a perfect connection banking business...banking+business a perfect connection “in order to ensure...

www.rlbooe.at

Annual Report 2018

A PERFECT CONNECTION

BANKING+BUSINESS

2018 at a glance

Balance sheet 31.12.2018 Change 31.12.2017 31.12.2016IN EUR M IN % IN EUR M IN EUR M

Loans and advances to customers 20,586 10.93 18,557 17,094

Loans and advances to banks 8,306 –0.48 8,346 8,547

Amounts owed to customers 11,300 7.72 10,490 10,810

Amounts owed to banks 12,704 4.24 12,187 11,037

Liabilities evidenced by certificates and subordinated liabilities 8,164 8.29 7,539 7,173

Equity capital 3,055 3.78 2,944 2,769

Total assets 35,743 6.03 33,709 32,330

Average equity (in the financial year) 3,000 4.99 2,857 2,727

Average total assets (in the financial year) 34,726 5.17 33,020 31,299

Income statement 2018 Change 2017 2016IN EUR M IN % IN EUR M IN EUR M

Operating income 577 5.21 548 522

Operating expenses –314 0.09 –314 –299

Operating profit 262 11.93 234 223

Profit on ordinary activities 220 0.78 218 188

Pre-tax profit for the year on income and earnings 200 2.12 196 155

After-tax profit for the year 152 –28.10 212 122

Key figures 2018 Change 2017 2016IN % IN % POINTS IN % IN %

Operating profit / Ø Total assets 0.76 0.05 0.71 0.71

Profit from ordinary activities / Ø Total assets 0.63 –0.03 0.66 0.60

Pre-tax profit for the year* / Ø Total assets (RoA) 0.58 –0.01 0.59 0.50

After-tax profit for the year / Ø Total assets (RoA) 0.44 –0.20 0.64 0.39

Pre-tax profit for the year* / Ø Equity (RoE) 6.67 –0.20 6.87 5.69

After-tax profit for the year / Ø Equity (RoE) 5.08 –2.34 7.42 4.47

Equity 31.12.2018 Change 31.12.2017 31.12.2016 IN % / IN % POINTS

Common Equity Tier 1 capital (CET 1) in EUR millions 2,935 4.19 2,817 2,658Tier 1 capital in EUR millions 2,935 4.19 2,817 2,658Total capital in EUR millions 3,520 2.41 3,437 3,300Risk weighted assets (RWA total) in EUR millions 23,234 7.38 21,637 20,328

Common Equity Tier 1 (CET 1 ratio) in % 12.63 –0.39 13.02 13.08Tier 1 capital ratio in % 12.63 –0.39 13.02 13.08

Total capital ratio in % 15.15 –0.74 15.89 16.24

Long-/Short-term Moody’s rating 31.12.2018 31.12.2017

Baa1/P-2 Baa1/P-2

* Pre-tax profit for the year on income and earnings

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Balance sheet 31.12.2018 Change 31.12.2017 31.12.2016IN EUR M IN % IN EUR M IN EUR M

Loans and advances to customers 22,375 9.94 20,352 19,093

Loans and advances to banks 8,255 –1.16 8,352 8,499

Amounts owed to customers 12,720 5.53 12,054 12,564

Amounts owed to banks 12,955 5.04 12,333 11,082

Liabilities evidenced by certificates and subordinated liabilities 9,618 6.01 9,073 9,086

Equity capital 4,453 1.11 4,404 3,928

Total assets 41,988 4.14 40,319 39,385

Average equity (in the financial year)** 4,391 5.40 4,166 3,834

Average total assets (in the financial year)** 41,100 3.13 39,852 38,342

Income statement 2018 Change 2017 2016IN EUR M IN % IN EUR M IN EUR M

Operating income 1,162 –11.63 1,315 999

Operating expenses –795 5.02 –757 –740

Operating profit 367 –34.23 558 260

Pre-tax profit for the year 369 –30.90 534 244

After-tax profit for the year 299 –39.23 492 205

Comprehensive income 185 –64.08 515 239

Key figures 2018 Change 2017 2016IN % IN % POINTS IN % IN %

NPL ratio (non-performing loans ratio) 2.60 –1.82 4.42 5.86

Operating income / Ø Total assets** 2.83 –0.47 3.30 2.61

Pre-tax profit for the year / Ø Total assets (RoA)** 0.90 –0.44 1.34 0.64

After-tax profit for the year / Ø Total assets (RoA)** 0.73 –0.50 1.23 0.53

Pre-tax profit for the year / Ø Equity (RoE)** 8.40 –4.42 12.82 6.36

After-tax profit for the year / Ø Equity (RoE)** 6.81 –5.00 11.81 5.35

Consolidated equity*) (Banking group)

31.12.2018 Change 31.12.2017 31.12.2016 IN % / IN % POINTS

Common Equity Tier 1 capital (CET 1) in EUR millions 3,977 1.69 3,911 3,402

Tier 1 capital in EUR millions 3,979 1.74 3,911 3,402

Total capital in EUR millions 4,400 –0.29 4,413 3,964

Risk weighted assets (RWA total) in EUR millions 26,276 5.96 24,797 23,276

Common Equity Tier 1 (CET 1 ratio) in % 15.13 –0.64 15.77 14.62

Tier 1 capital ratio in % 15.15 –0.62 15.77 14.62

Total capital ratio in % 16.75 –1.04 17.79 17.03

Raiffeisenlandesbank Oberösterreich Group

* at the level of the uppermost financial holding (CRR Circle of RBG OÖ Verbund eGen)

** after taking into account the effects of the first-time application of IFRS 9

BANKING+BUSINESS

Foreword by Heinrich Schaller, CEO General Information

The Group Raiffeisenlandesbank of Upper Austria

Raiffeisen Banking Group Upper Austria

Annual Report 2018

In the digital age, we not only want to accompany trends, but above all to initiate them. Our customers therefore benefit from innovative financial solutions. In addition, with our strong network, we can offer them more than just banking services.

A PERFECT CONNECTION

BANKING+BUSINESS

Contents

General informationForeword by Heinrich Schaller, Chief Executive Officer 5

Responsibilities of the Managing Board 8

Foreword by Jakob Auer, President of the Supervisory Board of Raiffeisenlandesbank Oberösterreich 10

The Supervisory Board of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft 12

2018 in retrospect 14

Sustainability and Corporate Social Responsibility 16

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft GroupGroup Management Report 2018 of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft 20

IFRS Consolidated Financial Statements 2018 of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft 40

Raiffeisenlandesbank Oberösterreich AktiengesellschaftManagement Report 2018 of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft 184

Annual financial statements 2018 of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft 206

Statement of the Managing Board 236

Report of the Supervisory Board pursuant to section 96 of the Austrian Stock Corporation Act (AktG) 237

Raiffeisen Banking Group Upper Austria Report on business performance and the results in 2018 238

Glossary 244

Imprint 246

Annual Report 20184

BANKING+BUSINESSA perfectconnection

Foreword by Heinrich Schaller, Chief Executive Officer ____________________________________________ 5

The Managing Board of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft _________ 8

Foreword by Jakob Auer, President of the Supervisory Board of Raiffeisenlandesbank Oberösterreich ________________________________________________________________________________________________ 10

The Supervisory Board of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft ____________________________________________________________________________________________ 12

2018 in retrospect ____________________________________________________________________________________________ 14

Sustainability and Corporate Social Responsibility __________________________________________________ 16

General Information

Annual Report 2018 5




We set the benchmarks and thereby secure our success

Customers of Raiffeisenlandesbank Oberösterreich and of the Upper Austrian Raiffeisen banks found themselves in a very positive environment in 2018 as a result of the economic situation. As a strong partner and sustainable driving force, we were also able to benefit from this by supporting private individuals closely with their plans and also providing sup-port to companies in exploiting their business potential to the full at both the national as well as the international levels. In addition to providing customised financing solutions, we also provided support with equity and through our expertise and experience. This in turn allowed Raiffeisenlandesbank Oberösterreich to grow its operational customer business once again in 2018 and to increase total Group assets by 4.1 per cent year-on-year to just under EUR 42 billion.

We represent reliability and efficiency and we excel in our ability to bear risks

Yet reliability, integrity and stability, as well as a focus on the customer, are not the only things that we represent. In order to ensure optimum support for our customers, we work on improving our internal processes, our expertise and our ac-tivities on the market even further on a daily basis. Our own fi-nancial indicators are just as important in this process, based on healthy Tier 1 capital, efficient and targeted liquidity man-agement and comprehensive risk management, combined with modern controlling and compliance instruments.

Stable Tier 1 capital as a reflection of stability

The development of our Tier 1 capital (CET 1 ratio) is parti-cularly important to us as a reflection of a bank’s stability. This remains at a high level in the Group (banking group) in 2018 at 15.13 per cent. This is extremely encouraging with respect to the increase in investment finance by 10.2 per cent to EUR 14.9 billion. There are also negative effects in the cal-culation of the capital ratio at 2018 year end arising from first-time application of IFRS 9. The good Tier 1 capital position

was also confirmed by the European Central Bank, which classifies Raiffeisenlandesbank Oberösterreich as the only ”significant” Upper Austrian bank in the currency union, with the Bank now also undergoing its third EU-wide stress test in 2018. Raiffeisenlandesbank Oberösterreich performed better in the stress test than the average of the other banks exam-ined in the EU. It features strong capital ratios even under the difficult stress scenario in accordance with the ECB’s stipu-lated methods and international standards. The Tier 1 capital represents a valuable and central basis for further develop-ment going forward in our efforts as a stable bank partner to support customers with their plans and projects. Despite a fall, Raiffeisenlandesbank Oberösterreich was able to gen-erate very good results in the Group with a pre-tax profit for the year of EUR 368.9 million and an operating profit of EUR 367.5 million.

Evaluations taken into consideration

The 2018 annual balance sheet also takes into consideration the valuations that may be required as necessary in accor-dance with the international accounting regulations under the IFRS for companies accounted for under the equity method, with results of EUR 89.0 million recorded in the 2018 fi-nancial year, representing a fall of EUR 273.5 million. This fall is primarily attributable to the decline in stock prices for voestalpine AG as well as the impairment in the investment of the RBI Group.

Loan loss allowances remain at a low level

The active risk policy of Raiffeisenlandesbank Oberösterreich also had an effect on the profit for the year 2018. Although the loan loss allowances rose for instance by EUR 12.6 million compared with the previous year, they continued to be held at a low level of EUR –57.9 million. The expected credit loss model is being taken into consideration as of the 2018 finan-cial year pursuant to IFRS 9.

Annual Report 20186


“In order to ensure optimum support for our customers we work on improving our internal processes, our expertise and our activities on the market even further on a daily basis. Our own financial indicators are just as important in this process, based on healthy Tier 1 capital, efficient and targeted liquidity management and comprehensive risk management combined with modern controlling and compliance instruments.”





New branch offices

Raiffeisenlandesbank Oberösterreich has opened a new branch in Stuttgart so that it can provide intensive support to companies that are focused on growth and that require financing models oriented towards the customer and the future in the dynamic economic region of Baden-Württem-berg; the Bank now has a total of nine branches in South-ern Germany. Raiffeisenlandesbank Oberösterreich currently supports around 8,500 customers locally through its 112 em-ployees, including approximately 6,200 companies. Business volumes here amount to more than EUR 9.3 billion.

Sustainability rating of PRIME status

In the area of “Sustainability and Corporate Social Responsi-bility (CSR)”, Raiffeisenlandesbank Oberösterreich has in re-cent years successfully launched many sustainable initiatives within the Group. These endeavours are also recognised by the sustainability rating of PRIME Status awarded by oekom research AG. All the measures taken are described in detail in the Sustainability Report, which meets the specifications of the Austrian Sustainablity and Diversity Improvement Act (NaDiVeG), and which is available via the homepage of Raiff-eisenlandesbank Oberösterreich.

A new kind of customer focus

We will embark on some important initiatives going forward aimed at safeguarding our strong market position and keep-ing Raiffeisenlandesbank Oberösterreich fit for the future. We need to redefine and rethink our special focus on the cus-tomer with respect to digitalisation: customers’ requirements and needs are becoming more complex, while at the same time the linkages and the possibilities associated with these are increasing. Through our strength as Raiffeisen Banking Group Upper Austria, and as the most significant local finan-cial service provider in the federal state, we see ourselves as a pioneer that is setting the benchmarks of the future in this major change process. We see all of these developments as opportunities and we want to provide our customers with the best options for setting their banking transactions via all available channels.

Providing pioneering work

The key to our success going forward will be in keeping a keen eye on trends and developments and continuing to per-form pioneering work in digital innovation. This is because all of us in the Upper Austrian Banking Group must brace ourselves for the many changes still to come through digita-lisation – and these changes will be rapid ones. Our aim must be to remain a leader in innovation. It is important therefore to think openly and on a global scale, and not to restrict our horizon based on our past, but to link it with the develop-ments of the future.

Dr. Heinrich SchallerChief Executive Officer of Raiffeisenlandesbank Oberösterreich

Annual Report 20188

STRATEGY+TEAMA perfectconnection

The Managing Board of Raiffeisenlandesbank Oberösterreich is a dynamic team with different areas of responsibility and with one common objective: to lead the company towards a successful future.


Member of the Managing Board

Level 2 (Division) Level 2 (Subsidiaries) Staff unit

Responsibilities of the Managing Board

General Information



Managing Board AreaDr. Heinrich Schaller

Managing Board AreaMichaela Keplinger-Mitterlehner

Corporate Governance & Compliance bankdirekt.at

Public Affairs Raiffeisenlandesbank Oberösterreich branches

Public Relations and Media Corporates Market

Legal Office PRIVAT BANK

Regulatory affairs, data protection & outsourcing

Product management and Corporates Sales

Office of the Managing Board Product management / Sales manage-ment for Retail and Private Banking / Group marketingManagement of Raiffeisen banks

Corporate customers of Raiffeisen banks KEPLER-FONDS KAG

Group audit RVM Raiffeisen-Versicherungsmakler

Human resources management

Strategic planning for Raiffeisen Banking Group Upper Austria

Treasury Financial Markets

Managing Board AreaStefan Sandberger

Managing Board AreaReinhard Schwendtbauer

Managing Board AreaMarkus Vockenhuber

Managing Board AreaMichael Glaser

Cash Management products

Collateral Financing Management Financing Management

Data Governance Tax Office Overall bank risk management

Overall bank risk management

Product responsibility Treasury

Investment management

Operations Factoring

Organisation Group accounting and controlling

GRZ IT Center GmbH Raiffeisen-IMPULS-Leasing

Raiffeisen Software GmbHREAL-TREUHAND Management GmbH

Up to 10.2018 From 10.2018

Annual Report 201810


“The affinity of Raiffeisenlandesbank Oberösterreich and of Raiffeisen Banking Group Upper Austria with our customers and with our region is an important basis for trust. Here, people from the region work for people in the region. Here regional institutions, companies and private individuals are financed and local associations are supported. Because Raiffeisen is more than just a bank.”


General Information



Foreword by President Jakob Auer

Raiffeisen as a basis for constructive change. Our future successes are already being prepared today.

The banking industry is undergoing radical change. This radical change not only requires a response on our part; we must help fashion it proactively. We need to accompany this change and help drive it forward. Raiffeisen is a constructive part of this change. Not only do we have the expertise, capa-ble employees and the required regional network, Raiffeisen also has the fundamental values upon which sustainable change can be based. Often derided, the cooperative idea is a crucial factor to us that represents values as well as secu-rity. No experiments or tests at the expenses of customers. This is because the affinity of Raiffeisenlandesbank Oberös-terreich and of Raiffeisen Banking Group Upper Austria with our customers and with our region is an important basis for trust. Here, people from the region work for people in the region. Here regional institutions, companies and private in-dividuals are financed and local associations are supported. Because Raiffeisen is more than just a bank. With owners based in the local region. One of the main arguments for not being replaceable. And the more things that happen in the world, the more important these close local roots become.

ELBA – and a handshake

Throughout human history, we have never had such effective communication options and we have never been as mobile. The options and possibilities have all increased. Yet the digital transformation is far from being completed. As well as exploi-ting these new possibilities, we must therefore also actively pursue and of course influence these developments.

So far Raiffeisen has been a pioneer with ELBA and with mo-bile banking in general, and this will continue to be the case in future thanks to the ambitious commitments of our em-ployees responsible. Yet we are also aware that no modern

device, computer, tablet or mobile phone can replace a smile or handshake from one of our trusted employees. This com-bination is our strength. This is because customers today are no longer to be found visiting their local bank as often in per-son. Yet when they do, they expect the perfect well-informed and friendly advice.

Development based on strength

We have a huge advantage these days as Raiffeisen Banking Group Upper Austria. Focusing on our customers enables us to design useful new services from our own strength. These strengths provide us with the excellent results that both Raiff-eisenlandesbank Oberösterreich and also the Upper Austrian Raiffeisen banks are publishing for the 2018 financial year. Alongside the consistent support shown to customers, an extremely professional risk management system and the on-going development of countless innovative banking services, our shared commitment is more than anything else a guaran-tee that we will overcome any future challenges.

Thank you for your commitment

I would like to thank all of our customers for the trust that they place in Raiffeisen Banking Group Upper Austria. I would also like to say a special thank you to our employees as well as to all our managers, officials and members of the Supervisory Board for all their hard work and dedication. A special thank you is also due to the members of the Managing Board of Raiffeisenlandesbank Oberösterreich, and especially to its Chairman Heinrich Schaller. This is where the foundation is laid for the future success of our customers and of the entire Raiffeisen Banking Group Upper Austria, based on a high level of dedication and personal commitment.

President Jakob AuerPresident of the Supervisory Board



The Supervisory Board of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Chairman

Jakob Auer Chairman of the Supervisory Board, National Assembly, retired, Deputy Advocate General of the Austrian Raiffeisen Association, Chairman of Raiffeisenbank Wels Süd, Agriculturist

Deputy Chairman

Volkmar Angermeier Vice-President of the Supervisory Board, Chairman of the Supervisory Board of Raiffeisenbank Region Eferding, Deputy Chairman of the Upper Austrian Greengrocers’ Cooperative (“EFKO”), Agriculturist

Josef Kinzl Vice-President of the Supervisory Board, Chairman of Raiffeisenbank Region Schärding, Official expert

Registered members

Klaus Ahammer Director of Raiffeisenbank Salzkammergut Chairman of the Association of Managing Partners of Upper Austria Raiffeisen banks

Cornelia Altreiter-Windsteiger Head of the Upper Austrian Social Affairs department State Government

Roman Braun Chairman of the Supervisory Board of Raiffeisenbank Region Schwanenstadt, Agricultural Advisor for Maschinenring Oberösterreich

Annemarie Brunner Member of the State Parliament, Farmer’s Federation

Manfred Denkmayr Chairman of the Supervisory Board, Raiffeisenbank Mattigtal, Barrister-at-Law

Karl Dietachmair Director, Manager of Raiffeisenbank Region Sierning-Enns

Norman Eichinger Director of the Raiffeisen Association of Upper Austria

Karl Fröschl Director, Manager of Raiffeisenbank Perg

Christian Hofer Honorary Consul of the Republic of Poland, Director of the Upper Austrian Chamber of Commerce, retired

Walter Lederhilger Councillor of the Chamber of Agriculture, Chairman of the Supervisory Board of Raiffeisenbank Kirchdorf Chairman of the VLV (Association of Agricultural Refinement Producers), Agriculturalist

Walter Mayr Director of Raiffeisenbank Region Freistadt

Robert Oberfrank Deputy Chairman of Raiffeisenbank Inneres Salzkammergut and Chairman of the Bad Ischl branch, Head of all Upper Austrian District Offices of the Upper Austrian Chamber of Commerce

Josef Pfoser Chairman of the Supervisory Board of Raiffeisenbank Region Rohrbach, Master Builder and Carpenter, Managing Director of the Company of Resch Brothers Building Construction GmbH


General Information



Supervisory Board

Staff Council Representatives

Helmut Feilmair Chairman of the Staff Council

Gerald Stutz Deputy Chairman of the Staff Council

Michaela Hochreiter

Christoph Huber

Harald John

Dorina Meißl

Sandra Müller

Albert Ruhmer

Authorised representative Hermann Schwarz

Authorised representative Richard Seiser

State Commissioners

Gerhard Popp State Commissioner, Federal Ministry for Digital and Economic Affairs

Regina Reitböck Deputy State Commissioner to the Federal Ministry of Finance

Honorary presidents

Gerhard Ritzberger

Helmut Angermeier

Gertrude Schatzdorfer-Wölfel Managing partner of Schatzdorfer Gerätebau GmbH & Co KG

Johann Stockinger Chairman of the Association of Chairpeople of Upper Austrian Raiffeisen Banks, Chairman of Raiffeisen Bank Region Gallneukirchen

Josef Stockinger Chairman of the Managing Board of OÖ. Versicherung AG

Anita Straßmayr Councillor of the Chamber of Agriculture, District Representative in the Farmers’ Federation, Deputy Chairwoman of the Supervisory Board of Raiffeisenbank Bad Wimsbach-Neydharting, Agriculturist, Chairwoman of the Functionary Advisory Body of the Austrian Raiffeisen Association

Registered members


The customer reception in Vienna was attended by 1,500 guests

The summer festival of Raiffeisenlandesbank Oberösterreich in Vienna has a long tradition and took place in 2018 for what was already the thirteenth time on the Rider’s Platform of the Albertina Museum. About 1,500 guests from the worlds of economics, politics, culture accepted the invitation and gath-ered together in the stylish surroundings.

KEPLER-FONDS KAG celebrated its anniversary with numerous awards

Investment company KEPLER-FONDS KAG celebrated its 20th anniversary in 2018 and also received several awards this year. Prestigious rating agency Scope gave the Raiffeisen-landesbank Oberösterreich subsidiary the “Scope Investment Award” in the “Best Asset Manager – all-round provide in Austria” category. The Linz-based fund manager also achieved outstanding marks on the German market. KEPLER ranked second among the 100 most important fund providers in the CAPITAL Fonds Kompass 2018. KEPLER Institutional Day in Autumn focused on the issue of “Sustainable investments with a focus on the area of e-mobility”, with numerous Raiffeisen-landesbank Oberösterreich investors attending the event.

Head of Palfinger’s Managing Board Andreas Klauser, AMAG CEO Helmut Wieser, CEO Heinrich Schaller and Federal Chancellor Sebastian Kurz

Andreas Lassner-Klein, Chief Executive of KEPLER-FONDS KAG, Robert Haßler, Member of the Managing Board at ISS-oekom, RLB Oberösterreich Deputy Chief Executive Michaela Keplinger-Mitterlehner and Josef Thurnhofer, State Director of Upper Austrian automobile club ÖAMTC at the KEPLER Institutional Day

DRIVING+FORCE

Minister of Finance Hartwig Löger

2018 in retrospect

Hartwig Löger at “Minister in talks”

Finance Minister Hartwig Löger spoke of some of the issues of central concern to him during his speech at the “Minister in talks” event in July at Raiffeisenlandesbank Oberösterreich. These included an end to debt policy, system savings and reliefs in tax and contribution ratios. His presentation and the subsequent panel discussion were followed by about 1,000 customers in the Raiffeisen Forum.

Stress test: ECB once again gives Raiffeisenlandesbank Oberösterreich a good report

Raiffeisenlandesbank Oberösterreich was the only bank in Upper Austria classified as one of the eurozone’s “significant” banks by the European Central Bank (ECB). In this context Raiffeisenlandesbank Oberösterreich also passed a EU-wide stress test once again in 2018 following the successful tests in 2014 and 2016. Encouraging result: Raiffeisenlandesbank Oberösterreich has robust capital ratios according to the specified methods and international standards of the ECB, even in the tough adverse scenario.

Innovative ideas and actions go well beyond banking activities at Raiffeisenlandesbank Oberösterreich. We are a sustained driving force in the region as a business location and link innovative generators of new ideas with our partners and customers.

A perfectconnection


2018 in retrospect General Information



Chief Executive Officer Heinrich Schaller with e-tec founder Bert Kuhn and Investments Managing Director Reinhard Schwendtbauer

New branch offices

Raiffeisenlandesbank Oberösterreich opened a new branch in Stuttgart in 2018 so that it can provide even more inten-sive support to companies focused on growth and requiring financing models oriented towards the customer and the fu-ture in the dynamic economic region of Baden-Württemberg. This ninth branch to be opened in Southern Germany is fo-cused on supporting medium-sized enterprises.

Chief Executive Officer Heinrich Schaller and Dieter Hundt, Chairman of the Supervisory Board at Allgaier Werke GmbH and President of the German Chamber of Commerce in Austria at the official opening ceremony

Reception for World Savings Day

World Savings Day is traditionally celebrated as the high point of the banking year. As every year, Raiffeisenlandes-bank Oberösterreich welcomed around 2,000 visitors to the Raiffeisen Forum, including numerous representatives from the worlds of politics, business and culture. The reception for World Savings Day focuses on face-to-face discussion.

Networking evening at Linz Music Theatre

Raiffeisenlandesbank Oberösterreich invited visitors to a net-working evening for corporate and private customers at Linz Music Theatre in early October. Patrick Kramer, head of the Hamburg-based company “Digiwell – upgrading humans”, spoke in his presentation about technologies such as mi-crochip implants that should no longer simply unlock mobile phones and computers in future, but should also be capable of opening house doors or starting engines.

Mayor of the City of Linz Klaus Luger, Chief Executive Officer Heinrich Schaller, Digiwell CEO Patrick Kramer, Deputy Chief Executive Officer Michaela Keplinger-Mitterlehner, Governor of Upper Austria Thomas Stelzer

Governor of Upper Austria Thomas Stelzer, Supervisory Board President Jakob Auer

Further expansion for theinvestment division

Raiffeisen Banking Group Upper Austria provided under-took important initiatives in 2018 with its holding companies INVEST AG and Raiffeisen KMU Beteiligungs AG with the aim of supporting companies at important stages, accompanying enterprises over the longer term and exploiting opportunities jointly with the management team. Support was provided for instance for the transfer of Austria’s biggest e-commerce trader “e-tec electronic”, for the planned growth of multi-pur-pose vehicle developer “Syn Trac”, as well as for a spin-off of the Bilfinger technology group operating in Austria and Ger-many based in Wels in Austria.


DUTY+AWARENESS

Sustainability and Corporate Social Responsibility

Over 150 years ago, Friedrich Wilhelm Raiff-eisen laid the foundation for an international cooperative idea which has at its core the principle of helping people to help themselves, and which is intended to serve as a means to an end, to enable people and regions to de-velop further. Raiffeisenlandesbank Oberös-terreich sees itself as a bank with local responsibilities. Particularly in Upper Austria, we consider ourselves to be a local financial service provider, partner and promoter of do-mestic companies, as well as a support point for stable economic development.

Take responsibility? – Of course we do!

We are aware of the impact of and responsibility for our decisions and activities on society, the economy and the environment, which is why we are a sustained driving force in Upper Austria with all our activities.

4 Principles

ResponsibilityRaiffeisenlandesbank

Oberösterreich is a dynamic trendsetter and driving force

for Upper Austria.

ProximityOur customers are at the core of our thinking and actions.

ReliabilityRaiffeisenlandesbank Oberösterreich is a reliable and trustworthy partner to people and companies in Upper Austria.

Creative powerRaiffeisenlandesbank

Oberösterreich invests in the region.

SOCIAL AFFAIRS

E

CO

LOGY

ECO

NO

MY

Raiffeisenlandesbank Oberösterreich puts people at

the centre of everything it does. Subsidiarity, solidarity, nearness,

reliability and empathy are our guiding principles in dealing

with people.

EN

VIRO

NM

ENT

SOC

IETY

R

EASON

KNOW

LEDG

E &

EXP

ER

TIS

E

RE

SP

ON

SIBILITY

CREATIV

E P

OW

ER

S

US

TAIN

ABILITY

COO

PER

ATIV

E

ECONOM

IC S

UC

CE

SS

interacts responsibly with its environment

is a productive part of society

places human beings at the centre of things

HUMAN BEINGS

EMPATHY

NEARNESS AND RELIABILITY

SUBSIDIARITY & SOLIDARITY

Raiffeisenlandesbank Oberösterreich is a

productive part of society. We help to shape the society in which we operate with our knowledge and expertise in line with basic cooperative

principles.

Raiffeisenlandesbank Oberösterreich interacts responsibly with its environment. We assume responsibility for our environment in a sustainable and sensible manner.

Strategic core

The following principles are at the forefront with respect to successfully ful-filling these responsibilities.

A perfectconnection


Sustainability and CSR

DUTY+AWARENESS

The most crucial issues for the future were identified, together with representatives of interest groups and stakeholders. An impact analysis was carried out based on this in a joint inter-nal workshop with representatives from all parts of the Group.

The result is the materiality matrix for Raiffeisenlandesbank Oberösterreich.

Crucial issues

Vision of sustainability

Raiffeisenlandesbank Oberösterreich aims to become the leading sustainable regional bank in Austria in the medium term and to set an example as a bank that is prepared to assume social political responsibility.

A holistic, professional and systematic approach to integrat-ing sustainability and CSR is the starting point for us. We see this as essential in order to meet society’s needs and to con-tinue developing in the right direction. This is the only way that we can be prepared for future challenges. The sustainability strategy of Raiffeisenlandesbank Oberösterreich is based on the three dimensions of sustainability: social affairs, economy and ecology.

Organisational management Environment

Human rights

Fair production and business practices

Working conditions Consumer issues

Involving stake-holders & social development

Responsible organisational management

Sustainability

Environmental policy

Avoidance of environmental pollution

Sustainable usage of resources

Mitigating climate change and adapting

Due diligence

Anti-discrimina-tion (Diversity Management)

Basic principles and rights in the workplace

Anti-corruption

Fair competition

Health and safety at work

Personnel development

Fundamentals and basic prin-ciples of con-sumer needs

Fair marketing

Protection of customer data

Social responsibility

Regionalism

People in employment

Job creation and pro-fessional qualifications

Technology and access to it

Dialogue & communication

Sustainable products and services

Social responsibility

Ecology & environment

Employees

Compliance & business ethics

Partnerships

The most crucial issues for the future are:

Action areas:

General Information





ı The amount of value created directly by Raiffeisen Bank-ing Group Upper Austria in 2017 amounted to EUR 762 million.

ı If we also count indirect value created triggered via economic integration, then the total gross value added amounts to EUR 999 million. This means that every 62nd euro generated in Upper Austria is attributable to Raiff-eisen Oberösterreich.

ı The total contribution towards value created is 1.61 per cent and is therefore among the highest values in the whole of Austria.

ı Raiffeisen Banking Group Upper Austria accounts directly for every 76th job in Upper Austria.

ı The density of the branch network shows that Raiffeisen Oberösterreich meets its aspirations as a local financial service provider. The branch network is densest in the Innviertel with 0.46 branches for every 1,000 inhabitants, followed by the Mühlviertel with a value of 0.44.

ı Raiffeisen Oberösterreich’s total taxies and other levies in 2017 amounted to about EUR 398.2 million.

Added value report 2017: Raiffeisen Oberösterreich is an industry leader and trendsetter

Global responsibility

Source: ÖKONOMISCHER FUSSABDRUCK© (ECONOMIC FOOTPRINT) of Raiffeisenlandesbank Oberösterreich AG and the Raiffeisen banks in Upper Austria in 2017

Raiffeisenlandesbank Oberösterreich has joined the UN Global Compact, the world's largest network for corporate responsibility, and is committed to the ten principles of the global pact.

Sustainable forms of investment

ı Raiffeisen AnlageDuo sustainable investment 2018 ı 3 sustainable KEPLER ethical funds ı KEPLER Umwelt-Aktienfonds a new feature since

November 2018 ı HYPO Salzburg and sustainable securities management

since 2003

Raiffeisen’s contributions towards social, economic and eco-logical development have been examined each year for the last four years as part of Raiffeisen Österreich’s sustainability activities. The Ökonomischer Fußabdruck© (Economic Foot-print) – a registered trademark of the Economica/Cognion Research Association – was created for Austria and also

specifically for Upper Austria once again in 2018 with an added value report published for 2017. The study was devel-oped by experts from the Economica Institute of Economic Research. In addition to direct economic contributions, the Footprint also focuses on indirect and induced effects that arise in the upstream and downstream economic network.

Figure 2: Gross added value by the Raiff-eisen Banking Group by federal state in per cent, 2017

Source: RZB Group, Economica

0.90% – 1.21%1.21% – 1.53%1.53% – 1.84%1.84% – 2.16%2.16% – 2.47%

Accreditations of KEPLER-FONDS KAG:


General Information



Sustainability and CSR

Raiffeisenlandesbank Oberösterreich has its own sponsorship strategy that is consis-tent with the sustainable direction, and also creates clear guidelines for reviewing and processing queries. Our sponsoring strat-egy and follow-up reports on our commit-ment can be obtained at www.rlbooe.at/engagement.

Ra i f fe i sen landes-bank Oberösterre-ich’s sponsorship strategy is based on the following principles:

Our awards and memberships

Full commitment to our employees

Commitment

UNTERNEHMEN FÜR FAMILIENNachhaltigkeits-Initiative

ZERTIFIZIERT

TÜV AUSTRIA CERT GMBH

ZERTIFIKAT NR. TA270151442819EN ISO 50001

finanz-marketing verband

sehr gute Kundenorientierung

1. Platz Großbanken

proethikw e r b e r a t

z e r t i f i z i e r t 1 8 / 1 9

Link to Raiff-eisenlandesbank Oberösterreich’s commitments

Regionalism

Shar

ed

conc

ept

Future generationS

ustainability

Transparency

A separate Sustainability Report has been published since the 2017 financial year that outlines the Raiffeisenlandesbank Oberösterreich Group’s performance. The current Report for the 2018 financial year along with any previous reports and studies such as the Added Value Report 2017 are available on the website www.rlbooe.at/nachhaltigkeit. The sustainability

reports and studies are available online.

The Sustainability Report

The Raiffeisenlandesbank Oberösterreich Group’s sustain-ability efforts are currently rated by three agencies. These ratings are crucial in terms of positioning ourselves as an attractive business partner with institutions aligned to-wards sustainability and among bond purchasers on the

international capital markets. Encouragingly, all the ratings show that the Raiffeisenlandesbank Oberösterreich Group’s sustainability efforts have been successful and that sustain-able development is well underway.

Sustainability ratings



Group Management Report 2018 of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

1. Report on business development and the economic situation _______________________________ 21

2. Outlook and risks faced by the company _______________________________________________________________________________________________ 32

3. Research and development ____________________________________________________________________________ 35

4. Main aspects of the internal control and risk management system in relation to the accounting process _________________________________________________________________ 37


The Group

General information Raiffeisenlandesbank of Upper Austria


Group management report 2018 | Business development and the economic situation

1.1. Economic background

The world economy finds itself in a period of strong, broad-based growth that is supported by both industrialised and emerging countries. The economy in the Eurozone was somewhat weaker. This was due to a general increase in un-certainties and risks. Many leading and business sentiment indicators recorded significant declines over the course of 2018 in the Eurozone, while they barely weakened in the U.S. The emerging markets performed basically well: commod-ity exporters benefited from higher prices, and the expected slowdown in growth in China has not yet manifested itself in 2018. However, countries with high external debt and/or cur-rent account deficits remained vulnerable to currency deval-uations as a result of turbulence caused by increased inflation and capital outflows. According to estimates by the Interna-tional Monetary Fund (IMF), global gross domestic product (GDP) grew by 3.7% in 2018.

Until the third quarter of 2018, above-average economic ac-tivity was measured in the U.S., with the economy picking up significantly in the course of the year. Until then, the trade dispute that the U.S. had set off did not reflect on the long-term U.S. economic data. However, the high level of capacity utilisation is leading to an acute shortage of skilled workers. Overall, the IMF estimates that GDP growth in the US econ-omy amounted to 2.9% in 2018. The US Federal Reserve (Fed) raised the target range for the Federal Funds Rate four times in 2018, in each case by 25 basis points, the target range ending the year at 2.25% to 2.50%.

In the Eurozone, GDP growth momentum declined steadily in 2018, mainly due to the lacking support from net exports. Due to numerous disruptive factors and uncertainties (Brexit, trade dispute, budget disputes with Italy), economic senti-ment in the Eurozone deteriorated significantly in the course of 2018. In the third quarter, Germany and Italy even recorded a slight decline in production. However, consumer demand in particular developed very robustly, supported by income growth due to the noticeably improved situation on the la-bour markets and still rather low inflation. The ECB formally announced the end of its net bond purchasing programme in December 2018. According to the IMF, GDP growth for 2018 in the eurozone was 1.8%.

The Austrian economy entered the later stages of a boom after reaching a peak in mid-2018, although the boom is broadly based, driven by sound export performance and robust domestic demand. Industrial production in particular was very strong, and businesses continued to be optimistic about the near future. Concerns are mainly related to capac-ity limitations and the availability of qualified personnel. Con-sumer spending is gradually becoming the primary driver of economic growth on the back of a high level of consumer

confidence and a favourable income situation (rising employ-ment, modest inflation, fiscal stimulus packages such as a re-duction in unemployment insurance contributions and, from 2019, “Family bonus plus”). Austria was rather little affected by the economic risks in 2018, whereby the global dampen-ing of sentiment did indeed play a role. The government bud-get is also benefiting from the lively economy, estimated to result in a zero deficit in 2018 and slight surpluses in 2019/20.

The Upper Austrian regional economy recorded a very good financial year in line with the booming national economy. Es-timates put the real growth in the economic output for the region at 3.2% for 2018. Industry has traditionally been the economic driver in Upper Austria, especially mechanical en-gineering, the electrical and metal industries and, to a large extent in 2018, the construction industry. The employment situation developed very dynamically, especially noticeably so in the tertiary sector (retail trade, tourism, business-related services). With registered unemployment at 5.0%, Upper Austria (together with Salzburg and Tyrol) has the lowest un-employment rate of all the Austrian federal states.

1.2. Business development

In the good economic environment of 2018, Raiffeisenlandes-bank Oberösterreich was able to pursue its sustainable course. The consistent actions taken in the areas of inno-vation, customer orientation, market development and risk optimisation played a major role in the successful business performance. The consistently applied strategy for increasing efficiency primarily contributed to the good half-year result in 2018. A broad orientation across numerous business sectors also ensures stability in the Bank’s development. It ensures that Raiffeisenlandesbank Oberösterreich is able to offset any external influences effectively. The positive performance throughout the entire company for instance shows that the prescient and active risk management system with compre-hensive early warning parameters and the continuous further development of the early warning system were not only well planned strategically, but have also been consistently im-plemented. The goal in all this is also not least to preserve autonomy and secure a long-term position of strength from which to act.

Moreover, Raiffeisenlandesbank Oberösterreich meets the high standards that the European Central Bank applies to a “significant” bank. Particular attention is paid here to com-pliance with all statutory regulations, and in laying the foun-dations for compliance with the statutory requirements that will be imposed on banks in Austria and the rest of the Euro-pean Union in future, such as in relation to equity/own funds and risk management. In this regard, Raiffeisenlandesbank Oberösterreich once again passed an EU-wide stress test in

1. Report on business development and the economic situation



2018, the only Upper Austrian bank to do so. This followed the successful completion of similar tests in 2014 and 2016, the results demonstrating that Raiffeisenlandesbank Oberös-terreich is above the average for the other tested banks in the European Union.

Raiffeisenlandesbank Oberösterreich’s operative customer business was also extremely successful in 2018. The total assets for the Group increased year on year and amounted to EUR 42.0 billion as at 31 Dec. 2018.

Raiffeisenlandesbank Oberösterreich also provides strong stimuli in the Southern Germany region for customers from industry, medium-sized enterprises and affluent private customers. In order to further expand the Bank’s position in this strong economic region, a new branch was opened in Stuttgart. The new location is intended to generate addi-tional growth as well as intensify existing business connec-tions. Raiffeisenlandesbank Oberösterreich has been active in Southern Germany since 1991 and, with the new branch in Stuttgart, now has a total of nine locations in the region.

In addition, the number of customers could be increased further. This is reflected in particular in the high degree of customer focus, which is characterised by speed, efficiency, reliability, flexibility and innovative services. Raiffeisenlandes-bank Oberösterreich has devoted particular attention to the customer groups in Corporate Banking (business and insti-tutional customers), Retail Banking (individual and self-em-ployed/small business customers), Private Banking (affluent private customers) and Investor Relations (Raiffeisen banks) to ensure that these attributes of its customer focus are consistently implemented in day-to-day transactions with customers, helping it to become a key player in the local economy, contributing to the successful development of the region. Raiffeisenlandesbank Oberösterreich was awarded the Recommender Award of the Austrian Financial Market-ing Association in the first quarter of 2018 for its sustainable customer focus based on a study of customers’ willingness to recommend Raiffeisenlandesbank Oberösterreich to oth-ers and was announced winner in the Major Banks category.

The fact that Raiffeisenlandesbank Oberösterreich is also recognised on the international financial markets can be seen in the success of the most recent issue of a benchmark bond. The collateralised bond issued by Raiffeisenlandes-bank Oberösterreich in the amount of EUR 500 million was heavily oversubscribed in a very short space of time by inter-ested parties from Central and Northern Europe as well as from America and Asia. This was the third successful issue of a benchmark bond by Raiffeisenlandesbank Oberösterreich since 2016.

In the first half of 2018, Raiffeisenlandesbank Oberöster-reich set the course for personnel changes. At its session on 22 June 2018, the Supervisory Board of Raiffeisenland-esbank Oberösterreich appointed Dr. Michael Glaser as a new member of the Managing Board. On 1 October 2018, Dr. Glaser will take over the Managing Board agendas of

overall bank risk management and financing management from Mr. Markus Vockenhuber, who is stepping down from the Managing Board at his own request. In addition, the Su-pervisory Board has extended the periods of appointment to the Managing Board of Deputy Chief Executive Officer Michaela Keplinger-Mitterlehner and Stefan Sandberger by a further five years.

A challenge – and at the same time an opportunity – for the whole banking industry is the rapidly advancing digitisation, which is causing equally rapid changes in customer require-ments and behaviour. Raiffeisenlandesbank Oberösterreich has long since adapted to this and is considered a pioneer when it comes to the development and deployment of inno-vative banking technologies. By positioning itself as a mod-ern advisory bank that places a great emphasis not only on intense personal service but also on the ongoing develop-ment of comprehensive lines of innovative bank technologies, Raiffeisenlandesbank Oberösterreich aims at optimally fulfill-ing the different wishes of the individual customer groups. The digital services on offer are constantly being expanded to include modern products; Raiffeisenlandesbank Oberöster-reich does not develop all of these itself and instead relies on partnerships with innovative companies along with creative and flexible start-ups. For example, Raiffeisenlandesbank Oberösterreich works in cooperation with the Business Angel network “startup300”, is a partner in the “capital300” Venture Capital Fund, and a partner in “think300”, which works with start-ups on developing banking solutions of the future. Fur-thermore, Raiffeisenlandesbank Oberösterreich is a financing partner of “PIER4”, a project run by tech2b and the federal state of Upper Austria and referred to as “multi-corporate venturing”. This arrangement links leading companies with start-ups in order to design new solutions and prototypes together for the industry of tomorrow.

The “Raiffeisen Banking Group Upper Austria 2020” project, which was started around five years ago, was also continued in 2018. Achieving further efficiency increases is the primary objective of this intensive collaboration between Raiffeisen-landesbank Oberösterreich and the Upper Austrian Raiff-eisen banks. Efficiency packages in a number of areas – e.g. compliance and anti-money laundering, settlement – are being jointly developed and implemented by representatives from the Upper Austrian Raiffeisen banks and Raiffeisenland-esbank Oberösterreich.

The strong positioning as a modern advisory bank as well as the openness to and flexibility for further development of the strategy form the best basis for further expanding the strong market position of Raiffeisenlandesbank Oberösterre-ich alongside the present interim results for 2018.

Group structure

As a superordinated banking institute, starting with finan-cial year 2007, Raiffeisenlandesbank Oberösterreich has been obliged to prepare and publish consolidated finan-cial statements in accordance with the IAS Regulation (EC)


The Group




1606/2002, abiding by the regulations of the International Fi-nancial Reporting Standards (IFRSs). In addition, disclosures and notes are required in accordance with the regulations of the Austrian Banking Act and the Austrian Commercial Code. The group management report has been prepared in accor-dance with section 267 of the Austrian Commercial Code.

As at 31 Dec. 2018, the consolidated companies, including Raiffeisenlandesbank Oberösterreich as the parent com-pany, consisted of 150 (previous year: 161) fully consolidated Group companies and ten (previous year: nine) companies consolidated using the equity method. The fully consolidated companies consist of two credit institutions, 84 financial in-stitutions by virtue of their business activities, 16 financial institutions by virtue of their holding company function, one financial holding company, three providers of ancillary ser-vices and 44 other companies. Please refer to the “Basis of consolidation” section in the Disclosures for details.

Effects of the Basel III implementation

The European supervisory provisions for banks (Basel III im-plementation in the form of the Capital Requirements Reg-ulation (CRR), Capital Requirements Directive (CRD) and resulting EBA standards) mean that reports required by the supervisory authorities must be submitted at consolidated level in accordance with the provisions of IFRS. However, the group of entities to be included in these consolidated reports is determined by the CRR. Essentially, this group of entities only includes banks, financial institutions, financial institutions on the basis of business activity or holding entity function, financial holding entities and providers of ancillary services, but it does not include any other entities that are also included in the IFRS Group of Raiffeisenlandesbank Oberösterreich.

Regulatory developments

Raiffeisenlandesbank Oberösterreich was the only Upper Austrian bank to be classified as a significant institution (SI) in accordance with the Single Supervisory Mechanism (SSM). This means that Raiffeisenlandesbank Oberösterreich will continue to be subject to direct supervision by the European Central Bank (ECB).

With the amendment to the Austrian Banking Act (BWG-No-velle) published on 14 June 2018, the requirements of the ESMA/EBA guidelines for assessing the suitability of mem-bers of the management body and holders of key functions (EBA/GL/2017/12) and the EBA guidelines on internal gover-nance (EBA/GL/2017/11) were transposed into Austrian law. The Austrian Banking Act (BWG) amendment determined new organisational requirements for credit institutions. With regard to the composition of the Supervisory Board of banks, a certain minimum number of formally independent mem-bers of the Supervisory Board was defined. In addition, new compliance requirements for banks were introduced. Under the newly added section 39 (6) of the Austrian Banking Act, banks must set down in writing appropriate principles and procedures for compliance processes designed to reveal the

risks of any non-compliance with regulatory requirements and to limit such risks to the minimum possible level. In ad-dition, credit institutions of significant importance must es-tablish a permanent, effective and independent compliance function related to business and operational banking aspects with direct access to the management.. The provisions of the amendment to the Austrian Banking Act (BWG) came into force on 1 September 2018, whereby the requirements re-garding the new compliance function for banks of significant importance did not come into force until 1 January 2019.

In December 2018, trilogue negotiations (between the Coun-cil of the European Union, the European Parliament and the European Commission) resulted in an agreement on the re-view of the CRR, which includes planned changes to the CRR and CRD IV. As technical details are still open, the final decision is still pending. Key points in the agreement are a binding leverage ratio of 3%, the introduction of a mandatory long-term liquidity ratio known as the net stable funding ratio (NSFR), amendments to the large exposure provisions, the introduction (as a reporting requirement) of a new market risk approach referred to as the fundamental review of the trading book (FRTB) as developed by the Basel Committee on Bank-ing Supervision (BCBS), changes in connection with credit risk and amendments to the minimum requirements for own funds and eligible liabilities (MREL).

Supervision in 2018 also focused on monitoring and reduc-ing non-performing loans (NPLs). In the context of the CRR Review, which is expected to result amongst other things in amendments to the CRR and CRD IV, an agreement was reached in December 2018 in the three-way negotiations be-tween the Council of the European Union, the European Par-liament and the European Commission. Negotiations on the NPL package for the reduction of non-performing loans pub-lished by the European Commission in March 2018, which, in addition to the backstop, provides for an accelerated ex-trajudicial realisation of secured loans and the further devel-opment of secondary markets for non-performing loans, are still ongoing.

A strongly changing regulatory environment is expected in the banking sector also for 2019. Raiffeisenlandesbank Oberösterreich will continue to proactively monitor the regu-latory developments, implement resulting changes and take them into account in its business activities.

Business development in the segments

In the Raiffeisenlandesbank Oberösterreich Group, segment reporting distinguishes between the following five segments: ı Corporates ı Retail & Private Banking ı FINANCIAL MARKETS ı Equity Investments ı CORPORATE CENTER

For further details, please refer to the segment reporting in the Disclosures.



Corporates

In 2018, the Corporates segment contributed EUR 119.8 mil-lion pre-tax profit for the year (previous year: EUR 94.6 mil-lion). A notable change compared with the previous year was a significant improvement in net interest income, attributable to the rise in demand for loans and lower additions to provi-sions in connection with Supreme Court decisions relating to negative interest rates.

Retail & Private Banking

The Retail & Private Banking segment generated an over-all positive contribution to pre-tax profit of EUR 11.9 million (previous year: negative contribution of EUR 1.4 million). The main reasons for this improvement were lower loan loss al-lowances and a positive change in net interest income. In 2018, the performance of this segment also reflected lower additions to provisions in connection with Supreme Court de-cisions relating to negative interest rates.

FINANCIAL MARKETS

The Financial Markets segment made a positive contribution to the pre-tax profit for the year amounting to EUR 93.7 million in 2018 (previous year: EUR 111.3 million). The year-on-year change reflects a number of factors, mainly a contraction in net income from maturity transformation.

Equity investments

The Investments segment is divided into four investment port-folios from an organisational perspective: “Banks & Financial Institutions”, “Outsourcing & banking-related investments”, “Property” and “Opportunity & Partner Capital”. Overall, the Equity Investments segment generated pre-tax profit for the year of EUR 184.6 million in 2018 (previous year: EUR 378.1 million). For a quantitative representation, reference is made on the one hand to the table on sub-groups contained in the segment reporting table and on the other to the relevant facts and figures in the Disclosures for information on those com-panies reported under the equity method.

The Banks and Financial Institutions portfolio encompasses Raiffeisenlandesbank Oberösterreich's equity investments in banks and other financial institutions (leasing, factoring, asset management entities). These strategic investments in finan-cial institutions significantly strengthen Raiffeisenlandesbank Oberösterreich's market position and make it possible to pro-vide comprehensive customer assistance in existing and new markets and to expand and round out the products and ser-vices of Raiffeisenlandesbank Oberösterreich.

Raiffeisenbank International AG constitutes Raiffeisenlandes-bank Oberösterreich’s largest equity investment, equating to an indirect holding of approximately 9.5%. RBI is the cen-tral institution in the Raiffeisen Banking Group Austria and considers Austria, together with Central and Eastern Europe (CEE), to be its home market. In Austria, the RBI is a leading

commercial and investment bank and forms part of the larg-est banking group in the country. In Central and Eastern Eu-rope (CEE), the RBI acts as a universal bank via its subsidiary banks and is one of the largest financial services providers in the region.

Raiffeisenlandesbank Oberösterreich’s 25% interest in Raiff-eisenbank a.s. also represents a significant equity investment in the Banks & Financial Institutions portfolio. Raiffeisenbank a.s. has grown very steadily over the last few years and the share of the profit from this equity-accounted investment makes a stable contribution to the consolidated net profit of Raiffeisenlandesbank Oberösterreich.

Oberösterreichische Landesbank AG (Hypo OÖ) is also ac-counted for at equity. Hypo OÖ is a bank with strong regional roots and has also achieved constant, favourable results over the years.

Investments in IT, services (insurance, etc.) and tourism are associated with the portfolio “Outsourcing & Banking-related Investments”. Banking-related services represent an import-ant add-on to conventional banking services for Raiffeisen-landesbank Oberösterreich and its customers, and they are also sometimes required within the Group and the Raiffeisen Banking Group Upper Austria.

The Real Estate portfolio brings together all the equity invest-ments in the real estate sector (real estate service providers, investment-property companies, housing development enti-ties, etc.) The activities undertaken are down to structuring of the portfolio of holdings and in optimisation measures to ensure sustainable earnings and dividend potential.

The performance of the equity-accounted “Beteiligungs- und Wohnungsanlagen” Group (Beteiligungs- und Wohnungsan-lagen GmbH and WAG Wohnungsanlagen GmbH), together with the “Beteiligungs- und Immobilien” Group (Beteiligu-ngs- und Immobilien GmbH und EBS Wohnungsgesellschaft mbH), was in line with forecasts, delivering a steady contri-bution to earnings.

The Venture and Partner Capital portfolio comprises equity investments in industrial and foodstuffs sectors, comple-mented by shares in private equity entities. The main focus in the Opportunity & Partner Capital portfolio is on strength-ening the capital base for rapidly expanding companies in order to ensure these companies enjoy sustainable earnings potential, thus enabling the portfolio to share in rising enter-prise values. Moreover, equity is used to support company successions and acquisitions. Venture and Partner Capital is also deployed to bolster Upper Austrian core businesses such as voestalpine AG and AMAG AG.

The voestalpine Group is an internationally leading technol-ogy and industrial commodity group within its sectors. The global group of companies has approximately 500 Group companies and locations in more than 50 countries on all five continents.


The Group




In conditions of steady economic growth, the voestalpine Group increased revenue in the first three quarters of the 2018/19 financial year to EUR 9.95 billion, 5.2% higher than the equivalent figure of EUR 9.46 billion in the prior-year com-parative period, with revenue growth posted by all segments of the business. Profit after tax amounted to EUR 275.7 mil-lion, well below the equivalent figure in the same period of the previous year (EUR 555.9 million), primarily because of non-recurring items. The main factors contributing to the contraction in earnings were delays and delivery problems at the Cartersville automotive supplier plant in the USA, the comprehensive renovation of the largest blast furnace in the Group, the threat of penalties under anti-trust legislation and weather-related shutdowns at the HBI plant in Texas.

AMAG is a leading Austrian premium provider of high-qual-ity aluminium cast and rolled products. High-quality primary aluminium with an outstanding life cycle assessment is pro-duced using the electrolysis process of the Canadian Alou-ette company, in which AMAG has a 20% holding. In 2018, the total volume sales of the AMAG Group reached an all-time high of 424,600 tonnes (up by 0.7% compared with the previous year) as production at the new plants in the rolling segment was ramped up. After taking into account a num-ber of non-recurring factors that had a substantial impact on the market environment in 2018 (additional US import tariffs on aluminium, a sharp rise in the price of aluminium oxide as a result of a curtailment in production ordered by the au-thorities at the world’s largest alumina refinery in Brazil and US sanctions against one of the largest producers of alumin-ium oxide and primary aluminium in the world in Russia) and higher ramp-up costs for the expansion of facilities, AMAG still managed to post a sound earnings performance for the year. EBITDA fell to EUR 141.0 million, down by approximately 14% year on year.

Sales revenue and earnings generated by the companies in the foodstuffs sector – consisting of the VIVATIS Holding AG Group and the efko Frischfrucht und Delikatessen GmbH Group, both major Austrian companies within the food and beverage sector, continued to be influenced by a competitive market environment. In the case of efko, the procurement of raw ingredients presents a particular challenge in view of the increasing difficulties caused by climatic conditions. How-ever, the close relationship with agricultural producers main-tained as a result of the structure of the company represents a considerable advantage. Despite challenging conditions, the major business areas performed robustly in the year under review, securing or consolidating their earnings for the most part. Following the takeover of Frisch & Frost Nahrung-smittel GmbH, this company was successfully integrated into the VIVATIS Holding AG Group.

In addition to its branch locations, Raiffeisenlandesbank Oberösterreich is also represented abroad by companies in the IMPULS-LEASING Group. In addition to providing ser-vices in Southern Germany and Czechia through subsidiaries for nearly two decades, the IMPULS-LEASING Group has had leasing companies in Romania and Croatia since 2006

and in Poland and Slovakia since 2007. These companies focus on financing of vehicles as well as machinery and tech-nical equipment. The focus is on servicing corporate cus-tomers. The IMPULSE-LEASING Group has six branches in Southern Germany and 35 branches in Eastern European countries. In addition, there are also long-standing partner-ships with producers and retailers. The companies have now achieved strong market positions in all markets.

Corporate Center

The Corporate Center segment includes content for income and expenses which does not fit into any other segment. One-off items that would distort the various segment earn-ings and are not allocated to individual market segments in the internal report to the Managing Board are also included in this segment, if required. In the 2018 financial year, this seg-ment showed a pre-tax loss for the year of EUR 41.2 million (previous year: loss of EUR 48.9 million).

Income statement

2018 2017 Change

IN

EURIN

EURIN

EUR M IN %

Net interest income 401.8 351.7 50.1 14.2

Loan loss allowances –57.9 –45.3 –12.6 27.8

Net interest income after loan loss allowances 343.9 306.4 37.5 12.2

Share of profit or loss of equity-accounted investments 89.0 362.5 –273.5 –75.4

Net fee and commission income 166.1 154.1 12.0 7.8

Net income from trading operations 7.5 6.3 1.2 19.0

Gains and losses on financial instruments measured at fair value 55.0 15.6 39.4 252.6

Gains and losses on other financial instruments 4.3 5.3 –1.0 –18.9

Other net financial income 66.8 27.2 39.6 145.6

General administrative expenses –484.4 –460.2 –24.2 5.3

General administrative expenses OÖ Wohnbau –33.7 –34.5 0.8 –2.3

General administrative expenses VIVATIS/efko –276.6 –262.0 –14.6 5.6

Other net operating income 152.2 129.2 23.0 17.8

Other net operating income OÖ Wohnbau 46.4 44.1 2.3 5.2

Other net operating income VIVATIS/efko 299.2 267.0 32.2 12.1

Pre-tax profit for the year 368.9 533.8 –164.9 –30.9

Taxes on income –69.4 –42.2 –27.2 64.4

After-tax profit for the year 299.5 491.6 –192.1 –39.1

Operating profit 367.5 558.2 –190.7 –34.2



Net interest income rose by EUR 50.1 million or 14.2% year on year to EUR 401.8 million (previous year: EUR 351.7 million). This was due to increased demand for loans from custom-ers. Interest income also included the impact from a lower addition to the provision for possible claims for repayment on the part of customers in connection with Supreme Court decisions relating to negative interest rates, the addition to the provision amounting to EUR 5.9 million (previous year: pro-vision addition of EUR 27.7 million). Besides interest income from loans and advances to customers and banks, as well as fixed income securities, this reflects income from shares and other variable-yield securities, designated and derivative financial instruments, and lease receivables, as well as from investments in affiliated companies, investments and other income related to interest. Interest expenses result from Amounts owed to customers or banks, securitised liabilities, subordinated capital and other interest-like expenses. For detailed itemisation, please refer to the section “Net interest income” in the Notes.

Loan loss allowances increased year-on-year by EUR 12.6 million to EUR 57.9 million (previous year: EUR 45.3 million). Overall, the active risk policy of the previous years was re-tained and the need for loan loss allowances kept at a low level. In 2018, the year-on-year change also included effects from the use of the expected credit loss model under IFRS 9. Please refer to the “Loan loss allowances” section for de-tails, as well as to the breakdown of provisions for impairment losses in the Disclosures.

In 2018, the share of profit or loss of equity-accounted in-vestments amounted to EUR 89.0 million (previous year: EUR 362.5 million). The main reasons for the year-on-year decline were the overall net loss from Raiffeisenlandesbank Oberös-terreich Invest GmbH & Co OG in an amount of EUR 58.6 million (caused by the impairment loss on the investment in voestalpine AG) and the impairment loss in respect of the RBI Group amounting to EUR 37.7 million (previous year: impair-ment loss reversal of EUR 112.3 million). Please refer to the section “Share of profit or loss of equity-accounted invest-ments” in the Notes for further details.

Net fee and commission income went up by EUR 12.0 mil-lion, or 7.8%, to EUR 166.1 million (previous year: EUR 154.1 million). Most of the increase was attributable to fee and com-mission income in the lending and securities business and to fees and commissions from other service business. Please refer to the “Net fee and commission income” section in the Disclosures for details.

Other net financial income – consisting of net income from trading operations, gains and losses on financial instru-ments at fair value and gains and losses on other financial instruments – amounted to EUR 66.8 million in 2018 (pre-vious year: EUR 27.2 million). Net income from trading op-erations amounted to EUR 7.5 million in the reporting year (previous year: EUR 6.3 million). Gains and losses on financial instruments at fair value amounted to a net gain of EUR 55.0 million (previous year: net gain of EUR 15.6 million), mainly arising from rolldown in respect of interest rate exposures and

heightened volatility of exposures that do not meet the SPPI criterion. However, the interest rate landscape, which has re-mained virtually unchanged overall since 31 Dec. 2017, only had a minor impact. In the year under review, Hypo Salzburg provided a positive contribution of EUR 8.4 million (previous year: negative contribution of EUR 5.0 million), primarily in connection with the sale of the “contingent additional pur-chase price of HETA ASSET RESOLUTION AG”. Gains and losses on other financial instruments in 2018 came to a net gain of EUR 4.3 million (previous year: EUR 5.3 million).

Personnel expenses, general administrative expenses, de-preciation and amortisation are recognised in the income statement under “General administrative expenses”. In 2018, general administrative expenses at the “OÖ Wohnbau” com-panies remained virtually unchanged year on year at EUR 33.7 million (previous year: EUR 34.5 million). The general ad-ministrative expenses of the companies in the food sector – consisting of the “VIVATIS Holding AG” Group and the “efko Frischfrucht und Delikatessen GmbH” Group – rose at a year-on-year rate of 5.6% to EUR 276.6 million (previous year: EUR 262.0 million). The other Group companies, including Raiff-eisenlandesbank Oberösterreich, saw a 5.3% increase to EUR 484.4 million (Previous year: EUR 460.2 million), mainly as a result of higher IT costs in connection with an upward trend in program and operating costs.

Other net operating income largely consists of the gross profit (sales revenue less cost of sales) earned by non-bank group companies. The “OÖ Wohnbau” companies generated other net operating income of EUR 46.4 million, which represented an increase in this figure compared to the previous year (pre-vious year: EUR 44.1 million). The companies in the food sec-tor (VIVATIS/efko) saw a rise in other net operating income of 12.1% to EUR 299.2 million (previous year: EUR 267.0 mil-lion). The equivalent figure for the other Group companies amounted to EUR 152.2 million, a rise of 17.9% (previous year: EUR 129.2 million). Other net operating income also included the stability levy expenses due from the banks included in the IFRS consolidated financial statements in an amount of EUR 19.7 million (previous year: EUR 19.5 million) as well as ex-penses of EUR 16.2 million for contributions to the resolution fund pursuant to the Austrian Bank Recovery and Resolution Act (BaSAG) (previous year: EUR 14.0 million) and expenses of EUR 2.8 million for contributions to the deposit guarantee scheme in accordance with the Austrian Deposit Guarantee and Investor Compensation Act (ESAEG) (previous year: EUR 2.7 million).

In 2018, pre-tax profit for the year declined by EUR 164.9 mil-lion to EUR 368.9 million (previous year: EUR 533.8 million). Taxes on income were reported at EUR -69.4 million com-pared to the previous year (previous year: EUR 42.2 million). This includes regular taxes on income, as well as deferred taxes. Please refer to the section “Taxes on income” in the Notes for details.

After-tax profit for the year came to EUR 299.5 million for the 2018 financial year (previous year: EUR 491.6 million).


The Group




Operating income – which comprises net interest income, share of profit or loss of equity-accounted investments, net fee and commission income, net income from trading oper-ations and other net operating income – amounted to EUR 1,162.1 million (previous year: EUR 1314.9 million). Operating expenses, which correspond to the general administrative ex-penses line item, came to EUR 794.7 million (previous year: EUR 756.7 million). The Group therefore generated an oper-ating profit of EUR 367.5 million (previous year: EUR 558.2 million).

Statement of comprehensive income

Other comprehensive income (OCI) in 2018 was reported at a loss of EUR 115.0 million (previous year: income of EUR 23.3 million).

The loss of EUR 94.3 million in 2018 arising from the remea-surement gains/losses of OCI debt instruments and own credit risk on financial liabilities measured at fair value largely resulted from the widening of credit spreads on the assets side and the narrowing of liquidity spreads on the liabilities side.

The share of other comprehensive income of companies ac-counted for using the equity method stemmed primarily from the holdings in Raiffeisenbank International AG and Hypo Oberösterreich.

The remaining other comprehensive income – consisting of remeasurement gains/losses associated with the hedge of a net investment in foreign operations and foreign exchange differences – amounted to a loss of EUR 1.3 million in 2018 (previous year: loss of EUR 1.0 million).

Deferred taxes recognised in respect of other comprehensive income increased to EUR 24.3 million, mainly due to remea-surement gains/losses in connection with OCI debt instru-ments and own credit risk (previous year: EUR 1.2 million).

Comprehensive income came to EUR 184.5 million in 2018 (previous year: EUR 514.9 million).

Changes in the balance sheet

The consolidated total assets of Raiffeisenlandesbank Oberösterreich rose by EUR 1,669 million, or 4.1%, year on year and amounted to EUR 41,988 million as at the reporting date (previous year: EUR 40,319 million).

Loans and advances to banks declined during the course of 2018 by EUR 97 million, or 1.2%, to EUR 8,255 million (previ-ous year: EUR 8,352 million). Of the total loans and advances to banks, EUR 751 million (previous year: EUR 733 million) relates to refinancing to Upper Austrian Raiffeisen banks.

Loans and advances to customers rose by 9.9%, or EUR 2,023 million, to EUR 22,375 million (previous year: EUR 20,352 million); this increase was attributable to a very fa-vourable economic situation, a rise in the demand for loans and a continuation of the acquisition strategies in the Corpo-rates segment.

Trading assets – consisting of bonds and other fixed-income securities plus derivatives with positive fair values – had a carrying amount of EUR 1,749 million as at 31 Dec. 2018 (pre-vious year: EUR 1,886 million). Compared with the figures of the previous year, this was down by EUR 137 million, or 7.3%, and was due largely to changes in the fair value of derivative exposures.

Financial assets amounted to EUR 5,653 million, a decline of EUR 105 million, or 1.8%, compared with the figure as at 31 Dec. 2017 (previous year: EUR 5,758 million).

The carrying amount of equity-accounted investments as at 31 Dec. 2018 was EUR 2,118 million (previous year: EUR 2,158 million). Please refer to the section “Companies accounted for using the equity method” in the Disclosures for details.

The other asset items – consisting of cash and cash equiv-alents, intangible assets, property, plant and equipment, in-vestment property, current and deferred tax assets and other assets – swelled by EUR 26 million, or 1.4%, year on year to EUR 1,838 million (previous year: EUR 1,812 million).

IN EUR M 2018 2017

After-tax profit for the year 299.5 491.6

Remeasurement gains/losses on OCI debt instruments (FVOCI) –69.9 n/a

Evaluation change of own credit risk for financial liabilities accounted for at fair value –24.4 n/a

Remeasurement gains/losses in respect of AfS reserves n/a 1.7

Other share of profit or loss of equity-accounted investments –40.4 24.3

Actuarial gains and losses –3.3 –2.9

Additional other net profit/loss –1.3 –1.0

Taxes recognised in respect of this amount 24.3 1.2

Total other comprehensive income –115.0 23.3

Comprehensive income 184.5 514.9

Assets

31.12.2018 31.12.2017 Change

IN EUR M IN % IN EUR M IN % IN EUR M IN %

Loans and advanc-es to banks 8,255 19.7 8,352 20.7 –97 –1.2(of which to Raiff-eisen banks) (751) (1.8) (733) (1.8) (18) (2.5)

Loans and ad-vances to customers 22,375 53.3 20,352 50.5 2,023 9.9

Trading assets 1,749 4.2 1,886 4.7 –137 –7.3

Financial assets 5,653 13.5 5,758 14.3 –105 –1.8

Companies accounted for using the equity method 2,118 4.9 2,158 5.3 –40 –1.9

Other Assets 1,838 4.4 1,812 4.5 26 1.4

Total 41,988 100.0 40,319 100.0 1,669 4.1



Compared to the preceding year, amounts owed to banks rose by EUR 622 million, or 5.0%, to EUR 12,955 million (pre-vious year: EUR 12,333 million). This reflects the excellent process for transferring surplus liquidity from the Raiffeisen banks in Upper Austria to Raiffeisenlandesbank Oberös-terreich. Of the amounts owed to banks, EUR 6,135 million (previous year: EUR 5,499 million) is owed to Upper Austrian Raiffeisen banks.

Amounts owed to customers rose by EUR 666 million, or 5.5%, to EUR 12,720 million (previous year: EUR 12,054 mil-lion). The qualitative focus of this increase was on the term extension of customer deposits and the proportionality of the volume of liabilities to the amount of the entire business with the respective customer.

Trading liabilities – consisting of interest rate/foreign ex-change/equity/index-related and other business – had a carrying amount of EUR 1,407 million as at 31 Dec. 2018 (previous year: EUR 1,514 million). This equated to a decline of EUR 107 million, or 7.1%, which was attributable for the most part to interest rate transactions.

Liabilities evidenced by certificates rose by EUR 793 mil-lion, or 10.0%, to a carrying amount of EUR 8,715 million at 31 Dec. 2018 (previous year: EUR 7,922 million) and con-sisted of the following: ı issued bonds in an amount of EUR 3,834 million (previous

year: EUR 3,082 million), ı listed and unlisted pfandbriefs/local authority debt secu-

rities of EUR 458 million (previous year: EUR 444 million) and

ı other liabilities evidenced by certificates amounting to EUR 4,423 million (previous year: EUR 4,396 million).

Of the liabilities evidenced by certificates, EUR 2,475 million (previous year: EUR 1,810 million) was accounted for by cov-ered bonds. In 2018, the Bank successfully issued its second covered bond benchmark issue. Subscription orders, in par-ticular from investors in Europe, were available for the issue

of EUR 500 million. The bond was 1.5 times oversubscribed. Subordinated capital was reported at a carrying amount of EUR 903 million as at 31 Dec. 2018 (previous year: EUR 1,152 million), a year-on-year decrease of EUR 249 million, or 21.6%. This change stemmed from higher levels of redemp-tion when compared with new issues. Unsecured issues with denominations of less than EUR 2,000 (or the equivalent in foreign currency for issues in foreign currency) aimed at re-tail investors accounted for EUR 3,227 million (previous year: EUR 3,757 million) of the total volume outstanding.

The remaining liability items – consisting of provisions, current and deferred tax liabilities and other liabilities – declined to EUR 835 million (previous year: EUR 941 million).

The breakdown of equity as at the last two reporting dates was as follows:

For details, please refer to the statement of changes in equity and the “Equity” section in the Disclosures.

1.3. Report on the bank branches, branches and subsidiaries

Branches

As at 31 Dec. 2018, the Raiffeisenlandesbank Oberösterre-ich Group had a total of 42 (previous year: 42) branches, to-gether with one (previous year: one) regional branch office in Prague and nine (previous year: eight) regional branch offices in Germany. The branches consisted of branches of Raiff-eisenlandesbank Oberösterreich (Upper Austria, 17; Vienna, one) and branches of Hypo Salzburg (24). Raiffeisenlandes-bank Oberösterreich places particular emphasis on combin-ing digital products with personal advice and support at the branches.

Branches and subsidiaries abroad

Raiffeisenlandesbank Oberösterreich has been operat-ing its own southern Germany office since 1991. In 2018, it opened a new regional branch office in Stuttgart, enabling it to provide an even greater level of support for fast-growing businesses in this dynamic economic region based on cus-tomer-focused, forward-looking financing models.

