5,063 4,933 4,819 4,637 Other payroll reserves 3,541 2,742 2,570 2,442 2,162

Total 85,077 65,590 63,939 62,572 60,633

The weighted average term of the defined contrac- No contributions to the plan are expected for the tual obligations (duration) for the banking sector next reporting periods. The evaluation of the exist- is 12.28 years in the reporting year for severance ing personnel reserves is based on assumptions repayments (previous year: 12.49 years), for pension garding the calculated interest rate, the retirement commitments 15.45 years (previous year: 13.46 years) age, the life expectancy, the fluctuation rate and and for death grants (Sterbequartale) 23.00 years the future salary developments. In the calculations, (previous year: 20.66 years). For non-banking benefits, the current regulations for the gradual alignment the duration in the reporting year was 12.38 years of the retirement age for men and women to 65 for severance payments and 12.75 years for pension were taken on board. commitments.

17d Actuarial assumptions for the banking sector 2014 2013

Financial assumptions Rate for the discount 2.15 % 3.50 % Pay increase 3.18 % 3.25 % Increase the old-age pension 2.48 % 2.75 % Discount for employee turnover 0 0 Demographic assumptions Age for pension entitlement: female employees 65 years 65 years Age for pension entitlement: male employees 65 years 65 years mortality table AVÖ 2008 AVÖ 2008

Compared with BTV AG, other actuarial assump- and the different accounting year for the Silvretta tions arise owing to the non-banking benefits Montafon Bergbahnen Group.

17e Actuarial assumptions for the non-banking sector 2014 2013

Financial assumptions Rate for the discount 2.40 % 3.50 % Pay increase 3.13 % 3.25 % Increase the old-age pension 2.43 % 2.75 % Discount for employee turnover 0 0 Demographic assumptions Age for pension entitlement: female employees 65 years 65 years Age for pension entitlement: male employees 65 years 65 years mortality table AVÖ 2008 AVÖ 2008

76 foresight Group Management report Group financial statements

In the case of a change of the calculated interest increases, the contributions to the reserves would rate by +/– 1.00 percentage points, a change of +/– develop as follows if all other parameters remain 0.50 percentage points for pay increases as well as the same: a change of +/– 0.50 percentage points for pension

17f Sensitivity analysis Calculated interest rate Pay increase Pension increases in thousands of euros –1,00 % +1,00 % –0,50 % +0,50 % –0,50 % +0,50 % Severances 23,352 18,397 19,480 21,921 0 0 Pensions 63,506 47,392 53,882 55,020 51,426 57,760 Death grants (Sterbequartale) 4,457 2,876 3,517 3,568 3,222 3,911

The maturity profile of the expected benefit pay- lows for the reporting years 2014 to 2018: ments from the staff reserves formed looks as fol-

17g Maturity profile of the 2015 2016 2017 2018 2019 Total expected benefit payments in €000s

Severances 527 1,706 513 818 1,382 4,946 Pensions 2,735 3,016 2,895 2,778 2,653 14,077 Death grants (Sterbequartale) 88 88 96 104 114 490

17h Other reserves Position 31 Currency Additions Consump- Reductions Splitting Position 31 in thousands of euros December conversion tion December 2013 2014

Other reserves and 4,021 9 10,040 –692 –2,823 31,734 42,289 provisions

The other reserves have been created as required by The reclassification of reserves totalling €31,734 thou- IAS 37 for legal or actual obligations of the group. In sand results from the proportional consolidation of BTV this balance sheet item mainly includes reserves ALPENLÄNDISCHEN GARANTIE-GESELLSCHAFT for off-balance sheet Guarantees and other liabili- M.B.H. and the full consolidation of VoMoNoSi ties, legal cases as well as for taxes and levies. The Beteiligungs AG. consumption of reserves in the current year can be expected with a high degree of probability. Group financial statements financial Group

BTV Business Report 2014 76 |77 18 Tax debts in €‘000 31.12.2014 31.12.2013

Current tax owed 1,732 9,877 Deferred tax owed 5,184 2,593

Tax debts 6,916 12,470

By retroactively including the subgroup BTV Beteili- companies of BTV, deferred tax owed from balancing gungsholding GmbH in the group of consolidated effects decreased by €2,559 thousand in 2013.

18a latent tax obligations in €‘000 31.12.2014 31.12.2013

Revaluation Finance Leasing and Other 318 0 Other latent tax refunds and tax debts abroad 4,866 2,593

Deferred tax owed 5,184 2,593

19 other liabilities in €‘000 31.12.2014 31.12.2013

Negative market values from derivatives trades 39,026 41,440 Other liabilities 90,947 59,342

Other liabilities 129,973 100,782

20 Subordinated capital in €‘000 31.12.2014 31.12.2013

Subordinated capital 378,952 407,841

of which fair value 195,833 153,085

The supplementary capital shown among subordi- Repayment on maturity is only possible on pro- nated capital shows maturities during the financial portional deduction for the losses which occurred years 2015-2030 and coupons of between 0.386% during the lifetime. For supplementary capital and 7.000% (previous year: 0.528% and 6.500%). which was issued after 1 January 2010, the interest is only to be paid out if this is covered by dispos- In the reporting year, subordinated supplementary able profits. capital of €33,486 thousand was issued with final maturity of 2024 (previous year: €0). In the report- The overall expense for subordinated liabilities in ing year, €23,700 thousand (previous year: €27,500 the year under review was €8,895 thousand (previ- thousand) in listed supplementary capital and ous year: €8,797 thousand). In the financial year €46,888 thousand (previous year: €0) in unlisted 2015, issued supplementary capital with a total supplementary capital was repaid. nominal amount of €48,500 thousand (previous year: €70,588 thousand) will fall due. An early redemption of the bonds by the bank or the lender is not possible. Interest can only be paid, The repayment amount for the subordinated capi- if they are covered by the annual profit as defined tal for which the fair value option was exercised by company law before assignments to reserves. amounted to €179,086 thousand (previous year:

78 foresight Group Management report Group financial statements

€137,804 thousand). The amount of the difference During the reporting year for the BTV Group, no between the fair value of the subordinated capital, hybrid loan was issued (previous year: €0). Over- for which the fair value option was applied, and its all interest paid for the hybrid loans amounted to repayment amount is €16,747 thousand (previous €5,199 thousand (previous year: €5,199 thousand). year: €15,281 thousand).

21 equity

On 31 December 2014 the issued capital totalled book value of the shares held by the company was €50.0 million (previous year: €50.0 million). The €223 thousand on the balance sheet date (previous share capital is represented by 22,500,000 (previous year: €571 thousand). The capital reserves include year: 22,500,000) – bearer – voting individual shares premium values from the share issues. In the capital (common shares). In addition 2,500,000 (previ- reserves both retained earnings as well as income ous year: 2,500,000) – bearer – non-voting shares and expenses with no effect on profits were ac- (preference shares) were issued, with a minimum counted. The represented shares correspond to the dividend of 6% attached (in the event of dividends approved shares. being suspended, to be paid retrospectively). The

development of the shares in circulation in shares 2014 2013

Issued shares in circulation 01/01 24,964,869 24,978,583 Purchase of own shares –5,503 –14,759 Sale of own shares 27,623 1,045 Issued shares in circulation 31/12 24,986,989 24,964,869 plus own shares in Group portfolio 13,011 35,131 Shares issued 31/12 25,000,000 25,000,000

21a Regulatory capital and debt levels ments Directive IV). For the entire core capital, a As of 2014, the consolidated capital of the Group is minimum requirement of 6.0% is provided; the reported in accordance with the provisions of Basel total capital must reach a value of 8.0%. Pursuant III. This is based on EU Regulation 575/2013 (Capital to the CRR accompanying regulation, for Austria, Requirements Regulation – CRR), in conjunction different minimum requirements are set from those with the Austrian CRR accompanying regulation. specified by the CRR, i.e. 4.0% for common equity The capital according to CRR consists of the com- and 5.5% for the entire core capital. The minimum mon equity (Common Equity Tier 1 – CET1), the requirement for total capital remains unchanged additional core capital (Additional Tier 1 – AT1) and at 8.0%. Additional regulatory capital buffers are supplementary capital (Tier 2 – T2). The respective not defined for the 2014 reporting period. With capital ratios are determined by contrasting the regard to the debt ratio (leverage ratio), a revised corresponding regulatory capital component after version of the guidelines for the determination taking into account all regulatory deductions and and disclosure of the leverage ratio was published transitional provisions of the overall measure of in January 2014. It is expected to be adopted into risk. In accordance with the provisions of the CRR the European regulatory framework in 2015. Within a minimum requirement of 4.5% is planned for BTV the future impact will be examined and the ap- CET1 which will be increased by the capital buffer propriate requirements in terms of disclosure from defined in accordance with CRD IV (Capital Require- 1 January 2015 prepared. Group financial statements financial Group

BTV Business Report 2014 78 |79 consolidated equity according to CRR in € million Basel III Basel II 31.12.2014 31.12.2013

Common equity (CET1) Capital instruments qualifying as CET1 99.5 Proprietary CET1 instruments –1.5 Retained earnings 778.5 Aggregated other income 60.3 Other reserves 128.7 Transitional changes owing to the transitional provisions for CET1 capital instruments 4.0 Goodwill 0.0 Other intangible assets –0.0 Regulatory changes in connection with CET1 instruments of financial companies, in –324.7 which the bank holds a substantial interest Other transitional changes to CET1 51.3 Common equity (CET1) 796.1 n. a.

Additional core capital (Additional Tier 1) Changes owing to the transitional provisions for Additional Tier 1 capital instruments 64.8 Other transitional changes to Additional Tier 1 –64.8 Additional core capital (Additional Tier 1) 0.0 Core capital (Tier 1): sum of common equity (CET1) and additional (AT1) core capital 796.1 807.0

Supplementary capital (Tier 2) Paid-up capital instruments and subordinated loans 141.1 Direct positions in supplementary capital instruments –0.9 Changes owing to the transitional provisions for supplementary capital instruments 71.8 and subordinated loans Other transitional changes to supplementary capital –78.0 Supplementary capital (Tier 2) 134.0 157.3 Equity applied under Section 23 para. 14 line 7 BWG (Tier 3) n. a. 0.1

Total qualifying equity 930.1 964.4 Total risk-weighted assets 6,212.8 6,055.4 Common equity Tier 1 ratio 12.81 % n. a. Core capital ratio 12.81 % 13.33 % Equity ratio 14.97 % 15.93 %

The structure of regulatory capital is based on the The equity calculation for 2014 included retained final proposal of the guidelines of the EBA (Euro- earnings totalling €19,465 thousand following ap- pean Banking Authority); the values are assessed proval by the Supervisory Board on 27 March 2015. on the basis of the scope of consolidation required by supervisory regulations. The comparative Explanation: n.s. = not shown figures with Basel II are limited to the total items, since the structure of equity under Basel III differs considerably from that under Basel II.

80 foresight Group Management report Group financial statements

Information on overall income statement and segment reports

22 Interest income in €‘000 2014 2013

Interest and similar income from Lending and money market transactions with credit institutions 6,574 8,360 Lending and money market transactions with clients 150,984 152,288 Debenture bonds and fixed-interest securities 43,590 49,691 Equities and variable-rate securities 1,855 1,241 Other shareholdings 2,172 2,288 Other transactions 3,628 29,239 Sub-total interest and similar income 208,803 243,107

Interest and similar expenses on Credit institutions deposits –8,929 –9,871 Customer deposits –26,388 –31,199 Securitised debt –4,591 –3,144 Subordinated capital –13,758 –13,348 Other trades –7,088 –33,021 Sub-total interest and similar expenses –60,754 –90,583

Income from at-equity valued companies 34,219 27,689

Net interest income 182,268 180,213

The interest income for financial assets, including For impaired financial assets, accumulated interest at-equity income for which valuation is not carried in the amount of €1,739 thousand (previous year: out at fair value, amounted to €238,764 thousand €1,742 thousand) was collected. (previous year: €268,677 thousand). The corresponding interest costs for financial liabilities amounted to Owing to the inclusion of BTV 2000 Beteiligungs- €54,063 thousand (previous year: €84,465 thousand). verwaltungsgesellschaft m.b.H. in the group of consolidated companies, 2013 was also adjusted and in this case the „Income from companies valued at equity“ item increased by €3,165 thousand. Group financial statements financial Group

BTV Business Report 2014 80 |81 23 risk provisions in credit transactions in €‘000 2014 2013

Allocation of on-balance sheet provision –28,280 –45,220 Allocation of off-balance sheet provision –9,791 –519 Loan loss insurance premiums 0 –4,405 Release of on-balance sheet provisions 8,567 6,893 Release of off-balance sheet provisions 1,379 74 Direct amortisation –1,213 –3,965 Income from amortised receivables 297 258

Loan-loss provisions in the credit business –29,041 –46,884

The allocations to and write backs from provisions The premium for the loan default insurance included for off-balance sheet loan risks are contained in the the payments to ALPENLÄNDISCHE GARANTIE-GE- above figures. SELLSCHAFT M.B.H. which, owing to the proportional consolidation of the company, amounted in the reporting year to €0 (previous year: –€4,405 thousand).

24 net commission income in €‘000 2014 2013

Credit transaction 6,063 5,703 Payment transactions 12,287 13,108 Securities trading 20,546 21,601 Currency, foreign exchange and precious metals trading 2,943 3,094 Other services business 1,890 1,773

Net commission income 43,729 45,279

25 trading income in €‘000 2014 2013

Income from derivatives –668 –295 Income from securities 503 388 Income from foreign exchange and notes and coins transactions 930 908

Trading income 765 1,001

26 operating expenses in €‘000 2014 2013

Payroll –83,353 –60,401 thereof salaries and wages –62,956 –44,721 thereof legal social contributions –16,337 –12,424 thereof other personnel costs –1,940 –2,004 thereof expenditures for long-term personnel deferrals –2,120 –1,252 Materials –39,492 –28,774 Amortisation –16,763 –6,862

Operating expenses –139,608 –96,037

Personnel costs include expenses for contributable pension plans of €1,601 thousand (previous year: €1,432 thousand).

82 foresight Group Management report Group financial statements

The costs invoiced by the auditors of the Group the individual and group financial statements (KPMG Austria GmbH Auditor and Accounting com- as well as other services rendered amounted to pany and KPMG network companies) for the audit of (incl. VAT):

26a auditor expenses in €000s 2014 2013

Audit of year end accounts company and group 349 317 Tax advisory services 51 65 Other services 89 31

Auditor expenses 489 413

26b average number of employees, weighted according to personnel years 2014 2013

White collar 888 766 Blue collar 307 27

Payroll 1,195 793

In addition, in the reporting year, an average of 26 to closely related companies. These are not taken employees (previous year: 26 employees) were sent into account in the table above.

27 other operating income in €‘000 2014 2013

Other operating income 60,096 6,102 Other operating expenses –30,228 –8,341 Hedge accounting income 88 –33

Other operating profit 29,956 –2,272

The total amount of other taxes which apply to other sand). Hedged underlying transactions incurred a loss operating income totalled €9,785 thousand in 2014 of €33,371 thousand (previous year: €14,438 thou- (previous year: €4,199 thousand). The gains on fair sand), while hedging instruments made a gain of value hedge accounting amounted to €88 thousand €33,459 thousand (previous year: €14,405 thousand). in the reporting year (previous year: loss of €33 thou-

28 Income from financial assets – at fair value through 2014 2013 profit or loss in €‘000

Profit arising from financial assets – at fair value through profit or loss 209 2,518

Profit arising from financial assets – at fair value through profit or loss 209 2,518 Group financial statements financial Group

BTV Business Report 2014 82 |83 29 profit from financial assets – available for sale in €‘000 2014 2013

Profit arising from financial assets – available for sale 1,904 2,479

From the sales of available financial assets in the sales or repayments from the AfS assessment re- reporting period in the area of fixed interest and non- serves €5,388 thousand profit (previous year: profit fixed interest securities a total profit of €14,969 thou- of €2,758 thousand) was posted under the P&L sand (previous year: loss of €10,953 thousand) was heading „Income from financial assets – available recorded directly under equity. for sale“. In addition, this result item in the financial year 2014 includes permanent write-downs In the reporting period, a total profit from other (impairments) of fixed interest and non-fixed investments and other associated investments in interest securities to the value of €0 (previous year: the amount of €62,575 thousand (previous year: €107 thousand). In the reporting year, write-downs €58,672 thousand) was recorded directly under of €711 thousand were recorded for other invest- equity. In addition, in the reporting year, due to ments and other associated investments.

30 income from financial assets – held to maturity in €‘000 2014 2013

Profit arising from financial assets – held to maturity –414 –23

31 taxes on income and profits in €‘000 2014 2013

Current tax expense –18,632 –24,726 Tax provision cost (-)/income (+) 4,945 6,975

Taxes on earnings and profit –13,687 –17,751

The taxes on income include the individual group rections for previous years and changes to the tax companies on the basis of calculated taxable provisions. results from current income taxes, income tax cor-

84 foresight Group Management report Group financial statements

31a tax: reconciliation calculation in €‘000 2014 Reconcilia- 2013 Reconcilia- tion of tion of tax rate tax rate Annual net profit before tax 89,768 86,274 Calculated tax expense –22,442 25.0 % –21,569 25.0 % Tax reduction due to tax-exempt revenue from holdings 1,910 –2.1 % 1,756 –2.0 % and other tax-exempt revenues Tax increase from non-deductible expenses –1,527 1.7 % –512 0.6 % Other 2,078 –2.3 % 5,793 –6.7 % Tax expense for other periods –1,349 1.5 % –9,230 10.7 % Tax exemption at-equity revenues 7,643 –8.5 % 6,011 –7.0 %

Taxes on earnings and profit –13,687 15.3 % –17,751 20.6 %

The „Other“ item comprises essentially the tax In the reporting year, on the statement of compre- assessment and differences from foreign taxation. hensive income, €1,375 thousand (previous year: The tax expenses not relating to the period con- €1,805 thousand) in deferred taxes was recorded tains taxes on income from previous periods and directly under equity. Of this, unrealised profits/ other sources of tax. losses on disposal of assets held for sale (depreciation reserves) accounted for -€2,642 thousand (previous year: €1,125 thousand) and the revaluation of performance-related pension plans accounted for €4,018 thousand (previous year: €679 thousand).

32 earnings per share (common and preference shares) 2014 2013

Equities (ordinary and preference shares) 25,000,000 25,000,000 Average float (ordinary and preference shares) 24,967,581 24,972,350 Group net profit attributable to the owners in €000s 75,870 68,523 EPS (Earnings per share) in € 3.04 2.74 Diluted earnings per share in € (ordinary and preference shares) 3.04 2.74 Dividend per share in € 0.30 0.30

The diluted earnings per share are the same as means that there is no difference between the the undiluted earnings per share as no financial values „earnings per share“ and „diluted earnings instruments with diluting effect were issued. These per share“.

33 application of profits

The distributable profits are determined from the that for the financial year 2014 a dividend of €0.30 per financial statements of BTV AG. The net earnings for share (previous year: €0.30) be paid out. The pay- the financial year 2014 amounted to €30,592 thou- ment requires therefore a total of €7,500 thousand sand (previous year: €51,167 thousand). After increase (previous year: €7,500 thousand). The total amount of reserves of €23,185 thousand (previous year: of dividends on preference shares was €750 thousand €43,600 thousand) and adding back the profits carried (previous year: €750 thousand). The remaining profit forward there is an available sum of €7,568 thousand is to be carried forward as per Section 65 para 5 of the (previous year: €7,619 thousand). The Board of Direc- Shares Act (Aktiengesetz). statements financial Group tors will recommend to the Annual General Meeting

BTV Business Report 2014 84 |85 34 segment reporting

BTV adapted its segment reporting in 2014. This Finance and Controlling division for the reports. A was based on the newly developed overall bank reciprocal check, current agreements or plausibility management reports and due to the inclusion of checks between the Sales and Strategy Control- VoMoNoSi Beteiligungs AG (includes the Silvretta ling, Risk Controlling, Reporting and Balance Sheet Montafon group) in the scope of full consolidation Presentation and Tax and Accounting groups are and BTV Leasing crossing the qualitative and quan- therefore guaranteed. The criterion for the separa- titative thresholds defined in IFRS 8 (previously tion of business areas is primarily the responsibility reported in corporate banking). For the new overall for looking after clients. Changes in this responsi- bank management reports the previous year‘s fig- bility can also lead to changes in attribution to a ures were calculated so that a comparison with last segment during the course of a year. These effects year could be shown in the segment reporting. were, where insignificant, not corrected in the comparison with last year. Segment reporting is provided by BTV Group as required by the information and valuation rules In 2014, the following business areas are defined of IFRS 8. Segment information is based on what within BTV: is known as the „Management Approach“. This The corporate client business area is responsible requires segment information to be presented ac- for small, medium and large business clients and cording to internal reporting as it is regularly used chartered accountants and auditors. The retail by the company‘s key decision-makers for deci- client business area is responsible for the retail cli- sions on allocation of resources to the segments ents, freelance professionals and micro-companies and to assess their performance. The qualitative market segments. The institutional clients and and quantitative thresholds defined in IFRS 8 are banks division mainly includes treasury and trading met by this segment reporting. The business areas activities. BTV Leasing brings together all leasing are reported as independent businesses. operations of BTV AG. The Silvretta Montafon Berg- bahnen Group contains all of its tourism activities. Segment reporting is based on internal divisional The results of these segments also include transac- accounting for the corporate and retail customers tions between segments, particularly between the business areas, on the overall bank report for the corporate customer segment and leasing and the institutional clients and banks business area, on Silvretta Montafon Group. Services are charged the Reporting Package and the monthly report for for at market rates. Alongside these five reporting the BTV Leasing subgroup and on the respective segments is the „Other segments/consolidations/ monthly report for the Silvretta Montafon Berg- misc.“ heading. This item reports the results from bahnen Group. These reports reflect the structure service areas across BTV, such as Finance and of management responsibilities within BTV in 2014. Controlling, Legal and Investments, Marketing and These internal reports to the Board of Directors, Communications and Group Auditing, etc. In addi- which only satisfy IFRS accounting standards in tion, the effects of consolidation and fully consoli- part, are supplied monthly and are almost totally dated companies below the thresholds (Alpenlän- automated by preparatory systems and interfaces. dische Garantie-Gesellschaft m.b.H., BTV Hybrid The reporting dates for the data are the respective I GmbH and BTV Hybrid II GmbH, as well as TiMe period closing dates of the subsidiaries included in Holding GmbH) are allocated to this segment. the consolidated financial statements. The information of the internal and external accounting system The results of the five reporting segments are is based on the same base data and is agreed in the described below.

