111 PICTURES THE HISTORY OF HYPO TIROL BANK 1 2 3 111 PICTURESBILDER AUS DER GESCHICHTE THE HISTORY OF DER HYPO TIROL HYPO TIROL BANK 7 BANK 8 12 13 14 18 19 20 4 5 6 9 10 11 15 16 17 111111 PICTURESBILDER AUS DER GESCHICHTE THE HISTORY OF DER HYPO TIROL HYPO TIROL BANK 21 BANK 22 23 24 25 111111 PICTURESBILDER AUS DER GESCHICHTE THE HISTORY OF DER HYPO TIROL HYPO TIROL BANK 29 30 BANK 34 35 36 40 41 42 26 27 28 31 32 33 37 38 39 111 PICTURESBILDER AUS DER GESCHICHTE THE HISTORY OF DER HYPO TIROL HYPO TIROL BANK BANK 43 44 45 46 47 50 51 52 111 PICTURESBILDER AUS DER GESCHICHTE THE HISTORY OF DER HYPO TIROL HYPO TIROL BANK BANK 56 57 61 62 63 111 PICTURESBILDER AUS DER GESCHICHTE THE HISTORY OF DER HYPO TIROL HYPO TIROL BANK 48 BANK 49 53 54 55 58 59 60 64 65 66 67 68 69 111 PICTURESBILDER AUS DER GESCHICHTE THE HISTORY OF DER HYPO TIROL HYPO TIROL BANK BANK 73 74 78 79 80 83 84 85 70 71 72 75 76 77 111 PICTURESBILDER AUS DER GESCHICHTE THE HISTORY OF DER HYPO TIROL HYPO TIROL BANK 81 82 BANK 86 87 88 89 90 91 95 96 97 101 102 103 111 PICTURESBILDER AUS DER GESCHICHTE THE HISTORY OF DER HYPO TIROL HYPO TIROL BANK 107 BANK 108 92 93 94 98 99 100 104 105 106 109 110 111 INTRO DUCTION Dear Tyroleans! Dear clients of Hypo Tirol Bank! 2012 was a decisive year in the history of Hypo Tirol Bank. Decisive - because the Province of the Tyrol in its posi- tion as the owner of the bank realised the approved equity capital contribution; decisive - because the European Commission approved and supported this capital contribution; and above all decisive - because we have already achieved some success regarding the new alignment of the bank. The result we achieved in 2012 is satisfying. Needless to say, this result was influenced by substantial restructuring expenses. With regard to 2013, we expect that the measures that have been taken will soon lead to higher results. Due to the fact that we have succeeded in reducing the balance sheet total and the risk-adjusted assets considerably, the owner, the Province of the Tyrol, has received dividends in the amount of 12 million Euros. Subsequent to the deduction of dividends, the bank’s core capital rate has amounted to 9.5 %. Therefore, I would like to thank all our employees for their commitment in the course of these challenging months and for their support to implement the strategies which are required to bring about a change. Moreover, the report written by the European Commission has confirmed, that the owner and the Supervisory Board have chosen the right way; and we will all consequently pursue that way in the forthcoming years. In this context, main emphasis is put on the needs of our clients in the core market of the Tyrol, and we want to convince our clients by offering them up-to-date products, fair conditions and the highest level of service quality. HYPO TIROL BANK AG The Province of the Tyrol is not the only institution that benefits from a successfully operating Hypo Tirol Bank, because the Federal State Bank also makes a major contribution to the economic development by granting loans. 99 % of all Tyrolean companies are small and medium-sized enterprises. Investments that are made by the local tourism enterprises and by more than 35,000 small and medium sized enterprises have to be supported. Therefore, money at reasonable conditions is needed – and it is provided by the Federal State Bank. In addition, a successful Federal State Bank safeguards assets for future generations on the long run. Going private would be like flogging the family silver. To run a regional company means to establish and to safeguard values for generations to come. A challenging year is behind us. The prospects for 2013 and the upcoming years are good; however, greatest efforts that must be made by the entire company will still be required combined with the consequent and unconditional implementation of the initiated measures. The foundation for the positive development was laid by the Province of the Tyrol in December 2011, when it clearly acknowledged the Federal State Bank. Once again, I would like to express my gratitude to the Tyrolean Diet, the Tyrolean Government and in particular to Governor Günther Platter for making fast decisions that have been so favourable for the bank. Yours, Mag. Wilfried Stauder Supervisory Board Chairman of Hypo Tirol Bank CONSOLIDATED FINANCIAL STATEMENT 2012 Dr. Markus Jochum Chairman of the Managing Board of Hypo Tirol Bank If you review the year 2012 and the 111th anniversary of Hypo Tirol Bank, what have been the most pleasant and the most challenging events for you? Well, definitely 2012 was both, a very active and a very emotional year. The European Commission approved of a