Equity and liabilities

31.12.2018 31.12.2017 ChangeIN EUR M IN % IN EUR M IN % IN EUR M IN %

Amounts owed to banks 12,955 30.8 12,333 30.6 622 5.0

(of which to Raiffeisen banks) (6,135) (14.6) (5,499) (13.6) (636) (11.6)

Amounts owed to customers 12,720 30.3 12,054 29.9 666 5.5

Trading liabilities 1,407 3.4 1,514 3.8 –107 –7.1

Liabilities evidenced by certificates 8,715 20.8 7,922 19.6 793 10.0

Subordinated capital 903 2.2 1,152 2.9 –249 –21.6

Other Assets 835 1.9 941 2.3 –106 –11.3

Equity capital 4,453 10.6 4,404 10.9 49 1.1

Total 41,988 100.0 40,319 100.0 1,669 4.1

IN MILLIONS EUR 31.12.2018 31.12.2017

Share capital 277.6 277.6

Capital reserves 972.0 972.0

Retained earnings 2,990.3 2,952.9

Non-controlling interests 212.7 201.0

Total 4,452.6 4,403.5


The Group




As at the end of 2018, Raiffeisenlandesbank Oberösterreich had a presence at a total of nine locations in Bavaria and Baden-Württemberg (Augsburg, Passau, Nuremberg, Mu-nich, Regensburg, Würzburg, Ulm, Stuttgart and Heilbronn), acting as a significant driving force for the region’s econ-omy. The main focus for support activities is on customers from industry, medium-sized enterprises and affluent private customers.

In addition, Raiffeisenlandesbank Oberösterreich also has a branch in the Czech Republic. Affluent private customers and corporate customers are provided with a broad spectrum of professional financial services, all of which reflect the Bank’s customer focus, from the Prague location.

In addition to its branch locations, Raiffeisenlandesbank Oberösterreich is also represented abroad by companies in the IMPULS-LEASING Group. After providing services in Southern Germany and the Czech Republic through sub-sidiaries for more than two decades, the IMPULS-LEASING Group has had leasing companies in Romania and Croatia since 2006 and in Poland and Slovakia since 2007. These companies focus on financing of vehicles as well as machin-ery and technical equipment. The focus is on servicing cor-porate customers. The IMPULSE-LEASING Group has six branches in Southern Germany (previous year: six) and 35 branches in Eastern European countries (previous year: 31).

For a quantitative description by geographic region, see the section “Country-by-country reporting” in the Notes.

1.4. Financial and non-financial performance indicators

Financial performance indicators

The key figures used in international comparisons and for in-ternal controls are as follows:

Profitability – key figures

ı The return on equity for 2018 – calculated as the percent-age ratio of pre-tax profit to average consolidated equity – stood at 8.4% (previous year: 12.8%).

Key liquidity figures

ı The Net Stable Funding Ratio (NSFR) is currently still in the observation phase from the perspective of the regu-lator. As at 31 Dec. 2018, the NSFR for the highest-level financial holding entity (the group of consolidated en-tities in accordance with the CRR in the registered co-operative society RBG OÖ Verbund eGen) stood at 110.2% (previous year: 107.3%) and therefore already ex-ceeded the future minimum NSFR requirement of 100%.

ı The LCR (liquidity coverage ratio) for the highest-level fi-nancial holding entity (the group of consolidated entities in accordance with the CRR in the registered coopera-tive society RBG OÖ Verbund eGen) as at 31 Dec. 2018 was 128.1% (previous year: 128.1%) and therefore clearly exceeded the LCR of 100% that banks were required to meet as at 31 Dec. 2018.

Asset quality indicators

The asset quality indicators included amongst the recovery indicators outlined in the Bank Recovery and Resolution Act (BaSAG) illustrate any and all changes in the Bank’s portfolio (CRR of the Raiffeisen Banking Group Upper Austria Group eGen). The focus is placed on credit risk (including counter-party risk). For the purposes of determining non-performing loans (NPLs), the definition of “non-performing” specified in EBA regulations is applied in the BaSAG indicators.

The thresholds of the asset quality indicators were deter-mined in such a way that there are still sufficient buffers in place above and beyond the limits set internally (now reg-ulatory minimum quotas set by the regulators), in order to ensure there is an opportunity to react or take restructuring measures before the restructuring threshold is breached. ı Coverage ratio I refers to the level of loss allowances al-

located in relation to non-performing loans. The ratio ex-presses the institution’s ability to absorb potential losses resulting from the non-performing portfolio. At Group level (the group of consolidated entities in accordance with the CRR in the registered cooperative society RBG OÖ Ver-bund eGen), the coverage ratio I as at 31 Dec. 2018 was 40.2% (previous year: 47.3%).

ı Coverage ratio II refers to the level of loss allowances and collateral allocated in relation to non-performing loans. The ratio expresses the institution’s ability to absorb po-tential losses resulting from the non-performing portfolio. The difference between coverage ratio I and II is that cov-erage ratio II includes collateral. At Group level (the group of consolidated entities in accordance with the CRR in the registered cooperative society RBG OÖ Verbund eGen), the coverage ratio II as at 31 Dec. 2018 was 77.1% (previ-ous year: 81.3%).

ı The NPL rate of change (in %) indicates how fast the port-folio of non-performing loans is changing. This exercised a direct impact on the results and on the bank’s equity. As at the end of 2018, the NPL rate of change (based on one year) at Group level (the group of consolidated entities in accordance with the CRR in the registered cooperative society RBG OÖ Verbund eGen) was -35.6% (previous year: -30.2%). The portfolio could thereby be substantially reduced.

ı The NPL ratio (ratio of non-performing loans exposure/total exposure) gives an indication of the significance of the portfolio of non-performing loans. At Group level (the group of consolidated entities in accordance with the CRR in the registered cooperative society RBG OÖ Verbund eGen), this ratio was 1.9% as at 31 Dec. 2018 (previous year: 3.2%).



The fall in the NPL ratio and coverage ratios compared with the previous year was predominantly attributable to the changeover to IFRS 9.

Please consult the Risk Report in the Notes for related, addi-tional risk indexes which are used internally at Raiffeisenland-esbank Oberösterreich, and which are determined according to a different set of customary definitions and calculations.

Key equity and solvency figures

Consolidated capital and reserves at the level of a chief fi-nancial holding (CRR Circle Raiffeisen Banking Group Upper Austria Verbund eGen) as per capital requirements regula-tions (CRR) are as follows:

At year-end 2018, the Common Equity Tier 1 (CET 1) capital amounted to EUR 3,976.6 million (31 Dec. 2017: EUR 3,911.0 million). The increase chiefly results from the addition of the consolidated annual results attributable to the owners of the parent company less foreseeable expenditures and divi-dends and from lower deductions.

Tier 1 (T 1) capital was calculated at EUR 3,979.5 million (31 Dec. 2017: EUR 3,911.0 million). The Additional Tier 1 (AT 1) capital of EUR 2.9 million (previous year: EUR 0) re-sulted from the calculation of non-controlling interests and lower deductions in AT 1 capital.

As at 31 Dec. 2018, Tier 2 (T 2) capital amounted to EUR 420.9 million (previous year: EUR 501.5 million). The decrease arose from the fact that, in 2018, the amortisation of Tier 2 capital instruments pursuant to Article 64 CRR at Raiffeisen-landesbank Oberösterreich was higher than new issues. Transitional provisions relating to own funds instruments qualifying as Tier 2 capital also had an effect (non-controlling interests). Similarly, 2018 Tier 2 capital instruments were sub-scribed to by major participations, which led to a deduction.

Total capital (TC) comprises Tier 1 capital and Tier 2 capital and amounted to EUR 4,400.4 million as at 31 Dec. 2018 (previous year: EUR 4,412.5 million).

The total risk exposure amount (risk-weighted assets, RWAs) as at 31 Dec. 2018 was EUR 26,276.0 million (previous year: EUR 24,796.8 million). The rise in risk-weighted assets results from the broad and increased customer demand for financ-ing solutions.

As at the end of the 2018 financial year, the regulatory capital ratios reported in accordance with the CRR were as follows: Common Equity Tier 1 capital ratio, 15.1% (previous year: 15.8%); Tier 1 capital ratio, 15.2% (previous year: 15.8%); and total capital ratio, 16.8% (previous year: 17.8%). The ratios are calculated on the total risk-weighted assets in accordance with Art. 92 CRR.

A capital conservation buffer was introduced effective 1 Jan. 2016 in accordance with section 23 of the Austrian Banking

Act, and this must be maintained in the form of Common Equity Tier 1 capital. This amounted to 1.875% for 2018. From 2019 onwards the capital conservation buffer stands at 2.50%.

Similarly Raiffeisenlandesbank Oberösterreich, at the con-solidated level of RBG OÖ Verbund eGen, as the highest financial holding entity as defined by section 7 of the Cap-ital Buffer Regulation (KP-V) of the FMA, had a capital buffer ratio imposed for systemic vulnerability (systemic risk buffer), amounting to 1.0% in accordance with KP-V section 10.

This anti-cyclical capital buffer is intended to function as an economic corrective measure during times in which credit growth exceeds GDP. The buffer is equivalent to between 0% and 2.5% of the risk-weighted assets and is held in Common Equity Tier 1 capital. Regulatory bodies may also stipulate that banks that operate in their respective states maintain an anti-cyclical capital buffer of over 2.5%.

As at 31 Dec. 2018 the capital buffer ratio for significant risk exposures in Austria was 0%. Raiffeisenlandesbank Oberös-terreich’s bank-specific anti-cyclical capital buffer was, in ac-cordance with section 23a (1) of the Austrian Banking Act, calculated as the weighted average of the ratios of anti-cy-clical capital buffers of the countries in which Raiffeisenland-esbank Oberösterreich has significant credit risk exposures. It is expected that Raiffeisenlandesbank Oberösterreich’s anti-cyclical capital buffer in 2019 will, similarly to 2018, be insignificant in size.

Please refer to the disclosures on consolidated regulatory own funds in the Notes for further details of own funds and the capital requirements.

Institutional protection scheme

The existing Institutional Protection Scheme (IPS) for Upper Austria (L-IPS) was adjusted in the past to the particulars of the new European legislation and complied with the legal framework as at the reporting date of 31 Dec. 2018. An IPS is a liability or indemnity agreement – created by means of a contractual agreement or through articles of association, statutes or charters – that provides protection for member banks in a decentralised banking group. Such an agreement sets out the terms on which the member banks stand to-gether and provide mutual solidarity. Pursuant to Article 49 CRR, in the determining their capital and reserves credit, in-stitutions must deduct their positions in equity instruments of other credit institutions, except where exempted under Article 49 (3) CRR in conjunction with Art. 113 (7) CRR as part of an existing IPS. Raiffeisenlandesbank Oberösterre-ich is a member of the regional state IPS, whose members also include all Raiffeisen banks in Upper Austria, as well as Raiffeisen-Kredit-Garantiegesellschaft m.b.H. Raiffeisen-Ein-lagensicherung OÖ reg. Gen.m.b.H acts as the trustee and manages the L-IPS assets of the scheme.


The Group




In addition, Raiffeisenlandesbank Oberösterreich is a mem-ber of the federal IPS (B-IPS), whose members also include Raiffeisen Bank International (RBI), as well as all Austrian Raiff eisenlandesbanks, Raiffeisen Wohnbaubank AG, Raiff-eisen-Holding Niederösterreich-Wien reg. Gen.m.b.H., Poso-jilnica Bank eGen and Raiffeisen Bausparkasse GmbH. In this case, Österreichische Einlagensicherung eGen has assumed the role of trustee for management of the B-IPS assets. Under Article 113 (7) of the CRR, and subject to consent from the competent authorities, banks may give a risk weight of 0% to risk exposures in respect of counterparties with whom the bank has signed an IPS, although this does not apply to risk exposures that make up items of CET 1 capital, additional Tier 1 capital or Tier 2 capital as specified by the CRR.

The Austrian Financial Market Authority (FMA) has issued a decision approving both protection schemes (L-IPS and B-IPS) of which Raiffeisenlandesbank Oberösterreich is a member and allowing the exemptions under Articles 49 (3) and 113 (7) of the CRR.

Non-financial performance indicators

Please refer to the separate non-financial report on the Raiff-eisenlandesbank Oberösterreich website.



2.1. Expected development of the economic environment

The global economy lost some momentum in the last few months of 2018 and economic forecasters revised their pro-jections downwards. The European Commission anticipates global economic growth of 3.8% in 2019/20, while the In-ternational Monetary Fund is somewhat more pessimistic, at 3.5% for 2019 and 3.6% for 2020. These muted prospects are based amongst other things on the slower growth that has been evident since the second half of 2018, for example in Germany (automotive industry), Italy (debt situation), Turkey (deepening recession). The situation is compounded by gen-eral risks, such as the negative impact from the trade dispute instigated by the US, heightened financial market volatility, the risk that the economic slowdown in China will be greater than expected and the persistent uncertainty surrounding Brexit. According to the IMF, it is even possible that the hard figures from the last few months could be underestimating the true extent of the economic slowdown because of the effects from international trade brought forward in expectation of higher customs duties.

In the US, sentiment and leading indicators continue to be very positive and higher than the long-term averages, even though there have been corrections since the autumn of 2018. The rate of growth in the USA will (be forced to) slow down: limitations in capacity (particularly in the labour mar-ket) are increasingly evident, fiscal stimuli are coming to end, and the mini-boom in investments stimulated by higher oil prices in the first half of 2018 is not likely to be repeated in 2019. Consumers are still in a buying mood, which is why consumption could again become the most important eco-nomic engine. The Fed is projecting GDP growth of 2.3% for 2019 and 2.0% for 2020. The IMF forecasts are 2.5% for 2019 and 1.8% for 2020.

In 2019, growth in the EU is likely to be sustained for the sev-enth year in succession, with every member state sharing in this expansion. Nevertheless, the pace of growth will proba-bly be more modest than in the last few years and the outlook is clouded by a number of uncertainties and risks (see above). However, according to EU analysts and the ECB, the fun-damental economic basis remains robust. The ECB expects growth of 1.7% in the Euro countries in 2019 (IMF: 1.6%, Euro-pean Commission: 1.3%), and for 2020 both the ECB and IMF are forecasting 1.7%, and the European Commission 1.6%. The drop in inflation in the eurozone towards the end of 2018 was caused by lower energy and food prices. The core rate of inflation (i.e. excluding the volatile prices of the energy and food sectors) remained low despite wage growth. Inflationary

pressure is not expected to be high in 2019 either, mainly due to the expected subdued development of commodity prices.

Austria's economy is also increasingly confronted with global economic risks and is therefore losing momentum. However, GDP should continue to grow above the eurozone average due to dynamic domestic demand. Consumer spending is gradually becoming the primary driver of economic growth on the back of a high level of consumer confidence and a favour-able income situation (rising employment, modest inflation, “Family bonus plus”, reduction in unemployment insurance contributions). GDP growth forecasts for 2019 are between 2.0% (WIFO, Austrian Institute of Economic Research) and 1.6% (European Commission), and for 2020 between 1.8% (WIFO) and 1.6% (European Commission, IHS).

Upper Austria also saw the peak of the boom during 2018 and, in line with the rest of Austria and the principal trading partners, expects a slight slowdown in the pace of growth. Solid fundamental data suggest that economic growth in 2019/20 will continue to be slightly above the Austrian aver-age. The federal state of Upper Austria is projecting growth in gross regional product (GRP) of 2.3% for 2019 and 2.0% for 2020.

2.2. Expected development of the companyDigitalisation is changing the banking business at an increas-ing pace and poses major challenges for the entire industry. Our focus on the requirements and needs of our customers is unique. Raiffeisenlandesbank Oberösterreich, as a pio-neer of innovation in this major change process, is providing strong impulses for the future with the permanent further de-velopment of all online and mobile products, thus offering its customers the opportunity to optimally conduct their bank-ing business through all channels. Cooperation with creative companies such as start-ups and FinTechs, with whom new products and technologies are jointly tested for their future viability, plays an important role in this.

However, as a consequence of the rapid changes, it is no longer enough to create digital services perfectly aligned with the new customer requirements and to combine these services with professional face-to-face advice and support. In order to keep pace with global changes, a visionary and future-oriented approach is needed with far-reaching con-sequences on familiar processes and structures. Therefore the future-oriented project LEAD`25 was launched in 2018. The term “Home of Financial Intelligence” was coined here as a vision. The premises for the initiated change process,

2. Outlook and risks faced by the company


The Group



Group management report 2018 | Outlook and risks

which goes hand in hand with the implementation of a new organisation, are a radical customer orientation, a sustained increase in the Group's profitability, interdisciplinary work as well as flat hierarchies and bundling of know-how. The pro-cesses already initiated with LEAD' 25 are to be further in-tensified in 2019 and the working methods and structures of Raiffeisenlandesbank Oberösterreich are to be changed in the long term. Another topic in which the entire Raiffeisen Banking Group Upper Austria has been intensively engaged for several years now is the “Raiffeisen Banking Group Oberösterreich 2020” project, in which Raiffeisenlandesbank Oberösterreich together with the Upper Austrian Raiffeisen Banks is developing a number of measures for the future to secure stability and guarantee long-term qualitative growth.

Intensive work is also taking place in parallel on the “Digi-tal regional bank” project. This is based on an “aggregated business model” in which the physical and digital channels no longer co-exist separately but are in fact intertwined. The physical proximity of the branch remains important and is retained based around the relevant need. The support and service approaches will change, however, and digital chan-nels will increasingly be selected for these which are indepen-dent of location and time. This concept benefits customers in that they receive active support with differing services and support and care concepts. Raiffeisenlandesbank Oberös-terreich benefits from increases in productivity and efficiency based on process harmonisation and simplification. This is associated with new and modern branch concepts that are precisely tailored to customer needs. The general aim is to improve existing services, create new ones, further increase efficiency and sharpen the strategy for the future. It is partic-ularly important to combine personal consultation with digital services, and align them perfectly. The key to our success going forward will be in keeping a keen eye on trends and developments and continuing to perform pioneering work in digital innovation.

Raiffeisenlandesbank Oberösterreich is a strong driving force with its professional range of sustainable financial services for private, corporate and institutional customers, and is broadly and stably positioned through other business areas, such as equity investments.

Businesses are offered a dedicated network and services that extend well beyond the norm as a result of a high level of cooperation between Raiffeisenlandesbank Oberöster-reich and the Raiffeisen banks in Upper Austria. Raiffeisen-landesbank Oberösterreich's unique position in the equity investment sector also gives it special know-how in providing financing via equity financing. The development of the core capital ratio, which represents an important foundation for the future stability and independence of Raiffeisenlandesbank Oberösterreich, also remains in focus.

Based on the Bank's strengths – such as efficient, targeted liquidity planning and control, comprehensive risk man-agement combined with detailed control – and the close collaboration with the Raiffeisenbanks in Upper Austria, Raiff-eisenlandesbank Oberösterreich is doing everything it can to enable it to continue to justify the confidence of custom-ers in the future and to provide comprehensive support for businesses, institutions and retail customers in their various projects.

The forward-looking measures and the outlook for the key subsidiaries and equity-accounted investments are also positive:

SALZBURGER LANDES-HYPOTHEKENBANK AKTIEN-GESELLSCHAFT (Hypo Salzburg) will continue to be a re-liable partner for its customers in the future. It has a stable ownership structure and possesses the successful business model of a regional bank. The emphasis is on a systematic commitment to meeting customer needs and keeping a con-sistent focus on target groups by providing attractive prod-ucts as well as the responsible handling of costs and risks. The equity and liquidity situation of Hypo Salzburg is very sound and paves the way for sustained growth within key customer segments. Opportunities to enhance the collabora-tion with Hypo Salzburg are investigated on an ongoing basis with a view to reducing unnecessary duplication.

The IMPULS-LEASING Group predicts that there will be a stable trend in new business in 2019 in its home markets of Austria and Southern Germany and in Central and Eastern Europe (CEE). It will retain its conservative business policy strategy in terms of income and risk. As part of efficiency en-hancement measures, interfaces with Raiffeisenlandesbank Oberösterreich and the Raiffeisen Banking Group Upper Austria are being continuously evaluated and optimised.

With a customer volume of around EUR 15 billion, KEPLER- FONDS KAG is one of the top four investment companies in Austria. Numerous domestic and international awards (which include a win in the SCOPE Awards as best all-round provider in Austria and the top 5-star ranking in the Fonds-Kompass awards run by CAPITAL magazine in Germany) bear testi-mony to the high quality of its product portfolio. KEPLER is a recognised specialist in managing bond funds, ethical funds, dynamic mixed funds and defensively oriented equity funds.

The VIVATIS Holding AG Group and the efko Frischfrucht und Delikatessen GmbH Group are assuming an increase in sales revenue above the inflation rate for the 2019 financial year. These groups aim to generate organic growth, notably by increasing the innovation rate and by attracting new custom-ers. The main stimulus for growth is derived from business in the frozen, fresh convenience produce, catering and branded products segments. Capital investment of approximately EUR 34.0 million is planned for the foodstuffs division in 2019.



The OÖ Wohnbau Group has planned a construction vol-ume of EUR 80 million for 2019. In the housing management business, the group plans to expand its current portfolio of approximately 42,400 management units by adding units that it constructs itself and by acquiring other housing manage-ment portfolios.

Thanks to its strong market position and on the basis of a modest trend in the business cycle, the voestalpine Group anticipates growth in sales revenue. From today’s perspec-tive, the group expects to generate operating profit (EBITDA) of EUR 1,550 million. Factors that will be critical to earn-ings growth over the medium term include the elimination of non-recurring items and, above all, developments in the international arena (including global trade policy, Brexit).

Raiffeisenbank a.s. represents an important institution within the Czech bank market as the fifth largest bank and offers a broad variety of financial services. It addresses customers’ needs throughout Czechia with over 129 branches and busi-ness centres. The bank’s primary focus in 2019 will remain on organic growth, thereby strengthening the market position of Raiffeisenbank a.s. on an ongoing basis.

AMAG will benefit from a larger product portfolio, increasing volume and gains in productivity over the coming years as a consequence of its capital investment in site expansion. The company expects global demand for primary aluminium to grow by 3.4% in 2019, with equivalent growth in demand for rolled aluminium products forecast at 3.9%.

2.3 Significant risks and uncertainties

Raiffeisenlandesbank Oberösterreich Group’s long-term success has largely been due to active risk management. In order to achieve this objective, Raiffeisenlandesbank Oberös-terreich has implemented a risk management and internal control system with structures that enable it to identify and measure all risks (credit risk, market risk, equity risk, liquidity risk, macroeconomic risk, and operational and other risks) and then to proactively manage them.

The overall risk strategy approved by the Managing Board ensures that the risks assumed by the Bank are consistent with the corporate strategy. The Managing Board and the Supervisory Board are kept regularly informed.

For more detailed information on all the financial risks in the Raiffeisenlandesbank Oberösterreich Group for the year 2018 and the goals and methods of risk management, please refer to the risk report in the Notes.


The Group



Group management report 2018 | Outlook and risks | Research and development

3. Research and developmentThe “Digital regional bank” programme is a key future proj-ect. The aim is to open new, exploited pathways and network with existing structures. The aim of the programme – which consists of twelve strategic projects – is to promote and ac-celerate product innovation to further reinforce customer confidence, secure new market share, continue to consol-idate the Bank’s leadership in terms of quality and further increase efficiency through standardisation. The programme includes online projects (app, “Mein ELBA”, website, digital sales, direct product purchase channels, etc.), advisory-re-lated projects (SMART, advisory services, product purchase channels for advisers, etc.) and the development of an om-nichannel platform and analytics. The Bank is also pressing ahead with innovative projects for Upper Austria (FX platform, community platform, digital corporate banking, ROBO advi-sory, etc.).

A central element is the development of a personal finance portal known as “Mein ELBA”. In the future, “Mein ELBA” will play an important role in the relationship with customers. The finance portal, which can be customised by users, primarily also serves as a platform for communications between cus-tomers and the Bank. The services provided by this core cus-tomer platform are rounded off by the facility to send suitable product proposals to customers with an option that allows customers to sign up to the product immediately. In 2018, the first end-to-end programmes will become available in the form of an option to open an account online and Raiffeisen Sofort Kredit on the app. Going forward, customers will be offered a unique, overarching standardised service based on the integration and joint refinement of an omnichannel strat-egy in the “New advice”, “Customer contact centre”, “Analyt-ics” and “Mein ELBA” projects.

The rapid changes in customer behaviour are also demanding continuous modifications to systems. Architecture therefore needs to be fit for the future. The cornerstones are cut-ting-edge software architecture (e.g. micro-services), system architecture (e.g. operating system, databases), application architecture (interface presentation) and integration architec-ture (e.g. use of APIs via API management platforms). Inde-pendent developments and the integration of off-the-shelf developments (such as start-ups) can be quickly deployed.

The trend towards smartphone-based banking is increasing sharply. Raiffeisenlandesbank Oberösterreich offers its cus-tomers numerous options in this regard. For example, the smartphone-based payment process is being constantly ex-panded to include more value-added functions. One of the developments has been the addition of customer cards to the ELBA pay app (available since 2017) so that all payment and customer cards are now offered in one app. One of the developments has been the addition of customer cards to the ELBA pay app (available since 2017) so that all payment and customer cards are now offered in one app. Through a cooperation with Blue Code (July 2018), private customers

of Raiffeisen Oberösterreich can activate ELBA directly via a mobile banking app and start cashless payments on their iPhone and Android smartphone immediately.

In 2018, Raiffeisenlandesbank Oberösterreich already pro-cessed more than 23 million contactless payments, which equates to approximately every third payment. The number of NFC transactions rose by 80% in 2018 compared with 2017. This trend will increase as the situations in which NFC appli-cations can be used are expanded. For example, all payment terminals in Austria must be NFC-capable by 2020, thereby enabling contactless payment by card or smartphone. Fur-thermore, the vast majority of all Raiffeisen ATMs and cash recyclers will be equipped with an NFC reader by the end of 2018. All transaction cards issued by Raiffeisenlandesbank Oberösterreich have the necessary NFC technology for con-tactless payment.

With the launch of the ZOIN product, Raiffeisenlandesbank Oberösterreich is offering the first P2P payment solution and thereby extending the scope of its mobile payment offering. ZOIN enables monetary amounts to be sent from smart-phone to smartphone in real time. The transaction only re-quires that the recipient’s mobile phone number; there is no need to input the IBAN.

The European instant payment standard has been imple-mented for Raiffeisen customers in “Mein ELBA” and “ELBA business” in the form of the Raiffeisen express transfer. Cus-tomers can use the new bank transfer in a matter of seconds around the clock and 365 days a year.

In the area of online product offerings, online account settle-ment was used across the board in 2018. This facility gives customers the option of opening an account (conventional current account or student account) from the comfort of their own homes. Customer identity is verified by video link, eps transfer or in person at a branch of Raiffeisen Oberösterreich. The online instant loan (up to EUR 4,000 in the ELBA app), the Raiffeisen online loan (up to EUR 30,000 in “My ELBA”) and the new Raiffeisen online saving (for new and existing cus-tomers) were also used in 2018. Over the next few months, online sign-up will be extended to further products such as vehicle leasing, home savings contracts, insurance and the opening of online investment accounts; it will also be possible to order Raiffeisen credit cards online.

Since the summer of 2017, Raiffeisen Österreich has been working in collaboration with its partner FinReach to offer what is for customers a fully automated online account-switching service, making it easy for new customers to move their ac-count to Raiffeisen.

As part of its educational and training programmes, Raiff-eisenlandesbank Oberösterreich employs e-learning, blend-ed-learning modules and web-based training sessions.



Raiffeisenlandesbank Oberösterreich has developed its own e-learning platform and serves as a competence centre in this regard for Raiffeisen Österreich.

At the Raiffeisenlandesbank Oberösterreich computer cen-tre, the GRZ IT Center, cutting-edge IT safety standards and methods are consistently being designed and implemented. In addition to ISO 27001 and ISAE3402 type B certification, a variety of measures and projects are being implemented to enhance security from a technical perspective (such as the deployment of products to help identify advanced persistent threats) and to significantly sharpen the security awareness of employees relating to infrastructure, systems and data.

Via Open Banking, Raiffeisenlandesbank Oberösterreich open up the innovative and secure use of bank data for Fin-Techs, start-ups and third party providers. This results in a far-reaching change of existing financial services through a deep and fast integration of data. This results in an improve-ment in customer convenience and creates a bundling of services.

Open Banking simplifies collaboration with cooperation part-ners. This enables business models to be developed that offer customers convenient, simple, versatile and custom-er-friendly solutions. This development will make it possible to develop new processes and structures that will fundamen-tally change the banking business.

The prevention of fraud in payment transactions faces new challenges in the age of real-time payment transactions. Through the use of artificial intelligence, Raiffeisenlandesbank Oberösterreich can review and assess transactions more rapidly, respond faster to new types of fraud and improve its identification of fraudulent transactions.

The GRZ IT Center GmbH (GRZ), as a full-service provider of IT infrastructure to the Raiffeisen Banking Group Upper Austria, has been able to further consolidate its position as one of the leading bank data centres in Austria, not least through a series of long-term constructive partnerships. From a strategic standpoint, in addition to the actual data centre production operation (shared services/data centre; system operation), GRZ’s own professionals are engaged in all re-lated tasks such as systems and security engineering using a proactive, state-of-the-art approach.

A great deal of attention is given to all aspects of security: employee awareness, asset security, network security, com-puter centre security, virus protection, intrusion prevention and detection, software security, server security, computer and internet security. Internal audits of IT security (Group review) draw on the strict IT basic protection manual of the German Federal Office for Information Security Technology (BSI). External audits have been successfully completed/sup-ported as follows: (re)certification and testing according to ISO 9001:2015, ISO 27001:2013 and ISAE 3402 type 2 for the Linz, Innsbruck and Salzburg sites.

Contacts for research and development are primarily from the Johannes Kepler University of Linz and the software park in Hagenberg. There are also other channels for exchanging knowledge relating to specific situations and topics with other computer centres, IT service providers and consulting com-panies in Austria, Germany and Switzerland.

Raiffeisen Software GmbH (RSG), also headquartered in Linz, arose in 2015 from the fusion of RACON Software GmbH, Linz, and Raiffeisen Solution Software und Service GmbH, Vienna. This brought together the two software development companies in the Raiffeisen sector that had operated for years in parallel into a new, integrated, innovative and broadly based analytical and software developing and consultation unit that is professionally involved in topics such as software engineering, process models (especially agile methodologies) and all forms of standardisation. RSG also avails itself of ex-ternal networks and academic cooperative efforts.

In the VIVATIS Holding AG Group, a group innovation man-agement system integrated with company management has been in place for a number of years to safeguard and enhance the group's market position. Each Group company has its own innovation managers who are supervised by the Group innovation management team. One of the key areas of man-agement focus in the group is on continuous improvement in recipes and processing technologies as well as on ongoing development of new products, services and business mod-els. Another focus is on digital trends and their relevance to and potential for the VIVATIS Group companies. Since 2018, the VIVATIS Group has, among other things, worked in part-nership with “factory300”, the start-up campus based at the Linz tobacco factory. The objective is to step up collaborative activities with start-ups.

The efko Group has local innovation teams in all its entities. In 2017, these teams were amalgamated into central coop-eration groups, which since then have become an import-ant driving force to intensify innovative activities. The current priority is to implement the strategy drawn up in 2018. This strategy aims to safeguard the basis of the business – i.e. the core business of canned foods – by rejuvenating the range and creating new uses. It also focuses on product develop-ment and the establishment of new sales structures in the growing fresh convenience produce and away-from-home (food service) markets. In this regard, activities in 2019 will include product launches for new premium salad bowls and an organic food service concept.


The Group



Group management report 2018 | Research and development | Main aspects of the internal control and risk management system

4. Main aspects of the internal control and risk management system in relation to the accounting process

The accounting-related internal controls systems at Raiff-eisenlandesbank Oberösterreich relate to the process drafted and executed by the Managing Board and those individuals entrusted with monitoring the company and any other peo-ple, with the aim of achieving the following objectives: ı Effectiveness and economic viability of the accounting

process (this also includes protecting the assets from losses caused by damage and misappropriation),

ı Reliability in the financial reporting ı Compliance with the statutory regulations that apply to

accounting.

Balanced and complete financial reporting is an important goal for Raiffeisenlandesbank Oberösterreich and its board members. The task of the internal control system is to sup-port management in such a way that it guarantees effective and constantly improving internal controls in the context of accounting. The bases for preparing consolidated financial statements are pertinent Austrian laws, in particular the Aus-trian Commercial Code and the Banking Act in which the rules are set forth for consolidated annual financial state-ments. The standards of accounting for consolidated finan-cial statement consist in the International Financial Reporting Standards (IFRS) as they are to be applied within the EU.

Control environment

The structure of the internal control systems is determined via the control environment. The control environment is deter-mined through awareness on the part of the Managing Board and executives of good corporate governance. The Manag-ing Board of Raiffeisenlandesbank Oberösterreich bears overall responsibility for the design and effectiveness of the internal control system. The general control environment in-cludes the middle management level (heads of organisational units) in addition to the Managing Board.

The Code of Conduct forms the basis for the conduct of day-to-day business operations and is a binding framework that reflects Raiffeisen’s cooperative principles and the values of the Raiffeisenlandesbank Oberösterreich and its affiliates (Raiffeisenlandesbank Oberösterreich Group). The internal control system is geared towards the size and type of busi-ness operated in the Raiffeisenlandesbank Oberösterreich Group (in terms of complexity, diversification and risk poten-tial) and towards the legal requirements that the Group must comply with. The current version of the Code of Conduct is published on the Raiffeisenlandesbank Oberösterreich website.

The Fit & Proper Policy represents the written definition of the strategy for the selection of and procedure for assessing the suitability of members of the Supervisory Board, execu-tive management and employees in key functions and com-plies with the professional values and long-term interests of Raiffeisenlandesbank Oberösterreich. The principles for the remuneration policy in accordance with section 39b of the Austrian Banking Act or Article 92 et seq CRD are adhered to as applicable.

Risk assessment

The risk assessment is a dynamic and iterative process for identifying and assessing risks. Risks which represent ob-structions towards achieving certain objectives must be identified in good time, with appropriate actions introduced. The responsibilities for assessing and controlling the risks in accordance with section 39 of the Austrian Banking Act or CRR/CRD as well as the CEBS/EBA standards are regulated at Raiffeisenlandesbank Oberösterreich. The requisite func-tional separation is ensured with this.

The Risk Management division is responsible for the develop-ment and deployment of risk measurement procedures and IT systems at Raiffeisenlandesbank Oberösterreich; it pre-pares the results and risk information necessary to carry out active risk control and relays accounting-relevant information to the Managing Board accordingly.

Major risks related to accounting procedures are assessed and monitored by the Managing Board. It is also important that there are uniform principles for measurement, especially measurement of the essential financial instruments used in the Group.

Control measures

Principles and procedures for complying with company de-cisions are set up and published in order to provide safe-guards against risks and to achieve the corporate objectives. The effectiveness, traceability and efficiency of the internal control system essentially depend on the balanced mixture and proper documentation of the different control activities. Specific control and monitoring activities have been set out for this.



Individual financial statements

Separate financial statements are prepared on a decen-tralised basis in the respective Group units according to the guidelines issued by Raiffeisenlandesbank Oberösterreich. The employees responsible for accounting and the manager of the organisational unit for group accounting are responsi-ble for the complete disclosure and correct evaluation of all transactions brought to their attention.

Appropriate control measures are applied in ongoing busi-ness processes to ensure that potential misstatements or deviations in financial reporting are prevented or identified and corrected. Controlling measures range from examina-tion of period results by management and the specific recon-ciliation of accounts and an analysis of ongoing accounting processes.

Group consolidation

Standardised forms that are uniform throughout the Group form the basis for the consolidated financial statements. Ac-counting and measurement standards are defined and ex-plained by Raiffeisenlandesbank Oberösterreich, and are binding for the preparation of statement data.

Data for the financial statements, which are audited by an external auditor, is provided primarily through direct entry into the IDL Konsis consolidation system. The IT system is pro-tected with respect to IT security through the restrictions on the issuance of authorisations. The financial statements data submitted by the Group units is first reviewed by employees in Group accounting responsible for that unit and appropriate controls are performed by the relevant managers.

Information and communication

Functional information and communication channels are set up and are supported, recorded and processed using suit-able IT applications, so that information can be identified, re-corded and processed on time before being forwarded to the relevant levels within the company.

The consolidated results are presented in the form of con-solidated financial statements in the Annual Report. These consolidated financial statements are audited by an external auditor. In addition, a Group Management Report is also pre-pared in which disclosures and notes on the consolidated results is provided in accordance with statute.

The consolidated financial statements, together with the Group Management Report, are discussed in the Supervi-sory Board’s Accounting Committee . The consolidated fi-nancial statements are also submitted to the Supervisory Board. They are published in the Annual Report, on the com-pany’s own website and in the official gazette of the Wiener Zeitung, and then are entered into the Company Register.

Monitoring

The entire Raiffeisenlandesbank Oberösterreich Group has at its disposal effective and reliable control, information and communication systems that encompass all key business ac-tivities and, in particular, that are consistent with the organi-sational and internal control requirements for IT and with the need for an appropriate audit trail. These systems and organ-isational structures are continuously evaluated and improved.

Raiffeisenlandesbank Oberösterreich’s Internal Auditing unit is responsible for the internal auditing function. Group-wide, auditing-specific policies apply for all auditing activities, and these policies are minimum standards for internal auditing according to Austrian financial market oversight as well as international best practices.

Group auditing performs independent and regular checks for compliance with internal guidelines within the Group units of Raiffeisenlandesbank Oberösterreich. The head of the Inter-nal Auditing area reports directly to the Managing Boards of Raiffeisenlandesbank Oberösterreich.


The Group



Group management report 2018 | Main aspects of the internal control and risk management system

Linz, 2 April 2019Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Europaplatz 1a, 4020 Linz

THE MANAGING BOARD

Dr. Heinrich Schaller Chief Executive Officer

Michaela Keplinger-Mitterlehner Deputy Chief Executive Officer

Michael GlaserMember of the Managing Board

Stefan Sandberger Member of the Managing Board

Reinhard SchwendtbauerMember of the Managing Board



IFRS Consolidated Financial Statements of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft for the year ended 31 Dec. 2018

Income statement ____________________________________________________________________________________________ 41

Statement of comprehensive income ___________________________________________________________________ 42

Statement of financial position ____________________________________________________________________________ 43

Statement of changes in equity ___________________________________________________________________________ 44

Cash flow statement _________________________________________________________________________________________ 45

Notes ____________________________________________________________________________________________________________ 46

The company __________________________________________________________________________________________________ 46

Principles underlying the consolidated financial statements in accordance with IFRS _____ 46

Accounting policies __________________________________________________________________________________________ 59

Segment reporting ___________________________________________________________________________________________ 72

Income statement disclosures ____________________________________________________________________________ 88

Balance sheet disclosures _________________________________________________________________________________ 98

Risk report _____________________________________________________________________________________________________ 140

Other disclosures _____________________________________________________________________________________________ 158

Disclosures required under Austrian accounting standards _______________________________________ 166

Events after the reporting date ____________________________________________________________________________ 171

Members of the boards of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft _______ 171

Audit Certificate of the independent auditors Austrian Raiffeisen Association _________________________________________________ 172

Report of the independent auditors KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft ___________________________________________ 178


The Group



IFRS consolidated financial statements | Income statement

Income statement

IN EUR '000 Note 2018 2017

Interest and interest-related income (1) 753,672 723,557

Interest income using the effective interest method 495,903 416,838

Other interest income, similar income and current income 257,769 306,719

Interest and interest-related expenses (1) –351,896 –371,857

Net interest income (1) 401,776 351,700

Loan loss allowances (2) –57,940 –45,287

Net interest income after loan loss allowances 343,836 306,413

Share of profit or loss of equity-accounted investments (3) 89,041 362,514

Fee and commission income (4) 227,218 212,185

Fee and commission expenses (4) –61,248 –58,101

Net fee and commission income (4) 165,970 154,084

Net income from trading operations* (5) 7,532 6,287

Gains and losses on financial instruments measured at fair value** (6) 55,001 15,594

Gains and losses on other financial instruments*** (7) 4,343 5,327

Other net financial income 66,876 27,208

General administrative expenses (8) –794,687 –756,712

Other operating income (9) 1,092,252 1,204,363

Other operating expenses (9) –594,425 –764,098

Other net operating income (9) 497,827 440,265

Pre-tax profit for the year 368,863 533,772

Taxes on income (10) –69,389 –42,221

After-tax profit for the year 299,474 491,551

of which attributable to equity holders of the parent company 278,579 484,095

of which attributable to non-controlling interests 20,895 7,456

* 2017: Net trading income ** 2017: Net income/loss from designated financial instruments and derivatives*** 2017: Net income from investments



IN EUR '000 Note 2018 2017


Items that cannot be reclassified to profit or loss –39,105 8,478

Actuarial gains and losses on defined benefit plans (31) –2,392 –2,163

Amounts recognised in equity –3,297 –2,896

Taxes recognised in respect of this amount 905 733

Other income from companies accounted for under the equity method (18), (31) –18,396 10,641

Amounts recognised in equity –18,401 10,575


Gains or losses due to change in own credit risk in respect of financial liabilities designated at fair value (31) –18,317 n/a

Amounts recognised in equity –24,366 n/a

Taxes recognised in respect of this amount 6,049 n/a

Items that can be reclassified to profit or loss –75,832 14,857

Remeasurement gains/losses of financial assets at fair value through other comprehensive income (FVOCI) (31) –52,394 n/a

Amounts recognised in equity –65,151 n/a

Amounts reclassified to profit or loss –4,707 n/a

Taxes recognised in respect of this amount 17,464 n/a

Gains or losses on remeasurement of AfS securities (31) n/a 1,304

Amounts recognised in equity n/a 14,456

Amounts reclassified to profit or loss n/a –12,726

Taxes recognised in respect of this amount n/a –426

Gain or loss from the hedging of net investments (31) 198 –1,610

Amounts recognised in equity 264 –1,973

Amounts reclassified to profit or loss 0 –174

Taxes recognised in respect of this amount –66 537

Currency differences (31) –1,523 1,177


Amounts reclassified to profit or loss 0 0


Other income from companies accounted for under the equity method (18), (31) –22,113 13,986


Amounts reclassified to profit or loss 0 0

Taxes recognised in respect of this amount –100 272

Total other comprehensive income –114,936 23,335

Comprehensive income 184,538 514,886

of which attributable to equity holders of the parent company 167,917 506,089


Statement of comprehensive income


The Group



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

Assets IN EUR '000 Note 31.12.2018 31.12.2017

Cash and cash equivalents (11), (12) 71,452 70,402

Loans and advances to banks (11), (13), (15) 8,255,104 8,352,262

Loans and advances to customers (10), (14), (15) 22,374,848 20,352,182

Trading assets (10), (16) 1,749,390 1,885,912

Financial assets (10), (17) 5,653,479 5,758,495

Companies accounted for using the equity method (18) 2,117,861 2,158,102

Intangible assets (20) 47,636 50,102

Property, plant and equipment (21) 435,347 425,146

Investment property (21) 717,384 740,692

Current tax assets (10) 5,141 7,861

Deferred tax assets (10) 43,140 36,160

Other assets (22) 503,660 439,928

Assets held for sale (11), (23) 13,983 42,205

Total 41,988,425 40,319,449

Equity and liabilities IN EUR '000 Note 31.12.2018 31.12.2017

Amounts owed to banks (11), (24) 12,955,054 12,333,368

Amounts owed to customers (11), (25) 12,719,896 12,054,121

Trading liabilities (11), (26) 1,407,329 1,513,826

Liabilities evidenced by certificates (11), (27) 8,714,515 7,921,626

Provisions (15), (28) 266,896 252,982

Current tax liabilities (10) 45,058 43,992

Deferred tax liabilities (10) 40,564 81,923

Other liabilities (29) 483,135 545,044

Liabilities associated with assets classified as held for sale (23) 0 17,352

Subordinated capital (11), (30) 903,419 1,151,698

Equity capital (31) 4,452,559 4,403,517

of which attributable to equity holders of the parent company 4,239,902 4,202,514


Total 41,988,425 40,319,449

Balance sheet



Statement of changes in equity

IN EUR '000

Share capital

Capital reserves

Retained earnings Subtotal

Non- controlling interests Total

Equity 31 Dec. 2017 277,630 971,973 2,952,911 4,202,514 201,003 4,403,517

Effects of first-time application of IFRS 9 & IFRS 15 0 0 –72,112 –72,112 –1,002 –73,114

Effects of first-time application of IFRS 9 0 0 –72,587 –72,587 –1,331 –73,918

Effects of first-time application of IFRS 15 0 0 475 475 329 804

Equity 1 Jan. 2018 277,630 971,973 2,880,799 4,130,402 200,001 4,330,403

Total comprehensive income for the period 0 0 167,917 167,917 16,621 184,538

After-tax profit for the year 0 0 278,579 278,579 20,895 299,474

Total other comprehensive income 0 0 –110,662 –110,662 –4,274 –114,936

Dividends 0 0 –41,446 –41,446 –3,147 –44,593

Change in basis of consolidation 0 0 77 77 –1,225 –1,148

Shareholding changes, restructuring 0 0 0 0 0 0

Capital increases 0 0 0 0 –5 –5

Other changes in capital 0 0 –17,048 –17,048 412 –16,636

Equity 31 Dec. 2018 277,630 971,973 2,990,299 4,239,902 212,657 4,452,559

IN EUR '000

Share capital

Capital reserves

Retained earnings Subtotal

Non- controlling interests Total

Equity 1 Jan. 2017 277,630 971,973 2,487,239 3,736,842 191,629 3,928,471

Comprehensive income 0 0 506,089 506,089 8,797 514,886

After-tax profit for the year 0 0 484,095 484,095 7,456 491,551

Total other comprehensive income 0 0 21,994 21,994 1,341 23,335

Dividends 0 0 –36,699 –36,699 –2,523 –39,222

Change in basis of consolidation 0 0 0 0 3,100 3,100

Shareholding changes, restructuring 0 0 0 0 0 0

Capital increases 0 0 0 0 0 0

Other changes in capital 0 0 –3,718 –3,718 0 –3,718

Equity 31 Dec. 2017 277,630 971,973 2,952,911 4,202,514 201,003 4,403,517

For information on the effects on equity and for background information in connection with the first-time application of IFRS 9 and IFRS 15, please refer to the reconciliation tables shown under accounting policies and the details on equity in the relevant disclosures (“Equity”).

Further details on equity components can be found in the notes concerning “equity”.


The Group



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

Cash and cash equivalents comprise cash in hand and balances at central banks repayable at any time.

IN EUR '000 Disclosure 2018 2017


Non-cash items contained in the profit for the year and reconciliation to the cash flow from operating activities:

Impairment losses, reversals of impairment losses, remeasurements in respect of property, plant and equipment and financial assets, trading securities, intangible assets and investment property 57,123 111,681

Reversal of /additions to reserves and risk provisions 129,045 97,269

Profit/loss from sale of property, equipment and financial assets, dealing securities, intangible assets and investment property –7,722 –18,872

Dividends (1) –43,517 –42,403

Interest income (1) –710,155 –681,154

Interest expenses (1) 351,896 371,856

Share of profit or loss of equity-accounted investments (3) –89,041 –362,514

Effects from initial consolidation and deconsolidation (7) –3,043 –10,064

Other adjustments due to non-cash items 41,349 49,199

Subtotal 25,409 6,549

Change in assets and liabilities from operating activities after adjusting for non-cash items

Loans and advances to banks and customers –2,097,569 –1,197,318

Trading assets 16,397 –36,997

Other assets –79,931 –19,271

Amounts owed to banks and customers 1,330,743 847,828

Trading liabilities 19,187 42,569

Liabilities evidenced by certificates 746,589 434,910

Other liabilities –111,309 –46,573

Dividends received 111,095 86,740

Interest received 731,770 768,319

Interest paid –320,285 –391,818

Taxes paid on income –53,107 –6,358

Cash flow from operating activities 318,989 488,580

Cash proceeds from sale of:

Financial assets and shares in companies 509,508 806,520

Property, plant and equipment, investment property and intangible assets 71,497 47,137

Payments to acquire:

Financial assets and shares in companies –469,629 –812,241

Property, plant and equipment, investment property and intangible assets (19) –137,537 –125,441

Acquisition of subsidiaries (net of acquired cash and cash equivalents) 0 –18,129

Disposal of subsidiaries (net of sold cash and cash equivalents) 7,064 518

Cash flow from investing activities –19,097 –101,636

Capital increase –5 0

Issue of subordinated capital (30) 66,786 120,859

Repayment/repurchase of subordinated capital (30) –321,029 –471,268

Purchase of non-controlling interests 0 0

Dividends –44,594 –39,223

Cash flow from financing activities –298,842 –389,632

Cash at the end of the previous period 70,402 73,090

Cash flow from operating activities 318,989 488,580

Cash flow from investing activities –19,097 –101,636

Cash flow from financing activities –298,842 –389,632

Cash and cash equivalents at the end of the period 71,452 70,402

Cash flow statement



Disclosure

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft (hereinafter: Raiffeisenlandesbank Oberösterreich) acts as a regional central institution of the Raiffeisen Banking Group Upper Austria and is recorded in the Commercial Register at the District Court in Linz under the number FN247579m. The registered office is situated at Europaplatz 1a, 4020 Linz, Austria.

As at 31 Dec. 2018, the registered co-operative society Raiff-eisenbankengruppe Oberösterreich Verbund eGen (here-after: RBG OÖ Verbund eGen) held 98.92 per cent of the ordinary shares in Raiffeisenlandesbank Oberösterreich. RLB Holding eGen Oberösterreich owns 1.08% of the ordinary shares in Raiffeisenlandesbank Oberösterreich. As of 31 Dec. 2018, RBG Oberösterreich Verbund eGen held over 50% of

the shares of RLB Holding eGen Oberösterreich, making it the ultimate parent company. The Upper Austrian Raiffeisen banks make up the most important owner groups of the two co-operatives. Both of these are supported by Raiffeisen-landesbank Oberösterreich in its function as Upper Austrian headquarters in all banking matters.

Since the 2007 financial year, Raiffeisenlandesbank Oberös-terreich, as the highest-level bank in the Group, has been subject to the mandatory requirement specified in IAS Reg-ulation (EC) 1606/2002 to prepare consolidated financial statements in accordance with the International Financial Re-porting Standards (IFRS). In addition, disclosures and notes are required in accordance with the regulations of the Aus-trian Banking Act and the Austrian Commercial Code.

Principles

These consolidated financial statements for the 2018 finan-cial year, as well as the comparative figures from 2017, have been prepared in compliance with the International Financial Reporting Standards (IFRSs) as published by the Interna-tional Accounting Standards Board (IASB) and international accounting and financial reporting standards based on the IAS Regulation (EC) 1606/2002 as adopted by the EU. The Bank has also taken into account the additional disclosures required in accordance with the regulations under the Aus-trian Banking Act (BWG) and the Austrian Commercial Code (UGB).

Unless noted otherwise, the figures in these financial state-ments are stated in thousands of euros. Minor discrepancies may arise in calculations because of rounding in the individual items in the financial statements.

First-time adoption of new and revised standards and interpretations

The following new or amended standards and interpretations must be taken into account for the first time in preparing IFRS financial statements relating to an annual reporting period starting on or after 1 Jan. 2018. The accounting policies ap-plied are, with the exception of the amendments and changes listed here, the same as those of the previous financial year.

The company

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

Standard/InterpretationTo be applied in

financial years fromalready adopted

by the EU

Annual improvements (2014-2016) 01.01.2017/01.01.2018 Yes

IFRS – 9 “Financial instruments” 01.01.2018 Yes

IFRS 15 – “Revenue from contracts with customers” 01.01.2018 Yes

Amendments to IFRS 15 – “Revenue from contracts with customers” (clarifications) 01.01.2018 Yes

Amendments to IFRS 2 – Share-based payment 01.01.2018 Yes

Amendments to IFRS 4 – Application of IFRS 9 with IFRS 4 Insurance contracts 01.01.2018 Yes

Amendments to IAS 40 – Transfers of real estate held as financial investments 01.01.2018 Yes

IFRIC 22 – Foreign currency transactions and advance consideration 01.01.2018 Yes


The Group



IFRS consolidated financial statements | Disclosure | The company | Basis of presentation

Annual improvements (2014 – 2016)

The changes published in Dec. 2016 as part of the IASB's annual improvements project envisage changes being made in various standards. Adjustments to IFRS 1 are made by cancelling the short-term exemptions for first-time users. The amendments to IFRS 12 relate to clarifying the area to which the standard is applied in connection with investments com-ing under the area of application of IFRS 5. The amendments to IAS 28 are intended to clarify that the right of selection with regard to the valuation of a holding in an associated company or joint venture which is held by a venture capital company or another qualifying company can be exercised in different ways, depending on the holding. The changes to IFRS 12 come into force for financial years beginning on or after 1 Jan. 2017 (EU Endorsement only came into force in 2018). The changes to IFRS 1 and IAS 28 apply from reporting periods beginning on or after 1 Jan. 2018. These changes have no material impact on the consolidated financial statements of Raiffeisenlandesbank Oberösterreich.

IFRS 9 Financial Instruments

Overview of key amendmentsIFRS 9 was issued in July 2014, is subject to mandatory ap-plication with effect from financial year 2018 and replaces the existing guidelines in IAS 39 “Financial Instruments” (recogni-tion and measurement). IFRS 9 introduces new regulations for classifying and valuating financial assets, requires changes in accounting for effects arising from the change in own capital risk with financial liabilities designated at Fair Value, replaces the current regulations regarding the impairment loss of finan-cial assets and changes the accounting provisions relating to hedge accounting. Raiffeisenlandesbank OÖ applies the accounting provisions of hedge accounting in IFRS9. For the most part, IFRS 9 adopts the regulations for recognising and de-recognising financial instruments from IAS 39 and leads to adjustments of the amounts previously recognised in the financial statements.

Raiffeisenlandesbank Oberösterreich has not taken up the option of adjusting the previous year comparative data at first-time adoption of the new standards. Instead, the effect of first-time adoption of IFRS 9 on 1 Jan. 2018 was recorded in the equity capital opening balance.

As a result, the consequential amendments to IFRS 7 dis-closures were also only applied to the notes for the current period. The figures for the comparative period usually repeat the previous year’s figures. IFRS 9 also considerably changes other standards for financial instruments such as IFRS 7 “Fi-nancial instruments: Disclosures”.

Similarly, the regulatory option under Article 473a CRR to dis-tribute the first-time application effect by introducing IFRS 9 over five years is not being taken up by Raiffeisenlandesbank Oberösterreich.

Further details on the specific accounting principles of IFRS 9 applied in the current period are described in the section on accounting policies.

Overall effectOverall, despite the major substantial changes associated with IFRS 9, the accounting impact of the initial application within the Raiffeisenlandesbank Oberösterreich Group is moderate. The negative net effect from the conversion as at 1 Jan. 2018 with regard to the Group equity capital ac-counted for under IFRS amounts to around –1.7%. Further details on the effects of IFRS 9 can be found in the transition tables in the Disclosures.

IFRS 15 – “Revenue from contracts with customers” and changes to IFRS 15 – “Revenue from contracts with customers” (clarifications)

Overview of key amendmentsIn May 2014, the IASB published the new standard for rev-enue recognition, which must be applied with effect from fi-nancial year 2018. The goal is to harmonise the regulations of IFRS and US-GAAP and to increase transparency and comparability. Almost all contracts with customers fall within the scope of this standard. The most notable exceptions are leases, financial instruments and insurance contracts. Under IFRS 15, the transfer of substantially all the risks and rewards is no longer the critical factor for revenue recognition. The new rules specify that revenue is recognised when the cus-tomer acquires control over the agreed goods and services and can obtain benefits from them. The revenue is measured in an amount that reflects the consideration to which the en-tity expects to be entitled in exchange for those goods or services. In addition, the disclosure requirements have been expanded to include a range of quantitative and qualitative information intended to help the readers of the consolidated financial statements understand the nature, amount, timing and uncertainty of revenue and cash flows from contracts with customers. IFRS 15 supersedes IAS 11, IAS 18 and a series of interpretations.

The changes to IFRS 15, which was issued by the IASB in April 2016, assist with the clarification of three specific top-ics. They have a particular bearing on the identification of contractual obligations and principal-agent relationships, the treatment of licences and transitional provisions making first-time adoption of the standards simpler in practical ways. The clarifications of IFRS 15 must, like the relevant standard, also be applied as of financial year 2018.



Overall effectRaiffeisenlandesbank Oberösterreich has not taken up the option to adjust the previous year comparative data at first-time adoption of the new standards. Instead, the effect of first-time adoption of IFRS 15 on 1 Jan. 2018 was recorded in the equity capital opening balance.

The initial application of IFRS 15 has resulted in only minimal effects on the group equity on the balance sheet of Raiff-eisenlandesbank Oberösterreich. These result mainly from timeframe-related revenue recognised from group compa-nies in the property sector and have to do with contracts that were not yet fulfilled at the time of first-time application. There are also changes to how turnover/cost of sales is presented in the income statement, in particular for a company from the food industry, as a result of substantiation of the control prin-ciple in the definition of agent and principal.

With respect to the fees and commissions, only those that are not integral components of the effective interest rate under IFRS 9 fall within the scope of IFRS 15. As such the stan-dard has no impact on fees and charges that are directly associated with the awarding of credit or the formation of a financial instrument. Examples of fees and commissions to which IFRS 15 applies include commissions associated with consortium agreements or the deposit of securities. How-ever, there are no changes in this area as a result of the new standard. There are also no customer loyalty programmes in place at Raiffeisenlandesbank Oberösterreich.

Reference is made in this regard to the “Net fee and com-mission income” disclosure for a breakdown of the revenues from contracts with customers, and to the “Other net oper-ating income” disclosure in the Notes for the revenue from non-banking activities.

First-time application of IFRS 15 also has an impact on the statement of the disclosures in the Notes regarding the other assets and other equity and liabilities. Formation of a contract gives rise to a performance obligation on the one hand and a claim for consideration on the other.

This obligation to transfer goods and/or services to the cus-tomer for which the company has already received consid-eration represents a contractual liability. Advance payments received in the Raiffeisenlandesbank Oberösterreich Group are stated as a contractual liability and are no longer stated as other liabilities as had been the case in previous periods.

A claim for consideration in exchange for goods or services that have already been transferred to a customer represents a contractual asset. Transitioning from recognising revenue at a specific point in time to a period recognition means that revenue from contracts with customers in the real estate area is now stated under assets and no longer as inventories as

it was in previous periods. The performance obligations and claims for consideration must be netted out and stated as a balance.

Further details on the effects of IFRS 15 can be found in the transition tables in the Disclosures. Further details on the spe-cific accounting principles of IFRS 15 applied in the current period are described in the section on accounting policies.

Amendments to IFRS 2 – Share-based payment

This project covers various changes to IFRS 2 which are in-tended to help clarify the classification and valuation of activ-ities with share-based remuneration. These changes are not expected to have any material impact on the consolidated financial statements of Raiffeisenlandesbank Oberösterreich.

Amendments to IFRS 4 – Application of IFRS 9 with IFRS 4 Insurance contracts

The amendments to IFRS 4 were published by the IASB in Sept. 2016 and regulate the application of IFRS 9 Financial In-struments in connection with IFRS 4 Insurance Contracts. In order to meet the challenges of the different dates of first-time application of IFRS 9 and the standard resulting from IFRS 4, that is, IFRS 17 Insurance Contracts, the amendments to IFRS 4 serve to provide every company that issues insurance contracts within the field of application of IFRS 4 with two op-tions, the overlay approach and the deferral approach. Since the Raiffeisenlandesbank Oberösterreich Group does not in-clude any companies within the field of application of IFRS 4, the amendments to IFRS 4 have no effect.

Amendments to IAS 40 – “Transfers of real estate held as financial investments”

The amendments to IAS 40 are intended to provide clarifi-cation with regard to the transfer of assets held in the form of real estate held as financial investments. In particular, a company can only transfer an item of real estate held in the form of a financial investment if proof is available regarding a change of use. This amendment only has implications for the Raiffeisenlandesbank Oberösterreich Group if a transaction of this nature takes place in the future.

IFRIC 22 – Foreign currency transactions and advance consideration

IFRIC 22 covers the accounting procedures for business transactions that include the receipt or payment of consider-ation in a foreign currency. Specifically it clarifies the point in


The Group



time that must be seen as the date of the transaction in the event that advance payments are made. The changes have no material impact on the consolidated financial statements of Raiffeisenlandesbank Oberösterreich.

Standards and interpretations that are not yet mandatory

The following new or amended standards and interpretations had already been published as at 31 Dec. 2018. However, they had not yet come into force for the financial year begin-ning 1 Jan. 2018 and have therefore not been applied in these consolidated financial statements:

IFRS 14 – “Regulatory deferral accounts”

IFRS 14 permits first-time adopters of IFRIS to apply the na-tional financial reporting standards that they have used hith-erto to rate-regulated transactions maintaining, provided the impact of the rate regulation is separately identifiable. The IFRS 14 adoption process was postponed by the EU until the publication of the new standards for rate-regulated activities. Companies who are already using IFRS are not permitted to make use of IFRS 14. Accordingly, IFRS 14 does not apply to Raiffeisenlandesbank Oberösterreich.

IFRS 16 – Leases

The IASB passed the new standard for entering leasing re-lationships into the balance sheet in January 2016. The ob-jective of this standard is to treat all leasing relationships in a unified way in terms of their effects on the balance sheet. Going forward the new lease standard replaces IAS 17 “Leases” along with the associated interpretations IFRIC 4 “Determining whether an arrangement contains a lease”, SIC-15 “Operating leases – incentives” and SIC-27 “Evaluat-ing the substance of transactions in the legal form of a lease”.

The introduction of IFRS 16 means that lessees no longer have to decide in future between finance leases recognised on the balance sheet and operating leasing not recognised on the balance sheet as was required previously under IAS

17. This means that, as soon as a contract is classified as a leasing relationship, the facts of the matter are to be shown in the balance sheet. Contracts are to be classified as leas-ing relationships if the lessor contractually grants the lessee the right to control over an asset for a certain period of time and receives a consideration in exchange. Control over the leasing object is present if the lessee has the right to dispose of the asset and the total benefit is afforded to him over the period of validity of the contract. If these criteria are not met in any case, then a service contract entailing costs is involved. Lessees will therefore have to provide evidence in future of usage rights for assets and liabilities for the outstanding lease payments for most lease relationships. The accruals for the lease liability are updated over the course of the term of the lease agreement. The usage right is subject to scheduled de-preciation, which results in higher expenses at the start of the term of the lease agreement. There is an exception in place for short-term lease agreements with terms not exceeding one year and which include no option to purchase, as well as for low value lease items. This option is exercised by the Raiffeisenlandesbank Oberösterreich Group.

The changes to the lessor’s balance sheet accounting fol-lowing introduction of IFRS 16 will be negligible. A distinction will also be made accordingly between finance leases and operating leases in future.

Raiffeisenlandesbank Oberösterreich deployed a project team to all of the Group’s lease relationships in the past year

Standard/InterpretationTo be applied in

financial years fromalready adopted

by the EU

IFRS 14 – “Regulatory deferral accounts” 01.01.2016 No

IFRS 16 – Leases 01.01.2019 Yes

Annual improvements (2015–2017) 01.01.2019 Yes

Amendments to IFRS 9 – “Prepayment features with negative compensation” 01.01.2019 Yes

Amendments to IAS 19 – Deferred 01.01.2019 No

Amendments to IAS 28 – Long-term interests in associates and joint ventures 01.01.2019 Yes

IFRIC 23 – Uncertainty over Income Tax treatment 01.01.2019 Yes

Revision of the IFRS conceptual framework for financial reporting 01.01.2020 No

Amendments to IFRS 3 – Definition of a business 01.01.2020 No

Amendments to IAS 1 and IAS 8 – Definition of materiality 01.01.2020 No

IFRS 17 – “Insurance contracts” 01.01.2021 No

IFRS consolidated financial statements | Disclosure | Basis of presentation



with respect to the impact of IFRS 16. The standard will pri-marily have an impact on the accounting procedures for con-tracts classified up until now as operating leases. In addition to defining and implementing the technical topics, intensive work was carried out over the course of 2018 on the nec-essary adjustment/implementation of the systems required. One tool is used consistently throughout the Group to record lease agreements.

As at 31 Dec. 2018, Raiffeisenlandesbank Oberösterreich had non-terminable obligations from operating leases in the amount of about EUR 27 million. Short-term leases and low value leases each account for around EUR 1 million of this amount. The expenses from these agreements will in both cases be recognised affecting net income in the income statement as soon as they are incurred following the applica-tion of IFRS 16 in future.

With respect to the other lease obligations beyond these, Raiffeisenlandesbank Oberösterreich assumes that, follow-ing first-time application of IFRS 16 as of 1 Jan. 2019, it will be able to recognise usage rights as assets in the amount of about EUR 91 million and recognise lease liabilities as li-abilities at the same amount (following adjustments made as at 31 Dec. 2018 for advance payments made and lease payments accrued). There is also an expectation that rights of use as well as lease liabilities amounting to about EUR 4 million will be recognised as assets in connection with sub-leases where the sub-lease agreements are categorised as operating leases. It is also assumed that lease receivables of about EUR 8 million will be accounted for in future from sub-lease agreements categorised as finance leases. These receivables are accompanied by lease liabilities at the same amount from the main lease. First time application of IFRS 16 is expected to have a minor effect on deferred taxes and on the Group’s own funds. The effects expected from the transition to IFRS 16 on the consolidated own funds under supervisory law and the capital ratios associated with this are expected to be comparatively minimal.

Furthermore the type of expenses associated with these lease relationships will also change, as IFRS 16 replaces the straight line expenses for operating leases with depreciation expense for the recognised rights of use and interest ex-penses for the outstanding liabilities from the leases. The new standard is initially to be applied as mandatory to financial years beginning on or after 1 Jan. 2019. Raiffeisen-landesbank Oberösterreich has not taken up the option to adjust the previous year comparative data at first-time adop-tion of the new standards. Instead, any effect of first-time adoption of IFRS 16 on 1 Jan. 2019 is recorded in the equity capital opening balance.

Annual improvements (2015–2017)

The changes published in Dec. 2017 as part of the IASB's annual improvements project envisage changes being made in various standards.

The adjustments to IFRS 3 stipulate that companies that gain control over a business in which they had previously had a stake must revalue the shares previously held in this business.

The adjustments to IFRS 11 affect companies that gain joint control over a business in which they had previously had a stake. The amendment explicitly stipulates that there must be no revaluation of the shares in the business held previously.

The amendments to IAS 12 illustrate that income tax con-sequences for dividend payments must be accounted for in the same way as the income upon which the dividends are based.

The amendments to IAS 23 stipulate that borrowed funds that have not yet been repaid and which were raised for the purposes of procuring a qualified asset must be included in the determination of the general cost of borrowed capital for other qualified assets for which no specific borrowed funds were raised from the point in time that this qualified asset is essentially prepared for its intended use or sale. The amend-ments must be applied to borrowed funds that are raised in reporting periods that begin after 1 Jan. 2019.

The changes to IFRS 3, IFRS 11, IAS 12 and IAS 23 come into force for financial years beginning on or after 1 Jan. 2019. These changes are not expected to have any material impact on the consolidated financial statements of Raiffeisenlandes-bank Oberösterreich.

Amendments to IFRS 9 – “Prepayment features with negative compensation”

The changes to IFRS 9 were published in October 2017 and relate to two sets of circumstances: balance sheet account-ing for prepayment features with negative compensation and modification of financial liabilities.

The existing regulations in IFRS 9 on rights of termination are amended through the new regulation associated with neg-ative prepayment features. The amendments are aimed at enabling a valuation, including under certain conditions with negative compensation at amortised cost or, depending on the business model, at fair value, without affecting net in-come in other comprehensive income, instead of at fair value affecting net income, although the criterion of being “solely


The Group



payments of principal and interest on the principal outstand-ing” is not met.

With respect to the restructuring of financial liabilities that have not resulted in these being derecognised, clarification is provided that with most of these modifications, the carrying amount of these financial liabilities must be adjusted directly affecting net income. This may make it necessary to effect a retrospective change to the balance sheet accounting where the effective interest rate was adjusted as opposed to the amortised costs.

The changes to IFRS 9 apply to financial years beginning on or after 1 Jan. 2019. The changes described are not ex-pected to have any material impact on the consolidated fi-nancial statements of Raiffeisenlandesbank Oberösterreich.

Amendments to IAS 19 – Deferred

The amendments to IAS 19 were published in February 2018 and stipulate how enterprises recognise pension expenses if defined benefit plans change as a result of modifications, curtailment or payment. First-time application of the amend-ments has been specified for financial years beginning on or after 1 Jan. 2019. These changes are not expected to have any material impact on the consolidated financial statements of Raiffeisenlandesbank Oberösterreich.

Amendments to IAS 28 – Long-term interests in associates and joint ventures

The amendments are aimed at clarifying the position for investments in associated or joint ventures that are not ac-counted for using the equity method. IFRS 9 must be ap-plied to these enterprises in future. First-time adoption of the standard has been specified for financial years beginning on or after 1 Jan. 2019, but earlier adoption is permitted. These changes are not expected to have any material impact on the consolidated financial statements of Raiffeisenlandesbank Oberösterreich.

IFRIC 23 – Uncertainty over Income Tax treatment

IFRIC 23 was published in June 2017 and is aimed at clarify-ing how the recognition and valuation regulations for the IAS 12 “Incomes taxes” are to be presented in connection with income tax risks. A tax risk is understood as uncertainty with respect to acceptance of the income tax accounting by the tax authorities. Uncertainty in particular must be recorded with respect to the balance sheet accounting of income tax risks if the company comes to the conclusion that it is unlikely that the tax authorities will accept the tax treatment selected

and consequently it is likely that there will be a need for a sub-sequent payment or a repayment. It must be assumed that the tax authority has comprehensive information available for the purposes of the evaluation. Under IFRIC 23 any risky cir-cumstances can either be assessed individually or can be consolidated for assessment purposes. First-time adoption of the standard has been specified for financial years begin-ning on or after 1 Jan. 2019, but earlier adoption is permitted. These changes are not expected to have any impact on the consolidated financial statements of Raiffeisenlandesbank Oberösterreich.

Revision of the IFRS conceptual framework for financial reporting

In March 2018 the IASB published a revised conceptual framework that covered topics that had previously remained unregulated or which featured identifiable shortcomings. Definitions of assets and liabilities were adapted in particular, with new guidelines also created on valuation and derecog-nition, statements and disclosures. The changes are to be applied in financial years beginning on or after 1 Jan. 2020. These changes are not expected to have any material impact on the consolidated financial statements of Raiffeisenlandes-bank Oberösterreich.

Amendments to IFRS 3 – “Definition of a business”

The changes to IFRS 3 were published in October 2018. These amendments are aimed at solving the problems that occur when a company determines whether it has acquired a business or a group of assets. The changes are to be ap-plied for business combinations acquired on or after 1 Jan. 2020. These amendments could only have implications for Raiffeisenlandesbank Oberösterreich’s consolidated financial statements if a transaction of this nature were to take place in the future.

Amendments to IAS 1 and IAS 8 – Definition of materiality

In October 2018 the IASB published amendments to IAS 1 “Presentation of financial statements” and IAS 8 “Accounting policies”, changes to accounting-related estimates and errors related to the definition of materiality. The changes ensure a consistent and precisely defined definition in the IFRS for materiality of consolidated statement information and sup-plement this with accompanying examples. The changes are to be applied from 1 Jan. 2020. These changes are not expected to have any material impact on the consolidated financial statements of Raiffeisenlandesbank Oberösterreich.




IFRS 17 – “Insurance contracts”

IFRS 17 was published in May 2017 and governs the prin-ciples related to the assessment, valuation, statement and disclosures for insurance contracts within the area of applica-tion for the standard. This will replace IFRS 4 “Insurance con-tracts” in future. The standard must be applied as mandatory

for the first time for financial years beginning on or after 1 Jan. 2021, although the IASB has planned for a postponement of the first-time application to 1 Jan. 2022. Since the Raiff-eisenlandesbank Oberösterreich Group does not include any companies within the scope of application of IFRS 17, these amendments are not expected to have any effect.