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Corporate client segment reversed. Operating expenses were up €0.3 million Interest income in the corporate client business and amounted to around €2.6 million for 2014. exceeded the previous year‘s result by 1.7% based on The main reason for the declining result was the the moderate rise in business volume and amounted „Income from financial assets and trading income“ to €87.0 million in the reporting year. Another factor item, which following a drop from €6.0 million to determining income is the established risk provision: €2.4 million was 60.4% below the value of 2013. This fell in comparison to 2013 by €5.1 million, or down 20.5%. In 2014 risk provisions of €19.8 million In total, this led to an annual profit before tax of were formed for the corporate client business. Com- €12.5 million, which was €3.1 million, or 19.9%, pared with the previous year, net commission income below the previous year‘s profit. in the corporate client segment grew by €0.2 million to €20.0 million. At €33.8 million, operating expenses The segment loans rose by €174 million to €2,377 mil- were only €0.9 million, or 2.6%, above the 2013 value. lion. The liabilities for the segment fell from €3,193 million to €2,752 million. In total, this led to an annual profit before tax increase of €5.9 million to €53.3 million for the cor- Segment Leasing porate client segment, outperforming the previous BTV Leasing posted an excellent financial year. The year‘s value by 12.5%. leasing subsidiary‘s net interest income jumped from €13.9 million to €15.7 million, or by 12.7%. The The segment loans grew in 2014 from €4,267 million loan loss provisions formed for the leasing business to €4,281 million. The segment liabilities increased fell from €1.2 million to €1.1 million, or down 2.8%, significantly from €1,734 million to €1,902 million, or in 2014. by 9.7%. Overall, pre-tax profit grew by €1.6 million to Retail client segment €12.4 million. Here the reduced volume in client receivables is put- ting pressure on interest income. In 2014 net interest The cash volume rose in 2014 by €17 million, or income was nonetheless maintained just under the 2.5%, and stood at €718 million at 30 September previous year‘s level and amounted to €38.4 million 2014. for the reporting year. In 2014 commission income was, however, well down on the previous year. Com- Silvretta Montafon segment mission income of €31.3 million was still achieved in The result of the Silvretta Montafon Group is 2013, while in 2014 it was down to €27.3 million. The reported for the first time due to full consolidation retail client segment is typically highly cost intensive in 2014, so there are no comparable values. On because of the high staff and premises resources the reporting date, the months of October 2013 to required. Costs rose by 5.8% in 2014. Staff costs September 2014 for Silvretta Montafon Bergbah- amounted to €51.5 million. Loan loss provisions nen Group were included. Owing to the course of for the credit business remained stable, falling by business being dominated by tourism, the result €0.3 million to €3.6 million. fell drastically due to the season. Other operating profit (€41.2 million) mainly includes the revenues. Pre-tax profit for this segment fell overall by €6.7 mil- These are the decisive factors for Silvretta Mon- lion, or 36.9%, to €11.4 million. tafon with its average of 397 employees in the quarter under review. Administrative expenses The segment loans fell by €53 million to €1,266 mil- amounted to €34.3 million. lion. The liabilities for the segment increased from €2,784 million to €2,807 million. Overall, the annual pre-tax profit with a slightly negative net interest income (down €0.9 million) Institutional Clients and Banks Segment was around €6.0 million.

Interest income in the Institutional Clients and statements financial Group Banks division fell from €15.3 million to €12.3 million, or by 20.0%, owing to the weak interest rate stuctural result in the financial year 2014. No loan loss provisions had to be formed in 2014 for the Institutional Clients and Banks division. Loan loss provisions totalling €0.4 million were

BTV Business Report 2014 86 |87 Segment reporting in Year Corporate Retail Institutional Leasing Silvretta Reporting Other Group in €000s clients clients clients Montafon segments segments/ balance and banks consolida- sheet/P&L tion/misc. Net interest income 12/2014 87,000 38,426 12,276 15,711 –941 152,472 –4,423 148,049 12/2013 85,509 38,715 15,341 13,935 0 153,500 –976 152,524

Income from at-equity 12/2014 0 0 0 0 0 0 34,219 34,219 valued companies 12/2013 0 0 0 0 0 0 27,689 27,689

Loan-loss provisions in 12/2014 –19,763 –3,612 372 –1,140 0 –24,143 –4,898 –29,041 the credit business 12/2013 –24,867 –3,961 –3,500 –1,173 0 –33,501 –13,383 –46,884

Net commission income 12/2014 19,950 27,333 0 527 0 47,810 –4,081 43,729 12/2013 19,753 31,342 0 512 0 51,607 –6,328 45,279

Operating expenses 12/2014 –33,842 –51,479 –2,566 –6,153 –34,264 –128,304 –11,303 –139,608 12/2013 –32,974 –48,639 –2,310 –6,016 0 –89,939 –6,098 –96,037

Other operating profit 12/2014 0 727 0 3,416 41,243 45,386 –15,430 29,956 12/2013 0 596 0 3,628 0 4,224 –6,495 –2,271

Profit arising from finan- 12/2014 0 0 2,395 69 0 2,464 0 2,464 cial assets and trading 12/2013 0 0 6,048 –73 0 5,975 0 5,975 profit Annual profit before tax 12/2014 53,345 11,395 12,477 12,430 6,038 95,685 –5,916 89,768 12/2013 47,421 18,053 15,579 10,813 0 91,866 –5,591 86,274

Segment loans 12/2014 4,280,865 1,266,182 2,376,810 717,977 1,821 8,643,655 224,911 8,868,566 12/2013 4,267,023 1,319,433 2,202,426 700,707 0 8,489,589 435,921 8,925,510

Segment liabilities 12/2014 1,901,694 2,806,926 2,751,868 673,298 34,359 8,168,145 160,907 8,329,052 12/2013 1,733,619 2,784,298 3,193,290 633,553 0 8,344,760 131,477 8,476,237

Changes in this responsibility can lead to changes in attribution to a segment. These effects are not corrected in the year-on-year comparison.

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Segment reporting: explanatory notes The segment receivables include the entries for The net interest income is allocated according to the loans and advances to banks, loans and advances market interest method. Sales figures are included to clients, trading assets and all fixed-interest secu- in the corporate and retail clients for management rities, guarantees and liabilities. The „Other seg- reasons, among other items. Income from equity- ments/consolidation/misc.“ column includes loan valued companies is allocated to the „Other segments/ loss provisions, since the internal control considers consolidation/misc.“ area. Net commission income is the liabilities as net figures in contrast to the bal- determined by the assignment of the internal divi- ance sheet. Also included in this column are consol- sional accounting (including all manual entries being idating entries. The entries for liabilities to banks, assigned to commission). Costs are allocated to the liabilities to clients, trading liabilities, securitised respective segments in which they were incurred and debt, trading liabilities and subordinated capital the expenses of BTV Leasing GmbH or Silvretta Mon- are allocated to the liabilities segment. Consolidat- tafon Group are directly allocated in accordance with ing entries are also included here in the „Other the management reports. Costs not directly imputable segments/consolidation/misc.“ column. are shown under „Other segments/consolidation/ misc.“ The other operating income includes, among The success of the business field concerned is other things, the conversion of the Silvretta Montafon measured by the before-tax annual net profit gen- Group and, in addition to the consolidation effects, erated by that segment. essentially the stability tax and rental operations under „Other segments/consolidation/misc.“ The result of the investment in the Silvretta Mon- tafon Group was included in 2013 in the at-equity result and not yet part of the full consolidation, therefore the comparative figures for the „Silvretta Montafon“ segment for 2013 are stated as 0. Group financial statements financial Group

BTV Business Report 2014 88 |89 35 Risk reporting

Risk strategy and policy for risk management a balance between risk and profit, BTV has developed As part of the risk report, a qualitative and quan- a risk strategy. This risk strategy is characterised by a titative disclosure is made of the ICAAP (Internal conservative approach to operational banking risks, Capital Adequacy Assessment Process) at BTV. This resulting from the demands of a client-oriented focus disclosure includes the global banking level as well in banking business and the attitude towards the legal as the individual risk categories. BTV‘s risk catego- requirements. ries were determined as follows: Therefore a control loop has been implemented BTV‘s global bank risk is defined as the sum of within BTV, which ensures that all risks within the Risk capability group are identified, quantified, aggregated and actively managed. The individual risk definitions Credit risk and management mechanisms applied as part of Risk of default by other party this control circuit are described in detail below. Equity investment risk Credit concentration risk Credit risk Risks from credit risk reducing techniques At BTV credit risk is broken down as follows: Market risk Risk of a change in interest rates • Risk of default by other party Currency risk • Equity investment risk Share price risk • Credit concentration risk Credit spread risk • Risks from credit risk reducing techniques Liquidity risk Operational risk The securitisation risk is of no relevance, since BTV Macroeconomic risk has no securitisation positions in its asset portfolio. Other risks Strategic risk Risk of default by other party Reputation risk Under this heading BTV looks at the total or partial Capital risk default of a counterparty and the resultant loss Profit or business risk of the income due or loss of the capital invested. Model risk Particular importance is attached to the monitoring of party default risk, being the most important credit, market, liquidity, operational, macroeco- type of risk for BTV. nomic and other risks. This states the likelihood of BTV continuing to be in a position to meet the Management of counterparty default risk risk capability requirements within a specific time The credit management department is responsi- horizon. ble for risk management of its loan book as well as for assessing the creditworthiness of clients. This Within BTV, risk is understood to mean the risk of department is also responsible for overall manage- a negative divergence from an expected result. The ment, restructuring management, management of conscious and selective assumption of risks and their loan commitments in default, drawing up of financial appropriate management represents a core banking statements and company analyses, as well as collec- function and hence a core function of BTV too. The tion and evaluation of sector information. Knowing aim is to achieve a balanced ratio between risk and our customers well is particularly important for BTV. profit, in order to make a sustainable contribution to This is reflected strongly in the loan management the positive development of the company. Because of area. Regular meetings between customers and loan the operational necessity of being able to continue to managers from BTV are just as self-evident as at least meet the risk capability requirement and to maintain annual borrower reviews.

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The main defined goals for the management of the The measures listed are applied in both an individual borrower‘s default risk have been defined as the long- as well as combined way. term optimisation of the lending business with regard to the risk/return ratio, and in the short term, the Risks achievement of the credit risk objectives budgeted for All of the measures mentioned above generally rein the individual client segments. At individual level, duce the risk of the borrower defaulting. If however risk management techniques include assessment of the agreements made are not adhered to on the creditworthiness when granting loans, the acceptance part of the client, there is the risk of a reduced quo- of collateral, ongoing monitoring of account man- ta of collectability due to the delay of the default or agement and scheduled reviews of ratings and the the delay in a possible termination of the loan. soundness of collateral. Loan loss provision is carefully formed, taking into consideration existing collateral, Risk management and risk control for default risks identified and quantified during the The internal regulations of BTV provide that debt financial year. arrangements are only to be granted if, on the basis of the available data, documents and information, Transactions involving debt arrangements a proper repayment is ensured. The approval is Here, it concerns transactions in which the borrow- made through the decision-making channels. The er, who has been under financial pressure has been agreements made with the borrower are always to given through one or more measures the opportu- be documented in writing. If there is interference nity to pay off his liabilities within the framework of in existing contracts, the changed or new contracts his current economic situation. have to be agreed to by the borrower as well as all the co-borrowers and issuers of securities. Types of debt arrangement The following types of debt arrangement are The control is carried out by the credit manage- distinguished at BTV: ment department by means of existing control systems such as, for instance, lists for overdrafts Debt arrangement concerning capital repayment: and credit limits. Other agreements made with • The credit period is extended. the client are controlled separately through the • Arrears are capitalised. relevant responsible person for the market. • Redemption payments are temporarily put on hold. • Loans are waived in part or as a whole. Accounting policies and valuation methods • Repayment vehicles are temporarily put on hold. Debt arrangements granted to borrowers do not lead directly to a loan loss provision, a reserve or a Debt arrangements concerning the interest pay- derecognition of the receivable. ments to be made: • Interest payments are temporarily put on hold. If the agreed measures are not complied with, the • Favourable rates of interest are agreed in order to client is submitted to a renewed and timely credit reduce the burden of interest. check. Within the context of this check, a change of the borrower‘s rating to default as well as the Other types of debt arrangement: formation of a loan loss provision or a reserve will • The credit relationship is readjusted by contract. be evaluated. • The obligation to comply with binding conditions (covenants) on the part of the borrower If, within a credit commitment, a credit default is to be is temporarily relaxed. expected, a loan loss provision or a reserve is created • Securities are released. for the part that is probably not recoverable. • Additional borrowers are adopted into the credit relationship. Group financial statements financial Group

BTV Business Report 2014 90 |91 Generally, entire or partial write-offs of claims take Equity investment risk place only with clients who have already defaulted Equity investment risks (shareholder risks) are de- and after assessment through the reorganisa- fined within BTV as the potential losses from equity tion management. Provided that a borrower in a furnished, non-payment of dividends, partial write- difficult financial position can cover some of his downs, losses on disposals, reduction of hidden re- obligations, in individual cases a release of existing serves, liability risks (e.g. letters of comfort), or profit claims can take place also for clients who have not transfer agreements (assumption of losses). defaulted. Credit concentration risk Probation period Within BTV, credit risk concentration is defined as Once an agreed debt arrangement has formally the risks which arise from un uneven distribution of come into force, a two-year probation period will business partners in loan or other business rela- start for the borrower. tionships, the formation of geographical or sector- specific business clusters or other concentrations, After the two-year probation period has been com- which may generate losses that are large enough pleted and all of the criteria listed below have been to threaten BTV‘s continued existence. cumulatively fulfilled, the client is again managed as a client without a debt arrangement: Risks from credit risk reducing techniques This is understood to mean the risk that the credit • The client is within the living rating area. risk reducing techniques implemented by BTV • According to the assessment of the commercial are less effective than expected. This risk can be situation, the borrower can repay the claims. differentiated according to credit, market, liquidity, • Within the probationary period, the payment operational and other risks. obligations are fulfilled properly. • Currently, the total position of the borrower Under credit risk BTV looks in this context at the total is less than 30 days overdue. or partial default of a counterparty and of the collateral issuer or security provider and the resultant loss of If a customer who has been granted a debt ar- income due or loss of the capital invested. rangement defaults during the probationary period, the probationary period will be interrupted Market risks include the interest rate change, for 365 calendar days. The customer cannot obtain currency, share price and credit spread risks. The a living rating for the period of interruption of the currency risk arises as a result of inconsistencies in probationary period. Provided that the borrower‘s the currency between debts and risk-mitigating overall position is not overdue, a new two-year techniques. If the nominal price of the security probationary period will start when the inter- changes negatively in relation to the nominal price ruption period ends. For those customers whose of the loan, the unsecured portion of the debt will probationary period was interrupted, stringent increase and so will the potential loss amount in monitoring criteria will apply to the new probation- the event of default on the debt. The interest rate ary period: change, share price and credit spread risks should be seen here as mainly being connected with • If the borrower‘s overall position is more than financial security. For example, the market values 30 days overdue, this is regarded as default. of financial security (equities, bonds, etc.) could be • The granting of a further debt arrangement is reduced owing to macroeconomic influences. regarded as default. As part of the risks arising from risk-mitigating techniques, liquidity risk is defined as the non- liquidity of parts of the collateral portfolio.

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Furthermore, operational and other risks – cor- Types of interest rate risk responding to the definitions in the following sec- Within BTV, the different forms of interest rate risk tions – may result in parts of the collateral portfolio are broken down as follows: losing in value. • Interest rate adjustment risk: This risk arises In the case of all the risks mentioned, owing to the from setting of interest rates, which can lead to reduction in the value of the security, the unse- inconsistencies in the fixed interest rates and a cured portion of the debt increases and so does potential reduction in the net interest margin. the potential amount of the economic loss for BTV • Interest curve risk: This risk arises from changes in the event of default on the debt. in the yield curve (position, steepness, convex- ity), which on the one hand affect the net present Market risk value of interest rate-sensitive positions, and on Under market risk BTV understands the potential the other hand influence the structural contribu- loss which can arise due to changes in prices and tion to the net interest margin. interest rates in financial markets for all the posi- • Basis risk: This risk arises from the different rate tions of the bank and its trading book. The market sensitivities of asset and liability positions to risk is made up of interest risk, currency risk, share interest rate movements. price risk and credit-spread risk types. • Non-linear risks from derivative positions and embedded options. Control of market risks Management of market risks is undertaken cen- While the first three categories of interest risk arise trally in the Institutional Clients and Banks business from traditional banking activity and are moni- area of BTV. Both the periodical and net asset value tored, the fourth type of risk arises in the case of effects of asset/liability management are taken into transactions involving options. consideration to this end. As central auxiliary conditions, the impacts of the management measures Currency risk on invoicing according to IFRS and UGB and the BTV defines currency risk as the danger that the clauses relating to supervisory law are taken into profit which is obtained from transactions which consideration. require conversion from one currency to another, deviates negatively from the expected result. At BTV, management measures include the identification of commitment incongruities and their Share price risk adjustment, the ongoing monitoring of credit Within BTV, share price risk is understood to be spreads in the security nostro, the assurance of the price fluctuations in equities and equity funds. effectiveness of hedge relationships, the separation of income components using a transfer price Credit spread risk system and the assurance of risk-bearing ability at The credit spread represents a risk premium for all times. investments which include loan and liquidity risks. The credit spread is defined as the difference in re- Interest rate risk turns from an asset and a risk-free reference bond. Interest rate risk has a twofold impact. On the one Credit spread risk in BTV is reflected in fluctuations hand there is the risk of reduced net asset values in the net value of bond portfolios, which cannot due to the changes of market rates in the interest be attributed to interest rate changes. register. On the other hand, there is a risk that the expected interest revenue will not be achieved due Liquidity risk to a change in interest rates. Within liquidity risk, BTV distinguishes between liquidity risk in the narrower and in the broader sense. Group financial statements financial Group

BTV Business Report 2014 92 |93 Liquidity risk in the narrower sense (insolvency risk Management of liquidity risk or funding liquidity risk) is defined as the danger BTV‘s liquidity risk management is used to guaran- that BTV is no longer able to meet its current and tee adequate liquidity at all times, so that the bank future payment liabilities either in full or by the is able to meet its payment liabilities. established deadlines. This can occur due to short- term liquidity bottle-necks such as e.g. delayed The Institutional Clients and Banks department is arrival of expected payments, unexpected with- responsible for short-term liquidity risk manage- drawal of deposits and drawdowns on approved ment. The primary task of short-term liquidity risk lines of credit. management is to identify and manage the optional liquidity risk position. This management is based Within BTV, liquidity risk in the narrower sense essen- on an analysis of daily payments and the planning tially consists of management of the following risks: of expected cash flows, as well as demand-related money market trading, taking into account the • Due date risk as the risk of an unscheduled liquidity buffer and access to central bank facilities. extension to the capital commitment period of lending operations due to behaviour which is not Monitoring of the long-term liquidity risk is carried contractually compliant. out by BTV bank management and consists of the • Withdrawal risk, which is the danger arising from following points: unexpected drawdown of lending commitments or the unexpected withdrawal of deposits. • Optimisation of the refinancing structure with minimisation of refinancing costs Liquidity risk in the broader sense essentially is risk • Sufficient provision of primary funds within the structural liquidity, and describes the • Diversification of sources of refinancing effects on earnings of sub-optimal availability of • Optimisation of the liquidity buffer liquidity. Within BTV, this category is a part of the • Clear investment strategy for tenderable securi- management of assets and liabilities and consists ties on the bank‘s books of refinancing risk and market liquidity risk: • Compliance with regulatory conditions in connection with the provisions of Regulation (EU) • Refinancing risk is the danger that additional No 575/2013 (CRR), the Austrian Banking Act refinancing can only be obtained at higher mar- (BWG) and the Credit Institution Risk Management ket interest rates. This describes the situations in Ordinance (KI-RMV) which only insufficient liquidity can be obtained under the expected conditions. The maturity Operational risk mismatches which are deliberately contracted Operational risk is defined as the danger of losses from the point of view of profitability, entail the due to the failure of internal processes, procedures, danger that purchasing conditions will become systems and individuals, or as a result of external more expensive. This situation can arise either events. This definition includes legal risk, but ex- due to disturbance in the interbank market or cludes strategic risk and reputation risk. due to a reduction in the credit rating of BTV. On the basis of the money-at-risk approach, this Macroeconomic risk risk thus corresponds to the costs which would Risk are described as macroeconomic risks if they have to be borne by the bank in the event of an result from unfavourable changes in the economic unspecified negative scenario occurring, in order development as a whole in the markets in which to exclude this risk, i.e. in order to close out the BTV transacts business. existing maturity mismatches (sale of realisable assets or assumption of long-term refinancing). • Market liquidity risk is the danger, contingent on extraordinary events, that assets may only be realised at discounts in the market.