capital increase provided by the owner, the Province of the Tyrol. The negotiations in this respect were constructive and we were all on an equal footing. The positive conclusion was the confirmation on the part of the EU that we had chosen the right way. Brussels has also conformed to the realignment plan submitted by the bank, because it guarantees that Hypo Tirol Bank can engage in profit-making economic activities on the long run. The European Commission’s requirements correspond to the strategic align- ment indicated by the owner and the Supervisory Board. The primarily agreed capital contribution in the amount of EUR 230 million could be reduced to EUR 220 million. The difference of EUR 10 million was generated by ourselves, because, earlier than expected, we have successfully reduced the bank’s equity capital demand by means of volume reduction. Thus, for instance, the credit volume in Italy has already been reduced by EUR 120 million. Press reports and public discussions regarding the downrating by Moody’s belonged to the incidents in 2012 that were rather unpleasant. On the one hand, Moody’s generally does not consider the ownership of Provinces in federal state banks as good as they used to do, and on the other hand it regards the focus on the core market as a risk for strong competition on the own narrow market. However, even though we have expected the rating change, HYPO TIROL BANK AG we definitely do not agree with the degree of downrating. In this context, it is very important to point out once again that we have already initiated all necessary measures and strategic modifications to achieve an improved rating evaluation as soon as possible. What I experienced as most delightful were the numerous activities relating to the anniversary year. An overwhelming number of 133 running teams participated in the corporate challenge which signalized the lasting unbowed loyalty of employees, clients and partners of Hypo Tirol Bank. For us this was a sign of common will to move together, also in terms of further developing ourselves. And in this respect we clearly succeeded in achieving this goal because in 2012, once again a two-figure million result before taxation was generated. Therefore, I would like to express my gratitude to all people who support us with their positive power: my fellow colleagues of the Supervisory Board, the management executives and the numerous employees. Not to forget the works council and the Supervisory board, because without their commitment it would not have been possible to achieve the progress. The confidence that has been shown by the owner, the Province of the Tyrol by providing the capital contribution represents an additional stimulus for us to consequently pursue the way to consolidation in order to return to the road to success. CONSOLIDATED FINANCIAL STATEMENT 2012 Johann Peter Hörtnagl Member of the Managing Board of Hypo Tirol Bank In 2012, Italy represented a central subject – both, in the media and on an internal basis. What kind of pro- gress has been achieved? As a result of the extraordinary commitment provided by the expert team, which had been established to manage Italian business matters, we could achieve first partial success in 2012. For that reason, I would like to thank all committed team members from Austria and Italy for their cooperation. Even though we are currently facing a challenging economic situation in Italy, we have been able to return granted loans ahead of schedule. HYPO TIROL BANK AG In accordance with our strategy, the Italian branch office network was tightened up and the preparation works -re garding the closing of the branch offices in Trento and Verona were initiated. Therefore, in future, business activities in Italy will concentrate on South Tyrol with a branch office in Bolzano and two consulting centres in Bressanone and Merano. In this context the focus is put on SME-business, private residential building and sophisticated investment. Hypo Tirol Bank still stands by its Italian subsidiary; nevertheless, Hypo Tirol Bank Italy will return to the parent company and will be operated as an EU-branch office. The implementation of this measure required formal and above all structural and process related preparations, which kept us very busy in 2012. CONSOLIDATED FINANCIAL STATEMENT 2012 Mag. Johann Kollreider Member of the Managing Board of Hypo Tirol Bank Can you describe the conditions relating to the sales department in 2012? What where the challenges, the sales team was confronted with; how did the management provide support and what kind of success was achieved? As far as the sales department is concerned, the conditions in 2012 were definitely not optimal.