Consolidation methods

The starting point for preparing the consolidated balance sheet and the group income statement is the sum of the separate financial statements of the subsidiaries included in the consolidated financial statements. The separate financial statements of the fully consolidated subsidiaries are prepared in accordance with IFRS provisions and are based on the uniform accounting policies applied throughout the Group. The balance sheet date of the fully consolidated companies is 31 December with the exception of 39 companies that are included with a reporting date of 30 September. In addition, a leasing company is included as of 30 November. The se-lection of a date for these companies that differs from that of the parent company guarantees that the financial statements can be prepared and audited without delay. One subsidiary prepares its financial statements as at 28 February and re-ports as at 31 Dec. with an IFRS interim report. Significant events or other events that occur between the reporting date and the consolidated balance sheet date are taken into ac-count in the consolidated financial statement provided that they are material.

The Group accounts for business combinations using the acquisition method in accordance with IFRS 3 if the Group has acquired control. The net assets measured at fair value are offset against the consideration paid or, if necessary, against the fair value of the evaluated shares already held and the value of non-controlling interests on the date control is obtained.

Under IFRS 3.19, the non-controlling interests component can be measured at fair value (full goodwill) or at the pro-portionate share of the non-controlling interests in the rec-ognised amounts of the acquiree's identifiable net assets (partial goodwill). Basically, the Group uses the partial good-will method. In other words, the non-controlling interests are measured in the amount of the proportionate share of the identifiable net assets. Transaction costs are recognised im-mediately as expense, unless they are associated with the issue of bonds or equity instruments. Any positive difference is recognised as goodwill. As the Group uses the partial

goodwill method, goodwill is only reported for the propor-tionate share of the Group and not for the share attributable to the non-controlling interests. Goodwill is not amortised but rather is subject to an annual impairment test in accordance with IAS 36. Any profit from an acquisition at a price below the value of the net assets is recognised directly in the group income statement.

Subsidiaries are entities controlled by the Group in accor-dance with IFRS 10. The Group controls an entity if the Group is exposed, or has rights, to variable returns from its involve-ment with the entity and has the ability to affect those returns through its power over the entity. The consolidated financial statements of subsidiaries are included in the consolidated financial statements from the point in time at which the con-trol begins and until the point in time that the control ends.

If a company is jointly controlled, then a decision has to be made between Joint Operation and Joint Venture. If rights exist to the assets to be accounted to the joint agreement, together with liabilities for their debts, according to IFRS 11 a Joint Operation is in place, which is proportionately included in the consolidated financial statement. If rights only exist to the net assets of the jointly controlled company, then ac-cording to IFRS 11 what is involved is a joint company which is included at equity. Within the framework of this decision, the structure, legal form of the company, contractual agree-ments and any other circumstances must further be taken into account.

Associates are companies on which the group exercises a significant influence on business and financial policy but has no control or joint leadership in relation to this. There is usually a significant influence when the shareholding is between 20% and 50%. Furthermore, there may still be significant influence even if the shareholding is smaller; this may arise through representation on the relevant entity’s executive board or su-pervisory board. Material investments in associates are rec-ognised using the equity method and reported in a separate balance sheet item. The proportionate profit and losses from companies reported under the equity method are also shown separately in the income statement. When applying the equity


The Group



method, the same basic approach is used in accounting for acquisitions as is used for a fully consolidated company. When there are indications that there could be impairment pursuant to IAS 28, equity carrying amounts are subjected to an impairment test according to IAS 36. The analysis is usually done by applying a valuation method based on future financial surplus funds and/or based on share prices, if they are available. If there is a disposal of the associate then it is derecognised via the group income statement.

Structured companies are companies which are structured in such a way that voting or similar rights are not pivotal in the decision as to who controls the company. This is the case for instance if voting rights only relate to administrative tasks and the relevant activities are controlled through contrac-tual agreements. Project companies and leasing property companies with restricted areas of activity and public funds are viewed as structured entities in particular. Disclosures on structured companies in accordance with IFRS 12 also take the type of business relationship between these and the Group into consideration.

Intercompany profits are eliminated if they are not of minor significance for the items of the income statement. Banking transactions between the individual companies of the group are performed according to market conditions.

In the course of the debt consolidation, loans and advances within the group are set off against internal liabilities. Ex-penses and income resulting from transactions between companies in the full basis of consolidation are eliminated in the course of the expense and income consolidation.

Basis of consolidation

The basis of consolidation was determined in accordance with the provisions of IAS 10, taking the principle of materiality

into consideration. Materiality is determined according to cri-teria applied uniformly throughout the Group, focusing on the effect of the inclusion or non-inclusion of a subsidiary on the presentation of the Group’s financial position and financial performance. The same applies for drawing up the balance sheets of companies under joint control according to IFRS 11, together with associated companies according to IAS 28. A total of 74 subsidiaries were not fully consolidated and 32 associates were not accounted for using the equity method because of their minor significance for the presentation of financial position and financial performance.

The basis of consolidation for the IFRS consolidated financial statements of Raiffeisenlandesbank Oberösterreich for the year ended 31 Dec. 2018 comprised 150 fully consolidated entities (including Raiffeisenlandesbank Oberösterreich). Ten other entities were included using the equity method. Of the 160 companies, 120 are based in Austria and 40 abroad. Of the fully consolidated entities, two are banks, 84 are finan-cial institutions based on business activities, 16 are financial institutions based on their function as holding companies, one is a finance holding company, three are providers of an-cillary services and 44 are other miscellaneous entities. The dividends and capital repayments from fully consolidated banks or banks accounted for using the equity method are restricted under banking standards and regulatory require-ments, especially because of the need to comply with mini-mum capital ratios.

The following list shows the material subsidiaries and associ-ates. An overview of all investments of the Raiffeisenlandes-bank Oberösterreich Group (information according to section 265 (2) of the Austrian Commercial Code) has been prepared separately. This list is available at the headquarters of the par-ent company.

Name

Attributed share of capital

in % CountryReporting

dateAssimila-tion 2018

Fully consolidated entities

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft Group parent Austria 31.12.

activ factoring AG 100.00% Germany 31.12.

Bauen und Wohnen Beteiligungs GmbH 99.97% Austria 31.12.

BHG Beteiligungsmanagement und Holding GmbH 100.00% Austria 28.02.

Burgenländische Tierkörperverwertungsgesellschaft m.b.H. 90.00% Austria 31.12.

DAILY SERVICE Tiefkühllogistik Gesellschaft m.b.H. & Co.KG 100.00% Austria 31.12.

DAILY Tiefkühlhaus ErrichtungsgmbH 100.00% Austria 30.09.

EFIS s.r.o. 100.00% Czech Republic 31.12.

efko cz s.r.o. 51.00% Czech Republic 31.12.

efko Frischfrucht und Delikatessen GmbH 51.00% Austria 31.12.

Eurolease finance d.o.o. 100.00% Slovenia 31.12.

EUROPASTEG Errichtungs- und Betriebs GmbH1 47.88% Austria 30.09.

Eurotherme Bad Schallerbach Hotelerrichtungsgesellschaft m.b.H. 51.00% Austria 31.12.

F6 Entwicklungsgesellschaft m.b.H. & Co KG 100.00% Austria 31.12.

Franz Reiter Ges.m.b.H. & Co. OG. 100.00% Austria 31.12.




Name




Frisch & Frost Nahrungsmittel GmbH 100.00% Austria 31.12.

FW Trading GmbH 100.00% Austria 31.12.

Gesellschaft zur Förderung agrarischer Interessen in Oberösterreich GmbH 100.00% Austria 31.12.

Gesellschaft zur Förderung des Wohnbaus GmbH 67.81% Austria 30.09.

GMS GOURMET GmbH 100.00% Austria 31.12.

GOURMET Beteiligungs GmbH 100.00% Austria 31.12.

Grundstücksverwaltung Steyr GmbH 95.00% Austria 31.12.

Grundstücksverwaltung Villach-Süd GmbH 51.49% Austria 31.12.

GRZ IT Center GmbH 87.24% Austria 31.12.

HYPO Beteiligung Gesellschaft m.b.H. 67.81% Austria 30.09.

HYPO Grund- und Bau-Leasing Gesellschaft m.b.H. 67.81% Austria 30.09.

Hypo Holding GmbH 85.63% Austria 31.12.

HYPO IMPULS Immobilien Leasing GmbH 93.88% Austria 30.09.

HYPO IMPULS Immobilien Rif GmbH 93.88% Austria 30.09.

HYPO IMPULS Mobilien Leasing GmbH 100.00% Austria 30.09.

HYPO IMPULS Vital Leasing GmbH 93.88% Austria 30.09.

HYPO Liegenschaftsverwertungs Gesellschaft m.b.H. 67.81% Austria 30.09.

HYPO Salzburg IMPULS Leasing GmbH 93.88% Austria 30.09.

HYPO-IMPULS Immobilien GmbH 51.00% Austria 31.12.

IL 1 Raiffeisen-IMPULS-Mobilienleasing Gesellschaft m.b.H. 100.00% Austria 30.09.

IMMOBILIEN Invest Real-Treuhand Portfoliomanagement GmbH & Co OG 100.00% Austria 31.12.

IMPULS Bilina s.r.o. 100.00% Czech Republic 31.12.

IMPULS Chlumcany s.r.o. 100.00% Czech Republic 31.12.

IMPULS-Immobilien GmbH & Co. Objekt Gersthofen KG 81.00% Germany 31.12.

IMPULS-Immobilien GmbH & Co. Objekt Laupheim KG2 5.10% Germany 31.12.

IMPULS-Immobilien GmbH & Co. Objekt Offingen KG2 5.40% Germany 31.12.

IMPULS-INSURANCE Polska Sp.z o.o. 100.00% Poland 31.12

IMPULS-Leasing-AUSTRIA s.r.o. 100.00% Czech Republic 31.12.

IMPULS-LEASING d.o.o. 100.00% Croatia 31.12.

IMPULS-Leasing GmbH & Co. Objekt Hengersberg KG 100.00% Germany 31.12.

IMPULS-Leasing GmbH & Co. Objekt Schkeuditz KG 94.90% Germany 31.12.

IMPULS-Leasing GmbH & Co. Objekt Wiesau KG 51.00% Germany 31.12. X

IMPULS-LEASING International GmbH 100.00% Austria 31.12.

IMPULS-LEASING Polska Sp.z o.o. 100.00% Poland 31.12.

IMPULS-Leasing-Real-Estate s.r.o. 100.00% Czech Republic 31.12.

IMPULS-LEASING Romania IFN S.A. 90.00% Romania 31.12.

IMPULS-LEASING Services SRL 90.00% Romania 31.12.

IMPULS-LEASING Slovakia s.r.o. 100.00% Slovakia 31.12.

IMPULS Malvazinky s.r.o. 100.00% Czech Republic 31.12.

IMPULS Milovice s.r.o. 100.00% Czech Republic 31.12.

IMPULS Modletice s.r.o. 100.00% Czech Republic 31.12.

IMPULS Plzen s.r.o. 100.00% Czech Republic 31.12.

IMPULS-Praha spol. s r.o. 100.00% Czech Republic 31.12.

IMPULS Sterboholy s.r.o. 100.00% Czech Republic 31.12.

IMPULS Teplice s.r.o. 100.00% Czech Republic 31.12.

IMPULS Trnavka s.r.o. 100.00% Slovakia 31.12.

Invest Holding GmbH 100.00% Austria 31.12.

KARNERTA GmbH 100.00% Austria 31.12.

KEPLER-FONDS Kapitalanlagegesellschaft m.b.H. 64.00% Austria 31.12.

LABA-IMPULS-Gebäudeleasing Gesellschaft m.b.H. 100.00% Austria 31.12.

LABA-IMPULS-Gebäudeleasing GmbH & Co KG 100.00% Austria 31.12.

LABA-IMPULS-IT-Leasing GmbH & Co KG 100.00% Austria 31.12.

Landstraße 113 GmbH & Co OG 100.00% Austria 31.12.

LKW-Zentrum Radfeld Liegenschaftsverwaltung GmbH 100.00% Austria 30.09.

machland obst- und gemüsedelikatessen gmbh 51.98% Austria 31.12.

MARESI Austria GmbH 92.70% Austria 31.12.


The Group



Name




MARESI Foodbroker Kereskedelmi Kft 92.70% Hungary 31.12.

MARESI Foodbroker SRL 92.70% Romania 31.12.

MARESI Foodbroker s.r.o. 92.70% Czech Republic 31.12.

MARESI Foodbroker, s.r.o. 92.70% Slovakia 31.12.

MARESI Trademark GmbH & Co KG 100.00% Austria 31.12.

MH53 GmbH & Co OG 100.00% Austria 31.12.

Oberösterreichische Kfz-Leasing Gesellschaft m.b.H. 50.69% Austria 31.12.

OK Platz Errichtungs- und Vermietungs GmbH 100.00% Austria 31.12.

O.Ö. Kommunal-Immobilienleasing GmbH 3 40.00% Austria 31.12.

O.Ö. Kommunalgebäude-Leasing Gesellschaft m.b.H.3 40.00% Austria 31.12.

OÖ Wohnbau gemeinnützige Wohnbau und Beteiligung GmbH n/a4 Austria 31.12.

OÖ Wohnbau Gesellschaft für den Wohnungsbau gemeinnützige GmbH n/a4 Austria 31.12.

Privatstiftung der Raiffeisenlandesbank Oberösterreich Aktiengesellschaft5 n/a Austria 31.12.

PROGRAMMIERFABRIK GmbH 89.80% Austria 30.09.

Projekt Blumau Tower Immobilien GmbH 100.00% Austria 30.11.

Raiffeisen-IMPULS-Alpha Immobilien GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-Bautenleasing Gesellschaft m.b.H. 100.00% Austria 30.09.

Raiffeisen-IMPULS-Delta Immobilien GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-Delta Mobilienleasing GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-Epsilon Immobilien GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-Fahrzeugleasing GmbH (formerly: Raiffeisen-IMPULS-Fuhrparkmanagement GmbH) 100.00% Austria 30.09.

Raiffeisen-IMPULS Finance & Lease GmbH 100.00% Germany 31.12.

Raiffeisen-IMPULS Fuhrparkmanagement GmbH & Co. KG 100.00% Germany 31.12.

Raiffeisen-IMPULS-Gamma Immobilien GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-Immobilien GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-Immobilien GmbH & Co. Objekt Gunzenhausen KG2 5.10% Germany 31.12.

Raiffeisen-IMPULS-Immobilien GmbH & Co. Objekt Hilpoltstein KG 100.00% Germany 31.12.

Raiffeisen-IMPULS-Immobilienleasing GmbH 75.00% Austria 31.12.

Raiffeisen-IMPULS Kfz und Mobilien GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-Leasing Beteiligungs Gesellschaft m.b.H. 100.00% Germany 31.12.

Raiffeisen-IMPULS-Leasing Gesellschaft m.b.H. 100.00% Austria 31.12.

Raiffeisen-IMPULS-Leasing GmbH & Co KG 100.00% Germany 31.12.

Raiffeisen-IMPULS-Leasing Schönau GmbH 100.00% Germany 31.12.

Raiffeisen-IMPULS-Liegenschaftsverwaltung Gesellschaft m.b.H. 75.00% Austria 31.12.

Raiffeisen-IMPULS-Mobilienleasing GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-My Immobilien GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-Projekt Atzbach GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-Projekt Gänserndorf GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-Projekt Hörsching GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-Projekt Kittsee GmbH 95.00% Austria 31.12.

Raiffeisen-IMPULS-Projekt Lehen GmbH 95.00% Austria 31.12.

Raiffeisen-IMPULS-Projekt Ort GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-Projekt Straßwalchen GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-Projekt Traunviertel GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-Projekt Urstein GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-Projekt Wien-Nord GmbH 100.00% Austria 31.12.

Raiffeisen-IMPULS-Projekt Wolfsberg GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-Rankweil Immobilien GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-Realitätenleasing GmbH 100.00% Austria 30.09.

Raiffeisen-IMPULS-Rho Immobilien GmbH 100.00% Austria 31.12.

Raiffeisen-IMPULS-Rho Immobilien GmbH & Co KG 100.00% Austria 31.12.

Raiffeisen-IMPULS-Vermietungsgesellschaft m.b.H. 100.00% Austria 31.12.

Raiffeisen-IMPULS-Zeta Immobilien GmbH 60.00% Austria 30.09.

Raiffeisen OÖ Immobilien- und Projektentwicklungs GmbH 100.00% Austria 31.12.

RealBestand Immobilien GmbH & Co KG 100.00% Austria 31.12.




Name




RealRendite Immobilien GmbH 100.00% Austria 31.12.

Real-Treuhand Bau- und Facilitymanagement GmbH 100.00% Austria 31.12.

REAL-TREUHAND Management GmbH 100.00% Austria 31.12.

Real-Treuhand Projekt- und Bauträger GmbH 100.00% Austria 31.12.

Ringstraße 8 GmbH & Co OG 100.00% Austria 31.12.

RLB OÖ Alu Invest GmbH 100.00% Austria 31.12.

RLB OÖ Sektorholding GmbH 100.00% Austria 31.12.

RLB OÖ Unternehmensholding GmbH 100.00% Austria 31.12.

RVD Raiffeisen-Versicherungsdienst Gesellschaft m.b.H. 75.00% Austria 31.12.

RVM Raiffeisen-Versicherungsmakler GmbH 100.00% Austria 30.09.

SALZBURGER LANDES-HYPOTHEKENBANK AKTIENGESELLSCHAFT6 67.81% Austria 31.12.

Schwesternheim Wels Vermietungsgesellschaft m.b.H. 100.00% Austria 31.12.

Select Versicherungsberatung GmbH 93.25% Austria 30.09.

SENNA Nahrungsmittel GmbH & Co KG 100.00% Austria 31.12.

Steirische Tierkörperverwertungsgesellschaft m.b.H. & Co KG 100.00% Austria 31.12.

Tiefkühlkost Weinbergmaier Gesellschaft m.b.H. 100.00% Austria 31.12.

TKV Oberösterreich GmbH 100.00% Austria 31.12.

VIVATIS Beteiligungs-GmbH 100.00% Austria 31.12.

VIVATIS Capital Invest GmbH 100.00% Austria 31.12.

VIVATIS Capital Services eGen 100.00% Austria 31.12.

VIVATIS Holding AG 100.00% Austria 31.12.

VIVATIS Vermögensverwaltungs Alpha GmbH (formerly: Heimo Loidl + Johann Loidl Gesellschaft m.b.H.) 100.00% Austria 31.12.

VIVATIS Vermögensverwaltungs GmbH & Co KG (formerly: LANDHOF GesmbH & Co KG) 100.00% Austria 31.12.

WDL Infrastruktur GmbH 51.00% Austria 30.09.

Entities accounted for using the equity method

“VOG” Einfuhr und Großhandel mit Lebensmitteln und Bedarfsgütern Aktiengesellschaft 20.83% Austria 31.12.

AMAG Austria Metall AG 16.50% Austria 31.12.

Beteiligungs- und Immobilien GmbH 46.00% Austria 31.12.

Beteiligungs- und Wohnungsanlagen GmbH 46.00% Austria 31.12.

Kapsch Financial Services GmbH7 49.00% Austria 30.09. X

Oberösterreichische Landesbank Aktiengesellschaft 41.61% Austria 31.12.

Österreichische Salinen Aktiengesellschaft 41.25% Austria 30.06.

Raiffeisen Bank International AG 9.51% Austria 31.12.

Raiffeisenbank a.s. 25.00% Czech Republic 31.12.

Raiffeisenlandesbank Oberösterreich Invest GmbH & Co OG8 75.65% Austria 30.09.

1 Control based on majority voting rights

2 Control based on general partnership with majority voting rights

3 Control based on majority of members of the executive board and agreement binding voting rights

4 Taking into account the restrictions of the Austrian Public House Building Act (WGG), restriction to paid-in capital as well as earnings payable to proprietors (see in this regard also the appendix on “Significant non-controlling interests”). The holding of Bauen und Wohnen Beteiligungs GmbH in the capital of OÖ Wohnbau gemeinnützige Wohnbau und Beteiligung GmbH amounts to 83.59 %.

5 Control based on the right to appoint members to the foundation’s management board

6 Owing to an option on non-controlling interests in Hypo Holding GmbH, which is presented according to the “anticipated acquisition method”, shares amounting to about 6.3% are taken into account in the attributed capital ratio and are not posted to the “Non-controlling interests”.

7 Joint control over this company based on the resolution regulations in the articles of association.

8 Joint control over this company based on an agreement relating to voting rights with an external partner.


The Group



Changes in the basis of consolidation and their effects

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

Fully consolidated Equity method

2018 2017 2018 2017

As at 1 Jan. 161 153 9 7

Included for the first time during the reporting year 1 15 1 2

Merged in the reporting year 5 4 – –

Deconsolidated during the reporting year 7 3 – –

As at 31 Dec. 150 161 10 9

The new fully consolidated company IMPULS-Leasing GmbH & Co. Objekt Wiesau KG was founded in the 2018 financial year and included in the scope of consolidation for the first time – see also the relevant indicator in the consolidated group list above.

Further changes to the scope of consolidation compared with the position as at 31 Dec. 2017 arose as a consequence of the disposal and associated deconsolidation of the following previously fully consolidated companies: ı vivo Leasing GmbH & Co KG ı H. Loidl Wurstproduktions- und -vertriebsgesellschaft

m.b.H. & Co KG ı IMPULS-Immobilien GmbH & Co. Objekt Karlstein KG ı IMPULS-Immobilien GmbH & Co. Objekt Eitdorf KG ı IMPULS Rakovnik s.r.o. ı Kapsch Financial Services GmbH ı Projekt Eberstalzell Immobilien GmbH

At the time of the deconsolidation, the assets and liabilities of these companies that were previously fully consolidated amounted to a total of EUR 78,586 thousand and EUR 69,972 thousand respectively, and are broken down as shown in the following table:

The company Kapsch Financial Services GmbH, which was fully consolidated up to and including 31 Dec. 2018, was deconsolidated as at 31 Dec. 2018 following the sale of a 25.00% stake. The purchase price for the stake held by the company Raiffeisen-IMPULS-Leasing Gesellschaft m.b.H. amounted to EUR 1,743 thousand. The remaining stake amounting to 49.00% was included in the scope of con-solidation for the first time as at 31 Dec. 2018 following the

classification as a joint venture pursuant to IFRS 11. The total net profit from the deconsolidation amounts to EUR 1,695 thousand and this is stated under “Net profit or loss from other financial instruments” in the group income statement. The purchase price from the other companies deconsoli-dated in 2018 amounts to EUR 5,321 thousand.

Additional changes arose within the group of consolidated companies in the 2018 financial year as a result of mergers: ı Merger of Am Ölberg Liegenschaftsverwertungs GmbH

with Raiffeisen-IMPULS-Immobilien GmbH ı Merger of INCOM Private Equity GmbH with BHG Beteili-

gungsmanagement und Holding GmbH ı Merger of OÖ HYPO-IMPULS Leasing GmbH with HY-

PO-IMPULS Immobilien GmbH ı Merger of RB Prag Beteiligungs GmbH with RLB OÖ

Sektorholding GmbH ı Merger of RLB OÖ Unternehmensbeteiligungs GmbH

with RLB OÖ Sektorholding GmbH

Foreign currency translation

The consolidated financial statements are presented in euros, reflecting the national currency. Financial statements of fully consolidated companies whose functional currency differs from the group currency are translated into euros employing the modified current rate method in accordance with IAS 21. Generally, the national currency is the same as the functional currency.

When the modified closing rate method is applied, equity is translated at historical rates while all other assets and equity and liabilities are translated using the relevant closing rates (middle rates of the European Central Bank (ECB) as at the Group reporting date). The items on the income statement are translated using the average currency exchange rates of the ECB. Currency differences resulting from the transla-tion of the equity components using historical rates and the translation of the income statement using average rates com-pared to a translation using closing rates are recognised in the statement of comprehensive income.

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

IN EUR '000 2018

Loans and advances to banks 43

Loans and advances to customers 49,833

Property, plant and equipment 2

Other assets 281

Assets held for sale (IFRS 5) 28,427

Amounts owed to banks 39,900

Provisions 313

Tax liabilities 1,264

Other liabilities 3,762

Liabilities held for sale (IFRS 5) 24,733




Prices in currency per euro

2018 2017

Rate on prevailing date Average rate Rate on prevailing date Average rate

Croatian kuna (HRK) 7.4125 7.4203 7.4400 7.4652

Polish zloty (PLN) 4.3014 4.2614 4.1770 4.2556

Czech koruna (CZK) 25.7240 25.6674 25.5350 26.3454

Romanian leu (RON) 4.6635 4.6560 4.6585 4.5711

Forint (HUF) 320.9800 319.2308 310.3300 309.3500


The Group



IFRS consolidated financial statements | Disclosure | Accounting policies

Accounting policiesFinancial instruments

The scope of application of IFRS 9 has not changed com-pared to the regulations of IAS 39. The regulations on the recognition and derecognition of financial instruments were also adopted.

A financial instrument is any contract that gives rise to a fi-nancial asset of one entity and a financial liability or equity instrument of another entity. All financial assets and liabili-ties, including all derivative financial instruments, must be re-corded on the balance sheet in accordance with both IAS 39 and IFRS 9.

A distinction is made here between the following categories in accordance with IFRS 9:

ı financial assets and financial liabilities that are measured at amortised cost (AC)

ı financial assets or liabilities for which an option exists to be designated at fair value through profit or loss (Fair Value Option, FVO)

ı financial assets or liabilities that are measured at Fair Value through Profit or Loss (FVTPL)

ı financial assets that are measured at fair value through other comprehensive income – FVOCI); in turn, this cate-gory is subdivided into: – financial assets that are measured at fair value with no

effect on income, recyclable – financial assets that are designated at fair value with no

effect on income, non-recyclable

A financial instrument is first recognised in the balance sheet when Raiffeisenlandesbank Oberösterreich acquires a con-tractual right and/or incurs obligations in connection with the financial instrument concerned. Purchases and sales of fi-nancial instruments are generally accounted for on the trade date. The trade date is the date on which the entity enters into the obligation to buy or sell a financial instrument. Financial instruments are stated at fair value following first time rec-ognition. Additional transaction costs are stated for financial assets or liabilities that are not measured at fair value through profit or loss.

A financial asset (or part of a financial asset or part of a group of similar financial assets) is derecognised when the contrac-tually agreed rights to cash flows from the financial asset have expired or have been transferred, and the Group has trans-ferred substantially all the risks and rewards associated with the ownership of the asset.

A financial liability is derecognised when the obligation as-sociated with the liability has been settled, revoked or has expired.

Classification and valuation according to IFRS 9

IFRS 9 contains a new classification model for financial as-sets that reflects the business model within whose scope the financial assets are held as well as the properties of their cash flows (cash flow condition).

Unlike on the assets side, the changes with regard to the accounting treatment of financial instruments on the liabilities side are relatively small compared to IAS 39 and relate to the disclosure of the change in own credit risk for financial liabilities in the Fair Value Option. There has been no material change to the classification of financial liabilities at Raiffeisen-landesbank Oberösterreich.

Business model

The business model reflects how the Group administers as-sets to generate cash flows. In accordance with IFRS 9, there are three business models: “Hold to collect”, “Hold to collect and sell” and “Other”: ı The business model “Hold to collect” exists when the fi-

nancial instrument is part of a business model whose goal is to hold financial instruments in order to generate cash flows from them.

ı The “Hold to collect and sell” business model exists if the financial instrument is part of a business model whose objective is to hold financial instruments in order to col-lect contractual cash flows from them and to sell financial instruments.

ı The “Other” business model applies if the financial in-strument cannot be allocated either to the “Hold to col-lect” business model or to the “Hold to collect and sell” business model (i.e. always for the trading portfolio and in portfolios with frequent or substantial turnover activity). This business model concerns a residual amount.

The business model is defined at portfolio level. The alloca-tion of portfolios is based on the management of business activities and must be objectively verifiable (referred to as the management approach).

The business model in the loan business of Raiffeisenland-esbank Oberösterreich generally corresponds to a “Hold to collect” model. A “Hold to collect” business model is only ap-plicable if the disposals from the portfolio circulate within the lower range in terms of frequency, volume and distance to the due date of the items included. Sales that are not compatible



with the “Hold to collect” business model are generally insig-nificant and rare. Raiffeisenlandesbank Oberösterreich has set thresholds for marginal turnover in the credit business based on the financial value of the relevant sub-portfolio per financial year. The sub-portfolios are sub-divided are oriented towards the respective business areas.

The “Hold to collect and sell” business model is the main one that applies for securities portfolios held at Raiffeisenlandes-bank Oberösterreich. The “Hold to collect” business model is used to a significantly reduced extent for portfolios held with the intention of holding to collect. The volume of securities portfolios held for trading purposes (“Other” business model) on the other hand is of minor significance.

Payment flow condition

Financial assets are only valued at amortised cost if the SPPI criterion (Solely Payments of Principal and Interest criterion) is met. This is the case if the contractual conditions of the financial asset lead to payments at certain times which solely represent repayments and interest on the outstanding capital amount. These contractual payment flows must correspond to those of a basic lending arrangement.

IFRS 9 defines the loan amount as the fair value of the finan-cial asset at the time of initial recognition which may change over the term (e.g. as a result of pro-rata repayments). This amount usually equates to the transaction price that was paid upon receipt.

The following components fall under the definition of interest:

ı the fee for the time value of money, i.e. the compensation for the transfer of money taking into account the currency of the financial instrument and the period for which the interest rate is fixed

ı the compensation for the default risk (credit risk) that is associated with the outstanding capital amount over a certain period

ı the compensation for liquidity costs ı the fee for further risks and costs (e.g. administrative costs)

that occur or are incurred as part of a basic loan allocation ı Potential profit margins that are consistent with a basic

lending arrangement

Aspects of the interest rate agreement (e.g. interest rate es-calation clause, maturity mismatch, advance adjustments or prior fixing of interest rates) and further contractual agree-ments (e.g. non-recourse, unreasonable repayment amount, covenants independent of the credit risk) are examined in particular when reviewing whether the SPPI criteria have been met. The SPPI test is always carried out at the level of the financial asset at the time of receipt. The test of the SPPI criterion must be applied to the entire agreement for finan-cial assets with embedded derivatives. Compliance with the

payment flow condition is verified for the purposes of cate-gorising the financial asset. If the SPPI criterion is not met, then the financial instrument must be measured at fair value entirely through profit or loss.

Benchmark test The time value of money may be modified in certain cases. This is the case, for example, if the frequency for redefining the interest rate is quarterly and the term (tenor) of the in-terest rate corresponds with a longer or shorter period. It is necessary in these cases according to IFRS 9 to analyse the effect of this modified time value and to perform qualitative and quantitative benchmark tests.

The aim of the benchmark test is to prove that the effect re-sulting from the modified time value of money is not material. The benchmark test is regarded as passed if the significance limits are not violated.

A qualitative benchmark test is considered if it is clear that the effect resulting from the modified time value of money is material or not material. A quantitative benchmark test must then no longer be performed. This immateriality is assumed in advance primarily for fixings at Raiffeisenlandesbank Oberös-terreich if the time lag of the fixing only amounts to a few days at the beginning of a interest period.

In particular, the following interest rate clauses are evaluated in terms of their harmfulness:

ı Maturity mismatch incl. UDRB ı Interest rate escalation clauses (CMS) ı Basket rates (blended interest rates) ı Prior fixing ı Average interest rates

Designated financial instruments

Raiffeisenlandesbank Oberösterreich may irrevocably des-ignate financial assets and liabilities which are not held for trading purposes as being measured at fair value through profit and loss on initial recognition if one of the following cri-teria is met:

ı The classification significantly eliminates or reduces mis-matches in the valuation or designation of financial assets or financial liabilities which would otherwise occur.

ı A portfolio of financial liabilities and its performance are managed and measured on a fair value basis in accor-dance with a documented risk management or investment strategy.

ı The liability contains an embedded derivative that requires bifurcation.

The right to choose can be exercised separately for each in-dividual financial instrument pursuant to IFRS 9.


The Group



Reclassification

A reclassification of financial assets is not carried out with the exception of very rare instances in which Raiffeisenland-esbank Oberösterreich changes the business model of a business field. A reclassification of financial liabilities is not carried out.

Valuation categories

Financial instruments measured at fair value through profit or loss (FVTPL)This category includes derivatives, equity instruments and debt capital instruments that are neither measured at amor-tised cost nor at fair value with no effect on income or at fair value through profit and loss using the fair value option. This valuation method does not differ from the method already known under IAS 39. Each fluctuation in value of the financial instrument is recorded in net income from fair value account-ing through profit and loss. Interest income or expenses from financial instruments measured at fair value through profit or loss are recognised under net interest income. The regula-tions for forming the loan loss allowance are not to be applied to this valuation class.

The following balance sheet items mainly include financial in-struments at fair value:

ı Loans and advances to banks ı Loans and advances to customers ı Financial assets ı Trading assets ı Trading liabilities

Financial instruments designated at fair value through profit or loss (fair value option, FVO)These financial instruments are assessed at fair value. Unre-alised and realised profits and losses are recorded with ef-fect on the income statement as net income/loss from fair value accounting. Interest income or expenses from desig-nated financial instruments are recognised under net interest income.

The effects of changes to the inherent default risk of a liability that was designated at fair value are recorded in other com-prehensive income (OCI).

The following balance sheet items mainly include financial in-struments designated at fair value:

ı Loans and advances to customers ı Financial assets ı Amounts owed to banks ı Amounts owed to customers ı Liabilities evidenced by certificates ı Subordinated capital

Financial assets and financial liabilities measured at amortised cost (Amortised Cost, AC)This category does not include derivative financial assets that are held within the framework of a business model whose objective is to generate contractual cash flows from the as-sets held and which have passed the SPPI test. The category does not include financial assets that, on initial recognition, are designated as at fair value through profit and loss.

Financial assets in this category are measured at amortised cost using the effective interest method. Interest income or expenses from financial instruments which are measured at amortised cost are recognised in the “Net interest income” item in the income statement. Impairment losses as defined by IFRS 9 (Impairment) are recognised in profit or loss. The effects from the modifications of financial assets measured at amortised cost are disclosed in net income from financial investments.

If financial instruments on the liabilities side are neither classi-fied as “At fair value through profit and loss” nor are they are attributed to the category “Designated at fair value through profit and loss”, a valuation is performed at amortised cost.

The following balance sheet items include financial instru-ments measured at amortised cost:

ı Loans and advances to banks ı Loans and advances to customers ı Financial assets ı Amounts owed to banks ı Amounts owed to customers ı Liabilities evidenced by certificates ı Subordinated capital

Financial assets measured at fair value through other comprehensive income – recyclable (Fair Value through Other Comprehensive Income, FVOCI)This category does not include derivative debt capital instru-ments that have passed the SPPI test and are held within the framework of a business model whose objective is to gener-ate contractual cash flows and sell financial assets. The first step of this valuation method involves calculating the amor-tised cost using the effective interest method. The difference between this “preliminary carrying amount” and the fair value is recorded directly against other comprehensive income (OCI). Impairment losses as defined by IFRS 9 (Impairment) are recorded through profit and loss and impact the other comprehensive income. Interest income or expenses from recyclable financial instruments which are measured at fair value with no effect on income are recognised under net in-terest income. The effects from modifications are disclosed in net income from financial investments.




The disposal of the instrument will result in the balance from the amount previously recorded in other comprehensive in-come (OCI) being derecognised in the income statement (re-ferred to as recycling).

The balance sheet item “Financial assets” includes recyclable financial assets that are measured at fair value with no effect on income.

Financial assets measured at fair value through other comprehensive income – non-recyclable (Fair Value through Other Comprehensive Income, FVOCI option)A irrevocable decision can be made for equity instruments; this equity instrument must be measured at fair value with no effect on income (Fair Value through Other Comprehensive Income).

Fluctuations in the value of equity instruments in the FVOCI option category are recorded directly in other comprehensive income (OCI). The disposal of the instrument results in the ac-cumulated fluctuations that were taken into account in other comprehensive income (OCI) not being recorded through profit and loss (no recycling). The balance will be transferred within equity from other comprehensive income (OCI) to the revenue reserve. Dividends from non-recyclable financial as-sets that are measured at fair value with no effect on income are recorded through profit and loss.

The right to choose can be exercised separately for each in-dividual financial instrument. However, this right to choose does not apply to instruments that are acquired for trading. These instruments must be allocated to the FVTPL category. This right to choose is currently not applied by Raiffeisenland-esbank Oberösterreich.

Presentation of the balance sheet items by measurement basis (IFRS 9) and category

Assets

Main measurement basis

Fair value Amortised Cost Category according to IAS 39

Cash and cash equivalents x At amortised cost

Loans and advances to banks x At amortised cost

Loans and advances to banks x Fair value through profit and loss

Loans and advances to customers x At amortised cost

Loans and advances to customers x Fair value through profit and loss

Loans and advances to customers x Fair value option

Trading assets x Fair value through profit and loss

Financial assets x At amortised cost

Financial assets x Fair value through profit and loss

Financial assets x Fair value option

Financial assets x Fair value OCI


Main measurement basis

Fair value Amortised Cost Category according to IAS 39

Amounts owed to banks x At amortised cost

Amounts owed to banks x Fair value option

Amounts owed to customers x At amortised cost

Amounts owed to customers x Fair value option

Trading liabilities x Fair value through profit and loss

Liabilities evidenced by certificates x At amortised cost

Liabilities evidenced by certificates x Fair value option

Subordinated capital x At amortised cost

Subordinated capital x Fair value option


The Group




Level Instrument TypesValuation technique Input factors

IILoans and ad-vances to banks

capital value oriented

Cash flows already fixed or determined using forward rates; observable yield curve; observable credit spreads for banks by rating categories

IIILoans and ad-vances to banks


Cashflows already fixed or determined using forward rates; interest yield curve; credit risk of the contract partnersCash flows already fixed or determined using forward rates; interest yield curve; cost of risk premiums based on internal calculations for the credit risk of the contract partners *

III

Loans and advances to customers



II Derivatives Over the countercapital value oriented

Cash flows already fixed or determined using forward rates; observable yield curve; observable credit spreads of counterparties and own credit spread

I Financial assetsListed securities market value

oriented Stock market prices; prices quoted by market participants

II Financial assets Non-listed securitiesmarket value oriented

Prices quoted by market participants for equivalent financial instruments; cash flows already fixed or determined using forward rates; observable yield curve; credit spreads of comparable observable instruments

III Financial assets Non-listed securitiescapital value oriented


I Financial assets Sharesmarket value oriented Stock market price

III Financial assets

Shares in non- consolidated subsidiaries, other investments and par-ticipation rights

Discount-ed Cashflow (“DCF”)

Free cashflows Risk-free interest rate: interest rate structure of German federal bonds using the Svensson method Beta factor: beta factor derived from listed companies featuring similar risk (peer group) Market risk premium: based on the recommendation of the Professional Committee for Economics and Organisation of the Chamber of Chartered Accountants Return required from the lender: average borrowing costs for the peer group Leverage ratio: leverage ratio for the peer group



Dividend Discount Model (“DDM”)

Dividends Risk-free interest rate: interest rate structure of German federal bonds using the Svensson method Beta factor: beta factor derived from listed companies featuring similar risk (peer group) Market risk premium: based on the recommendation of the Professional Committee for Economics and Organisation of the Chamber of Chartered Accountants



Net Asset Value (“NAV”)

The NAV is used for the Sum of the Parts valuation (“SoP”) for holding companies and their investments. The hidden reserves in the equity investments are added to the net asset value of the parent company. For holding companies, the value contri-bution of their operational divisions was generally taken into account.

IIAmounts owed to banks


Cash flows already fixed or determined using forward rates; observable yield curve; observable liquidity costs (differentiation by maturity and collateral/seniority) which also include own credit risk

II

Amounts owed to customers



I

Liabilities evidenced by certificates

market value oriented prices quoted by market participants

II




IISubordinated capital



Valuation techniques and input factors for determining fair values

* The risk premiums are determined depending on the average probability of default (PD, through-the-cycle) for each rating and original maturity and on the loss given default (LGD). The probabilities of default and migration for corporate and retail customers are determined every quarter and are based on the Group’s own default data since 2004. The term components of the actuarial risk cost factors are represented by matrix multiplication of the transition matrices produced.



Modifications

The modifications within the meaning of IFRS 9 are subse-quent changes to the contractual relationship between bor-rowers and lenders. Modifications may usually result from different reasons (e.g. restructuring or changed market con-ditions). If there is a significant modification, a substantial change to the financial instrument is to be expected. Aside from changes to the contractually agreed payment flows, contract changes may also cause a significant modification without having a direct impact on the agreed payment flows. The following essential qualitative criteria represent a signifi-cant modification for financial assets:

ı Change in currency ı Change in debtor ı Contract changes which cause a change in the assess-

ment of the SPPI criterion ı Changes to the priority of servicing the financial

instrument

The quantitative assessment of the contract changes for financial assets as regards to when a significant modifica-tion is to be assumed is carried out based on the difference between the present value of the originally agreed payment flows and the newly agreed payment flows at the time of the modification. The present value is calculated based on the ef-fective interest rate before the modification. Raiffeisenlandes-bank Oberösterreich defined a threshold of 10% as of which there is a significant modification.

A change to the contractual payment flows as of a differ-ence between the present value of the original and the newly agreed payment flows of more than 10% is to be classified as significant for financial liabilities. Qualitative criteria such as a change in creditor also apply for the assessment of the significance of modifications in the case of financial liabilities.

If an existing contract is substantially changed, this corre-sponds economically to a disposal of the existing contract. The payment flows from the old contract are considered to be void and are replaced with the new, modified contract. This results in the derecognition of the (old) contract. The disposal income will be calculated from the difference between the net carrying amount of the disposed financial instrument and the fair value of the received financial instrument.

For insignificant modifications, the carrying amount is ad-justed and the modification result is recorded in the amount of the adjustment. The amount of the carrying amount ad-justment and the modification result is calculated from the comparison of the contractual cash flows of the asset or lia-bility discounted with the previous effective interest rate be-fore and after the modification. The focus is on the expected cash flows, taking into account all contract components but without taking into account expected losses. Fees incurred

as a result of the modification are amortised over the term to maturity of the financial instrument.

Impairment according to IFRS 9

The introduction of IFRS 9 resulted in a change being made from a loan loss allowance model for incurred loss (incurred loss model) to a model for expected loss (expected loss model).

The following examples fall under the area of application of IFRS 9 Impairment provisions:

ı Financial assets that are measured at amortised cost ac-cording to IFRS 9 including trade receivables and active contract items according to IFRS 15

ı financial assets that are to be allocated to the category at fair value with no effect on income (with recycling)

ı credit commitments provided that there is currently a con-tractual obligation for lending; credit commitments that are measured at fair value through profit or loss are excluded from this

ı financial guarantees that fall under the scope of applica-tion of IFRS 9 and are not measured at fair value through profit or loss

ı lease receivables that fall under the scope of application of IAS 17 (in its current version or in the area of application of the future standard of accounting for leases, IFRS 16)

The formation of the loan loss allowance under IFRS 9 is cal-culated on the basis of the amount of the expected future loss and in terms of the period to be taken into account is depen-dent on the stage at which the financial instrument finds itself at the reporting date.

The allocation takes place in three stages for all financial assets in accordance with the evaluation of the credit risk. Those items that already feature an impairment upon recog-nition are excluded from this.

ı Stage 1 includes all items upon recognition as well as those financial instruments for which no significant in-crease in credit risk has been determined since the point of recognition. The “expected 12-month loss” (present value of the expected payment defaults which result from possible default events within the next 12 months after the balance sheet date) is recognised for these items as a loan loss allowance amount in the balance sheet.

ı Stage 2 includes all financial instruments for which a sig-nificant increase in credit risk has been determined since these were first recognised. The total expected loss over the term to maturity of the instrument (present value of the expected payment defaults as a result of possible default events over the term to maturity of the financial instrument) is recognised for these items as a loan loss allowance amount in the balance sheet.


The Group



ı Stage 3 includes all financial instruments featuring a de-fault. The total expected loss over the term to maturity of the instrument is recognised for these items as a loan loss allowance amount in the balance sheet. In the case of significant customer exposures in the lending business, each individual case is analysed as the basis for recognis-ing specific loan loss allowances or provisions for contin-gent liabilities and lending commitments. The calculation for the amount of the allowances for losses on loans and advances takes into account the discounted cash inflows expected from interest payments and repayments of prin-cipal, together with any inflows that can be obtained from the recovery of collateral. Statistical methods are used to determine the total losses expected over the term to maturity for insignificant customer exposures. In Stage 3, interest income is recorded as “unwinding” based on the net carrying amount.

With the exception of financial assets that have already ex-hibited an impairment upon recognition, the loss for Stage 2 financial instruments amounting to the present value of the expected loss over the term to maturity will be recorded if the default risk of the instrument increases significantly since the receipt of said instrument. The assessment of whether the default risk has increased significantly is based on a rel-ative and absolute increase in the probability of default since receipt. The current probability of default for the term to ma-turity will be compared with the probability of default fore-cast for the current term to maturity at the time of receipt. In addition to the quantitative element, qualitative factors such as early warning signals or the verification of the payment de-lays are also included in the examination of the credit quality (backstop criterion).

The transfer criteria (transfer of financial instruments between stages) are assessed in a symmetrical manner. If the transfer criteria described in the previous sections no longer apply, the loans and advances affected will be transferred back.

A right of choice applies to instruments whose default risk on the reporting date is “low”: in this case, it may be assumed that the default risk has not increased significantly since re-ceipt. Standard practice is to describe the default as “low” if there is only a minimal risk of defaults, the debtor is largely capable of making their contractually agreed payments, and detrimental changes to the economic and business environ-ment may but will not necessarily have a negative impact on the debtor’s ability to make their contractually agreed pay-ments in the long term. An “Investment Grade” quality rat-ing is described as a possible indicator of a minimal default risk as standard practice. A “minimal” credit risk is defined at Raiffeisenlandesbank Oberösterreich as none of the afore-mentioned stage transfer criteria being met.

Loan loss allowances in Stage 3 are recognised primarily if a debtor is experiencing economic or financial difficulties or fails to make interest payments or repayments of principal or if other circumstances arise that indicate a probability of

default based on regulatory standards. Within the internal risk management system, ongoing monitoring of the counterparty and the specific case involved is used to determine whether relevant circumstances exist.

The 3-stage model is not applied for financial assets that were already classified as impaired upon recognition (POCI – Purchased or Originated Credit Impaired). The accumulated changes of the lifetime expected loss since the initial recog-nition will be recorded in the balance sheet for these financial instruments in later reporting periods. The positive or neg-ative changes are recognised as indirect appreciation and depreciation respectively of the receivable.

The amount of the expected credit losses is measured as a probability-weighted estimation of credit losses (i.e. the pres-ent value of all payment defaults) over the expected term of the financial instrument. A payment default is the difference between the payments that are owed to a company con-tractually and the payments that the company is expected to receive.

Raiffeisenlandesbank Oberösterreich relies on different pieces of forward-looking information in evaluating the sig-nificant increase in the credit risk and in determining the ex-pected credit losses. Macroeconomic factors are used for this such as gross domestic product, the consumer price index and the unemployment rate from different sources, in particular the OeNB, OECD and the World Bank.

The macroeconomic variables and the forecasts for these enter subsequently into the model used to determine the fu-ture probabilities of default as well as the loss ratios upon default for the next three years. A convergence factor was determined for each model for the period beyond this which brings the parameters closer to the long-term average value. Three different scenarios are determined overall and included in the calculation with weighted values.

All models used as part of IFRS 9 in projections of future risk parameters are subject to uncertainty of estimation inherent to the model. The actual realisation of parameters may there-fore differ significantly from the projections. However, the an-nual validation of the IFRS 9 risk parameters ensures that significant deviations are noticed and the knowledge gained from these is used in developing the model further.

Simplified approach

IFRS 9 includes a simplification for trade receivables, active contract items and lease receivables. The loan loss allowance can be recorded for these financial instruments based on the lifetime expected loss. The accounting method for trade re-ceivables, active contract items and lease receivables can be applied independently of each other. Raiffeisenlandesbank Oberösterreich uses the simplified approach for trade receiv-ables and for loans and advances in relation to real factoring.




Off-balance-sheet commitments

Financial guarantees are contracts via which the guaran-tor undertakes to make certain payments to the guarantee holder to compensate the guarantee holder for any loss. This loss must have been occurred because a certain debtor has not met their original or modified payment obligations agreed by contract from a debt instrument. Financial guarantees are liabilities that are recognised at the time of the pledge with a time value, that steadily corresponds to the present value of the agreed return service.

Loan commitments (credit risks) are fixed obligations incum-bent on a lender to provide credit to a borrower on fixed terms agreed by contract. Fixed obligations are defined as legally binding agreements to exchange a certain quantity of resources at a fixed price at one or more future points in time.

Raiffeisenlandesbank Oberösterreich recognises loan com-mitments and financial guarantees (in particular indemnity agreements and warranties) at the point in time at which the loan agreement or contract for the financial guarantee is formed with the borrower. A loan loss allowance is formed on the balance sheet at the amount of the 12-month expected credit loss (ECL) for the part that is expected to be claimed in the next twelve months when these off-balance sheet trans-actions are recorded. An ECL is calculated over the entire term of the expected utilisation period in the event of a sig-nificant increase in the credit risk. If a borrower defaults, then the Bank records a provision for the amount of the expected default. In the case of loan commitments, the estimated pay-ments are discounted with the effective interest rate for the agreed loan. With financial guarantees a risk-free interest rate is used to calculate the present value. Risks specific to the payment flows are taken into account in estimating the pay-ment flows.

Hedge accounting

Raiffeisenlandesbank Oberösterreich has been using fair value hedge accounting pursuant to the provisions of IFRS 9 since 1 Jan. 2018. In such hedging arrangements, the change in the fair value of a recognised hedged item (under-lying transaction) that can be attributed to a particular risk is offset by a countervailing hedging instrument (generally a derivative). The recognition of a fair value hedge means that one-sided effects on profit or loss from economically hedged risks can be avoided. A key requirement is that the hedges must be effective and this effectiveness must be demonstra-ble and documented prospectively.

As is the case with the regulations of IAS 39, a hedge must consist of one or more suitable hedging instrument(s) and one or more underlying transaction(s) in order to meet the requirements for hedge accounting. A formal designation must still also be made at the beginning of the hedge and

corresponding documentation must be created. However, the risk management strategy and objective in IFRS 9 is of greater significance than the regulations of IAS 39.

The main area of application in the Group is the hedging of underlying transactions with fixed interest rate risks by the use of countervailing derivative financial instruments in which the key parameters are otherwise largely identical (e.g. issues with fixed coupons and receiver swaps). The objective is to reduce the volatility of results that could occur without hedge accounting with a one-sided mark-to-market measurement of the derivative recognised in profit or loss.

The hedging transactions in the context of fair value hedge accounting are recorded – as are the other derivative financial instruments – under the balance sheet items “Trading assets” and “Trading liabilities”.

Underlying transactions in conjunction with fair value hedge accounting are recorded above all in the following balance sheet items:

ı Loans and advances to customers ı Financial assets ı Amounts owed to banks ı Amounts owed to customers ı Liabilities evidenced by certificates ı Subordinated capital

The gains and losses arising from fair value hedge account-ing are reported in the income statement under the item “Net income from other financial instruments”.

In addition, Raiffeisenlandesbank Oberösterreich hedges the foreign currency risk arising from net investments in foreign operations, applying the relevant provisions on such hedges of net investments in accordance with IFRS 9 in conjunction with IFRIC 16. The hedged underlying transaction in this case is the net investment in a foreign operation; the Group uses financial liabilities as the hedging instrument. The effective portion of the hedge is recognised in other comprehensive income.

Repurchase agreements

In a 'genuine' repurchase transaction (repo), the Group sells assets to a counterparty, at the same time agreeing to buy them back on a certain date and at a certain price. These as-sets remain on the balance sheet and are evaluated accord-ing to the rules of the various balance sheet items. A liability in the amount of the price received is posted.

In a reverse repo transaction, the Group buys assets, at the same time agreeing to sell them back in the future. A receiv-able is recognised in the amount of the price paid. Interest expenses from repo transactions and interest income from


The Group



reverse repo transactions are recognised over the period of the transaction and reported under net interest income.

In a non-genuine repo, the seller has an obligation to buy the assets back but it does not have the right to demand them back. The buyer alone decides whether it wants to sell the assets back or not. In a non-genuine repo, the assets are not reported on the seller's balance sheet, but on the balance sheet of the buyer.

Leases

The group differentiates between finance leases and operat-ing leases. A lease is classified as a finance lease under IFRS if it transfers substantially all the risks and rewards inciden-tal to the ownership of the asset to the lessee. An operating lease is a lease that is not a finance lease. The critical factor in determining whether a lease is a finance lease or an operating lease is the substance of the transaction rather than the form at the inception of the lease. Changes to a lease may mean that lease has to be reclassified.

In accordance with IAS 17, the lessor in a finance lease recog-nises the present values of the future lease payments and any possible residual value as receivables due from the lessee. Under a finance lease, the lessee reports the assets under the relevant item of property, plant and equipment and rec-ognises a corresponding lease liability on the other side of the balance sheet.

In the case of operating leases, the lease payments are rec-ognised in profit or loss by both the lessee and the lessor. The lessor recognises the lease asset on its balance sheet at cost less depreciation.

The Group companies are lessors and, to a minor degree, also lessees.

Intangible assets

Purchased intangible assets are measured at cost on initial recognition. In subsequent measurement, a distinction is made between intangible assets with finite and those with indefinite useful lives.

Intangible assets with a finite useful life are subject to straight-line amortisation over the useful life concerned. In addition, an impairment test is carried out if there are indications of any impairment. The amortisation period and method are re-viewed at the end of each financial year as a minimum and adjusted if necessary. Amortisation of intangible assets with finite useful lives is recognised in the income statement under general administrative expenses.

Intangible assets with indefinite useful lives are subjected to an impairment test annually and whenever there is other-wise an indication of impairment. In the impairment test, the

carrying amount of the intangible asset is compared with the recoverable amount. The recoverable amount of an asset is the higher of fair value less costs to sell and value in use. If the carrying amount of an intangible asset or a cash-generating unit exceeds the recoverable amount, the asset is impaired and must be written down to the recoverable amount. In ad-dition, a review is carried out once a year to establish whether the classification of the useful life as indefinite is still justified or whether an appropriate adjustment must be made. Any impairment loss is recognised in the income statement under general administrative expenses.

With the exception of goodwill, all intangible assets have finite useful lives. The amortisation of intangible assets is based on the following useful lives:

Years

Method of depreciation/ amortisation

Goodwill unlimited Impairment test

Brand 5 – 15 Straight line

Customer base 2 – 15 Straight line

Other intangible assets 1 – 33 Straight line

Property, plant and equipment, and investment property

Property, plant and equipment, together with investment property, is measured at cost and reduced by depreciation. The following useful lives are usually taken as the basis for straight-line depreciation:

Years

Movable assets 1 – 25

Immovable assets 3 – 66

Investment property 5 – 65

If impairment is identified, an impairment loss is recognised to reduce the carrying amount to the higher of fair value less costs to sell and value in use in accordance with IAS 36. If the reasons for the impairment no longer exist, the impairment loss is reversed up to a maximum of the carrying amount that would have applied, taking into account depreciation, if the impairment loss had not been recognised.

Property that is held for rental and leasing or for capital ap-preciation is reported as “investment property”. If part of the property is owner-occupied, it is only classified as an invest-ment property if the part used by the owner is insignificant. Buildings under construction that have the same expected purpose as investment property are treated as investment property. Investment property is also recognised at amor-tised cost in accordance with the relevant option in IAS 40.




Standard industry valuation reports and present value cal-culations are prepared for investment property classified as Level 3. Depending on the use of the investment property, the fair value is determined using the income capitalisation approach, the replacement cost approach or the sales com-parison approach. The main input factors are income and expenses attributable to the property, condition and location of the property, similar assets and interest rates, depending on which valuation method is considered appropriate.

Other assets and other equity and liabilities

Inventories are reported under other assets. They are re-ported at the lower of cost and net realisable value.

Contract assets recognize the surplus of order costs incurred plus gains recorded via partial invoicing and advance pay-ments received or due.

Contract liabilities include advance payments received as well as the balance on the liabilities side from production orders. The advance payments received are recognised at their nom-inal value.

Provisions

All social provisions (provisions for pensions, severance ob-ligations and long-service awards) are determined in accor-dance with IAS 19 “Employee Benefits” using the Projected Unit Credit Method.

The Raiffeisenlandesbank Oberösterreich Group has made commitments to a group of employees relating to retirement pensions, occupational disability pensions and pensions for surviving dependants. Defined benefit pension plans guaran-tee the employees a specific retirement benefit that depends on years of employment and a certain percentage of remu-neration. If employees become permanently disabled, they are entitled to an invalidity pension under the Austrian Gen-eral Social Security Act (Allgemeines Sozialversicherungs-gesetz – ASVG) provided that they meet the criteria in section 271 (1) of this Act. A surviving dependants' pension is paid if an employee or pension beneficiary dies. For some of the beneficiaries, the obligations have been transferred to a pen-sion fund. In the case of the obligations funded through a pension fund, the amount of the entitlement is determined once at the time of retirement; after that, no further contribu-tions need to be paid.

In one subsidiary, employees have been compensated for pension commitments originally made. These employees are entitled to an “ASVG equivalent”, which will be paid to the employees or their surviving dependants for a limited period: employees are entitled to an invalidity and retirement pension; in the event of death, the surviving dependants are also en-titled to a pension. The ASVG equivalent is paid after retire-ment and after the period covered by the severance package until an ASVG pension has been awarded and is paid.

The pension provisions include provisions for additional pen-sion allowances. The beneficiaries receive, in the event of in-validity or upon retirement and after the end of the period covered by the severance package, a family allowance and/or supplementary insurance covering an allowance. The pre-condition for payment is that the employee has a right to one or both of these allowances at the time of retirement.

Employees of Austrian companies whose employment began before 1 Jan. 2003 have a right to a severance payment if the employer ends the employment and when they retire. This right depends on the number of years they worked for the company and their final salary.

In Austria, employees receive anniversary bonuses (long-ser-vice awards) after a certain number of years of employment.

The calculations are based on a notional pensionable age of 60 for women and 65 for men and take into account the statutory transitional provisions pursuant to the Austrian Bud-get Accompanying Act (Budgetbegleitgesetz) of 2003 as well as individual contractual provisions. The pensionable age for women has also been set in compliance with the Austrian Federal Constitutional Act on Differing Age Limits (Bundesver-fassungsgesetz Altersgrenzen – BVG Altersgrenzen) (Federal Law Gazette 1992/832). The Actuarial Association of Austria’s (AVÖ) calculation bases for pension insurance “AVÖ 2018-P – Rechnungsgrundlagen für die Pensionsversicherung” for employees (in the previous year “AVÖ 2008-P – Rechnungs-grundlagen für die Pensionsversicherung – Pagler & Pagler” for employees) were used as the bases for calculation.

For the entitlement phase, the actuarial calculation of pen-sion obligations uses a valuation interest rate of 1.50% p.a. (previous year: 1.25 p.a.) and an average sector-specific sal-ary increase of 2.17% p.a. affecting a pension (previous year: 1.87% p.a.). The parameters for the benefit phase are cal-culated using an interest rate of 1.50% p.a. (previous year: 1.25% p.a.) and an expected pension increase of 1.86% p.a. on average (previous year: 1.82% p.a.).

The actuarial calculation of severance obligations and long-service awards likewise uses a valuation interest rate of 1.50% p.a. (previous year: 1.25 p.a.) and an average sec-tor-specific salary increase of 3.55% p.a. (previous year: 3.33% p.a.). Calculations also take into account annual em-ployee turnover rates (related to period of service) based on internal statistics for early termination of employment in ad-dition to invalidity rates, mortality rates and factors resulting from the termination of employment on attaining retirement age.

Defined benefit plans give rise to actuarial risks in the Group. These risks include longevity risk, currency risk, interest rate risk, market risk and investment risk.


The Group



In accordance with IAS 19, actuarial gains and losses on pen-sion and severance provisions are recognised immediately in other comprehensive income; actuarial gains and losses on the provisions for long-service awards are recognised imme-diately in profit or loss as personnel expenses. The net inter-est expense and service cost are recognised in profit or loss under personnel expenses

Further provisions are recognised for contingent liabilities to third parties in the amount of anticipated utilisation if it is likely that the liability will materialise. If the effect from the time value of money is material, then provisions of this nature are dis-counted and recognised at present value.

Defined contribution plans

Pursuant to IAS 19, a distinction needs to be made between defined contribution plans and defined benefit plans, the latter requiring provisions for pensions and severance pay-ments. For a group of employees certain payments are trans-ferred to a pension fund that manages the funds and makes the pension payments. For employees whose employment commenced after 31 December 2002, a defined contribu-tion system is used to cover severance payment entitlements.

In such defined contribution plans, specified payments are made to an independent institution (pension fund, employee pension fund) and the company only guarantees the contri-butions, not the amount of the benefits to be paid out sub-sequently. These payments are recognised as personnel expenses in profit or loss.

Taxes on income

Taxes on income are accounted for in accordance with IAS 12. Deferred taxes based on country-specific tax rates are calculated for temporary differences between the amounts recognised in the consolidated financial statements and those in the tax base and that will reverse in subsequent pe-riods. Deferred tax assets are recognised for loss carryfor-wards if it is probable that there will be taxable profits in the future in a similar amount in the same company or in the same corporate group.

In 2005, Raiffeisenlandesbank Oberösterreich, acting as head of the group, formed a corporate group with various financially affiliated entities within the meaning of section 9 of the Austrian Corporation Tax Act (Körperschaftsteuerge-setz – KStG).

Deferred tax assets and deferred tax liabilities are reported in the Group on a net basis if there is a legally enforceable right of set-off in relation to the taxes and the taxes relate to tax-able items within the same tax unit or corporate group. Future

tax obligations from offsetting of losses from foreign subsid-iaries are recognised without discounting in the consolidated financial statements.

Fiduciary transactions

Business operations based on the administration or place-ment of assets for third party account are not reported on the balance sheet. Commission payments from these operations are included under net fee and commission income.

Net interest income

Interest and interest-related income includes interest income from loans and advances to customers and banks, as well as bonds and interest-dependent derivatives. It also includes current income from shares, profit participation rights, stakes in investment funds open to the public as well as in affiliated companies and other equity investments that are neither fully consolidated nor accounted for using the equity method.

Interest expenses arise mainly in relation to amounts owed to customers and banks, liabilities evidenced by certificates, subordinated capital and interest-dependent derivatives.

Interest income and expenses are subject to accrual ac-counting; dividends are recognised as soon as legal entitle-ment arises.

Negative interest in connection with financial liabilities is re-ported as a separate item in interest income. Negative in-terest in connection with financial assets is reported as a separate item in interest expenses.

Share of profit or loss of equity-accounted investments

The net profit or loss from companies accounted for using the equity method are presented as a separate main item in the income statement in the 2018 financial year. This includes proportional profits or losses from ongoing results as well as any expenses or income associated with impairments or reversals of impairment losses. The previous year has been adjusted to reflect this.

Loan loss allowances

This item on the income statement is used to report the rec-ognition and reversal of loan loss allowances. This relates to all value adjustments and provisions from the loan and se-curities business. Direct impairment losses and subsequent receipts in respect of loans and advances that have already been written off are also included in this item.




Net fee and commission income

Net fee and commission income is the balance of income and expenses in connection with the service business, rec-ognised in the periods to which the income and expenses apply. These arise mainly from payment transactions, foreign exchange, notes/coins business, precious metal transac-tions, securities business and financing business.

Net income from trading operations

Interest and dividend income, refinancing costs, commissions and changes in the value of securities in the trading portfolio are recorded under Net income from trading operations.

Net income from financial instruments carried at fair value

The “Net income from financial instruments carried at fair value” item includes realised and unrealised gains and losses in relation to the fair value valuation of financial instruments in the categories “At fair value through profit or loss” and “Des-ignated at fair value through profit or loss”.

Gains and losses on other financial instruments

“Net income from other financial investments” shows the in-come from disposals recorded at profit or loss which occur for securities of the IFRS 9 categories “At fair value with no effect on income” and “At amortised cost”. Gains and losses from FVOCI inventories that are transferred into the income statement as part of recycling can be found in the statement of comprehensive income and the equity information in the Disclosures.

The modification result from financial assets of the categories “At amortised cost” or “At fair value without no effect on in-come” is disclosed in this item of the income statement. The amount of this carrying amount adjustment is calculated from the comparison of the contractual cash flows of the asset discounted with the effective interest rate before and after the modification.

The gain or loss arising from hedge accounting according to IFRS 9, gains and losses from first time consolidation and deconsolidation as well as – if applicable – disposal gains and losses from loans and advances to customers and banks measured at amortised cost and gains, and losses from re-classifications are also disclosed under this item of the in-come statement.

General administrative expenses

The general administrative expenses include personnel and other administrative expenses as well as depreciation and amortisation of intangible assets, property, plant and equip-ment and investment property.

Other net operating income

In addition to regulatory fees, the business activities of com-panies outside of the banking and leasing industry are re-flected in particular in other operating income. This essentially involves revenues from non-banking activities in the food, real estate and IT sectors.

IFRS 15 specifies that revenue is recognised when the cus-tomer acquires control over the agreed goods and services and can obtain benefits from them.

Proceeds are realised for a specific time period if the fulfilment of the service obligation by Raiffeisenlandesbank Oberöster-reich goes hand in hand with the use and consumption by the customer, if an asset is generated or improved and the cus-tomer obtains the power of disposal during this process or if there is no alternative possibility for use and Raiffeisenlandes-bank Oberösterreich is entitled to a payment for the service provided to date. The Group uses an input-based method to determine the performance progress. If, on the other hand, none of these listed criteria apply, the sales proceeds are re-alised at a specific date.

Management judgement and estimates

When applying the accounting policies in the consolidated financial statements, the management exercises judgement, keeping in mind the objective of the financial statements to provide meaningful information about the company’s finan-cial position and financial performance as well as about any changes in the net assets and financial position of the busi-ness. Assumptions and estimates also take into account, in particular, market-related input factors, statistical data, em-pirical values and expert opinions.

Key areas in which management judgement and estimates are applied are described below.

Fair value of financial instruments

If the fair value of recognised financial assets and financial liabilities cannot be determined based on the data from an active market there are various alternative methods that can be used. If there is no observable data from which to derive parameters for a valuation technique, the fair value is deter-mined on the basis of estimates.

Equity investments and participation rights are generally clas-sified as financial assets belonging to the category of “Finan-cial instruments measured at fair value through profit or loss (FVTPL) and must therefore be measured at fair value. If there are no observable market prices, the income approach to val-uation or other suitable forms of business valuation are used for material items (e.g. net asset value or sum of the parts method) based on the data available.


The Group



Valuation in conjunction with companies accounted for using the equity method

Recourse is likewise made to company valuations for hold-ings accounted for using the equity method in which there are indicators for impairment or, if applicable, a later reversal of impairment losses: in addition to the fair value (less sales costs), a value in use according to IAS 36 is usually estab-lished in this process with the aim of determining the amount to be achieved, based on company budget plans. With ex-ternal assessments, a separate assessment of the underlying premises and budgetary planning is undertaken via the Raiff-eisenlandesbank Oberösterreich. Reference is made to the item “Companies reported under the equity method” in the Disclosures with respect to the essential application cases in the 2018 financial year.

Valuation of the expected credit loss

The valuation of the expected credit loss for financial assets measured at amortised cost and for financial assets mea-sured at fair value with no effect on income is an area that requires the use of complex models and significant assump-tions about future economic conditions and credit behaviour.

The impairment method is described in more detail in the “Impairment according to IFRS 9” section in which the key characteristics of the expected credit loss calculation are also listed. Several important assessments are required for mea-suring expected credit loss such as e.g.: ı Defining criteria for a significant increase in the credit risk ı Selecting suitable models and assumptions ı Defining the number and relative weighting of future-ori-

ented scenarios ı Defining groups of similar financial assets

As part of the process for recognising loan loss allowances for significant customer exposures, specific loan loss allow-ances or provisions for contingent liabilities and lending com-mitments are formed on a case-by-case basis. The following important evaluations are required for this: ı Estimation of the financial position and development with

the relevant customer ı Determination and weighting of scenarios ı Estimation of expected returns from realising the collateral

Provisions for pensions, severance payments and long-service awards

The actuarial measurement is largely based on assumptions about discount rates and future changes in personnel costs. Estimates of demographic trends are also necessary. Appro-priate quantitative sensitivity analyses are presented in the Notes.

Leasing

The extent to which the risks and opportunities associated with the property leased lie with the lessor or lessee provides the basis for classifying leases. There is an estimate with this of the essential transfer of risk and opportunity, which may also differ with contractual amendments and require an ad-justment. Detailed explanations are provided in the “Leases” section.

Recognition and measurement of deferred taxes

Deferred taxes are assessed and valued based on current evaluations and legislation. Deviations from the expected fu-ture results from business operations or changes to tax law may impact the tax position and result in a change to the de-ferred taxes. More detailed explanations are provided in the “Income taxes” section.

Recognition of contingent liabilities and contingent tax items

The use of estimated values is of relevance when determining the need for provisions for contingent liabilities and contin-gent tax items. The Group measures these potential losses – to the extent that they are probable and can be estimated – in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets or IAS 12 Income Taxes. Significant esti-mates are required regarding the amounts to be recognised for provisions. The final liabilities may ultimately differ from these estimates. Further disclosures are provided in the Pro-visions section.

Useful lives of non-current assets

The useful lives for property, plant and equipment are deter-mined on the basis of assumptions, estimates and empiri-cal values relating to the useful lives of non-current assets. Further descriptions are available in the “Property, plant and equipment, and investment property” section.




Segment reporting in accordance with IFRS 8 is based on the segment approach in the internal management accounts submitted to the Managing Board. This is based on the ac-counting policies according to IFRS and the internal organ-isational structure in the business divisions. There are no differences compared with the Group's accounting policies.

As part of the internal report to the entire Managing Board, the segment information is regularly presented to the mem-bers of the Managing Board to aid decision making, sup-port management and enable resource allocation. The entire Managing Board is the chief operating decision maker within the meaning of IFRS 8.

The segment reporting distinguishes between the following five segments:

Corporates

The Corporates segment encompasses the customer busi-ness of Raiffeisenlandesbank Oberösterreich in the areas of Corporates (industry, trade, services, property), Institutional Corporates and Correspondent Banking. Customer advice is primarily provided by personal advisers as well as with indi-vidual customer solutions for financing (incl. export financing, leasing and factoring), cash management, risk hedging, sub-sidies and investments.

Retail & Private Banking

The Retail & Private Banking segment includes the custom-ers from the retail sector, private banking, direct banking as well as freelancers and small enterprises. These customers are served in the branch network of Raiffeisenlandesbank Oberösterreich and via the direct banking business. Market-ing in the branch business takes place on the basis of individ-ual advice. In particular, standardised products in the areas of financing (incl. leasing), investments, payment transfer busi-ness and provision products are used for this.

Financial Markets

The Financial Markets segment brings together the trading and service earnings from customer business involving foreign exchange, securities and derivatives. The earnings from the central interest rate and liquidity management activities in the banking and trading books are also included in this segment.

Equity Investments

In accordance with the management approach, all direct and indirect holdings of Raiffeisenlandesbank Oberösterreich are allocated to the “Equity Investments” segment. Aside from the most important fully consolidated subsidiaries, this seg-ment also includes associated companies and other hold-ings that are reported under the equity or fair value method, or at acquisition costs. The Equity Investments segment is

sub-divided into four equity investment portfolios from an organisational perspective. These are “Banks and financial institutions”, “Outsourcing and bank-related investments”, “Real estate” and “Venture and partner capital”.

The reporting of equity investments is generally based on analyses of individual investments and/or subgroups. In the course of the expansion of the scope of consolidation as of 31 Dec. 2013 for the purposes of harmonization with super-visory regulations (CRR scope of consolidation) and with due regard to reporting purposes of this kind, a subgroup struc-ture was introduced for Hypo Salzburg, IMPULS-LEASING Gruppe, VIVATIS/efko and the Oberösterreich Wohnbauge-sellschaften (first-time consolidation 1 Jan. 2014). Key figures from the four essential sub-groups mentioned following the segment reporting is purely for the purposes of providing ad-ditional information to the readers of the Annual Report.