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These risks lie outside the sphere of influence of Reputation risk describes the negative conse- BTV, the sensitivity of client groups, sectors and quences which may arise from a negative diver- markets versus negative economic changes as gence in BTV‘s reputation from the expected level. a whole is however expresses itself to different Reputation is understood to be the standing of degrees and is taken into account in the direction BTV with regard to its competence, integrity and of the business. From this perspective, an internal trustworthiness resulting from the perceptions closeness to the strategic risks is also the case. of public stakeholders (shareholders, employees, customers, etc.). Other risks BTV understands „other risks“ to cover the follow- Capital risk arises from the inadequate availability ing types of risk: of risk cover capital.

• Strategic risk The earnings and business risk arises from inad- • Reputation risk equate diversification of the earnings structure or • Capital risk from the inability to achieve an adequate and last- • Profit or business risk ing level of profitability. • Model risk The model risk is the risk that a model generates BTV defines these types of risk as follows: incorrect results and therefore incorrect steering impulses are given. The production of incorrect As far as BTV is concerned, strategic risk arises results can be due to the fact that the model was from the negative effects on equity and revenue of incorrectly designed, or is unsuitable for the se- business policy decisions, changes in the economic lected application. The model may also have been environment, failure to implement or inadequate used incorrectly, or the incorrect input data were implementation of decisions or a failure to adapt to used for a model. It is also possible that a model is changes in the economic environment. no longer valid or is inconsistent. Group financial statements financial Group

BTV Business Report 2014 94 |95 Structure and organisation of risk management

The central responsibility for risk management and Banks as well as Finance and Controlling. The lies with all the Directors. It decides on risk policy, main responsibility of the APM meeting includes approves the basic principles of risk management, decisions with regard to investment activities in the determines limits for all of the relevant risks for BTV bank register, the development of hedging strate- and defines the procedures for risk monitoring. The gies as well as the analysis of the interest income central steering committees are the APM meeting components. Furthermore, a thorough analysis of and the BTV Bank Management. the liquidity situation as well as BTV‘s refinancing costs takes place. Within the framework of risk management, the supervisory board of BTV has the responsibility for At present the BTV Bank Management meets monitoring the risk management system. The reali- monthly. It consists of the full Board of Directors sation of this supervisory role is essentially carried and the heads of the Finance and Controlling and out through the reports listed below: Credit Management departments, as well as the Corporate Client, Retail Client and Institutional Cli- • Risk reporting of the Group Management Board ents and Banks departments. The Controlling team within the framework of the preparing sessions leader is responsible for chairing this meeting. The of the auditing committee and within the ple- principal responsibility of BTV Bank Management num of the Supervisory Board. covers management of the balance sheet struc- • Annual ICAAP report to the audit committee ture from the perspective of risk/return, as well as • Annual session of the risk and credit committee management of credit, market, liquidity risk as well • On-going reports by the Group Audit to the au- as operational and macroeconomic risk. Strategic, dits undertaken with different areas of emphasis reputation, capital and business risk, as well as • Annual report of the auditor about the functional model risks are combined in the „other risks“ risk capacity of the risk management system to the category and are also discussed within the context Chairman of the Supervisory Board of BTV Bank Management.

At present the APM meeting is held on a monthly Risk Controlling is responsible for providing inde- basis, one week before the BTV Bank Management. pendent and neutral reporting of risks within BTV for It comprises the divisional board members and the management and guidance decisions. The core tasks of heads of the business areas Institutional Clients Risk Controlling are the identification, measurement,

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analysis, monitoring and reporting of risks, as well as Both the compliance function and the money advising managers within the corporate divisions and laundering officer report directly to the full Board processes. Through these core tasks, Risk Controlling of Directors. provides an important supportive business management service to the management for risk-oriented Within BTV, the functions of risk control, group planning and management. audit and the compliance/money laundering function are organised so as to be independent of each As an autonomous supervisory body, BTV‘s group other. This guarantees that these organisational audit audits the effectiveness and appropriateness units can execute their tasks in an appropriate of overall risk management and thereby also sup- manner within the framework of an effective inter- plements the role of representatives of regulatory nal control system. bodies and owners.

The compliance function monitors all legal regulations and internal guidelines relating to financial services according to the Securities Supervision Act (WAG). The supervision of employee and customer transactions is intended to secure confidence in the capital markets, whereby compliance contributes directly to the protection of the reputation of BTV.

The anti-money laundering department has the task of preventing money laundering and financing of terrorism within BTV. On the basis of the legally prescribed risk analysis, measures and guidelines are defined to prevent the channelling of illegally obtained assets into the legal financial system. In case of evidence of money laundering or the financing of terrorism, the money laundering officer must inform the Federal Ministry of the Interior. Group financial statements financial Group

BTV Business Report 2014 96 |97 Risk measurement procedures

The requirements which apply to a quantitative risk its, etc.). The determination of the risk and the risk management system, which arise from the 2nd pil- cover capital are carried out by various methods, lar (ICAAP) of Basel III and from commercial needs, using the going-concern and liquidation approach. are covered within BTV mainly by the risk capacity This occurs against the background of the differing calculation. With the help of this calculation, BTV protection aims of the two approaches. The risk determines the extent to which it is able to absorb capacity requirement must be fulfilled for both ap- unexpected losses. proaches in a normal as well as a stress situation.

In calculating risk capacity, BTV assumes two In the liquidation approach, equity is essentially viewpoints - the going concern and the perspective defined as internal capital (risk cover capital). In of liquidation. BTV has also built an early warning the going-concern approach, the risk cover capital stage to cater for both approaches. From the per- essentially consists of the expected net profits for spective of a going concern, the continued exist- the financial year, the hidden reserves and the core ence of a regular ongoing concern is to be assured. capital surplus. At BTV, the core income capital is The aim of the protection at the early warning stage defined as the surplus of core capital beyond the is to be able to ensure that smaller, high-probability internally defined minimum core capital ratio. risks can be absorbed, without needing to change the type and extent of business activity, or the In order to measure the risks within the context of risk strategy. Furthermore, triggering of the early ICAAP, the following processes and parameters are warning stage has the effect of implementing cor- applied: responding measures. From a liquidation perspective, the early warning stage should ensure BTV‘s aim of guaranteeing the claims of outside financial backers (holders of debt securities, savings depos-

interest rate risk liquidation approach going-concern approach

Confidence interval 99.9 % 95.0 % Probability horizon 250 days 30/250 days Internal capital i. w. qualifying equity expected annual net profit, hidden (Risk cover capital) reserves and core capital surplus

Credit risk Risk of default by other party IRB approach Equity investment risk IRB-PD/LGD approach Credit concentration risk IRB Granularity Adjustment Market risk Diversification across market risks considered Interest rate risk VaR (historical simulation) Currency risk VaR (historical simulation) Share price risk VaR (historical simulation) Credit spread risk VaR (historical simulation) Structural liquidity risk Structural liquidity risk Liquidity risk (P&L risk) (Cash value risk) Operational risk Standard approach VaR approach macroeconomic risk macroeconomic risk Macroeconomic risk Extreme scenario Extreme scenario Other risks 10% buffer 10% buffer

98 foresight Group Management report Group financial statements

Furthermore, limits are defined for each risk category The management of credit risk at portfolio level is (credit, investment, credit concentration, market, primarily based on internal ratings, classes by size, liquidity, operational and macroeconomic risk) in sectors, currencies and countries. Besides the risk total, as well as for controlling units (corporate clients, bearing capacity calculation, the credit risk reporting private clients, institutional clients and banks) within system and here above all, the continually produced the credit risk and for detailed risk categories within BTV credit risk report, represent a central manage- market risk. The other risks which are not quantifiable ment and monitoring instrument for decision makers. are taken into account by means of a buffer in the risk bearing capacity calculation. Market risk For risk measurement purposes at the overall bank Credit risk level, BTV quantifies the value-at-risk for the risk BTV uses the IRB basic approach to quantify the categories of interest, currency, share price and counterparty default risk and the IRB-PD/LGD credit spread risk with regard to the liquidation ap- approach to quantify the investment risk in the proach, on the basis of a confidence level of 99.9% risk-bearing capacity calculation. and a retention period of 250 days. The value at risk (VaR) is the loss which on the basis of a given prob- The probability of default represents the central ability, will not be exceeded over a defined period. parameter for calculating credit risk in this approach. This is derived from internal bank ratings. Value at Risk is calculated on the basis of a historic For corporate and retail clients, as well as for banks simulation method. The basis for the market param- and property project financing, rating systems eters used are historical time series from the last are used which spread the credit risks over a scale 4 years. Diversification effects between the individual with 13 available levels. The rating forms the basis market risk classes are already implicitly included in for the calculation of credit risks and provides the the data histories and are accounted for separately. framework for a risk-based calculation of terms, as well as for the early identification of problem cases. The VaR model can be briefly outlined as follows: The price calculation in the lending business is based on this and is carried out taking into consid- • Definition of risk factors for each risk category eration ratings-based risk premiums. • Mapping of the products on the risk factors • Determination of the historical risk factors based The risk from high credit volumes is integrated into on historical observations ICAAP at BTV in two respects: • Simulation of changes in risk factors based on historical events • Model to quantify the risk from high credit vol- • Revaluation of positions in all scenarios and umes (IRB Granularity Adjustment) calculation of profit and loss • Stress test to analyse the risk in relation to high • Calculation of the VaR quantile based on profit credit volumes or loss distribution of positions

The quantification of the risk in relation to risks Interest rate risk from credit risk reducing techniques as well as In the context of the ICAAP, the risk capital is com- credit concentration risks, which are not related to pared with the potential risk according to the VaR high credit volumes with individual clients or com- model, and is therefore limited. mercial entities, takes place by means of sensitivity analyses. For this purpose, stress tests are per- BTV’s interest risk is herewith also part of reporting in formed for the following four subportfolios: the course of the management of assets and liabilities. A basis point value limit is used for each maturation • Construction and tourism firms band. The basis point value is the change in value of • Property development financing the interest portfolio which results from an increase

• Repayment vehicle loans of the interest by one basis point. statements financial Group • Foreign currency loans The basis for this is BTV‘s interest rate portfolio, Credit risks not considered here are taken into ac- which comprises all interest rate sensitive assets and count under the other risks in the buffer of the risk liabilities and derivative transactions. This portfolio bearing capacity calculation. is broken down into fixed interest rates for individual

BTV Business Report 2014 98 |99 transactions and combined in a maturity structure Liquidity risk (gap analysis). The measurement of liquidity risks begins with the drawing up of a liquidity maturity statement, Currency risk in which all balance sheet, off-balance sheet and The quantifying of the foreign currency risk is also derivative transactions are classified by maturity carried out on the basis of a historical value-at-risk ap- intervals. For positions with an indeterminate proach. The measurement of the foreign currency risk capital commitment, care is taken to ensure that at overall bank level is carried out on a monthly basis the liquidity assumptions correspond as closely in the course of drafting of the ICAAP. as possible to actual client behaviour. For this purpose maturity profiles are estimated based on Share price risk historical data and using statistical methods. In ad- The quantifying of the share price risk is carried out dition assumptions are modelled for the drawdown on the basis of a historical value-at-risk approach. on unused credit and the take-up of guarantees. In which individual shares are directly assigned Securities and credits suitable for central banks to the respective rate histories. Share price risk at within the liquidity buffer (under consideration of overall bank level is measured on a monthly basis. a relevant haircut) are treated as assets that can be liquidated at any time. Credit spread risk The quantifying of the credit spread risk is carried For the determination of the liquidity risk, the risk out on the basis of a historical value-at-risk ap- premiums of a pool of reference banks are ana- proach. The credit default swap spread serves as a lysed in comparison with best-rated government basis for calculating the credit spreads per issuer. In bonds and the volatilities for the individual maturi- the case of non-tradable credit default swaps, the ties are calculated on the basis of the fluctuations asset value is allocated to a CDS index. The credit in these premiums. The multiplication of these spread risks are measured on a monthly basis. credit spread volatilities with the cumulative liquidity gaps gives the liquidity risk over the period.

The drivers of the risk are therefore the amount and the distribution of the liquidity gaps as well as the fluctuations in the risk premiums in the individual terms.

Alongside the integration of the liquidity risk as a risk to earnings in ICAAP, the liquidity risk situation at group level is monitored daily. For this the net financing gap (capital inflows minus capital outflows plus liquidity buffer) is assigned limits which are time-dependent, which influences the medium- term liquidity requirement. The cumulative net financing gap indicates from what moment in time the liquidity buffer is exhausted by the net capital outflows if there is no new business or exten- sions. And dependencies on large capital suppliers (whether in the banking or in the customer area) are shown in the liquidity report and confined by applying the limits.

100 foresight Group Management report Group financial statements

Operational risk Macroeconomic risk In BTV a risk management process has been devel- The macroeconomic risk manifests itself in the oped, which applies both for qualitative and quan- negative change for BTV within the market envi- titative methods. For losses which have already oc- ronment and its implications for the significant risk curred, a loss database exists which collects details drivers. Consequently, the quantifying takes place of all cases of losses. After analysis of the losses, by means of a macroeconomic stress test which suitable measures are taken to minimise the risk contains the significant changes in the parameters of loss in future. This approach is complemented of an economic downturn. Herein the maintaining by the implementation of self-assessments for the of the risk-bearing capacity in the case of stress is operational risk where all areas and processes are now calculated implicitly. checked for possible operational risks. These risks are assessed through interviews, and if necessary, Other risks internal processes and systems are then adapted. Other risks are considered within the risk capacity calculation through the buffer. Under the liquidation approach the operational risk is measured using the standard approach. In the going-concern approach, BTV applies a VaR approach that uses previously sustained losses in the loss database to quantify the risk. Group financial statements financial Group

BTV Business Report 2014 100 |101 Risk reporting system

The following explanations relate to the extent and BTV is subject to an internal limit on utilisation of the type of BTV‘s risk reporting system. quantified overall risk as a percentage of risk cover capital of 90%, with this amounting at year-end to The measurement of overall bank risk and of individual 72.8% (€819.5 million). The highest relative level of risk categories is carried out on a monthly basis. The usage was in October 2014. 10% of the risk cover short-term liquidity risk as well as the individual mar- capital is reserved for unquantifiable other risks. ket risks in the trading book are measured daily. The macroeconomic risk is quantified on a quarterly basis, while the operational risk is quantified on an annual basis. In addition, an ad hoc report is drawn up in so far as this is necessary. Within BTV Bank Management, a report is given on the current utilisation levels and limiting of overall bank risk, as well as of the individual risk categories, together with definition and monitoring of control measures.

102 foresight Group Management report Group financial statements

Total bank risk - liquidation approach Amounts in € million Values in % 100.0 %

1,200

75.0 %

800 50.0 %

400 25.0 %

0 0.0 % Jan 14 Feb 14 March 14 April 14 May 14 June 14 July 14 Aug 14 Sept 14 Oct 14 Nov 14 Dec 14

Qualifying RCC / Absolute limit utilisation in € million Limit as % of RCC (right-hand scale) utilisation as % of RCC (right-hand scale) RCC = risk cover capital

Total bank risk - liquidation approach Maximum Average Year-end

31.12.2014 Utilisation in € million 867.9 800.6 819.5 Utilisation in % of risk cover capital 73.7 % 69.7 % 72.8 % 31.12.2013 Utilisation in € million 679.9 610.2 666.4 Utilisation in % of risk cover capital 67.6 % 61.8 % 65.4 %

The above presentation is essentially characterised transitional provisions. On the other hand, the limit by two changes to the design of the ICAAP which was utilisation rose between March and April 2014 owing taken into consideration in the reporting year 2014 to a modification in the presentation of the ICAAP. for the first time. On the one hand, qualifying equity The modification consisted in including the buffer for (risk cover capital) rose between February and March Other risks totalling 10% of the risk cover capital in 2014 owing to first-time adoption of the CRR and its the total limit and risk utilisation. Group financial statements financial Group

BTV Business Report 2014 102 |103 Credit risk The illustrations below show the risks in comparison As can be seen from the illustrations below, the limit with the allocated risk cover capital and the set limit in all the partial risk categories of the credit risk was for the counterparty default and equity investment maintained. In addition, a buffer for the applied limit risk as well as the credit concentration risk. was available at all times.

Counterparty default - liquidity approach

Amounts in € million Values in %

800 60.0 %

600 40.0 %

400

20.0 % 200

0 0.0 % Jan 14 Feb 14 March 14 April 14 May 14 June 14 July 14 Aug 14 Sept 14 Oct 14 Nov 14 Dec 14

Qualifying RCC / Absolute limit utilisation in € million Limit as % of RCC (right-hand scale) utilisation as % of RCC (right-hand scale) RCC = risk cover capital

Counterparty default risk - liquidity approach Maximum Average Year-end

31.12.2014 Utilisation in € million 421.9 413.8 421.9 Utilisation in % of risk cover capital 41.6 % 36.2 % 37.5 % 31.12.2013 Utilisation in € million 417.1 396.7 416.2 Utilisation in % of risk cover capital 43.3 % 40.3 % 40.9 %

From February to March 2014, a decline in the increase in the risk cover capital already described relative use of the counterparty default risk was for the overall banking risk. recognised. This decline was again related to the

104 foresight Group Management report Group financial statements

Investment risk - liquidity approach

Amounts in € million Values in % 50 4.0 %

40 3.0 %

30 2.0 %

1.0 % 10

0 0.0 % Jan 14 Feb 14 March 14 April 14 May 14 June 14 July 14 Aug 14 Sept 14 Oct 14 Nov 14 Dec 14

Qualifying RCC / Absolute limit utilisation in € million Limit as % of RCC (right-hand scale) utilisation as % of RCC (right-hand scale) RCC = risk cover capital

INVESTMENT RISK - liquidity approach Maximum Average Year-end

31.12.2014 Utilisation in € million 33.8 30.7 32.6 Utilisation in % of risk cover capital 2.9 % 2.7 % 2.9 % 31.12.2013 Utilisation in € million 24.3 22.8 24.3 Utilisation in % of risk cover capital 2.4 % 2.3 % 2.4 %

In March 2014, increased use of the investment ing risk, the modification consisted in including the risk was apparent. This increase was attributable buffer for Other risks totalling 10% of the risk cover to a change in the ICAAP presentation. As already capital in the total limit and risk utilisation. described in the presentation of the overall bank- Group financial statements financial Group

BTV Business Report 2014 104 |105 Credit concentration risk – liquidation approach

Amounts in € million Values in % 40 3.0 %

2.0 %

1.0 %

0 0.0 % Jan 14 Feb 14 March 14 April 14 May 14 June 14 July 14 Aug 14 Sept 14 Oct 14 Nov 14 Dec 14

Qualifying RCC / Absolute limit utilisation in € million Limit as % of RCC (right-hand scale) utilisation as % of RCC (right-hand scale) RCC = risk cover capital

Credit concentration risk – liquidation approach Maximum Average Year-end

31.12.2014 Utilisation in € million 18.3 16.9 18.3 Utilisation in % of risk cover capital 1.7 % 1.5 % 1.6 % 31.12.2013 Utilisation in € million 16.8 14.8 16.8 Utilisation in % of risk cover capital 1.6 % 1.5 % 1.6 %

The credit concentration risk proved to be constant of the risk cover capital. Utilisation was therefore in 2014. Utilisation fluctuated between €18.3 mil- always within the allotted limit of 2% of the risk lion and €15.7 million or 1.7% and 1.3% respectively cover capital.

106 foresight Group Management report Group financial statements

Credit risk - overview The credit risk volume is made up from the balance The total loan volume of BTV fell year-on-year by sheet items „Loans to credit institutions“, „Loans €49.8 million or 0.6% to €8,876 million. The amount to customers“, all fixed interest securities as well of bad debt was reduced by €26.2 million or 9.8%. as securities and guarantees (gross presentation). Consequently, the share in the total volume fell As required by the guidelines in IAS 39 payment from 3.0% to 2.7%. guarantees and letters of credit are not taken into consideration in the credit risk volume.

Creditworthiness structure overall in €‘000

Due date Data No visible With High risk Prob- Total risk of default comment of default lematic

31.12.2014 Total drawn 7,785,229 789,831 59,392 241,214 8,875,666 Share in % 87.7 % 8.9 % 0.7 % 2.7 % 100.0 % Risk provisions 55,607 22,265 4,990 107,773 190,635 Percentage of cover 0.7 % 2.8 % 8.4 % 44.7 % 2.1 % 31.12.2013 Total drawn 7,733,160 820,265 104,712 267,373 8,925,510 Share in % 86.6 % 9.2 % 1.2 % 3.0 % 100.0 % Provision for risks 45,889 22,933 11,488 127,475 207,787 Percentage of cover 0.6 % 2.8 % 11.0 % 47.7 % 2.3 % Change in draw down vs. previous year 52,069 –30,434 –45,321 –26,159 –49,844 drawn down as % of previous year 0.7 % –3.7 % –43.3 % –9.8 % –0.6 % of loan loss provisions to previous year 9,718 –669 –6,498 –19,702 –17,151 of loan loss provisions to previous year in % 21.2 % –2.9 % –56.6 % –15.5 % –8.3 %

Creditworthiness structure, domestic and Foreign The presentation is based on the country of origin of relative to the previous year. The foreign component the borrower or issuer. In Austria, the overall credit of the credit risk volume, on the other hand, rose by risk volume fell by €156.2 million, or 2.9%, €106.4 million, or 3.0%.

Creditworthiness structure, domestic in €‘000

Due date Data No visible With High risk Prob- Total risk of default comment of default lematic

31.12.2014 Total drawn 4,453,951 594,706 44,228 167,621 5,260,507 Share in % 84.7 % 11.3 % 0.8 % 3.2 % 100.0 % Risk provisions 31,401 16,833 3,780 79,542 131,557 Percentage of cover 0.7 % 2.8 % 8.5 % 47.5 % 2.5 % 31.12.2013 Total drawn 4,524,408 628,343 59,532 204,422 5,416,706 Share in % 83.5 % 11.6 % 1.1 % 3.8 % 100.0 % Provision for risks 23,846 16,438 6,982 100,966 148,231 Percentage of cover 0.5 % 2.6 % 11.7 % 49.4 % 2.7 % Change in draw down vs. previous year –70,457 –33,637 –15,304 –36,801 –156,199 Group financial statements financial Group drawn down as % of previous year –1.6 % –5.4 % –25.7 % –18.0 % –2.9 % of loan loss provisions to previous year 7,556 396 –3,202 –21,423 –16,674 of loan loss provisions to previous year in % 31.7 % 2.4 % –45.9 % –21.2 % –11.2 %

BTV Business Report 2014 106 |107 Creditworthiness foreign in €‘000

Due date Data No visible risk With High risk Problematic Total of default comment of default

31.12.2014 Total drawn 3,331,278 195,125 15,163 73,593 3,615,159 Share in % 92.1 % 5.4 % 0.4 % 2.0 % 100.0 % Risk provisions 24,205 5,431 1,210 28,230 59,077 Percentage of cover 0.7 % 2.8 % 8.0 % 38.4 % 1.6 % 31.12.2013 Total drawn 3,208,751 191,922 45,180 62,951 3,508,804 Share in % 91.4 % 5.5 % 1.3 % 1.8 % 100.0 % Provision for risks 22,044 6,496 4,506 26,510 59,556 Percentage of cover 0.7 % 3.4 % 10.0 % 42.1 % 1.7 % Change in draw down vs, previous year 122,527 3,203 –30,017 10,642 106,355 drawn down as % of previous year 3.8 % 1.7 % –66.4 % 16.9 % 3.0 % of loan loss provisions to previous year 2,162 –1,064 –3,296 1,721 –478 of loan loss provisions to previous year in % 9.8 % –16.4 % –73.1 % 6.5 % –0.8 %

Creditworthiness structure of credit risk by country Change in COUNTRY structure credit risk in % Around 59.3% of the credit risk volume related to domestic borrowers. 20.1% is accounted for by 15.0 13.4 12.4 13.9 13,9 German and 6.7% by Swiss borrowers. 7.7 6.2 6.7 8.6 8.4 19.0 19.2 20,1 The remaining 13.9% is distributed as follows: 18.4 18.8 The US, Italy, France, Spain, Hungary and Ireland ac- 58.0 59.4 60.9 60.7 59,3 count for 5.5 percentage points. There are currently no receivables owed by Greek and Portuguese debtors. The remaining 8.4 percentage points are 2010 2011 2012 2013 2014 distributed over borrowers in other countries. Austria Germany Switzerland Other

Creditworthiness structure by country in €‘000

Countries No visible risk With High risk Problematic Total Share in % of default comment of default

Austria 4,453,951 594,706 44,228 167,621 5,260,507 59.3 % Germany 1,629,538 93,406 9,517 50,840 1,783,301 20.1 % Switzerland 486,190 85,584 3,219 21,755 596,748 6.7 % USA 179,144 201 0 7 179,352 2.0 % Italy 161,232 9,274 383 589 171,477 1.9 % France 124,800 0 0 0 124,801 1.4 % Ireland 8,737 0 0 0 8,737 0.1 % Hungary 1,884 0 0 0 1,884 0.0 % Spain 384 0 0 165 549 0.0 % Greece 0 0 0 0 0 0.0 % Portugal 0 0 0 0 0 0.0 % Other 739,369 6,660 2,043 237 748,309 8.4 %

Total 7,785,229 789,831 59,392 241,214 8,875,666 100.0 %

108 foresight Group Management report Group financial statements

Creditworthiness by sector of selected countries The following table illustrates the volume of receiva- Accordingly, the loan and insurance sector accounts bles owed by debtors in the countries of Italy, Ireland, for €41.7 million. The credit risk illustrated for Ireland Spain and Russia, ordered by sectors. There are is essentially accounted for by a US group, the finan- currently no receivables owed by Greek, Portuguese cial services subsidiary of which is headquartered in and Ukrainian debtors. Against the backdrop of recent Ireland. trends on the financial markets, the loan, insurance and public authority sectors have been highlighted.

Structure by sector of selected countries in €000s

Sectors Italy Ireland Spain Russia Total

Loans and insurance 33,092 8,654 0 0 41,746 Public sector 0 0 0 0 0 Remaining sectors 138,385 83 549 460 139,478

Total 171,477 8,737 549 460 181,224

Creditworthiness structure of credit risk by sector The sectoral focus points are like last year in the loan sector, services, trade, tourism and construction and insurance business, retail clients and production of sectors. The relative share of the other sectors has physical goods. In terms of proportional weight these decreased in comparison with the previous year and are followed by the property management, public is now at 5.9%.

Creditworthiness by sector total in €‘000

All sectors together No visible With High risk Problematic Total Share in % Risk of comment of default default

Loans and insurance 1,481,655 1,993 3 288 1,483,940 16.7 % Private 1,049,468 62,394 26,488 47,763 1,186,114 13.4 % Physical goods manufacture 1,029,599 92,539 5,242 42,330 1,169,709 13.2 % Property management 832,274 255,584 6,005 14,695 1,108,558 12.5 % Public sector 1,033,301 26 0 74 1,033,401 11.6 % Services 685,419 173,320 6,998 50,323 916,060 10.3 % Trade 507,669 34,280 4,465 32,470 578,883 6.5 % Tourism 374,156 97,353 7,888 28,698 508,094 5.7 % Construction 306,231 41,835 1,051 14,049 363,167 4.1 % Transport and communications 210,165 19,738 929 4,337 235,168 2.6 % Cable cars 207,773 378 287 205 208,643 2.4 % Energy/Water utilities 54,540 6,973 0 3,732 65,246 0.7 % Other 12,978 3,418 37 2,249 18,682 0.2 % Group financial statements financial Group

Total 7,785,229 789,831 59,392 241,214 8,875,666 100.0 %

BTV Business Report 2014 108 |109 In comparison with the previous year, a decrease volumes in the sectors of real estate, services, pub- has been recorded for retail clients and in the sec- lic sector, construction, transport and communica- tors production of physical goods, loans and insur- tions increased. ance, trade, tourism, cable cars and energy/water utilities. By contrast, the relative share of the credit

Creditworthiness by sector, domestic in €‘000

Domestic sectors No visible With High risk of Problematic Total Share in % Risk of comment default default

Private 778,400 50,036 19,453 26,962 874,851 16.6 % Property management 595,301 227,545 6,004 9,870 838,721 15.9 % Services 507,217 96,993 3,439 30,167 637,816 12.1 % Public sector 617,864 0 0 0 617,864 11.7 % Physical goods manufacture 389,120 54,493 3,880 23,712 471,204 9.0 % Tourism 294,234 79,466 6,752 27,472 407,924 7.8 % Loans and insurance 388,919 1,993 3 288 391,203 7.4 % Trade 278,049 23,948 2,419 29,547 333,962 6.3 % Construction 241,650 37,702 1,051 10,521 290,924 5.5 % Cable cars 203,540 378 287 205 204,409 3.9 % Transport and communications 137,688 13,902 903 3,374 155,866 3.0 % Energy/Water utilities 13,320 4,845 0 3,732 21,898 0.4 % Other 8,651 3,405 37 1,772 13,865 0.3 %

Total 4,453,951 594,706 44,228 167,621 5,260,507 100.0 %

Creditworthiness structure by sector, foreign in €‘000

Foreign sectors No visible With High risk Problematic Total Share in % Risk of comment of default default

Loans and insurance 1,092,736 0 0 0 1,092,736 30.2 % Physical goods manufacture 640,479 38,046 1,361 18,619 698,505 19.3 % Public sector 415,437 26 0 74 415,537 11.5 % Private 271,068 12,358 7,035 20,801 311,263 8.6 % Services 178,203 76,327 3,559 20,156 278,244 7.7 % Property management 236,973 28,039 0 4,826 269,838 7.5 % Trade 229,620 10,332 2,046 2,923 244,922 6.8 % Tourism 79,921 17,886 1,136 1,226 100,170 2.8 % Transport and communications 72,477 5,836 26 963 79,302 2.2 % Construction 64,581 4,134 0 3,528 72,242 2.0 % Energy/Water utilities 41,220 2,128 0 0 43,348 1.2 % Cable cars 4,234 0 0 0 4,234 0.1 % Other 4,327 13 0 476 4,817 0.1 %

Total 3,331,278 195,125 15,163 73,593 3,615,159 100.0 %

110 foresight Group Management report Group financial statements

Creditworthiness structure of credit risk by type of 57.9%). Retail clients represented a share of 14.8% business (previous year: 15.5%), the remainder 25.9% (previ- The share of the corporate client segment in the ous year: total credit risk volume was 59.3% (previous year: 26.5%) related to Institutional Clients and Banks.

Creditworthiness structure by type of business in €‘000

Types of busi- Data No visible With Increased Problematic Total ness risk of default comment Risk of default Corporate Total drawn 4,354,400 685,143 30,953 190,414 5,260,910 clients Share in % 82.8 % 13.0 % 0.6 % 3.6 % 100.0 % Provision for risks 40,107 17,433 2,625 88,285 148,450 Percentage of cover 0.9 % 2.5 % 8.5 % 46.4 % 2.8 % Retail clients Total drawn 1,134,157 98,695 28,438 50,800 1,312,090 Share in % 86.4 % 7.5 % 2.2 % 3.9 % 100.0 % Provision for risks 10,233 4,286 2,365 19,488 36,372 Percentage of cover 0.9 % 4.3 % 8.3 % 38.4 % 2.8 % Institutional Total drawn 2,296,672 5,993 0 0 2,302,665 clients and Share in % 99.7 % 0.3 % 0.0 % 0.0 % 100.0 % banks Provision for risks 5,268 546 0 0 5,814 Percentage of cover 0.2 % 9.1 % 0.0 % 0.0 % 0.3 %

Total Total drawn 7,785,229 789,831 59,392 241,214 8,875,666 Share in % 87.7 % 8.9 % 0.7 % 2.7 % 100.0 % Provision for risks 55,607 22,265 4,990 107,773 190,635 Percentage of cover 0.7 % 2.8 % 8.4 % 44.7 % 2.1 %

Creditworthiness structure of credit risk by currency currencies accounted for 1.0% (previous year: 1.5%) of 86.6% (previous year: 85.7%) of the credit risk volume the volume of receivables. The share of CHF financing related to loans in euro. 12.4% was accounted for by in the eurozone dropped from 8.3% to 7.5%. Swiss francs (previous year: 12.8%), the remaining

Creditworthiness structure by currency in €‘000

Currency No visible With High risk Problematic Total Share in % Risk of comment of default default

EUR 6,762,080 661,813 43,970 215,795 7,683,658 86.6 % CHF 599,732 45,263 12,539 7,265 664,798 7.5 % CHF with Swiss customers 335,826 80,664 2,702 18,002 437,192 4.9 % USD 60,725 378 0 38 61,141 0.7 % JPY 13,997 1,713 181 115 16,006 0.2 % Other 12,870 0 0 0 12,870 0.1 %

Total 7,785,229 789,831 59,392 241,214 8,875,666 100.0 % Group financial statements financial Group

BTV Business Report 2014 110 |111 Creditworthiness structure of overdue loans ment or interest or repayment of capital. Accord- The following charts show a breakdown of over- ing to BTV estimates - where the debtors or the due, but not written-down financial debts by the available securities are assessed - it is however not number of days overdue and the risk-class as- correct to establish individual value adjustments. signed. The borrower is in arrears in relation to pay-

Creditworthiness structure by overdue debts in €‘000

Due date Due date No visible risk With High risk of Total of default comment default

31.12.2014 31 - 60 days 14,138 549 603 15,291 61-90 days 736 152 74 962

Total 31 December 2014 14,874 701 678 16,253

31.12.2013 31 - 60 days 2,518 1,377 452 4,346 61-90 days 556 366 869 1,790

Total 31 December 2013 3,074 1,743 1,321 6,137

Collateral received BTV has received collateral in the form of mortgages, The lower level of securities in the creditworthiness shares and other securities and other assets. In class ‚bad debt‘ (this category contains clients who particular for higher risk classes we ensure that with a have defaulted) is due to securities already having reduction in the level of quality of borrower creditwor- been used. thiness the amount of the collateralisation increases.

Collateral received in €‘000

Dimension No visible With High risk Problematic Total Risk of comment of default default

Total drawn 7,785,229 789,831 59,392 241,214 8,875,666 31.12.2014 Land register collateral 1,531,874 285,178 29,193 57,731 1,903,976 Collateral securities 128,113 31,701 2,060 611 162,485 Collateral securities 625,361 114,836 9,772 28,890 778,860

Collateral in % 29.4 % 54.7 % 69.6 % 36.2 % 32.1 %

Total drawn 7,733,160 820,265 104,712 267,373 8,925,510 31.12.2013 Land register collateral 1,468,800 302,988 41,845 59,965 1,873,597 Collateral securities 161,099 33,161 5,697 577 200,534 Collateral securities 594,762 164,711 21,728 20,248 801,449

Collateral in % 28.8 % 61.1 % 66.2 % 30.2 % 32.2 %

112 foresight Group Management report Group financial statements

Risk structure of transactions involving debt arrangements according to credit quality The table below illustrates transactions involving provisions illustrated in the first three credit rating debt arrangements structured according to their levels, it concerns portfolio valuation adjustments. credit quality. The credit quality is differentiated The risk provisions shown in the category „bad debt“ hereby as follows: are value adjustments or reserves.

• Not individually value-adjusted and not bad debt The credit risk volume in the „Not individually • Not value-adjusted and bad debt value-adjusted and not bad debt“ category fell by • Value-adjusted and bad debt €9.9 million compared with the previous year. An increase was observed for „Not value-adjusted and In addition for each credit quality, the extent to which bad debt“ (€5.1 million) and „Value-adjusted and the risk provision has been built up is illustrated or the bad debt“ (€39.1 million). At the same time, collat- extent of the securities available. Within the risk eral for volumes of bad debt improved to reach the current level of 45.3% (previous year: 31.6%).

Risk structure of transactions involving debt arrangements according to credit quality in €000s

Credit quality Values No visible risk With High risk Problematic Total of default comment of default

Not individually Total drawn 42,213 9,472 9,674 0 61,359 value-adjusted and Provision for risks 443 236 855 0 1,535 not bad debt Shares/other Securities 17,967 6,795 5,498 0 30,260 Not value-adjusted Total drawn 0 0 0 5,510 5,510 and bad debt Provision for risks 0 0 0 0 0 Shares/other Securities 0 0 0 995 995 Value-adjusted and Total drawn 0 0 0 59,270 59,270 bad debt Provision for risks 0 0 0 18,133 18,133 Shares/other Securities 0 0 0 26,821 26,821 Total Total drawn 42,213 9,472 9,674 64,780 126,139 Provision for risks 443 236 855 18,133 19,668 Shares/other Securities 17,967 6,795 5,498 27,816 58,076 Group financial statements financial Group

BTV Business Report 2014 112 |113 Risk structure of transactions involving debt The type of capital repayment was adjusted for the arrangements according to type and number/account largest section of the volume affected by debt ar- The following table shows the volume of loans af- rangements. It hereby concerns a volume of loans fected by debt arrangements dependent on the type to the tune of €99.4 million or 78.8%. With regard of debt arrangements agreed. Furthermore a break- to €8.8 million or 7.0%, there was a reduction in the down according to the number of debt arrangements interest payments to be made. The entire financing granted per borrower within the reporting period is structure of customers was rearranged for a volume presented. of loans totalling €3.4 million or 2.7%. Other agreements were modified amounting to €14.6 million or 11.6%.

Risk structure of transactions involving debt arrangements according to type and number/account in €000s

Type of debt arrangement Number of No visible With High risk of Problematic Total debt arrangements/ Risk of comment default account default

Capital repayment was 1 41,380 8,746 7,465 36,167 93,758 adjusted 2 828 604 2,209 1,958 5,598 3 0 0 0 0 0 Interest payment to be 1 5 0 0 8,789 8,794 made was reduced 2 0 0 0 0 0 3 0 0 0 0 0 Revision of credit 1 0 122 0 3,251 3,373 relationship 2 0 0 0 0 0 3 0 0 0 0 0 Easing of compliance with 1 0 0 0 14,616 14,616 binding obligations 2 0 0 0 0 0 (covenants) 3 0 0 0 0 0 Total 42,213 9,472 9,674 64,780 126,139

Risk structure of transactions involving debt arrangements according to segment As in the previous year, debt arrangements were particularly made regarding loans to corporate clients.

Risk structure of transactions involving debt arrangements according to segment in €000s

Segment No visible With High risk Problematic Total Risk of comment of default default

Corporate clients 31,544 5,809 8,973 62,452 108,777 Retail clients 10,669 3,663 701 2,328 17,362

Total 42,213 9,472 9,674 64,780 126,139

114 foresight Group Management report Group financial statements

Risk structure of transactions involving debt across the economic sectors. A concentration of arrangements according to economic sector debt arrangements in specific economic sectors As in the previous year, the volume of loans affected cannot be recognised. by debt arrangements was distributed equally

Risk structure of transactions involving debt arrangements according to economic sector in €000s

Sector No visible With High risk Problematic Total Risk of comment of default default

Services 20,118 1,267 1,408 17,970 40,764 Trade 1,299 300 0 22,855 24,453 Physical goods manufacture 766 1,414 1,361 14,917 18,458 Private 10,244 2,330 684 2,126 15,383 Tourism 6,888 2,779 4,820 776 15,263 Property management 1,952 1,278 1,135 1,275 5,639 Construction 0 84 0 4,387 4,472 Cable cars 882 0 0 205 1,087 Transport and communications 65 0 265 0 330 Loans and insurance 0 6 0 0 6 Other 0 13 0 270 283

Total 42,213 9,472 9,674 64,780 126,139

Risk structure of transactions involving debt volume, with a volume of loans amounting to €90.7 arrangements according to country million or 71.9%, concerns borrowers from Austria. The following table shows the risk structure of Furthermore, debt arrangements were agreed with transactions involving debt arrangements struc- borrowers in Germany, Switzerland and Italy. tured according to country. The largest part of the

Risk structure of transactions involving debt arrangements according to country in €000s

Country No visible With High risk Problematic Total Risk of comment of default default

Austria 34,190 4,900 6,340 45,301 90,730 Germany 4,539 3,485 3,334 17,922 29,279 Switzerland 3,485 1,088 0 1,528 6,100 Italy 0 0 0 29 29

Total 42,213 9,472 9,674 64,780 126,139 Group financial statements financial Group

BTV Business Report 2014 114 |115 Income structure of transactions involving debt Interest income in the ratio to volume of credit with arrangements according to segment debt arrangements was at the previous year‘s level. Transactions, for which debt arrangements were agreed, generated interest income to the tune of €2.7 million in the financial year 2014.