The additional subsidiaries not included in sub-groups are also allocated to the “Equity Investments” segment. Aside from the subgroups, the entities accounted for using the equity method also shape the Equity Investments segment: these entities are, in particular, significant shareholdings in the RBI Group, RLB Oberösterreich Invest GmbH & Co OG (voestalpine AG), Raiffeisenbank Prague, Oberöster-reichische Landesbank AG (Hypo Oberösterreich) and AMAG Austria Metall AG.

Corporate Center

This segment comprises income and expenses not assigned to any other segment. One-off items that would distort the various segment earnings and are not allocated to individual market segments in the internal management reporting are also reported in this segment, if required.

With regard to the geographical information pertaining to IFRS 8, reference is made to the breakdown in accordance with country-by-country reporting in the Notes (see the notes regarding “Disclosures required under Austrian accounting standards”). The details are provided based on the regis-tered head office of the consolidated company concluding the contract. With the exception of the stake in Raiffeisen-bank a.s., Prague, which is accounted for using the equity method (see notes on “Companies accounted for using the equity method”) the Group only has a negligible amount of long-term assets according to IFRS 8.33 abroad (i.e. not in-cluding financial instruments, deferred taxes and rights from insurance contracts).

The details on balance sheet assets with their relevant car-rying amounts are provided as at year end and correspond with the statement in the internal report to the entire Manag-ing Board. For further details regarding the distribution of risk capital and Risk-Weighted Assets (RWA) over the segments, reference is made to the section dealing with “Risk-bearing capacity analysis” in the Risk report.

Segment reporting


The Group



Reporting by segment 2018

Reporting by segment for 2017

IN EUR '000 Corporates

Retail & Private

BankingFinancial Markets

Invest- ments

Corporate Center Total

Net interest income 228,945 36,672 78,450 56,856 853 401,776

Loan loss allowances –52,507 3,288 104 –13,223 4,398 –57,940

Net interest income after loan loss allowances 176,438 39,960 78,554 43,633 5,251 343,836

Share of profit or loss of equity-accounted investments 0 0 0 89,041 0 89,041

Net fee and commission income 41,673 31,652 28,765 59,486 4,394 165,970

Net income from trading operations 1,165 1,237 4,119 1,011 0 7,532

Net income from financial instruments carried at fair value 5,645 7 15,645 33,705 –1 55,001

Gains and losses on other financial instruments 0 0 3,165 1,178 0 4,343

General administrative expenses –83,027 –59,110 –35,771 –537,675 –79,104 –794,687

Other operating income 971 1,445 843 1,045,493 43,500 1,092,252

Other operating expenses –23,026 –3,266 –1,571 –551,321 –15,241 –594,425

Pre-tax profit for the year 119,839 11,925 93,749 184,551 –41,201 368,863

Operating profit 166,701 8,630 74,835 162,891 –45,598 367,459

Average equity 1,667,750 148,560 858,569 1,551,714 164,888 4,391,481

Return on Equity (RoE) 7.19% 8.03% 10.92% 11.89% –24.99% 8.40%

Assets as at 31 Dec. 16,202,414 2,199,083 12,358,632 9,924,591 1,303,705 41,988,425

IN EUR '000 Corporates

Retail & Private


Invest- ments


Net interest income 193,995 31,577 95,532 31,604 –1,008 351,700

Loan loss allowances –33,076 –7,613 0 –4,707 109 –45,287

Net interest income after allowances for losses on loans and advances 160,919 23,964 95,532 26,897 –899 306,413

Share of profit or loss of equity-accounted investments 0 0 0 362,514 0 362,514


Net income from trading operations 1,072 1,236 3,703 276 0 6,287

Net income from financial instruments carried at fair value –9,769 –246 23,902 1,707 0 15,594

Gains and losses on other financial instruments –511 0 –1,002 6,840 0 5,327

General administrative expenses –76,766 –57,021 –34,284 –513,950 –74,691 –756,712

Other operating income 2,068 2,098 855 1,161,371 37,971 1,204,363

Other operating expenses –23,493 –2,973 –1,755 –722,132 –13,745 –764,098

Pre-tax profit for the year 94,627 –1,448 111,328 378,131 –48,866 533,772

Operating profit 137,983 6,411 88,428 374,291 –48,975 558,138

Average equity 1,416,522 116,792 895,362 1,609,493 127,825 4,165,994

Return on Equity (RoE) 6.68% –1.24% 12.43% 23.49% –38.23% 12.81%

Assets as at 31 Dec. 14,020,796 2,045,157 13,081,975 10,014,240 1,157,281 40,319,449

IFRS consolidated financial statements | Disclosure | Segment reporting



Further details on the Equity Investments segment for the 2018 financial year

Further details on the Equity Investments segment for the 2017 financial year

IN EUR '000

Sub-group HYPO SALZBURG

IMPULS-LEASING Group VIVATIS/efko OÖ Wohnbau

Net interest income 40,963 43,295 236 –3,864

Loan loss allowances –1,922 –9,869 0 0

Net interest income after loan loss allowances 39,041 33,426 236 –3,864

Share of profit or loss of equity-accounted investments 0 0 2,435 0

Net fee and commission income 16,479 471 –466 –33

Net income from trading operations 101 1,176 0 0

Net income from financial instruments carried at fair value 8,407 626 2,357 –20

Gains and losses on other financial instruments –53 798 550 0

General administrative expenses –47,767 –71,740 –276,601 –33,695

Other operating income 5,142 108,301 669,122 117,279

Other operating expenses –7,466 –42,902 –369,879 –70,872

Pre-tax profit for the year 13,884 30,156 27,754 8,795

IN EUR '000

Sub–group HYPO SALZBURG

IMPULS–LEASING Group VIVATIS/efko OÖ Wohnbau

Net interest income 33,508 45,504 2,185 –4,126

Loan loss allowances 3,568 –4,462 0 0

Net interest income after allowances for losses on loans and advances 37,076 41,042 2,185 –4,126

Share of profit or loss of equity–accounted investments 0 0 16,826 0

Net fee and commission income 16,198 148 –360 –33

Net income from trading operations –24 367 0 0

Net income from financial instruments carried at fair value –4,985 0 426 0

Gains and losses on other financial instruments –862 1,898 1,462 0

General administrative expenses –45,645 –67,405 –261,964 –34,547

Other operating income 5,326 96,131 815,307 95,016

Other operating expenses –6,533 –43,801 –548,315 –50,889

Pre–tax profit for the year 551 28,380 25,567 5,421

The net income for the sub-group Hypo Salzburg in the 2018 financial year includes a special effect associated with the allo-cation to the margin maintenance reserve (negative interest rates) in the amount of EUR –1.5 million (previous year: EUR –6.1 million). Furthermore the item Net income from financial instruments carried at fair value includes extraordinary income from the sale of the “conditional additional purchase price of HETA ASSET RESOLUTION AG” in the amount of EUR +8.3 million. The net income of the VIVATIS/efko Group is presented excluding expenses relating to the servicing or valuation of profit-shar-ing rights amounting to EUR –1.6 million (previous year: EUR –3.2 million).

There was also a special effect in the VIVATIS/efko Group of EUR +3.7 million in the 2017 financial year in the net income from other financial instruments from the first time consolidation of eight previously non-consolidated subsidiaries, and a special effect of EUR +16.8 million in the share of profit or loss of equity-accounted investments through the incorporation of a com-pany recognised under the equity method.


The Group



Information on the first-time application of IFRS 9 and IFRS 15

1) Changes to accounting policies on the basis of IFRS 9

The table shows a reconciliation of the measurement categories and carrying amounts of the financial assets and liabilities pursuant to IAS 39 to IFRS 9 as at 1 Jan. 2018. In order to illustrate the transitional effects, these are shown on the basis of the original balance sheet items pursuant to IAS 39.

a) Original measurement categories pursuant to IAS 39 and new measurement categories pursuant to IFRS 9

Valuation category Carrying amount

IAS 39 IFRS 9 IAS 39

31 Dec. 2017 IFRS 9

1 Jan. 2018

ASSETS in EUR '000

Cash and cash equivalents 70,402 70,402

Loans and receivables Financial assets measured at amortised cost (AC) 70,402 70,402

Loans and advances to banks 8,352,262 8,353,163

Loans and receivables Financial assets measured at amortised cost (AC) 7,891,004 7,890,781

Loans and receivables Designated at fair value through profit or loss (FVO) 0 0

Loans and receivables At fair value through profit or loss (FVTPL) 461,258 462,382

Designated financial instruments - FV option

Financial assets measured at amortised cost (AC) (voluntary de-designation) 0 0


Financial assets measured at amortised cost (AC) (mandatory de-designation) 0 0

Designated financial instruments - FV option Designated at fair value through profit or loss (FVO) 0 0

Designated financial instruments - FV option At fair value through profit or loss (FVTPL) 0 0

Loans and advances to customers 20,352,182 20,233,346

Loans and receivables Financial assets measured at amortised cost (AC) 16,650,127 16,615,304


Loans and receivables At fair value through profit or loss (FVTPL) 395,790 408,201


Financial assets measured at amortised cost (AC) (voluntary de-designation) 383,142 324,001


Financial assets measured at amortised cost (AC) (mandatory de-designation) 805,504 771,439

Designated financial instruments - FV option Designated at fair value through profit or loss (FVO) 66,343 66,343

Designated financial instruments - FV option At fair value through profit or loss (FVTPL) 200 200

Lease financing Lease financing 2,051,076 2,047,858

Trading assets 1,885,912 1,885,912

Held for trading At fair value through profit or loss (FVTPL) 1,885,912 1,885,912






31 Dec. 2017 IFRS 9

1 Jan. 2018

Financial assets (debt instruments) 5,214,479 5,222,099


Financial assets measured at amortised cost (AC) (voluntary de-designation) 0 0


Financial assets measured at amortised cost (AC) (mandatory de-designation) 115,246 111,732


Designated financial instruments - FV option At fair value through profit or loss (FVTPL) 28,890 28,890

Designated financial instruments - FV option At fair value not affecting net income (FVOCI) 153,600 153,600

Financial assets available for sale (AfS) Financial assets measured at amortised cost (AC) 133,176 128,353

Financial assets available for sale (AfS) Designated at fair value through profit or loss (FVO) 0 0

Financial assets available for sale (AfS) At fair value through profit or loss (FVTPL) 173,756 173,756

Financial assets available for sale (AfS) At fair value not affecting net income (FVOCI) 3,587,936 3,587,936

Instruments held to maturity Financial assets measured at amortised cost (AC) 13,151 13,150

Instruments held to maturity Designated at fair value through profit or loss (FVO) 0 0

Instruments held to maturity At fair value through profit or loss (FVTPL) 0 0

Instruments held to maturity At fair value not affecting net income (FVOCI) 271,297 279,322

Loans and receivables Financial assets measured at amortised cost (AC) 119,867 119,861


Loans and receivables At fair value through profit or loss (FVTPL) 0 0

Loans and receivables At fair value not affecting net income (FVOCI) 419,009 426,948

Financial assets (equity instruments) 544,016 544,016

Financial assets available for sale (AfS) At fair value not affecting net income (FVOCI option) 0 0

Financial assets available for sale (AfS) At fair value through profit or loss (FVTPL) 544,016 544,016

Designated financial instruments At fair value not affecting net income (FVOCI option) 0 0

Designated financial instruments At fair value through profit or loss (FVTPL) 0 0

Deferred tax assets 36,160 38,030

Deferred tax assets Deferred tax assets 36,160 38,030

Total assets 36,455,413 36,346,968

* Carrying amount at 1 Jan. 2018 excl. IFRS 15 transition effect


The Group





31 Dec. 2017 IFRS 9

1 Jan. 2018

Equity and liabilities in EUR '000

Amounts owed to banks 12,333,368 12,331,721


Financial liabilities measured at amortised cost (AC) (voluntary de-designation) 0 0


Financial liabilities measured at amortised cost (AC) (mandatory de-designation) 118,749 117,112


Financial liabilities stated at amortised cost Financial liabilities measured at amortised cost (AC) 11,628,515 11,628,505

Financial liabilities stated at amortised cost Designated at fair value through profit or loss (FVO) 0 0

Amounts owed to customers 12,054,121 12,054,121




Financial liabilities measured at amortised cost (AC) (mandatory de-designation) 0 0




Trading liabilities 1,513,826 1,513,826

Held for trading At fair value through profit or loss (FVTPL) 1,513,826 1,513,826

Liabilities evidenced by certificates 7,921,626 7,917,526


Financial liabilities measured at amortised cost (AC) (voluntary de-designation) 88,764 84,958



Designated financial instruments - FV option Designated at fair value through profit or loss (FVO) 2,310,791 2,310,791


Financial liabilities stated at amortised cost Designated at fair value through profit or loss (FVO) 19,474 20,498

Deferred tax liabilities 81,923 55,609

Deferred tax liabilities Deferred tax liabilities 81,923 55,609

Subordinated capital 1,151,698 1,152,261






Financial liabilities stated at amortised cost Financial liabilities measured at amortised cost (AC) 631,120 631,120


Total liabilities 35,056,562 35,025,064





b) Reconciliation of carrying amounts from IAS 39 to IFRS 9

The following tables shows the changes in the categorisations of financial assets and financial liabilities at the time of the initial application of IFRS 9 on 1 Jan. 2018:

Financial assets 31.12.2017 01.01.2018

IN EUR '000

IAS 39 carrying amount

Reclassifi-cation Revaluation

IFRS 9 (“Financial

instruments”)

Cash and cash equivalents

Measured at amortised cost (AC) 0

Allocations:

from IAS 39 Loans and Receivables (L&R) 70,402 0

Total 0 70,402 0 70,402

Loans and Receivables (L&R) 70,402

Subtractions:

to IFRS 9 Measured at amortised cost (AC) –70,402 n/a

Total 70,402 –70,402 0 0

Total cash and cash equivalents 70,402 0 0 70,402

Loans and advances to banks


Allocations:

from IAS 39 Loans and Receivables (L&R) 7,891,004 –223

from IAS 39 Designated financial instruments - FV option (FVO) 0 0

0 7,891,004 –223 7,890,781

Loans and Receivables (L&R) 8,352,262

Subtractions:

according to IFRS 9 designated at fair value through profit or loss (FVO) 0 n/a

according to IFRS 9 measured at fair value through profit or loss (FVTPL) –461,258 n/a

to IFRS 9 Measured at amortised cost (AC) –7,891,004 n/a

Total 8,352,262 –8,352,262 0 0

Measured at fair value through profit or loss (FVTPL) 0

Allocations:

from IAS 39 Loans and Receivables (L&R) 461,258 1,124


Total 0 461,258 1,124 462,382

Designated at fair value through profit or loss (FVO) 0

Allocations:

from IAS 39 Loans and Receivables (L&R) 0 0

Subtractions:

according to IFRS 9 measured at fair value through profit or loss (FVTPL) 0 n/a

to IFRS 9 Measured at amortised cost (AC) 0 n/a

Total 0 0 0 0

Total loans and advances to banks 8,352,262 0 901 8,353,163


The Group




IN EUR '000




instruments”)



Allocations:

from IAS 39 Loans and Receivables (L&R) 18,701,203 –38,041

from IAS 39 Designated financial instruments - FV option (FVO) 1,188,646 –93,206

Total 0 19,889,849 –131,247 19,758,602

Loans and Receivables (L&R) 19,096,993

Subtractions:


to IFRS 9 Measured at fair value through profit or loss (FVTPL) –395,790 n/a


Total 19,096,993 –19,096,993 0 0


Allocations:



Total 0 395,990 12,411 408,401

Designated at fair value through profit or loss (FVO) 1,255,189

Allocations:


Subtractions:

according to IFRS 9 measured at fair value through profit or loss (FVTPL) –200 n/a


Total 1,255,189 –1,188,846 0 66,343

Total loans and advances to customers 20,352,182 0 –118,836 20,233,346

Trading assets (IFRS 9)


Allocations:

from IAS 39 Held for Trading (HfT) 34,367 0

from IAS 39 Positive market values from derivatives (Hedge Accounting) 203,387 0

from IAS 39 Positive fair values from derivatives (excl. Hedge Accounting) 1,648,158 0

Total 0 1,885,912 0 1,885,912

Trading assets (IAS 39)

Measured at fair value through profit or loss (FVTPL) 1,885,912

Subtractions:

according to IFRS 9 Trading assets – Measured at fair value through profit or loss (FVTPL) –34,367 n/a

to IFRS 9 Positive market values from derivatives (Hedge Accounting) –203,387 n/a

according to IFRS 9 Positive fair values from derivatives (excl. Hedge Accounting) –1,648,158 n/a

Total 1,885,912 –1,885,912 0 0

Total trading assets 1,885,912 0 0 1,885,912





IN EUR '000




instruments”)

Financial assets


Allocations:

from IAS 39 Loans and Receivables (L&R) 119,867 –6

from IAS 39 Designated financial instruments - FV option (FVO) 115,246 –3,514

from IAS 39 Instruments held to maturity (HtM) 13,151 –1

from IAS 39 Available for sale (AfS - debt instruments) 133,176 –4,823

from IAS 39 Available for sale (AfS - equity instruments) 0 0

Total 0 381,440 –8,344 373,096

Instruments held to maturity (HtM) 284,448

Subtractions:



to IFRS 9 Measured at fair value with no effect on income (FVOCI) –271,297 n/a


Total 284,448 –284,448 0 0


Subtractions:





Total 538,876 –538,876 0 0


Allocations:


from IAS 39 Designated financial instruments - FV option (FVO) 28,890 0

from IAS 39 Instruments held to maturity (HtM) 0 0

from IAS 39 Available for sale (AfS - debt instruments) 173,756 0

from IAS 39 Available for sale (AfS - equity instruments) 544,016 0

Total 0 746,662 0 746,662

Designated at fair value through profit or loss (FVO) 496,287

Allocations:



from IAS 39 Available for sale (AfS - debt instruments) 0 0

Subtractions:




Total 496,287 –297,736 0 198,551


The Group




IN EUR '000




instruments”)

Measured at fair value through other comprehensive income (FVOCI) 0

Allocations:



from IAS 39 Instruments held to maturity (HtM) 271,297 8,025

from IAS 39 Available for sale (AfS - debt instruments) 3,587,936 0

Total 0 4,431,842 15,964 4,447,806

Designated at fair value with no effect on income (FVOCI option) 0

Allocations:



Total 0 0 0 0

Available for sale (AfS - debt instruments) 3,894,868

Subtractions:



to IFRS 9 Measured at fair value with no effect on income (FVOCI) –3,587,936 n/a


Total 3,894,868 –3,894,868 0 0

Available for sale (AfS - equity instruments) 544,016

Subtractions:


according to IFRS 9 Designated at fair value with no effect on income (FVOCI option) 0 n/a

Total 544,016 –544,016 0 0

Total financial assets 5,758,495 0 7,620 5,766,115

Total Financial Assets 36,419,253 0 –110,315 36,308,938

Raiffeisenlandesbank Oberösterreich has performed a detailed analysis of its business models and cash flow features. Please refer to the “Accounting policies” section in the Disclosures for the business model and cash flow features.

The impact of first-time application of IFRS 9 as at 1 Jan. 2018 on financial assets is explained below:

The significant portfolio effects of classification are, on the one hand, fair value accounting for SPPI-injurious credits with a carrying amount as at 31 Dec. 2017 of EUR 857.2 million or SPPI-injurious securities in the amount of EUR 202.6 million, yet featuring a low net conversion effect overall on Group equity in the amount of EUR +10.1 million. On the other hand to a greater extent loans designated using the fair value option under IAS 39 were accounted for at amortised cost with a carrying amount as at 31 Dec. 2017 of EUR 1,188.6 million with securities amounting to EUR 115.2 million as part of the reclassification under IFRS 9. Voluntary declassifications took place generally in order to avoid fluctuations in net income in future through credit spreads with the prior fair value accounting. This fall in the financial assets carried at fair value caused the largest conversion effect from the first-time application of IFRS 9 with a negative net impact on consolidated equity of EUR –72.5 million.

As part of the new process of designating financial assets, Raiffeisenlandesbank Oberösterreich also exercised the option of applying prospective hedge accounting as of 1 Jan. 2018 for fixed income financial assets (predominantly government bonds in the FVOCI category) which are accompanied by corresponding interest hedge transactions. As a result, the volume of micro fair value hedges increased in the Financial assets balance sheet item by a carrying amount of collateralised underlying transactions of around EUR 1,674.7 million. Hedge accounting instances already existing under IAS 39 were updated as of 1 Jan. 2018 applying the IFRS 9 regulations in this regard.




Financial liabilities 31.12.2017 01.01.2018

IN EUR '000




instruments”)

Amounts owed to banks

Measured at amortised cost (AC) 11,628,515

Allocations:


Subtractions:


Total 11,628,515 118,749 –1,647 11,745,617


Allocations:

from IAS 39 Measured at amortised cost (AC) 0 0

Subtractions:


Total 704,853 –118,749 0 586,104

Total amounts owed to banks 12,333,368 0 –1,647 12,331,721

Amounts owed to customers


Allocations:


Subtractions:


Total 11,375,174 0 0 11,375,174


Allocations:


Subtractions:

to IFRS 9 Measured at amortised cost (AC) 0 n/a

Total 678,947 0 0 678,947

Total amounts owed to customers 12,054,121 0 0 12,054,121

Trading liabilities (IFRS 9)


Allocations:

from IAS 39 Held for Trading (HfT) 0 0

from IAS 39 Negative market values from derivatives (Hedge Accounting) 109,603 0

from IAS 39 Negative market values from derivatives (excl. Hedge Accounting) 1,404,223 0

Total 0 1,513,826 0 1,513,826

Trading liabilities (IAS 39)

Measured at fair value through profit or loss (FVTPL) 1,513,826

Subtractions:

according to IFRS 9 Trading liabilities - Measured at fair value through profit or loss (FVTPL) 0 n/a

according to IFRS 9 Negative market values from derivatives (Hedge Accounting) –109,603 n/a

according to IFRS 9 Negative market values from derivatives (excl. Hedge Accounting) –1,404,223 n/a

Total 1,513,826 –1,513,826 0 0

Total trading liabilities 1,513,826 0 0 1,513,826


The Group



Financial liabilities 31.12.2017 01.01.2018

IN EUR '000




instruments”)



Allocations:


Subtractions:

according to IFRS 9 designated at fair value through profit or loss (FVO) –19,474 n/a

Total 5,338,937 252,424 –5,124 5,586,237

Designated at fair value through profit or loss (FVO) 2,582,689

Allocations:

from IAS 39 Measured at amortised cost (AC) 19,474 1,024

Subtractions:


Total 2,582,689 –252,424 1,024 2,331,289

Total liabilities evidenced by certificates 7,921,626 0 –4,100 7,917,526

Subordinated capital

Measured at amortised cost (AC) 631,120

Allocations:


Subtractions:


Total 631,120 26,438 563 658,121


Allocations:


Subtractions:


Total 520,578 –26,438 0 494,140

Total subordinated capital 1,151,698 0 563 1,152,261

Total financial liabilities 34,974,639 0 –5,184 34,969,455

Off-balance-sheet commitments 31.12.2017 01.01.2018

IN EUR '000




instruments”)

Loan approvals 5,898,288 n/a –282 5,898,006

Contingent liabilities 2,350,647 n/a 3,312 2,353,959

Off-balance-sheet commitments 8,248,935 0 3,030 8,251,965

The impact of first-time application of IFRS 9 as at 1 Jan. 2018 on financial liabilities is explained below:

There were no material changes in the rules for classifying and measuring financial liabilities, with the exception of changes in the fair value of financial liabilities designated at fair value through profit or loss that are attributable to a change in the Bank’s own credit risk (see also the section entitled “Accounting policies” in the Disclosures). As part of the first-time application of IFRS 9, financial liabilities designated previously at fair value through profit or loss with a carrying amount as at 31 Dec. 2017 of EUR 417.1 million were reclassified at amortised cost, with a negligible net effect on Group capital on EUR +4.7 million.





IN EUR '000

IAS 39 and IAS 37 –

Agriculture:Reclassi-fi-cation Revaluation


instruments”)



Allocations:

from IAS 39 Loans and Receivables (L&R) 2,553 228


Total 0 2,553 228 2,781


Allocations:

from IAS 39 Loans and Receivables (L&R) 158 –158

Total 0 158 –158 0


Subtractions:


according to IFRS 9 measured at fair value through profit or loss (FVTPL) –158 n/a


Total 2,711 –2,711 0 0

Total loans and advances to banks 2,711 0 70 2,781

Loans and advances to customers - excl. lease financing


Allocations:

from IAS 39 Loans and Receivables (L&R) 384,882 –88,971

from IAS 39 Designated financial instruments - FV option (FVO) 0 12,400

Total 0 384,882 –76,571 308,311


Allocations:

from IAS 39 Loans and Receivables (L&R) 15,310 –15,310

Total 0 15,310 –15,310 0


Subtractions:




Total 400,192 –400,192 0 0

Loans and advances to customers - Lease financing

Lease financing 61,960 n/a 3,628

Total 61,960 0 3,628 65,588

Total loans and advances to customers 462,152 0 –88,253 373,899

c) Reconciliation of the loan loss allowances of IAS 39 with IFRS 9

The following table shows the changes in the area of risk provisioning due to the first-time application of IFRS 9 as at 1 Jan. 2018. For information on risk provisioning, please refer to the section “Accounting policies” or to the “Loan loss allowance” section in the Disclosures.


The Group



Financial assets


Allocations:




from IAS 39 Available for sale (AfS - debt instruments) 0 28


Total 0 0 48 48

Measured at fair value through other comprehensive income (FVO-CI) 0

Allocations:




from IAS 39 Available for sale (AfS - debt instruments) 0 2,719


Total 0 0 3,047 3,047

Total financial assets 0 0 3,095 3,095

Total Financial Assets 464,863 0 –85,088 379,775

Off-balance-sheet commitments 31.12.2017 01.01.2018

IN EUR ‘000

IAS 39 and IAS 37 –

Agriculture:Reclassifi-

cation Revaluation


instruments”)

Provisions for loan approvals 19,542 n/a 282 19,824

Provisions for contingent liabilities 16,372 n/a -3,312 13,060

Off-balance-sheet commitments 35,914 0 -3,030 32,884

It is explained below how the initial application of IFRS 9 as at 1 Jan. 2018 has an impact on risk provisioning:

In the course of the first-time application of IFRS 9, Raiffeisenlandesbank Oberösterreich determined a gross carrying amount volume of approximately EUR 219.2 million as so-called POCI financial instruments, for which credit rating-induced contractual changes were made before 1 Jan. 2018, which were in default at the time of the contract change and for which a full return was no longer expected. Due to the conversion to net carrying amount reporting, there was a decline in the loan loss allow-ance indirectly booked under IAS 39 in the mentioned cases of EUR 123.1 million.

Further changes in the reconciliation of loan loss allowances between 31 Dec. 2017 and 1 Jan. 2018 are mainly due to changes in classification and differences between portfolio valuation allowances under IAS 39 and the introduction of Stage 1 and 2 under IFRS 9.

The change in the loan loss allowance as a result of the POCI financial instruments results in a net impact of EUR –26.2 million on Group equity through the loan loss allowance which has otherwise increased as a whole under IFRS 9.




Financial assets reclassified from Available for sale (AfS) to Measured at amortised cost (AC) IN EUR THOUSAND

Fair value as at 30 June 2018 106,694

Net income from the change in fair value that would have been recorded under other income at fair value with no effect on income during the reporting period without reclassification –3,248

Financial assets reclassified from Designated financial instruments - FV option (FVO) to Measured at amortised cost (AC) IN EUR THOUSAND

Fair value as at 30 June 2018 1,085,747

Net income from the change in fair value that would have been recorded in the income statement at fair value through profit or loss during the reporting period without reclassification –7,576

Recognised interest income 32,881

Financial assets reclassified from Designated financial instruments - FV option (FVO) to Measured at fair value through other comprehensive income (FVOCI) IN EUR THOUSAND


Net income from the change in fair value that would have been recorded in the income statement at fair value through profit or loss during the reporting period without reclassification –8,221

Recognised interest income 6,416

Financial liabilities reclassified from Designated financial instruments - FV option (FVO) to Measured at amortised cost (AC) IN EUR THOUSAND


Net income from the change in fair value that would have been recorded in the income statement at fair value through profit or loss during the reporting period without reclassification 19,382

Recognised interest expenses –5,633

d) Effects based on the assumption that fair value accounting will be maintained under IFRS 9

For financial assets or financial liabilities reclassified as at 1 Jan. 2018 due to the first-time application of IFRS 9, the following table shows the fair values and the gain or loss from the change in fair value that would have been stated at fair value through profit or loss in the income statement or at fair value with no effect on income in other comprehensive income without reclas-sification of the financial assets during the reporting period.

2) Changes to accounting policies on the basis of IFRS 15

The following table shows the effects of the first-time application of IFRS 15 – “Revenue from contracts with customers” on the opening balance as at 1 Jan. 2018:

IN EUR '000 31.12.17Adjustment due to

IFRS 15 01.01.18

Deferred tax assets 36,160 –158 36,002

Other assets 439,928 –18,084 421,844

Receivables from non-bank activities 186,571 0 186,571

Prepaid expenses 23,165 0 23,165

Inventories 144,574 –25,671 118,903

Assets 0 7,587 7,587

Other assets 85,618 0 85,618


The Group



IN EUR '000 31.12.17Adjustment due to

IFRS 15 01.01.18

Deferred tax liabilities 81,923 0 81,923

Other liabilities 545,044 –19,046 525,998

Liabilities from non-bank activities 174,445 0 174,445


Liabilities 0 662 662


Equity* 4,403,517 804 4,404,321

IN EUR '000

with application of IFRS 15

1 Jan.–30 June 2018Adjustment

due to IFRS 15

without application of IFRS 15

1 Jan.–30 June 2018

Other operating income 1,092,252 –200,272 1,292,524

Income from non-banking activities 963,829 –200,272 1,164,101

Income from real estate held as financial investments 44,917 0 44,917

Miscellaneous operating income 83,506 0 83,506

Other operating expenses –594,425 201,996 –796,421

Expenses from non-banking activities –467,377 201,996 –669,373

Other tax and fees –21,751 0 –21,751

Miscellaneous operating expenses –105,297 0 –105,297

Other net operating income 497,827 1,724 496,103

Deferred taxes –6,088 –215 –5,873

IN EUR '000



due to IFRS 15


1 Jan.–30 June 2018

Deferred tax assets 43,140 –173 43,313

Other assets 503,660 –12,386 516,046

Receivables from non-bank activities 168,857 0 168,857


Inventories 129,264 –23,256 152,520

Assets 10,870 10,870 0

Other assets 167,247 0 167,247

IN EUR '000



due to IFRS 15


1 Jan.–30 June 2018

Deferred tax liabilities 40,564 200 40,364


Liabilities from non-bank activities 135,378 0 135,378


Liabilities 615 615 0


Equity capital 4,452,559 2,313 4,450,246


The following tables show the effects of these changes on the consolidated financial statements as at 31 Dec. 2018. The relevant items of the financial statement are prepared both according to IFRS 15 and according to previously applicable ac-counting provisions (in particular IAS 18 and IAS 11).

For a company from the food industry, the first-time application of IFRS 15 resulted in a change in the statement of revenues and cost of sales as a result of substantiation of the control principle in the definition of agent and principal. This reduces the revenues and expenses from non-banking activities for this company by EUR 217,610 thousand in the 2018 financial year.

The remaining effects on the income statement and balance sheet as well as the resulting effect on the equity in the amount of EUR 2,313 thousand arise from the period-related revenue recognition from companies in the real estate sector as outlined in further detail in the chapter “First-time adoption of new and revised standards and interpretations”.




Income statement disclosures

1. Net interest income

IN EUR '000 2018 2017

Interest income in accordance with the effective interest method* 495,903 n/a

from financial assets in the “At amortised cost” (AC) category 404,877 n/a

from financial liabilities in the “At amortised cost” (AC) category 17,482 n/a

from financial assets in the “At fair value with no effect on income” (FVOCI) category 73,544 n/a

Other interest income 213,793 n/a

from financial assets in the “At fair value through profit and loss” (FVTPL) category 134,041 n/a

from financial assets in the “Designated at fair value through profit or loss” (FVO) category 6,368 n/a

from financial liabilities in the “At fair value through profit and loss” (FVTPL) category 0 n/a

from financial liabilities in the “Designated at fair value through profit or loss” (FVO) category 0 n/a

from lease financing 73,384 n/a

Other interest-related income 459 n/a

Current income from financial assets in the “At fair value through profit or loss” (FVTPL) category 43,517 n/a

Interest income n/a 681,123

from financial assets in the “Loans and receivables” category n/a 337,514

from financial assets in the “Available for sale” category n/a 67,139

from financial assets in the “Held-to-maturity” category n/a 6,171

from financial liabilities that are measured at amortised cost (AC) n/a 6,015

from lease financing n/a 74,466

from designated and derivative financial instruments n/a 189,818

from designated financial liabilities n/a 0

Other interest-related income n/a 31

Current income n/a 42,403

from shares and other variable-yield securities n/a 15,704

from investments in affiliated companies n/a 18,472

from other investments n/a 8,227

Interest and interest-related income 753,672 723,557

Interest expenses –345,903 –368,626

for financial liabilities in the “At amortised cost” (AC) category –208,123 n/a

for financial liabilities in the “At fair value through profit and loss” (FVTPL) category –6,417 n/a

for financial liabilities in the “Designated at fair value through profit or loss” (FVO) category –118,127 n/a

from financial assets in the “At amortised cost” (AC) category –13,236 n/a

from financial assets in the “At fair value with no effect on income” (FVOCI) category 0 n/a

from financial assets in the “At fair value through profit and loss” (FVTPL) category 0 n/a

from financial assets in the “Designated at fair value through profit or loss” (FVO) category 0 n/a

for financial liabilities that are measured at amortised cost (AC) n/a –193,885

for financial assets that are measured at amortised cost (AC) n/a –11,300

for designated and derivative financial instruments n/a –163,441

for designated financial assets n/a 0

Other interest-related expenses –5,993 –3,231

Interest and interest-related expenses –351,896 –371,857

Net interest income 401,776 351,700

* A statement of the interest and similar income based on the effective interest rate method was completed accordingly as of the 2018 financial year following an IFRIC decision in March 2018.


The Group



IFRS consolidated financial statements | Disclosure | Income statement disclosures

2. Loan loss allowances

3. Net income from companies accounted for using the equity method

IN EUR '000 2018 2017

Pro rate net income 115,764 265,111

Impairment / reversal of impairment of companies accounted for using the equity method

–26,723 97,403

Total 89,041 362,514

IN EUR '000 2018 2017

Changes to the loan loss allowance through profit and loss under IFRS 9 –66,698 n/a

Additions to allowances for losses on loans and advances n/a –195,374

Reversal of loan loss allowances n/a 162,029

Direct impairment losses –10,611 –18,532

Amounts received against loans and advances written off 19,369 6,590

Total –57,940 –45,287

The interest income includes interest income from value-adjusted loans and advances to customers and banks of EUR 5,698 thousand (previous year: EUR 7,929 thousand). Interest income from significant value-adjusted loans and advances to cus-tomers and banks are recognised using the interest rate which was used in determining the impairment loss for discounting the future cash flow.

Reference is made to the effects resulting from the law in relation to maintaining margins in the case of negative interest rates in the “Provisions” section in the Notes.

For further details regarding the results from companies accounted for using the equity method as well as the respective gains or losses (impairment or reversal of impairment), reference is made to the “Companies accounted for using the equity method” section in the Notes. The above amounts are assigned to the “Investments” segment.

For further details on the loan loss allowance, please refer to the loan loss allowance schedule in the Disclosures.



4. Net fee and commission income

2018 IN EUR '000 Corporates

Retail & Private


Invest- ments


Fee and commission income 46,192 34,932 60,577 77,466 8,051 227,218

from payment transactions 10,772 10,748 82 7,289 3,488 32,379

from funding transactions 32,364 1,875 4,213 1,737 3,416 43,605

from securities business 1,465 14,538 55,461 36,557 645 108,666

from foreign exchange, currency and precious metals transactions 1,541 973 821 881 298 4,514

from other service business 50 6,798 0 31,002 204 38,054

Fee and commission expenses –4,519 –3,280 –31,812 –17,980 –3,657 –61,248

from payment transactions –437 –1,036 –268 –1,005 –1,085 –3,831

from funding transactions –3,719 –746 –1 –229 –2,445 –7,140

from securities business –1 –1,371 –31,076 –13,051 –80 –45,579

from foreign exchange, currency and precious metals transactions 0 0 0 –9 0 –9

from other service business –362 –127 –467 –3,686 –47 –4,689


2017 IN EUR '000 Corporates

Retail & Private


Invest- ments


Fee and commission income 44,430 34,866 53,559 70,947 8,381 212,185

from payment transactions 9,972 10,547 64 7,491 3,337 31,411

from funding transactions 31,946 1,215 3,107 1,477 3,978 41,723

from securities business 988 15,009 49,870 36,330 622 102,818

from foreign exchange, currency and precious metals transactions 1,461 1,006 519 774 226 3,986

from other service business 64 7,090 0 24,875 219 32,247

Fee and commission expenses –3,323 –3,372 –29,182 –16,340 –5,884 –58,101

from payment transactions –280 –1,016 –293 –887 –1,024 –3,500

from funding transactions –2,919 –620 –1 –385 –4,721 –8,646

from securities business –1 –1,610 –28,762 –12,362 –80 –42,816

from foreign exchange, currency and precious metals transactions 0 0 0 –6 0 –6

from other service business –123 –127 –125 –2,699 –59 –3,133



The Group



5. Net income from trading operations (2017: Net trading income)

6. Net income from financial instruments carried at fair value (2017: Net income from designated financial instruments and derivatives)

IN EUR '000 2018 2017

Net income from financial instruments carried at fair value 55,001 n/a

from financial assets in the “At fair value through profit or loss” (FVTPL) category 12,385 n/a

from financial liabilities in the “At fair value through profit or loss” (FVTPL) category 0 n/a

from financial assets in the “Designated at fair value through profit or loss” (FVO) category –612 n/a

from financial liabilities in the “Designated at fair value through profit or loss” (FVO) category 43,228 n/a

IN EUR '000 2018 2017

Net gain or loss on designated financial instruments and derivatives n/a 15,594

of which from designated underlying transactions n/a 83,145

of which from derivatives n/a –67,551

IN EUR '000 2018 2017

Interest rate-related business 1,822 1,867

Currency related business 4,657 3,722

Other transactions 1,053 698

Total 7,532 6,287




IN EUR '000 2018 2017

Gain or loss on disposal of securities in the “At amortised cost” (AC) category 18 n/a

Gain or loss on disposal of securities in the “At fair value through other comprehensive income” (FVOCI) category 3,093 n/a

Securities in the category “held-to-maturity” n/a 0

Gain or loss on remeasurement n/a 0

Gain or loss on disposal n/a 0

Securities classified as loans and receivables n/a –514

Gain or loss on remeasurement n/a –511

Gain or loss on disposal n/a –3

Securities in the category “available for sale” n/a 4,486

Gain or loss on remeasurement n/a –2,829

Gain or loss on disposal n/a 7,315

Shares in companies classified as available for sale n/a –398

Gain or loss on remeasurement n/a –3,657

Gain or loss on disposal n/a 3,259

Gain or loss arising from hedge accounting –2,426 –8,311

Gains and losses arising on hedging transactions 17,733 –54,608

Valuation from underlying transactions –20,159 46,297

Net income on disposal 0 n/a

Net income on disposal of loans and advances to banks in the “At amortised cost” (AC) category 0 n/a

Gains from the disposal of loans and advances to banks in the “At amortised cost” (AC) category 0 n/a

Losses from the disposal of loans and advances to banks in the “At amortised cost” (AC) category 0 n/a

Net income on disposal of loans and advances to customers in the “At amortised cost” (AC) category 0 n/a

Gains from the disposal of loans and advances to customers in the “At amortised cost” (AC) category 0 n/a

Losses from the disposal of loans and advances to customers in the “At amortised cost” (AC) category 0 n/a

Modification result 615 n/a

Modification income 1,601 n/a

from financial assets in the “At amortised cost” (AC) category 1,601 n/a


Modification expenditure –986 n/a

from financial assets in the “At amortised cost” (AC) category –986 n/a


Net income from reclassification 0 n/a

Net income from reclassification of financial assets from the “At amortised cost” (AC) category to the “At fair value through profit or loss” category (FVTPL) 0 n/a

Net income from reclassification of financial assets from the “At fair value through other comprehensive income (FVOCI) category to the “At fair value through profit or loss” category (FVTPL) 0 n/a

Gain or loss from initial consolidation and deconsolidation 3,043 10,064

Total 4,343 5,327

7. Net income from other financial instruments (2017: Net income from investments)


The Group



Net income from initial consolidation and deconsolidation comes to a total of EUR +3,043 thousand (previous year: EUR +10,064 thousand). The table showing the individual additions and disposals is visible in the section “Principles underlying the consolidated financial statements in accordance with IFRS”. The greatest effects of additions or disposals in the 2018 financial year originated in conjunction with the deconsolidation of the following companies:

ı H. Loidl Wurstproduktions- und vertriebsgesellschaft m. b. H. & Co KG EUR +550 thousand ı Kapsch Financial Services GmbH EUR +1,695 thousand ı Projekt Eberstalzell Immobilien GmbH EUR +556 thousand

IN EUR '000 2018 2017

Personnel expenses –413,581 –397,324

Wages and salaries –314,402 –301,541

Compulsory social security contributions –77,823 –75,627

Voluntary social security contributions –4,999 –4,350

Expenses for severance payments and pensions –16,357 –15,806

Administrative expenses –295,231 –270,429

Rent and leasing expenses –17,392 –16,544

Expenses for office space (operation, maintenance) –47,867 –48,204

IT and communications –75,026 –64,823

Legal and consulting expenses –31,595 –28,206

Advertising and representation expenses –31,177 –27,849

Expenses from real estate held as financial investments –13,144 –14,152

Other administrative expenses –79,030 –70,651

Depreciation and impairment losses on property, plant and equipment and on investment property, amortisation and impairment losses on intangible assets –85,875 –88,959

Property, plant and equipment –61,931 –61,331

Investment property –16,214 –16,651

Goodwill 0 –4,501

Other intangible assets –7,730 –6,476

Total –794,687 –756,712

8. General administrative expenses

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

IN EUR '000 01.01.–31.12.2018 01.01.–31.12.2017

Pension fund –3,441 –3,407

Employee pension fund –2,515 –2,345

Total –5,956 –5,752

In the 2018 financial year the “general administrative expenses” included about EUR 276.6 million (previous year: EUR 262.0 million) from companies in the foodstuff sector (VIVATIS/efko Group). Companies from the food industry are, as their business is unrelated to banking, mainly reported in the income statement under “Other operating income” and “General administrative expenses”. There was no unscheduled impairment of goodwill in the 2018 financial year (previous year: unscheduled impair-ment of EUR 4.5 million – see also the statements in the Notes on “Intangible assets”).

The “General administrative expenses” from the “Oberösterreich Wohnbau” companies were posted at around EUR 33.7 million in the 2018 financial year. (previous year: EUR 34.5 million).




9. Other net operating income

IN EUR '000 2018 2017

Other operating income 1,092,252 1,204,363

Income from non-banking activities 963,829 1,092,934

Income from real estate held as financial investments 44,917 43,457

Miscellaneous operating income 83,506 67,972

Other operating expenses –594,425 –764,098

Expenses from non-banking activities –467,377 –632,758

Other tax and fees –21,751 –23,851

Miscellaneous operating expenses –105,297 –107,489

Total 497,827 440,265

IN EUR '000 01.01.–31.12.2018 01.01.–31.12.2017

Sales revenue from non-banking activities 963,829 1,092,934

Revenues from the food industry 660,573 808,613

Revenue from the real estate industry 128,013 117,194

Revenue from the IT group 102,952 96,031

Others 72,291 71,096

In the 2018 financial year, total expenditure of EUR 19.7 million (previous year: EUR 19.5 million) was booked for the stability levy in Raiffeisenlandesbank Oberösterreich AG and in SALZBURGER LANDES-HYPOTHEKENBANK AKTIENGESELLSCHAFT. All expenses in connection with the stability levy are stated in the item of “Other tax and fees”. The expenses for the 2018 an-nual contributions to the resolution fund and deposit guarantee scheme for both financial institutions amounting to EUR 19.1 million (previous year: EUR 16.7 million) are posted under “Other operating expenses”.

Of the “Revenue from non-banking activities”, by far the largest portion – i.e. EUR 660.8 million (previous year: EUR 808.9 million) originates from companies in the food industry (VIVATIS/efko Group). The amount of the (deployed) reserves of these companies which was recorded as expenditure in the reporting period is EUR 362.4 million (previous year: EUR 536.5 million) and is reported under “expenses from non-banking activities”. In addition to the changes to the structure of sales revenues and cost of sales triggered by the initial consolidations and deconsolidations (in particular the disposal of LANDHOF GesmbH & Co KG und H. Loidl Wurstproduktions- und -vertriebsgesellschaft m. b. H. & Co KG as well as the addition of Frisch & Frost Nahrungsmittel GmbH, Tiefkühlkost Weinbergmaier Gesellschaft m.b.H., efko cz. s.r.o. and several foreign MARESI compa-nies), the first-time application of IFRS 15 also takes effect here – see also the Disclosures in connection with the reconciliation tables for IFRS 15.

In total, the “Other operating income” of the companies in the VIVATIS/efko Group amounts to about EUR 299.2 million (previ-ous year: EUR 267.0 million). As their business is unrelated to banking, the companies that are in the food industry are mainly reported in the income statement under “Other operating income” and “General administrative expenses”.

The ”OÖ Wohnbau” companies contribute about EUR 46.4 million to the “Other operating income” (previous year: EUR 44.1 million).

The sales revenue from non-banking activities are broken down by key product groups in the following table. All revenues from non-banking activities are disclosed in the “Equity investments” segment.


The Group




10. Taxes on income

Taxes on income by cause:

IN EUR '000 2018 2017

Current taxes on income –63,301 –47,897

Actual ongoing tax expenditure for the current year –65,720 –49,121

Tax adjustments from previous years 1,859 676

Consideration of tax losses from earlier periods 560 548

Deferred taxes –6,088 5,676

Formation/reversal of temporary differences –7,891 8,724

Tax adjustments from previous years –256 –3,742

Effects of tax rate changes or introduction of new taxes –4 0

Change in the reduction in value of deferred taxes without tax losses 1,623 2,290

Change in capitalised tax losses 440 –1,596

Total –69,389 –42,221

IN EUR '000 2018 2017

Current taxes on income –63,301 –47,897

of which in Austria –55,765 –44,308

abroad –7,536 –3,589

Deferred taxes –6,088 5,676

Total –69,389 –42,221

Taxes on income by origin:

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

IN EUR '000 2018 2017

Pre-tax profit for the year 368,863 533,772

Income tax expense expected for the financial year at the statutory tax rate (25%) –92,216 –133,443

Tax increases/reductions due to tax-exempt income from equity investments 26,465 19,325

Tax reductions due to surpluses from companies reported under the equity method 3,355 78,495

Tax reductions due to other tax-exempt income 1,440 3,259

Tax increase due to non-deductible expenses –4,404 –6,303

Tax credit/charge from previous years 1,602 –3,066

Effect from different foreign tax rates 1,418 704

Change to the non-stated losses carried forward –536 –84

Other –6,513 –1,108

Effective tax expense –69,389 –42,221



Changes in tax assets

IN EUR '000 2018 2017

Current tax assets 5,141 7,861

Deferred tax assets 43,140 36,160

Total 48,281 44,021

Changes in tax liabilities

IN EUR '000 2018 2017

Current tax liabilities 45,058 43,992

Deferred tax liabilities 40,564 81,923

Total 85,622 125,915

Of the current tax assets, assets in the amount of EUR 5,111 thousand (previous year: EUR 7,861 thousand) are due within one year. Of the deferred tax assets, assets in the amount of EUR 8,982 thousand (previous year: EUR 9,191 thousand) are due within one year.

Of the current tax liabilities, liabilities in the amount of EUR 4,644 thousand (previous year: EUR 5,979 thousand) are due within one year. Of the deferred tax liabilities, EUR 16,854 thousand (previous year: EUR 6,604 thousand) are due within on year.


The Group



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

IN EUR '000

Deferred tax assets

2018

Deferred tax liabilities

2018

Recognised in profit or loss

2018

Financial assets in the category “At fair value through profit or loss” 10,753 51,056 –11,910

Financial assets in the category “At amortised cost” 21,575 1,772 1,116

Financial assets in the category “At fair value through other comprehensive income” 14,645 80,267 –3,602

Financial assets in the category “Designated at fair value through profit or loss” 131,645 4,429 –573

Derivatives 12,551 97,306 3,927

Leases 361,768 347,603 4,094

Provisions 28,306 2,533 1,097

Tax losses carried forward, not yet utilised 9,145 0 575

Other temporary differences 14,504 17,350 –812

Netting of deferred taxes –561,752 –561,752 0

Total 43,140 40,564 –6,088

IN EUR '000

Deferred tax assets

2017

Deferred tax liabilities

2017

Recognised in profit or loss

2017

Financial assets classified as available for sale 31,757 122,118 –4,334

Financial assets classified as held-to-maturity 123 3,036 3,102

Securities classified as loans and receivables 228 5,106 1,213

Designated financial instruments and derivatives 124,061 121,194 –1,868

Leases 369,028 359,798 3,625

Social provisions 20,224 992 –674

loan loss allowances 10,917 129 951

Other provisions 6,146 1,879 3,563

Tax losses carried forward, not yet utilised 8,597 0 –1,596

Other temporary differences 12,896 15,488 1,693

Netting of deferred taxes –547,817 –547,817 0

Total 36,160 81,923 5,675

For tax losses carried forward in the amount of EUR 63,900 thousand (previous year: EUR 60,925 thousand), no deferred tax assets were recognised, as a tax benefit does not currently appear to be achievable within a reasonable period of time. Most of the tax losses carried forward can be carried forward without time limit.

The deferred tax assets include amounts totalling EUR 4,863 thousand (previous year: EUR 12,729 thousand) relating to as yet unused one-sevenths of tax write-downs to going-concern value on investments in accordance with section 12 (3) no. 2 of the Corporation Tax Act (KStG). An amount of EUR 5,142 thousand (previous year: EUR 4,192 thousand) has not been recognised as a deferred tax asset in respect of as yet unused one-sevenths of tax write-downs to going-concern value on investments, as, from today’s view, a tax benefit does not appear to be achievable within a reasonable period of time.

Temporary differences in association with shares in subsidiaries, branches and affiliated companies as well as shares in joint agreements for which no deferred tax liabilities have been recognised in the balance sheet amount to EUR 2,189,893 thousand (previous year: EUR 2,176,193 thousand).

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




Balance sheet disclosures

11. Financial instruments disclosures

Categories of financial assets and financial liabilities as at 31 Dec. 2018:

As of 31 Dec. 2018, Raiffeisenlandesbank Oberösterreich was given a Baa1 rating (previous year: Baa1) by Moody's. From the fair value changes in liabilities designated at fair value through profit or loss in the 2018 financial year, a cumulative portion amounting to EUR 11,602 thousand is due to losses in value stemming from changes caused by creditworthiness. Effects of changes in default risk are recorded in other comprehensive income. The remaining part of the change in fair value of the financial liabilities is recorded through profit and loss. In order to calculate the fair value change caused by creditworthiness, the fair value at the balance sheet date is compared with a fair value which is determined using historic premiums on the yield curves caused by credit risk at the start of the transaction and at the balance sheet date from the previous year. The business data and yield curves from the balance sheet date are used. The carrying amount of the liabilities designated at fair value through profit or loss amounts to EUR 3,535,536 thousand as of 31 Dec. 2018. EUR 1,895 thousand of accumulated profit or loss within equity was reclassified as a result of repayments or redemptions in the 2018 financial year.

The carrying amount of designated financial liabilities as at 31 Dec. 2018 was EUR 128,186 thousand higher than the repay-ment sum contractually agreed on.

Assets IN EUR '000

Measured at amortised cost

(AC)

Measured at fair value

through other comprehen-sive income

(FVOCI)

Designated at fair value

through other comprehen-sive income

(FVOCI option)

Measured at fair value

through profit or loss

(FVTPL)

Designated at fair value

through profit or loss (FVO)

Total carrying amount

31 Dec. 2018

Total fair value

30 June 2013

Cash and cash equivalents 71,452 0 0 0 0 71,452 71,452

Loans and advances to banks 7,859,480 0 0 395,624 0 8,255,104 8,256,603

Loans and advances to customers 22,141,018 0 0 130,378 103,452 22,374,848 23,017,978

Trading assets 0 0 0 1,749,390 0 1,749,390 1,749,390

Financial assets 306,045 4,390,508 0 740,646 216,280 5,653,479 5,670,005

Assets held for sale* 0 0 0 13,983 0 13,983 13,983

Total carrying amount 31 Dec. 2018 30,377,995 4,390,508 0 3,030,021 319,732 38,118,256 38,779,411

Equity and liabilities IN EUR '000

Measured at amortised cost (AC)

Measured at fair value through profit or loss

(FVTPL)

Designated at fair value through profit or loss

(FVO)

Total carrying amount

31 Dec. 2018

Total fair value

30 June 2013

Amounts owed to banks 12,492,312 0 462,742 12,955,054 12,935,272

Amounts owed to customers 12,219,066 0 500,830 12,719,896 12,690,548

Trading liabilities 0 1,407,329 0 1,407,329 1,407,329

Liabilities evidenced by certificates 6,515,857 0 2,198,658 8,714,515 8,670,544

Subordinated capital 530,113 0 373,306 903,419 876,204

Total carrying amount 31 Dec. 2018 31,757,348 1,407,329 3,535,536 36,700,213 36,579,897

The amount of the change in fair value of assets designated at fair value through profit and loss that was due to changes in rat-ings came to a valuation loss of EUR 700 thousand for the 2018 financial year (aggregate valuation profit EUR 4,441 thousand). This figure was obtained by applying the changes in credit spread. The maximum default risk for these assets designated at fair value through profit and loss as at 31 Dec. 2018 was EUR 319,732 thousand.

* only carrying amounts for financial instruments affected


The Group



Categories of financial assets and financial liabilities as at 31 Dec. 2017:

In the 2017 financial year, Raiffeisenlandesbank Oberösterreich was given a Baa1 rating (previous year: Baa2) by Moody’s. From the fair value changes in designated liabilities in the 2017 financial year, a portion amounting to EUR -36,449 thousand is due to losses in value attributable to changes caused by creditworthiness. Cumulatively, the portion encompasses a valua-tion gain of EUR 17,891 thousand. In order to calculate the fair value change caused by creditworthiness, the fair value at the balance sheet date is compared with a fair value that is determined using historic premiums on the yield curves caused on the one hand by credit risk at the start of the transaction, and at the balance sheet date from the previous year on the other. The business data and yield curves from the balance sheet date are used. The carrying amount of these designated loans and receivables as at 31 Dec. 2017 was EUR 4,492,708 thousand.

The carrying amount of designated financial liabilities as at 31 Dec. 2017 was EUR 138,159 thousand higher than the repay-ment sum contractually agreed on.

Assets IN EUR '000

Financial instruments

held for trading

Designated financial

instruments and derivatives

Financial assets

available for sale (AfS)

Financial investments

held-to- maturity

Loans and receivables

Carrying amount total 31 Dec. 2017

Fair value total

31 Dec. 2017

Cash and cash equivalents 0 0 0 0 70,402 70,402 70,402

Loans and advances to banks 0 0 0 0 8,352,262 8,352,262 8,335,618

Loans and advances to customers 0 1,255,189 0 0 19,096,993 20,352,182 20,761,661

Trading assets 1,885,912 0 0 0 0 1,885,912 1,885,912

Financial assets 0 496,286 4,438,884 284,448 538,877 5,758,495 5,786,827

Assets held for sale* 0 0 14,008 0 31 14,039 14,039

Carrying amount total 31 Dec. 2017 1,885,912 1,751,475 4,452,892 284,448 28,058,565 36,433,292 36,854,459

Equity and liabilities IN EUR '000

Financial instruments

held for trading

Designated financial

instruments and derivatives

Financial liabilities measured at

amortised cost

Carrying amount total 31 Dec. 2017

Fair value total

31 Dec. 2017

Amounts owed to banks 0 710,494 11,622,874 12,333,368 12,326,007

Amounts owed to customers 0 678,947 11,375,174 12,054,121 12,074,622

Trading liabilities 1,513,826 0 0 1,513,826 1,513,826

Liabilities evidenced by certificates 0 2,582,689 5,338,937 7,921,626 7,953,375

Subordinated capital 0 520,578 631,120 1,151,698 1,166,933

Carrying amount total 31 Dec. 2017 1,513,826 4,492,708 28,968,105 34,974,639 35,034,763

Carrying amounts or also fair value statements in the category “Financial assets available for sale (AfS)” contain equity instru-ments to the amount of EUR 132,724 thousand that are measured at the cost of purchase because their fair value cannot be reliably determined or the procurement costs approximately correspond to their fair value.

The amount of the change in fair value of designated loans and receivables that was due to changes in ratings in the 2017 financial year was EUR 2,082 thousand (aggregate EUR 715 thousand). This figure was obtained by applying the changes in credit spread. The credit risk exposure for these designated loans and receivables as at 31 Dec. 2017 was EUR 1,255,189 thousand.

* only carrying amounts for financial instruments affected

IFRS consolidated financial statements | Disclosure | Balance sheet disclosures



IN EUR '000

Financial instruments measured

at fair value 31 Dec. 2018

Thereof market prices listed in active markets

(Level I)

Thereof valuation

methods based on market data

(Level II)

Thereof valuation

methods not based on market data

(Level III)

Measured at fair value through profit or loss (FVTPL) 3,030,021 79,203 2,153,406 797,412

Designated at fair value through profit or loss (FVO) 319,732 210,052 6,228 103,452

Measured at fair value through other comprehensive income (FVOCI) 4,390,508 3,905,116 485,392 0

Designated at fair value through other comprehensive income (FVOCI option) 0 0 0 0

Total financial assets measured at fair value 7,740,261 4,194,371 2,645,026 900,864

Measured at fair value through profit or loss (FVTPL) 1,407,329 0 1,407,329 0

Designated at fair value through profit or loss (FVO) 3,535,536 0 3,535,536 0

Total financial liabilities measured at fair value 4,942,865 0 4,942,865 0

IN EUR '000

Measured at fair value through profit or loss

(FVTPL)

Designated at fair value through profit or loss

(FVO)

As at 1 Jan. 1,033,450 66,343

Purchases 54,932 39,453

Divestments –331,543 –6,529

Change in the consolidated companies 21,151 0

Effective results 19,422 4,185

Effect-neutral results 0 0

Revalued at fair value 0 0

Reclassification to Level III 0 0

Reclassification from Level III 0 0

As at 31 Dec. 797,412 103,452

Breakdown of the fair value of financial instruments as at 31 Dec. 2018:

Reclassifications between Level I and Level II in the 2018 financial year:

Reconciliation accounting for financial instruments measured at fair value in Level III in the 2018 financial year:

There were neither reclassifications from Level I to Level II nor from Level II to Level I in the 2018 financial year.

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

Reclassifications between Level I and Level II take place at Raiffeisenlandesbank Oberösterreich as soon as there is a change in the input factors that are relevant for the classification in the measurement hierarchy.

There was no reclassification from Level II to Level III in the 2018 financial year. The amount of income statement-related gains and losses recorded from recurring valuation of the fair value in Level III of the assets and liabilities found in the portfolio on the reporting date amounts to EUR –26,433 thousand.

Effective results from financial assets are essentially recognised in the income statement in the following items: ı Net income from financial instruments carried at fair value ı Gains and losses on other financial instruments

Effect-neutral results are recognised in the statement of comprehensive income and thus in the equity item “Retained earn-ings”. This does not include disposal results and currency valuations from monetary financial instruments (debt instruments) which are recognised in the results from other financial instruments.


The Group



Carrying amount corresponds with fair value (Level III)

Fair value gain –100 basis points

IN EUR '000 IN %

Loans and advances 234,184 1.24%

Securities 288,266 16.64%

Equity investments 297,190 37.50%


Fair value loss +100 basis points

IN EUR '000 IN %

Loans and advances 234,184 –7.58%

Securities 288,266 –11.69%

Equity investments 297,190 –27.22%

Sensitivity analysis as at 31 Dec. 2018

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

The sensitivity analysis for variable income securities and investments was likewise conducted based upon a shift in interest rates of +100 basis points or –100 basis points respectively. In the case of real estate values, the capitalisation interest rate was varied in accordance with the Net Asset Value Method. In the case of the remaining investments, the risk-free base in-terest rate or, in the case of the investments valued according to the DCF Method, the WACC was changed. The remaining valuation parameters remained constant in this process (e.g. no consideration was taken of the countervailing or dampening financing advantage generated from fixed interest rate agreements). The remaining valuation parameters remained constant in this process (e.g. no consideration was taken of the countervailing or dampening financing advantage generated from fixed interest rate agreements).

No interest rate shift was conducted for non-significant investments and non-fixed interest securities. The carrying amount or fair value of these financial assets (amounting to EUR 81,224 thousand) is consequently not included in the above table.

In the case of equity investments and profit participation rights, variations were also made, e.g. as to parameters within the framework of the associated company valuations. In contrast to the case with the discount interest rate, in each case a partial amount of the company valuations was taken as the basis for which the parameters or parameter shift makes sense or is possible respectively. This led to the following results: ı A change of +100 base points or –100 base points in the interest rate for the “perpetual annuity” leads, in view of underlying

company valuations with a fair value in total of EUR 247.4 million, to an increase of +10.09% or to a reduction of –10.06% respectively.

ı A change of +100 base points or –100 base points in the absolute “lease price” leads, in view of underlying company val-uations (of real estate companies) with a Fair Value in total of EUR 139.2 million, to an increase of +2.91% or to a reduction of -3.05% respectively.

ı A change of +5%/MWh or –5%/MWh in the long-term energy price level leads, in view of underlying company valuations (of energy supply companies) with a fair value in total of EUR 157.3 million, to an increase of +7.36% or to a reduction of –9.25% respectively.




IN EUR '000

Carrying amounts as at 31 Dec. 2013

Fair value 31 Dec. 2018


(Level I)

Thereof measurement


(Level II)

Thereof valuation

methods not based on market

data (Level III)

Loans and advances to banks 7,859,480 7,860,979 0 82,060 7,778,919

Loans and advances to customers 22,141,018 22,784,148 0 0 22,784,148

Financial assets 306,045 322,571 25,053 201,520 95,998

Total financial assets not measured at fair value 30,306,543 30,967,698 25,053 283,580 30,659,065

Amounts owed to banks 12,492,312 12,512,094 0 12,512,094 0

Amounts owed to customers 12,219,066 12,248,414 0 12,248,414 0

Liabilities evidenced by certificates 6,515,857 6,559,828 1,490,072 5,069,756 0

Subordinated capital 530,113 557,328 0 557,328 0

Total financial liabilities not measured at fair value 31,757,348 31,877,664 1,490,072 30,387,592 0

Breakdown of the fair value of financial instruments not measured at fair value as at 31 Dec. 2018:

IN EUR '000

Financial instruments measured

at fair value 31 Dec. 2017


(Level I)

Thereof measurement


(Level II)

Thereof valuation

methods not based on market data

(Level III)

Financial instruments held for trading 1,885,912 28,756 1,857,156 0

Designated financial instruments and derivatives 1,751,475 365,046 10,308 1,376,121

Financial assets available for sale (AfS) 4,320,168 3,607,059 205,827 507,282

Total financial assets measured at fair value 7,957,555 4,000,861 2,073,291 1,883,403

Financial instruments held for trading 1,513,826 0 1,513,826 0

Designated financial instruments and derivatives 4,492,708 0 4,492,708 0

Total financial liabilities measured at fair value 6,006,534 0 6,006,534 0

Breakdown of the fair value of financial instruments as at 31 Dec. 2017:

Reclassifications between Level I and Level II in the 2017 financial year:

There were neither reclassifications from Level I to Level II nor from Level II to Level I in the 2017 financial year.


The Group



Reclassification from Level III to Level II took place in the 2017 financial year, which is to be attributed to a change in the input factors that are significant for the valuation. The amount of gains and losses effectively recorded from recurring measure-ments of the fair value in Level III of the assets and liabilities found in the portfolio on the reporting date amounts to EUR 1,241 thousand.

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

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

Reconciliation accounting for financial instruments measured at fair value in Level III in the 2017 financial year:

IN EUR '000

Financial assets available for sale (AfS)

Designated financial assets

As at 1 Jan. 475,429 1,109,367

Purchases 23,282 605,457

Divestments –3,240 –343,917

Change in the consolidated companies –15,433 0

Effective results –1,006 2,277

Effect-neutral results 21,738 2,937

Revalued at fair value 6,512 0

Reclassification to Level III 0 0

Reclassification from Level III 0 0

As at 31 Dec. 507,282 1,376,121




Breakdown of the fair value of financial instruments not measured at fair value as at 31 Dec. 2017:

IN EUR '000


Fair value 31 Dec. 2017


(Level I)

Thereof measurement


(Level II)

Thereof valuation methods

not based on market data

(Level III)

Financial assets held-to-maturity (HtM) 284,448 293,562 282,662 10,900 0

Loans and receivables 27,988,153 28,400,206 0 998,782 27,401,424

Total financial assets not measured at fair value 28,272,601 28,693,768 282,662 1,009,682 27,401,424

Financial liabilities stated at amortised cost 28,968,105 29,028,229 980,959 28,047,270 0

Total financial liabilities not measured at fair value 28,968,105 29,028,229 980,959 28,047,270 0

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

The sensitivity analysis for variable income securities and investments was likewise conducted based upon a shift in interest rates of +100 basis points or –100 basis points respectively. In the case of real estate values, the capitalisation interest rate was varied in accordance with the Net Asset Value Method. In the case of the remaining investments, the risk-free base in-terest rate or, in the case of the investments valued according to the DCF Method, the WACC was changed. The remaining valuation parameters remained constant in this process (e.g. no consideration was taken of the countervailing or dampening financing advantage generated from fixed interest rate agreements). The remaining valuation parameters remained constant in this process (e.g. no consideration was taken of the countervailing or dampening financing advantage generated from fixed interest rate agreements).

No interest rate shift was conducted for non-significant investments and non-fixed interest securities. The carrying amount and fair value of these financial assets (amounting to EUR 9,895 thousand) is consequently not included in the above table.

In the case of equity investments and profit participation rights, variations were also made, e.g. as to parameters within the framework of the associated company valuations. In contrast to the case with the discount interest rate, in each case a partial amount of the company valuations was taken as the basis for which the parameters or parameter shift makes sense or is possible respectively. This led to the following results: ı A change of +100 base points or –100 base points in the interest rate for the “perpetual annuity” leads, in view of underly-

ing company valuations with a fair value in total of EUR 159.5 million, to an increase of +9.09% or to a reduction of –9.09% respectively.

ı A change of +100 base points or –100 base points in the absolute “lease price” leads, in view of underlying company valu-ations (of real estate companies) with a Fair Value in total of EUR 104.4 million, to an increase of +4.23% or to a reduction of –4.42% respectively.

ı A change of +5%/MWh or –5%/MWh in the long-term energy price level leads, in view of underlying company valuations (of energy supply companies) with a fair value in total of EUR 155.7 million, to an increase of +8.21% or to a reduction of –8.72% respectively.

Sensitivity analysis as at 31 December 2017


Fair value gain –100 basis points

IN EUR '000 IN %

Loans and advances 1,255,189 1.03

Securities 359,105 9.67

Equity Investments 259,214 35.72


Fair value loss +100 basis points

IN EUR '000 IN %

Loans and advances 1,255,189 –4.25

Securities 359,105 –7.71

Equity Investments 259,214 –25.65


The Group



Term of hedging transactions

Hedging transactions IN EUR '000 up to 3 months

3 months to 1 year 1 to 5 years over 5 years

Fair value hedges – Assets

Nominal amount 0 22,000 1,560,934 2,727,203

Fair value hedges – Liabilities

Nominal amount 105,000 135,000 961,226 1,760,817

Hedging instruments IN EUR '000

Carrying amount of hedging instruments

31.12.20108Nominal amount

31.12.2018

Change in the fair value which is

used as the basis for recording

hedge ineffectiveness2018

Fair value hedge derivatives – Assets

Fixed interest rate risk

Interest rate swaps 226,006 4,303,137 25,037

Swaptions 16 7,000 24

Fair value hedge derivatives - Liabilities


Interest rate swaps 198,498 2,950,042 –6,316

Swaptions 4 12,000 27

Underlying transactions IN EUR '000

Carrying amount of the underlying transactions

31.12.2018

Accumulated amount of the hedge adjustment in the carrying amount

of the underlying transaction31.12.2018

Change in the value of the underlying transaction which is used as the basis for recording

hedge ineffectiveness in the period

2018



Loans and advances to banks 46,276 519 519

Loans and advances to customers 581,645 7,449 3,394

Financial assets 2,150,586 77,421 7,357



Amounts owed to banks 598,755 11,590 -6,164

Amounts owed to customers 547,185 38,443 -3,161

Liabilities evidenced by certificates 3,681,392 147,375 -22,755

Subordinated capital 106,567 -1,934 -426

Hedge Accounting




Ineffectiveness IN EUR '000

Hedge ineffectiveness

2018



Loans and advances to banks –49

Loans and advances to customers –367

Financial assets 246



Amounts owed to banks –83

Amounts owed to customers –81

Liabilities evidenced by certificates –2,414

Subordinated capital 285

As regards statements on the hedging of a net investment in a foreign business operation, reference is made to the “Account-ing policies” section as well as the description of respective reserves in the “Equity” notes.

Fixed interest rate risk positions as part of the ordinary business activities of Raiffeisenlandesbank Oberösterreich result from the conclusion of loans and term deposits with customers as well as from the purchase of securities and from issues. Posi-tions on the liabilities side, in particular, are hedged in terms of their fixed interest rate risk in order to reduce negative maturity transformation effects. Customer transactions on the asset side usually remain unsecured in the context of the established interest rate expectation. Only high-volume transactions with stable cash flows are hedged occasionally. There is also in-creased hedging on the asset side in the securities sector.

The main area of application for IFRS hedge accounting is the hedging of underlying transactions with fixed interest rate risks by the use of derivative financial instruments with opposite effect in which the key parameters are otherwise largely identical (e.g. issue with fixed coupons and receiver swap). The positions usually contain 1:1 interest rate hedged underlying trans-actions for which a stable cash flow is to be expected (e.g. institutional issues, bond positions in assets or large loans with stable cash flows). They are therefore micro-hedge relationships in the form of fair value hedges. Interest rate swaps and a few swaptions are predominantly used as hedging instruments for hedging interest change risks. The aim of using hedge accounting is to prevent fluctuations in the income statement as a result of interest change risks. If the cash flows of the un-derlying transactions or the hedge ratios between underlying transactions and hedging transactions change during the term, the hedge is adjusted accordingly. For one thing, micro-hedge relationships can be formed at the beginning of an underlying transaction, or can take place through prospective hedge accounting during the term from the date of effectiveness.

Despite what are usually almost congruent conditions between underlying and hedging transactions, certain inefficiencies may occur with an effect on the income statement for the following reasons: ı differences in discounting for underlying and hedging transactions, ı interest valuation results on the variable side of derivative hedging transactions and ı Discrepancies of the specific business characteristics as verified in the critical term match, which are within the tolerance

limits, such as the term discrepancy, nominal discrepancy and interest payment dates.