Income structure of transactions involving debt arrangements according to segment in €000s

Segment No visible With High risk Problematic Total Risk of comment of default default

Corporate clients 712 139 157 1,386 2,394 Retail clients 153 52 3 50 258

Total 865 191 161 1,436 2,652

Risk structure for derivatives according to segments this is related to loans to credit institutions. Loans to The presented credit volume of derivatives corre- corporate clients amounted to €34.3 million or 30.7% sponds to the fair value. The credit volume from de- and to retail clients €0.2 million or 0.2%. rivatives amounted to €111.9 million on the reporting date of 31 December 2014. €77.3 million or 69.1% of

Risk structure of derivatives according to segments in €000s

Segment No visible With High risk of Problematic Total Risk of comment default default

Corporate clients 26,440 7,749 88 60 34,337 Private 164 1 61 0 226 Institutional clients and banks 76,756 535 0 0 77,291

Total 103,360 8,285 150 60 111,855

116 foresight Group Management report Group financial statements

Derivative risk structure by type of business and nated in EUR. 5.7% originate from CHF transactions, currencies the remaining 0.8% relate to USD, JPY and other As in the previous year, around 93.5% of the vol- currencies. ume is accounted for by loans which are denomi-

Risk structure of derivatives according to segments and currencies in €‘000

Segment Currency No visible risk With High risk Problematic Total of default comment of default

Corporate EUR 25,642 6,666 88 60 32,456 clients CHF 715 1,083 0 0 1,798 Other 83 0 0 0 83 Private EUR 164 0 0 0 164 CHF 0 1 61 0 63 Institutional EUR 71,484 535 0 0 72,019 clients and CHF 4,495 0 0 0 4,495 banks JPY 774 0 0 0 774 USD 4 0 0 0 4

Total 103,360 8,285 150 60 111,855 Group financial statements financial Group

BTV Business Report 2014 116 |117 Risk structure of derivatives by country in Switzerland, the United States, France and other 44.3% of debts are in respect of counterparties in countries. There are no credit risks from derivatives Germany. A further 39.4% relate to Austrian part- with regard to Greece, Ireland, Italy, Portugal, Spain ners. The remainder is distributed among clients and Hungary.

Risk structure of derivatives by country in €‘000

Country No visible With High risk Problematic Total Risk of comment of default default

Germany 49,468 18 61 0 49,547 Austria 35,865 8,105 88 60 44,118 Switzerland 1,602 44 0 0 1,646 USA 935 118 0 0 1,053 France 877 0 0 0 877 Other 14,614 0 0 0 14,614

Total 103,360 8,285 150 60 111,855

Risk structure of derivatives by transaction type to derivatives on asset values. As in the previous 84.9% of loans relate to interest rate swaps, 8.6% to year, most of the volume is for interest rate swaps currency derivatives and 5.6% to foreign exchange while currency swaps are down slightly. futures. Currently there is no credit risk in relation

Risk structure of derivatives by transaction type in €‘000

Transaction type No visible With High risk Problematic Total Risk of comment of default default

Interest rate swaps 90,520 4,247 150 39 94,955 Currency swaps 5,666 3,905 0 0 9,571 Foreign exchange futures 6,314 1 0 0 6,315 Interest options 860 20 0 21 901 Bond options 0 113 0 0 113

Total 103,360 8,285 150 60 111,855

118 foresight Group Management report Group financial statements

Market risk In June 2014, there was an increase in the market The following diagram shows the utilisation of risk. This increase resulted from the loss of the diver- market risk limits at global banking level. Risk capital sification effect, which came about because of the is assigned to each of the risk types of interest risk, interaction between changes in credit spreads and currency risk, equity price risk and credit spread risk. interest rates. In this context, a significant synchroni- The correlations which are inherent in the timelines sation of both risk factors was recognised on some have a risk-reducing effect. days in the data history. The drop in the absolute and relative risk during the rest of the year was For the interest risk, 15.5% of the respective risk cov- mainly attributable to the lower interest rate risk. er capital was allocated to risk capital, while for the categories currency risk and equity price risk a limit of 1.5% was allocated to each. The credit spread risk from investments in the banking book was capped at 8.0% of the risk cover capital. market risk - liquidation approach

Amounts in € million Values in % 24.0 % 280

240 18.0 %

200

160 12.0 %

120

80 6.0 %

0 0.0 % Jan 14 Feb 14 March 14 April 14 May 14 June 14 July 14 Aug 14 Sept 14 Oct 14 Nov 14 Dec 14

Qualifying RCC / Absolute limit utilisation in € million Limit as % of RCC (right-hand scale) utilisation as % of RCC (right-hand scale) RCC = risk cover capital

market risk - liquidation approach Maximum Average Year-end

31.12.2014 Utilisation in € million 177.9 147.6 125.8 Utilisation in % of risk cover capital 15.0 % 12.8 % 11.2 % 31.12.2013 Utilisation in € million 151.4 134.7 124.9 Utilisation in % of risk cover capital 15.1 % 13.7 % 12.3 % Group financial statements financial Group

BTV Business Report 2014 118 |119 Interest rate risk The following diagram shows the utilisation of interest fall throughout 2014. The interest rate risk fell during risk limits on the global banking level. The interest risk the year owing to a decline in the interest rate maturity primarily results from the differences in time periods transformation, particularly as a result of a shortening in the assets/liabilities items in the bank register. The of the maturity of securities. interest rate risk at global banking level continued to

interest rate risk - liquidation approach

Amounts in € million Values in % 200 16.0 %

160 12.0 %

120

8.0 %

4.0 % 40

0 0.0 % Jan 14 Feb 14 March 14 April 14 May 14 June 14 July 14 Aug 14 Sept 14 Oct 14 Nov 14 Dec 14

Qualifying RCC / Absolute limit utilisation in € million Limit as % of RCC (right-hand scale) utilisation as % of RCC (right-hand scale) RCC = risk cover capital

interest rate risk - liquidation approach Maximum Average Year-end

31.12.2014 Utilisation in € million 120.8 109.5 75.9 Utilisation in % of risk cover capital 11.4 % 9.6 % 6.7 % 31.12.2013 Utilisation in € million 129.1 121.5 103.4 Utilisation in % of risk cover capital 13.0 % 12.3 % 10.2 %

120 foresight Group Management report Group financial statements

Currency risk positions. The average utilisation in 2014 was ap- The following illustration depicts the risk in com- prox. €9.4 million or 0.8% of the risk cover capital. parison to the allocated risk-covering capital and The maximum relative utilisation was measured at the limit set for this risk category. The absolute 1.2% in July 2014. and relative fluctuations in the risk utilisation were mainly attributable to short-term open currency

currency risk - liquidation approach

Amounts in € million Values in % 30 2.0 %

1.0 %

0 0.0 % Jan 14 Feb 14 March 14 April 14 May 14 June 14 July 14 Aug 14 Sept 14 Oct 14 Nov 14 Dec 14

Qualifying RCC / Absolute limit utilisation in € million Limit as % of RCC (right-hand scale) utilisation as % of RCC (right-hand scale) RCC = risk cover capital

currency risk - liquidation approach Maximum Average Year-end

31.12.2014 Utilisation in € million 14.6 9.4 4.2 Utilisation in % of risk cover capital 1.2 % 0.8 % 0.4 % 31.12.2013 Utilisation in € million 9.9 7.7 5.4 Utilisation in % of risk cover capital 1.0 % 0.8 % 0.5 % Group financial statements financial Group

BTV Business Report 2014 120 |121 Share price risk by an average utilisation of €11.5 million or 1.0% of The following illustration depicts the risk in com- the risk cover capital. In addition, the risk position parison to the allocated risk-covering capital and was significantly reduced at the year-end. This was the limit set for this risk category. The generation observed in the utilisation of €2.8 million or 0.2% of of income from the equity business does not count the risk cover capital at the year-end. amongst BTV‘s core activities. This was underlined

Share price risk - liquidation approach

Amounts in € million Values in % 30 2.0 %

1.0 %

0 0.0 % Jan 14 Feb 14 March 14 April 14 May 14 June 14 July 14 Aug 14 Sept 14 Oct 14 Nov 14 Dec 14

Qualifying RCC / Absolute limit utilisation in € million Limit as % of RCC (right-hand scale) utilisation as % of RCC (right-hand scale) RCC = risk cover capital

Share price risk - liquidation approach Maximum Average Year-end

31.12.2014 Utilisation in € million 14.3 11.5 2.8 Utilisation in % of risk cover capital 1.2 % 1.0 % 0.2 % 31.12.2013 Utilisation in € million 10.7 9.6 10.5 Utilisation in % of risk cover capital 1.1 % 1.0 % 1.0 %

122 foresight Group Management report Group financial statements

Credit spread risk more robust owing to an expansion of the market The risk utilisation appeared to be relatively data history, which now contains a larger number constant throughout 2014 as the change in credit of extreme values. The average risk utilisation was spreads has plateaued at a moderate level in €69.5 million or 6.1% of the risk cover capital. The comparison with previous years. The table below maximum absolute utilisation of the credit spread shows an increase in the risk utilisation from April risk was recorded at €74.1 million in July 2014. to May 2014. The increase is model-specific as the estimate of a 99.9% confidence interval was made

Credit spread risk - liquidity approach

Amounts in € million Values in % 120

8.0 % 100

80 6.0 %

60 4.0 %

2.0 % 20

0 0.0 % Jan 14 Feb 14 March 14 April 14 May 14 June 14 July 14 Aug 14 Sept 14 Oct 14 Nov 14 Dec 14

Qualifying RCC / Absolute limit utilisation in € million Limit as % of RCC (right-hand scale) utilisation as % of RCC (right-hand scale) RCC = risk cover capital

Credit spread risk - liquidity approach Maximum Average Year-end

31.12.2014 Utilisation in € million 74.1 69.5 72.3 Utilisation in % of risk cover capital 6.4 % 6.1 % 6.4 % 31.12.2013 Utilisation in € million 68.8 65.3 64.5 Utilisation in % of risk cover capital 6.8 % 6.5 % 6.3 % Group financial statements financial Group

BTV Business Report 2014 122 |123 Liquidity risk The utilisation of the liquidity risk demonstrated vola- was €15.2 million or 1.3% of the risk cover capital. tile behaviour over the course of 2014. This behaviour The maximum absolute utilisation was measured at resulted from alternating rising and falling credit €19.5 million in September 2014. spread volatilities. The average absolute utilisation

Liquidity risk - liquidation approach

Amounts in € million Values in % 40 3.0 %

30 2.0 %

1.0 %

0 0.0 % Jan 14 Feb 14 March 14 April 14 May 14 June 14 July 14 Aug 14 Sept 14 Oct 14 Nov 14 Dec 14

Qualifying RCC / Absolute limit utilisation in € million Limit as % of RCC (right-hand scale) utilisation as % of RCC (right-hand scale) RCC = risk cover capital

Liquidity risk - liquidation approach Maximum Average Year-end

31.12.2014 Utilisation in € million 19.5 15.2 12.6 Utilisation in % of risk cover capital 1.7 % 1.3 % 1.1 % 31.12.2013 Utilisation in € million 14.6 9.8 12.7 Utilisation in % of risk cover capital 1.5 % 1.0 % 1.2 %

124 foresight Group Management report Group financial statements

RESIDUAL MATURITIES OF LIABILI- overnight < 3 M. 3 M.–1 Y. 1–5 Y. > 5 Y. Total income TIES 2014 under IFRS 7.39 in thousands of euros

Liabilities to banks 292,878 425,564 280,098 327,171 97,002 1,422,713 Liabilities to clients 3,150,704 1,092,053 700,102 492,809 128,158 5,563,827 Securitised debt 0 29,606 119,508 577,026 331,683 1,057,824 Subordinated capital 2,172 1,349 105,200 236,395 76,843 421,959

Total liabilities 3,445,754 1,548,572 1,204,909 1,633,402 633,686 8,466,323

Derivative financial –0 –2,894 –4,482 –8,599 –99 –16,073 liabilities Total derivatives –0 –2,894 –4,482 –8,599 –99 –16,073

RESIDUAL MATURITIES OF overnight < 3 M. 3 M.–1 Y. 1–5 Y. > 5 Y. Total income LIABILITIES 2013 under IFRS 7.39 in thousands of euros

Liabilities to banks 205,739 841,150 554,091 70,220 86,490 1,757,690 Liabilities to clients 3,402,688 977,578 539,495 450,311 95,441 5,465,513 Securitised debt 1,502 38,329 81,867 588,645 253,454 963,796 Subordinated capital 49 22,189 95,653 249,219 83,803 450,914

Total liabilities 3,609,978 1,879,245 1,271,106 1,358,396 519,189 8,637,914

Derivative financial –1 –3,126 –6,232 –12,582 –658 –22,599 liabilities Total derivatives –1 –3,126 –6,232 –12,582 –658 –22,599

In accordance with contractual residual maturities The internal control of the liquidity risk is carried under IFRS 7.39, the structure of liabilities showed out at BTV either on the basis of modelled payment a significant year-on-year reduction in overnight flows, or using the increasingly popular funding deposits. Increased issuing activities in the capital matrix approach according to contractual capital market resulted overall in long-term refinancing commitments by managing the Liquidity Coverage being available and therefore being placed on a Ratio (LCR) and mainly also the Net Stable Funding sounder footing. Ratio (NSFR). Group financial statements financial Group

BTV Business Report 2014 124 |125 Operational risk The calculation of the operational risk is made an- In order to guarantee a closed circuit process and nually. Therefore, the absolute utilisation remains the quality of the implemented control loop - risk constant throughout the year. The relative utilisation identification, risk quantification and risk management on the other hand varies depending on the risk cover - decision-makers are kept informed on a continuous capital available at the time. basis by a quarterly report on the trend in operational risk (loss events incurred) and the measures taken and their ongoing monitoring.

Operational risk – liquidation approach

Amounts in € million Values in %

50 4.0 %

40 3.0 %

2.0 %

1.0 % 10

0 0.0 % Jan 14 Feb 14 March 14 April 14 May 14 June 14 July 14 Aug 14 Sept 14 Oct 14 Nov 14 Dec 14

Qualifying RCC / Absolute limit utilisation in € million Limit as % of RCC (right-hand scale) utilisation as % of RCC (right-hand scale) RCC = risk cover capital

operational risk – liquidation approach Maximum Average Year-end

31.12.2014 Utilisation in € million 30.5 30.5 30.5 Utilisation in % of risk cover capital 3.0 % 2.7 % 2.7 % 31.12.2013 Utilisation in € million 26.1 26.1 26.1 Utilisation in % of risk cover capital 2.7 % 2.6 % 2.6 %

126 foresight Group Management report Group financial statements

Macroeconomic risk From May to June 2014 an increase was recorded in the utilisation of the macroeconomic risk. This increase was due to changes in the parameters underlying the stress test performed.

macroeconomic risks - liquidation approach

Amounts in € million Values in %

100 8.0 %

7.0 % 80 6.0 %

5.0 % 60

4.0 %

40 3.0 %

2.0 % 20 1.0 %

0 0.0 % Jan 14 Feb 14 March 14 April 14 May 14 June 14 July 14 Aug 14 Sept 14 Oct 14 Nov 14 Dec 14

Qualifying RCC / Absolute limit utilisation in € million Limit as % of RCC (right-hand scale) utilisation as % of RCC (right-hand scale) RCC = risk cover capital

macroeconomic risk - liquidation approach Maximum Average Year-end

31.12.2014 Utilisation in € million 69.3 57.5 65.3 Utilisation in % of risk cover capital 5.9 % 5.0 % 5.8 % 31.12.2013 Utilisation in € million 51.1 47.0 45.4 Utilisation in % of risk cover capital 5.1 % 4.7 % 4.5 % Group financial statements financial Group

BTV Business Report 2014 126 |127 Further developments in 2014

Further developments in 2014 It should also be pointed out that the CRR‘s imple- 2014 was essentially characterised by changes con- mentation at BTV has resulted in modification of the ditional on the currently applicable provisions of equity calculation. At BTV, equity forms an essential the CRR. In addition, the risk measurement systems component of the risk cover capital in the liquidation were validated and the stress-testing methodology approach and impacts on the risk cover capital in the was further developed. going-concern approach of the ICAAP.

The implementation of the CRR requires that the New liquidity figures were an essential component valuation of assets and of off-balance sheet items in the introduction of the CRR. Thus, comprehen- should now be carried out in accordance with the sive templates for calculating the monthly Liquidity applicable accounting standards. Therefore, BTV Coverage Ratio (LCR) and the quarterly Net Stable has to apply IFRS for the purpose of calculating the Funding Ratio (NSFR) had to be completed by the consolidated capital requirement. reporting date on 31 March. Liquidity has become an increasingly important commodity for banks The implementation of the CRR also required the over the last few years. Thus, the topic of liquidity formation of a consolidation scope for supervisory was discussed in many sessions and meetings at purposes. This consolidation scope for supervisory BTV and measures for improving structural liquid- purposes should be used, inter alia, to calculate the ity were worked out, which resulted in a significant consolidated capital requirement. The consolida- improvement in the LCR. tion scope for supervisory purposes is different from the consolidation scope, which is formed In addition to the above-mentioned requirement for under IFRS as part of the financial statements. As further development for supervisory purposes, the already stated above, BTV uses the same base data risk measurement systems were validated. Within to calculate the capital requirement and the eco- credit risk, validation of the rating systems was carried nomic risk. Therefore, the risk is now also presented out here. The validation was divided up into a quantita- in the ICAAP in accordance with the consolidation tive and qualitative section. The qualitative validation, scope for supervisory purposes. on the one hand, comprised all validation processes in

128 foresight Group Management report Group financial statements

which statistical core values (selectivity, stability and Following the EU‘s directive proposal (BRRD), the calibration) of the rating processes were determined Banking Intervention and Restructuring Act (BIRG) and interpreted using an empirical database. The was passed in Austria. The BIRG came into force qualitative validation, on the other hand, had the task as of 2014 before the EU Directive. It requires the of ensuring the applicability and the correct use of obligation to draw up restructuring plans by 1 the quantitative methods in practice. The quantitative July 2015 and resolution plans by 31 December and qualitative validation facilitated the derivation of 2015. With regard to the legal requirements, BTV potential for improvement and resulted in the adop- has undertaken all the preparations in the form of tion of measures to achieve this. Within the market its own project to draw up the restructuring plan and liquidity risk, a validation of the interest or capital for submission to the Austrian Financial Market commitment of products with non-specific interest or Authority (FMA). As a result of the supersession - capital commitments was undertaken. effective on 1 January 2015 - by the Federal Act on the restructuring and resolution of banks (BaSAG for short), BTV now has to draw up its restructuring plan by 30 September 2015; the preparation of the resolution plan is carried out directly by the FMA. Group financial statements financial Group

BTV Business Report 2014 128 |129 Outlook for 2015

Outlook for 2015 Furthermore, new risk-controlling software will be Anyone who wants to shape the future must be rolled out in 2015. Going forward, this programme prepared for it. With this thought in mind, the strat- will take over the calculation tasks below: egy project „BTV 20.20“ was launched in 2014. The aim of this project is to develop a new pioneering, • Capital requirement for the credit risk forward-looking corporate strategy by mid-2015. • Capital requirement for the market risk • Capital requirement for the credit valuation BTV’s philosophy has always been to invest rather adjustment (CVA) risk than to speculate. This philosophy has been rein- • Economic risk for the counterparty and invest- forced by the successes of previous years. BTV will ment risk therefore also focus on extending its equity basis • Stress tests for the capital requirement for the and expanding its refinancing sources even further credit risk, market risk and CVA risk, as well as in the current financial year. for the counterparty and investment risk • Leverage ratio BTV views the quality of its management instruments and its human capital as central success fac- The new application will replace existing solutions tors in this loop. Against this backdrop, the existing and combine them in a single module. This will management instruments will be further enhanced further increase the transparency of the results and in 2015 and the already high level of knowledge will make the calculation process more efficient. reinforced by targeted top-class training. It will increase the level of integration and significantly improve the performance of simulations.

130 foresight Group Management report Group financial statements

Notes to the Balance Sheet - Other and supplementary notes

36 Other details in €‘000 31.12.2014 31.12.2013

a) Non interest-bearing loans 213,065 147,223

Assets deposited as guarantees: Debenture bonds and other fixed-interest securities 1,592,746 2,006,389 Loans to Credit Institutions 19,096 31,590 Loans to clients 945,386 960,596 b) Assets deposited as guarantees 2,557,228 2,998,575

c) Liabilities for which collateral was transferred: Trust fund deposits 11,730 11,671 Bonds issued 276,450 221,610 Liabilities to credit institutions 108,598 118,674 c) Liabilities for which collateral was transferred 396,778 351,955

Subordinated assets: Loans to clients 8,410 8,900 Debenture bonds and other fixed-interest securities 43,217 42,328 Equities and other variable-interest securities 12,024 20,560 d) Subordinated assets 63,651 71,789

Foreign currency volumes Receivables 1,364,729 1,396,162 Liabilities 618,416 831,995 e) Foreign currency volumes

Foreign volumes: Foreign assets 3,728,022 3,509,411 Foreign liabilities 2,735,225 2,119,290 f) Foreign volumes

Trust loans: 67,586 61,173 Loans to clients 67,586 61,173 Trust liabilities: 67,586 61,773 Liabilities to credit institutions 43,334 41,036 Liabilities to clients 24,252 20,737 g) Trust business

h) Genuine repurchase agreements 893,196 871,125

Performance guarantees and credit risks: statements financial Group Performance guarantees 224,183 225,239 Credit risks 1,085,749 1,097,790 i) Performance bonds and credit risks 1,309,932 1,323,029

BTV Business Report 2014 130 |131 The European Investment Bank (EIB) refinanced In the context of repos, securities were transferred to investment loans for clients amounting to third parties. At 31 December 2014, the total market €4,825 thousand. value was €1,650,442 thousand. Of which €887,796 thousand were in the category „Available for Sale“, €0 Transactions in which securities are sold with the in the fair value option and €762,646 thousand were agreement of a retrocession on a specific date are in the category „Held to Maturity“. At 31 December referred to as repos. The sold financial instruments 2014, the carrying value was €1,547,085 thousand. are recorded on BTV‘s balance sheet as all the risks The associated liabilities are shown under liabilities and rewards related to ownership basically remain to credit institutions and liabilities to customers. with BTV AG. The financial instruments are retro- The utilisation on 31 December 2014 amounted to ceded on expiry of the repo. During the term of €893,196 thousand. the repo, BTV AG is the beneficiary of all interest payments and other income received during the term. The accounting as financing corresponds to the economic substance of the transaction.

36a Information regarding Financial Effects from Received/issued Financial assets/ offsetting of financial instruments assets/debts settlement securities in the debts (net) as at 31 December 2014 in €000s agreements form of financial instruments

Trading assets - derivatives 91,469 –20,007 –14,331 57,131 Total debt 91,469 –20,007 –14,331 57,131

Liabilities to Credit institutes 6,921,723 0 –1,355,769 5,565,954 and client deposits Trading liabilities – Derivatives 49,644 –20,007 –17,287 12,350 Total liabilities 6,971,367 –20,007 –1,373,056 5,578,304

Information regarding offsetting Financial Effects from Received/issued Financial assets/ of financial instruments as at assets/debts settlement securities in the debts (net) 31 December 2013 in €000s agreements form of financial instruments

Trading assets - derivatives 66,302 –24,181 –3,059 39,062 Total debt 66,302 –24,181 –3,059 39,062

Liabilities to Credit institutes and client 7,180,273 0 –1,071,136 6,109,137 deposits Trading liabilities – Derivatives 64,152 –24,181 –30,473 9,498 Total liabilities 7,244,425 –24,181 –1,101,609 6,118,635

The contractual terms for all collateral and setoff agreements are in line with banking practice.

132 foresight Group Management report Group financial statements

36b Notes pursuant to section 64 BWG

SELECTED DATA AND FIGURES CONCERNING BRANCHES Austria Switzerland Germany pursuant to section 64 BWG in thousands of euros

Net interest income 157,335 9,209 15,724 Operating income 196,559 12,777 17,426 Number of employees in persons/years 1,118 23 54 Annual profit before tax 81,003 4,894 3,871 Taxes on earnings 12,235 568 884 State aid received 0 0 0

BTV has a branch in Switzerland, BTV Switzerland BTV has a branch in Germany, BTV Germany with with registered office in Staad, and BTV Leasing registered office in Memmingen, and BTV Leasing has a branch, BTV Leasing Schweiz AG, also with has a branch, BTV Leasing Deutschland GmbH with registered office in Staad. registered office in Augsburg.

RETURN ON INVESTMENT pursuant to section 64 BWG 2014 2013

Return on investment 0.79 % 0.71 %

36c Comfort letters

During the reporting year, BTV did not issue any comfort letters (previous year: €299 thousand). Group financial statements financial Group

BTV Business Report 2014 132 |133 37 Information on shares in other companies

With the resolution of the vote trust agreement, obtained 15% of the voting rights. As such, MPR MPR Holding GmbH gained control over VoMoNoSi Holding GmbH held 64% of the shares and 64% Beteiligungs AG as at 1 January 2014. The purpose of the voting rights in VoMoNoSi Beteiligungs Ag of VoMoNoSi Beteiligungs AG is to hold participa- as at 1 January 2014. The resolution of the voting tions in the tourism segment. Due to the resolution trust agreement is to be seen as an element in the of the vote trust agreements, MPR Holding GmbH implementation of the overall strategy.

Assets and debts of VOMONOSO Beteiligungs AG at the point of acquisition 01.01.2014 in thousands of euros

Petty cash balance 80 Loans to Credit Institutions 4,165 Loans to clients 1 Intangible assets 349 Property, plant and equipment 78,515 Financial assets 322 Accrued income 236 Other assets 6,060 Deferred tax assets 4,073 Liabilities to banks –79,839 Other liabilities –4,916 Deferred tax liabilities –299 Long-term payroll reserves –1,899 Other reserves and provisions –3,361 Net assets 3,487 Indirect non-controlling interests 744 Net assets without indirect non-controlling interests 2,743

The resolution of the voting trust agreements re- MoNoSi Beteiligungs AG as at 1 January 2014. sults in a participation adjustment measured at fair Of these shares, 36% are minority interests at the value in the income statement of €1,755 thousand. time of acquisition. MPR Holding GmbH held 64% of the shares in Vo- minority interests at date of acquisition in €000s 01.01.2014

Indirect minority interests 744 Direct minority interests 987 Total minority interests as at 1 January 2014 1,731

The sales revenue of the subgroup VoMoNoSi On 14 March 2014 MPR Holding GmbH acquired the Beteiligungs AG amounted to €51,340 thousand for remaining 36% of shares in VoMoNoSi Beteiligungs the reporting year. Annual net profit after tax was AG and has therefore held 100% of the shares since €4,995 thousand since the acquisition date, which the quarterly reporting date of 31 March 2014. As equates to the reporting year 2014. a result of this transaction among shareholders in March 2014 only indirect minority interests have been reported since 31 March 2014.

134 foresight Group Management report Group financial statements

change in the share of MPR Holding GmbH in VoMoNoSi Beteiligungs AG in €000s

Share of MPR Holding GmbH as at 1 January 2014 (without indirect minority interests) 1,755 Effect of the increase of the amount of holding to 100% 987 Shares in the comprehensive income as at 31 March 2014 849 Less profit carried forward from previous years –786 Share of MPR Holding GmbH as at 31 March 2014 2,805

The company ALPENLÄNDISCHE GARANTIE- GESELLSCHAFT M.B.H. is classed as joint operations as of 1 January 2014 as a result of IFRS 11 coming into effect and recognised pro rata with the assets and debts in the consolidated financial statements.

reconciliation of the equity method to the pro rata accounting of assets and debts in €000s

At-equity valued investment 1 January 2014 974

Disclosed assets and debts 31 March 2014: Loans to Credit Institutions 43,761 Reserves for guarantees –42,781 Other reserves and provisions –6 Equity at 31 March 2014 974

38 notes on transactions with closely related persons

As part of normal business activity transactions are sons at normal market terms and conditions. concluded with closely related companies and per- The scope of these transactions is shown below:

38a Emoluments and loans to members of the Board of Directors and the Supervisory Board

The loans and advances granted to the members of In the reporting year, remuneration of the Board of the Board of Directors amounted to a total volume Directors amounted to €1,355 thousand including at the end of 2014 of €142 thousand (previous year: severance pay (previous year: €1,693 thousand), the €350 thousand). Loans of €6,091 thousand are due pension payments to former members of the Board from members of the Supervisory Board (previ- of Directors amounted to €597 thousand (previous ous year: €42,194 thousand). The interest rates and year: €589 thousand). other conditions (maturity and collateral) are in line with the market. During the current financial During the financial year, active members of the BTV year, members of the Board of Directors made AG Supervisory Board received annual remuneration loan repayments of €222 thousand (previous year: for their positions in the amount of €242 thousand €0). Members of the Supervisory Board made loan (previous year: €200 thousand). repayments during 2014 of €41,310 thousand (previous year: €48 thousand). Group financial statements financial Group

BTV Business Report 2014 134 |135 38b loans and liabilities to associated 31.12.2014 31.12.2013 non-consolidated companies and holdings in €000s

Loans to Credit Institutions 0 0 Loans to clients 13,279 8,215 Liabilities to customers 13,279 8,215

Liabilities to credit institutions 0 0 Liabilities to clients 11,964 10,362 Total liabilities 11,964 10,362

In the context of the profit and loss account, there vious year: €57 thousand) was incurred for transac- are earnings of €365 thousand (previous year: €275 tions with the parent company and its associated thousand) and expenditure of €105 thousand (pre- companies.

38c receivables and liabilities to 31.12.2014 31.12.2013 associated companies and holdings in €000s

Loans to Credit Institutions 10,154 105,125 Loans to clients 67 35,897 Liabilities to customers 10,221 141,022

Liabilities to credit institutions 62,858 140,646 Liabilities to clients 852 1,843 Total liabilities 63,711 142,489

In the context of the profit and loss account, there are €362 million on the reporting date (previous year: earnings of €77 thousand (previous year: €1,207 thou- €344 million). The temporary differences under IAS sand) and expenditure of €320 thousand (previous 12.87 at the balance sheet date were €330 million year: €780 thousand) was incurred for transactions (previous year: €299 million). with the parent company and its associated companies. The number of shares held by associated compa- The fair value of the listed companies, which are nies was 6,702,625 (previous year: 6,702,625 shares). included according to the equity method, was

38d Reconciliation of the eq- Written- Change not Change Written- Market Market uity carrying value of the as- down recognised recognised down value price of price of sociated companies included value as at in profit in profit as at 31 ordinary preference in the group financial state- 1 January and loss and loss December shares shares ments based on the portfolio 2014 2014 2014 2014 as at 31 December 2014 in €000s

BKS Bank AG 133,471 9,911 6,580 149,962 17.30 15.20 Oberbank AG 237,742 1,822 20,096 259,660 50.35 37.81 Drei-Banken Versicherungs-Aktien- 4,285 0 91 4,376 n.a. n.a. gesellschaft Moser Holding AG 11,354 –203 1,782 12,933 n.a. n.a.

Explanation: n.a. = not available

136 foresight Group Management report Group financial statements

38e the associated companies valued at equity showed 31.12.2014 31.12.2013 the following values at the balance sheet date in €000s

BKS Bank AG 6,859,235 Oberbank AG 18,038,640 Drei-Banken Versicherungs-Aktiengesellschaft 136,449 Moser Holding AG 145,349 Assets 25,179,673 24,672,249

BKS Bank AG 6,117,767 Oberbank AG 16,507,700 Drei-Banken Versicherungs-Aktiengesellschaft 114,916 Moser Holding AG 89,961 Liabilities 22,830,344 22,538,948

BKS Bank AG 247,418 Oberbank AG 603,480 Drei-Banken Versicherungs-Aktiengesellschaft 11,248 Moser Holding AG 107,686 Earnings 969,832 984,367

Group net profit for the year 43,003 Other comprehensive income 5,387 BKS Bank AG Total annual earnings 48,390 Group net profit for the year 132,652 Other comprehensive income 7,219 Oberbank AG Total annual earnings 139,871 Group net profit for the year 754 Other comprehensive income n.a. Drei-Banken Versicherungs-Aktiengesellschaft Total annual earnings 754 Group net profit for the year 8,368 Other comprehensive income –338 Moser Holding AG Total annual earnings 8,030 Overall profit for the financial year 197,045 160,082

BKS Bank AG 1,548 Oberbank AG 2,008 Drei-Banken Versicherungs-Aktiengesellschaft 90 Moser Holding AG 0 Dividends received 3,646 3,646

Explanation: n.a. = not available

38f acquisition costs carried over or associated companies valued 31.12.2014 31.12.2013 at fair value showed the following values at the balance sheet date in thousands of euros Assets 69,837 67,939 Liabilities 31,283 29,302 Earnings 61,860 57,415 statements financial Group Profit/loss for the period 1,207 –276

The last available annual financial statements were used as the basis for the calculation of the values in tables 38e and 38f.

BTV Business Report 2014 136 |137 39 Total volume of not yet transacted derivative financial products

Total volume of not yet transacted derivative financial products at 31 December 2014:

in thousands of euros Contract volume / residual terms Market values positive negative positive negative positive negative < 1 year 1- 5 years > 5 years Total < 1 year 1- 5 years > 5 years Interest rate swaps 259,929 908,998 506,900 1,675,827 2,586 –1,733 32,845 –29,633 58,763 –7,759 Purchase 107,063 322,217 80,350 509,630 0 –1,733 0 –29,630 0 –7,657 Sale 152,866 586,781 426,550 1,166,197 2,586 0 32,845 –3 58,763 –102 Interest rate options 69,586 225,441 32,972 327,999 22 –22 638 –584 154 –196 Purchase 34,793 112,333 16,486 163,612 22 0 403 –167 69 –65 Sale 34,793 113,108 16,486 164,387 0 –22 235 –417 85 –131 Interest rate contracts, total 329,515 1,134,439 539,872 2,003,826 2,608 –1,755 33,483 –30,217 58,917 –7,955

Currency swaps 30,000 32,755 0 62,755 4,927 –4,899 4,801 –5,311 0 0 Purchase 15,000 15,568 0 30,568 0 –4,899 0 –5,311 0 0 Sale 15,000 17,187 0 32,187 4,927 0 4,801 0 0 0 Foreign exchange futures 56,781 11,728 0 68,509 723 –1,237 318 –227 0 0 FX Swaps 1,027,388 0 0 1,027,388 5,119 –2,136 0 0 0 0 Total currency exchange rate contracts 1,114,169 44,483 0 1,158,652 10,769 –8,272 5,119 –5,538 0 0

Derivative trades relating to 4,300 14,650 0 18,950 30 0 664 0 0 0 securities and other derivatives Purchase 0 0 0 0 0 0 0 0 0 0 Sale 4,300 14,650 0 18,950 30 0 664 0 0 0 Trades relating to securities and 4,300 14,650 0 18,950 30 0 664 0 0 0 other derivatives Total Total bank book 1,447,984 1,193,572 539,872 3,181,428 13,407 –10,027 39,266 –35,755 58,917 –7,955

Coupon swap options – 5,650 8,135 31,413 45,198 0 0 0 0 87 –91 trading book Purchase 2,825 3,604 15,394 21,823 0 0 0 0 87 0 Sale 2,825 4,531 16,019 23,375 0 0 0 0 0 –91 Coupon swap – trading book 0 0 0 0 0 0 0 0 0 0 Purchase 0 0 0 0 0 0 0 0 0 0 Sale 0 0 0 0 0 0 0 0 0 0 Interest rate contracts, total 5,650 8,135 31,413 45,198 0 0 0 0 87 –91

Derivative trades relating to 0 0 2,000 2,000 0 0 0 0 113 0 securities and other derivatives Purchase 0 0 2,000 2,000 0 0 0 0 113 0 Trades relating to securities and 0 0 2,000 2,000 0 0 0 0 113 0 other derivatives Total Total trading book 5,650 8,135 33,413 47,198 0 0 0 0 200 –91

Non-transacted derivatives 1,453,634 1,201,707 573,285 3,228,626 13,407 –10,027 39,266 –35,755 59,117 –8,046 Total financial instruments

138 foresight Group Management report Group financial statements

Total volume of not yet transacted derivative financial products as at 31 December 2013:

in thousands of euros Contract volume / residual terms Market values positive negative positive negative positive negative < 1 year 1- 5 years > 5 years Total < 1 year 1- 5 years > 5 years Interest rate swaps 221,169 1,063,618 482,666 1,767,453 1,490 –1,486 37,135 –35,197 19,537 –5,344 Purchase 110,923 420,797 97,443 629,163 0 –1,486 4 –34,735 118 –4,991 Sale 110,246 642,821 385,223 1,138,290 1,490 0 37,131 –462 19,419 –353 Interest rate options 54,808 197,033 131,760 383,601 185 –185 407 –410 1,078 –986 Purchase 27,404 98,659 65,880 191,943 183 –2 399 –6 778 –198 Sale 27,404 98,374 65,880 191,658 2 –183 8 –404 300 –788 Interest rate contracts, total 275,977 1,260,651 614,426 2,151,054 1,675 –1,671 37,542 –35,607 20,615 –6,330

Currency swaps 17,500 48,536 12,186 78,222 1,943 –1,909 7,674 –7,564 1,291 –1,619 Purchase 8,750 24,268 5,300 38,318 0 –1,909 0 –7,564 0 –1,619 Sale 8,750 24,268 6,886 39,904 1,943 0 7,674 0 1,291 0 Foreign exchange futures 37,116 4,358 0 41,474 336 –1,006 3 –160 0 0 FX Swaps 921,960 0 0 921,960 5,506 –7,056 0 0 0 0 Total currency exchange rate con- 976,576 52,894 12,186 1,041,656 7,785 –9,971 7,677 –7,724 1,291 –1,619 tracts Derivative trades relating to 26,000 16,000 5,000 47,000 814 0 554 0 60 0 securities and other derivatives Purchase 0 0 0 0 0 0 0 0 0 0 Sale 26,000 16,000 5,000 47,000 814 0 554 0 60 0 Trades relating to securities 26,000 16,000 5,000 47,000 814 0 554 0 60 0 and other derivatives Total Total bank book 1,278,553 1,329,545 631,612 3,239,710 10,274 –11,642 45,773 –43,331 21,966 –7,949

Coupon swap options – 0 15,383 34,735 50,118 0 0 8 –11 303 –315 trading book Purchase 0 7,171 17,022 24,193 0 0 8 0 303 0 Sale 0 8,212 17,713 25,925 0 0 0 –11 0 –315 Coupon swap – trading book 0 0 0 0 0 0 0 0 0 0 Purchase 0 0 0 0 0 0 0 0 0 0 Sale 0 0 0 0 0 0 0 0 0 0 Interest rate contracts, total 0 15,383 34,735 50,118 0 0 8 –11 303 –315

Derivative trades relating to 0 0 0 0 0 0 0 0 0 0 securities and other derivatives Purchase 0 0 0 0 0 0 0 0 0 0 Trades relating to securities and 0 0 0 0 0 0 0 0 0 0 other derivatives Total Total trading book 0 15,383 34,735 50,118 0 0 8 –11 303 –315 Group financial statements financial Group

Non-transacted derivatives 1,278,553 1,344,928 666,347 3,289,828 10,274 –11,642 45,781 –43,342 22,269 –8,264 Total financial instruments

BTV Business Report 2014 138 |139 The trading volume is divided by the type of underly- currency swaps. The securities-related transactions ing financial instrument into the categories of interest relate solely to issued structured investment prod- rate, currency rate and security related trades. The se- ucts. The options required for these were bought in lected subdivision of the volumes by time to maturity through third-party banks. concords with international recommendations, as does the classification into interest rate, currency rate and The hedging period for derivatives used in hedge security based trades. At the end of 2014, BTV only accounting is identical to that for the hedged item. had OTC (over the counter) trades on its books. The group uses fair value hedge accounting predomi- The derivative instruments held for non-trading nantly through interest rate swaps, in order to hedge purposes are mainly represented by interest against changes in the fair values of fixed-income rate contracts primarily requested by customers. financial instruments due to movements in market Alongside interest swaps customers also asked for interest rates. The fair values of the hedging instru- cross-currency swaps and interest rate options. ments are classified under assets in the other assets BTV closes off these positions with back-to-back and classified as liabilities in the other liabilities. transactions with other credit institutions and does not carry any risk on its own book. BTV itself uses The following table shows the current fair market primarily interest rate swaps to manage the overall value of derivatives, which are held as part of fair bank rate risk. For management of currency rate value hedges: risks BTV mainly uses foreign exchange futures and