The Group



IN EUR '000

Amortised cost before

modificationModification

profitModification

loss Net result

Financial assets measured at amortised cost 167,866 1,601 –986 615

Loans and advances to banks 0 0 0 0

Loans and advances to customers 167,866 1,601 –986 615

Financial assets 0 0 0 0

Financial assets measured at fair value through other comprehensive income 0 0 0 0

Financial assets 0

Total 167,866 1,601 –986 615

Non-significant modifications

Derecognition of financial assets in the “Measured at amortised cost” category

All non-significant modifications presented in the table above relate to financial assets previously found in Stage 1. There were no financial assets with non-significant modification that were transferred from Stage 2 to Stage 1 in the 2018 financial year.

Financial assets in the “Measured at amortised cost” category in the amount of EUR 23,513 thousand, for which individual value adjustments were made in accordance with Stage 3, were sold in the 2018 financial year. The derecognition resulted in profits in the amount of EUR 8,689 thousand and losses in the amount of EUR –2,733 thousand, which are shown in the item “Loan loss allowances” in the income statement. In addition, there was derecognition in both the loan and securities portfolio due to amortisations and redemptions.




The following derivative financial instruments existed on the 2018 balance sheet date:

Nominal amount Fair value

Term to maturity IN EUR '000 up to 1 year

over 1 year to 5 years

over 5 years Total Positive Negative

Interest rate-dependent futures

OTC products

Forward rate agreements 0 0 0 0 0 0

Interest rate swaps 3,596,632 11,241,758 13,688,326 28,526,716 1,692,063 1,353,429

Interest rate options – calls 95,940 190,396 303,938 590,274 4,746 132

Interest rate options – puts 136,598 2,364,906 2,478,225 4,979,729 3,830 16,378

Other interest rate swaps 0 0 0 0 0 0

Exchange-traded products

Interest rate futures 0 0 0 0 0 0

Interest rate options – calls 0 0 0 0 0 0

Interest rate options – puts 0 0 0 0 0 0

Total 3,829,170 13,797,060 16,470,489 34,096,719 1,700,639 1,369,939

Foreign exchange forwards/futures

OTC products

Spot exchange and forward transactions 629,647 127,183 0 756,995 6,833 8,630

Currency and interest rate swaps involving several currencies 2,636,686 291,185 239,838 3,167,709 31,109 28,712

Foreign exchange options – calls 20,165 0 0 20,165 57 0

Foreign exchange options – puts 20,165 0 0 20,165 0 48

Other foreign exchange contracts 0 0 0 0 0 0


Foreign exchange futures 0 0 0 0 0 0

Foreign exchange options 0 0 0 0 0 0

Total 3,306,663 418,368 239,838 3,965,034 37,999 37,390

Other forwards/futures

OTC products

Structured shares/index products 0 0 0 0 0 0

Shares options – calls 0 0 0 0 0 0

Shares options – puts 0 0 0 0 0 0

Credit derivatives 0 0 0 0 0 0

Precious metal transactions 0 0 0 0 0 0

Commodity options – calls 0 0 0 0 0 0

Commodity options – puts 0 0 0 0 0 0

Other transactions 5,000 0 0 5,000 1,264 0


Shares futures 0 0 0 0 0 0

Shares options 0 0 0 0 0 0

Other futures 0 0 0 0 0 0

Other options 0 0 0 0 0 0

Total 5,000 0 0 5,000 1,264 0

Total OTC products 7,140,833 14,215,428 16,710,327 38,066,753 1,739,902 1,407,329

Total exchange-traded products 0 0 0 0 0 0

Total 7,140,833 14,215,428 16,710,327 38,066,753 1,739,902 1,407,329


The Group



Nominal amount Fair value

Term to maturity IN EUR '000 up to 1 year


over 5 years Total Positive Negative

Interest rate-dependent futures

OTC products

Forward rate agreements 0 0 0 0 0 0




Other interest rate swaps 0 0 0 0 0 0


Interest rate futures 45,310 0 0 45,310 0 0

Interest rate options – calls 0 0 0 0 0 0

Interest rate options – puts 0 0 0 0 0 0

Total 4,042,457 12,458,818 15,724,748 32,226,023 1,822,238 1,474,761


OTC products





Other foreign exchange contracts 0 0 0 0 0 0


Foreign exchange futures 0 0 0 0 0 0

Foreign exchange options 0 0 0 0 0 0

Total 2,343,631 224,942 267,751 2,836,324 27,985 39,065


OTC products

Structured shares/index products 0 0 0 0 0 0

Shares options – calls 0 0 0 0 0 0

Shares options – puts 0 0 0 0 0 0

Credit derivatives 10,000 0 0 10,000 1 0

Precious metal transactions 0 0 0 0 0 0

Commodity options – calls 0 0 0 0 0 0

Commodity options – puts 0 0 0 0 0 0

Other transactions 0 5,000 0 5,000 1,322 0


Shares futures 0 0 0 0 0 0

Shares options 0 0 0 0 0 0

Other futures 0 0 0 0 0 0

Other options 0 0 0 0 0 0

Total 10,000 5,000 0 15,000 1,323 0


Total exchange-traded products 45,310 0 0 45,310 0 0

Total 6,396,088 12,688,760 15,992,499 35,077,347 1,851,546 1,513,826

The following derivative financial instruments existed on the 2017 balance sheet date:




Possible effects of netting agreements

Assets

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

Unrecognised amounts

IN EUR '000

Financial assets (gross) = recognised financial assets (net)

Effect of offsetting framework

agreements Cash collateral Net amount

Loans and advances to banks 8,255,104 –112,820 –539,172 7,603,112

Positive fair values generated from derivative financial instruments 1,739,902 –860,308 –412,938 466,656

Total 31 Dec. 2015 9,995,006 –973,128 –952,110 8,069,768


IN EUR '000

Financial assets (gross) = recognised financial assets (net)



Loans and advances to banks 8,352,262 –86,464 –506,588 7,759,210

Positive fair values generated from derivative financial instruments 1,851,546 –985,455 –435,210 430,881

Total 31 Dec. 2017 10,203,808 –1,071,919 –941,798 8,190,091


IN EUR '000

Financial liabilities (gross) = recognised

financial liabilities (net)



Amounts owed to banks 12,955,054 –112,820 –420,769 12,421,465

Negative fair values from derivative financial instruments 1,407,329 –860,308 –531,341 15,680

Total 31 Dec. 2015 14,362,383 –973,128 –952,110 12,437,145


IN EUR '000

Financial liabilities (gross) = recognised

financial liabilities (net)



Amounts owed to banks 12,333,368 –86,464 –439,525 11,807,379

Negative fair values from derivative financial instruments 1,513,826 –985,455 –502,273 26,098

Total 31 Dec. 2017 13,847,194 –1,071,919 –941,798 11,833,477

Liabilities


The Group



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

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

In addition to offsetting market value surpluses against cash collateral, the statement of “cash collateral” also takes into ac-count offsetting options within the remaining cash collateral.

12. Cash and cash equivalents

13. Loans and advances to banks

14. Loans and advances to customers

IN EUR '000 31.12.2018 31.12.2017

Cash in hand 35,181 38,653

Balances at central banks 36,271 31,749

Total 71,452 70,402

IN EUR '000 31.12.2018 31.12.2017

Loans and advances to central banks 2,600,026 2,742,093

Payment on demand loans and advances to banks 3,216,509 3,207,764

Money market transactions 1,007,821 1,332,567

Loans to banks 796,718 680,718

Purchased receivables 634,030 389,120

Total 8,255,104 8,352,262

In Austria 6,933,295 7,344,452

Abroad 1,321,809 1,007,810

Total 8,255,104 8,352,262

IN EUR '000 31.12.2018 31.12.2017

Money-market transactions 943,697 1,001,685

Loan transactions 17,709,213 15,964,569

Mortgage loans 143,899 160,714

Covering loans 773,167 668,690

Purchased receivables 663,495 474,836

Lease financing 2,101,996 2,051,076

Others 39,381 30,612

Total 22,374,848 20,352,182

In Austria 13,990,147 12,963,764

Abroad 8,384,701 7,388,418

Total 22,374,848 20,352,182




Loan loss allowances 2018

15. Loan loss allowances

The column “Other adjustments” contains almost exclusively effects which do not affect net income. These include, in partic-ular, an effect which increases loan loss allowance from the acquisition of liabilities in the amount of EUR +4,694 thousand, as well as revaluations with no impact on profit and loss in association with currency conversions of foreign subsidiaries amounting to EUR –329 thousand.

As at 1 Jan. 2018

Allocations as a result of additions

Reversals as a result of disposals

Changes due to changed default risk without stage transfer or with stage transfer between

Stage 2 and Stage 3

Changes due to changed default risk with stage

transfer between Stage 1 and Stage 2 or Stage 3 Reclassifi-

cations due to stage transfer

Changes due to modification

Other adjustments Utilised

Change in basis of

consolidationAs at

31 Dec. 2018 IN EUR '000 Allocations Reversals Allocations Reversals

Loans and advances to banks 2,781 136 –95 10 –2,262 0 0 0 0 21 0 0 591

thereof Stage 1 - Non POCI 2,487 133 –94 10 –2,262 0 0 0 0 21 0 0 295

thereof Stage 2 - Non POCI 2 3 –1 0 0 0 0 0 0 0 0 0 4

thereof Stage 3 - Non POCI 292 0 0 0 0 0 0 0 0 0 0 0 292

thereof POCI 0 0 0 0 0 0 0 0 0 0 0 0 0

Loans and advances to customers - excl. lease financing 308,311 26,046 –18,210 30,097 –25,984 36,480 –3,171 0 26 –6 –81,845 0 271,744

thereof Stage 1 - Non POCI 24,778 9,397 –1,199 23 –4,002 0 –3,097 2,601 26 17 0 0 28,544

thereof Stage 2 - Non POCI 37,917 2,451 –3,298 71 –5,425 3,475 –1 –4,050 0 6 0 0 31,146

thereof Stage 3 - Non POCI 245,616 13,523 –12,547 27,600 –15,882 32,948 0 1,449 0 –29 –81,845 0 210,833

thereof POCI 0 675 –1,166 2,403 –675 57 –73 0 0 0 0 0 1,221

Loans and advances to customers - Lease financing 65,588 4,103 –3,901 1,273 –1,450 5,089 –1,037 0 0 –310 –30,239 –29 39,087

thereof Stage 1 - Non POCI 2,838 2,005 –217 98 –3 0 –1,037 1,108 0 –22 0 –16 4,754

thereof Stage 2 - Non POCI 2,674 548 –168 5 –572 1,793 0 –648 0 –12 0 0 3,620

thereof Stage 3 - Non POCI 60,076 1,550 –3,516 1,170 –875 3,296 0 –460 0 –276 –30,239 –13 30,713

thereof POCI 0 0 0 0 0 0 0 0 0 0 0 0 0

Financial assets – excluding FVOCI 48 0 –3 81 0 0 0 0 0 0 0 0 126




thereof POCI 0 0 0 0 0 0 0 0 0 0 0 0 0

Financial assets – FVOCI 3,047 275 –37 2,273 –944 861 –120 0 0 0 0 0 5,355

thereof Stage 1 - Non POCI 1,537 162 –37 491 –732 0 0 –146 0 0 0 0 1,275

thereof Stage 2 - Non POCI 1,510 113 0 1,782 –212 861 –120 146 0 0 0 0 4,080


thereof POCI 0 0 0 0 0 0 0 0 0 0 0 0 0

Subtotal 379,775 30,560 –22,246 42,430 –30,640 42,430 –4,328 0 26 –295 –112,084 –29 316,903

excl. provisions for off-balance-sheet obligations 32,884 18,117 –9,412 2,118 –3,840 10,285 –96 0 0 4,664 0 0 54,720

thereof Stage 1 - Non POCI 3,814 3,162 –660 53 –534 0 –91 47 0 1 0 0 5,792

thereof Stage 2 - Non POCI 1,788 337 –65 91 –614 458 –5 –116 0 0 0 0 1,874

thereof Stage 3 - Non POCI 27,282 14,618 –8,687 1,974 –2,692 9,827 0 69 0 4,663 0 0 47,054

thereof POCI 0 0 0 0 0 0 0 0 0 0 0 0 0

Total 412,659 48,677 –31,658 35,852 –34,480 52,715 –4,424 0 26 4,369 –112,084 –29 371,623


The Group



As at 1 Jan. 2018

Allocations as a result of additions

Reversals as a result of disposals

Changes due to changed default risk without stage transfer or with stage transfer between

Stage 2 and Stage 3

Changes due to changed default risk with stage

transfer between Stage 1 and Stage 2 or Stage 3 Reclassifi-

cations due to stage transfer

Changes due to modification

Other adjustments Utilised

Change in basis of

consolidationAs at

31 Dec. 2018 IN EUR '000 Allocations Reversals Allocations Reversals

Loans and advances to banks 2,781 136 –95 10 –2,262 0 0 0 0 21 0 0 591

thereof Stage 1 - Non POCI 2,487 133 –94 10 –2,262 0 0 0 0 21 0 0 295



thereof POCI 0 0 0 0 0 0 0 0 0 0 0 0 0

Loans and advances to customers - excl. lease financing 308,311 26,046 –18,210 30,097 –25,984 36,480 –3,171 0 26 –6 –81,845 0 271,744

thereof Stage 1 - Non POCI 24,778 9,397 –1,199 23 –4,002 0 –3,097 2,601 26 17 0 0 28,544

thereof Stage 2 - Non POCI 37,917 2,451 –3,298 71 –5,425 3,475 –1 –4,050 0 6 0 0 31,146

thereof Stage 3 - Non POCI 245,616 13,523 –12,547 27,600 –15,882 32,948 0 1,449 0 –29 –81,845 0 210,833

thereof POCI 0 675 –1,166 2,403 –675 57 –73 0 0 0 0 0 1,221

Loans and advances to customers - Lease financing 65,588 4,103 –3,901 1,273 –1,450 5,089 –1,037 0 0 –310 –30,239 –29 39,087

thereof Stage 1 - Non POCI 2,838 2,005 –217 98 –3 0 –1,037 1,108 0 –22 0 –16 4,754

thereof Stage 2 - Non POCI 2,674 548 –168 5 –572 1,793 0 –648 0 –12 0 0 3,620

thereof Stage 3 - Non POCI 60,076 1,550 –3,516 1,170 –875 3,296 0 –460 0 –276 –30,239 –13 30,713

thereof POCI 0 0 0 0 0 0 0 0 0 0 0 0 0

Financial assets – excluding FVOCI 48 0 –3 81 0 0 0 0 0 0 0 0 126




thereof POCI 0 0 0 0 0 0 0 0 0 0 0 0 0

Financial assets – FVOCI 3,047 275 –37 2,273 –944 861 –120 0 0 0 0 0 5,355

thereof Stage 1 - Non POCI 1,537 162 –37 491 –732 0 0 –146 0 0 0 0 1,275

thereof Stage 2 - Non POCI 1,510 113 0 1,782 –212 861 –120 146 0 0 0 0 4,080


thereof POCI 0 0 0 0 0 0 0 0 0 0 0 0 0

Subtotal 379,775 30,560 –22,246 42,430 –30,640 42,430 –4,328 0 26 –295 –112,084 –29 316,903

excl. provisions for off-balance-sheet obligations 32,884 18,117 –9,412 2,118 –3,840 10,285 –96 0 0 4,664 0 0 54,720

thereof Stage 1 - Non POCI 3,814 3,162 –660 53 –534 0 –91 47 0 1 0 0 5,792

thereof Stage 2 - Non POCI 1,788 337 –65 91 –614 458 –5 –116 0 0 0 0 1,874

thereof Stage 3 - Non POCI 27,282 14,618 –8,687 1,974 –2,692 9,827 0 69 0 4,663 0 0 47,054

thereof POCI 0 0 0 0 0 0 0 0 0 0 0 0 0

Total 412,659 48,677 –31,658 35,852 –34,480 52,715 –4,424 0 26 4,369 –112,084 –29 371,623




Significant changes in the gross carrying amount for 2018

Gross carrying amount IN EUR '000

As at 1 Jan. 2018

Additions, disposals, balance changes

Reclassifica-tions due to

stage transfer UtilisedDirect

amortisationsOther

adjustmentsAs at

31 Dec. 2018

Loans and advances to banks 7,893,563 –33,492 0 0 0 0 7,860,071

stage 1 7,879,715 –46,084 2,249 0 0 0 7,835,880

stage 2 13,556 12,592 –2,249 0 0 0 23,899

stage 3 292 0 0 0 0 0 292

Loans and advances to customers - excl. lease financing 18,019,056 2,379,612 0 –81,845 –6,057 0 20,310,766

stage 1 16,292,286 2,342,505 –183,561 0 –2,486 0 18,448,744

stage 2 1,187,474 74,333 90,650 0 –255 0 1,352,202

stage 3 539,296 –37,226 92,911 –81,845 –3,316 0 509,820

Loans and advances to customers - Lease financing 2,113,445 62,432 0 –30,239 –4,554 0 2,141,084

stage 1 1,828,665 139,050 –38,438 0 –18 0 1,929,259

stage 2 147,036 –26,481 11,750 0 –76 0 132,229

stage 3 137,744 –50,137 26,688 –30,239 –4,460 0 79,596

Financial assets – excluding FVOCI 373,144 –66,973 0 0 0 0 306,171

stage 1 373,144 –66,973 0 0 0 0 306,171

stage 2 0 0 0 0 0 0 0

stage 3 0 0 0 0 0 0 0

Financial assets – FVOCI 4,089,053 63,805 0 0 0 0 4,152,858

stage 1 4,056,632 61,893 –23,163 0 0 0 4,095,362

stage 2 32,421 1,912 23,163 0 0 0 57,496

stage 3 0 0 0 0 0 0 0

Subtotal 32,488,261 2,405,384 0 –112,084 –10,611 0 34,770,950

Off-balance-sheet commitments 8,284,849 397,791 0 0 0 0 8,682,640

stage 1 8,021,088 405,969 –62,403 0 0 0 8,364,654

stage 2 152,461 3,682 37,061 0 0 0 193,204

stage 3 111,300 –11,860 25,342 0 0 0 124,782

Total 40,773,110 2,803,175 0 –112,084 –10,611 0 43,453,590

Sensitivity analysis for loan loss allowances

PD Shift +25%: The lifetime PD is increased by 25% for each position. All positions that exceed both thresholds for the quanti-tative stage transfer criterion due to their modified lifetime PD, are assigned to Stage 2. To calculate the loan loss allowances, the new stage will be used according to the lifetime expected loss and increased by 25% due to the PD shift.

For all other positions and the positions with “simplified approach”, the stage remains the same; only the loan loss allowance increases by 25% due to the PD shift.


The Group



IN EUR '000

As at 31 Dec.

2018 Delta

Status PD

+25%

Loans and advances to banks 299 75 374

thereof Stage 1 - Non POCI 295 74 369

thereof Stage 1 with transfer in Stage 2 - Non POCI 0 0 0


Loans and advances to customers - excl. lease financing 59,690 22,624 82,314

thereof Stage 1 - Non POCI 26,370 6,592 32,962

thereof Stage 1 with transfer in Stage 2 - Non POCI 2,174 8,246 10,420


Loans and advances to customers - Lease financing 8,374 2,486 10,860



thereof Stage 2 - Non POCI 3,620 895 4,515

Financial assets – excluding FVOCI 126 287 413




Financial assets – FVOCI 5,355 3,586 8,941


thereof Stage 1 with transfer in Stage 2 - Non POCI 175 2,291 2,466


Subtotal 73,844 29,058 102,902

excl. provisions for off-balance-sheet obligations 7,666 2,066 9,732




Total 81,510 31,124 112,634

IN EUR '000

As at 31 Dec.

2018 Delta

Status PD

–25%

Loans and advances to banks 299 –74 225

thereof Stage 1 - Non POCI 295 –73 222



Loans and advances to customers - excl. lease financing 59,690 –17,048 42,642

thereof Stage 1 - Non POCI 28,544 –7,136 21,408

thereof Stage 2 with transfer in Stage 1 - Non POCI 3,999 –3,126 873


Loans and advances to customers - Lease financing 8,374 –2,349 6,025


thereof Stage 2 with transfer in Stage 1 - Non POCI 685 –437 248

thereof Stage 2 - Non POCI 2,935 –724 2,211

Financial assets – excluding FVOCI 126 –32 94




Financial assets – FVOCI 5,355 –1,426 3,929

thereof Stage 1 - Non POCI 1,275 –319 956



Subtotal 73,844 –20,929 52,915

excl. provisions for off-balance-sheet obligations 7,666 –1,983 5,683




Total 81,510 –22,912 58,598

PD Shift -25%: The lifetime PD is reduced by 25% for each position. All positions that fall below one of the two thresholds for the quantitative stage transfer criterion due to their modified lifetime PD, are in default of payment for less than 30 days and exhibit none of the defined early warning indicators, are assigned to Stage 1. To calculate loan loss allowances, the new stage will be used in accordance with the One-year-expected Loss and reduced by 25% during the PD shift.

For all other positions and the positions with “simplified approach”, the stage remains the same; only the loan loss allowances decrease by 25% due to the PD shift.

LGD Shift +/-25%: The loss ratio was increased or decreased by 25% for each position. Commensurately, loan loss allow-ances also changed by 25%.




Loan loss allowances 2017

IN EUR '000

As at 1 Jan. 2017

Change in basis

of consoli-dation

Currency differences Allocations Reversals Utilised Transfers

As at 31 Dec. 2017

Loans and advances to banks 291 0 0 1 0 0 0 292

of which in Austria 0 0 0 0 0 0 0 0

abroad 291 0 0 1 0 0 0 292

Loans and advances to customers 620,858 0 688 150,076 –135,727 –201,735 0 434,160

of which in Austria 437,315 0 0 116,950 –115,170 –151,586 3 287,512

abroad 183,543 0 688 33,126 –20,557 –50,149 –3 146,648

Portfolio valuation allowances 19,997 0 12 20,884 –10,483 0 0 30,410

Subtotal 641,146 0 700 170,961 –146,210 –201,735 0 464,862

excl. provisions for off-balance-sheet obligations 23,195 0 0 18,381 –13,787 –121 0 27,668

Provisions from Portfolio valuation allowances 4,246 0 0 6,032 –2,032 0 0 8,246

Total 668,587 0 700 195,374 –162,029 –201,856 0 500,776

IN EUR '000

As at 31 Dec.

2018 Delta

Status LGD

+25%

Loans and advances to banks 299 75 374



Loans and advances to customers - excl. lease financing 59,690 14,922 74,612



Loans and advances to customers - Lease financing 8,374 2,083 10,457



Financial assets – excluding FVOCI 126 32 158



Financial assets – FVOCI 5,355 1,339 6,694



Subtotal 73,844 18,451 92,295

excl. provisions for off-balance-sheet obligations 7,666 1,917 9,583



Total 81,510 20,368 101,878

IN EUR '000

As at 31 Dec.

2018 Delta

Status LGD –25%

Loans and advances to banks 299 -75 224



Loans and advances to customers - excl. lease financing 59,690 –14,922 44,768



Loans and advances to customers - Lease financing 8,374 –2,083 6,291



Financial assets – excluding FVOCI 126 –32 94



Financial assets – FVOCI 5,355 –1,339 4,016

thereof Stage 1 - Non POCI 1,275 –319 956


Subtotal 73,844 –18,451 55,393

excl. provisions for off-balance-sheet obligations 7,666 –1,917 5,749



Total 81,510 –20,368 61,142


The Group



16. Trading assets

IN EUR '000 31.12.2018 31.12.2017

Bonds and other fixed-income securities 9,488 34,366

Municipal bonds that can be refinanced 0 6,765

Other public-sector debt instruments 0 1,035

Bonds and debt securities from other issuers 9,488 26,566

Positive fair values from derivative transactions 1,739,902 1,851,546

Interest rate transactions 1,700,639 1,822,238

Currency exchange transactions 37,999 27,985

Stock and index related business 0 0

Other transactions 1,264 1,323

Total 1,749,390 1,885,912

17. Financial assets

Financial assets in the category “Measured at fair value through profit or loss” (FVTPL)

Financial assets in the category “Designated at fair value through profit or loss” (FVO)

Financial assets in the category “Measured at fair value through other comprehensive income” (FVOCI)

IN EUR '000 31.12.2018 31.12.2017

Bonds and other fixed-income securities 10,051 n/a

Municipal bonds that can be refinanced 0 n/a

Other public-sector debt instruments 0 n/a

Bonds and debt securities from other issuers 0 n/a

Tier 2 capital 10,051 n/a

Shares and other variable-yield securities 405,448 n/a

Shares 11,963 n/a

Investment fund units/shares 2,309 n/a

Other variable-yield securities 391,176 n/a

Shares in companies 325,147 n/a

Investments in affiliated companies 107,093 n/a

Other investments 218,054 n/a

Total 740,646 n/a

IN EUR '000 31.12.2018 31.12.2017


Municipal bonds that can be refinanced 51,999 n/a


Bonds and debt securities from other issuers 164,281 n/a

Total 216,280 n/a

IN EUR '000 31.12.2018 31.12.2017

Bonds and other fixed-income securities 4,390,508 n/a

Municipal bonds that can be refinanced 2,192,089 n/a


Bonds and debt securities from other issuers 2,198,419 n/a

Total 4,390,508 n/a




Financial assets in the category “Measured at amortised cost” (AC)

Financial assets in the category “Designated at fair value through profit or loss” (FVO)

Financial assets in the category “Available for sale” (AfS)

IN EUR '000 31.12.2018 31.12.2017


Municipal bonds that can be refinanced 0 n/a


Bonds and debt securities from other issuers 306,045 n/a

Total 306,045 n/a

IN EUR '000 31.12.2018 31.12.2017

Bonds and other fixed-income securities n/a 468,336

Municipal bonds that can be refinanced n/a 158,821

Other public-sector debt instruments n/a 0

Bonds and debt securities from other issuers n/a 309,515

Shares and other variable-yield securities n/a 27,950

Shares n/a 0

Investment fund units/shares n/a 0

Other variable-yield securities n/a 27,950

Total n/a 496,286

IN EUR '000 31.12.2018 31.12.2017

Bonds and other fixed-income securities n/a 3,721,113

Municipal bonds that can be refinanced n/a 1,805,844


Bonds and debt securities from other issuers n/a 1,915,269

Shares and other variable-yield securities n/a 416,678

Shares n/a 14,361

Investment fund units/shares n/a 2,375

Other variable-yield securities n/a 399,942

Shares in companies n/a 301,093

Investments in affiliated companies n/a 131,171

Other investments n/a 169,922

Total n/a 4,438,884


The Group



Financial assets in the category “Held-to-maturity” (HtM)

Financial assets in the category “Loans and Receivables” (L&R)

IN EUR '000 31.12.2018 31.12.2017


Municipal bonds that can be refinanced n/a 190,136



Total n/a 284,448

IN EUR '000 31.12.2018 31.12.2017


Municipal bonds that can be refinanced n/a 0



Total n/a 538,877

18. Companies accounted for using the equity method

IN EUR '000 31.12.2018 31.12.2017

Banks 1,362,324 1,327,847

Non-banks 755,537 830,255

Total 2,117,861 2,158,102

The share of Raiffeisenlandesbank Oberösterreich in the RBI Group in the amount of about 9.5% is disclosed under banks reported using the equity method.

RBI sees Austria and Central and Eastern Europe (CEE) as its home market. The Austrian economy continued to perform well in 2018, with real GDP growth of +2.7%, although momentum slowed over the course of the year. At 4.5%, the Central Europe (CE) region again exceeded the 4% mark in 2018 (previous year: 4.5%). At country level, Poland achieved the highest figure with 5.1%. In Southeastern Europe (SEE), GDP growth slowed to 3.7% in the period under review, following the strong increase of 5.1% in 2017. The economic position continued to improve in 2018 in other Eastern European countries as well. Russia benefited from the recovery in oil prices and posted GDP growth of 2.3% in 2018. New US sanctions in April and September prompted the Central Bank of Russia to exercise increased caution and raise interest rates demonstratively by 0.5 percentage points to 7.75% in the second half of the year. Likewise, Ukraine and Belarus grew at an increased rate of 3.3% and 3.0% over the previous year. In this environment, RBI generated a consolidated profit of EUR 1,270 million in the 2018 financial year, which was 14% above the previous year. The expected loss from the sale of the Polish core banking business is also taken into account. Operating income increased by 4% in a half-year comparison and the extraordinarily high rever-sals of loan loss allowances led to a positive result for impairments to financial assets. The CET 1 ratio stood at 13.4% on 31 Dec. 2018 (fully loaded). RBI aims to achieve a CET 1 ratio of 13% and a Group return on equity of approx. 11% in the medium term.

Due to a stock market price that was significantly below the carrying amount of the investment at the reporting date, the stake in the RBI Group was tested for impairment as at 31 Dec. 2018. The fair value less sales costs as at 31 Dec. 2018 was deter-mined on the basis of the stock exchange rate of RBI on the Vienna Stock Exchange at the amount of EUR 22.20 per share (previous year: EUR 30.20 per share). The company valuation was calculated based on the present value of the cash flow to be expected (discounted cash flow procedure) of the companies in the Group taking into account the adjustments required for the purpose of calculating the value in use. The discounting of the cash flow that can be achieved with the valuation object




was undertaken with the aid of a risk-adequate capitalisation interest rate. An cost of equity after tax of 10.74% was used for the valuation of the RBI Group. A change in the cost of capital of RBI by plus or minus 100 basis points would result in a fall or rise of the correspondingly calculated company value of the RBI Group by –11.42% or +14.43% respectively.

The value to be attained as of 31 Dec. 2018 was the higher value chosen from comparing the value in use and the fair value less sales costs. After taking into account the pro-rata income and capital changes, the impairment amounted to approx. EUR -37,658 thousand (previous year: EUR +112,294 thousand value recovery) in the 2018 financial year, resulting in an IFRS carrying amount of EUR 969,196 thousand (previous year: EUR 945,099 thousand) as of 31 Dec. 2018.

Among other banks that are accounted for using the equity method is the 48.6%, or 41.6% attributed, stake in the Ober-österreichische Landesbank AG Group (Hypo Oberösterreich), which is held by the fully consolidated Hypo Holding GmbH. Raiffeisenlandesbank Oberösterreich sees itself as a long-term strategic partner to the regional bank that is headquartered in Linz and in which the province of Upper Austria has a majority holding. On the basis of an updated medium-term planning of Hypo Oberösterreich, a periodic company valuation was carried out on 31 Dec. 2018. The attainable value was determined to be a value in use based on the present value of the expected dividends (discounted dividend method). The four-year plan which was used for the reference period is based on the planning that was approved by the Management and that was valid at the time the valuation was conducted. The discounting of the dividends that can be achieved from the valuation object is undertaken with by means of a risk-adequate capitalisation interest rate. For Hypo Oberösterreich, cost of equity after tax of 7.87% was used. Due to the continuing difficult interest rate environment, there was a slight decline in value. Despite positive pro-rata results in the income statement, Hypo Oberösterreich’s share of equity declined in the 2018 financial year due to strong, negative OCI effects, in particular associated with valuations of equity items under IFRS 9 at fair value through OCI. Consequently, despite the slight decline in the value in use, a value recovery of EUR +6,846 thousand (previous year: EUR –10,825 thousand) to an IFRS carrying amount as of 31 Dec. 2018 of EUR 122,507 (previous year: EUR 125,739 thousand) was reached.

Any change in the discount interest rate used by plus or minus 100 basis points would result in a fall or rise of the calculated company value of Hypo Oberösterreich by –8.29% or +8.83% respectively.

As regards non-bank holdings, the participation in Raiffeisenlandesbank Oberösterreich Invest GmbH & Co OG is worth par-ticular mention. Based on an agreement relating to voting rights with an external partner, from the perspective of Raiffeisen-landesbank Oberösterreich joint control is in place with regard to Raiffeisenlandesbank Oberösterreich Invest GmbH & Co OG. Accounting using the equity method is undertaken under the classification as Joint Venture as defined by IFRS 11. According to the financial statements as at 30 Sept. 2018, they also own 13.71% of the shares in the voestalpine AG group and have, as the largest individual shareholder, the opportunity to exercise a considerable influence on the financial and business policies of the most important steel company in Austria. In his function as Deputy Chairman of the Supervisory Board, the Chief Exec-utive Officer of Raiffeisenlandesbank Oberösterreich, Heinrich Schaller, is an active participant in the strategic decisions made at voestalpine AG. At the level of Raiffeisenlandesbank Oberösterreich Invest GmbH & Co OG, the stake in voestalpine AG accounted for using the equity method was subject to an impairment test due to the sharp decline in the stock market price and the significantly lower earnings expectations associated with the ad-hoc notifications of voestalpine AG from 24 Oct. 2018 and 16 Jan. 2019 respectively. The fair value less sales costs was taken as the attainable value. This was determined on the basis of the stock exchange rate of voestalpine AG on the Vienna Stock Exchange as at 31 Dec. 2018 in the amount of EUR 26.10 per share (previous year: EUR 49.85 per share). The total negative net result of Raiffeisenlandesbank Oberösterreich Invest GmbH & Co OG, due to the depreciation, was recorded as part of the accounting process as a joint venture into the Raiffeisenlandesbank Oberösterreich Group on a pro-rata basis in the amount of EUR -58.6 million in accordance with the equity method. The carrying amount of Raiffeisenlandesbank Oberösterreich Invest GmbH & Co OG amounts to EUR 477.3 million as at 31 Dec. 2018 (previous year: EUR 570.3 million).

He also has a significant influence on Aluminiumkonzern AMAG Austria Metall AG because Raiffeisenlandesbank Oberöster-reich still holds 16.50% and remains the second largest single shareholder. In addition, Raiffeisenlandesbank Oberösterreich concluded a holding agreement with B & C Industrieholding GmbH. The aim of this holding agreement is to conduct an on-going discuss dealing with key financial and business policy issues as well as providing advice and reaching agreements prior to decisions being made in the appropriate committees of AMAG Austria Metall AG. The Chief Executive Officer of Raiffeisen-landesbank Oberösterreich, Heinrich Schaller, is also involved in all strategic decisions within the AMAG Austria Metall AG as an additional deputy to the Chair of the Supervisory Board and also as a member of the committees of the Supervisory Board (exception: Remuneration Committee). There are also standard banking relations in place with AMAG Austria Metall AG. The price per share as at 31 Dec. 2018 amounted to EUR 31.20 (previous year: EUR 51.39 per share).


The Group



As at 31 Dec. 2018, the 41.25% stake in Österreichischen Salinen AG, which had been adjusted in value in the previous year, was subjected to a periodic business valuation. The attainable value was determined to be a value in use based on the income approach to valuation, whereby a WACC after tax of 5.29% was used. As at 31 Dec. 2018, this resulted in a value recovery of EUR 4,090 thousand (previous year: reduction in value EUR –4,066 thousand) to an IFRS carrying amount as of 31 Dec. 2018 of EUR 31,426 (previous year: EUR 26,298 thousand). A change in the discount interest rate used by plus or minus 100 basis points would result in a fall or rise of the calculated company value of Österreichische Salinen AG by –14.51% or +21.20% respectively.

The holding of VIVATIS Beteiligungs-GmbH in the “VOG Einfuhr und Großhandel mit Lebensmitteln und Bedarfsgütern Ak-tiengesellschaft” of 20.83% was included in the VIVATIS/efko Group for the first time in the 2017 financial year as a company using the equity method. The carrying amount of the company accounted for using the equity method at 31 Dec. 2018 amounts to EUR 19.9 million (previous year: EUR 18.7 million).

The carrying amount of the RealBestand Immobilien GmbH & Co KG in Beteiligungs- und Immobilien GmbH, in the amount of 46.00% was included in the 2017 financial year using the equity method for the first time and amounted to EUR 9.8 million as at 31 Dec. 2018 (previous year: EUR 9.1 million).

Raiffeisen-IMPULS-Leasing Gesellschaft m.b.H’s holdings in Kapsch Financial Services GmbH in the amount of 74.00%, which was included in the scope of consolidation as a fully consolidated subsidiary until 31 Dec. 2018, were deconsolidated as at 31 Dec. 2018 due to the sale of a stake in the amount of 25.00%. The remaining stake amounting to 49.00% was in-cluded in the scope of consolidation using the equity method for the first time as at 31 Dec. 2018 following the classification as a joint venture pursuant to IFRS 11. The carrying amount of the holdings amounts to EUR 3.4 million as at 31 Dec. 2018. Further information can be found in the notes under “Consolidated companies”.

Three of the companies have a balance sheet date that is different from that of Raiffeisenlandesbank Oberösterreich. Both, when applying the equity method and also for the overview below, Raiffeisenlandesbank Oberösterreich Invest GmbH & Co OG and Kapsch Financial Services GmbH were considered with values as at its reporting date of 30 Sept.. The data for Ös-terreichische Salinen AG (reporting date 30 June) is based on an interim report as at 31 December.

An overview of the companies that reported using the equity method can be found under the heading “Consolidated com-panies”. The following table shows the financial data on the companies reported using the equity method. Operating income was included as earnings for banks.




* for Raiffeisenlandesbank Oberösterreich Invest GmbH & Co OG: values presented include shares in voestalpine AG directly held by the Group ** at RLB OÖ Invest GmbH & Co OG: adjustments from consideration of shares held directly

IN EUR '000

AMAG Austria Metall AG

Oberöster- reichische

Landesbank AGRaiffeisen Bank International AG

Raiffeisenbank a.s., Prague

Raiffeisen- landesbank

Oberösterreich Invest GmbH

& Co OG

Other companies

accounted for using the equity

method

Assets 1,561,243 7,770,470 140,115,155 14,094,383 655,390 1,437,320

Liabilities 940,369 7,325,445 127,701,797 12,975,498 24,477 1,031,466

Equity capital 620,874 445,025 12,413,358 1,118,885 630,913 405,854

Earnings 1,101,564 68,157 5,297,557 421,236 0 530,787

Result 44,541 15,747 1,397,954 131,099 –77,396 41,145

Total other comprehensive income 12,732 –35,572 –180,563 –1,454 –10,568 48

Comprehensive income 57,273 –19,825 1,217,391 129,645 –87,964 41,193

Net assets (owners) 620,874 445,121 10,584,322 1,017,215 630,913 362,183

Proportionate net assets 102,444 216,284 1,006,971 254,304 477,263 139,249

Adjustments** 34,536 –93,777 –37,775 16,317 0 2,045

Carrying amount in Raiffeisen-landesbank Oberösterreich* 136,980 122,507 969,196 270,621 477,263 141,294

Market value (Stock Market value)* 181,539 0 694,741 0 477,263 0

Dividends received* 6,982 2,915 19,403 14,806 25,531 5,985

IN EUR '000

AMAG Austria Metall AG

Oberöster- reichische

Landesbank AGRaiffeisen Bank International AG

Raiffeisenbank a.s., Prague

Raiffeisen- landesbank

Oberösterreich Invest GmbH

& Co OG

Other companies

accounted for using the equity

method

Assets 1,404,869 7,756,390 135,146,339 13,354,518 773,123 1,374,520

Liabilities 796,995 7,290,624 123,904,989 12,289,823 19,235 1,000,574

Equity capital 607,874 465,766 11,241,350 1,064,695 753,888 373,946

Earnings 1,036,238 65,584 5,227,569 391,148 0 482,169

Result 63,160 11,523 1,246,009 107,216 89,982 41,019

Total other comprehensive income –45,071 29,787 –197,007 49,750 10,051 –381

Comprehensive income 18,089 41,310 1,049,002 156,966 100,033 40,638

Net assets (owners) 607,874 465,860 9,935,209 962,273 753,888 0

Proportionate net assets 100,299 226,361 945,216 240,568 570,298 0

Adjustments** 34,536 –100,622 –117 16,441 0 0

Carrying amount in Raiffeisen- landesbank Oberösterreich* 134,835 125,739 945,099 257,009 570,298 125,122

Market value (Stock Market value)* 299,016 0 0 0 911,463 0

Dividends received* 6,982 2,915 0 13,242 20,054 4,093

Companies accounted for using the equity method as at 31 Dec. 2018

Companies accounted for using the equity method as at 31 Dec. 2017


The Group



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

IN EUR '000 2017/2018 2016/2017

Assets 1,045,511 1,080,200

Liabilities 957,541 995,898

Earnings 312,687 283,604

Result 8,860 –1,849




Schedule of movements in fixed assets 2018

Schedule of changes in non-current assets 2017

19. Schedule of movements in fixed assets

Purchase and production costs Appreciation and depreciationCarrying amount

IN EUR '000

As at 1 Jan. 2018

Change in basis of

consolidationCurrency

differences Additions DisposalsRe-

classifications

Liabilities in connection with

assets held for sale

As at 31 Dec. 2018

Cumulative write-downs

of which scheduled

depreciation/amortisation

in the financial year

of which scheduled

depreciation/amortisation in

the financial year

Change in basis of

consolidation

Liabilities in connection with assets held for

saleAs at

31 Dec. 2018

Intangible assets 145,086 –106 –75 6,924 5,240 10 0 146,599 99,069 134 7,596 –106 0 47,636

Goodwill 36,345 0 0 0 5 0 0 36,340 25,154 0 0 0 0 11,186

Other intangible assets 108,741 –106 –75 6,924 5,235 10 0 110,259 73,915 134 7,596 –106 0 36,450

Property, plant and equipment 1,003,342 –106 31 93,847 55,363 –31,317 0 1,010,434 575,191 32 61,899 –104 0 435,347

Land and buildings used for operations 472,041 0 –38 4,787 2,496 –26,786 0 447,508 232,256 0 11,027 0 0 215,252

Other property, plant and equipment 522,109 –106 69 82,836 52,810 4,971 0 557,069 342,935 32 50,872 –104 0 214,238

Property under construction 9,192 0 0 6,224 57 –9,502 0 5,857 0 0 0 0 0 5,857

Investment property 929,739 0 –54 36,766 54,324 31,307 0 943,434 226,050 77 16,137 0 0 717,384


Property under construction 39,949 0 0 30,147 12,067 –13,457 0 44,572 216 77 146 0 0 44,356

Total 2,078,167 –212 –98 137,537 114,927 0 0 2,100,467 900,310 243 85,632 –210 0 1,200,367


IN EUR '000

As at 1 Jan. 2017

Change in basis of



classifications



As at 31 Dec. 2017


of which scheduled



of which scheduled


the financial year

Change in basis of

consolidation


saleAs at

31 Dec. 2017

Intangible assets 129,076 11,845 84 11,489 4,848 39 –2,599 145,086 93,492 4,755 6,222 1,492 –2,086 50,102

Goodwill 32,474 0 0 5,084 1,213 0 0 36,345 25,154 4,501 0 0 0 11,191

Other intangible assets 96,602 11,845 84 6,405 3,635 39 –2,599 108,741 68,338 254 6,222 1,492 –2,086 38,911

Property, plant and equipment 997,520 29,517 943 89,254 59,437 –53 –54,402 1,003,342 558,160 205 61,126 20,036 –42,937 425,146

Land and buildings used for operations 469,864 12,531 –36 2,239 3,078 882 –10,361 472,041 244,564 0 10,603 6,601 –4,678 220,876

Other property, plant and equipment 522,427 16,653 979 79,642 56,344 2,784 –44,032 522,109 313,596 205 50,523 13,435 –38,259 195,078

Property under construction 5,229 333 0 7,373 15 –3,719 –9 9,192 0 0 0 0 0 9,192

Investment property 916,113 22,080 402 29,782 38,652 14 0 929,739 184,269 383 16,268 4,778 0 740,692

Investment property 856,239 20,242 402 3,246 33,100 42,761 0 889,790 184,064 383 16,198 4,778 0 700,948

Property under construction 59,874 1,838 0 26,536 5,552 –42,747 0 39,949 205 0 70 0 0 39,744

Total 2,042,709 63,442 1,429 130,525 102,937 0 –57,001 2,078,167 835,921 5,343 83,616 26,306 –45,023 1,215,940


The Group




IN EUR '000

As at 1 Jan. 2018

Change in basis of



classifications



As at 31 Dec. 2018


of which scheduled



of which scheduled


the financial year

Change in basis of

consolidation


saleAs at

31 Dec. 2018

Intangible assets 145,086 –106 –75 6,924 5,240 10 0 146,599 99,069 134 7,596 –106 0 47,636

Goodwill 36,345 0 0 0 5 0 0 36,340 25,154 0 0 0 0 11,186

Other intangible assets 108,741 –106 –75 6,924 5,235 10 0 110,259 73,915 134 7,596 –106 0 36,450

Property, plant and equipment 1,003,342 –106 31 93,847 55,363 –31,317 0 1,010,434 575,191 32 61,899 –104 0 435,347

Land and buildings used for operations 472,041 0 –38 4,787 2,496 –26,786 0 447,508 232,256 0 11,027 0 0 215,252

Other property, plant and equipment 522,109 –106 69 82,836 52,810 4,971 0 557,069 342,935 32 50,872 –104 0 214,238

Property under construction 9,192 0 0 6,224 57 –9,502 0 5,857 0 0 0 0 0 5,857



Property under construction 39,949 0 0 30,147 12,067 –13,457 0 44,572 216 77 146 0 0 44,356

Total 2,078,167 –212 –98 137,537 114,927 0 0 2,100,467 900,310 243 85,632 –210 0 1,200,367


IN EUR '000

As at 1 Jan. 2017

Change in basis of



classifications



As at 31 Dec. 2017


of which scheduled



of which scheduled


the financial year

Change in basis of

consolidation


saleAs at

31 Dec. 2017

Intangible assets 129,076 11,845 84 11,489 4,848 39 –2,599 145,086 93,492 4,755 6,222 1,492 –2,086 50,102

Goodwill 32,474 0 0 5,084 1,213 0 0 36,345 25,154 4,501 0 0 0 11,191

Other intangible assets 96,602 11,845 84 6,405 3,635 39 –2,599 108,741 68,338 254 6,222 1,492 –2,086 38,911

Property, plant and equipment 997,520 29,517 943 89,254 59,437 –53 –54,402 1,003,342 558,160 205 61,126 20,036 –42,937 425,146

Land and buildings used for operations 469,864 12,531 –36 2,239 3,078 882 –10,361 472,041 244,564 0 10,603 6,601 –4,678 220,876

Other property, plant and equipment 522,427 16,653 979 79,642 56,344 2,784 –44,032 522,109 313,596 205 50,523 13,435 –38,259 195,078

Property under construction 5,229 333 0 7,373 15 –3,719 –9 9,192 0 0 0 0 0 9,192

Investment property 916,113 22,080 402 29,782 38,652 14 0 929,739 184,269 383 16,268 4,778 0 740,692

Investment property 856,239 20,242 402 3,246 33,100 42,761 0 889,790 184,064 383 16,198 4,778 0 700,948

Property under construction 59,874 1,838 0 26,536 5,552 –42,747 0 39,949 205 0 70 0 0 39,744

Total 2,042,709 63,442 1,429 130,525 102,937 0 –57,001 2,078,167 835,921 5,343 83,616 26,306 –45,023 1,215,940




IAS 36.90 requires that those cash-generating units to which a figure for good will is allocated for the financial year must be subjected to an impairment test every year and whenever there is cause to suspect any impairment. In this regard, the peri-odic impairment test for the remaining goodwill from the first-time consolidations of “TKV Oberösterreich GmbH” in the 2012 financial year, the “Frisch & Frost Nahrungsmittel GmbH” in the 2017 financial year and the “IMPULS-LEASING International” Group (host country Romania) in the 2009 financial year were conducted in the course of the fourth quarter. Under the im-pairment test, with due regard to the item being valued, the most suitable method to establish the value in use is employed.

The discounted cash flow method is applied for the impairment test of both goodwill bearing, cash-generating units in the VIVATIS/efko Group. For this, the assets and liabilities (not including the interest-bearing liabilities) attributed to the cash-gen-erating unit including the attributable goodwill are compared with the company value (value in use). In determining the value in use of the goodwill-bearing, cash-generating units, a distinction is made between a detailed forecasting period and a sub-sequent extrapolation period. The reporting period for the detailed forecast covers a period of three years and is based on the current medium-term budgeting. The free cash flows were calculated indirectly with inclusion of the projected working capital change and investments. The cash flows beyond the detailed forecasting are determined using the perpetual annuity concept. The valuation-relevant cash flow for the perpetual annuity is based on a sustainable cash flow assumption, less a calculated reinvestment rate, depending on the assumed growth rate for the perpetual annuity of the respective goodwill-bear-ing, cash-generating unit. The present value of perpetual annuity was determined assuming a sustainable growth rate of 2%.

For the valuation of the cash-generating unit “TKV Oberösterreich”, a WACC before taxes of 7.24% is applied in accordance with the Capital Asset Pricing Model (CAPM). A change in the discount interest rate applied by plus or minus 100 basis points would result in a fall or rise of the calculated value in use of EUR –2.9 million or EUR +4.3 million respectively. With regard to the goodwill of the cash-generating unit “TKV Oberösterreich” with a carrying amount of EUR 4.6 million (previous year: EUR 4.6 million), the impairment test did not show any need for impairment as at the 31 Dec. 2018 reporting date (previous year: unscheduled impairment charge in the amount of EUR 4.5 million).

With the acquisition of “Frisch & Frost Nahrungsmittel GmbH”, it was also stipulated that it will be merged with “Tiefkühlkost Weinbergmaier Gesellschaft m.b.H” in the medium term. Thus, both companies are considered as a “Frozen convenience” cash-generating unit based on a comprehensive analysis. For the valuation of the cash-generating unit “Frozen convenience”, a WACC before taxes of 7.97% is applied in accordance with the Capital Asset Pricing Model (CAPM). A change in the discount interest rate applied by plus or minus 100 basis points would result in a fall or rise of the calculated value in use of EUR –5.3 million or EUR +7.4 million respectively. With regard to the goodwill of the cash-generating unit “Frozen convenience” with a carrying amount of EUR 5.1 million (previous year: EUR 5.1 million), the impairment test did not show any need for impairment as at the 31 Dec. 2018 reporting date.

The income approach to valuation (Ertragswertverfahren) is applied as the impairment test for the goodwill-bearing, cash-gen-erating unit “IMPULS-LEASING International” Group based in Romania. For this the value of the company (value in use) deter-mined at amortised cost is compared with the equity plus goodwill allocated to the cash-generating unit. When determining the value in use, a distinction is made between a detailed forecast period and a subsequent extrapolation period. The detailed forecast period covers a period of five years and is based on the current medium-term budgeting, which is then discounted back in the course of the impairment test to the reporting date as at 31 Dec. 2018. In contrast, the continuing value is based on the figures for the fifth planning year of the medium-range planning and is determined using the present value of the per-petual annuity without taking possible growth rates into account. The sum of the present values arising from the detailed forecast and the continuing value give the value in use, which is then compared with the equity plus the goodwill of the good-will-bearing, cash-generating unit to test for any impairment. The medium-term planning used as the basis for this calculation is based on data from the past taking future market developments into account. Internal expectations from within the group are supplemented by external market expectations. For the valuation of the goodwill-bearing, cash-generating units in Romania, cost of equity before tax at 12.72% are applied in accordance with the Capital Asset Pricing Model (CAPM). The goodwill of “IMPULS-LEASING International” Group has a value of EUR 1.5 million as per 31 Dec. 2018.

20. Intangible assets

IN EUR '000 31.12.2018 31.12.2017

Customer base 4,978 7,132

Brand 14,820 16,862

Goodwill 11,186 11,191

Other intangible assets 16,652 14,917

Total 47,636 50,102


The Group



The fair value of investment property, for which a fair value assessment exists, amounts to EUR 292,399 thousand (previous year: EUR 276,813 thousand) with a carrying amount of EUR 231,618 thousand.(previous year: EUR 226,548 thousand). The reports were compiled by the Gesellschaft Real-Treuhand Immobilien Vertriebs GmbH.

As of 31 Dec. 2018, no contractual obligations were in place as regards of real estate held as financial investments (previous year: EUR 0 thousand).

With regard to the investment property, by far the largest portion – EUR 474.9 million (previous year: EUR 498.2 million) orig-inates from “OÖ Wohnbau” companies. Access to this investment property is subject to legal restrictions as a result of the Austrian Public House Building Act (WGG).

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

In the 2018 financial year, a carrying amount of EUR 3,244 thousand (previous year: EUR 14 thousand) was reclassified from operational buildings and land to investment property due to the change in the intended use of a property.

IN EUR '000 31.12.2018 31.12.2017

Property, plant and equipment 435,347 425,146

Land and buildings used for bank operations 215,252 220,876

Other property, plant and equipment 214,238 195,078

Property under construction 5,857 9,192

Investment property 717,384 740,692

Investment property 673,028 700,948

Property under construction 44,356 39,744

Total 1,152,731 1,165,838

21. Property, plant and equipment, and investment property




Sales group which is classified as being held for sale

The sale of the H. Loidl Wurstproduktions- und vertriebsgesellschaft m. b. H. & Co KG and the business operations of LAND-HOF GesmbH & Co KG was concluded in Jan. 2018. The company remaining within the Group was renamed VIVATIS Ver-mögensverwaltungs GmbH & Co KG.

The transactions were concluded as of 31 Jan. 2018. In the course of the transaction, a sales price of EUR 4,250 thousand and net profit of EUR 550 thousand was generated. Beyond that there were no material effects on income in the 2018 financial year.

23. Assets held for sale and sales disposal groups

IN EUR '000 31.12.2018 31.12.2017

Sales group which is classified as being held for sale 0 28,393

Individual assets which are classifed as being held for sale 13,983 13,812

Total 13,983 42,205

22. Other assets

Inventories essentially consist of real estate projects which have not yet been concluded as well as inventories from the com-panies in the food industry (VIVATIS/efko Group). The value of the (deployed) inventories which was recorded as expenditure in the reporting period is EUR 451.8 million (previous year: EUR 616.3 million).

The proportion of “Other assets” attributable to the “OÖ Wohnbau” companies amounted to EUR 97.2 million (previous year: EUR 82.8 million).

Revenue recognised in the reporting period, which were included in the balance of contractual obligations at the beginning of the period, amount to EUR 404 thousand.

IN EUR '000 31.12.2018 31.12.2017

Receivables from non-bank activities 168,857 186,571

Prepaid expenses 27,422 23,165

Inventories 129,264 144,574

Assets 10,870 0

Other assets 167,247 85,618

Total 503,660 439,928


The Group



Individual assets which are classifed as being held for sale

The balance sheet item “Assets held for sale” includes the following individual assets:

ı Holding in the Leopoldauerstraße 70-72 Immobilienentwicklung GmbH with a carrying amount of EUR 408 thousand ı Holding in a property in Mariahilferstraße (MH 114 GmbH & Co OG) with a carrying amount of

EUR 13,575 thousand

In the financial year, a valuation affecting net income in connection with the Mariahilferstraße (MH 114 GmbH & Co OG) property is included. The resulting valuation gain in the amount of EUR 181 thousand is reported in the consolidated income statement in “Result from financial instruments recognised at fair value”.

The holding in the Liegenschaftsverwaltung Kraußstraße 1-7 GmbH (previously: Raiffeisen-Leasing Liegenschaftsverwaltung Kraußstraße Gesellschaft m.b.H.) with a carrying amount of EUR 10 thousand was sold in Jan. 2018. This sale only led to an insignificant gain on disposal.

The individual assets that were classified as held for sale are assigned to the “Equity investments” segment.

Assets of the for sale group which are classified as being held for sale:

Debts from the for sale group which are classified as being held for sale:

IN EUR '000 31.12.2018 31.12.2017

Cash and cash equivalents 0 9

Loans and advances to banks 0 22

Financial assets 0 195

Intangible assets 0 513

Property, plant and equipment 0 11,465

Tax assets 0 2,241

Other assets 0 13,948

Total 0 28,393

IN EUR '000 31.12.2018 31.12.2017

Provisions 0 9,800

Tax liabilities 0 123

Other liabilities 0 7,429

Total 0 17,352




26. Trading liabilities

27. Liabilities evidenced by certificates

24. Amounts owed to banks

25. Amounts owed to customers

IN EUR '000 31.12.2018 31.12.2017

Interest rate transactions 1,369,939 1,474,761

Currency exchange transactions 37,390 39,065

Stock- and index-related business 0 0

Other transactions 0 0

Total 1,407,329 1,513,826

IN EUR '000 31.12.2018 31.12.2017

Bonds issued 3,833,909 3,081,896

Listed mortgage bonds/municipal bonds 122,436 111,985

Non-listed mortgage bonds/municipal bonds 335,755 331,650

Other liabilities evidenced by certificates 4,422,415 4,396,095

Total 8,714,515 7,921,626

IN EUR '000 31.12.2018 31.12.2017

Demand deposits 6,369,016 5,813,803

Term deposits 4,807,337 4,755,325

Savings deposits 1,400,424 1,368,634

Others 143,119 116,359

Total 12,719,896 12,054,121

In Austria 9,750,647 8,972,198

Abroad 2,969,249 3,081,923

Total 12,719,896 12,054,121

IN EUR '000 31.12.2018 31.12.2017

Liabilities payable on demand 4,418,434 4,162,059

Money market transactions 5,011,674 4,938,857

Long-term financing 3,264,574 2,969,343

Others 260,372 263,109

Total 12,955,054 12,333,368

In Austria 11,497,278 10,023,634

Abroad 1,457,776 2,309,734

Total 12,955,054 12,333,368


The Group



28. Provisions

Severance provisions

Changes in severance obligations

IN EUR '000 2018 2017

Present value (DBO) 1 Jan. 94,704 92,575

Change in basis of consolidation –245 2,710

Current service cost 3,891 3,941

Past service cost 0 –440

Interest cost 1,145 1,120

Payments –3,763 –4,112

Actuarial profit/loss –590 745

of which adjustments based on past experience –255 –651

of which changes in demographic assumptions 195 124

of which changes in financial assumptions –530 1,272

Reclassification to liabilities in connection with assets held for sale 0 –1,835

Present value (DBO) 31 Dec. 95,142 94,704

IN EUR '000 2018 2017

Fair value 1 Jan. 294 219

Change in basis of consolidation 0 0

Interest income 5 2

Contributions 89 89

Payments 0 0

Other profits/losses –10 –16

Fair value 31 Dec. 378 294

IN EUR '000 31.12.2018 31.12.2017

Provisions for personnel expenses 166,908 163,581

of which severance provisions 94,764 94,410

of which pension provisions 53,421 52,200

of which anniversary provisions 18,723 16,971

Other provisions 99,988 89,401

Total 266,896 252,982

Change in plan assets

Due to the current level of interest rates, the valuation interest rate for calculating the provisions for personnel expenses as at 31 Dec. 2018 was adjusted to 1.50% (previous year: 1.25%).

Interest rate movements in recent years have led to negative indicator values, which are used to calculate interest. In several cases, the Supreme Court has now declared that the receipt of a mark-up that was not explicitly agreed to is not allowed. With regard to consumer contracts, in which the receipt of a mark-up was agreed in the form of an interest floor, the Supreme Court has further declared that this contradicts the Austrian Consumer Protection Act (KSchG) without the simultaneous im-position of an interest cap. A provision was therefore created to cover repayment claims from customers in the 2017 financial year for the period from 2015 to 2017. This provision amounted to EUR 27.7 million as at 31 Dec. 2017, of which an amount of approx. EUR 10.6 million was refunded to consumer customers and consumer customers consortia in the 2018 financial year. An additional provision of approx. EUR 5.9 million was created for remaining customers in the 2018 financial year so that the provision amounts to EUR 23.0 million as of 31 Dec. 2018. The amount will be disclosed in “Other provisions” and the allocation made in net interest income.




Pension provisions

Changes in pension provisions

IN EUR '000 2018 2017



Current service cost 567 563

Past service cost 0 0

Gains or losses from settlements 0 0

Interest cost 658 663

Payments –3,994 –3,968

Actuarial profit/loss 3,751 2,281

of which adjustments based on past experience 1,813 768

of which changes in demographic assumptions 3,618 0

of which changes in financial assumptions –1,680 1,513

Other change 0 11

Present value (DBO) 31 Dec. 55,638 54,656

IN EUR '000 2018 2017

Fair value 1 Jan. 2,456 2,409


Interest income 31 30

Contributions 71 61

Payments –215 –190

Other profits/losses –126 146

Other change 0 0

Fair value 31 Dec. 2,217 2,456

Change in plan assets

IN EUR '000 2018 2017

Present Value (DBO) of the pension obligations as at 31 Dec. 55,638 54,656

Fair value of plan assets as at 31 Dec. 2,217 2,456

Net obligations 31 Dec. (= provisions) 53,421 52,200

Change in pension provisions

The market value of the reimbursement claims reported amounted at 31 Dec. 2018 to EUR 1,550 thousand (previous year: EUR 1,833 thousand).

IN EUR '000 2018 2017

Present Value (DBO) of the severance obligations as at 31 Dec. 95,142 94,704

Fair value of plan assets as at 31 Dec. 378 294

Net obligations 31 Dec. (= provisions) 94,764 94,410

Reconciliation of severance provisions


The Group



Classification of pension obligations by beneficiaries

IN EUR '000 2018 2017

Present Value (DBO) of the pension obligations as at 31 Dec. 55,638 54,656

of which obligations to active beneficiary employees 9,327 9,314

of which obligations to retired beneficiary employees with vested claims 0 162

of which obligations to pensioners 46,311 45,180

Investment of plan assets for severance and pension obligations

IN % 2018 2017

Bonds and other fixed-income securities 42.2 41.9

Shares and other variable-yield securities 18.3 28.9

Others 39.5 29.2

Total 100.0 100.0

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

For 2019, defined benefit payments (adjusted for the payments made from plan assets) amounting to EUR 125 thousand are scheduled in the budget.

Sensitivities

The following sensitivity analysis shows a change in the present value of the obligation (DBO) as of 31 Dec. 2018 when any of the essential actuarial parameters is changed. The calculations for the sensitivity analysis is analogous to the calculation of provisions pursuant to IAS 19 – Employee Benefits – using the projected unit credit method.

Change in the parameter of

Effect on DBO in %

Change in the parameter of

Effect on DBO in%

Severance provisions

Interest rate +0.5% –5.4 –0.5% 5.9

Increasing the bases for assessment +0.5% 5.7 –0.5% –5.3

Fluctuation +0.5% –3.3 –0.5% 1.0

Pension provisions

Interest rate +0.5% –5.5 –0.5% 6.1

Increasing the bases for assessment +0.5% 0.8 –0.5% –0.7

Increase in future pensions +0.5% 5.1 –0.5% –4.7

Mortality table/Life expectancy +1 year 6.8 –1 year –7.0

Weighted residual maturity of the financial liabilities

IN YEARS 2018 2017

Severance obligations 11 11

Pension obligations 12 12




29. Other liabilities

IN EUR '000 31.12.2018 31.12.2017

Liabilities from non-bank activities 135,378 174,445

Prepaid expenses 28,264 16,826

Liabilities 615 0

Other liabilities 318,878 353,773

Total 483,135 545,044

Changes in other provisions

Other provisions

IN EUR '000 2018* 2017**

As at 1 Jan. 53,487 30,761

Allocations 18,760 51,402

Reversals –534 –5,141

Utilised –26,445 –18,693

Reclassification to liabilities in connection with assets held for sale 0 –4,842


As at 31 Dec. 45,268 53,487

IN EUR '000 31.12.2018 31.12.2017

Total of other provisions 45,268 53,487

up to 1 year 40,440 46,259

from 1 to 5 years 4,457 3,940

over 5 years 371 3,288

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

Changes in staff anniversary provisions

IN EUR '000 2018 2017


Change in basis of consolidation –68 477

Current service cost 1,231 1,204

Past service cost –158 0

Interest cost 205 198

Payments –1,018 –1,067

Actuarial profit/loss 1,560 –69

Reclassification to liabilities in connection with assets held for sale 0 –229

Present value (DBO) 31 Dec. (= provisions) 18,723 16,971

The level of other provisions as at 31 Dec. 2018 amounts to EUR 99,988 thousand (previous year: EUR 89,401 thousand). In addition to the other provisions, the development of which is shown in the following table, it still contains the provisions for off-balance-sheet obligations as of 31 Dec. 2018 in the amount of EUR 54,720 thousand (previous year: EUR 35,914 thousand). Further details on the development of the provision for off-balance-sheet obligations can be found in the notes concerning “Loan loss allowances”.

* excl. provisions for off-balance-sheet obligations** excl. provisions for off-balance-sheet obligations (incl. portfolio valuation allowance for off-balance-sheet transactions)


The Group



IN EUR '000 2018 2017

As at 1 Jan. 1,152,260 1,511,478

Changes affecting payments –254,243 –350,409

of which proceeds from issues 66,786 120,859

of which buyback/repayment –321,029 –471,268

Changes not affecting payments 5,402 –9,371

thereof net income from financial instruments carried at fair value 218 –4,704

of which valuation due to change in own credit risk 12,469 n/a

of which other amendments –7,285 –4,667

As at 31 Dec. 903,419 1,151,698

31. Equity

IN EUR '000 31.12.2018 31.12.2017

Share capital 277,630 277,630

Capital reserves 971,973 971,973

Retained earnings 2,990,299 2,952,911

Non-controlling interests 212,657 201,003

Total 4,452,559 4,403,517

In accordance with its articles, Raiffeisenlandesbank Oberösterreich‘s share capital as at 31 December 2012 was EUR 277,630 thousand (previous year: EUR 277,630 thousand). It consists of 1,942,042 ordinary shares (previous year: 1,942,042 ordinary shares). The ordinary shares consist of ones in the name of holder without a nominal value (individual share certifi-cates). Sales of name shares require the written approval of the Managing Board and of the Supervisory Board.

Capital reserves were built in the amount of EUR 410,859 thousand in connection with the transfer of the bank business from former Raiffeisenlandesbank Oberösterreich reg. Gen.m.b.H. to Raiffeisenlandesbank Oberösterreich in the financial year 2004, and in the amount of EUR 136,987 thousand resulting from a premium during a new issue of preferred shares in 2007. In connection with an additional payment in accordance with section 229 (2) line 5 of the Austrian Commercial Code, capital reserves increased by EUR 149,992 thousand in financial year 2008. The increase in share capital in the form of ordinary shares in 2013 led to the capital reserves rising in value by EUR 274,257 thousand. The change in the amount of EUR –122 thousand in the 2016 financial year was due to the conversion of participation capital into ordinary shares.

In the first half of 2018, dividends of EUR 41,446 thousand were paid on the ordinary shares, in accordance with the decision made at the annual general meeting on 08 May 2018 concerning the use of the profit from 2017. A dividend of EUR 21.34 per ordinary share accordingly results from this. The recommendation of the Managing Board as to the use of the profit for 2018 will be to pay dividends of EUR 40,000 thousand on ordinary shares. This results in a planned dividend of EUR 20.60 per ordinary share.

In addition to the reinvested profit from the previous financial years, the item headed “Cumulative profit” in the amount of EUR 2,990,299 thousand (previous year: EUR 2,952,911 thousand) in the shareholders' equity of the controlling interests contains the share of changes in equity recognised with no effect on the income statement and the share of the current net profit for the year that is attributable to the shareholders of the parent company. Total equity includes other comprehensive income of the current period and of previous periods in the amount of EUR –200,593 thousand (previous year: EUR –23,916 thousand).

Change in liabilities stemming from financial activities

30. Subordinated capital

IN EUR '000 31.12.2018 31.12.2017

Tier 2 capital and subordinated liabilities 885,569 1,134,946

Participation capital 17,850 16,752

Total 903,419 1,151,698




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

Change in the reserve for own credit risks

Change in the reserve for financial assets in the category “measured at fair value through other comprehensive income” (FVOCI)

IN EUR '000 2018 2017

As at 1 Jan. –20,607 –18,444


Changes in the valuation of reserves of actuarial gains/losses on defined benefit plans –3,297 –2,896

Amounts reclassified to the profit reserve 294 0

Taxes recognised in respect of these amounts 905 733

As at 31 Dec. –22,626 –20,607

IN EUR '000 2018 2017

As of 1 January 2018 or 31 December 2017 pursuant to IAS 39 0 n/a

Reclassifications/reallocations based on the IFRS 9 initial application 0 n/a

Revaluation based on the IFRS 9 initial application 14,517 n/a

Taxes recorded in the revaluation –3,469 n/a

As of 1 January 2018 pursuant to IFRS 9 11,048 n/a

Gains or losses due to change in own credit risk in respect of financial liabilities desig-nated at fair value –24,366 n/a

Amounts reclassified to the profit reserve –1,895 n/a

Taxes recognised in respect of these amounts 6,512 n/a

As at 31 Dec. –8,701 n/a

IN EUR '000 2018 2017

As of 1 January 2018 or 31 December 2017 pursuant to IAS 39 0 n/a

Reclassifications/reallocations based on the IFRS 9 initial application 165,339 n/a

Revaluation based on the IFRS 9 initial application 15,975 n/a

Taxes recorded in the revaluation –3,993 n/a

As of 1 January 2018 pursuant to IFRS 9 177,321 n/a

Remeasurement gains/losses in the reserve for financial assets in the category “measured at fair value through other comprehensive income” (FVOCI) –65,151 n/a

Amounts reclassified to profit or loss –4,707 n/a

Taxes recognised in respect of these amounts 17,464 n/a

As at 31 Dec. 124,927 n/a

Changes in the fair value of financial liabilities measured at fair value through profit or loss, that are attributable to changes in the company’s own credit risk, are recognised with no impact on profit or loss under the item “Reserve for own credit risks”. There are no plans to reclassify the amounts contained in this reserve to the income statement at a later date. In the event of derecognition, the corresponding amounts are reclassified to retained earnings. In the 2018 financial year, an amount of EUR +1.4 million was reclassified to retained earnings after deferred taxes (previous year: EUR 0.0 million).

The reserve for financial assets in the category “measured at fair value through other comprehensive income” (FVOCI) reflects the remeasurement gains/losses to be recognised with no impact on profit or loss in equity and the loan loss allowance for financial assets in the category “fair value through other comprehensive income” (FVOCI) in accordance with IFRS 9.

In the 2018 financial year, debt instruments in the “measured at fair value through other comprehensive income” category amount to EUR –65,151 thousand with no impact on profit or loss. In addition, an amount of EUR –4,707 thousand was reclassi-fied to the income statement in the 2018 financial year. Of this amount, EUR –4,629 thousand relate to valuation effects that were reclassified to the disposal result of the category “measured at fair value through other comprehensive income”, and EUR –78 thousand relate to loan loss allowances that were reclassified to the position “loan loss allowances” in the income statement.


The Group



Changes in AfS reserves

Development of the valuation result from the hedging of a net investment in a foreign business

Changes in foreign currency translation reserves

The following table shows the reconciliation of the AfS reserve in connection with the first-time application of IFRS 9:

IN EUR '000 2018 2017

As at 1 Jan. n/a 247,747

Change in basis of consolidation n/a 0

Changes in the valuation of AfS securities n/a 14,456

Amounts reclassified to profit or loss n/a –12,726

of which due to impairment of AfS inventories n/a 0

of which through disposal of AfS inventories n/a –12,755

of which from reclassified AfS inventories n/a 29

Taxes recognised in respect of these amounts n/a –426

As at 31 Dec. n/a 249,051

IN EUR '000 2018 2017

As at 1 Jan. –1,105 505

Gain or loss from the hedging of net investments 264 –1,973

Amounts reclassified to profit or loss 0 –174

Taxes recognised in respect of these amounts –66 537

As at 31 Dec. –907 –1,105

IN EUR '000 2018 2017

As at 1 Jan. –292 –1,469

Gain or loss from foreign currency translation –1,523 1,177

As at 31 Dec. –1,815 –292

IN EUR '000 2018

As of 1 January 2018 or 31 December 2017 pursuant to IAS 39 249,051

Reallocations from AfS to financial instruments in the “Measured at amortised cost” (AC) category –3,596

Reallocations from AfS to financial instruments in the “Measured at fair value through profit and loss” (FVTPL) category –112,726

Reallocations from AfS to financial instruments in the “Measured at fair value with no effect on income” (FVOCI) category –132,729

Reallocations from AfS to financial instruments in the “Designated at fair value with no effect on income” (FVOCI option) category 0

As of 1 January 2018 pursuant to IFRS 9 0

There is hedging for currency risks resulting from a net investment in a foreign business. The volume of the hedged under-lying transaction amounted to EUR 35.6 million as at 31 Dec. 2018. (previous year: EUR 35.9 million). Hedging transactions represent refinancing in this foreign currency in the same amount. The effective portion of the valuation gains and losses of hedging transactions is recognised in the aforementioned reserves with no effect on income.