Derivatives fair value (as part of fair value hedges) Other assets Other Other assets Other in thousands of euros 2014 liabilities 2013 liabilities 2014 2013

Derivatives in fair value hedges 47,135 7,451 12,461 6,237

140 foresight Group Management report Group financial statements

40 fair value hierarchy of financial instruments which are valued at fair value

The financial instruments reported at fair value are The allocation of certain financial instruments to classified at fair value in the three tier valuation the categories requires a systematic assessment, hierarchy as follows. especially if the valuation is based on both observable as well as unobservable market parameters. This hierarchy reflects the significance of the input data The instrument classification may also change over used for the valuation and is classified as follows: time in consideration of changes to the market parameters. Quoted prices in active markets (Level 1): This category contains equity, corporate bonds and For securities and other investments which are val- government lending listed on major exchanges. The ued at fair value, the following valuation processes fair value of financial instruments traded in active mar- are applied: kets is calculated on the basis of quoted prices, in so far as these represent prices applied within the context Level 1 of regular and current transactions. The fair value is derived from the transaction prices as traded on the stock exchange. An active market must fulfil cumulatively the following conditions: Level 2 Securities which are not traded in an active market • the products traded on the market are are valued by means of the discounted cash flow homogenous, method. This means that the future projected cash • normally willing contractual buyers and flows are discounted by means of suitable discount sellers can be found any time and factors in order to calculate the fair value. The dis- • prices are available to the public. count factors contain both the credit curve without credit risk as well as the credit spreads which follow A financial instrument is seen as listed on an active the credit rating and the rank of the issuer. The market if its prices are available easily and regularly interest curve for discounting contains securities from a stock exchange, a trader or broker, an indus- account, money-market futures and swap rates as try group, a price service agency or a supervisory observable on the market. The calculation of the authority and these prices represent actual and credit spread follows a 3-step process: regularly occurring market transactions. 1) If there is for the issuer a bond of the same rank Valuation procedure through observable param- and of the same remaining term which is actively eters (Level 2): traded on the market, this credit spread is used. This category includes OTC derivative contracts, 2) if there is no comparable bond which is actively receivables and issued debt securities of the Group traded on the market, the credit default swap classified at fair value. spread (CDS spread) with a similar term is applied. 3) If there is neither a comparable bond traded on Valuation procedures through significant unob- the market nor an actively traded CDS, then the servable parameters (Level 3): credit spread from a comparable issuer is applied The financial instruments in this category show (level 3). This approach is currently not being used input parameters which are based on unobserv- at the BTV group.

able markets. statements financial Group

BTV Business Report 2014 140 |141 Level 3 Level 2 The accompanying current values of the men- Derivative financial instruments are divided into tioned financial assets in the third stage where de- derivatives with a symmetrical payment profile as well termined in accordance with generally recognised as derivatives with an asymmetrical payment profile. valuation processes. Significant parameters are the depreciation rate as well as long-term success and At BTV, derivatives with a symmetrical payment capitalisation values with consideration of the ex- profile contain interest derivatives (interest swaps perience of the management as well as knowledge and interest rate forwards) and foreign currency of the market conditions of the specific industry. derivatives (FX Swaps, cross currency swaps and FX outright transactions). These derivatives are The issues are categorised at level 2 and the valuation calculated by means of the discounted cash flow takes place in accordance with the following process: method which is based on money market interest rates, money market futures-interest rates, swap Level 2 interest rates as well as basis spreads which can be The own issues are not subject to active trade on observed continually on the market. the capital market. Instead they are retail issues and private placements. The valuation consequently At BTV, derivatives with an asymmetrical pay- takes place by means of a discounted cash flow ment profile contain interest derivatives (caps and valuation model. This is based on an interest curve floors). The calculation of the fair value occurs here based on money market interest rates and swap by means of the Black-76-Option price model. All interest as well as BTV‘s credit spreads. The credit inputs are either completely directly observable spreads align themselves with the spreads that are on the market (money market rates, money market payable at the time for an interest rate hedging futures- interest rates as well as swap interest rates) transaction (interest spread on swap). or derived from input factors observable on the market (caps / floor volatilities implicitly deducted The derivatives are also categorised at level 2. The from option prices). following valuation processes are applied: The following tables show the fair value valuation methods used in order to determine the fair value of the balance sheet financial instruments.

142 foresight Group Management report Group financial statements

Fair value hierarchy of financial instruments which Prices listed Valuation Valuation are valued at fair value as at 31 December 2014 in €000s in active markets methods methods not based on based on market data market data

Level 1 Level 2 Level 3 Financial assets stated at fair value Trading portfolio securities 0 7,122 0 Positive market values from derivative financial instruments 0 111,854 0 Assets classified at fair value 115,935 26,145 128 Financial assets available for disposal 984,509 126,932 151,635 Overall financial assets classified at fair value 1,100,444 272,053 151,763

Financial liabilities stated at fair value Negative market values from derivative financial instruments 0 54,833 0 Liabilities classified at fair value 0 620,707 0 Overall liabilities classified at fair value 0 675,540 0

Fair value hierarchy of financial instruments which Prices listed in Valuation Valuation are valued at fair value as at 31 December 2013 in €000s active markets methods methods not based on based on market data market data

Level 1 Level 2 Level 3 Financial assets stated at fair value Trading portfolio securities 0 0 0 Positive market values from derivative financial instruments 0 77,401 0 Assets classified at fair value 129,100 25,823 301 Financial assets available for disposal 891,804 127,321 187,573 Overall financial assets classified at fair value 1,020,904 230,545 187,874

Financial liabilities stated at fair value Negative market values from derivative financial instruments 0 62,883 0 Liabilities classified at fair value 0 548,796 0 Overall liabilities classified at fair value 0 611,679 0 Group financial statements financial Group

BTV Business Report 2014 142 |143 Movements in level 3 of December Result Result Pur- Sales, Transfer Transfer Con- Currency December financial instruments as- 2013 P&L in other chases repay- to from solidation conversion 2014 sessed at fair value in 2014 operating ments level 3 level 3 effects in €000s income

Trading portfolio securities 0 0 0 0 0 0 0 0 0 0 Positive market values from de- 0 0 0 0 0 0 0 0 0 0 rivative financial instruments Classified at fair value - 301 –57 0 0 –116 0 0 0 0 128 Assets Available for sale 187,573 0 3,905 7,226 –13,099 0 0 –33,970 0 151,635 financial assets

Overall financial assets 187,874 –57 3,905 7,226 –13,215 0 0 –33,970 0 151,763 classified at fair value

Movements in level 3 of December Result Result Pur- Sales, Transfer Transfer Con- Currency December financial instruments 2012 P&L in other chases repay- to from solidation conversion 2013 assessed at fair value in 2013 operating ments level 3 level 3 effects in €000s income

Trading portfolio securities 0 0 0 0 0 0 0 0 0 0 Positive market values from 0 0 0 0 0 0 0 0 0 0 derivative financial instruments Assets classified at fair value 0 –307 0 0 0 608 0 0 0 301

Financial assets available 0 0 0 0 0 187,573 0 0 0 187,573 for disposal

Overall financial assets 0 –307 0 0 0 188,181 0 0 0 187,874 classified at fair value

During the reporting period, there were no reclas- In the reporting year 2014, no significant profits and sifications between the individual levels. Owing to losses were realised from sales for level 3 financial in- consolidation effects in connection with the subgroup struments. The amounts in level 3 recognised in profit VoMoNoSi Beteiligungs AG, there were changes and loss resulted mainly from valuation losses. totalling -€33,970 thousand. Purchases and other additions resulted on the one hand from purchases of At the end of a reporting period, BTV AG checks to equity instruments totalling €6,401 thousand and on what extent regroupings have taken place owing the other hand from company formations and share- to changes in relevant parameters between the holder contributions totalling €825 thousand. different levels of the fair value hierarchy. Regroup- ings take place on the basis of the portfolios in the reporting period concerned.

41 Fair Value of financial instruments, which are not valued at fair value

In the following table for each balance sheet item For positions without a contractually fixed term the fair market value is compared to the book the relevant book value was applied. If no market value. The market value is the amount, which in prices exist, then generally accepted valuation an active market could be raised from the sale of models were applied, in particular analysis using a financial instrument or which would need to be discounted cash flow and the option price model. paid to make an equivalent purchase.

144 foresight Group Management report Group financial statements

Assets Fair value 31 Book value Fair value 31 Book value in thousands of euros December 31.12.2014 December 31.12.2013 2014 2013 Cash reserves 173,002 173,002 229,545 229,545 Loans to Credit Institutions 276,423 273,979 323,088 321,850 Loans to clients 6,916,304 6,386,508 6,881,828 6,404,543 Financial assets – held to maturity 800,149 741,772 875,006 846,262

Liabilities Fair value 31 Book value Fair value 31 Book value in thousands of euros December 31.12.2014 December 31.12.2013 2014 2013 Liabilities to credit institutions 1,442,880 1,394,692 1,744,778 1,752,704 Liabilities to clients 5,551,723 5,527,031 5,423,886 5,419,758 Securitised debt 580,884 587,697 467,988 478,781 Subordinated capital 183,507 183,119 253,086 254,756

Assets consequently, are based on assumptions which are made within the bank. This primarily effects non- Level 1 securitised loans to customers and banks which are For securities which were assigned to the account- valued ‚at cost‘. Herewith, for the fair value calcula- ing category ‚held to maturity‘ (HtM), the fair value tion the underlying credit spread per counter party is calculated from the price created on the market. is normally not known and also cannot be derived from the market. Level 2 For securities which cannot be valued through prices Liabilities created on the market (mostly regarding securities traded on stock exchanges and on functioning Level 2 markets), the fear value is determined in accordance For liabilities which are not accounted for at fair with the discounted cash flow method. This means value, the fair value is determined according to that the future projected cash flows are discounted by the discounted cash flow method. This means that means of suitable discount factors in order to calculate the future projected cash flows are discounted the fair value. In this case, adequate credit spreads per by means of suitable discount factors in order to bond issuer are flowing in. The credit spread is primar- calculate the fair value. In the case of securitised ily derived for illiquid securities from credit default liabilities, BTV‘s credit spread is used which orien- swaps. If no credit default swap spread is available, the tates itself with the spreads of bond issues payable calculation of the credit spread is made via comparable at the time. financial instruments from comparable issuers available on the market. Furthermore, external valuations Level 3 by third parties are also taken into consideration which In the same way as the non-securitised loans, the however have indicative character at any rate. non-securitised liabilities to customers and banks are also components of level 3. These products are Level 3 also generally not valued at market value. The crea- At level 3, the fair value calculation takes place via tion of a fair value also takes place by means of the models, whereby a part of the input parameters discounted cash flow method whereby the credit contains data not observable on the market and, spread remains disregarded here. Group financial statements financial Group

BTV Business Report 2014 144 |145 42 Fair value hierarchy of financial instruments, Prices listed Valuation Valuation which are not valued at fair value as at 31 December in active markets methods based methods not 2014 in €000s on market data based on market data Financial assets not valued at fair value Loans to Credit Institutions 0 0 276,423 Loans to clients 0 0 6,916,304 Financial assets held until maturity 800,149 0 0 Overall financial assets not valued at fair value 800,149 0 7,192,727

Financial liabilities not valued at fair value Liabilities to credit institutions 0 0 1,442,880 Liabilities to clients 0 0 5,551,723 Securitised debt 0 580,884 0 Subordinated capital 0 183,507 0 Overall liabilities not valued at fair value 0 764,391 6,994,603

Fair value hierarchy of financial instruments, Prices listed Valuation Valuation which are not valued at fair value as at 31 December in active markets methods based methods not 2013 in €000s on market data based on market data Financial assets not valued at fair value Loans to Credit Institutions 0 0 323,088 Loans to clients 0 0 6,881,828 Financial assets held until maturity 829,821 45,186 0 Overall financial assets not valued at fair value 829,821 45,186 7,204,916

Financial liabilities not valued at fair value Liabilities to credit institutions 0 0 1,744,778 Liabilities to clients 0 0 5,423,886 Securitised debt 0 467,988 0 Subordinated capital 0 253,086 0 Overall liabilities not valued at fair value 0 721,074 7,168,664

146 foresight Group Management report Group financial statements

43 Term to maturity breakdown

Assets as at 31 December 2014 overnight < 3 months 3 months – 1- 5 years > 5 years Total in €000s 1 year

Loans to Credit Institutions 42,620 160,630 50,094 20,635 0 273,979 Loans to clients 1,050,324 500,802 1,154,453 1,906,438 1,774,491 6,386,508 Trading assets 0 5,378 1,434 19,896 11,725 38,433 Financial assets - at fair value 128 0 4,384 134,736 2,960 142,208 through profit or loss Financial assets - available for sale 41,255 28,129 127,616 738,644 327,432 1,263,076 Financial assets – held to maturity 0 31,020 80,256 371,846 258,650 741,772

Total assets 1,134,327 725,959 1,418,237 3,192,195 2,375,258 8,845,976

Liabilities as at 31 December overnight < 3 months 3 months – 1- 5 years > 5 years Total 2014 in €000s 1 year

Liabilities to credit institutions 273,921 427,824 285,306 347,161 60,479 1,394,692 Liabilities to clients 3,053,923 1,199,556 659,343 480,907 133,302 5,527,031 Securitised debt 0 24,609 117,340 549,144 321,478 1,012,571 Trading liabilities 0 2,980 1,517 10,820 489 15,806 Subordinated capital 0 0 57,971 214,013 106,968 378,952

Total liabilities 3,327,844 1,654,969 1,121,477 1,602,045 622,716 8,329,052 Group financial statements financial Group

BTV Business Report 2014 146 |147 Assets as at 31 December 2013 overnight < 3 months 3 months – 1- 5 years > 5 years Total in €‘000 1 year Loans to Credit Institutions 167,473 118,768 4,975 30,634 0 321,850 Loans to clients 1,198,311 424,232 1,009,606 1,925,176 1,847,218 6,404,543 Trading assets 0 5,360 1,214 18,954 1,680 27,208 Financial assets - at fair value 301 0 14,600 132,217 8,105 155,223 through profit or loss Financial assets - available for sale 72,835 49,127 88,093 610,065 386,577 1,206,697 Financial assets – held to maturity 0 99,992 112,216 333,999 300,055 846,262

Total assets 1,438,920 697,479 1,230,704 3,051,045 2,543,635 8,961,783

Liabilities as at 31 December overnight < 3 months 3 months – 1- 5 years > 5 years Total 2013 in €‘000 1 year

Liabilities to credit institutions 208,152 842,619 559,243 94,890 47,800 1,752,704 Liabilities to clients 2,987,851 1,219,764 588,804 535,333 88,006 5,419,758 Securitised debt 0 32,854 75,169 538,661 227,807 874,491 Trading liabilities 0 4,378 4,232 11,657 1,176 21,443 Subordinated capital 0 20,320 86,475 209,651 91,395 407,841

Total liabilities 3,196,003 2,119,935 1,313,923 1,390,192 456,184 8,476,237

148 foresight Group Management report Group financial statements

44 bodies of BTV AG

The following members of the Board of Directors and the Supervisory Board were active for BTV during 2014:

Chairman Consul Peter Gaugg – Spokesman for the Board Mag. Matthias Moncher, Member of the Board of Directors Gerhard Burtscher, Member of the Board of Directors

Supervisory Board

Honorary Presidents Honorary Chairman Dr Hermann Bell, Linz † Dr Heinrich Treichl, Vienna (died on 2 November 2014)

Chairman Consul Kommerzialrat Chief Executive Dr Franz Gasselsberger, MBA, Linz

Deputy Consul Kommerzialrat Chief Executive Business School Graduate Dr Heimo Johannes Penker, Klagenfurt (until 14 May 2014) Consul Board Chairwoman Mag. Dr Herta Stockbauer, Klagenfurt (as from 14 May 2014)

Members Mag. Pascal Broschek, Fieberbrunn Dipl.-Ing. Johannes Collini, Hohenems Franz Josef Haslberger, Freising (D) (from 11 May 2012) Univ.-Prof. Dr Waldemar Jud, Graz Dr Dietrich Karner, Vienna RA Dr Andreas König, Innsbruck Consul General „Councillor of Commerce“ Business School Graduate Dr Johann F. Kwizda, Vienna Dr Edgar Oehler, Balgach (CH) Director Karl Samstag, Vienna Councillor of Commerce Hanno Ulmer, Wolfurt

Employee representative Harald Gapp, Chairman of the Central Works Council, Innsbruck Alfred Fabro, Deputy Chairman of the Works Council, Wattens Harald Praxmarer, Deputy Chairman of the Works Council, Neustift im Stubaital Stefan Abenthung, Götzens Birgit Fritsche, Nüziders Bettina Lob, Vils

Government commissioner statements financial Group Government commissioner Privy councillor Dr Erwin Trawöger, Innsbruck Deputy: Privy Councillor Dr Elisabeth Stocker, Innsbruck

BTV Business Report 2014 148 |149 45 presentation of holdings as at 31 December 2014

As at 31 December 2014, the company had holdings in at least 20% of the shares in the following companies which are included in the Group accounts and are also insignificant as a whole:

name of company and registered office Total capi- Direct capi- Equity Results Reporting tal holding tal holding in €000s1 in €000s2 date a) Affiliated companies 1. Domestic financial institutions: BTV Real-Leasing VI Gesellschaft m.b.H., Vomp 100.00 % 855 18 31.12.2014 2. Other domestic companies: Beteiligungsholding 3000 GmbH, Innsbruck 100.00 % 100.00 % 7,587 12 30.11.2014 Beteiligungsverwaltung 4000 GmbH, Innsbruck 100.00 % 4,198 –212 30.11.2014 Stadtforum Tiefgaragenzufahrt GmbH, Innsbruck 100.00 % 100.00 % 35 9 31.12.2014 Mayrhofner Bergbahnen Aktiengesellschaft, 50.52 % 63,378 4,482 30.11.2013 Mayrhofen Freiraum I GmbH, Mayrhofen 50.52 % 36 13 30.11.2013 KM Immobilienservice GmbH, Innsbruck 100.00 % 6 –21 31.12.2013 KM Immobilienprojekt IV GmbH, Innsbruck 100.00 % 540 –35 31.12.2013 Miniaturpark Bodensee GmbH, Meckenbeuren 100.00 % 0 437 31.12.2013 PV Management GmbH, Innsbruck 5 100.00 % 100.00 % 26 6 31.10.2014 C3 Logistik GmbH, Innsbruck 100.00 % 158 –125 30.09.2014 IC Telfs-Untermarkt Grundverwertungs GmbH, 100.00 % –339 293 31.12.2013 Innsbruck Dr Wilhelm Greil Straße 4 in Innsbruck, 100.00 % 99.71 % Immobilienverwaltungs GmbH, Innsbruck 3) 3. Other foreign companies: AG für energiebewusstes Bauen AGEB, Staad 50.00 % 165 –11 30.06.2014 KM Beteiligungsinvest AG, Staad 100.00 % 25,104 –11 31.12.2014

150 foresight Group Management report Group financial statements

name of company and registered office Total capi- Direct capi- Equity in Results in Reporting date tal holding tal holding €000s1 €000s2 b) Associated companies Other domestic companies: Beteiligungsverwaltung Gesellschaft m.b.H., Linz 30.00 % 30.00 % 13,703 625 31.12.2014 DREI-BANKEN-EDV Gesellschaft m.b.H., Linz 30.00 % 30.00 % 3,488 –13 31.12.2014 3-Banken Beteiligung Gesellschaft m.b.H., Linz 30.00 % 20,110 245 31.12.2014 SHS Unternehmensberatung GmbH, Innsbruck 25.00 % 846 446 31.12.2013 Sitzwohl in der Gilmschule GmbH, Innsbruck 25.71 % 22 117 30.09.2014 Montafoner Kristberg-Bahn Silbertal Gesellschaft 32.29 % 570 74 30.04.2014 m.b.H., Silbertal Montafon Tourismus GmbH, Schruns 27,71 % –185 –287 31.12.2013

1 E quity in the sense of Section 229 of the Austrian Commercial Code (UGB) plus untaxed reserves 2 Annual profit/loss after taxes on income, before transfer to reserves or application of results, for fiscal entities and non-limited companies annual profit before taxes. 3 Company established in 2014, first balance sheet on 31 December 2015

Innsbruck, 16 March 2015

The Board of Directors

Peter Gaugg Mag. Matthias Moncher Gerhard Burtscher Board Spokesperson Member of the Board Member of the Board

Spokesperson for the Board of Member of the Board of Directors Member of the Board, responsible Directors with responsibility with responsibility for risk, pro- for retail client business in Tyrol, for corporate client business in cess, IT and cost management; The Vorarlberg, Vienna and italian clients; Vorarlberg, Innsbruck, South Tyrol departments for finance and Corporate client business in and Vienna; Corporate and private controlling, legal matters and Tiroler Oberland and Unterland; customer business Southern investments and group audit; Corporate and private customer Germany; Corporate audit, Compliance and money laundering. business in Switzerland; Human resources, Marketing & Institutional Clients and Banks, statements financial Group Communications divisions; Corporate audit; Compliance Compliance and money laundering. and money laundering.