Development of “Other comprehensive income” from companies accounted for using the equity method

Development of retained earnings in connection with the first-time application of IFRS 9

IN EUR '000 2018 2017

As at 1 Jan. –250,963 –275,591

Change due to proportionate “Other results” –40,413 24,290

Taxes recognised in respect of these amounts –95 338

As at 31 Dec. –291,471 –250,963

IN EUR '000 2018

As of 1 January 2018 or 31 December 2017 pursuant to IAS 39 3,200,374

Reclassifications/reallocations based on the IFRS 9 initial application 83,712

Revaluation based on the IFRS 9 initial application –133,531

Revaluation based on the IFRS 15 initial application 962

Taxes recorded in the revaluation 36,425

As of 1 January 2018 pursuant to IFRS 9 3,187,942

Significant non-controlling interests

Country of registration

Non-controlling interests Equity capital

After-tax profit for the year

Total other comprehensive

incomeTotal result

Company2018 2017 2018 2017 2018 2017 2018 2017 2018 2017IN % IN % IN EUR '000 IN EUR '000 IN EUR '000 IN EUR '000 IN EUR '000 IN EUR '000 IN EUR '000 IN EUR '000

Hypo Holding subgroup Austria 14.37 14.37 78,919 79,461 5,497 –154 –4,576 1,608 921 1,454

OÖ Wohnbau gemeinnützige Wohnbau subgroup Austria n/a n/a 86,993 77,944 8,442 4,990 309 41 8,751 5,031

Other 46,745 43,598 6,956 2,620 –7 –308 6,949 2,312

212,657 201,003 20,895 7,456 –4,274 1,341 16,621 8,797

Due to the provisions of section 10 of the Austrian Public House Building Act (WGG) which limit dividends and proceeds in connection with the withdrawal or liquidation, in the case of the non-profit housing development companies (OÖ Wohnbau ge-meinnützige Wohnbau und Beteiligung GmbH and OÖ Wohnbau Gesellschaft für den Wohnungsbau gemeinnützige GmbH) the equity share is limited to the paid-up capital and to the results distributable to the owners when consolidating.


The Group



Companies with substantial non-controlling interests in 2018

Companies with substantial non-controlling interests in 2017

IN EUR '000

Hypo Holding subgroup

OÖ Wohnbau gemeinnützige

Wohnbau subgroup

Assets 3,315,404 615,557

Liabilities and provisions 3,024,381 517,798

Equity capital 291,023 97,759

Earnings 68,580 85,623


Total other comprehensive income –23,340 309


Dividends paid to non-controlling shareholders 750 31

Cash flow from operating activities –9,693 –20,269

Cash flow from investing activities 41,404 20,650

Cash flow from financing activities –27,756 –381

Change in cash levels 3,955 0

IN EUR '000

Hypo Holding subgroup

OÖ Wohnbau gemeinnützige

Wohnbau subgroup

Assets 3,597,053 626,048

Liabilities and provisions 3,305,827 537,339

Equity capital 291,226 88,709

Earnings 42,955 66,812

After-tax profit for the year –1,658 5,340

Total other comprehensive income 13,111 41


Dividends paid to non-controlling shareholders 750 31

Cash flow from operating activities –295,679 –1,681

Cash flow from investing activities 293,968 2,060

Cash flow from financing activities 3,160 –381

Change in cash levels 1,449 –2




Summary

Raiffeisenlandesbank Oberösterreich Group’s long-term success has largely been due to active risk management. In order to meet this objective, Raiffeisenlandesbank Oberös-terreich, as the dominant Group company, has implemented a risk management system in accordance with sections 39, 39a of the Austrian Banking Act and the Credit Institution Risk Management Regulation (KI-RMV), which enables all risks in the Group (credit risk, market risk, equity risk, liquidity risk, macroeconomic risk, operational risk and other risks) to be identified, measured and actively managed by management.

The risk policy that has been sanctioned by the Raiffeisen-landesbank Oberösterreich Managing Board serves as a guideline for the other group companies.

The Managing Board and all employees act in accordance with these risk policy principles and make decisions on the basis of these guidelines. Risk management is organised in such a way as to avoid conflicts of interest both at the per-sonal level and at the level of organisational units.

For the main types of risks, the Raiffeisenlandesbank Oberös-terreich strives to operate a risk management system on a level which at least corresponds to that of institutions of a similar structure and size (best practice principle) and is pri-marily aimed at the continuation of the company as a going concern (going concern principle).

The Raiffeisenlandesbank Oberösterreich in general only aims its work at areas of business in which it has the requi-site expertise in the assessment of the specific risks. Before it moves into new areas of business or products, the group always carries out an adequate analysis of the risks posed by that specific business.

The Managing Board and the Supervisory Board of Raiff-eisenlandesbank Oberösterreich are informed promptly of the bank’s risk situation by means of comprehensive, objec-tive reports. All the relevant risks (credit risks, market risks, equity risks, liquidity risks, macroeconomic risks, operational risks and other risks) to which Raiffeisenlandesbank Oberös-terreich is exposed are monitored and coordinated with the group’s overall strategy.

All the quantifiable risks are monitored on the basis of the group-wide risk-bearing capacity. The aim of the risk early identification and risk monitoring systems is to ensure the qualified and timely identification of all major risks.

Risk Controlling analyses all risks and examines adherence to the defined risk limits by means of ongoing variance analyses. Internal/Group Auditing assesses the effectiveness of work-ing procedures, processes and internal controls.

Modifications and enhancements of risk management are continuously documented in the Risk Management Manual.

The supervisory Raiffeisenlandesbank Oberösterreich Group publishes detailed information with regard to risk management in accordance with Section 8 of the CRR. The information is published on the internet site of the Raiff-eisenlandesbank Oberösterreich in the “Facts and Figures” domain.

Risk management organisation

The Managing Board of Raiffeisenlandesbank Oberöster-reich bears responsibility for all risk management activities. The Managing Board approves the risk policy in accordance with the business strategies, the risk principles, procedures and methods of risk measurement and the risk limits. The Chief Risk Officer (Managing Board member) is responsible for controlling all the quantifiable risks, including in particular credit risk, market risk, equity risk, liquidity risk, macroeco-nomic risk and operational risks that Raiffeisenlandesbank Oberösterreich is exposed to and for developing and imple-menting the overall risk strategy.

An organisational separation between front and back offices is guaranteed.

The organisational unit Consolidated Bank Risk Management is responsible for identifying and measuring risks in coop-eration with the organisational units commissioned for this purpose. It is also responsible for the development and de-ployment of risk measurement procedures and IT systems, develops the results and risk information necessary to carry out active risk control and relays accounting-related informa-tion accordingly to the Managing Board.

The Committee for Product Approval ensures that the risks have been adequately portrayed for new products as well, and that they have been handled in accordance with the regulations. During the approval process, the committee not only reviews the risk measurement but also market topics, legal admissibility, supervisory stipulations and general ques-tions about carrying out business. The result of the approval process must be recorded in writing by the responsible or-ganisational units. New products /product variants must be submitted to the Managing Board of Raiffeisenlandesbank Oberösterreich for approval before the first transaction is completed – together with all necessary statements and opinions.

The Country Risk Committee is responsible for managing the country risk. Business transactions that result in a country risk/country exposure may only be carried out when the re-sulting country risk/country exposure is within the approved country risk and country exposure limit.

Risk report


The Group



The further development of the existing risk management system (identification, measurement, control) is the responsi-bility of the Risk Management business area in coordination with the Chief Risk Officer, the Managing Board and the em-ployees responsible for assessing operating risk.

Legally independent group units and their boards are respon-sible for the risk policy of their business unit and only enter into risks if they are in harmony with the established risk policy of Raiffeisenlandesbank Oberösterreich.

To assess the group risks, the Risk Management organisa-tional unit identifies and measures the risks in cooperation with the group members. Business-related manifestations in the risk measurement procedure are coordinated with the Risk Management organisational unit. A high degree of stan-dardisation has the purpose of ensuring a comparable con-solidation of the group risks.

Risk management for the subgroup Gesellschaft zur Förderung agrarischer Interessen in Oberösterreich GmbH is decentralised among the individual group companies. In addition to credit risk, the subgroup is confronted with pur-chasing and sales related price risks. These result from the global supply and demand situation in the commodities mar-kets and the industry-related intensity of competition.

Market risks

Market risks take the form of changes in interest rates, spreads, currency, volatility and exchange rates relating to securities, interest rates and foreign exchange items.

The basis for all business is a balanced risk/reward ratio.

The strict division of labour between front, middle and back office and risk controlling ensures that risks can be described comprehensively, transparently and objectively to the full Managing Board, the Supervisory Board and supervisory authorities.

New products and markets are evaluated in an approval pro-cess and then authorised by the Managing Board.

The trades and the market price risk are limited by an exten-sive limit system. All trading positions are valued every day at market prices.

For risk management purposes, the securities in the trading book are handled separately; they are included in the report on market risk.

The market risks are measured every day with the value-at-risk index for the trading and banking books. This indicates a possible loss which, with 99% probability, will not be ex-ceeded during a one-month holding period.

In addition to value at risk, stop-loss and scenario analyses are used to limit risk.

The market risk is calculated in Front Arena/Risk Cube. The weighted historical simulation is used as the value-at-risk model.

The quality of the Front Arena/Risk Cube programme used or of the methods for historical simulation used there is reviewed daily using back testing. Both the mark-to-market results ac-tually obtained (financial profit/loss) as well as the hypothet-ical results (portfolio is kept constant one day; no impact on exogenous factors) are compared with the risks calculated and tested for significance.

Market risks are managed using a value-at-risk based limit system. All market risk activities are assigned a risk limit which is included in full in the risk-bearing capacity analysis.

The other fully consolidated group companies minimise their market risks through maturity-matched funding via Raiff-eisenlandesbank Oberösterreich.

The following table shows the value at risk figures for the Raiffeisenlandesbank Oberösterreich Group as at 31 Dec. 2018 and 31 Dec. 2017 (confidence level 99.0%, holding pe-riod one month).

31 Dec. 2018

IN EUR '000

31 Dec. 2017 IN EUR '000

Total 57,956 69,727

Interest 38,395 56,382

Spread 26,585 26,275

Currency 8 19

Shares 2,092 897

Volatility 2,586 2,335

The total value at risk as at 31 Dec. 2018 fell by EUR 11.8 mil-lion compared with 31 Dec. 2017 to EUR 58.0 million. In addition, stress tests are conducted to take account of risks in the event of extreme market movements. The cri-sis scenarios include the simulation of large fluctuations in the risk factors and are designed to highlight potential losses which are not covered by the value at risk model. The stress scenarios comprise both the extreme market fluctuations which have actually occurred in the past and also a series of

IFRS consolidated financial statements | Disclosure | Risk report



standardised shock scenarios involving interest rates, credit spreads, share prices, currency exchange rates and volatility.

A stress test with a +/-200 basis point interest rate shift is carried out for the trading and banking book.

The following table shows the results of the stress test as at 31 Dec. 2018 and 31 Dec. 2017 respectively:

31.12.2018 31.12.2017

IN EUR '000 +200 BP –200 BP +200 BP –200 BP

EUR –299,059 183,127 –309,755 226,329

USD –1,684 –719 –3,088 1,939

GBP –270 285 –577 603

CHF 746 –726 –158 186

JPY 1,692 –1,734 48 72

CZK –11,516 13,176 –11,266 12,986

Other currencies –57 66 478 –499

The stress test shows the change in present value when the yield curve is shifted in parallel by one and two percentage points respectively.

Interest rate risk management

Interest rate risk management at Raiffeisenlandesbank Oberösterreich is carried out on the basis of management strategies agreed with the Managing Board as a whole and financial targets. The interest rate projections and the respec-tive concerted positioning are continuously presented within the framework of the Asset Liability Committee. At the con-solidated level, the aim is to achieve a fixed-interest surplus in order to capture maturity transformation outcomes. Interest rate risk is managed primarily through basic business trans-actions (loans, issues) or their hedging. For asset items in proprietary fond holdings, a “balance sheet review” is carried out; the bonds thus enter into the hedging strategies of the consolidated banking book.

Basic business transactions can be classified as fair value option in order to reduce the balance sheet fair value risk of the overall position. For this purpose, however, a partial or full hedging transaction must exist for this underlying transaction. It is also possible to link several basic businesses with one hedging transaction if the business content is almost iden-tical. An explicit increase in the interest rate risk of the FVPL position by including a transaction in the fair value option is avoided. The fair value option is used primarily for transac-tions on the liabilities side of the balance sheet, usually for retail issues, time deposits and transactions with options re-quired to be separated.

Credit risk

The credit risk constitutes the risk to the bank that a loss will occur as a result of the non-fulfilment of the contractual obligations of customers or contractual partners. Credit risk is mainly generated by the loans and advances to customers and banks and from securities from the banking book.

A credit value adjustment (CVA) and debt value adjustment (DVA) were determined as part of the inclusion of credit risk in the mark-to-model measurement of derivatives. The main factors used in determining the CVA and DVA were the term to maturity, counter-party default risk and collateralisation.

A report on the credit risk is given to the Managing Board once each quarter, or as needed. For the purposes of the group’s risk reporting, it takes into account all elements of credit risk related to loans and advances, such as individual debtor default risk, country and sector risks.

The industry distribution of the credit portfolio is checked for concentration risks four times a year. The maximum exposure of individual borrowers or groups of associated customers is only permitted up to the upper limit for large-volume invest-ments. The prerequisites are business policy and strategic interests of the Raiffeisenlandesbank Oberösterreich Group along with the an investment grade credit rating for the bor-rower. The credit volume in foreign currency is also limited.

The principles of the customers’ credit ratings are incorpo-rated in the “Rating Standards” and “Collateral Standards” manuals. These regulations provide a compact representa-tion of the standards valid for Raiffeisenlandesbank Oberös-terreich. They are based on international standards (Basel), regulations from the European Union (CRR), the EBA Guide-lines, national statutes and laws (Austrian Banking Act, Credit Institutions and Risk Management Regulation) or on supervi-sory recommendations (FMA minimum standards for lending, FMA series of guidelines on credit risk).

In order to measure the credit risk, the bank carries out its own internal ratings and classifies financing transactions into credit rating and risk classes. The risk class of a borrower accordingly comprises two dimensions – recording and as-sessing their financial situation and measuring the collateral provided.

Both hard and soft facts are employed as creditworthiness criteria. In corporate customer business, soft facts are also defined systematically during discussions with the company and then adjudged.

Providing loan collateral for loans is a crucial strategy aimed at reducing any potential credit risk. Recognised collateral is set out in the collateralisation standard with the associated valuation guidelines. The value of the collateral is calculated using uniform methods which include pre-defined deduc-tions, expert opinions and standardised calculation formulas.


The Group



The collateral is mapped and maintained in a central collateral system.

Rating systems are differentiated according to the cus-tomer segments Corporates, Retail Customers, Projects, Banks, States, Federal States/Municipalities, Insurance Companies and Funds. A scoring system is in use for the automated classification of small volume retail business with non-self-employed private customers, freelancers and small entrepreneurs.

This credit rating system is constantly being validated and developed. A validation report is compiled for this every quar-ter with a summary of the validation results. Qualitative and quantitative elements are used for validation. The qualitative validation focuses on reviewing and improving data quality and an analysis of compliance with the rating standards. The quantitative validation involves an examination of the accu-racy and the stability of the rating models.

The credit portfolio of Raiffeisenlandesbank Oberösterre-ich is reviewed regularly using automated parameters which highlight any negative economic developments for individual customers. The customers identified as having a significant risk content are assigned to the customer portfolio “intensive support” in the wake of a four-eyes review and subsequently subject to a follow-up review at least every six months.

Limitations on the industries are implemented at Raiffeisen-landesbank Oberösterreich using nominal limits based on the bank’s exposure. The ICAAP credit risk for Raiffeisenlandes-bank Oberösterreich as well as economic industry analyses form the basis for determining the nominal limits. The current limit utilisation can be queried by the consultant in the system. An assessment of the limited industries is also compiled and sent out monthly to the members of the Managing Board re-sponsible for the markets and risk.

The CVA risk represents the risk of a negative change in the fair value of OTC derivatives with an increase in the counter-party risk, and is accounted for by adjusting the fair value (credit-valuation adjustment) of a portfolio of transactions with a counterparty.

In the “Risk Report on counterparty risk” there is a structured presentation of Raiffeisenlandesbank Oberösterreich’s coun-terparty risk for the purposes of internal risk control in the sense of the minimum standards for credit business and for general international standards (“ICAAP”). The structure and content of the Risk Report at Raiffeisenlandesbank Oberös-terreich is also the standard for risk reports by the subsid-iaries. The Risk Report is sent to the entire Managing Board each quarter.

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

Individual rating classes are defined and delineated by means of calculations which assess statistical default probabilities. The descriptions in words are simply for illustrative purposes.

Credit value at risk

The overall risk of all assets exhibiting counter-party default risk is assessed on a monthly basis. Risk may arise due to credit default, deterioration in creditworthiness or a reduc-tion in the intrinsic value of collateral, and it is communicated through the key figures expected loss and unexpected loss.

The expected loss represents the most probable value de-crease of a given portfolio. This specified decrease in value should be expected each year. This loss is covered by the calculated risk costs.

The unexpected loss represents a portfolio’s possible loss beyond the expected loss. Thus, it communicates possible negative deviation from the expected loss. The unexpected loss is covered by the equity capital and is the maximum loss that can possibly arise within a single year, and which – with a certain amount of probability – will not be exceeded. Raiff-eisenlandesbank Oberösterreich calculates unexpected loss at probabilities of 95% and 99.9%.

Unexpected loss is calculated in a portfolio model that also takes into account concentration risk. The portfolio value dis-tribution is prepared on the basis of transition probabilities and correlations using a Monte Carlo simulation. The country

10-point scale

Sub- classes Text

0.5 0.5 risk-free

1.0 1.0 outstanding creditworthiness

1.5 1.5 very good creditworthiness

2.02 +

good creditworthiness2.0

2.52 –

average creditworthiness2.5

3.03 +

satisfactory creditworthiness3.0

3.53 – mediocre creditworthiness

3.5 poor creditworthiness

4.04 +

very poor creditworthiness 4.0

4.5 4.5 in danger of default

5.0

5.0

default criteria reached5.1

5.2




Overall structure by balance sheet item

Maximum credit risk exposure

Collateral values

Collateral for overall structure

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

As at 31 Dec. 2018, 60.8% (previous year: 52.8%) of the total financial collateral value consists of collateral on immovable assets (e.g. mortgages, land register rankings).

IN EUR '000 31.12.2018 31.12.2017

Loans and advances to banks 64,052 67,747


Trading assets 384,820 353,701

Financial assets* 183,629 855,744

Total 12,546,824 12,136,260

Financial guarantees* 195,473 342,292

Loan approvals 726,706 1,159,809

Total 922,179 1,502,101

Total collateral values 13,469,003 13,638,361

IN EUR '000 31.12.2018 31.12.2017

Cash and cash equivalents (credit balance at central banks) 36,272 31,749

Loans and advances to banks 8,255,104 8,352,262


Trading assets 1,749,390 1,885,912

Financial assets 4,915,141 5,015,148

Total 37,330,755 35,637,253

Financial guarantees 2,501,670 2,350,647

Loan approvals 6,126,250 5,898,288

Total 8,627,920 8,248,935

Total maximum credit risk exposure 45,958,675 43,886,188

sector model (= asset value model) is applied. The asset value model derives the correlations between the counterparties on the basis of the MSCI Sector Indexes. The unexpected loss per quantile is read from the portfolio value distribution.

Credit risk for customers with the rating w5.2 is determined using the ÖRE model. The risks or opportunities from defaults

or changes in credit quality for customers with a rating better than w5.2 are determined within the portfolio model using a mark-to-market method. The market data required for the portfolio value distribution (interest rates, credit spreads and sector indices) are updated every month.

* As at December 2018, the Raiffeisenlandesbank Oberösterreich Group no longer applies an internal financial collateral approach for covered bonds and completion guarantees.


The Group



Industry structure/Concentration risk

Maximum credit risk exposure by industry groups

In the CRR scope of finance holding (Raiffeisenbankengruppe OÖ Verbund eGen) there were 21 major loans* (without loans to Group members) as at 31 Dec. 2018 (31 Dec. 2017: 22). Of these, 10 (31 Dec. 2017: 11) account for large exposures in the commercial sector, 2 (31 Dec. 2017: 2) for large exposures in the banking sector and 9 (31 Dec. 2017: 9) for large exposures to public authorities.

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

Geographic distribution of the loans and advances to customers

IN EUR '000 31.12.2018 31.12.2017

Credit institutions in Austria 8,637,725 9,198,311

Public sector and non-profit organisations 3,902,631 3,961,507

Commercial and other real estate projects 3,223,676 2,869,247

Real estate project operators 3,092,714 2,899,912

Construction and ancillary building trade 2,766,832 2,555,761

Credit institutions in the EU, except Austria 2,156,847 2,227,785

Mechanical engineering and plant construction 2,145,885 1,760,308

Private households 1,998,512 2,025,831

Credit institutions other 1,425,162 1,203,132

Residential building management 1,386,283 1,383,497

Motor vehicles 1,380,646 1,199,887

Transport and warehousing 1,263,583 1,181,796

Metal production and processing 1,261,248 1,175,231

Consumer goods 1,058,653 1,076,473

Tourism, accommodation, gastronomy 864,784 773,854

Electronic/electrical 858,115 827,092

Foodstuffs 770,036 653,676

Other economic services 755,366 609,973

Plastics, chemical products 734,024 643,735

Agriculture and forestry 634,180 576,116

Energy supply 614,731 606,359

Freelance/technical services 598,538 413,793

Information and communication 543,186 398,337

Financial and insurance services 525,010 545,849

Subtotal 42,598,367 40,767,462

Other sectors 3,360,308 3,118,726

Total 45,958,675 43,886,188

Austria: 62.5% (previous year: 63.7%)

Germany: 22.8% (previous year: 21.4%)

Czech Republic: 4.6% (previous year: 4.7%)

Romania: 1.6% (previous year: 1.6%)

Poland: 1.5% (previous year: 1.4%)

Slovakia: 1.5% (previous year: 1.4%)

Croatia: 1.2% (previous year: 1.7%)

Hungary: 1.0% (previous year: 1.3%)

Others: 3.3% (previous year: 2.8%)




Disclosures on government bonds from selected European countries

As at 31 Dec. 2018, for the listed government bonds in the category “measured at fair value through other comprehensive income” (FVOCI) there was a positive OCI reserve of approximately EUR 21.5 million. In addition, there are no credit default swaps (CDS) in connection with these countries.

There is a positive AfS reserve of about EUR 4.3 million as of 31 December 2017 for the government bonds listed in the “Financial assets available for sale” category. The fair values of the government bonds listed in the category “Financial assets held to maturity” was about EUR 0.8 million above the carrying amounts as at 31 Dec. 2017.

Carrying amounts IN EUR MILLIONS

Measured at fair value through

other comprehensive income (FVOCI)

Measured at fair value through

profit or loss (FVTPL)

Designated at fair value through profit or loss (FVO) Total

12/2018 12/2018 12/2018 12/2018

Ireland 124.0 0 0 124.0

Italy 120.1 0 0 120.1

Portugal 60.9 0 0 60.9

Spain 47.6 0 2.7 50.3

Total 352.6 0 2.7 355.3

Carrying amounts IN EUR MILLIONS

Designated financial instruments

Financial assets available

for sale (AfS)Financial assets

“held-to-maturity” Total

12/2017 12/2017 12/2017 12/2017

Ireland 0 105.4 0 105.4

Italy 84.4 0 0 84.4

Portugal 0 0 21.2 21.2

Spain 0 95.9 0 95.9

Total 84.4 201.3 21.2 306.9


The Group



Rating structure for credit risk exposure which is neither overdue nor impairedThe quality of the financial assets which are neither overdue nor impaired are depicted as follows on the basis of the internal rating classification:

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

Very low or low risk Normal risk Increased risk No rating

IN EUR '000 12/2018 12/2017 12/2018 12/2017 12/2018 12/2017 12/2018 12/2017

Cash and cash equivalents 36,272 31,749 0 0 0 0 0 0


8,022,629 8,176,380 230,985 174,065 0 0 1,490 1,817


4,845,282 4,609,851 13,934,162 12,478,142 2,315,376 2,237,976 2,137 5,855

Trading assets 1,456,766 1,659,610 291,569 222,338 1,055 3,964 0 0

Financial assets 4,643,375 4,658,080 255,518 345,472 15,450 10,761 798 835

Financial guarantees 1,011,760 1,091,534 1,297,358 1,052,218 153,381 163,328 3,696 6,546

Loan approvals 2,075,231 2,241,535 3,484,336 3,175,879 491,100 425,660 33,331 3,867

Total 22,091,315 22,468,739 19,493,928 17,448,114 2,976,362 2,841,689 41,452 18,920

Structure of the unimpaired overdue credit risk exposures and collateral for the unimpaired overdue credit risk exposures

The carrying amounts of overdue yet non-impaired assets relate exclusively to the balance sheet item Loans and advances to customers. They are shown in the following table including the corresponding collateral values:

31.12.2018 31.12.2017

IN EUR '000 overdue assetsCollateral for

overdue assets overdue assetsCollateral for

overdue assets

up to 30 days 718,156 519,934 460,716 314,649

31 to 60 days 176,665 151,558 106,505 85,978

61 to 90 days 22,807 19,628 14,301 12,738

over 90 days 13,679 11,611 63,450 59,157

Total 931,307 702,731 644,972 472,522

Collateral values include deductions, are reviewed promptly and correspond to a conservative estimate of the proceeds that could be expected over the long term from recovery of the collateral.

As at 31 Dec. 2018, 23.4% (31 Dec. 2017: 22.6%) of the total collateral values for non-impaired overdue credit risk exposures consisted of collateral on immovable assets (e.g. mortgages, land register rankings).

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




Appropriated collateral

Collateral taken into possession by Raiffeisenlandesbank Oberösterreich Group is sold in an orderly and proper man-ner, and the proceeds from the sale are applied to the re-payment of the loan or advance concerned. Appropriated collateral is not generally used in the bank's own operations.

The principal objective is to dispose of these properties within an appropriate time-frame. In cases where the disposal of a property proves difficult, alternative uses will be considered, especially letting the property. The carrying amount of these assets amounted to EUR 1,919 thousand as of 31 Dec. 2018 (previous year: EUR 910 thousand) and is broken down as follows:

In 2018, the Raiffeisenlandesbank Oberösterreich Group took possession of collateral in the amount of EUR 1,453 thousand.

31.12.2018 31.12.2017

Carrying amount IN EUR '000 Number

Carrying amount IN EUR '000 Number

Undeveloped land 76 1 74 1

Mixed use buildings* 390 1 836 1

residential property 1,453 1 – –

Total of collateral taken into possession 1,919 3 910 2

Collateral values include deductions, are reviewed promptly and correspond to a conservative estimate of the proceeds that could be expected over the long term from recovery of the collateral.

As at 31 Dec. 2018, 50.2% (31 Dec. 2017: 52.3%) of the total collateral values for impaired credit risk exposures consisted of collateral on immovable assets (e.g. mortgages, land register rankings).

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

Structure of impaired credit risk exposure

Carrying amounts of impaired financial assets:

not impaired or up to 30 days 31 to 60 days 61 to 90 days over 90 days

IN EUR '000 31.12.2018 31.12.2017 31.12.2018 31.12.2017 31.12.2018 31.12.2017 31.12.2018 31.12.2017

Loans and advances to banks 0 0 0 0 0 0 0 0Loans and advances to customers 181,686 193,985 11,977 6,720 9,651 6,029 143,270 168,652

Financial assets 0 0 0 0 0 0 0 0

Financial guarantees 35,475 37,021 0 0 0 0 0 0

Loan approvals 42,252 50,949 0 0 0 0 0 398

Total 259,413 281,955 11,977 6,720 9,651 6,029 143,270 169,050

not impaired or up to 30 days 31 to 60 days 61 to 90 days over 90 days

IN EUR '000 31.12.2018 31.12.2017 31.12.2018 31.12.2017 31.12.2018 31.12.2017 31.12.2018 31.12.2017

Loans and advances to banks 0 0 0 0 0 0 0 0Loans and advances to customers 94,954 89,402 10,916 6,100 8,979 4,302 99,276 121,908

Financial assets 0 0 0 0 0 0 0 0

Financial guarantees 5,189 8,723 0 0 0 0 0 0

Loan approvals 6,400 4,099 0 0 0 0 0 0

Total 106,543 102,224 10,916 6,100 8,979 4,302 99,276 121,908

Collateral for impaired credit risk exposure

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

* Partial sale of the property in question in 2018


The Group




Loans and advances to customers Financial guarantees Credit risks

IN EUR '000 31.12.2018 31.12.2017 31.12.2018 31.12.2017 31.12.2018 31.12.2017 31.12.2018 31.12.2017

Gross value 292 292 589,417 809,549 59,763 49,101 65,019 66,935

Loan loss allowances –292 –292 –242,833 –434,162 –24,288 –12,080 –22,767 –15,588

of this: Loan loss allowances FX financing 0 0 –17,376 –29,847 0 0 –56 0

Carrying amount 0 0 346,584 375,387 35,475 37,021 42,252 51,347

Loan loss allowances for impaired credit risk exposure

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

* Amounts refer to credit risk exposures in Stage 3 incl. POCI

Loan loss allowances in Stage 3 are recognised primarily if a debtor is experiencing economic or financial difficulties or fails to make interest payments or repayments of principal or if other circumstances arise that indicate a probability of de-fault based on regulatory standards.

The default definition of the Raiffeisenlandesbank Oberöster-reich Group includes insolvencies, imminent insolvency, legal actions, deferred payments, restructuring, substantial credit risk adjustments, waivers of receivables, direct impairment losses, creditworthiness-related interest exemptions, matur-ities with expected economic loss and moratoria/payment stoppages/ withdrawal of licenses at banks as well as 90-day overdues (default in accordance with Article 178 CRR). Cus-tomers with a default indicator are assigned to creditworthi-ness classes 5.0, 5.1 and 5.2. The default definition is also the basis for calculating the non-performing loan ratio (NPL ratio).

In terms of asset quality, the Raiffeisenlandesbank Oberös-terreich Group had the following key figures for loans and ad-vances to customers: The NPL ratio as at 31 Dec. 2018 was 2.60% (31 Dec. 2017: 4.42%). Coverage Ratio I amounted as at 31 Dec. 2018 to 41.19% (31 Dec. 2017: 47.26%), Coverage Ratio II was at 77.52% (31 Dec. 2017: 80.94%).

Due to the changeover to a net book value under IFRS 9, the so-called POCI financial instruments saw a decline in the loan loss allowance booked indirectly under IAS 39 in the amount of around EUR 123.1 million. Mainly as a result of this, the NPL ratio and coverage ratios were lower than in the previous year.




IN EUR '000

Rating class

31.12.2018

Stage 1 Stage 2 Stage 3 POCI Total

Gross book values per stage according to w-note

0.5 3,703,989 25 0 0 3,704,014

1.0 9,085,184 25,889 0 0 9,111,073

1.5 6,752,478 255,478 0 0 7,007,956

2.0 10,575,497 369,114 0 0 10,944,611

2.5 4,272,264 178,869 0 0 4,451,133

3.0 4,904,869 279,541 0 3,786 5,188,196

3.5 1,514,744 408,729 0 0 1,923,473

4.0 115,581 175,522 0 992 292,095

4.5 15,229 59,771 0 525 75,525

5.0 0 0 646,618 67,871 714,489

No rating 35,965 5,058 0 0 41,023

Total 40,975,800 1,757,996 646,618 73,174 43,453,588

Loan loss allowances per stage according to w-note

0.5 –84 0 0 0 –84

1.0 –627 –6 0 0 –633

1.5 –1,619 –16,470 0 0 –18,089

2.0 –6,414 –6,135 0 0 –12,549

2.5 –5,285 –475 0 0 –5,760

3.0 –12,951 –2,638 0 52 –15,537

3.5 –10,407 –7,858 0 0 –18,265

4.0 –2,941 –4,913 0 –54 –7,908

4.5 –412 –2,228 0 67 –2,573

5.0 0 0 –288,892 –1,286 –290,178

No rating –46 –1 0 0 –47

Total –40,786 –40,724 –288,892 –1,221 –371,623

Total carrying amount 40,935,014 1,717,272 357,726 71,953 43,081,965

Value adjustment stages pursuant to IFRS 9 by rating classes

The gross carrying amounts and the corresponding final balances of loan loss allowances for loans and advances to banks, loans and advances to customers, financial assets, financial guarantees and credit risks are broken down per stage according to the 10-level rating scale as follows:


The Group



Forbearance

The financial assets (carrying amounts) for which forbearance-relevant measures existed on the balance sheet date have the following structure:

Performing IN EUR '000 31.12.2017 Absorption 2018 Disposal 2018 31.12.2018

Loans and advances to customers 355,305 67,349 –261,754 160,900

Loan approvals 38,092 1,815 –21,962 17,945

Total 393,397 69,164 –283,716 178,845

Loan loss allowances 0 0 0 0

Non-performing incl. POCI IN EUR THOUSAND 31.12.2017 Absorption 2018 Disposal 2018 31.12.2018


Loan approvals 10,887 13,705 –4,415 20,177

Total 288,529 57,578 –136,798 209,309

Loan loss allowances 295,936 49,308 –222,834 122,410

Performing IN EUR '000 31.12.2016 Absorption 2017 Disposal 2017 31.12.2017


Loan approvals 27,869 27,566 –17,343 38,092

Total 408,858 128,361 –143,822 393,397

Loan loss allowances 0 0 0 0

Non-performing IN EUR '000 31.12.2016 Absorption 2017 Disposal 2017 31.12.2017


Loan approvals 21,042 6,992 –17,147 10,887

Total 346,407 90,662 –148,540 288,529

Loan loss allowances 442,175 114,073 –260,312 295,936

“Forbearance” means measures which are characterised by the fact that conditions of the loan agreement are changed in favour of the borrower (e.g. deferred payments) or loans are refinanced because the borrower can no longer fulfil the existing conditions due to financial difficulties. A borrower’s financial hardship and alterations to the credit agreement do not necessarily result in losses for the lending institution in

every case. If forbearance measures lead to losses for the bank, corresponding value adjustments are made in accor-dance with IFRS 9 for Stage 3.

Other changes to credit agreements that are not related to the borrower’s experience of financial hardship are to be qualified as market-induced measures.


The liquidity risk encompasses the risk of not being able to fulfil one’s payment obligations by the due date or, in the case of a liquidity shortage, of not being able to acquire enough liquidity at the terms expected (structural liquidity risk).

Ensuring that there is sufficient liquidity takes top priority at Raiffeisenlandesbank Oberösterreich as the central insti-tution for the Raiffeisen Banking Group Upper Austria. Li-quidity has to be safeguarded at all times. The refinancing strategy therefore focuses on achieving the best possible

diversification – both in terms of products (savings and de-mand deposits, senior funding through bonds and promis-sory note loans, covered bonds, interbank refinancing and equity instruments) and in terms of diversification of distribu-tion channels and/or customers. This includes sales of the Bank’s own issues directly to retail customers through Raiff-eisenlandesbank Oberösterreich and the Raiffeisen banks in Upper Austria together with institutional funding through placements with institutional investors, either directly through the investment sales activities of Raiffeisenlandesbank

Liquidity risk



Oberösterreich or through international intermediary banks. Further funding is available in the form of direct primary fund-ing from deposits by Raiffeisenlandesbank Oberösterreich’s retail and business customers and indirect primary funding from customer deposits at Upper Austrian Raiffeisen banks invested with Raiffeisenlandesbank Oberösterreich. Develop-ment banks are also used as direct sources of funding for lending.

Liquidity and liquidity risk at Raiffeisenlandesbank Oberöster-reich is managed in a control loop between the Asset Liability Management, Market Risk Control and Raiffeisen Bank Busi-ness Administration departments. The Asset Liability Man-agement department is responsible for liquidity control with this, while the Market Risk Control department is responsi-ble for liquidity risk management. The Asset/Liability Man-agement Committee represents a crucial element in overall bank control as a cross-divisional body with responsibility for tasks related to asset/liability management and liquidity management.

The Upper Austrian Raiffeisen banks are integrated into the liquidity management system via the liquidity management agreement with the Aid association of the Raiffeisen Banking Group Upper Austria with the participation of Raiffeisenland-esbank Oberösterreich.

The objective of this agreement is to secure the supply of liquidity in Upper Austria. Every Raiffeisen bank plans and manages its own liquidity, the Raiffeisenlandesbank plants and manages the liquidity for the sector as the central in-stitution for the Raiffeisen Banking Group Upper Austria. Communication with the Raiffeisen banks takes place via the Raiffeisen Bank Business Administration department. A liquidity committee is also set up which is made up of rep-resentatives from Raiffeisenlandesbank Oberösterreich, the Raiffeisen banks and the association of Raiffeisen banks, and which deals with current topics and/or develops countermea-sures when the liquidity position is under pressure.

In Raiffeisenlandesbank Oberösterreich, in addition to the uniform sector liquidity emergency plan defined for the Aus-trian Raiffeisen Banking Group, Raiffeisen Banking Group Upper Austria also has its own liquidity emergency plan, which governs processes, responsibilities and actions in the event of a liquidity crisis.

Liquidity management and liquidity risk are managed under a standardised model which, besides normal circumstances, also encompasses stress scenarios arising from reputational risk, systemic risk, a non-performing loan or a crisis involv-ing several risks. Whereas the normal scenario takes into account liquidity inflows and outflows based on the current market conditions (going concern), the crisis scenarios are based on an assumption of a deterioration in cash flows in certain projected market situations. In the reputational cri-sis scenario, the deterioration in conditions is triggered by damage to the Raiffeisen image (for example, as a result of negative reporting), but the systemic crisis scenario assumes a general crisis affecting the whole of the banking industry.

The scenario problem/combined crisis is defined as a com-bination of reputation and system crisis.

All the scenarios involve the calculation of the anticipated inflows and outflows to determine resulting liquidity gaps, which are then compared against a liquidity buffer compris-ing liquid assets. Based on this comparison, the following figures are calculated and limited.

ı The operational liquidity maturity transformation ratio (ab-breviated in German to “O-LFT”) for operational liquidity for up to 18 months is formed from the ratios of assets to liabilities accumulated from the beginning over the matu-rity band. Limiting the operational liquidity maturity trans-formation ratio (O-LFT) ensures that the risk appetite, i.e. the liquidity outflows in relation to the liquidity inflows tak-ing into account the liquidity buffer, does not exceed a certain level.

ı For the structural liquidity maturity transformation (“S-LFT”), the key figure is formed by taking the ratios of assets to liabilities calculated by going backwards from the end of the maturity band. The limitation of the S-LFT ensures that risk appetite in connection with longer matur-ities (taking the form of insufficiently long funding arrange-ments) is limited.

ı The GBS (German abbreviation for the gap between the ratio total and total assets) ratio is formed by taking the ratios of the net positions per maturity band to total as-sets and shows any excessive funding risks. Therefore, this also limits risk appetite.

The following are also the key pillars for managing liquidity and liquidity risk at Raiffeisenlandesbank Oberösterreich:

ı Operational liquidity is also measured, in addition to the aforementioned O-LFT, against the Liquidity Coverage Ratio (LCR) as well as a survival period.

ı The intraday liquidity risk is also monitored and restricted using limitation.

ı The structural liquidity is also measured against the net stable funding ration (NSFR).

ı Funding risk gauges the loss of assets related to increased liquidity costs associated with closing liquidity gaps as a result of a price increase for funding, which will not – with 99.9% certainty – be exceeded within 250 trading days.

ı A quantitative liquidity emergency plan is prepared on a weekly basis.

The LCR as at 31 Dec. 2018 is 128% at Group level and thus clearly exceeds the legally required 100%. This demon-strates the good liquidity situation of the Raiffeisenlandes-bank Oberösterreich Group.

Raiffeisenlandesbank Oberösterreich has been rated Baa1 by Moody's with regard to its long-term issuer rating since 3 Nov. 2017 (confirmed in February 2019).


The Group



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

31 Dec. 2018 IN EUR '000

payment on demand/

without a termup to

3 months3 months to 1 year

1 to 5 years

More than 5 years Total

Amounts owed to banks 4,784,384 1,004,930 842,663 3,991,911 2,429,528 13,053,416

Amounts owed to customers 7,206,240 664,448 1,427,782 2,062,484 1,526,945 12,887,899

Liabilities evidenced by certificates 56,500 169,503 621,594 4,148,793 4,418,467 9,414,857

Trading liabilities 2 105,388 180,395 1,043,211 2,271,777 3,600,773

Subordinated capital 1 7,943 42,148 489,661 461,536 1,001,289

Total 12,047,127 1,952,212 3,114,582 11,736,060 11,108,253 39,958,234

Contingent liabilities 2,501,670 0 0 0 0 2,501,670

Loan approvals 6,126,250 0 0 0 0 6,126,250

31 Dec. 2017 IN EUR '000

payment on demand/

without a termup to


1 to 5 years

More than 5 years Total



Liabilities evidenced by certificates 44,500 290,332 1,032,190 3,206,430 3,993,332 8,566,784

Trading liabilities 1 123,836 188,038 1,142,054 2,427,490 3,881,419

Subordinated capital 0 184,029 178,011 348,897 553,876 1,264,813

Total 11,012,700 2,598,135 3,928,802 10,051,467 10,794,230 38,385,334

Contingent liabilities 2,350,647 0 0 0 0 2,350,647

Loan approvals 5,898,288 0 0 0 0 5,898,288

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

2,500

2,000

1,500

1,000

500

0

–500

–1,000

–1,500

–2,000

up to 1 year 1 to 3 years 3 to 5 years 5 to 7 years 7 to 10 years over 10 years

Exc

ess

asse

ts

(long

pos

ition

)E

xces

s lia

bilit

ies

(sho

rt p

ositi

on)

31.12.2018 31.12.2017

* The positions without fixed capital commitment were analysed for a more realistic presentation in accordance with historical developments and are presented in model form as at 31 Dec. 2018; the figures as at 31 Dec. 2017 are also presented using this method.

Raiffeisenlandesbank Oberösterreich liquidity gaps in EUR millions*




Equity investment risk

Equity investment risk covers potential losses caused by dividends not paid, adjustments, disposal losses, regulatory funding obligations, strategic financial restructuring respon-sibilities, and the reduction of hidden reserves.

In the course of acquiring a new investment, the assessment made by investment risk management is supported as much as possible by due diligence performed by external experts. In addition, the organisational unit Financing Management Projects & Structured Financing provides a risk evaluation statement regarding the proposed acquisition.

The operative business activities of the investments is closely monitored by sending members of the board at Raiffeisen-landesbank Oberösterreich to Managing Boards, Supervi-sory Boards, and other committees.

Periodic controlling of investments includes the analysis and testing of financial statement and planning figures, as well as the evaluation of strategic positioning in the form of SWOT analyses (Strengths/Weaknesses/Opportunities/Threats).

The Raiffeisenlandesbank Oberösterreich Group has a broadly diversified investment portfolio. A value-at-risk model

is used to assess the risk potential from equity investments, which, on the basis of external valuations (generally on the basis of discounted cash flow-based expert valuations), cal-culates statistically significant iterations to these expert valu-ations and then compares the calculated value-at-risk figures (confidence interval: 95% or 99.9%) with the expert valuation, hereby determining the corresponding risk potential in case of a problem or liquidation for each individual investment.

Historical fluctuation intensities observed in the market with regards to cash flow volatilities (of the underlying sector) and discount rates are applied to the input parameters used in the expert valuation procedure; and statistically significant iterations are thus calculated. The procedure is analogous for pro rata market share values of stock market listed invest-ments. The risk potential of the entire investment portfolio can thus be determined by aggregating the risk potential of all investments.

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

Very low or low risk Normal risk Increased risk No rating

IN EUR '000 12/2018 12/2017 12/2018 12/2017 12/2018 12/2017 12/2018 12/2017

Banks 1,389,770 1,354,479 0 0 3,171 2,838 404 808

Non-banks 1,077,786 1,147,424 306,681 360,995 78,348 35,212 20 77

Total 2,467,556 2,501,903 306,681 360,995 81,519 38,050 424 885

The following table presents the carrying amounts of equity investments held by the Raiffeisenlandesbank Oberösterreich as at 31 Dec. 2018 and 31 Dec. 2017, organised by risk classes: The quality of the financial assets – based on the internal rating – is presented below:

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


The Group



Macroeconomic risk

Macroeconomic risk measures the effects of a slight or se-vere recession on the risk situation at Raiffeisenlandesbank Oberösterreich. To this end, a statistics-based macroeco-nomic model analyses the correlation between macroeco-nomic factors (GDP, real wages index) and the probability of default. The simulated economic downturn in the model is used to determine the additional risk based on the CVaR figures.

Operational risk

Raiffeisenlandesbank Oberösterreich defines operational risk as the risk of losses caused by the inadequacy or failure of internal processes, people and systems – including ICT (in-formation and communications technology) risks – or by ex-ternal events, and includes legal risks. Raiffeisenlandesbank Oberösterreich uses the basic indicator approach to quantify operational risk as part of its overall bank risk management.

Raiffeisenlandesbank Oberösterreich uses both organisa-tional measures and IT systems to limit this type of risk as far as possible. A high degree of security is attained by means of limit systems, competence regulations, a risk-adequate in-ternal control system, a comprehensive security manual as a behaviour code and directive, as well as scheduled and unscheduled audits by Internal Auditing. The operative man-agement of this type of risk involves risk discussions and analyses with managers (early warning system) and the sys-tematic recording of errors in a database for analysis (ex-post analysis).

Other risk

Raiffeisenlandesbank Oberösterreich takes into account other, non-quantifiable risks in terms of risk-bearing capacity by means of a risk buffer. These include: strategic risk, rep-utation risk, equity risk, systemic risk, income and business risk, risk of excessive indebtedness, remaining risk from tech-niques used to reduce credit risks, risks from money launder-ing and the financing of terrorism.

Risk-bearing capacity analysis

The risk-bearing capacity analysis compares the aggregated overall bank risk of the group, organised by credit risks, mar-ket risks, equity risks, refinancing risks (as a measurement parameter for liquidity risk), macroeconomic risks, operational risks and other risks (= strategic risks, reputation risks, equity capital risks and profit risks) to risk coverage. This compari-son of the group risks with the available coverage depicts the risk-bearing capacity.

With this comparison, the Raiffeisenlandesbank Oberöster-reich Group is able to guarantee that it can cover extremely unexpected losses from its own funds without major negative effects. Economic capital is the measurement of risk used to calculate extremely unexpected losses. It is defined as the minimum amount of capital necessary to cover unexpected losses with a probability of 99.9 % within one year.

The following table shows the economic capital for the Raiff-eisenlandesbank Oberösterreich Group as at 31 Dec. 2018, compared to the previous year (confidence level 99.9%).


Corporates Retail & Private


Equity investments


IN EUR M 12/2018 12/2017 12/2018 12/2017 12/2018 12/2017 12/2018 12/2017 12/2018 12/2017 12/2018 12/2017

Market risk1 21.3 28.4 460.4 461.9 38.0 38.1 519.7 528.4

Credit risk2 938.2 923.3 87.7 79.8 159.2 277.6 137.7 152.7 102.4 96.7 1,425.2 1,530.1

Equity investment risk 52.5 29.6 910.6 1,101.6 963.1 1,131.2

Refinancing risk 0.0 0.0 0.0 0.0

Operational risk3 27.0 22.6 7.9 6.5 15.6 14.1 44.2 47.9 3.3 2.7 98.1 93.8

Macroeconomic risks 201.9 198.3 13.8 11.9 3.3 6.3 20.3 21.2 16.8 9.0 256.1 246.7

Others risks/buffers 5.2 4.6 1.5 1.3 3.0 2.9 8.6 9.7 0.6 0.5 19.0 19.0

Total 1,246.1 1,206.8 111.0 99.5 641.5 762.8 1,159.4 1,371.2 123.2 108.9 3,281.2 3,549.2

RWA 15,071.9 13,960.2 1,354.1 1,345.2 1,240.7 1,226.4 5,852.2 6,027.3 2,757.2 2,237.7 26,276.0 24,796.8

Details regarding risk capital

SegmentType

of risk

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

1 Market risks are incurred in the Financial Markets, Investments and Corporates segments. Reason: The SALZBURGER LANDES-HYPOTHEKENBANK AKTIEN-GESELLSCHAFT is included in its entirety in the Investments section of the IFRS statements. The spread risk from M-Bonds is allocated entirely to market risk. This is why market risk is also incurred to some extent in the Corporates segment.

2) Credit risks are also incurred in the Corporate Center because financing is also allocated to this segment in the IFRS statements.3) Operational risks and the risk buffer were distributed proportional to income.



Procedures and methods for supervisory monitoring and evaluation.

There is no requirement from the authority responsible to publish the result of the bank’s own procedure for evaluat-ing the suitability of the internal capital. Raiffeisenlandes-bank Oberösterreich significantly overachieves at all times the SREP ratio stipulated by the authority. The capital ratios applicable for 2019 (P2R and P2G) were also complied with by Raiffeisenlandesbank Oberösterreich as at 31 Dec. 2018.

Stress tests

Integrated stress tests covering all risk types are also carried out in addition to the isolated stress tests for the individual risk types. These consider the impact on profit and loss as well as on the capital resources, and also present the impact on the risk utilisation.

Impact on profit and loss

The resulting risk parameters are determined based on stressed macroeconomic conditions and an aggregated view of potential losses covering all types of risk is presented. The impact on the income statement is considered and the result-ing capital resources are ascertained for the end of the stress test period. The analysis is based on a stress test covering multiple periods, in which hypothetical market developments are simulated with a significant economic downturn. The risk parameters used include interest rates and exchange rates, as well as changes to the probabilities of default in the credit portfolio.

Impact on risk-bearing capacity

The objective is to analyse the risk-bearing capacity under stress conditions for all types of risk and the risk coverage. The stressed credit risk or equity investment risk is deter-mined by simulating deteriorations in the ratings of individual borrowers that are in an industry that is significant to Raiff-eisenlandesbank Oberösterreich. A negative trend for the interest rate curve or the credit spread is assumed in the Mar-ket Risk area. Three defined scenarios (problem, reputational risk and systemic crisis) are simulated with the refinancing risk resulting from this then defined. Default on the part of the biggest borrowers is also simulated with an illustration of the operational harm.

EBA/SSM SREP stress test

The impact on profit and loss and therefore on the capital ratios is also considered within the scope of the EBA or SSM-SREP stress test. The time frame is three years and is imple-mented in accordance with the methods stipulated by the authority.



The Raiffeisen Banking Group Austria (RBG Ö) is Austria's largest banking group with around 388 local Raiffeisen Banks, eight regional Raiffeisen Banks and Raiffeisen Bank International AG in Vienna. Some 1.7 million Austrians are members and thus co-owners of Raiffeisen banks.

The Raiffeisen Banking Group Upper Austria is made up of a central institution, Raiffeisenlandesbank Oberösterreich AG, and 80 Raiffeisen banks with a total of 422 bank branches.

About 317,700 Upper Austrians are co-owners of the Upper Austrian Raiffeisen banks.

As credit institutions within the network of a co-operative so-ciety, the Raiffeisen banks are bound to the principles of sub-sidiarity, solidarity, and regionalism.

Based on Articles 49 (3) and 113 (7) CRR, all Raiffeisen banks in the Raiffeisen Banking Group Upper Austria have signed an agreement to set up an institutional guarantee scheme to-gether with Raiffeisenlandesbank Oberösterreich AG, the Aid Association of the Raiffeisen Banking Group Upper Austria as well as Raiffeisen-Kredit-Garantiegesellschaft mbH. This in-stitutional guarantee scheme is aimed at guaranteeing mem-bers’ holdings and securing their liquidity and solvency in order to avoid bankruptcy. There is an early detection system in place to fulfil these tasks which requires the basic principle of uniform and common risk assessment in accordance with Raiffeisen deposit guarantee (ÖRE) regulations. Based on the organisational structure of the Raiffeisen Banking Group, the development of the IPS was designed in two stages (Federal- and State-wide IPS). Raiffeisenlandesbank Oberösterreich is a member of both the Federal and the State IPS.

The risk council that has been established monitors and man-ages the development of the entire L-IPS and of the individual members within the institutional guarantee system at state level. The institutional guarantee system is represented at state level by the Chief Executive Officer of Raiffeisenlandes-bank Oberösterreich AG, Heinrich Schaller. Approval for the institutional guarantee system was obtained from the FMA by a decision dated 3 Nov. 2014.

Aid Association of the Raiffeisen Banking Group Upper AustriaRaiffeisen-Kredit-Garantiegesellschaft m.b.H.

Together, the Upper Austrian Raiffeisen banks have es-tablished a joint aid association with Raiffeisenlandesbank Oberösterreich AG (Hilfsgemeinschaft der RBG Oberösterre-ich und Raiffeisen-Kredit-Garantiegesellschaft m.b.H.), which ensures that in case of economic problems the distressed institutions receive help through adequate measures.


The Group



To ensure the security of the money our customers have en-trusted in us, we have also created additional institutions:

Raiffeisen Customer Guarantee Association Austria (RKÖ)

This association, whose members comprise participating Raiffeisen banks and Raiffeisenlandesbanks as well as Raiff-eisen Bank International AG (RBI), guarantees all customer deposits and securities issues of participating banks, regard-less of the individual amounts involved, up to the joint financial risk-bearing capacity of the participating banks. The structure of the Customer Guarantee Association has two tiers: first, the Raiffeisen Customer Guarantee Fund Upper Austria at state level, and then the Raiffeisen Customer Guarantee As-sociation Austria at federal level. Thus, the Customer Guar-antee Association guarantees protection for customers that goes beyond the legal deposit guarantee.

Statutory minimum coverage

The new Austrian Deposit Guarantee and Investor Compen-sation Act (ESAEG), which implements a European Directive, came into force in mid-August 2015. All member institutions of Raiffeisen Banking Group Upper Austria are joint members of the “Austrian Raiffeisen-Einlagensicherung eGen” via the Upper Austrian state deposit guarantee.

The act anticipates the establishment of a deposit guarantee fund that is stocked by annual contributions from banks. The target volume, which must be reached by 2024, is 0.8% of covered deposits. If these funds are not sufficient, the banks may be required to provide an additional 0.5% of the covered deposits annually.

Deposits are secured up to EUR 100,000 per customer per institute. This applies to both natural and legal entities. Not covered are all deposits listed in section 10 (1) ESAEG (including deposits from financial institutions, investment firms, insurance companies, pension funds and government agencies).

The guaranteed deposits should be reimbursed within seven working days as of 1 Jan. 2024 (gradual reduction in the pe-riods by then).

Until 31 December 2018, the Austrian deposit guarantee system was divided into sectors. All member institutions of Raiffeisen Banking Group Upper Austria are joint members of the “Austrian Raiffeisen-Einlagensicherung eGen” via the Upper Austrian state deposit guarantee. As of 1 Jan. 2019, they joined the AUSTRIA deposit guarantee scheme in their entirety.

The tried and tested intra-sector protection schemes oper-ated by the Raiffeisen Banking Group at federal-state and federal levels (state IPS, federal IPS) will remain in force. As a result of these sectoral institutional protection schemes,

deposits at Raiffeisen banks continue to be guaranteed to the greatest possible extent.

Bank Recovery and Resolution Act (BaSAG)

The Banking Recovery and Resolution Directive (BRRD) came into force effective 1 Jan. 2015 with the establishment of a Europe-wide banking union by the European Union. The Bank Recovery and Resolution Act (BaSAG) implemented the BRRD into Austrian law, effective 1 Jan. 2015. This act requires every bank domiciled in Austria, and that is not part of a group which is subject to consolidated supervision, to create a recovery plan in accordance with the requirements defined in the BaSAG and to update this on an annual basis. As the EU parent company the RBG Oberösterreich Verbund eGen created the 2018 group recovery plan based on this legal position, and this includes the specifics related to Raiff-eisenlandesbank Oberösterreich.

A resolution plan will be created by the resolution author-ity and reviewed at least once per year and updated as necessary.

For the purposes of the stress test associated with the recov-ery plan under the BaSAG, the bank’s recovery potential was ascertained in six different scenarios, with systemic, reputa-tional and also combined crises considered in the character-istics rapid and slow.

So that crises can be identified at an early stage, early warn-ing indicators are set out in a comprehensive framework concept aimed at ensuring that there is adequate time for implementing suitable countermeasures. The set of indica-tors selected meets the minimum requirements for qualita-tive and quantitative indicators in accordance with the EBA Guidelines. Additional indicators were also selected by the organisation itself, meaning monitoring of a total set of 27 indicators is undertaken and regular reports are submitted to the Managing Board.

Raiffeisenlandesbank Oberösterreich is obliged by statute to make an annual contribution to the Single Resolution Fund (“SRF”) at the European level. The contribution to the res-olution fund is stipulated by the supervisory authority re-sponsible in accordance with the deposits not guaranteed in association with the bank’s risk profile. If the funds available are not sufficient for the purposes of covering losses, costs and other expenses associated with utilising the fund as a resolution mechanism, extraordinary contributions are col-lected in order to cover the additional expenses.

The scope of application extends to all banks operating within the eurozone. Non-euro states are able to participate in the SRF on a voluntary basis.




Information regarding associated companies and persons

The ultimate parent company is Raiffeisen Banking Group Upper Austria Verbund eGen which is not operationally ac-tive, apart from its function as a holding company.

The “Subsidiaries (non-consolidated)” category contains all subsidiaries which are not fully consolidated for reasons of significance. The “Associated companies” category shows details regarding companies with significant influence, includ-ing the companies reported under the equity method. The “Joint enterprises” category includes all companies in which

Raiffeisenlandesbank Oberösterreich is a partner company as part of a joint enterprise. The category of “Members of the Management in Key Positions” covers the Managing Board and Supervisory Board members of Raiffeisenlandesbank Oberösterreich. The category of “Other associated compa-nies and persons” shows details of close family members of the management in key positions (incl. their companies).

Other informationBreakdown of remaining maturities

Breakdown of remaining maturities as at 31 Dec. 2018

Breakdown of remaining maturities as at 31 Dec. 2017

IN EUR '000

Payment on demand/with-

out a termUp to


1 to 5 years

Additional or 5 years Total

Cash and cash equivalents 71,452 0 0 0 0 71,452

Loans and advances to banks 5,819,250 464,867 669,338 771,986 529,663 8,255,104

Loans and advances to customers 1,861,249 2,489,263 3,139,865 9,279,968 5,604,503 22,374,848

Trading assets 191,819 16,010 35,866 283,287 1,222,408 1,749,390

Financial assets 765,773 122,529 291,495 1,887,329 2,586,353 5,653,479

Companies accounted for using the equity method 2,117,861 0 0 0 0 2,117,861

Amounts owed to banks 4,848,042 983,861 812,749 3,918,547 2,391,855 12,955,054


Trading liabilities 115,935 14,691 26,291 229,171 1,021,241 1,407,329


Subordinated capital 27,505 7,199 25,915 417,965 424,835 903,419

IN EUR '000

Payment on demand/with-

out a termUp to


1 to 5 years

Additional or 5 years Total

Cash and cash equivalents 70,402 0 0 0 0 70,402

Loans and advances to banks 5,947,794 372,203 602,324 903,027 526,914 8,352,262

Loans and advances to customers 1,963,655 1,908,242 3,218,701 7,929,683 5,331,901 20,352,182

Trading assets 153,502 15,818 36,032 334,275 1,346,285 1,885,912

Financial assets 713,994 147,782 150,890 2,056,018 2,689,811 5,758,495

Companies accounted for using the equity method 2,158,102 0 0 0 0 2,158,102



Trading liabilities 76,207 23,049 24,947 282,610 1,107,013 1,513,826


Subordinated capital 152,670 45,874 159,892 280,941 512,321 1,151,698


The Group



IFRS consolidated financial statements | Disclosure | Other information

Information regarding associated companies and persons as at 31 Dec. 2018

Information regarding associated companies and persons in the 2018 financial year

IN EUR '000

Parent Company

Subsidiaries (non-consolidated)

Associates and joint enterprises

Loans and advances to banks 0 0 3,551,592

Loan loss allowance for loans and advances to banks 0 0 122

Loans and advances to customers 0 314,160 806,204

Loan loss allowance for loans and advances to customers 0 482 918

Trading assets 0 0 281,973

Financial assets 0 139,093 720,429

Loan loss allowance for securities 0 0 42

Companies accounted for using the equity method 0 0 2,117,861

Other assets 0 19,232 7,420

Loan loss allowance for receivables from non-bank activities 0 0 0

Assets held for sale 0 13,984 0

Amounts owed to banks 0 0 822,248

Amounts owed to customers 343 86,665 443,018

Trading liabilities 0 1 44,938

Liabilities evidenced by certificates 0 0 0

Provisions 0 0 0

Other liabilities 0 3,781 2,388

Liabilities in connection with assets held for sale 0 0 0

Subordinated capital 0 0 17,851

Granted credit commitments, financial guarantees and other commitments 0 26,040 473,480

Received credit commitments, financial guarantees and other commitments 0 0 12,081

IN EUR '000

Parent Company



Net interest income 0 17,685 103,926

Additions to allowances for losses on loans and advances 0 –34 –223

Loan loss allowance reversal 0 65 2,332

Share of profit or loss of equity-accounted investments 0 0 89,041

Direct impairment losses 0 0 0

Amounts received against loans and advances written off 0 0 0



Companies reported under the equity method – stated in the column “Associates and joint enterprises” – include an IFRS carrying amount of EUR 477,272 thousand (previous year: EUR 570,298 thousand) in relation to joint enterprises. In addition, liabilities to joint ventures of EUR 29 thousand (previous year: EUR 3 thousand) and loan commitments of EUR 40 thousand (previous year: EUR 40 thousand) are included as of 31 Dec. 2018.

As at 31 Dec. 2018 EUR 15,000 thousand (previous year: EUR 15,000 thousand) were pledged to companies reported under the equity method.

Advances, credits and liabilities towards members of the Managing Board exist as at 31 Dec. 2018 amounting to EUR 43 thousand (previous year: EUR 46 thousand) and towards members of the Supervisory Board EUR 513 thousand (previous year: EUR 711 thousand). Loans to members of the Managing Board and the Supervisory Board are granted on standard banking industry terms. Repayments are made as agreed.

Liabilities towards member of the Managing Board and the Supervisory Board exist amounting to EUR 4,060 thousand (pre-vious year: EUR 3,600 thousand).

As at 31 Dec. 2018 advances, loans and liabilities amounting to EUR 4,178 thousand exist towards associated persons and companies (previous year: EUR 5,139 thousand) and liabilities amounting to EUR 1,361 thousand (previous year: EUR 1,046 thousand).

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

Information regarding associated companies and persons as at 31 Dec. 2017

IN EUR '000

Parent Company



Loans and advances to banks 0 0 3,792,818

of which loan loss allowances 0 0 1,481

Loans and advances to customers 0 426,979 675,986

of which loan loss allowances 0 7,260 648

Trading assets 0 32,481 274,443

Financial assets 0 200,532 658,068

Companies accounted for using the equity method 0 0 2,158,102

Other assets 0 14,375 11,417

Assets held for sale 0 13,802 11

Amounts owed to banks 0 0 999,875

Amounts owed to customers 351 86,694 520,261

Trading liabilities 0 1,437 69,488

Liabilities evidenced by certificates 0 0 0

Provisions 0 0 0

Other liabilities 0 3,814 1,465

Liabilities in connection with assets held for sale 0 0 0

Subordinated capital 0 0 16,752

Guarantees given 0 9,287 423,250

Guarantees received 0 0 8,954

Information regarding associated companies and persons in the 2017 financial year

IN EUR '000

Parent Company



Net interest income (excl. result from equity method) 0 20,781 90,219

Share of profit or loss of equity-accounted investments 0 0 362,514

Additions to allowances for losses on loans and advances 0 –814 –870

Direct impairment losses 0 –94 0


The Group




IN EUR '000 2018 2017

Ongoing payments 4,131 4,193

Post-employment benefits 2,540 2,812

Benefits upon termination of employment 0 879

Other long-term benefits due 20 10

Total 6,691 7,894

Remuneration of the Managing Board and the Supervisory Board

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

In 2018, remuneration (including reimbursements for travel expenses) of EUR 614 thousand (previous year: EUR 574 thousand) was paid to members of the Supervisory Board.

Non-consolidated structured companies

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

Mutual funds

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

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

Scope of non-consolidated structured companies

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

IN EUR '000 2018 2017

Scope 5,606,167 4,936,269

IN EUR '000 31.12.2018 31.12.2017

Assets 8,824 4,034

Loans and advances to customers 678 1,587

Trading assets 6,245 483

Financial assets 1,901 1,964

Liabilities 248,527 219,584

Amounts owed to customers 153,101 118,038

Liabilities evidenced by certificates 93,531 95,042

Trading liabilities 735 5,345

Subordinated capital 1,160 1,159

Off-balance-sheet commitments 136,122 125,813



Off-balance-sheet commitments

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

Collateral

As at 31 Dec. 2018, trust fund deposits amounting to EUR 12,892 thousand (previous year: EUR 8,645 thousand) were backed by securities with a value of EUR 14,092 thousand (previous year: EUR 12,392 thousand) held as cover assets. Securities to the amount of EUR 35,660 thousand (previous year: EUR 35,765 thousand) were held as cover for mort-gage bonds, municipal bonds and covered bonds, together with loans and advances to customers amounting to EUR 1,818,743 thousand (previous year: EUR 1,658,772 thou-sand). Loans and advances to customers and banks amount-ing to EUR 270,172 thousand (previous year: EUR 342,190 thousand) were used as collateral for third-party obligations.

Securities with a carrying amount of EUR 175,129 thousand (previous year: EUR 192,957 thousand) have been deposited as collateral at banks and stock exchanges.

An amount of EUR 587,477 thousand (previous year: EUR 578,735 thousand) had been lodged with banks and custom-ers under collateral agreements. Loans and advances were assigned to banks amounting to EUR 3,444,059 thousand (previous year: EUR 2,973,691 thousand).

The related contractual provisions are customary in the industry.

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

The maximum possible risk of loss is determined by the carrying amounts presented in the statement of financial position (bal-ance sheet) and the nominal values of the off-balance-sheet obligations (loan commitments) at the respective balance sheet date. The nominal values of off-balance sheet commitments do not reflect the probability of possible losses.

IN EUR '000 31.12.2018 31.12.2017

Loans and advances to customers 678 1,587

Trading assets 6,245 483

Financial assets 1,901 1,964

Off-balance-sheet commitments 136,122 125,813

IN EUR '000 31.12.2018 31.12.2017

Contingent liabilities 2,501,670 2,350,647

of which from guarantees, warranties and letters of credit 2,501,050 2,350,021

of which from other contingent liabilities 620 626

Loan approvals 6,126,250 5,898,288

A joint and several liability in accordance with section 2, Mortgage Lending Institutions Law is in place in the fully consoli-dated SALZBURGER LANDES-HYPOTHEKENBANK AKTIENGESELLSCHAFT for the liability borne by the Pfandbriefbank (Österreich) AG.


The Group




Transfers of financial assets

31.12.2018 31.12.2017

IN EUR '000

Carrying amount of transferred

assets

Carrying amount of affiliated liabilities

Carrying amount of transferred

assets

Carrying amount of affiliated liabilities


Designated financial instruments n/a n/a 87,351 71,386

Financial assets available for sale (AfS) n/a n/a 189,125 154,560

Financial assets “held-to-maturity” n/a n/a 0 0

Loans and receivables (L&R) n/a n/a 1,691,838 1,382,629

Financial assets measured at amortised cost (AC) 1,485,903 1,056,198 n/a n/a

Remeasurement gains/losses of financial assets at fair value through other comprehensive income (FVOCI) 437,999 311,335 n/a n/a

Measured at fair value through profit or loss (FVTPL) 30,222 21,482 n/a n/a

Designated at fair value through profit or loss (FVO) 0 0 n/a n/a

Total 1,954,124 1,389,015 1,968,314 1,608,575

31.12.2018 31.12.2017

IN EUR '000

Fair value of transferred

assets

Fair value of affiliated liabilities

Fair value of transferred

assets

Fair value of affiliated liabilities


Designated financial instruments n/a n/a 87,351 69,054

Financial assets available for sale (AfS) n/a n/a 189,125 149,511

Financial assets “held-to-maturity” n/a n/a 0 0

Loans and receivables (L&R) n/a n/a 1,729,645 1,367,351

Financial assets measured at amortised cost (AC) 1,532,758 1,052,651 n/a n/a

Remeasurement gains/losses of financial assets at fair value through other comprehensive income (FVOCI) 437,999 300,804 n/a n/a

Measured at fair value through profit or loss (FVTPL) 30,222 20,756 n/a n/a

Designated at fair value through profit or loss (FVO) 0 0 n/a n/a

Total 2,000,979 1,374,211 2,006,121 1,585,916

Liabilities stemming from repurchase transactions amounting to of EUR 1,389,015 thousand (previous year: EUR 1,608,575 thousand), which are measured at amortised cost, represent the obligation to return the securities for cash received.

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



Finance leases (lessor)

Receivables from finance leases were as follows:

Leasing

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

Finance leases (lessee)

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

IN EUR '000 31.12.2018 31.12.2017

Investment (gross) 2,257,491 2,184,434

Minimum lease payments 2,163,885 2,072,377

up to 1 year 636,352 646,625

1-5 years 1,252,509 1,152,302

over 5 years 275,024 273,450

Non-guaranteed residual values 93,606 112,057

Unrealised net financial income 143,321 145,535

up to 1 year 45,182 47,954

1-5 years 76,011 76,731

over 5 years 22,128 20,850

Investment (net) 2,114,170 2,038,899

IN EUR '000 31.12.2018 31.12.2017

Minimum lease payments 10,488 14,252

up to 1 year 3,305 3,848

1-5 years 7,183 10,404

over 5 years 0 0

Interest portion 156 139

Investment (net) 10,332 14,113

IN EUR '000 31.12.2018 31.12.2017

Vehicle leasing 1,125,704 867,989

Real estate leasing 451,055 488,240

Lease of movables 537,411 682,670

Other forms of leasing 0 0

Total 2,114,170 2,038,899

The receivables from the finance leases shown originate almost exclusively from companies of the IMPULS-LEASING Group. It offers innovative financing solutions for corporate and retail customers. In addition to Austria, the IMPULS-LEASING Group is also represented in Southern Germany, Czechia, Poland, Slovakia, Croatia and Romania. In Austria, Southern Germany, Czechia and Slovakia, the IMPULS-LEASING Group offers real estate loans in addition to motor vehicle and movable property financing.


The Group




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

IN EUR '000 31.12.2018 31.12.2017

Vehicle leasing 0 0

Real estate leasing 9,650 12,144

Lease of movables 682 1,969

Other forms of leasing 0 0

Total 10,332 14,113

Operating leases (lessor)

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

Operating leases (lessee)

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

Other operating revenues from operating leases amounted to EUR 38,375 thousand for the financial year 2018 (previous year: 34,293 thousand).

IN EUR '000 31.12.2018 31.12.2017

up to 1 year 41,022 43,813

1-5 years 93,358 115,981

over 5 years 67,476 74,955

Total 201,856 234,749

IN EUR '000 31.12.2018 31.12.2017

up to 1 year 10,404 10,419

1-5 years 12,471 11,700

over 5 years 3,811 3,541

Total 26,686 25,660



IN EUR '000 31.12.2018 31.12.2017

Assets 2,253,915 1,973,304

Equity and liabilities 989,101 667,936

IN EUR '000 31.12.2018 31.12.2017

Securities 10,259 39,806

Other financial instruments 4,002,640 3,155,171

Total 4,012,899 3,194,977

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

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

As of 1 Jan. 2014, Regulation (EU) No 575/2013 (Capital Requirements Regulation, CRR) and Directive (EU) No 36/2013 (Capi-tal Requirements Directive, CRD IV) came into force for the implementation of Basel III. In addition, the supplementary Austrian CRR Implementing Regulation specifies how the CRR's transitional provisions are to be implemented in Austria. These stat-utory regulations mean that banks will have to comply with significantly higher equity ratios and tighter liquidity requirements.

Information required under Austrian accounting standards

Foreign currency volumes

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

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

Of the bonds and other fixed-income securities admitted to trading, EUR 1,729,821 thousand (previous year: EUR 1,233,837 thousand) can be allocated to the fixed assets.

Of the shares and other variable-income securities admitted to trading, EUR 0 thousand (previous year: EUR 21,204 thousand) can be allocated to the fixed assets.

LISTED NON-LISTED

IN EUR '000 31.12.2018 31.12.2017 31.12.2018 31.12.2017

Bonds and other fixed-income securities 1,743,354 1,867,414 0 0

Shares and other variable-yield securities 31,193 54,678 0 0


The Group



IFRS consolidated financial statements | Disclosure | Information required under Austrian accounting standards

IN EUR '000 31.12.2018 31.12.2017

Capital instruments and the premium linked to them 1,032,857 1,032,857


Accumulated other net gains/losses –185,349 –16,500

Eligible Common Equity Tier 1 (CET 1) minority holdings (incl. transitional regulations) 43,858 51,822

Common Equity Tier 1 (CET 1) capital prior to regulatory adjustments (corrections and deductions) 4,102,608 4,106,097

Prudential filters correction 572 –24,763

Intangible assets deduction (incl. goodwill) –62,120 –67,570

Deductions for deferred taxes –3,168 –1,755

Deduction of common Tier 1 capital instruments from companies in the financial sector –5,092 –6,473

Items to be deducted from the items of additional Tier 1 capital, exceeding the additional Tier 1 capital 0 –16,279

Other transition adjustments to common Tier 1 capital 0 –33,772

Other deductions and components related to the common Tier 1 capital –56,235 –44,500

Common Tier 1 capital (CET 1) 3,976,565 3,910,985

Eligible AT 1 minority holdings (incl. transitional regulations) 9,398 7,656

Deduction of additional Tier 1 capital instruments from companies in the financial sector –6,417 –9,774

Other transition adjustments to additional Tier 1 capital 0 –14,161

Items to be deducted from the items of additional Tier 1 capital exceeding the additional Tier 1 capital (deduction from common Tier 1 capital) 0 16,279

Additional Tier 1 capital (AT 1) 2,981 0

Tier 1 capital (Tier 1 = CET 1 + AT 1) 3,979,546 3,910,985

Grandfathering of capital instruments of Tier 2 capital and subordinated loans 14,990 18,738

Eligible Common Equity Tier 2 minority holdings (incl. transitional regulations) 430,903 483,478

Tier 2 capital (T 2) before regulatory adjustments 445,893 502,216

Deductions as well as other transitional adjustments of Tier 2 capital –25,046 –663

Tier 2 capital (T 2) 420,847 501,553

Total capital (TC = T 1 + T 2) 4,400,393 4,412,538

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

IN EUR '000 31.12.2018 31.12.2017

Own funds requirements for credit, counterparty and dilution risk 24,848,130 23,384,102

Own funds requirements for processing and delivery risks 0 2

Own funds requirements for position, foreign currency and commodity risks 112,903 148,269

Own funds requirements for operational risks 1,226,854 1,172,556

Own funds requirements for adjustments to credit evaluation (CVA) 88,136 91,865

Risk-weighted assets 26,276,023 24,796,794

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

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

IN % 31.12.2018 31.12.2017

Common Equity Tier 1 capital ratio (CET 1 ratio) 15.13 15.77

Tier 1 capital ratio 15.15 15.77

Total capital ratio (TC ratio) 16.75 17.79



The effects from IFRS 9 explained in the previous sections which are mainly reflected in consolidated regulatory companies are also reflected in the own funds consolidated for regulatory purposes and risk-weighted assets.

A capital conservation buffer was introduced effective 1 Jan. 2016 in accordance with section 23 of the Austrian Banking Act, and this must be maintained in the form of Common Equity Tier 1 capital. This amounted to 1.875% for 2018. From 2019 onwards the capital conservation buffer stands at 2.50%.

In accordance with section 7 of the Capital Buffer Regulation (KP-V), the FMA prescribed a capital buffer ratio for systemic vulnerability (systemic risk buffer) of 1% for Raiffeisenlandesbank Oberösterreich Aktiengesellschaft based on the consolidated situation of the RBG OÖ Verbund eGen as the ultimate financial holding company and Raiffeisenlandesbank Oberösterreich AG on an individual basis.

This anti-cyclical capital buffer is intended to function as an economic corrective measure during times in which credit growth exceeds GDP. It is equivalent to between 0% and 2.5% of the risk-weighted assets and is held in Common Equity Tier 1 capital. The relevant regulatory bodies may also stipulate that banks in their countries maintain an anti-cyclical capital buffer of over 2.5%.

As at 31 Dec. 2018 the capital buffer ratio for significant risk exposures in Austria was 0%. Raiffeisenlandesbank Oberösterre-ich’s bank-specific anti-cyclical capital buffer was, in accordance with section 23a (1) of the Austrian Banking Act, calculated as the weighted average of the ratios of anti-cyclical capital buffers of the countries in which Raiffeisenlandesbank Oberös-terreich has significant credit risk exposures. It is expected that Raiffeisenlandesbank Oberösterreich’s anti-cyclical capital buffer in 2019 will, similarly to 2018, be insignificant in size.

IN % 31.12.2018 31.12.2017

Minimum requirement for Common Equity Tier 1 capital in accordance with CRR 4.500 4.500

Capital maintenance buffer 1.875 1.250

Systemic risk buffer 1.000 0.500

Anticyclical capital buffer 0.090 0.040

Capital requirement for Common Equity Tier 1 capital 7.465 6.290


Capital requirement for total capital 8.965 7.790

Minimum requirement for Tier 2 capital in accordance with the CRR 2.000 2.000


Overview of statutory minimum capital requirements

In addition to the minimum capital requirements and capital buffer requirements, banks must meet capital requirements in accordance with the Supervisory Review and Evaluation Process (SREP). As a result of this SREP carried out by the ECB, on the level of the CRR scope of consolidation of RBG OÖ Verbund eGen, Raiffeisenlandesbank Oberösterreich must take into account a Pillar 2 requirement (P2R) by means of Common Equity Tier 1 capital in the minimum capital requirements of Pillar 1. In addition, as part of the SREP process, the ECB issued a Pillar 2 guidance (P2G), which must also be fully met with Tier 1 capital. However, the Pillar 2 recommendation has no effect on the Maximum Distributable Amount (MDA).

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

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

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


The Group




Average number of employees pursuant to section 266 of the Austrian Commercial Code

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

In accordance with section 237 (14) of the Austrian Commercial Code, the fee for auditing the financial statements of subsid-iary companies is published in the notes to the consolidated financial statements. This is the cumulative fee for auditing the group's financial statement (gross amounts) and those of the subsidiaries.

31.12.2018 31.12.2017

Salaried employees 4,300 4,075

VIVATIS/efko 985 849

Worker 1,706 1,713

VIVATIS/efko 1,697 1,701

Total 6,006 5,788

VIVATIS/efko 2,682 2,550

2018 2017

IN EUR '000

KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungs-

gesellschaft*Österreichischer

Raiffeisenverband**

KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungs-

gesellschaft*Österreichischer

Raiffeisenverband**

Audit of the financial statements 1,554 822 1,503 707

Other attestation services 78 199 49 216

Tax consultancy services 101 0 102 0

Other services 44 0 22 0

Additional information on maturities as required by section 64 of the Austrian Banking Act

In 2019, bonds and other fixed-income securities held by the bank to the amount of EUR 217,052 thousand (2018: EUR 85,018 thousand), along with bond issues of EUR 222,381 thousand (2018: 372,356 thousand).

Subordinated capital

In the case of subordinated liabilities, the subordination is always agreed separately in writing pursuant to section 51 (9) of the Austrian Banking Act.

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

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

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

* incl. network companies** The expenses incurred by the Austrian Raiffeisen Association (ÖRV) in the financial year relate to the auditor appointed by the ÖRV.



Geographical distribution according to country-by-country reporting

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

As at 31 Dec. 2018, the return on assets (ratio of after-tax profit for the year to total assets) was 0.71% (previous year: 1.22%).

Country-by-country reporting in the 2017 financial year

Country-by-country reporting in the 2018 financial year

IN EUR '000

Net interest income

Operating income

Pre-tax profit for the year

Taxes on income

Number of employees

Austria 419,966 1,002,283 341,094 –64,601 5,376

Czech Republic 3,083 10,377 1,381 –288 143

Germany 40,838 96,620 4,876 –1,827 207

Croatia 5,093 16,285 4,028 –717 50

Poland 6,219 12,696 5,555 –550 83

Romania 11,133 18,405 10,756 –1,380 96

Slovenia 26 42 10 –2 0

Slovakia 4,459 5,438 1,163 –24 51

Total 490,817 1,162,146 368,863 –69,389 6,006

IN EUR '000

Net interest income

Operating income

Pre-tax profit for the year

Taxes on income

Number of employees

Austria 645,238 1,213,996 511,857 –37,904 5,267

Czech Republic 3,548 6,918 1,684 –396 45

Germany 40,503 52,671 8,201 –2,332 207

Croatia 4,595 14,653 4,115 –614 42

Poland 6,226 8,104 1,345 39 79

Romania 9,526 13,143 5,671 –980 96

Slovenia 27 41 9 0 0

Slovakia 4,551 5,324 890 –34 52

Total 714,214 1,314,850 533,772 –42,221 5,788

Expenses for subordinated capital

The total amount for expenses for subordinated liabilities in the 2018 financial year totalled EUR 36,683 thousand (previous year: EUR 51,330 thousand).


The Group




Events after the balance sheet dateThe consolidated financial statements were compiled on 2 April 2019 and presented to the Supervisory Board. There were no further events of particular significance after the reporting date.

Executive bodies of RaiffeisenlandesbankOberösterreich Aktiengesellschaft

Chairman of the Managing BoardHeinrich Schaller, Chief Executive Officer

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

Members of the Managing BoardMichael Glaser, Member of the Managing Board (from 1 Oct. 2018)Stefan Sandberger, Member of the Managing BoardReinhard Schwendtbauer, Member of the Managing BoardMarkus Vockenhuber, Member of the Managing Board (until 30 Sept. 2018)

Information on the members of the Raiffeisenlandesbank Oberösterreich Supervisory Board can be found on pages 12 and 13.



THE MANAGING BOARD








Audit Certificate of the independent auditor of the annual accounts

Report on the Consolidated Financial Statements

Audit opinion

I have audited the consolidated financial statements of

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft,Linz,

and its subsidiaries (the Group), consisting of the consol-idated statement of financial position as at 31 Dec. 2018, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the con-solidated cash flow statement for the financial year ending on this reporting date, in addition to the notes to the consoli-dated financial statements.

On the basis of the knowledge gained during the audit, in my judgement the consolidated financial statements attached comply with the legal regulations and present a true and fair view of the group’s assets and financial position as at 31 Dec. 2018 and the group’s earnings and cash flow in the financial year ending on this reporting date, in accordance with the International Financial Reporting Standards (IFRS) as they are applied in the EU, and the additional requirements under sec-tion 245a of the Austrian Commercial Code and the banking law provisions.

Basis for the audit opinion

I conducted my audit in accordance with EU Regulation no. 537/2014 (hereafter the EU Regulation) and with the Austrian principles of orderly accounting. These principles required the application of the International Standards on Auditing (ISA). My responsibilities in accordance with these regulations and standards are described in further detail in the “Respon-sibilities of the auditor for auditing the consolidated financial statements” section of my Audit Certificate. I am independent of the Group in compliance with Austrian company and pro-fessional laws and I have fulfilled my other professional obli-gations in accordance with these requirements. I believe that I have obtained sufficient and suitable auditing proof, so that my audit provides a reasonable basis for my audit opinion.

Key Audit Matters

Key audit matters are those matters that, in my professional judgement, were of most significance in my audit of the con-solidated financial statements for the financial year. These matters were considered in association with my audit of the consolidated financial statements as a whole and for the pur-poses of forming my audit opinion, and I do not give any sep-arate audit opinion on these matters.

Three key audit matters were identified as part of the audit. They are described as follows:

1. Valuation of shares in Raiffeisen Bank International AG accounted for using the equity method

The key audit matter and financial statement risk

The shares held in Raiffeisen Bank International AG (RBI), which is also the central institution of RLB Oberösterreich AG, are listed under the item “Companies accounted for using the equity method” in the consolidated financial statements of RLB Oberösterreich AG as at 31 Dec. 2018, with a total amount of EUR 969,196 thousand.

The entity describes the accounting policy for investments accounted for using the equity method in the consolidated financial statements as at 31 Dec. 2018 in the Notes in the chapters “Consolidation methods” and “Management judge-ment and estimates” and in Note “(18) Investments accounted for using the equity method”.

The recoverability of the carrying amount of RBI accounted for using the equity method must be reviewed if there are objective indications of impairment. Impairment losses or re-versals of impairment losses are to be recognised at the re-coverable amount. The recoverable amount is the higher of fair value less costs to sell and value in use.

As at 31 Dec. 2018, objective evidence of impairment was identified at RBI.

The recoverable amount was compared with the carrying amount in order to test the value of the shares. The value in use was determined on the basis of a discounted cash flow method and exceeded the fair value. As the carrying amount exceeded the recoverable amount as at 31 Dec. 2018, an impairment loss was recognised.

The risk for the consolidated financial statements arises from the fact that the calculation of the value in use is largely based on the estimation of future cash inflows by the legal


The Group



Audit Certificate

representatives and that the gain or loss on remeasurement depends to a large extent on the discount rate used and is therefore associated with a considerable degree of estimation uncertainty.

Audit approach

I have assessed the processes used to identify objective ev-idence of impairment or reversal of impairment losses and the controls in place to determine whether they are appropri-ate to identify impairment or reversal requirements in a timely manner.

I have assessed management’s estimates with regard to the presence of objective evidence of impairment.

I have examined the correct determination of the recoverable amount by comparing the fair value (market price) and the value in use resulting from an external expert opinion.

I have examined the bases of this external assessment, in particular, the valuation model and the parameters used, such as the discount rate. I did so by using market data spe-cific to the industry and information and market expectations specific to the company. I checked the parameters used, such as the discount rate, by comparing them with capital market data as well as company-specific information and market expectations. I compared the future cash inflows used in the external re-port with the Group planning and analysed and assessed the adherence to planning, in particular on the basis of company documentation and external reports.

The arithmetical correctness of the impairment was examined.

Furthermore, I have assessed whether the disclosures on the impairment of the shares in RBI in the consolidated financial statements (Notes) are appropriate.

2. Valuation of Loans and Advances to Customers


In the consolidated financial statements of RLB Oberösterre-ich AG as at 31 Dec. 2018, the item “Loans and advances to customers” is shown in the amount of EUR 22,374,848 thou-sand. Loan loss allowances for these receivables amounted to EUR 310,831 thousand as of the reporting date.

The bank applied the new accounting standard “IFRS 9 Fi-nancial Instruments” for the first time as at 1 Jan. 2018 for the classification of loans and advances to customers and the calculation of loan loss allowances.

The entity describes the procedure for determining loan loss allowances in the Notes, in the chapters “Accounting policies” and “Management judgement and estimates” and under Note (15) “Loan loss allowances 2018” along with the effects of the change in accounting principles in the chapters “Ac-counting policies” and “Disclosures on first-time application of IFRS 9 and IFRS 15”.

As part of credit monitoring, the entity reviews whether there are objective indications of impairment and whether individ-ual risk provisions should be recognised. This also includes estimates as to whether customers can fulfil the contractually agreed repayments in their entirety.

The calculation of the loan loss allowances for significant in-dividual customers in default is based on an analysis of the expected future repayments. This analysis is influenced by the estimate of the financial position and performance of the relevant customer, the valuation of collateral, as well as the estimate of the amount and time of the repayments derived from this.

Risk provisions for defaulted, individually insignificant cus-tomers are calculated on the basis of a statistical valuation model.

For all loans for which there is no objective evidence of im-pairment, the bank recognises a valuation allowance based on statistical valuation models.

For those receivables for which the default risk has not in-creased significantly since initial recognition, the allowance is measured at the amount of the expected 12-month credit loss. In the case of receivables whose default risk has in-creased significantly since initial recognition, valuation allow-ances are calculated on the basis of the expected credit loss over the term. Customer commitments, collateral and macroeconomic fac-tors are included in the valuation models. Parameters based on statistical assumptions include, in particular, the probabil-ity of default based on the customer's credit rating and the loss rate before and after taking collateral into account.

With regard to the estimation uncertainties in determining the valuation allowance on the basis of statistical valuation mod-els, reference is made to the chapter in the Notes.

The risk for the consolidated financial statements arises from the fact that the identification of objective indications of im-pairment and the determination of a significant increase in the default risk since initial recognition are based on assump-tions and discretionary powers. When calculating provisions for impairment losses, which are based to varying degrees on the assumptions and estimates described above, there is scope for discretion and estimation uncertainty with regard to the amount of provisions for impairment losses.



Audit approach

I have analysed the existing documentation and processes for the allocation, classification and monitoring of customer loans as well as loan loss allowances and assessed whether these processes are suitable for identifying objective indica-tions of impairment and determining the significant increase in the default risk since the initial approach, thus ensuring the proper valuation of customer receivables. I collected the process flows and essential controls and tested the key con-trols for their design and implementation, as well as for their effectiveness within the scope of random checks.

On the basis of the company documentation and processes presented, I assessed the correct classification of customer receivables in connection with the business model and the characteristics of the contractual cash flows on a sample basis.

For individually significant customers, I examined on the basis of samples of loans whether there was objective evidence of impairment and whether appropriate provisioning had been made for impairment losses. The samples were selected using a risk based approach with particular consideration of individual customer ratings with a higher probability of default. When objective indications of impairment were identified, the assumptions made by the bank regarding the timing and amount of the cash flows were examined. With regard to the internal collateral valuations, I checked on a random sample basis whether the assumptions made were adequate.

In the area of provisions for defaulted, individually insignificant clients and for clients for whom there is no objective evidence of impairment, I have reconstructed the models and the pa-rameters used in them, taking into account the validations carried out by the bank, and assessed them to determine whether they are suitable for calculating adequate provisions.

I analysed the calculations for the provisions.

Due to the first-time application of the new accounting stan-dard IFRS 9, I have examined the effects and their impact on equity as of 1 January 2018 on the basis of the corporate documentation. Furthermore, I have assessed whether the disclosures on the valuation of trade receivables and on the changeover effects in the consolidated financial statements (Notes) are appropriate.

With regard to the estimation uncertainties in determining the value adjustment on the basis of statistical valuation models, reference is made to the chapter “Management judgement and estimates” in the Notes.

3. Valuation of securities and derivative financial instruments


The fair values used to measure securities and derivative fi-nancial instruments are based on observable market prices in RLB Oberösterreich AG's consolidated financial statements or are determined using valuation models. Derivative financial instruments are used to a significant extent to form hedging relationships or are concluded for trading purposes.

The bank will apply the new accounting standard “IFRS – 9 “Financial instruments” for the classification of securities and derivative financial instruments and the resulting valuation principles for the first time as of 1 Jan. 2018.

The entity describes the procedures for the measurement of securities and derivative financial instruments, the establish-ment of hedging relationships in the Notes in the chapters “Accounting policies” and “Management judgement and es-timates” and the effects of the change in accounting princi-ples in the chapters “Accounting policies” and “Disclosures on first-time application of IFRS 9 and IFRS 15”.

When determining the fair values of securities and derivative financial instruments for which no market prices and no suf-ficiently observable market data are available for a valuation, the valuation is subject to discretion due to the use of internal valuation models and the assumptions and parameters con-tained therein.

For hedge accounting purposes, the Bank must satisfy doc-umentation requirements relating to the hedges concerned and their effectiveness.

The risk for the consolidated financial statements arises from the fact that when valuation models are used to determine fair values, the assumptions and parameters contained therein are highly discretionary and the formal and material require-ments for hedging relationships are met.

Audit approach

I have examined the documentation of the processes set up by the bank for the allocation and valuation of securities and derivative financial instruments. I also examined the ef-fectiveness of the controls set up internally using a sample approach.

I examined the appropriateness of the valuation models and the underlying valuation parameters to determine the fair val-ues. I also analysed the calculation assumptions and calcu-lation of the fair values using sample checks.


The Group



Audit Certificate

In particular, I assessed whether the documentation of the hedging relationship and the effectiveness of the hedge was consistent with internal guidelines. The effectiveness tests carried out were critically assessed by me with regard to their appropriateness.

Due to the first-time application of the new accounting stan-dard IFRS 9, I have examined the effects and their impact on equity as of 1 January 2018 on the basis of the corporate documentation.

In addition, I have examined whether the disclosures in the consolidated financial statements (Notes) concerning valu-ation methods and hedge accounting are appropriate and complete.

Responsibility of the legal officers and the Audit Committee for the consolidated financial statement

The legal representatives are responsible for compiling con-solidated financial statements that present a true and fair view of the assets, financial position and earnings of the company in accordance with the International Financial Reporting Standards (IFRS) as they are applied in the EU as well as with additional requirements stipulated in section 245a of the Aus-trian Commercial Code and the banking law regulations. The legal representatives of the company are also responsible for the internal controls which the legal representatives consider to be required in order to allow consolidated financial state-ments to be prepared which are free from any material mis-representations, whether these are intentional or unintended.

In preparing the consolidated financial statements the legal representatives are responsible for assessing the ability of the Group to continue its activities as a going concern, stating any circumstances associated with continuing its activities as a going concern as applicable, and for applying the account-ing principle of continuing its activities as a going concern, unless the legal representatives intend either to liquidate the Group or discontinue the company's activities or have no re-alistic alternative to this.

The Audit Committee is responsible for monitoring the Group's accounting process.

Responsibilities of the auditor for auditing the consolidated financial statements

My objectives include obtaining sufficient certainty regarding whether the consolidated financial statements are as a whole free from intentional or unintentional material misrepresenta-tions, and issuing an Audit Certificate which includes my audit opinion. Adequate certainty is a high degree of certainty, but not a guarantee, that any audit of the financial statements

carried out in accordance with the EU Regulation and the Austrian principles of proper auditing requiring application of the ISA will always reveal a material misrepresentation if one has been made. Misrepresentations may be the result of fraudulent activity or of mistakes and are seen as material if individually or as a whole they could reasonably be expected to influence the economic decisions of readers made based on these consolidated financial statements. As part of any audit in accordance with the EU Regulation and the Austrian principles of proper accounting which re-quire application of the ISA, I exercise due diligence and maintain a critical approach during the entire audit.

The following also applies:

ı I identify and assess the risks of material representations in the financial statements, whether intentional or uninten-tional risks, plan audit actions in response to these risks, implement the actions and obtain audit evidence that is adequate and appropriate to be used as a basis for my audit opinion. The risk that material misrepresentations re-sulting from fraudulent activity are not uncovered is higher than one resulting from a mistake, since fraudulent activ-ity may involve fraudulent co-operation by accomplices, counterfeiting, intentional incompleteness, misleading representations or the bypassing of internal controls.

ı In assessing these risks the banking auditor must take into account the relevant internal control system implemented by the company for the preparation and appropriate over-all presentation of the financial statements, in order to plan audit activities that are appropriate under the given cir-cumstances, but not with the objective of providing an audit opinion on the effectiveness of the Group’s internal control system.

ı I assess the appropriateness of the accounting methods applied by the legal representatives and the feasibility of the values estimated by the legal representatives in the accounting and disclosures made in this regard.

ı I draw conclusions on the appropriateness of the applica-tion of the accounting principles, and of the continuation of the company's activities as a going concern by the legal representatives, and on whether there is any material un-certainty associated with the events or facts which may give rise to significant doubt regarding whether the com-pany can continue as a going concern, based on the audit evidence obtained. If I do draw conclusions which point to material uncertainty, I am under an obligation to draw attention to the associated statements in the consolidated financial statements in my Audit Certificate, or to amend my audit opinion if these statements are inappropriate. I draw my conclusions based on the audit evidence ob-tained by the date of my Audit Certificate. Future events or facts may, however, result in the Group discontinuing its activities as a going concern.



ı I assess the overall presentation, the structure and con-tent of the consolidated financial statements including the Notes, and also assess whether the consolidated finan-cial statements represent the underlying transactions and events in a manner that achieves a picture that is as faithful as possible.

ı I obtain adequate and appropriate audit evidence on the financial information of the entities or business activities within the Group in order to provide an audit opinion on the consolidated financial statements. I am responsible for guiding, monitoring and implementing the audit of the consolidated financial statements. I bear sole responsibil-ity for my audit opinion.

I discuss inter alia the planned scope and planned temporal arrangement of the audit with the Audit Committee, along with the significant audit findings, including any significant defects in the internal control system which I identify during my audit. I also make a declaration to the Audit Committee that I have complied with the relevant professional requirements on inde-pendence, and discuss all relations and other circumstances with it which it is reasonable to assume may affect my in-dependence and any associated safeguards as applicable.

Based upon the circumstances which I have discussed with the Audit Committee, I determine those circumstances that were most significant for the audit of the consolidated finan-cial statements for the financial year and are therefore the audit circumstances that are of particular importance. I de-scribe these circumstances in my Audit Certificate, unless statutes or other legal regulations prohibit public disclosure of the relevant facts, or in extremely rare cases if I determine that a circumstance should not be communicated in my Audit Certificate as it can be reasonably expected that the negative consequences of any such communication would exceed the benefits of this to the public interest.

Other statutory and legal requirements

Report on the Group Management Report

According to Austrian company law regulations, the Group Management Report must be audited as to whether it is consistent with the consolidated financial statements and has been prepared in accordance with the applicable legal requirements.

The legal representatives of the company are responsible for preparing the Group Management Report in compliance with Austrian business and banking laws.

I carried out my audit in compliance with the professional principles associated with auditing a Group Management Report.

Assessment

In my assessment the Group Management Report has been prepared in accordance with the applicable legal require-ments, contains the appropriate statements in accordance with section 243a (2) of the Austrian Commercial Code and is in concordance with the consolidated financial statements.

Declaration

No material misstatements were determined in the Group Management Report given the findings obtained in the audit of the consolidated financial statements and the understand-ing gained of the Group and its environment.

Other information

The legal representatives are responsible for the other infor-mation. Other information includes all information in the An-nual Report, with the exception of the consolidated financial statements, the Group Management Report and the Audit Certificate. The Annual Report is expected to be provided to me after the date of the Audit Certificate.

My audit opinion of the consolidated financial statements does not cover this other information and I will not be provid-ing any type of warranty regarding this. In conjunction with my audit of the consolidated financial statements, it is my responsibility to read this other informa-tion once it is available and to determine whether it materially contradicts the consolidated financial statements, given the understanding obtained in the audit, or otherwise appears to include material misrepresentations.


The Group



Audit Certificate

Vienna, 2 April 2019As auditor for Österreichischer Raiffeisenverband:

Andreas GillyChartered Accountant and Auditor

Additional statements in accordance with Article 10 of the EU Regulation

I was appointed by the Austrian Raiffeisen Association, the auditing association responsible for the statutory audit of the company's consolidated financial statements in accordance with the Austrian Banking Act, as auditor of the consolidated financial statements for the 2018 financial year. I have been the bank auditor of the company without interruption since the audit of the 2016 consolidated financial statements.

I declare that the audit opinion in the section “Report on the 'Consolidated Financial Statement” is in accordance with the additional report to the Audit Committee pursuant to Article 11 of the EU Regulation.

I declare that I have not provided any prohibited non-audit services (Article 5 (1) of the EU Regulation) and that I have maintained my independence from the company audited which carrying out the audit.

Chartered accountant and auditor

The accountant and auditor responsible for the audit of the financial statements is Andreas Gilly.



Audit Certificate of the independent auditor

Audit opinion

We examined the consolidated financial statements of


and its subsidiaries (the Group), consisting of the consoli-dated statement of financial position as at 31 Dec. 2018, the consolidated statement of comprehensive income, the con-solidated cash flow statement, the consolidated statement of changes in equity for the financial year ending on this report-ing date, as well as the notes to the consolidated financial statements.

On the basis of the knowledge gained during the audit, in our judgement the consolidated financial statements comply with the legal regulations and present a true and fair view of the group’s assets and financial position as at 31 Dec. 2018 and the group’s earnings and cash flows in the financial year ending on this date, in accordance with International Finan-cial Reporting Standards (IFRSs) as adopted by the EU, the additional requirements of section 245a of the Austrian Com-mercial Code, and the banking regulations.


We were engaged by management as an additional (volun-tary) auditor and conducted our audit in accordance with In-ternational Standards on Auditing (ISA). Our responsibilities in accordance with these standards are described in further de-tail in the “Responsibilities of the auditor for auditing the con-solidated financial statements” section of our report. We are independent of the company in accordance with the Code of Ethics for Professional Accountants of the International Eth-ics Standards Board for Accountants (IESBA Code) and the Austrian Code of Ethics for Professional Accountants under the Wirtschaftstreuhandberufsgesetz 2017 (“WTBG 2017”) together with relevant ordinances (“Guidelines on the Prac-tice of Public Accounting Professions”) and guidelines, and we have complied with our other professional duties in accor-dance with these requirements and the IESBA Code. In terms of our responsibility and liability as auditors to the company and to third parties, the statutory liability provisions pursu-ant to section 62a of the Austrian Banking Act in conjunction with section 275 (2) of the Austrian Commercial Code apply. Those powers should be exercised in accordance with Reg-ulation (EU) No 537/2014.

We are of the opinion that the audit evidence obtained by us is adequate and appropriate for the purposes of serving as a basis for our audit opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the con-solidated financial statements for the financial year. These matters were considered in association with our audit of the consolidated financial statements as a whole and for the pur-poses of forming our audit opinion, and we do not give any separate audit opinion on these matters.

Recoverability of loans and advances to customers and valuation of the provisions for the credit business

The risk for the financial statements

The loans and advances to customers include an amount in the consolidated statement of financial position of EUR 22,374,848 thousand, this includes loan loss allowances in the amount of EUR 310,831 thousand, and provisions for the credit business amounting to EUR 54,720 thousand.

The Group Managing Board at Raiffeisenlandesbank Oberös-terreich describes the procedure for determining loan loss allowances in the Notes, under the chapters “Accounting pol-icies” and “Management judgement and estimates”.

At the beginning of the 2018 financial year, the Raiffeisenland-esbank Oberösterreich Group applied the new accounting standard “IFRS 9 – Financial Instruments” for the first time in accordance with the requirements. The main changes in IFRS 9 include the introduction of the 3-step model for the im-pairment of financial assets measured at cost or at fair value through profit or loss.

Specific loan loss provisions are recognised for loans where a default event has been identified (Stage 3 - loan loss al-lowances). The identification of default events and the deter-mination of the amount of specific valuation allowances, as well as the measurement of provisions for contingent liabilities and credit risks, are subject to significant estimation uncer-tainties and discretionary powers that result from the eco-nomic situation and development of the borrower as well as from the measurement of loan collateral, and therefore affect the amount and timing of expected future cash flows. Gen-eral individual value adjustments formed for non-significant


The Group




defaulted borrowers are based on models and statistical pa-rameters and therefore also include discretionary decisions and estimation uncertainties.

Loans for which no default event has occurred are to be as-signed to Stage 1 - expected 12-month credit loss at the time of addition and to Stage 2 - expected credit loss over the (en-tire) term if there is a relevant increase in the default risk (so-called transfer criterion). If the transfer criterion is not properly designed and applied, there is a risk of incorrect stage alloca-tion and, as a result, inadequate loan loss allowances. Loan loss allowances for Stages 1 and 2 are formed on the basis of models and statistical parameters and therefore also include discretionary decisions and estimation uncertainties.

Our audit approach

We assessed the appropriateness of the estimates applied for the loan loss allowances as follows: ı We surveyed the rating process and early warning system

and judged whether they are suitable for the purposes of identifying impairment requirements in good time. We reviewed the methodology stipulated in guidelines for cal-culating the value adjustments for loans or for calculating the provisions for contingent liabilities and credit risks for compliance with the accounting concept. We tested the key controls in this area in terms of their design and imple-mentation and also their effectiveness, using sample tests.

ı We used individual cases from the loan portfolio to review whether the ratings were applied based on internal guide-lines and whether default events were identified in good time. The test cases were selected using a risk-based ap-proach with particular weighting for ratings with a higher risk of default. The appropriateness of management as-sessments related to the amount and time of future pay-ments, and the assumptions made, were reviewed based on evidence of the borrower's economic position and per-formance, and on valuation of the loan collateral, for the purposes of evaluating the provisions for significant bor-rowers in default.

ı In individual cases we reviewed valuation reports and in-ternal bank valuations for real estate collateral with the in-volvement of our real estate surveyors, using market data in order to assess whether the valuation parameters used are adequate, in particular the real estate prices, rents and interest rates.

ı In the case of general individual value adjustments, we have assessed the underlying valuation models and the input parameters on the basis of validation reports to determine whether these are suitable for calculating the general provisions for non-significant impaired loans at an appropriate stage. On the basis of the transmitted data, the mathematical correctness of the calculation was verified.

ı For the loan loss allowance requirement calculated at portfolio level (Stages 1 and 2), we have assessed the calculation models applied, including the input parame-ters used and macroeconomic forecasts, using internal specialists to determine whether these are suitable for determining the loan loss allowance requirement in an ap-propriate manner. We have checked the defined transfer criterion for proper conception and application using inter-nal specialists. The development of the input parameters was analysed using validation reports.

ı Due to the first-time application of the new accounting standard “IFRS 9 - Financial Instruments”, we have per-formed the audit procedures described in respect of loan loss allowances Stages 1 and 2 both for the opening bal-ance sheet as at 1 Jan. 2018 and for the balance sheet as at 31 Dec. 2018.

The information in the Notes was then evaluated, in order to assess whether it is appropriate in terms of the credit risk provisions.

Classification and valuation of associated companies and joint ventures


Raiffeisenlandesbank Oberösterreich Group accounts for its shares in associated companies and joint ventures using the equity method. Overall the carrying amount for the compa-nies accounted for using the equity method is EUR 2,117,861 thousand. Discretionary leeway may arise in relation to clas-sification of a holding as an associated company, particular for holdings with a capital share or share in the voting rights below 20%. This leeway relates in particular to whether there is a significant influence exercised over the relevant holding.

The Managing Board at Raiffeisenlandesbank Oberösterre-ich describes the procedure for the classification and valua-tion of companies accounted for under the equity method in the Notes, under the chapters “Consolidation methods” and “Management judgement and estimates”.

If there is objective evidence of impairment, the recoverable amount - is the higher of value in use and fair value less costs to sell -. The value in use is determined on the basis of expert opinions provided by external experts. The risk for the finan-cial statements is that these valuations are to a large extent dependent on future expected cash flows and valuation pa-rameters, in particular discounting factors, growth assump-tions and corporate planning, and are therefore subject to uncertainties in terms of the estimates and to discretionary leeway.



Our audit approach

ı We examined the classification as an associated company or joint venture and the valuation under the equity method associated with this, based on inspections of internal documentation and on existing contractual documenta-tion. An analysis is carried out regarding whether there is significant influence.

ı We consulted with our own valuation experts for the valua-tion analyses. We reviewed the appropriateness of the val-uation models and valuation parameters used for the most significant associated companies and joint ventures. In in-dividual cases the corporate planning underlying the cash flow assessments was also reconciled with the relevant internal budgetary planning approved by the Supervisory Board. The ability to keep to the planning was evaluated by comparing the previous year's planning with the results of the current financial year. We evaluated the appropriate-ness of the assumptions used to determine the interest rates by reconciling these with capital market data.

ı Finally we assessed whether the statements in the Notes to the consolidated financial statements on the classifi-cation and valuation of associates and joint ventures are appropriate.

Financial instruments – assessments at fair value


Raiffeisenlandesbank Oberösterreich Group accounts for financial instruments as the assets side at fair value in the amount of EUR 7,740,261 thousand (of which EUR 900,864 thousand Level 3) and on the liabilities side in the amount of EUR 4,942,865 thousand (of which EUR 0 thousand Level 3). The Group Managing Board of Raiffeisenlandesbank Oberös-terreich describes the procedure for determining the fair value of financial instruments in the Notes, under the chap-ters “Accounting policies” and “Management judgement and estimates”.

At the beginning of the 2018 financial year, the Raiffeisen-landesbank Oberösterreich Group applied the new ac-counting standard “IFRS 9 - Financial Instruments” for the first time in accordance with the requirements. Among the major new features is a new classification model for financial instruments, which includes compliance with the cash flow criterion (SPPI criterion) as a prerequisite for measurement at amortised cost. If the SPPI criterion is not met, the finan-cial instrument must always be measured at fair value. The assessment of whether the contractual terms of a financial instrument result exclusively in SPPl-compliant cash flows can be complex in individual cases and involve discretionary decisions.

Financial instruments are measured at fair value if the SPPI criterion is not met or if the financial instrument has been des-ignated at fair value in accordance with IFRS 9.

The risk for the financial statements lies in the fact that the measurement of financial instruments carried at fair value on the assets and liabilities side of the balance sheet is subject to a high degree of discretion on the basis of valuation param-eters not observable on the market (Level 3 category) due to the strong dependence on valuation models and parameter estimates.

Our audit approach

ı We have assessed the bank's internal procedure by in-specting the documentation of the implementation proj-ect to determine whether it is suitable for carrying out a correct SPPI classification for the portfolio business as at 1 Jan. 2018.

ı On the basis of the total portfolio of active debt instru-ments both as of 1 Jan. 2018 (existing business) and from new business in 2018 as a whole, we assessed, by means of risk-based test cases based on an analysis of the in-dividual contracts, whether the SPPI rating given by the Raiffeisenlandesbank Oberösterreich Group is correct.

ı As part of the audit team, we used specialists to examine Level 3 category financial instruments, who examined the valuation models and assumptions made, as well as the parameters used, with regard to market conformity.

ı In individual cases, we reconstructed the fair values deter-mined by the Bank.

ı Finally, we assessed whether the statements in this regard in the Notes to the consolidated financial statements on the SPPI classification procedure and the presentation of the valuation methods are complete and appropriate.

Responsibility of the legal officers and the Audit Committee for the consolidated financial statement

The legal representatives are responsible for compiling con-solidated financial statements that present a true and fair view of the assets, financial position and earnings of the company in accordance with the International Financial Reporting Standards (IFRSs) as adopted by the EU as well as with addi-tional requirements stipulated in section 245a of the Austrian Commercial Code. The legal representatives of the company are also responsible for the internal controls which the legal representatives consider to be required in order to allow con-solidated financial statements to be prepared which are free from any material misrepresentations, whether these are in-tentional or unintended.


The Group




In preparing the consolidated financial statements the legal representatives are responsible for assessing the ability of the Group to continue its activities as a going concern, stating any circumstances associated with continuing its activities as a going concern as applicable, and for applying the account-ing principle of continuing its activities as a going concern, unless the legal representatives intend either to liquidate the Group or discontinue the company's activities or have no re-alistic alternative to this.

The Audit Committee is responsible for monitoring the Group's accounting process.

Responsibilities of the auditorfor auditing the consolidated financial statements

Our objectives include obtaining sufficient certainty regarding whether the consolidated financial statements are as a whole free from intentional or unintentional material representations, and issuing an Auditor’s report which includes our audit opin-ion. Adequate certainty is a high degree of certainty, but not a guarantee, that any audit of the financial statements carried out in accordance with Austrian principles requiring applica-tion of the ISA will always reveal a material misrepresentation if one has been made. Misrepresentations may be the result of fraudulent activity or of mistakes and are seen as material if individually or as a whole they could reasonably be expected to influence the economic decisions of readers made based on these consolidated financial statements.

As part of any audit in accordance with the Austrian princi-ples of proper accounting which require application of ISA we exercise due diligence and maintain a critical approach during the entire audit.


ı We identify and assess the risks of material representa-tions in the financial statements, whether intentional or unintentional risks, plan audit actions in response to these risks, implement the actions and obtain audit evidence that is adequate and appropriate to be used as a basis for our audit opinion. The risk that material misrepresen-tations resulting from fraudulent activity are not uncov-ered is higher than one resulting from a mistake, since fraudulent activity may involve fraudulent co-operation by accomplices, counterfeiting, intentional incompleteness, misleading representations or the bypassing of internal controls.

ı We gain an understanding of the internal control system to the extent that it is relevant for the financial statements, in order to plan audit activities that are appropriate under the given circumstances, but not with the objective of provid-ing an assessment on the effectiveness of the company’s internal control system.

ı Our audit also includes an assessment of the appropriate-ness of the accounting methods applied and the tenability of the estimated values provided by the legal representa-tives in the accounts and associated statements.

ı We draw conclusions on the appropriateness of the appli-cation of the accounting principles, and of the continua-tion of the company's activities as a going concern by the legal representatives, and on whether there is any mate-rial uncertainty associated with the events or facts which may give rise to significant doubt regarding whether the company can continue as a going concern, based on the audit evidence obtained. If we do conclude that there is a material uncertainty, we are under an obligation to draw attention to the associated statements in the consolidated financial statements in our Auditor’s report, or to amend our audit opinion if these statements are inappropriate. We draw our conclusions based on the audit evidence obtained by the date of our Audit Certificate. Future events or facts may, however, result in the Group discontinuing its activities as a going concern.

ı We assess the overall presentation, the structure and con-tent of the consolidated financial statements including the Notes, and also assess whether the consolidated finan-cial statements represent the underlying transactions and events in a manner that achieves a picture that is as faithful as possible.

ı We obtain adequate and appropriate audit evidence on the financial information of the entities or business activi-ties within the Group in order to provide an audit opinion on the consolidated financial statements. We are respon-sible for guiding, monitoring and implementing the audit of the consolidated financial statements. We bear sole re-sponsibility for our audit opinion.

ı We discuss inter alia the planned scope and planned tem-poral arrangement of the audit with the Audit Committee, along with the significant audit findings, including any sig-nificant defects in the internal control system which we identify during our audit.

ı We also make a declaration to the Audit Committee that we have complied with the relevant professional require-ments on independence, and discuss all relations and other circumstances with them which it is reasonable to assume may affect our independence and – where appro-priate – any associated safeguards.

ı Based upon the circumstances which we have discussed with the Audit Committee, we determine those circum-stances that were most significant for the audit of the con-solidated financial statements for the financial year and are therefore the audit circumstances that are of particular im-portance. We describe these circumstances in our Audit Certificate, unless statutes or other legal regulations pro-hibit public disclosure of the relevant facts, or in extremely rare cases if we determine that a circumstance should not be communicated in our Audit Certificate as it can be rea-sonably expected that the negative consequences of any such communication would exceed the benefits of this to the public interest.



Linz, 2 April 2019

KPMG Austria GmbHWirtschaftsprüfungs- und Steuerberatungsgesellschaft

Martha KloibmüllerChartered Accountant and Auditor

Other information

The legal representatives are responsible for the other infor-mation. Other information includes all information contained in the management report and the annual report.

Our audit opinion on the consolidated financial statements does not cover this other information and we do not provide any type of warranty regarding this.

In connection with our audit of the consolidated financial statements, it is our responsibility to read this other informa-tion and to consider whether there are any material discrep-ancies between the other information and the consolidated financial statements or whether there are any discrepancies with our knowledge gained during the audit or otherwise ap-pear to be material misstatements. If, based on the work per-formed, we conclude that the other information is materially misrepresented, we must report it. We have nothing to report on that.


The accountant and auditor responsible for the audit of the financial statements is Martha Kloibmüller.


The Group






Management Report 2018 of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

1. Business development and the economic situation ____________________________________________ 185

2. Outlook and risks for the company _________________________________________________________________________________________ 193

3. Research and development __________________________________________________________________________ 201

4. Reporting on the most important aspects of the internal control and risk management system with regard to the accounting process __________________________ 203


Raiffeisenlandesbank Oberösterreich

General information Group


Management Report 2018 l Business development and the economic situation

1. Business development and the economic situation

1.1. Economic background

The world economy finds itself in a period of strong, broad-based growth that is supported by both industrialised and emerging countries. The economy in the Eurozone was somewhat weaker. This was due to a general increase in un-certainties and risks. Many leading and business sentiment indicators recorded significant declines over the course of 2018 in the Eurozone, while they barely weakened in the U.S. The emerging markets performed basically well: commod-ity exporters benefited from higher prices, and the expected slowdown in growth in China has not yet manifested itself in 2018. However, countries with high external debt and/or cur-rent account deficits remained vulnerable to currency deval-uations as a result of turbulence caused by increased inflation and capital outflows. Global GDP growth in 2018 was esti-mated by the International Monetary Fund (IMF) to be 3.7%.

Until the third quarter of 2018, above-average economic ac-tivity was measured in the U.S., with the economy picking up significantly in the course of the year. Until then, the trade dispute that the U.S. had set off did not reflect on the long-term U.S. economic data. However, the high level of capacity utilisation is leading to an acute shortage of skilled workers. According to IMF estimates, overall GDP growth for the US economy in 2018 was 2.9%. The US Federal Reserve in-creased the prime rate four times during 2018, by 25 basis points each time, reaching 2.25 to 2.50% by the end of the year.

In the Eurozone, GDP growth momentum declined steadily in 2018, mainly due to the lacking support from net exports. Due to numerous disruptive factors and uncertainties (Brexit, trade dispute, budget disputes with Italy), economic senti-ment in the Eurozone deteriorated significantly in the course of 2018. In the third quarter, Germany and Italy even recorded a slight decline in production. However, consumer demand in particular developed very robustly, supported by income growth due to the noticeably improved situation on the la-bour markets and still rather low inflation. The ECB formally announced the end of its net bond purchasing programme in December 2018. According to the IMF, GDP growth for 2018 in the eurozone was 1.8%.

The Austrian economy entered the later stages of a boom after reaching a peak in mid-2018, although the boom is broadly based, driven by sound export performance and robust domestic demand. Industrial production in particu-lar was very strong, and businesses continued to be opti-mistic about the near future. Concerns are mainly related to capacity limitations and the availability of qualified person-nel. Economic growth is increasingly supported by private

consumption, based on high consumer confidence and good per capita income (increasing employment levels, modest in-flation, fiscal stimuli such as the reduction of unemployment insurance contributions, and from 2019 onwards the “Family Bonus Plus” tax deduction). Austria was rather little affected by the economic risks in 2018, whereby the global dampen-ing of sentiment did indeed play a role. The government bud-get is also benefiting from the lively economy, estimated to result in a zero deficit in 2018 and slight surpluses in 2019/20.

The Upper Austrian regional economy recorded a very good financial year in line with the booming national economy. Regional GDP growth for 2018 in real terms is calculated at 3.2%. Industry has traditionally been the economic driver in Upper Austria, especially mechanical engineering, the elec-trical and metal industries and, to a large extent in 2018, the construction industry. The employment situation developed very dynamically, especially noticeably so in the tertiary sec-tor (retail trade, tourism, business-related services). With a registered unemployment rate of 5.0%, Upper Austria to-gether with Salzburg and Tyrol had the lowest levels of un-employment compared to other states.

1.2. Business development

In the good economic environment of 2018, Raiffeisenland-esbank Oberösterreich was able to pursue its sustainable course. The consistent actions taken in the areas of inno-vation, customer orientation, market development and risk optimisation played a major role in the successful business performance. The consistently applied strategy for increasing efficiency primarily contributed to the good half-year result in 2018. A broad orientation across numerous business sectors also ensures stability in the Bank’s development. It ensures that Raiffeisenlandesbank Oberösterreich is able to offset any external influences effectively. The positive performance throughout the entire company for instance shows that the prescient and active risk management system with compre-hensive early warning parameters and the continuous further development of the early warning system were not only well planned strategically, but have also been consistently im-plemented. The goal in all this is also not least to preserve autonomy and secure a long-term position of strength from which to act.

Moreover, Raiffeisenlandesbank Oberösterreich meets the high standards that the European Central Bank applies to a “significant” bank. Particular attention is paid here to com-pliance with all statutory regulations, and to laying the foun-dations now for compliance with the statutory requirements that will be imposed on banks in Austria and the rest of the



European Union in future, such as in relation to equity and risk management. In this regard, Raiffeisenlandesbank Oberös-terreich once again passed an EU-wide stress test in 2018, as in 2014 and 2016 – and was moreover the only Upper Austrian bank to do so – achieving above-average results compared to all other banks tested in the European Union.

Raiffeisenlandesbank Oberösterreich’s operative customer business was also extremely successful in 2018. Volume increases were achieved both in deposits and in financing. Raiffeisenlandesbank Oberösterreich is therefore able to re-port growth in the operating business with a total increase in financing volume of EUR 2.0 billion (working capital finance +12.1%; investment financing +10.2%) and increase in depos-its of EUR 810 million (savings deposits and current accounts +7.7%). Total assets were also increased and are reported at EUR 35.7 billion as at 31 Dec. 2018.

Raiffeisenlandesbank Oberösterreich also provides strong stimuli in the Southern Germany region for customers from industry, medium-sized enterprises and affluent private customers. In order to further expand the Bank’s position in this strong economic region, a new branch was opened in Stuttgart. The new location is intended to generate addi-tional growth as well as intensify existing business connec-tions. Raiffeisenlandesbank Oberösterreich has been active in Southern Germany since 1991 and, with the new branch in Stuttgart, now has a total of nine locations in the region.

In addition, the number of customers could be increased further. This is reflected in particular in the high degree of customer focus, which is characterised by speed, effi-ciency, reliability, flexibility and innovative services. To con-sistently apply these things to daily customer service and, as an important regional economic factor, to contribute to the successful development of the federal province, Raiffeisen-landesbank Oberösterreich has devoted particular attention to the customer groups in Corporate Banking (business and institutional customers), Retail Banking (individual and busi-ness customers), Private Banking (affluent private customers) and Investor Relations (Raiffeisen banks). Raiffeisenlandes-bank Oberösterreich was awarded the Recommender Award of the Austrian Financial Marketing Association in the first quarter of 2018 for its sustainable customer focus based on a study of customers’ willingness to recommend Raiffeisen-landesbank Oberösterreich to others and was announced winner in the Major Banks category.

The fact that Raiffeisenlandesbank Oberösterreich is also recognised on the international financial markets can be seen in the success of the most recent issue of a benchmark bond. The collateralised bond issued by Raiffeisenlandes-bank Oberösterreich in the amount of EUR 500 million was heavily oversubscribed in a very short space of time by inter-ested parties from Central and Northern Europe as well as from America and Asia. This was the third successful issue of a benchmark bond by Raiffeisenlandesbank Oberösterreich since 2016.

In the first half of 2018, Raiffeisenlandesbank Oberösterre-ich set the course for personnel changes. At its session on 22 June 2018, the Supervisory Board of Raiffeisenlandes-bank Oberösterreich appointed Dr. Michael Glaser as a new member of the Managing Board. On 1 October 2018, Dr. Glaser will take over the Managing Board agendas of overall bank risk management and financing management from Mr. Markus Vockenhuber, who is stepping down from the Man-aging Board at his own request. Furthermore, the Supervi-sory Board has extended the Managing Board mandates of Deputy Chief Executive Officer Michaela Keplinger-Mitterleh-ner and Stefan Sandberger by a further five years.

A challenge - and at the same time an opportunity - for the whole banking industry is the rapidly advancing digitisation, which is causing equally rapid changes in customer require-ments and behaviour. Raiffeisenlandesbank Oberösterreich has long since adapted to this and is considered a pioneer when it comes to the development and deployment of inno-vative banking technologies. By positioning itself as a mod-ern advisory bank that places a great emphasis not only on intense personal service but also on the ongoing develop-ment of comprehensive lines of innovative bank technologies, Raiffeisenlandesbank Oberösterreich aims at optimally fulfill-ing the different wishes of the individual customer groups. The digital services on offer are constantly being expanded to include modern products; Raiffeisenlandesbank Oberöster-reich does not develop all of these itself and instead relies on partnerships with innovative companies along with creative and flexible start-ups. For example, Raiffeisenlandesbank Oberösterreich works in cooperation with the Business Angel network “startup300”, is a partner in the “capital300” Ven-ture Capital Fund, and a partner in “think300”, which works with start-ups on developing banking solutions of the future. Raiffeisenlandesbank Oberösterreich is also a finance part-ner for PIER4, a multi-corporate venture initiative by tech2b in cooperation with the Upper Austrian state government. This arrangement links leading companies with start-ups in order to design new solutions and prototypes together for the in-dustry of tomorrow.

The “Raiffeisen Banking Group Upper Austria 2020” project, which was started around five years ago, was also continued in 2018. Achieving further efficiency increases is the primary objective of this intensive collaboration between Raiffeisen-landesbank Oberösterreich and the Upper Austrian Raiff-eisen banks. Representatives from Raiffeisen banks in Upper Austria and Raiffeisenlandesbank Oberösterreich are working together to develop and implement service packages in a number of areas such as compliance and money laundering, liquidation etc.

The strong positioning as a modern advisory bank as well as the openness to and flexibility for further development of the strategy form the best basis for further expanding the strong market position of Raiffeisenlandesbank Oberösterre-ich alongside the present interim results for 2018.





Regulatory developments

Raiffeisenlandesbank Oberösterreich was the only Upper Austrian bank to be classified as a significant institution (SI) in accordance with the Single Supervisory Mechanism (SSM). This means that Raiffeisenlandesbank Oberösterreich will continue to be subject to direct supervision by the European Central Bank (ECB).

With the amendment to the Austrian Banking Act (BWG-No-velle) published on 14 June 2018, the requirements of the ESMA/EBA guidelines for assessing the suitability of mem-bers of the management body and holders of key functions (EBA/GL/2017/12) and the EBA guidelines on internal gover-nance (EBA/GL/2017/11) were transposed into Austrian law. The Austrian Banking Act (BWG) amendment determined new organisational requirements for credit institutions. With regard to the composition of the Supervisory Board of banks, a certain minimum number of formally independent mem-bers of the Supervisory Board was defined. In addition, new compliance requirements for banks were introduced. With regard to compliance processes, the recently introduced amendment section 39 (6) to the Austrian Banking Act re-quires credit institutions to provide a written description of appropriate principles and procedures designed to identify the risks of any violation of supervisory regulations and to limit them to a minimum. In addition, credit institutions of signifi-cant importance must establish a permanent, effective and independent compliance function related to business and operational banking aspects with direct access to the man-agement.. The provisions of the amendment to the Austrian Banking Act (BWG) came into force on 1 September 2018, whereby the requirements regarding the new compliance function for banks of significant importance did not come into force until 1 January 2019.

In the context of the CRR Review, which is expected to re-sult amongst other things in amendments to the CRR and CRD IV, an agreement was reached in December 2018 in the three-way negotiations between the Council of the European Union, the European Parliament and the European Commis-sion. As technical details are still open, the final decision is still pending. Key points of the agreement include a mandatory leverage ratio of 3%, the introduction of a mandatory long-term liquidity ratio (net stable funding ratio – NSFR), changes to the regulations on large loans, the introduction of the new market risk approach (the Basel Committee’s Fundamental Review of the Trading Book – FRTB) as a reporting require-ment, changes to credit risk and changes to the minimum requirements for own funds and eligible liabilities (MREL).

Supervision in 2018 also focused on monitoring and reduc-ing non-performing loans (NPLs). In the context of the CRR Review, which is expected to result amongst other things in amendments to the CRR and CRD IV, an agreement was reached in December 2018 in the three-way negotiations between the Council of the European Union, the European

Parliament and the European Commission. Negotiations on the NPL package for the reduction of non-performing loans published by the European Commission in March 2018, which, in addition to the backstop, provides for an acceler-ated extrajudicial realisation of secured loans and the fur-ther development of secondary markets for non-performing loans, are still ongoing.

A strongly changing regulatory environment is expected in the banking sector also for 2019. Raiffeisenlandesbank Oberösterreich will continue to proactively monitor the regu-latory developments, implement resulting changes and take them into account in its business activities.

Changes in the balance sheet

Raiffeisenlandesbank Oberösterreich’s total assets rose in year-on-year comparison by EUR 2,034 million, or 6.0%, to EUR 35,743 million. (previous year: EUR 33,709 million).

Loans and advances to customers rose in year-on-year comparison by EUR 2,029 million, or 10.9%, reaching a total volume of EUR 20,586 million by the 2018 reporting date (previous year: EUR 18,557 million). This increase can be as-cribed to the very positive economic situation and greater demand for credit as well as to a continuing campaign of acquisition in the Corporates segment.

Loans and advances to banks fell slightly over the course of the year by EUR –40 million or –0.5% to EUR 8,306 mil-lion (previous year: EUR 8,346 million), remaining steady. This total includes EUR 751 million (previous year: EUR 733 mil-lion) relates to refinancing to Upper Austrian Raiffeisen banks. Loans and advances to RBI of EUR 3,039 million (previous year: EUR 3,167 million) are also included.

The volume of securities held by Raiffeisenlandesbank Oberösterreich remained high in 2018 at EUR 4,357 million (previous year: EUR 4,373 million). As in previous years, all securities held as fixed assets were measured according to the strict lower of cost or market principle. If the reasons for

Assets


Loans and advances to customers 20,586 57.6 18,557 55.1 2,029 10.9

Loans and advances to banks 8,306 23.2 8,346 24.7 –40 –0.5

Securities 4,357 12.2 4,373 13.0 –16 –0.4

Investments and shares in affiliated companies 2,193 6.1 2,187 6.5 6 0.3

Other assets 301 0.9 246 0.7 55 22.4

Total assets 35,743 100.0 33,709 100.0 2,034 6.0




the write-down no longer apply, the write-down must be re-versed. As at the 2018 reporting date, securities were distrib-uted as follows: ı Municipal bonds and similar securities to the value of EUR

1,445 million (previous year: EUR 1,356 million). ı Bonds and other fixed-income securities at EUR 1,442

million (previous year: EUR 1,474 million). ı Shares and other variable-yield securities (e.g. (e.g. pen-

sion funds) at EUR 1,470 million (previous year: EUR 1,543 million).

Raiffeisenlandesbank Oberösterreich’s key investment focus continues to be on securities with high creditworthiness and liquidity. As additional liquidity potential, Raiffeisenlandes-bank Oberösterreich holds a large portfolio of loan collateral instruments which has been provided to the Österreichische Nationalbank as collateral. Unused loans in the Raiffeisen-landesbank Oberösterreich cover funds can also be mobil-ised as collateral with the Österreichische Nationalbank. As at 31 Dec. 2018, Raiffeisenlandesbank Oberösterreich’s unused liquidity reserves amount to EUR 5,072 million (previous year: EUR 4,771 million).

Equities and securities in affiliated companies increased in year-on-year comparison by EUR 6 million, or 0.3%, to EUR 2,193 million (previous year: EUR 2,187 million).

Other assets, comprised of cash assets and balances at cen-tral banks, intangible assets, property, plant and equipment, other assets, prepaid expenses and deferred tax assets, de-creased in comparison to 2017 by EUR -55 million, or –22.4%, to EUR 301 million (previous year: EUR 246 million).

Amounts owed to banks rose in year-on-year comparison by EUR 517 million to EUR 12,704 million (previous year: EUR 12,187 million) and were comprised of the following: ı Amounts owed to Upper Austrian Raiffeisen banks: EUR

6,103 million (previous year: EUR 5,465 million) ı Amounts owed to banks in the Raiffeisen Banking Group

(RBG) of Austria, not including Upper Austrian Raiffeisen banks: EUR 756 million (previous year: EUR 746 million)

ı Amounts owed to mortgage banks (primarily Oberös-terreichische Landesbank Aktiengesellschaft and SALZBURGER LANDES-HYPOTHEKENBANK AKTIEN-GESELLSCHAFT): EUR 264 million (previous year: EUR 416 million)

ı Amounts owed to development agencies and banks (pri-marily Österreichische Kontrollbank, European Investment Bank): EUR 2,958 million (previous year: EUR 2,539 million)

ı Other amounts owed to banks: EUR 2,623 million (previ-ous year: EUR 3,021 million)

The increase in amounts owed to banks is attributable particularly to the excellent transfer of liquidity from the Upper Austrian Raiffeisen banks to Raiffeisenlandesbank Oberösterreich.

Customer deposits (savings deposits and current accounts) increased year-on-year by EUR 810 million, or 7.7%, to EUR 11,300 million (previous year: EUR 10,490 million). These comprise savings deposits of EUR 859 million (previous year: EUR 832 million), and fixed-term deposits and deposits re-payable on demand of EUR 10,441 million (previous year: EUR 9,658 million). The qualitative focus of this increase was on the term extension of customer deposits and the propor-tionality of the volume of liabilities to the amount of the entire business with the respective customer.

The issue volume (without interest accruals) rose in compar-ison to the previous year by EUR 605 million, or 8.1%, with a total value of EUR 8,099 million at 31 Dec. 2018 (previ-ous year: EUR 7,494 million). Of the total issue volume, EUR 2,363 million (previous year: EUR 1,699 million) is attributable to covered bonds. Unsecured issues with a denomination under EUR 2,000 (or the equivalent in foreign currency for issues in foreign currency) that were made to retail investors amount to EUR 2,430 million (previous year: EUR 2,860 mil-lion) of the overall outstanding volume. In 2018, the Bank suc-cessfully issued its second covered bond benchmark issue. Subscription orders, in particular from investors in Europe, were available for the issue of EUR 500 million. The bond was 1.5 times oversubscribed.

Compared to the previous year, equity rose by EUR 111 mil-lion, or 3.8%, to amount to EUR 3,055 million at the 2018 reporting date (Previous year: EUR 2,944 million).

Remaining liabilities – comprised of other liabilities, deferred income and provisions – fell by EUR –29 million, or –5.4%, to EUR 520 million (previous year: EUR 549 million).

Earnings

Net interest income rose compared to the previous year by EUR 46.2 million or 19.8% to EUR 279.4 million (previous year: EUR 233.2 million). This was due to increased demand for loans from customers. It also reflects the reduced alloca-tion posted under interest income of a provision for possi-ble claims for repayment from customers in connection with Supreme Court decisions relating to negative interest rates, amounting to EUR –3.8 million (previous year: EUR –21.6 million). Earnings from securities and equity investments amounted to EUR 114.1 million (previous year: EUR 121.3 million). Net fee and commission income was increased by 10% to EUR 110.4 million (previous year: EUR 99.8 million),



Amounts owed to banks 12,704 35.5 12,187 36.2 517 4.2

Savings and giro deposits 11,300 31.6 10,490 31.1 810 7.7

Own issues 8,164 22.8 7,539 22.4 625 8.3

Equity capital 3,055 8.5 2,944 8.7 111 3.8

Other liabilities 520 1.6 549 1.6 -29 -5.4

Total equity liabilities 35,743 100.0 33,709 100.0 2,034 6.0





largely as a result of higher fee and commission income in the credit and securities sector. Other income amounted to EUR 72.7 million (previous year: EUR 94.0 million), a fall of –22.6% compared to the previous year. This is largely the result of negative valuation effects for derivatives.

Altogether, operating income rose in 2018 by 5.2% to EUR 576.6 million (previous year: EUR 548.3 million).

General administrative expenses in 2018 were comprised of personnel expenses – including additional personnel expenses as a result of incorporating the employees from Hypo Salzburg into Raiffeisenlandesbank Oberösterreich – amounting to EUR –146.2 million (previous year: EUR –140.7 million) and other administrative expenses of EUR –119.3 mil-lion (previous year: EUR 103.7 million). The increase is attrib-utable largely to IT expenses due to growing programming and operating costs.

Other expenses were reduced in comparison to the previ-ous year by –29.8%, amounting to a total for 2018 of EUR –48.9 million (previous year: EUR –69.6 million). Included are contributions to the resolution fund amounting to EUR –14.6 million (previous year: EUR –12.3 million) and deposit guar-antees amounting to EUR –1.9 million (previous year: EUR –1.9 million).

Total operating expenses showed little change in comparison to the previous year and are stated for 2018 at EUR –314.3 million (previous year: EUR –314.0 million).

The operating profit – calculated as the difference be-tween operating income and operating expenses – for 2018 amounted to EUR 262.3 million (previous year: EUR 234.3 million).

Loan loss allowances were EUR –48.7 million (previous year: EUR -72.9 million).

Income from securities and equity investments amounted to EUR 6.1 million (previous year: EUR 56.5 million). This fall is attributable largely to the high reversals of impairment losses in the previous year, and reduced income from sales of secu-rities during the present financial year.

As a result of the factors described above, profit on ordi-nary activities was similar to that of the previous year, and is stated for 2018 at EUR 219.7 million (previous year: EUR 217.9 million).

Taxes on income and earnings and other taxes increased to EUR –67.3 million (previous year: EUR –5.9 million). The stability levy payable by banks (including special contribu-tion) rose by EUR –0.4 million compared to the level for 2017, and amounted to EUR –19.2 million (previous year: EUR –18.8 million).

In the 2018 financial year, contributions to the stability levy, deposit guarantee scheme and resolution funds alone totalled EUR –35.7 million (previous year: EUR –33.0 million).

The resulting profit for the year was EUR 152.4 million. (previ-ous year: EUR 212.0 million).

1.3. Branches and regional branch offices

Branches

Continuous advancement of digitisation also gives rise to changes in terms of customer support requirements. In the context of these changing conditions, Raiffeisenlandesbank Oberösterreich has positioned itself as a modern advisory bank that combines innovative financial services with the personalised advice that remains an important feature. The needs of our customers are central. As at 31 Dec. 2018, Raiff-eisenlandesbank Oberösterreich had one bank branch in Vi-enna and 17 in Upper Austria (no change from the previous year). This allows Raiffeisenlandesbank Oberösterreich to ad-vise and serve 133,264 individual and corporate customers (previous year: 132,216).

2018 2017 Change

IN EURIN % Ø BS IN EUR

IN % Ø BS IN EUR M

IN % Ø BS

Net interest income 279.4 0.80 233.2 0.71 46.2 19.8

Income from securities and equity investments 114.1 0.33 121.3 0.37 –7.2 –6.0

Net fee and com-mission income 110.4 0.32 99.8 0.30 10.6 10.6

Other income 72.7 0.21 94.0 0.28 –21.3 –22.6

Operating income 576.6 1.66 548.3 1.66 28.3 5.2

Personnel expenses –146.2 –0.42 –140.7 –0.43 –5.4 3.9

Administrative expenses –119.3 –0.34 –103.7 –0.31 –15.6 15.1

Other expenses –48.9 –0.14 –69.6 –0.21 20.7 –29.8

Operating expenses –314.3 –0.91 –314.0 –0.95 –0.3 0.1

Operating profit 262.3 0.76 234.3 0.71 28.0 11.9

Net income from loan loss provisions –48.7 –0.14 –72.9 –0.22 24.2 –33.2

Income from securities and equity investments 6.1 0.02 56.6 0.17 –50.4 –89.2

Profit on ordinary activities 219.7 0.63 217.9 0.66 1.8 0.8

Taxes on income and earnings and other taxes –67.3 –0.19 –5.9 –0.02 –61.3 –

Profit for the year 152.4 0.44 212.0 0.64 –59.4 –28.1

Ø Total assets 34,726 33,020 1,706 5.2




International branches

Raiffeisenlandesbank Oberösterreich has maintained a re-gional branch operation in Southern Germany since 1991, acting as a driving force for customers from industry, medi-um-sized enterprises and affluent private customers. In addi-tion to branches in Augsburg, Passau, Nuremberg, Munich, Regensburg, Würzburg, Ulm and Heilbronn, Raiffeisenland-esbank Oberösterreich now also has a branch in Stuttgart, which opened in 2018. The new location is intended to gen-erate additional growth as well as intensify existing business connections.

Since the integration of PRIVAT BANK AG in 2015, Raiffeisen-landesbank Oberösterreich additionally maintains a regional presence in the Czech Republic. Affluent private customers and corporate customers are provided with a broad spec-trum of professional financial services, all of which reflect the Bank’s customer focus, from the Prague location.

1.4. Financial and non-financial performance indicators

Financial performance indicators

The key figures used in international comparisons and for in-ternal controls are as follows:

Profitability – key figures

ı Return on equity – calculated as the percentage ratio of pre-tax profit for the year on income to average equity – stood at 6.7% in 2018 (previous year: 6.9%).

Key liquidity figures

ı The Net Stable Funding Ratio (NSFR) is currently still in the observation phase from the perspective of the regula-tor. As at 31 Dec. 2018, NSFR at the individual bank level stood at 109.4% (previous year: 105.9%), which is above the level of 100% which will be required in future.

ı The liquidity coverage ratio (LCR) as at 31 Dec. 2018 was 124.0% at the individual bank level (previous year: 125.0%), significantly above the legally required 100%.

ı The survival period as at 31 Dec. 2018 was greater than 365 days, well above the minimum period of 30 days stip-ulated in the CEBS (Committee of European Banking Su-pervisors) guidelines.

Asset quality indicators

The asset quality indicators included amongst the recovery indicators outlined in the Bank Recovery and Resolution Act (BaSAG) illustrate any and all changes in Raiffeisenlandes-bank Oberösterreich’s portfolio. The focus is placed on credit risk (including counterparty risk).

In addition to the limits determined internally (no regulatory minimum quotas), the threshold values for the asset quality indicators also include a further buffer in order to guarantee the best possible response or timely implementation of re-covery measures before the recovery threshold is breached. ı The coverage ratio I or NPL coverage ratio reveals the as-

sociated level of loan loss allowances relative to non-per-forming loans. The ratio expresses the institution’s ability to absorb potential losses resulting from the non-perform-ing portfolio. As at 31 Dec. 2018, the Coverage Ratio I at the individual bank level was 48.4% (previous year: 50.3%).

ı The rate of change in NPLs (in %) is a demonstration of the dynamic development in the portfolio of non-performing loans. This exercised a direct impact on the results and on the bank’s equity. At the end of 2018, the rate of change in NPLs at the individual bank level for the year was –22.3% (previous year: –35.0%). The portfolio could thereby be substantially reduced.

ı The NPL ratio (relationship between non-performing loans exposure and total exposure) at the individual bank level was stated as at 31 Dec. 2018 at 1.9% (previous year: 2.6%).

Key equity and solvency figures

Raiffeisenlandesbank Oberösterreich’s Common Equity Tier 1 (CET 1) and Tier 1 (T 1) capital in accordance with the Capi-tal Requirements Regulation (CRR) amounted to EUR 2,934.7 million at the end of 2018 (previous year: EUR 2,817.0 million). This increase was primarily the result of deducting expected payments and dividends from the calculated profit for the year.

As at 31 Dec. 2018, supplementary capital (Tier 2, T 2) was stated at EUR 585.5 million (previous year: EUR 620.4 mil-lion). This decline resulted from the fact that the amortisation of Tier 2 capital instruments pursuant to Article 64 CRR was higher in 2018 than new issues. Similarly, 2018 Tier 2 capi-tal instruments were subscribed to by major participations, which led to a deduction.

Total Capital (TC) is comprised of Tier 1 capital and Tier 2 capital and increased to EUR 3,520.2 million as at 31 Dec. 2018 (previous year: EUR 3,437.4 million).

The total amount at risk (risk-weighted assets) is reported as at 31 Dec. 2018 at EUR 23,233.6 million (previous year: EUR 21,637.2 million). The rise in risk-weighted assets results from the broad and increased customer demand for financ-ing solutions.

As at the end of the 2018 financial year, in accordance with CRR the Common Equity Tier 1 capital and Tier 1 capital ratio stated was 12.6% (previous year: 13.0%) with a total capital ratio stated of 15.2% (previous year: 15.9%). The ratios are calculated on the total risk-weighted assets in accordance with Art. 92 CRR.





A capital conservation buffer was introduced effective 1 Jan. 2016 in accordance with section 23 of the Austrian Bank-ing Act, and this must be maintained in the form of Com-mon Equity Tier 1 capital. This amounted to 1.875% for 2018. From 2019 onwards the capital conservation buffer stands at 2.50%.