BTV Business Report 2014 150 |151 Declaration by the statutory representatives pursuant to Section 82 (4) and 87 (1) BörseG (Stock Exchange Act)

We confirm that to the best of our knowledge the We confirm that to the best of our knowledge that group accounts, drawn up in accordance with the the accounts of the parent company, drawn up in statutory accounting standards provides a true accordance with the statutory accounting stand- picture of the assets, financial and profit situation ards provides a true picture of the assets, financial of the group, that the management report presents and earnings situation of the company, that the the course of business, the results of business activ- management report presents the course of busi- ities and the situation of the group in a way which ness, the results of business activities and the situa- provides a true and fair view of the assets, financial tion of the company in a way which provides a true and earnings situation of the group, and that the and fair view of the assets, financial and earnings management report discloses all significant risks situation of the company, and that the manage- and uncertainties to which the group is exposed. ment report discloses all significant risks and uncertainties to which the company is exposed.

Innsbruck, 16 March 2015

The Board of Directors

Peter Gaugg Mag. Matthias Moncher Gerhard Burtscher Board Spokesperson Member of the Board Member of the Board

Spokesperson for the Board of Member of the Board of Directors Member of the Board, responsible Directors with responsibility for with responsibility for risk, for retail client business in Tyrol, corporate client business in process, IT and cost management; Vorarlberg, Vienna and italian clients; Vorarlberg, Innsbruck, South Tyrol The departments for finance and Corporate client business in Tiroler and Vienna; Corporate and private controlling, legal matters and Oberland and Unterland; Corpo- customer business Southern investments and group audit; rate and private customer business Germany; Corporate audit, Compliance and money laundering. in Switzerland; Institutional Clients Human resources, Marketing & and Banks, Corporate audit; Communications divisions; Compliance and money laundering. Compliance and money laundering.

152 foresight Group Management report Group financial statements

Report from independent auditors

Audit Certificate Responsibility of the group auditors and description of the type and scope of the legal annual audit Report on Group Accounts Our responsibility consists of issuing an audit We have audited the attached group accounts for opinion on these group financial statements on the basis of our audit. We carried out our audit in Bank für Tirol und Vorarlberg AG Aktiengesellschaft, accordance with the legal provisions which apply Innsbruck, in Austria and the International Standards on Audit- ing (ISAs) issued by the International Auditing and Audited for the financial year from 1 January to 31 De- Assurance Standards Board (IAASB) of the Inter- cember 2014 including the underlying bookkeeping. national Federation of Accountants (IFAC). These These group financial statements include the group principles require that we adhere to professional balance sheet on 31 December 2014, the group profit standards and plan and carry out the audit in such and loss statement, the group cash flow statement and a manner that we have sufficient assurance to be the statement of changes in the group equity for the able to form an opinion as to whether the group financial year ending 31 December 2014, as well as the financial statements are free from any material notes to the group accounts. misrepresentation.

Legal representatives‘ responsibility for the group An audit includes carrying out checks to provide accounts and the bookkeeping audit evidence of amounts and other information The legal representatives of the company are re- provided in the group financial statements. The sponsible for the maintenance of the books for the choice of audit checks is governed by the duty of group as well as for preparing the group accounts, judgement on the group account auditors taking which are to reflect a true picture of the assets, into account their assessment of the risk of material financial and earnings situation of the group, in misrepresentations being present, whether due to accordance with the International Financial Report- deliberate or unintentional errors. In undertaking ing Standards (IFRSs), as applied in the EU. This this risk assessment, the group accounts auditor responsibility includes: Design, implementation must also take into consideration the internal con- and enforcement of an internal control system, as trol system, insofar as it affects the creation of the required to support creation of the group accounts group financial statements and the presentation of which present a true picture of the assets, financial a true picture of the assets, financial and earnings and earnings situation of the group, so that these situation of the group, in order to determine suit- are free of any material misrepresentations, wheth- able audit checks to carry out appropriate to the er due to deliberate or unintentional errors; the circumstances, but not in order to provide an audit choice and application of appropriate accounting opinion on the effectiveness of the internal con- policies and valuation methods; the preparation trols themselves within the group. The audit also of estimates which appear suitable taking existing includes an opinion on the appropriateness of the circumstances into consideration. accounting policies and valuation methods applied and all material assessments made by the legal representatives, as well as an evaluation of the overall presentation of the group financial statements. We believe that we obtained sufficient and suitable

verification with our audit, so that our audit provides a statements financial Group reasonably sound basis for our audit opinion.

BTV Business Report 2014 152 |153 Audit opinion Opinion on the Group Management Report Our audit did not lead to any objections. Based on the The group management report is to be audited results of our audit, in our judgement the group finan- according to the legal requirements as to whether cial statements are in accordance with legal require- it is in accordance with the group financial statements and provide a true and fair view of the assets ments and whether the further information in the and financial situation of the group as at 31 December management report does not provided a mislead- 2014 as well as the earnings position of the group ing picture of the group situation. The audit cer- and the group‘s cash flows for the financial year from tificate must also contain an opinion as to whether 1 January to 31 December 2014 in accordance with the consolidated management report is consistent International Financial Reporting Standards (IFRS), as with the consolidated financial statements and applied in the EU. whether the data are accurate, pursuant to Section 243a UGB.

In our judgement the group management report is consistent with the group financial statements. The data are accurate, pursuant to Section 243a UGB.

Innsbruck, 16 March 2015

KPMG Austria GmbH Auditing and tax advisory company

Mag. Ulrich Pawlowski Auditor

Mag. Peter Humer, CIA Auditor

154 foresight Group Management report Group financial statements

Report from the supervisory board

The Supervisory Board has carried out the tasks tives of members of the Board of Directors from required of it by the law and the company statutes 28 November 2014 to 31 December 2015 and as while adhering to the regulations of the current members of the Board of Directors from 1 January version of the Austrian Code of Corporate Govern- 2016 for an appointment term of three years, which ance. The Board of Directors reported regularly on proposal was unanimously adopted in the Super- the progress of business and the situation of the visory Board‘s meeting on 28 November 2014. In company and the group. In particular, the develop- addition, the appointments committee fulfilled the ment of the economic environment as well as the duties otherwise assigned to it under the Banking implementation of the regulatory specifications, Act to their full extent. The risk and credit com- emphasis on Basel III, were again at the centre and mittee met once, as planned, and fully performed were comprehensively discussed and debated at during the financial year the duties assigned to the meetings of the supervisory board and its com- it especially under the Banking Act, particularly mittees. During the financial year, the supervisory advising management on risk appetite and risk board convened each quarter, whereby the Board strategy and monitoring the implementation of the of Directors has also been communicating outside risk strategy, and checking the appropriateness of the sessions of the supervisory board and its com- the pricing and of the risk incentives inherent in the mittees with the supervisory board in particular in remuneration system. The meetings and decisions relation to significant events. of the committees of the Supervisory Board were reported to the plenum of the Supervisory Board at Both the Working Committee and the Risk and the respective subsequent meeting. Loans Committee of the supervisory board have continuously monitored the business events which To permanently ensure the professional suitability required its approval. In addition, the auditing of members of the Supervisory Board and manage- committee met twice, as planned, and has per- ment of BTV, educational and training courses run formed its legally required audit and monitoring by both external and in-house lecturers took place tasks to the fullest extent, particularly in relation throughout the year. to the internal control system, the risk management system, the accounting process as well as The auditor of the financial statements, KPMG the corporate governance report. The remunera- Austria GmbH Auditor and Accounting Company, tion committee met twice and fully performed Innsbruck, has checked the book-keeping, the in- during the financial year the duties assigned to it dividual and the group financial statements as well especially through the Banking Act, especially the as the individual and group management reports passing, auditing and controlling of the principles for the company. The audit conformed to the legal of the remuneration policy as well as the measur- requirements and did not give rise to any objec- ing of the variable remuneration of the Members of tions. The financial statements are accompanied by the Board. The appointments committee also met an unqualified opinion. twice and, owing to the expiry of the mandates of Mr Peter Gaugg and Mag. Matthias Moncher on 31 At its meeting on 27 March 2015, the auditing com- December 2015, as part of a structured recruitment mittee examined the individual and group financial process, proposed the entire succession of BTV‘s statements and the individual and group manage- Board of Directors to the plenum of the Supervi- ment reports of the company and also the Corpo- sory Board and to extend the appointment term rate Governance report and recommended the statements financial Group of Mr Gerhard Burtscher until 31 December 2019 findings from the annual financial statements to and to appoint him as spokesperson of the Board the full meeting of the Supervisory Board, in which of Directors from 1 January 2016 and to appoint Mr regard this was reported to the full meeting of the Mario Pabst and Mr Michael Perger as representa- Supervisory Board accordingly.

BTV Business Report 2014 154 |155 The Supervisory Board adopts the results of the au- The recommendation of the Board of Directors to dit, declares that it is in agreement with the finan- pay out a dividend of €0.30 per share for the year cial statements presented by the Board of Directors 2014, i.e. €7,500,000.00 and to carry forward the re- including management report and approves the fi- sidual profit is endorsed by the Supervisory Board. nancial statements for 2014 for the company, which are thereby established as required by Section 96 para 4 of the Share Act. Innsbruck, 27 March 2015

The Supervisory Board had available to it copies of The Supervisory Board the Financial Statements and Management Report, drawn up as required by the Austrian company legal requirements. The Financial Statements show at 31 December 2014 a true and fair view of the capital and financial situation of the Bank für Tirol Dr Franz Gasselsberger, MBA Chairman und Vorarlberg Aktiengesellschaft. A similar view for the time period 1 January up to 31 December 2014 is provided by the attached comments on the earnings situation. The audit carried out by KPMG Austria GmbH Auditing and Accounting Company, Innsbruck, did not give rise to any objections.

156 foresight Group Management report Group financial statements

BTV Group - a 5-year overview

BALANCE SHEET € million 2014 2013 2012 2011 2010

Total assets 9,598 9,592 9,496 9,215 8,887 Loans to Credit Institutions 274 322 467 282 235 Loans to clients 6,387 6,405 6,387 6,214 5,940 Risk provisions –199 –207 –194 –184 –165 Financial assets - 142 155 203 203 226 at fair value through profit or loss Financial assets - available for sale 1,263 1,207 1,111 1,034 1,005 Financial assets – held to maturity 742 846 788 909 965 Shares in at-equity valued companies 427 376 319 297 277 Liabilities to credit institutions 1,395 1,753 1,812 1,601 1,795 Liabilities to clients 5,527 5,420 5,395 5,373 4,881 Securitised debt 1,013 874 749 776 804 Subordinated capital 379 408 439 479 483 Equity 1,004 933 846 767 676 Primary funds 6,919 6,702 6,583 6,628 6,168 Volume of securities held in deposit for customers 5,237 4,830 4,786 4,343 4,521

Profit & Loss Statement in € million 2014 2013 2012 2011 2010

Net interest income 182.3 180.2 164.3 164.6 146.6 Loan-loss provisions in the credit business –29.0 –46.9 –39.9 –37.1 –42.1 Net commission income 43.7 45.3 42.3 42.5 43.3 Trading income 0.8 1.0 3.2 0.6 2.8 Operating expenses –139.6 –96.0 –92.8 –94.8 –90.9 Other operating profit 30.0 –2.3 –2.4 –1.2 1.8 Profit arising from financial assets – 0.2 2.5 7.8 –6.7 2.6 at fair value through profit or loss Profit arising from financial assets – 1.9 2.5 –8.5 –3.2 –1.2 available for sale Profit arising from financial assets – –0.4 –0.0 –3.8 0.0 –1.2 held to maturity Annual net profit before tax 89.8 86.3 70.1 64.7 61.8 Group net profit for the year 76.1 68.5 60.7 53.5 49.2 Dividend paid by BTV AG 7.5 7.5 7.5 7.5 7.5 Group financial statements financial Group

BTV Business Report 2014 156 |157 Equity under CRR/Austrian Banking Act 2014 (CRR) Ø Lending Ø Lending Ø Lending Ø Lending (BWG) in € million and market and market and market and market risk equiva- risk equiva- risk equiva- risk equivalent pursuant lent pursuant lent pursuant lent pursuant to section 22 to section 22 to section 22 to section 22 BWG BWG BWG BWG Risk-adjusted assessment basis 6,213 6,055 5,992 6,387 6,038 Qualifying equity 930 964 995 935 853 Common equity ratio in % 12.81 % n. a. n. a. n. a. n. a. Core capital ratio in % 12.81 % 13.33 % 12.45 % 11.22 % 8.89 % Total capital ratio in % 14.97 % 15.93 % 16.61 % 14.63 % 14.13 %

company key indicators 2014 2013 2012 2011 2010

Earnings per share in € 3.04 2.74 2.44 2.16 1.98 Return on Equity before tax 9.27 % 9.50 % 8.69 % 8.96 % 9.59 % Return on Equity after tax 7.86 % 7.54 % 7.52 % 7.42 % 7.63 % Cost/income ratio 54.4 % 42.8 % 44.2 % 45.6 % 47.2 % Risk/earnings ratio 15.9 % 26.0 % 24.3 % 22.5 % 28.7 % Weighted average number of employees 1,195 793 805 816 819 Number of branches 38 37 37 40 41

Explanation: n.s. = not shown

158 foresight Group Management report Group financial statements

3 Banks shareholder structure

BTV Shareholder structure by VOTING RIGHTS

41.70 % CABO Beteiligungsgesellschaft 15.10 % BKS Bank AG, Klagenfurt *) GmbH, Vienna

14.69 % Oberbank AG, Linz *)

15.12% Generali 3 Banken Holding AG, Wien *)

10.46 % Widely spread shareholdings 2.53 % Wüstenrot Wohnungswirtschaft reg. Gen.mbH, Salzburg *) 0.40 % BTV Private Foundation

oberbank by VOTING RIGHTS

32.54 % CABO Beteiligungsgesellschaft 18.51% BKS Bank AG, Klagenfurt *) GmbH, Vienna

18.51% BTV AG, Innsbruck *)

5.13 % Wüstenrot Wohnungswirtschaft 19.28 % Widely spread shareholdings reg. Gen.mbH, Salzburg *) 3.82 % Employee holdings 2.21% Generali 3 Banken Holding AG, Vienna

bks bank by VOTING RIGHTS

26.81 % CABO Beteiligungsgesellschaft 19.44 % Oberbank AG, Linz *) GmbH, Vienna

6.74 % UniCredit Bank Austria AG, Vienna 19.57 % BTV AG, Innsbruck *) Group financial statements financial Group 16.13 % Widely spread shareholdings 7.84 % Generali 3 Banken Holding AG, Vienna *) 0.37 % BKS-Belegschaftsbeteiligungsprivatstiftung 3.10 % Wüstenrot Wohnungswirtschaft reg. Gen.m.b.H., Salzburg

*) Shareholders who form part of the syndicate agreement.

BTV Business Report 2014 158 |159 Overview of 3 Banken Group – Group information

BKS Bank Oberbank BTV

Profit and loss in € million 2014 2013 2014 2013 2014 2013

Net interest income 157.3 146.2 372.9 335.6 182.3 180.2 Loan-loss provisions in the credit business –49.5 –42.7 –78.0 –70.6 –29.0 –46.9 Net commission income 44.7 45.4 119.3 114.6 43.7 45.3 Operating expenses –105.8 –100.8 –236.9 –231.0 –139.6 –96.0 Other operating income/expenditure –2.5 –7.3 –25.0 –12.1 30.0 –2.3 Annual net profit before tax 51.2 45.5 157.6 141.7 89.8 86.3 Consolidated annual profit after tax 46.6 40.6 136.5 122.4 76.1 68.5

Profit & Loss Statement in € million

Total assets 6,864.5 6,743.8 17,774.9 17,531.8 9,597.7 9,591.8 Loans and advances to clients after loan loss provisions 4,828.9 4,874.2 11,801.8 11,277.9 6,187.2 6,197.4 Primary funds 5,013.0 4,597.5 12,288.6 12,250.4 6,918.6 6,702.1 of which savings deposits 1,705.5 1,741.2 3,098.5 3,352.1 1,176.3 1,175.8 of which securitised debt including 789.1 813.9 2,295.0 2,224.4 1,391.5 1,282.3 subordinated capital Equity 805.7 714.2 1,534.1 1,421.0 1,004.4 932.7 Managed deposits 12,972.0 11,383.4 23,441.9 22,787.5 12,155.4 11,532.0 of which customer deposits 7,959.0 6,785.9 11,153.3 10,537.1 5,236.8 4,829.9

Equity under CRR/Austrian Banking Act (BWG) in € million

Basis for measuring capital 4,846.6 4,423.3 11,935.2 10,734.0 6,212.8 6,055.4 Equity 580.9 707.6 1,874.4 1,824.8 930.1 964.4 of which common equity (CET1) 543.7 n. a. 1,306.9 n. a. 796.1 n. a. of which total core capital (CET1 and AT1) 543.7 662.5 1,385.2 1,320.6 796.1 807.0 Common equity ratio in % 11.22 % n. a. 10.95 % n. a. 12.81 % n. a. Core capital ratio in % 11.22 % 13.92 % 11.61 % 12.30 % 12.81 % 13.33 % Total capital ratio in % 11.99 % 16.00 % 15.70 % 17.00 % 14.97 % 15.93 %

Company key indicators in%

Return on Equity before tax 6.74 % 6.49 % 10.68 % 10.31 % 9.27 % 9.50 % Return on Equity after tax 6.13 % 5.79 % 9.25 % 8.91 % 7.86 % 7.54 % Cost/income ratio 52.7 % 54.3 % 50.1 % 52.1 % 54.4 % 42.8 % Risk/earnings ratio 31.5 % 29.2 % 20.9 % 21.1 % 15.9 % 26.0 %

Number of resources

Weighted average number of employees 915 910 2,004 2,001 1,195 793 Number of branches 57 56 156 150 38 37

Explanation: n.s. = not shown

160 Imprint

Bank für Tirol und Vorarlberg Aktiengesellschaft Media owner (Publisher) Bank für Tirol und Vorarlberg AG Stadtforum 1 Stadtforum 1 6020 Innsbruck 6020 Innsbruck

T +43/5 05 333-0 Design F +43/5 05 333-1180 BTV Marketing & Communication (page 1–22) SWIFT/BIC: BTVAAT22 Mag. Barbara Riesner Routing no.: 16000 Data processing register: 0018902 BTV Finanzen & Controlling (pages 23–161) Commercial register no.: 32.942w Mag. Hanna Meraner Tax ID: ATU 317 12 304 MA (Ms) Reinhard Auer [email protected] MA Martin Wurzer www.btv.at Design BTV Marketing & Communication Notes Markus Geets Any reference in the company reports to a person (e.g. he, him) is intended to apply equally to wom- Photographs en and men. Nicolò Degiorgis (pages 3–5) Ötztal Tourismus/Albin Niederstrasser (p. 8) In the BTV company report there may be slightly BTV/Julia Hammerle (p. 8) differing values between tables or charts. Tyrolit (p. 9) Voyage Air (p. 9) This report contains forward-looking statements fotowerk aichner (pages. 10, 15) relating to the future performance of BTV. These Markus Bstieler (p. 10) Flying Colours Ltd/Getty Images (p. 17) statements reflect estimates which have been Dietmar Mathis (p. 18) made on the basis of all information available to us Raimo Rudi Rumpler (p. 18) on the reporting date. Should the assumptions un- Clemens Ascher (p. 18) derlying such forward-looking statements prove hemis.fr/Getty Images (p. 22) incorrect, or should risks materialise to an extent not anticipated, actual results may vary from those Printing expected at present. Pircher Druck, Ötztal-Bahnhof

Final version 16 March 2015

BTV Business Report 2014 160 |161 FORESIGHT BUSINESS REPORT 2014

ADDRESSES BUSINESS REPORT 2014 KEY INDICATORS 2014 Bank für Tirol und Vorarlberg AG The BTV Group at a glance Shareholder structure Nuremberg

ADDRESSES BUSINESS REPORT 2014 KEY INDICATORS 2014 Bank für Tirol und Vorarlberg AG