This anti-cyclical capital buffer is intended to function as an economic corrective measure during times in which credit growth exceeds GDP. It is equivalent to between 0% and 2.5% of the risk-weighted assets and is held in Common Eq-uity Tier 1 capital. The relevant supervisory authorities may also stipulate that banks in their countries must maintain an anti-cyclical capital buffer of more than 2.5%.

As at 31 Dec. 2018 the capital buffer ratio for significant risk exposures in Austria was 0%. Raiffeisenlandesbank Oberös-terreich’s bank-specific anti-cyclical capital buffer was, in ac-cordance with section 23a (1) of the Austrian Banking Act, calculated as the weighted average of the ratios of anti-cy-clical capital buffers of the countries in which Raiffeisenland-esbank Oberösterreich has significant credit risk exposures. It is expected that Raiffeisenlandesbank Oberösterreich’s anti-cyclical capital buffer in 2019 will, similarly to 2018, be insignificant in size.

In accordance with section 23d of the Austrian Banking Act in conjunction with sections 6 and 7 of the FMA’s Capital Buffer Regulation (KP-V), a systemic risk buffer (capital buffer for systemic vulnerability) of 1% was prescribed in addition for Raiffeisenlandesbank Oberösterreich on an individual basis from 1 Jan. 2018.

This results in the following statutory minimum capital requirements:

in addition to the minimum capital requirements and capital buffer requirements, banks must meet capital requirements in accordance with the Supervisory Review and Evaluation

Process (SREP). As a result of this SREP carried out by the ECB, Raiffeisenlandesbank Oberösterreich must from 2019 onwards take into account a Pillar 2 requirement (P2R) by means of Common Equity Tier 1 capital in the minimum cap-ital requirements of Pillar 1.

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


The existing Institutional Protection Scheme (IPS) for Upper Austria (L-IPS) was previously adjusted to the particulars of the new European legislation and corresponds with the legal framework as at the reporting date of 31 Dec. 2018. An IPS is a liability or indemnity agreement – created by means of a contractual agreement or through articles of association, statutes or charters – that provides protection for member banks in a decentralised banking group. Such an agreement sets out the terms on which the member banks stand to-gether and provide mutual solidarity. Pursuant to Article 49 CRR, in the determining their capital and reserves credit, in-stitutions must deduct their positions in equity instruments of other credit institutions, except where exempted under Article 49 (3) CRR in conjunction with Art. 113 (7) CRR as part of an existing IPS. Raiffeisenlandesbank Oberösterreich is a mem-ber of the regional state IPS, whose members also include all Raiffeisen banks in Upper Austria, as well as Raiffeisen-Kred-it-Garantiegesellschaft m.b.H. Raiffeisen-Einlagensicherung OÖ reg. Gen.m.b.H acts as the trustee and manages the L-IPS assets of the scheme.

In addition, Raiffeisenlandesbank Oberösterreich is a mem-ber of the federal IPS (B-IPS), whose members also include Raiffeisen Bank International (RBI), as well as all Austrian Raiffeisenlandesbanks, Raiffeisen Wohnbaubank AG, Raif-feisen-Holding Niederösterreich-Wien reg. Gen.m.b.H., Poso-jilnica Bank eGen and Raiffeisen Bausparkasse GmbH. In this case, Österreichische Einlagensicherung eGen has assumed the role of trustee for management of the B-IPS assets. Under Article 113 (7) of the CRR, and subject to consent from the competent authorities, banks may give a risk weight of 0% to risk exposures in respect of counterparties with whom the bank has signed an IPS, although this does not apply to risk exposures that make up items of CET 1 capital, additional Tier 1 capital or Tier 2 capital as specified by the CRR.

The Austrian Financial Market Authority (FMA) has issued a decision approving both protection schemes (L-IPS and B-IPS) of which Raiffeisenlandesbank Oberösterreich is a member and allowing the exemptions under Articles 49 (3) and 113 (7) of the CRR.

31.12.2018 31.12.2017

IN % IN %


Capital maintenance buffer 1.875 1.250

Systemic risk buffer 1.000 –

Anticyclical capital buffer 0.089 0.040

Capital requirement for Common Equity Tier 1 capital 7.464 5.790



Minimum requirement for Tier 2 capital in accordance with the CRR 2.000 2.000





Non-financial performance indicators

Please refer to the separate non-financial report on the Raiff-eisenlandesbank Oberösterreich website.





2.1. Forecast of economic trends

The global economy lost momentum in the last few months of 2018, and forecasting institutes revised their expecta-tions downwards. The European Commission anticipates global economic growth of 3.8% in 2019/20, while the In-ternational Monetary Fund is somewhat more pessimistic, at 3.5% for 2019 and 3.6% for 2020. These muted prospects are based amongst other things on the slower growth that has been evident since the second half of 2018 in Germany (automotive industry), Italy (debt situation), Turkey (deepen-ing recession). These are compounded by general risks such as negative influences of the trade dispute originating in the USA, or increased volatility in the finance markets. Additional factors include a slowdown in growth in China and the on-going uncertainty with regard to Brexit. According to the IMF, the extent of the economic slowdown in early 2019 may be underestimated, due to anticipatory effects in international trade.

In the USA, confidence and leading economic indicators re-main very positive and above the long-term average, despite some dampening in autumn 2018. The rate of growth in the USA will (be forced to) slow down: limitations in capacity (par-ticularly in the labour market) are increasingly evident, fiscal stimuli are coming to end, and the mini-boom in investments stimulated by higher oil prices in the first half of 2018 is not likely to be repeated in 2019. Consumers are still in a buying mood, which is why consumption could again become the most important economic engine. The US Federal Reserve anticipates GDP growth of 2.3% for 2019, and 2.0% for 2020. The International Monetary Fund forecasts 2.5% for 2019 and 1.8% for 2020.

For the seventh year in succession, growth in the EU will con-tinue in 2019, in every member state. However the dynamic is expected to be more modest than in recent years, and the outlook is influenced by many uncertainties and risks (see above). However, according to EU analysts and the ECB, the fundamental economic basis remains robust. The ECB expects growth of 1.7% in the Euro countries in 2019 (IMF: 1.6%, European Commission: 1.3%), and for 2020 both the ECB and IMF are forecasting 1.7%, and the European Com-mission 1.6%. The fall in inflation recorded at the end of 2018 in the eurozone was based on lower energy and food prices. The core inflation rate, which excludes the volatile energy and food prices, remained low despite healthy wage growth. In-flationary pressure is not expected to be high in 2019 either, mainly due to the expected subdued development of com-modity prices.

Austria's economy is also increasingly confronted with global economic risks and is therefore losing momentum. However, GDP should continue to grow above the eurozone average due to dynamic domestic demand. Economic growth is in-creasingly reliant on private consumption, based on high consumer confidence and the favourable wage situation (increasing employment levels, modest inflation, the “Family Bonus Plus” tax deduction, reduced unemployment insur-ance contributions). GDP growth forecasts for 2019 are be-tween 2.0% (Austrian Institute of Economic Research (WIFO)) and 1.6% (European Commission), and for 2020 between 1.8% (WIFO) and 1.6% (European Commission, Institute for Advanced Studies (IHS)).

In Upper Austria too the economic peak was passed in 2018 and in common with the Austrian national situation and main trading partners, a slight slowdown in the growth dynamic is expected. Solid fundamental data suggest that economic growth in 2019/20 will continue to be slightly above the Aus-trian average. The federal province of Upper Austria expects regional GDP growth of 2.3% in 2019, and 2.0% in 2020.

2.2. Expected development of the company

Digitalisation is changing the banking business at an increas-ing pace and poses major challenges for the entire industry. Our focus on the requirements and needs of our customers is unique. Raiffeisenlandesbank Oberösterreich, as a pio-neer of innovation in this major change process, is providing strong impulses for the future with the permanent further de-velopment of all online and mobile products, thus offering its customers the opportunity to optimally conduct their bank-ing business through all channels. Cooperation with creative companies such as start-ups and FinTechs, with whom new products and technologies are jointly tested for their future viability, plays an important role in this.

These rapid changes mean it is no longer enough to create perfectly adapted digital services and to combine them with providing professional personalised advice and customer care. In order to keep pace with global changes, a vision-ary and future-oriented approach is needed with far-reaching consequences on familiar processes and structures. There-fore the future-oriented project LEAD`25 was launched in 2018. The term “Home of Financial Intelligence” was coined here as a vision. The premises for the initiated change pro-cess, which goes hand in hand with the implementation of a new organisation, are a radical customer orientation, a sus-tained increase in the Group's profitability, interdisciplinary work as well as flat hierarchies and bundling of know-how.

2. Outlook and risks for the company

Management Report 2018 | Outlook and risks for the company



The processes already initiated with LEAD' 25 are to be further intensified in 2019 and the working methods and structures of Raiffeisenlandesbank Oberösterreich are to be changed in the long term. Another topic in which the entire Raiffeisen Banking Group Upper Austria has been intensively engaged for several years now is the “Raiffeisen Banking Group Oberösterreich 2020” project, in which Raiffeisen-landesbank Oberösterreich together with the Upper Austrian Raiffeisen Banks is developing a number of measures for the future to secure stability and guarantee long-term qualitative growth.

Intensive work is also taking place in parallel on the “Digi-tal regional bank” project. This is based on an “aggregated business model” in which the physical and digital channels no longer co-exist separately but are in fact intertwined. The physical proximity of the branch remains important and is retained based around the relevant need. The support and service approaches will change, however, and digital chan-nels will increasingly be selected for these which are indepen-dent of location and time. This concept benefits customers in that they receive active support with differing services and support and care concepts. Raiffeisenlandesbank Oberös-terreich benefits from increases in productivity and efficiency based on process harmonisation and simplification. This is associated with new and modern branch concepts that are precisely tailored to customer needs. The general aim is to improve existing services, create new ones, further increase efficiency and sharpen the strategy for the future. It is partic-ularly important to combine personal consultation with digital services, and align them perfectly. The key to our success going forward will be in keeping a keen eye on trends and developments and continuing to perform pioneering work in digital innovation.

Raiffeisenlandesbank Oberösterreich is a strong driving force with its professional range of sustainable financial services for private, corporate and institutional customers, and is broadly and stably positioned through other business areas, such as equity investments. Businesses are offered a dedicated net-work and services that extend well beyond the norm as a result of a high level of cooperation between Raiffeisenland-esbank Oberösterreich and the Raiffeisen banks in Upper Austria. Raiffeisenlandesbank Oberösterreich's unique po-sition in the equity investment sector also gives it special know-how in providing financing via equity financing. The development of the core capital ratio, which represents an important foundation for the future stability and indepen-dence of Raiffeisenlandesbank Oberösterreich, also remains in focus.

Based on the Bank's strengths – such as efficient, targeted liquidity planning and control, comprehensive risk man-agement combined with detailed control – and the close collaboration with the Raiffeisenbanks in Upper Austria, Raiff-eisenlandesbank Oberösterreich is doing everything it can

to enable it to continue to justify the confidence of custom-ers in the future and to provide comprehensive support for businesses, institutions and retail customers in their various projects.

2.3 Significant risks and uncertainties

The long-term success of Raiffeisenlandesbank Oberöster-reich is largely dependent upon active risk management. To fulfil this aim, risk management has been implemented in ac-cordance with sections 39 and 39a of the Austrian Banking Act and the Credit Institution Risk Management Regulation (KI-RMV), that facilitates the identification and measurement of all risks in the Group (credit risks, concentration risks, mar-ket risks, equity investment risks, liquidity risks, macroeco-nomic risks, operational risks and other risks) and to take active steps to manage them.

The overall risk strategy approved by the Managing Board ensures that the risks assumed by the Bank are consistent with the corporate strategy. The Managing Board and the Supervisory Board are regularly given reports about the risk situation.

The various different types of risk are quantified and man-aged as shown in the table on page 195; a fuller explanation is provided below.

Market risks

Market risks take the form of changes in interest rates, spreads, currency and exchange rates relating to securities, interest rates and foreign exchange items.

The basis for all business is a balanced risk/reward ratio.

The strict division of labour between front, middle and back office and risk controlling ensures that risks can be described comprehensively, transparently and objectively to the full Managing Board, the Supervisory Board and supervisory authorities.

New products and markets are evaluated in an approval pro-cess and then authorised by the Managing Board.

The trades and the market price risk are limited by an exten-sive limit system. All trading positions are valued every day at market prices.

The market risks are measured every day with the value-at-risk index for the trading and banking books. This indicates a possible loss which, with 99% probability, will not be ex-ceeded during a one-month holding period.





In addition to value at risk, stop-loss and stress tests are used to limit risk.

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

Raiffeisenlandesbank Oberösterreich also uses the principle of diversification on the basis of business partners, products, regions and sales channels to reduce its risks. In addition, derivative transactions are conducted almost exclusively with banks with which collateral agreements are in place. Deriva-tive financial instruments in the trading book are recorded at their fair value, with effect on the income statement. Banking book derivatives that are not used for interest-rate manage-ment or that do not form part of a hedge are generally rec-ognised in profit or loss if the fair value is negative. For those derivative financial instruments in the banking book that serve

to manage interest rates, if there is a negative surplus for a functional unit per currency, then the change is recognised as income at the fair value from the previous year. The principle objective is establishing micro- and macro-hedges between underlying transactions (generally loans and bonds) and col-lateral transactions (especially interest rate swaps) in order to reduce volatility in the balance sheet results. Provisions for expected losses are recognised for negative fair values of derivatives in micro-hedges that are not fully effective. If there is a poor creditworthiness for a collateral or underlying trans-action with a micro-hedge, then an individual review takes place as to whether this micro-hedge needs to be released and, if applicable, a provision for pending losses is thereby formed based on the imparity principle.

Both the value at risk as well as standardised shock scenar-ios are subject to limits. These risk management methods are also used in hedging.

The total limit for these risks is decided on by the Managing Board after taking the risk-bearing capacity of the bank into consideration. The risk management system includes contin-uous checks on compliance with these limits.

Strategy and procedure for managing risk

Market risks

ı Ongoing quantitative controls using defined limits for risk and provisional gains and losses ı Daily calculation of the value at risk based on historical simulation as well as stress tests ı Risk/earnings management via return on risk adjusted capital (RoRAC) ı Treasury Rulebook as central regulatory framework

Credit risk

ı Quantitative controls by limiting the asset volume for each division, as well as via individual and industry-based limitations

ı Monthly determination of the credit value at risk within the scope of the ICAAP (expected and unexpected loss, as well as stress tests)

ı Risk/earnings management via RoRAC ı Risk Management Handbook and Financing Handbook as central regulatory framework


ı Risk calculation: the potential risk from equity investments is quantified using a simulation model based (where available) on existing external gains or losses (market capitalisations or figures from expert reports as at the relevant reporting date). In this model, the historical volatility observable in the market is applied to the inputs used in the experts’ valuation method (generally the income approach to valuation) facilitating the calculation of statistically significant iterations. A similar procedure is used for publicly listed equity investments. The outcome is a distribution of probabilities for the individual equity investment values. This can then be used to determine the potential risk for the equity investments and thus for the entire equity investment portfolio.

ı Risk/earnings management via RoRAC ı Early Identification Guidelines from the Austrian Raiffeisen deposit guarantee scheme (ÖRE) as central regulatory

framework

Liquidity risk

ı Quantitative controls of the structural liquidity risk using structural liquidity maturity transformation ratios (S-LFT) and gaps with the total assets (GBS ratio) for normal and stress cases, and by using the net stable funding ratio (NSFR)

ı Refinancing risks using funding liquidity value at risk (FLVaR) ı Operational liquidity risk through daily calculation of the liquidity coverage ratio (LCR) and the survival period as

well as through the operational liquidity maturity transformation ratios (O-LFT) ı Limiting of intraday liquidity risk via alert monitoring of outward flows and regulation of the use of liquidity buffers ı Liquidity Risk Management Handbook and Liquidity Emergency Plan Handbook as central regulatory framework

Operational risk

ı Self-assessment and loss event database ı Risk is determined using the basic indicator approach (BIA) ı Annual validation report on operational risk

Macroeconomic risk

ı Quantification of the macroeconomic risks using stress scenarios for the credit risk based on the time series for gross domestic product and the real wage index for Austria

ı Risk/earnings management via RoRAC

Other risks ı Risk buffer approach as well as an additional flat-rate amount for other non-quantifiable risks based on an expert

estimate as part of the risk-bearing capacity analysis




The market risk is calculated in Front Arena/Risk Cube. The weighted historical simulation is used as the value-at-risk model.

The quality of the Front Arena/Risk Cube programme used and the method of historical simulation applied is reviewed daily using back testing. Both the mark-to-market results ac-tually obtained (financial profit/loss) as well as the hypothet-ical results (portfolio is kept constant one day; no impact on exogenous factors) are compared with the risks calculated and tested for significance.

Credit risk

The principles of the customers’ credit ratings are incorpo-rated in the “Rating Standards” and “Collateral Standards” manuals. These regulations provide a compact representa-tion of the standards valid for Raiffeisenlandesbank Oberös-terreich. They are based on international standards (Basel), regulations from the European Union (CRR), the EBA Guide-lines, national statutes and laws (Austrian Banking Act, Credit Institutions and Risk Management Regulation) or on supervi-sory recommendations (FMA minimum standards for lending, FMA series of guidelines on credit risk).

An organisational separation between front and back offices has been implemented.

In order to measure the credit risk, the bank carries out its own internal ratings and classifies financing transactions into credit rating and risk classes. The risk class of a borrower accordingly comprises two dimensions – recording and as-sessing their financial situation and measuring the collateral provided.

Both hard and soft facts are employed as creditworthiness criteria. In corporate customer business, soft facts are also defined systematically during discussions with the company and then adjudged.

Providing loan collateral for loans is a crucial strategy aimed at reducing any potential credit risk. Recognised collateral is set out in the collateralisation standard with the associated valuation guidelines. The value of the collateral is calculated using uniform methods which include pre-defined deduc-tions, expert opinions and standardised calculation formulas. The collateral is mapped and maintained in a central collateral system.

Rating systems are differentiated according to the customer segments Corporates, Retail Customers, Projects, Banks, States, Federal States/Municipalities, Insurance Companies and Funds. A scoring system is used to automatically classify low-volume retail business with employed private customers.

This credit rating system is constantly being validated and developed. To this end, a validation report with a summary of

the validation results is prepared annually (for RBI models) or quarterly (for other rating models). Qualitative and quantitative elements are used for validation. The qualitative validation fo-cuses on reviewing and improving data quality and an analy-sis of compliance with the rating standards. The quantitative validation involves an examination of the discriminant power, stability and calibration of the rating models.

Business transactions that result in a country risk may only be carried out if the resulting country risk is within the approved country risk limit.

Limitations on the industries are implemented at Raiffeisen-landesbank Oberösterreich using nominal limits based on the bank’s exposure. The ICAAP credit risk for Raiffeisenlandes-bank Oberösterreich as well as economic industry analyses form the basis for determining the nominal limits. The current limit utilisation can be queried by the consultant in the system. An assessment of the limited industries is also compiled and sent out monthly to the members of the Managing Board re-sponsible for the markets and risk.

The overall risk of all assets exhibiting counterparty default risk is assessed on a monthly basis. Risk may arise due to credit default, deterioration in creditworthiness or a reduc-tion in the intrinsic value of collateral, and it is communicated through the key figures expected loss and unexpected loss.

The expected loss represents the most probable value de-crease of a given portfolio. This loss is covered by the calcu-lated risk costs.

The unexpected loss represents a portfolio’s possible loss beyond the expected loss. Thus, it communicates possible negative deviation from the expected loss. The unexpected loss is covered by the equity capital and is the maximum loss that can possibly arise within a single year, and which – with a certain amount of probability – will not be exceeded. Raiff-eisenlandesbank Oberösterreich calculates unexpected loss at probabilities of 95% and 99.9%.

Unexpected loss is calculated in a portfolio model that also takes into account concentration risk. The portfolio value dis-tribution is prepared on the basis of transition probabilities and correlations using a Monte Carlo simulation. The asset value model is applied to this end. The asset value model derives the correlations between the counterparties on the basis of the MSCI Sector Indexes. The unexpected loss per quantile is read from the portfolio value distribution. Credit risk for customers with the rating w5.2 is determined using the ÖRE model. For customers with a w-rating above 5.2, the risks/opportunities from loan defaults or changes in credit-worthiness are determined within the portfolio model using a market valuation model. The market data required for the portfolio value distribution (interest rates, credit spreads and sector indices) are updated every month.





The CVA risk represents the risk of a negative change in the fair value of OTC derivatives with an increase in the counter-party risk, and is accounted for by adjusting the fair value (credit-valuation adjustment) of a portfolio of transactions with a counterparty.

In the “Counterparty risk report”, there is a structured presen-tation of Raiffeisenlandesbank Oberösterreich’s counterparty risk for the purposes of internal risk control as required by the minimum standards for lending business and general inter-national standards (ICAAP). The structure and content of the Risk Report at Raiffeisenlandesbank Oberösterreich is also the standard for risk reports by the subsidiaries. The Risk Report is sent to the entire Managing Board each quarter.


Equity risk describes the danger of potential future value re-ductions for investments. The following types of risk are con-sidered under equity risk: ı Risk of dividend default ı Risk of current value depreciation ı Risk of impairment losses ı Risk of additional regulatory contributions ı Risk of strategic (ethical) responsibility for restructuring ı Risks resulting from the reduction of hidden reserves

The potential risk from equity investments is quantified using a simulation model based on existing external valuations (as at the relevant reporting date). In this model, the historical vol-atility observable in the market is applied to the inputs used in the experts’ valuation method (generally the income ap-proach to valuation) facilitating the calculation of statistically significant iterations. A similar procedure is used for publicly listed equity investments. The outcome is a distribution of probabilities for the individual equity investment values. This can then be used to determine the potential risk for the eq-uity investments and thus for the entire equity investment portfolio.

Liquidity risk

The liquidity risk encompasses the risk of not being able to fulfil one’s payment obligations by the due date or, in the case of a liquidity shortage, of not being able to acquire enough liquidity at the terms expected (structural liquidity risk).

Ensuring that there is sufficient liquidity takes top priority at Raiffeisenlandesbank Oberösterreich as the central institution for the Raiffeisen Banking Group Upper Austria. Liquidity has to be safeguarded at all times. The objective at the core of the funding strategy is therefore to achieve the best possi-ble diversification in terms of products (savings and demand deposits, senior funding through bonds and borrower’s note loans, covered bonds, interbank funding and equity instru-ments) as well as diversification in sales channels and/or cus-tomers. This includes sales of the Bank’s own issues directly to retail customers through Raiffeisenlandesbank Oberöster-reich and the Raiffeisen banks in Upper Austria together with institutional funding through placements with institutional in-vestors, either directly through the investment sales activities of Raiffeisenlandesbank Oberösterreich or through interna-tional intermediary banks. Further funding is available in the form of direct primary funding from deposits by Raiffeisen-landesbank Oberösterreich’s retail and business custom-ers and indirect primary funding from customer deposits at Upper Austrian Raiffeisen banks invested with Raiffeisenland-esbank Oberösterreich. Development banks are also used as direct sources of funding for lending.

Liquidity and liquidity risk at Raiffeisenlandesbank Oberöster-reich is managed in a control loop between the Asset Liability Management, Market Risk Control and Raiffeisen Bank Busi-ness Administration departments. The Asset Liability Man-agement department is responsible for liquidity control with this, while the Market Risk Control department is responsi-ble for liquidity risk management. The Asset/Liability Man-agement Committee represents a crucial element in overall bank control as a cross-divisional body with responsibility for tasks related to asset/liability management and liquidity management.

The Upper Austrian Raiffeisen banks are integrated into the liquidity management system via the liquidity management agreement with the Aid association of the Raiffeisen Banking Group Upper Austria with the participation of Raiffeisenland-esbank Oberösterreich. The objective of this agreement is to secure the supply of liquidity in Upper Austria. Every Raiff-eisen bank plans and manages its own liquidity; Raiffeisen-landesbank Oberösterreich, as the central institution for the Raiffeisen Banking Group Upper Austria, plans and manages the liquidity for the sector. Communication with the Raiffeisen banks takes place via the Raiffeisen Bank Business Admin-istration department. A liquidity committee is also set up which is made up of representatives from Raiffeisenlandes-bank Oberösterreich, the Raiffeisen banks and the Raiffeisen Association of Upper Austria, and which deals with current topics and/or develops countermeasures when the liquidity position is under pressure.




In Raiffeisenlandesbank Oberösterreich, in addition to the uniform sector liquidity emergency plan defined for the Aus-trian Raiffeisen Banking Group, Raiffeisen Banking Group Upper Austria also has its own liquidity emergency plan, which governs processes, responsibilities and actions in the event of a liquidity crisis.

Liquidity management and liquidity risk are managed under a standardised model which, besides normal circumstances, also encompasses stress scenarios arising from reputational risk, systemic risk, a non-performing loan or a crisis involv-ing several risks. Whereas the normal scenario takes into account liquidity inflows and outflows based on the current market conditions (going concern), the crisis scenarios are based on an assumption of a deterioration in cash flows in certain projected market situations. In the reputational cri-sis scenario, the deterioration in conditions is triggered by damage to the Raiffeisen image (for example, as a result of negative reporting), but the systemic crisis scenario assumes a general crisis affecting the whole of the banking industry. The problem scenario/combined crisis is a combination of the reputational and systemic crises.

All the scenarios involve the calculation of the anticipated inflows and outflows to determine resulting liquidity gaps, which are then compared against a liquidity buffer compris-ing liquid assets. The following ratios are then determined and limited on the basis of this comparison: ı The operational liquidity maturity transformation ratio (ab-

breviated in German to “O-LFT”) for operational liquidity for up to 18 months is formed from the ratios of assets to liabilities accumulated from the beginning over the maturity band. Limiting the O-LFT ensures that risk appetite, i.e. liquidity outflows in relation to liquidity inflows, does not ex-ceed a certain level, taking into account the liquidity buffer.

ı For the structural liquidity maturity transformation (S-LFT), the key figure is formed by taking the ratios of assets to liabilities calculated by going backwards from the end of the maturity band. The limitation of the S-LFT ensures that risk appetite in connection with longer maturities (taking the form of insufficiently long funding arrangements) is limited.

ı The GBS (German abbreviation for the gap between the ratio total and total assets) ratio is formed by taking the ratios of the net positions per maturity band to total as-sets and shows any excessive funding risks. Therefore, this also limits risk appetite.

The following are also the key pillars for managing liquidity and liquidity risk at Raiffeisenlandesbank Oberösterreich: ı Operational liquidity is also measured, in addition to the

aforementioned O-LFT, against the Liquidity Coverage Ratio (LCR) as well as a survival period.

ı The intraday liquidity risk is also monitored and restricted using limitation.

ı The structural liquidity is also measured against the net stable funding ration (NSFR).

ı Funding risk gauges the loss of assets related to increased liquidity costs associated with closing liquidity gaps as a result of a price increase for funding, which will not – with 99.9% certainty – be exceeded within 250 trading days.

ı A quantitative liquidity emergency plan is prepared on a weekly basis.

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

2,000

1,600

1,200

800

400

0

–400

–800

–1,200

–1,600up to 1 year 1 to 3 years 3 to 5 years 5 to 7 years 7 to 10 years over 10 years

Exc

ess

asse

ts

(long

pos

ition

)E

xces

s lia

bilit

ies

(sho

rt p

ositi

on)

31.12.2018 31.12.2017

* Items without fixed capital commitment are analysed in light of more realistically described historical developments and are modelled as at 31 Dec. 2018; values as at 31 Dec. 2017 are also described using this new method.

Raiffeisenlandesbank Oberösterreich liquidity gaps in EUR millions*





Operational risk

Raiffeisenlandesbank Oberösterreich defines operational risk as the risk of loss caused by the inappropriateness or fail-ure of internal processes, people or systems – including IT risks – or caused by external events. Raiffeisenlandesbank Oberösterreich uses the basic indicator approach to quantify operational risk. Raiffeisenlandesbank Oberösterreich uses both organisational measures and IT systems to limit this type of risk as far as possible. A high degree of security is attained by means of limit systems, competence regulations, a risk-adequate internal control system, a comprehensive se-curity manual as a behaviour code and directive, as well as scheduled and unscheduled audits by Internal Auditing. The operative management of this type of risk involves risk dis-cussions and analyses with managers (early warning system) and the systematic recording of errors in a database for anal-ysis (ex-post analysis).

Macroeconomic risk

Macroeconomic risk measures the effects of a slight or se-vere recession on the risk situation at Raiffeisenlandesbank Oberösterreich. To this end, a statistics-based macroeconomic model analyses the correlation between macroeconomic fac-tors (GDP, real wages index) and the probability of default. The simulated economic downturn in the model is used to deter-mine the additional risk based on the CVaR figures.

Other risk

Raiffeisenlandesbank Oberösterreich takes into account other, non-quantifiable risks in terms of risk-bearing capacity by means of a risk buffer. These include: strategic risk, rep-utation risk, equity risk, systemic risk, income and business risk, risk of excessive indebtedness, remaining risk from tech-niques used to reduce credit risks, risks from money launder-ing and the financing of terrorism.

Risk-bearing capacity analysis

A risk-bearing capacity analysis compares the potential group risk with the available risk coverage, in order to be certain that in the event of a problem (going concern – confidence level of 95%), or even in the very unlikely case of an extreme situ-ation (gone concern – confidence level of 99.9%), sufficient capital for risk coverage would be available. The risk-bearing capacity is calculated by comparing the group risk with the available coverage.

Procedures and methods for supervisory monitoring and evaluation.

There is no requirement from the authority responsible to publish the result of the bank’s own procedure for evaluating the suitability of the internal capital.

Raiffeisenlandesbank Oberösterreich always significantly overachieves the SREP ratio for Tier 1 capital that is stipu-lated by the authority.

Stress tests

Integrated stress tests covering all risk types are also carried out in addition to the isolated stress tests for the individual risk types. These consider the impact on profit and loss as well as on the capital resources, and also present the impact on the risk utilisation.

Impact on profit and loss

The resulting risk parameters are determined based on stressed macroeconomic conditions and an aggregated view of potential losses covering all types of risk is presented. The impact on the income statement is considered and the resulting capital resources are ascertained for the end of the stress test period. The analysis is based on a stress test covering multiple periods, in which hypothetical market developments are sim-ulated with a significant economic downturn. The risk param-eters used include interest rates and exchange rates, as well as changes to the probabilities of default in the credit portfolio.

Impact on risk-bearing capacity

The objective is to analyse the risk-bearing capacity under stress conditions for all types of risk and the risk coverage. The stressed credit risk or equity investment risk is deter-mined by simulating deteriorations in the ratings of individual borrowers that are in an industry that is significant to Raiff-eisenlandesbank Oberösterreich. A negative trend for the interest rate curve or the credit spread is assumed in the Mar-ket Risk area. Three defined scenarios (problem, reputational risk and systemic crisis) are simulated with the refinancing risk resulting from this then defined. Default on the part of the biggest borrowers is also simulated with an illustration of the operational harm.

EBA/SSM SREP stress test

The impact on profit and loss and therefore on the capital ratios is also considered within the scope of the EBA or SSM-SREP stress test. The time frame is three years and is imple-mented in accordance with the methods stipulated by the authority.

Raiffeisen Customer Guarantee Fund Upper Austria

One of the top priorities at Raiffeisen Banking Group Upper Austria is to protect customer deposits. The Raiffeisen Customer Guarantee Fund Upper Austria ensures that the deposits of our customers at Raiffeisenlandesbank Oberös-terreich are secure to an extent well beyond statutory deposit protection.

All members of the Customer Guarantee Fund have under-taken to use their financial reserves to ensure that all deposits and issues are honoured in a timely manner. The name Raiff-eisen Banking Group Upper Austria, backed by the financial strength of the entire group, is therefore a byword for cus-tomer and co-owner security and confidence.




Furthermore there is additional protection at federal level from the Raiffeisen Customer Guarantee Association Austria (Raiff-eisen-Kundengarantiegemeinschaft Österreich, RKÖ), which protects customer deposits if the regional (state) protection should prove to be inadequate.

Raiffeisen Customer Guarantee Association Austria (Raiffeisen-Kundengarantie-gemeinschaft Österreich, RKÖ)

This association, whose members comprise participating Raiffeisen banks and Raiffeisenlandesbanks as well as Raiff-eisen Bank International AG (RBI), guarantees all customer deposits and securities issues of participating banks, regard-less of the individual amounts involved, up to the joint financial risk-bearing capacity of the participating banks. The structure of the Customer Guarantee Association has two tiers: first, the Raiffeisen Customer Guarantee Fund Upper Austria at state level, and then the Raiffeisen Customer Guarantee As-sociation Austria (RKÖ) at federal level. Thus, the Customer Guarantee Association guarantees protection for customers that goes beyond the legal deposit guarantee.

Statutory minimum coverage

The new Austrian Deposit Guarantee and Investor Compen-sation Act (ESAEG), which implements a European Directive, came into force in mid-August 2015. All member institutions of Raiffeisen Banking Group Upper Austria are joint members of the “Austrian Raiffeisen-Einlagensicherung eGen” via the Upper Austrian state deposit guarantee.

The act anticipates the establishment of a deposit guarantee fund that is stocked by annual contributions from banks. The target volume, which must be reached by 2024, is 0.8% of covered deposits. If these funds are not sufficient, the banks may be required to provide an additional 0.5% of the covered deposits annually.

Deposits are secured by law up to EUR 100,000 per cus-tomer per institution. This applies to both natural and legal entities. Not covered are all deposits listed in section 10 (1) of the Austrian Deposit Guarantee Scheme and Investor Com-pensation Act (ESAEG) (including deposits from financial institutions, securities firms, insurance companies, pension funds and government agencies).

The guaranteed deposits should be reimbursed within seven working days as of 1 Jan. 2024 (gradual reduction of this pe-riod during the intervening years).

Until 31 December 2018, the Austrian deposit guarantee sys-tem was divided into sectors. All member institutions of Raiff-eisen Banking Group Upper Austria are joint members of the “Austrian Raiffeisen-Einlagensicherung eGen” via the Upper Austrian state deposit guarantee. As of 1 Jan. 2019, they have all joined the “Einlagensicherung AUSTRIA GesmbH” deposit guarantee scheme.

The tried and tested intra-sector protection schemes oper-ated by the Raiffeisen Banking Group at federal-state and federal levels (state IPS, federal IPS) will remain in force. As a result of these sectoral institutional protection schemes, de-posits at Raiffeisen banks continue to be guaranteed to the greatest possible extent.

Bank Recovery and Resolution Act (BaSAG)

The Banking Recovery and Resolution Directive (BRRD) came into force with effect from 1 Jan. 2015 with the estab-lishment of a Europe-wide banking union by the European Union. Following on from this EU Directive (BRRD) the Bank-ing Intervention and Bank Restructuring Act (BIRG) in Austria was repealed and replaced by the Bank Recovery and Res-olution Act (BaSAG) which implemented the BRRD into Aus-trian law effective 1 Jan. 2015. This act requires every bank domiciled in Austria, and that is not part of a group which is subject to consolidated supervision, to create a recovery plan in accordance with the requirements defined in the BaSAG and to update this on an annual basis. As the parent com-pany within the meaning of the CRR, RBG Oberösterreich Verbund eGen created the 2018 group recovery plan based on the new legal position, and this includes the specifics re-lated to Raiffeisenlandesbank Oberösterreich. A resolution plan will be created by the resolution authority and reviewed at least once per year and updated as necessary.

For the purposes of the stress test associated with the re-covery plan under the BaSAG, the bank’s recovery potential was ascertained in six different scenarios, with systemic, rep-utational and also combined crises considered in the char-acteristics rapid and slow. So that crises can be identified at an early stage, early warning indicators are set out in a comprehensive framework concept aimed at ensuring that there is adequate time for implementing suitable counter-measures. The set of indicators selected meets the minimum requirements for qualitative and quantitative indicators in ac-cordance with the EBA Guidelines. Additional indicators were selected by the organisation itself, meaning that a total set of 26 indicators are monitored.

Raiffeisenlandesbank Oberösterreich is obliged by statute to make an annual contribution to the Single Resolution Fund (SRF) at the European level. The contribution to the resolution fund is stipulated by the supervisory authority responsible in accordance with the deposits not guaranteed in association with the bank’s risk profile. If the funds available are not suf-ficient for the purposes of covering losses, costs and other expenses associated with utilising the fund as a resolution mechanism, extraordinary contributions are collected in order to cover the additional expenses.

The scope of application extends to all banks operating within the eurozone. Non-euro states are able to participate in the SRF on a voluntary basis.





The “Digital regional bank” programme is a key future proj-ect. The aim is to open new, exploited pathways and net-work with existing structures. The aim of the programme – which consists of twelve strategic projects – is to promote and accelerate product innovation to further reinforce cus-tomer confidence, secure new market share, continue to consolidate the Bank’s leadership in terms of quality and fur-ther increase efficiency through standardisation. The strat-egy includes online projects (app, My ELBA, website, digital business, product purchase channels etc.), advice projects (SMART advice, product purchase journeys for advisers etc.), and the development of an omni-channel platform and ana-lytics. In addition, innovative Upper Austrian projects (FX plat-form, community platform, digital corporate banking, ROBO advisory services etc.) are also being driven forward.

A central element is the development of a personal finance portal known as “Mein ELBA”. In the future, My ELBA will play an even more important role in the customer relationship. The finance portal, which can be customised by users, primarily also serves as a platform for communications between cus-tomers and the Bank. The services provided by this core cus-tomer platform are rounded off by the facility to send suitable product proposals to customers with an option that allows customers to sign up to the product immediately. In 2018, the first end-to-end programmes will become available in the form of an option to open an account online and Raiffeisen Sofort Kredit on the app. Customers will be offered a unique, overarching standardised service based on the integration and joint refinement of an omni-channel strategy through projects such as New advice, Customer contact centre, An-alytics and My ELBA.

The rapid changes in customer behaviour are also demand-ing continuous modifications to systems. Architecture there-fore needs to be fit for the future. The cornerstones are cutting-edge software architecture (e. g. micro-services), system architecture (e. g. operating system, data bases), ap-plication architecture (interface presentation) and integration architecture (e. g. use of APIs via API management platforms). Independent developments and the integration of off-the-shelf developments (e. g. start-ups) can be quickly deployed.

The trend towards smartphone-based banking is increasing sharply. Raiffeisenlandesbank Oberösterreich offers its cus-tomers numerous options in this regard. For example, the smartphone-based payment process is being constantly ex-panded to include more value-added functions. One of the developments has been the addition of customer cards to the ELBA pay app (available since 2017) so that all payment and customer cards are now offered in one app. One of the developments has been the addition of customer cards to the ELBA pay app (available since 2017) so that all payment and customer cards are now offered in one app. Through a

cooperation with Blue Code (July 2018), private customers of Raiffeisen Oberösterreich can activate ELBA directly via a mobile banking app and start cashless payments on their iPhone and Android smartphone immediately.

In 2018, Raiffeisenlandesbank Oberösterreich already pro-cessed more than 23 million contactless payments, which equates to approximately every third payment. As a result the number of NFC transactions increased by 80% in 2018, compared to 2017. This trend will increase as the situations in which NFC applications can be used are expanded. For example, all payment terminals in Austria must be NFC-capa-ble by 2020, thereby enabling contactless payment by card or smartphone. Furthermore, the vast majority of all Raiff-eisen ATMs and cash recyclers will be equipped with an NFC reader by the end of 2018. All transaction cards issued by Raiffeisenlandesbank Oberösterreich have the necessary NFC technology for contactless payment.

With the launch of the ZOIN product, Raiffeisenlandesbank Oberösterreich is offering the first P2P payment solution and thereby extending the scope of its mobile payment offering. ZOIN enables monetary amounts to be sent from smart-phone to smartphone in real time. The transaction only re-quires that the recipient’s mobile phone number; there is no need to input the IBAN.

The Raiffeisen express transfer system makes the European instant payment standard available to Raiffeisen customers through My ELBA and ELBA Business. Customers can use the new bank transfer in a matter of seconds around the clock and 365 days a year.

In the area of online product offerings, online account settle-ment was used across the board in 2018. This facility gives customers the option of opening an account (conventional current account or student account) from the comfort of their own homes. Customer identity is verified by video link, eps payment or direct in a bank branch.

The online instant loan (up to EUR 4,000 in the ELBA app), the Raiffeisen online loan (up to EUR 30,000 in “My ELBA”) and the new Raiffeisen online saving (for new and existing customers) were also used in 2018. Additional online product transactions will follow, such as vehicle leasing, home loans, insurance policies, online set-up of securities portfolios and the opportunity to order Raiffeisen credit cards online.

Since the summer of 2017, Raiffeisen Österreich has been working in collaboration with its partner FinReach to offer what is for customers a fully automated online account-switching service, making it easy for new customers to move their ac-count to Raiffeisen.

3. Research and development

Management Report 2018 | Outlook and risks for the company | Research and development



As part of its educational and training programmes, Raiff-eisenlandesbank Oberösterreich employs e-learning, blend-ed-learning modules and web-based training sessions. Raiffeisenlandesbank Oberösterreich has developed its own e-learning platform and serves as a competence centre in this regard for Raiffeisen Österreich.

At the Raiffeisenlandesbank Oberösterreich computer cen-tre, the GRZ IT Center, cutting-edge IT safety standards and methods are consistently being designed and implemented. In addition to ISO 27001 and ISAE3402 type B certification, a variety of measures and projects are being implemented to enhance technical security (such as the deployment of products to help identify advanced persistent threats), and to sharpen the security awareness of employees relating to infrastructure, systems and data.

Via Open Banking, Raiffeisenlandesbank Oberösterreich open up the innovative and secure use of bank data for Fin-Techs, start-ups and third party providers. This results in a far-reaching change of existing financial services through a deep and fast integration of data. This results in an improve-ment in customer convenience and creates a bundling of ser-vices. Open Banking simplifies collaboration with cooperation partners. This enables business models to be developed that offer customers convenient, simple, versatile and custom-er-friendly solutions. This development will make it possible to develop new processes and structures that will fundamen-tally change the banking business.

The prevention of fraud in payment transactions faces new challenges in the age of real-time payment transactions. Using artificial intelligence, Raiffeisenlandesbank Oberöster-reich will be able to ensure faster checking and evaluation of transactions, faster reaction to new forms of fraud and im-proved identification of fraudulent transactions.





The accounting-related internal controls systems at Raiff-eisenlandesbank Oberösterreich relate to the process drafted and executed by the Managing Board and those individuals entrusted with monitoring the company and any other peo-ple, with the aim of achieving the following objectives: ı Effectiveness and economic viability of the accounting

process (this also includes protecting the assets from losses caused by damage and misappropriation),

ı Reliability in the financial reporting ı Compliance with the statutory regulations that apply to

accounting.

Balanced and complete financial reporting is an important goal for Raiffeisenlandesbank Oberösterreich and its board members. The task of the internal control system is to sup-port management in such a way that it guarantees effective and constantly improving internal controls in the context of accounting. The basis on which annual financial statements are prepared is derived from the Austrian legislation, primarily the Austrian Commercial Code and the Austrian Banking Act, which govern the composition of separate annual financial statements.

Control environment

The structure of the internal control systems is determined via the control environment. The control environment is de-termined through awareness on the part of the managers and executives of good corporate governance. The Managing Board of Raiffeisenlandesbank Oberösterreich bears overall responsibility for the design and effectiveness of the internal control system. The general control environment includes the middle management level (heads of organisational units) in addition to the Managing Board.

The code of conduct reflects the cooperative principles at Raiffeisen and the values of Raiffeisenlandesbank Oberöster-reich and serves as a binding framework of rules and regula-tions governing the conduct of day-to-day business activities. The internal control system is geared towards the size and type of business operated at Raiffeisenlandesbank Oberös-terreich (in terms of complexity, diversification, risk potential) and towards the statutory regulations to be followed. The cur-rent version of the Code of Conduct was published on Raiff-eisenlandesbank Oberösterreich’s website.

The Fit & Proper Policy represents the written definition of the strategy for the selection of and procedure for assessing

the suitability of members of the Supervisory Board, execu-tive management and employees in key functions and com-plies with the professional values and long-term interests of Raiffeisenlandesbank Oberösterreich. The principles for the remuneration policy in accordance with section 39b BWG or Article 92 et seq CRD are adhered to as applicable.

Risk assessment

The risk assessment is a dynamic and iterative process for identifying and assessing risks. Risks which represent ob-structions towards achieving certain objectives must be identified in good time, with appropriate actions introduced. The responsibilities for assessing and controlling the risks in accordance with section 39 of the Austrian Banking Act or CRR/CRD as well as the CEBS/EBA standards are regulated at Raiffeisenlandesbank Oberösterreich. The requisite func-tional separation is ensured with this.

The Risk Management division is responsible for the develop-ment and deployment of risk measurement procedures and IT systems at Raiffeisenlandesbank Oberösterreich; it pre-pares the results and risk information necessary to carry out active risk control and relays accounting-relevant information to the Managing Board accordingly.

Major risks related to accounting procedures are assessed and monitored by the Managing Board.

Control measures

Principles and procedures for complying with company de-cisions are set up and published in order to provide safe-guards against risks and to achieve the corporate objectives. The effectiveness, traceability and efficiency of the internal control system essentially depend on the balanced mixture and proper documentation of the different control activities. Specific control and monitoring activities have been set out for this.

Appropriate control measures are applied in ongoing busi-ness processes to ensure that potential misstatements or deviations in financial reporting are prevented, or identified and corrected. Such controlling measures range from exam-ination of period results by management and the specific rec-onciliation of accounts and an analysis of ongoing accounting processes.

4. Reporting on the most important aspects of the internal control and risk management system with regard to the accounting process

Group management report 2018 | Research and development | Main aspects of the internal control and risk management system



The Group accounting unit was responsible for the prepa-ration of the annual financial statements. The employees responsible for accounting and the manager of the organ-isational unit for group accounting are responsible for the complete disclosure and correct evaluation of all transactions brought to their attention.

Information and communication

The annual financial statement is based on processes that are standardised and uniform throughout the company. Balanc-ing and evaluation standards are defined by Raiffeisenland-esbank Oberösterreich and are binding for the preparation of the annual financial statement.

Functional information and communication channels are set up and are supported, recorded and processed using suit-able IT applications, so that information can be identified, re-corded and processed on time before being forwarded to the relevant levels within the company.

Monitoring

The monitoring of the processes is the responsibility of the Managing Board and the relevant heads of the organisational units. The operational responsibility for ICS activities in the Group is currently exercised by the Internal Governance or-ganisational unit.

Raiffeisenlandesbank Oberösterreich’s Group Auditing unit is responsible for the internal auditing function. Group-wide, auditing-specific policies apply for all auditing activities, and these policies are minimum standards for internal auditing according to Austrian financial market oversight as well as international best practices.





Group management report 2018 | Main aspects of the internal control and risk management system



Annual financial statements 2018 of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Balance sheet as at 31 December 2018 ________________________________________________________________ 207

Income statement 2018 _____________________________________________________________________________________ 210

Notes to the 2018 Financial Statements ________________________________________________________________ 212

1. Disclosures concerning the accounting policies used in the balance sheet and income statement _____________________________________________________________________________________ 212

2. Balance sheet disclosures __________________________________________________________________________ 214

3. Income statement disclosures _____________________________________________________________________ 224

4. Other disclosures ______________________________________________________________________________________ 225

Audit Certificates ______________________________________________________________________________________________ 227





Financial statements 2018 | Balance sheet

Balance sheet as at 31 December 2018

Assets31.12.2018 31.12.2017

IN EUR IN EUR IN EUR '000 IN EUR '000

1. Cash in hand and balances at central banks 31,488,995.92

34,343

2. Public-sector debt instruments and bills of exchange eligible for refinancing at the Austrian Central Bank: a) Public sector debt issues and similar securities b) Bills of exchange eligible for refinancing at central banks

1,444,531,901.71

0.00

1,444,531,901.71

1,355,677

0

1,355,677

3. Loans and advances to banks: a) payment on demand b) Other loans and advances

5,829,836,286.36 2,475,745,613.89

8,305,581,900.25

5,953,649 2,392,563

8,346,212

4. Loans and advances to customers 20,585,937,663.60 18,556,890

5. Bonds and other fixed-income securities: a) from public issuers b) from other issuers including: own debt securities

0.00 1,442,113,686.27

181,285.35

1,442,113,686.27

1,035 1,473,113

14

1,474,148

6. Shares and other variable-yield securities 1,470,186,076.42 1,543,487

7. Equity investments including: in banks

6,104,388.06

454,345,995.62

5,129

452,561

8. Investments in affiliates including: in banks

31,523,145.11

1,738,172,821.20

31,523

1,734,201

9. Intangible fixed assets

15,916,965.43

17,252

10. Property, plant and equipment including: Land and buildings used by the bank in the course of its own operations

12,898,117.53

17,252,711.21

11,796

16,182

11. Shares in companies with a controlling or majority holding including: nominal value

0.00

0.00

0

0

12. Other assets 168,079,079.47 110,294

13. Subscribed capital for which payment has been requested but not yet paid

0.00

0

14. Prepaid expenses 28,418,367.84 30,679

15. Deferred tax assets 40,531,763.64 37,172

Total assets 35,742,557,928.58 33,709,098

1. Foreign assets 11,787,930,845.18 10,334,500



Equity and liabilities31.12.2018 31.12.2017


1. Amounts owed to banks: a) Payment on demand b) With a fixed term or withdrawal date

4,989,147,802.31 7,715,152,146.09

12,704,299,948.40

4,741,849 7,445,096

12,186,945

2. Amounts owed to customers: a) savings deposits including: aa) payment on demand bb) with a fixed term or withdrawal date b) other liabilities including: aa) payable on demand bb) with a fixed term or withdrawal date

858,932,863.93

177,872,960.01 681,059,903.92

10,440,844,158.15

5,798,186,432.21 4,642,657,725.94

11,299,777,022.08

831,762

171,165

660,597 9,658,558

5,120,543 4,538,015

10,490,320

3. Liabilities evidenced by certificates: a) debt securities b) other liabilities evidenced by certificates

3,820,377,636.77 3,566,295,047.22

7,386,672,683.99

3,095,456 3,431,437

6,526,893

4. Other liabilities 161,657,893.03 209,218

5. Deferred income 83,414,459.55 85,724

6. Provisions: a) Provisions for severance payments b) Provisions for pensions c) Tax provisions d) Other

38,505,857.56 19,575,054.33 48,466,024.45

167,403,458.75

273,950,395.09

36,022 17,491 46,189

153,929

253,631

6.a Fund for general bank risks 0.00 0

7. Tier 2 capital according to Part 2 Title I Chapter 4 of EU Regulation No 575/2013

777,620,995.92

1,012,192

8. Additional Tier 1 capital according to Part 2 Title I Chapter 3 of EU Regulation No 575/2013 including: Compulsory convertible bonds in accordance with Section 26 of the Austrian Banking Act

0.00

0.00

0

0

8.b Instruments without voting rights according to Section 26a of the Austrian Banking Act

0.00

0

9. Subscribed capital 277,630,343.36 277,630

10. Capital reserves: a) non-distributable b) distributable

824,230,812.41 149,991,600.00

974,222,412.41

824,231 149,992

974,222

11. Retained earnings: a) legal reserve b) reserves under articles of association c) other retained earnings

0.00 0.00

1,424,588,814.14

1,424,588,814.14

0 0

1,313,931

1,313,931

12. Liability reserve pursuant to section 57 (5) of the Austrian Banking Act 336,820,421.78 336,820

13. Balance sheet 41,902,538.83 41,569

Total equity and liabilities 35,742,557,928.58 33,709,098





Equity and liabilities31.12.2018 31.12.2017


1. Contingent liabilities including: a) Acceptances and endorsedbills sold b) Liabilities from indemnity agreements and guarantees from the pledging of collateral

0.00

2,567,576,446.75

2,567,589,328.10

0

2,319,564

2,319,575

2. Credit risks including: Liabilities from repurchase transactions

0.00

5,733,178,346.76

0

5,507,641

3. Liabilities from trust fund transactions 17,046,241.75 16,874

4. Eligible capital according to Part 2 of EU Regulation No 575/2013 including: Tier 2 capital pursuant to Part 2 Title I Chapter 4 of EU Regulation No 575/2013

585,506,637.80

3,520,234,401.83

620,401

3,437,389

5. Own funds requirements according to Article 92 of Regulation (EU) No. 575/2013 including: a) equity requirements according to Article 92 (1) (a) of Regulation (EU) No 575/2013 b) equity requirements according to Article 92 (1) (b) of Regulation (EU) No 575/2013 c) equity requirements according to Article 92 (1) (c) of Regulation (EU) No 575/2013

12.63%

12.63%

15.15%

23,233,615,878.38

13.02%

13.02%

15.89%

21,637,244

6. Foreign liabilities 5,233,326,831.33 5,437,578

Financial statements 2018 | Balance sheet



Income statement 2018

31.12.2018 31.12.2017


1. Interest and interest-related income including: from fixed-interest securities

57,349,652.33

558,605,125.30

61,326

534,702

2. Interest and interest-related expenses –279,214,849.15 –301,530

I. NET INTEREST INCOME 279,390,276.15 233,172

3. Income from securities and investments: a) Income from shares, other equity interests and variable-yield securities b) Income from investments c) Income from investments in affiliated companies

37,964,774.30 31,062,176.67 45,033,471.03

114,060,422.00

38,509 24,805 57,973

121,287

4. Fee and commission income 153,639,727.19 141,558

5. Fee and commission expenses –43,268,207.74 –41,761

6. Income from/expenses in financial operations 6,212,117.66 7,066

7. Other operating income 66,531,932.05 86,924

II. OPERATING INCOME 576,566,267.31 548,246

8. General administrative expenses: a) personnel expenses including: aa) wages and salaries ab) expenses for statutory social contributions and mandatory contributions linked to remuneration ac) other social expenses ad) expenses for pension schemes and support ae) allocations to the provisions for pensions af) expenses for severance payments and contributions to company employee pension funds b) other administrative expenses (administrative expenses)

–146,151,001.38

–108,057,649.87

–22,980,665.22 –1,390,038.89

–6,716,669.26 –2,083,732.06

–4,922,246.08

–119,286,406.38

–265,437,407.76

–140,717

–104,848

–22,199 –1,300

–6,823

–91

–5,455

–103,653

–244,370

9. Valuation allowances for assets in asset items 9 and 10

–4,398,663.53

–4,137

10. Other operating expenses –44,456,135.10 –65,416

III. OPERATING EXPENSES –314,292,206.39 –313,923

IV. OPERATING PROFIT 262,274,060.92 234,323





31.12.2018 31.12.2017


IV. OPERATING PROFIT (carryover) 262,274,060.92 234,323

11./12. Balance from reversals/additions, or value adjustments to loans and certain securities and provisions for contingent liabilities and credit risks

–48,674,919.86

–72,937

13./14. Balance from value adjustments or income from value adjustments to securities measured as financial assets, as well as to investments and shares in associated companies

6,091,902.51

56,511

V. PROFIT ON ORDINARY ACTIVITIES

219,691,043.57

217,897

15. Extraordinary income 0.00 0

16. Extraordinary expenses including: Allocations to the fund for general bank risks

0.00

0.00

0

0

17. Extraordinary result (subtotal from items 15 and 16)

0.00

0

18. Taxes on income including: deferred taxes 3,360,040.85

–47,725,518.78

58,088

15,794

19. Other taxes, unless reported under item 18 –19,528,300.30 –21,720

VI. PROFIT FOR THE YEAR 152,437,224.49 211,971

20. Movements in reserves including: allocation to the statutory reserve reversal from the statutory reserve

0.00 0.00

–110,534,685.66

0 0

–170,402

VII. NET PROFIT FOR THE YEAR 41,902,538.83 41,569

21. Profit/loss carried forward 0.00 0

VIII. NET INCOME FOR THE YEAR 41,902,538.83 41,569

Financial statements 2018 | Income statement



Notes to the 2018 Financial Statements

These financial statements for the year ended 31 Dec. 2018 have been prepared in accordance with the provisions of the Austrian Banking Act and those of the Austrian Commercial Code, insofar as they are applicable to banks, as well as the stipulations in Regulation (EU) No 575/2013 (CRR), insofar as they are relevant for these annual financial statements.

The balance sheet and the income statement are prepared according to the breakdown of Appendix 2 to Section 43 (1) and (2) of the Austrian Banking Act.

The annual financial statements have been based on gen-erally accepted accounting principles and on the standard requirement to provide a true and fair view of the net assets, financial position and results of operations of the company.

The principle of complete disclosure of all assets, liabilities, income and expenses has been observed.

Assets and liabilities have been measured individually and on the basis of the continued existence of the company as a going concern.

In accordance with the principle of prudence, only those gains realised as at the balance sheet date have been re-ported. All identifiable risks and impending losses have been recognised in the financial statements.

1.1. Foreign currency translation

Amounts denominated in foreign currency are translated at the middle exchange rate published by the European Central Bank (ECB) pursuant to section 58 (1) of the Austrian Bank-ing Act. If there are no ECB reference rates, middle exchange rates from reference banks are used. 1.2. Securities

Securities held as fixed assets, and also those held as current assets, are measured strictly at the lower of cost or market. If the reasons for a write-down no longer exist, the write-down is reversed in accordance with section 208 of the Austrian Commercial Code. If bonds and other fixed-income securi-ties held as fixed assets are purchased at a price that is more than the face value, in accordance with section 56 (2) of the Austrian Banking Act the premium is amortised on a pro rata basis over the life of the security concerned, using the effec-tive interest method. In the case of securities purchased at a price below face value, the discount is not unwound on a pro rata basis.

Securities used as cover funds for trust money are consid-ered part of fixed assets and valued according to the strict lower of cost or market method pursuant to section 2 (3) of the Austrian Trustees Securities Directive.

Stock market prices or trader quotes observable on the market are used as the basis for determining the value of securities.

The evaluation of Raiffeisenlandesbank Oberösterreich’s nostro securities using “inactive market” criteria involves individually assessing those securities for which Raiffeisen-landesbank Oberösterreich believes indicators of an inactive market exist.

The following indicators are a sign of an inactive market: a significant decline in trade volume or trade activities; avail-able stock exchange rates or market prices vary significantly over periods of time or between market participants; stock exchange rates or market prices are not current; a signifi-cant rise in bid/ask spreads. These indicators on their own, however, do not necessarily provide a sign that a market is inactive.

If adequate market quotes are not available, prices are de-termined with internal valuation models in which premiums or discounts are applied depending on credit rating, market-ability and features of the issue.

Trading securities are measured on a “mark to market” basis.

1.3. Measurement of loans and advances to banks and customers

Loans and advances to banks and customers are provided at cost.

Loan loss allowances are recognised primarily if a debtor is experiencing economic or financial difficulties, fails to make interest payments or repayments of principal, or other cir-cumstances arise that indicate a probability of default based on regulatory standards. Within the internal risk manage-ment system, ongoing monitoring of the counter-party and the specific case involved is used to determine whether rele-vant circumstances exist. In the case of significant customer exposures in the lending business, each individual case is analysed as the basis for recognising specific loan loss al-lowances or provisions for contingent liabilities and lending commitments. The calculation for the amount of the allow-ances for losses on loans and advances takes into account

1. Disclosures concerning the accounting policies used in the balance sheet and income statement





Notes to the financial statements 2018 | Accounting policy disclosures

the discounted cash inflows expected from interest pay-ments and repayments of principal, together with any inflows that can be obtained from the recovery of collateral. A stan-dardised method based on statistical models is used to form loan loss allowances for customer exposures that are not deemed to be significant.

Non-defaulted exposures are subjected to a portfolio exam-ination that looks for incurred but not reported losses; in the calculation of portfolio impairments, among other things sta-tistical loss experience is taken into consideration.

An improved statistical database in connection with the intro-duction of IFRS 9 was taken into account in the calculations.

1.4. Special valuation pursuant to section 57 (1) of the Austrian Banking Act

The measurement options stipulated in section 57 (1) and (2) of the Austrian Banking Act continue to be used with respect to loans and advances to customers that are not recognised as fixed assets.

1.5. Equity investments and shares in affiliated companies

Equity investments and shares in affiliated companies are measured at cost. Write-downs are applied if an equity in-vestment is impaired and the impairment is likely to be of a permanent nature due to sustained losses, a reduction in eq-uity, a reduction in fair value or other reasons. If the reasons for the write-down no longer exist, the write-down is reversed in accordance with section 208 of the Austrian Commercial Code.

1.6. Intangible fixed assets and property, plant and equipment

Intangible assets related to fixed assets and property, plant and equipment are measured at purchase or production costs less depreciation. The useful economic lives used as the basis for depreciation are as follows: 20 to 50 years for immovable fixed assets, 2 to 20 years for movable assets and 3 to 9 years for the intangible assets. Low-value assets are written off in full in the year of acquisition. If an item of prop-erty or equipment is expected to be permanently impaired, a write-down is recognised.

1.7. Liabilities

Liabilities are carried at the higher of the notional amount or settlement amount.

1.8. Own issues

For own issues, premiums and discounts are amortised/un-wound on a pro rata basis over the maturity of the instrument concerned.

1.9. Provisions for pensions, severance payments and long-service awards

Provisions for pensions, severance payments and long-ser-vice awards are, in line with the AFRAC Statement 27 on per-sonnel provisions (Austrian Commercial Code), calculated using actuarial principles. The Projected Unit Credit Method will be used for the financing procedure for these claims. Fu-ture increases in salaries and pensions along with fluctuation deductions will be taken into account.

Performance-related obligations related to a benefit scheme represented in the balance sheet reflects the present value of these performance-related obligations. In addition, pay-ments for contribution-based obligations are included under personnel expenses.

1.10. Other provisions

In application of the principle of prudence, other provisions are recognised for all risks identifiable on the date the finan-cial statements are prepared and for present obligations, the amount of which is contingent on a number of factors and cannot be reliably determined. These other provisions are recognized in an amount dictated by prudent business prac-tice. Discounting with a suitable interest rate was performed for long-term provisions.

1.11. Deferred taxes

Tax deferrals were used for the first time in the 2016 financial year. An asset balance is reported under the item “Deferred tax assets” and a liability balance under “Tax Provisions”.



2. Balance sheet disclosures

2.1. Maturity structure of loans and advances

Pursuant to section 64 (1) (4) of the Austrian Banking Act, the maturity structure of loans and advances to banks and non-banks not repayable on demand was as follows (in EUR '000):

Term to maturity

Loans and advances to banks Loans and advances to non-banks

Carrying amount 31 Dec. 2015

IN EUR ‘000


IN EUR ‘000


IN EUR ‘000


IN EUR ‘000

up to 3 months 441,265 327,970 2,417,639 1,873,809

more than 3 months to 1 year 669,961 593,281 2,861,765 2,869,377

more than 1 year to 5 years 785,412 918,692 8,599,717 7,278,052

more than 5 years 579,108 552,620 4,892,850 4,702,246

Total 2,475,746 2,392,563 18,771,971 16,723,484

2.2. Securities and investments

2.2.1. Securities

The securities admitted to trading shown in asset items 5 and 6 consist of bonds and other fixed-income securities at EUR 1,426,243 thousand (previous year: EUR 1,456,727 thousand) and listed shares and other variable-yield securities at EUR 30,841 thousand (previous year: EUR 50,543 thousand).

The items do not include any unlisted shares and other vari-able-yield securities, nor do they include any equity invest-ments or shares in affiliated companies that are admitted to trading.

The securities admitted to trading in asset items 5 and 6 break down into bonds and other fixed-income securities held as fixed assets amounting to EUR 1,420,077 thousand (previ-ous year: EUR 1,434,286 thousand) and bonds and other fixed-income securities held as current assets with a value of EUR 6,166 thousand (previous year: EUR 22,441 thousand).

The shares and other variable-yield securities consist of fixed assets amounting to EUR 0 thousand (previous year: EUR 19,912 thousand) and current assets amounting to EUR 30,841 thousand (previous year: EUR 30,631 thousand).

Asset items are allocated to fixed assets because the pur-pose of the securities concerned is to generate higher returns through the long-term investment of liquid funds.

Securities held as current assets are acquired for the pur-poses of trading, to generate capital gains and to provide a liquidity reserve.

Raiffeisenlandesbank Oberösterreich maintains a securi-ties trading book pursuant to Article 92 CRR. The trading book contains securities totalling EUR 10,259 thousand (pre-vious year: EUR 39,806 thousand) and derivative financial

instruments amounting to EUR 4,002,640 (previous year: EUR 3,155,171 thousand).

In 2019, bonds and other fixed-income securities held by Raiffeisenlandesbank Oberösterreich will mature to the amount of EUR 156,875 thousand (previous year: EUR 75,289 thousand).

Non-securitised receivables with a carrying amount of EUR 1,403,477 thousand (previous year: EUR 1,714,052 thousand) and securities with a carrying amount of EUR 547,241 thou-sand (previous year: EUR 249,876 thousand) were sold under repurchase agreements.

2.2.2. Equity Investments

The items do not include any equity investments or shares in affiliated companies that are admitted to trading. Entries re-lated to equity investments and shares in affiliated companies are reflected in the statement of changes in the book value of fixed assets.

As at 31 Dec. 2018, the equity investment in Raiffeisen Bank International AG (RBI), which equated to an indirect holding of 9.51%, was Raiffeisenlandesbank Oberösterreich’s largest equity investment.

RBI sees Austria and Central and Eastern Europe (CEE) as its home market. The Austrian economy continued to per-form well in 2018, with real GDP growth of +2.7%, although momentum slowed over the course of the year. At 4.5%, the Central Europe (CE) region again exceeded the 4% mark in 2018 (previous year: 4.5%). At country level, Poland achieved the highest figure with 5.1%. In Southeastern Europe (SEE), GDP growth slowed to 3.7% in the period under review, fol-lowing the strong increase of 5.1% in 2017. The economic position continued to improve in 2018 in other Eastern Euro-pean countries as well. Russia benefited from the recovery in oil prices and posted GDP growth of 2.3% in 2018. New





Notes to the financial statements 2018 | Balance sheet disclosures

US sanctions in April and September prompted the Central Bank of Russia to exercise increased caution and raise inter-est rates demonstratively by 0.5 percentage points to 7.75% in the second half of the year. Likewise, Ukraine and Belarus grew at an increased rate of 3.3% and 3.0% over the previ-ous year.

In this environment, RBI generated a consolidated profit of EUR 1,270 million in the 2018 financial year, which was 14% above the previous year. The expected loss from the sale of the Polish core banking business is also taken into account. Operating income increased by 4% in a half-year comparison and the extraordinarily high reversals of loan loss allowances led to a positive result for impairments to financial assets. The CET 1 ratio stood at 13.4% on 31 Dec. 2018 (fully loaded). RBI aims to achieve a CET 1 ratio of 13% and a Group return on equity of approx. 11% in the medium term.



2.3. Fixed assets

The intangible fixed assets were purchased mainly from affiliated companies.

The changes in the fixed assets held by Raiffeisenlandesbank Oberösterreich were as follows (given in EUR thousands):

Purchase and production costs Cumulative write-downs Carrying amounts

Balance sheet items IN EUR '000

As at 1 Jan. of the financial

yearAdditions in the financial year

Trans-fers

Disposals in the financial year

As at 31 Dec. of the financial

year



Scheduled depreciation/

amortisation in the financial year

Trans-fers



year


year

As at 31 Dec. of the previous

year

Public-sector debt instruments and similar securities 1,366,705 187,466 0 86,211 1,467,960 38,868 12,024 539 0 5,670 44,684 1,423,276 1,327,837

Loans and advances to banks 9,934 0 0 0 9,934 0 0 0 0 0 0 9,934 9,934

Loans and advances to customers 280,450 0 0 50,515 229,936 9,413 898 27 0 8,370 1,914 228,022 271,037

Public-sector bonds and other fixed-income securities 0 0 0 0 0 0 0 0 0 0 0 0 0

Bonds and other fixed-income securities from other issuers including: own bonds

1,460,458

0

96,611

0

0

0

105,140

0

1,451,928

0

26,172

0

5,936

0

163

0

0

0

94

0

31,851

0

1,420,077

0

1,434,286

0

Shares and other variable-yield securities 1,555,643 21,000 0 124,653 1,451,990 75,569 8,875 965 0 45,838 37,642 1,414,348 1,480,073

Equity investments 478,336 3,591 0 1,300 480,627 25,775 1,664 1,158 0 0 26,281 454,346 452,561

of which: in banks (11,963) (3,582) (0) (1,274) (14,271) (6,834) (1,664) (332) (0) (0) (8,166) (6,104) (5,129)

Investments in affiliated companies 1,803,204 113,135 0 113,098 1,803,242 69,003 0 3,934 0 0 65,069 1,738,173 1,734,201

of which: in banks (31,523) (0) (0) (0) (31,523) (0) (0) (0) (0) (0) (0) (31,523) (31,523)

Intangible assets 22,579 1,621 0 0 24,200 5,327 2,956 0 0 0 8,283 15,917 17,252

Property, plant and equipment 78,659 3,445 7 4,086 78,026 62,477 1,442 0 7 3,153 60,773 17,253 16,182

including: land and buildings used by the bank in the course of its own operations (55,995) (2,155) (0) (1,338) (56,812) (44,199) (440) (0) (0) (725) (43,914) (12,898) (11,796)

Total 7,055,968 426,869 7 485,003 6,997,843 312,604 33,795 6,786 7 63,125 276,497 6,721,346 6,743,363






Purchase and production costs Cumulative write-downs Carrying amounts

Balance sheet items IN EUR '000



Trans-fers



year



Scheduled depreciation/

amortisation in the financial year

Trans-fers



year


year

As at 31 Dec. of the previous

year

Public-sector debt instruments and similar securities 1,366,705 187,466 0 86,211 1,467,960 38,868 12,024 539 0 5,670 44,684 1,423,276 1,327,837

Loans and advances to banks 9,934 0 0 0 9,934 0 0 0 0 0 0 9,934 9,934

Loans and advances to customers 280,450 0 0 50,515 229,936 9,413 898 27 0 8,370 1,914 228,022 271,037

Public-sector bonds and other fixed-income securities 0 0 0 0 0 0 0 0 0 0 0 0 0

Bonds and other fixed-income securities from other issuers including: own bonds

1,460,458

0

96,611

0

0

0

105,140

0

1,451,928

0

26,172

0

5,936

0

163

0

0

0

94

0

31,851

0

1,420,077

0

1,434,286

0

Shares and other variable-yield securities 1,555,643 21,000 0 124,653 1,451,990 75,569 8,875 965 0 45,838 37,642 1,414,348 1,480,073

Equity investments 478,336 3,591 0 1,300 480,627 25,775 1,664 1,158 0 0 26,281 454,346 452,561

of which: in banks (11,963) (3,582) (0) (1,274) (14,271) (6,834) (1,664) (332) (0) (0) (8,166) (6,104) (5,129)

Investments in affiliated companies 1,803,204 113,135 0 113,098 1,803,242 69,003 0 3,934 0 0 65,069 1,738,173 1,734,201

of which: in banks (31,523) (0) (0) (0) (31,523) (0) (0) (0) (0) (0) (0) (31,523) (31,523)

Intangible assets 22,579 1,621 0 0 24,200 5,327 2,956 0 0 0 8,283 15,917 17,252

Property, plant and equipment 78,659 3,445 7 4,086 78,026 62,477 1,442 0 7 3,153 60,773 17,253 16,182

including: land and buildings used by the bank in the course of its own operations (55,995) (2,155) (0) (1,338) (56,812) (44,199) (440) (0) (0) (725) (43,914) (12,898) (11,796)

Total 7,055,968 426,869 7 485,003 6,997,843 312,604 33,795 6,786 7 63,125 276,497 6,721,346 6,743,363



In 2019, bonds issued by Raiffeisenlandesbank Oberöster-reich in the amount of EUR 212,799 thousand (previous year: EUR 370,749 thousand) mature.

2.5. Equity and equity-related liabilities

In the case of subordinated liabilities, the subordination is al-ways agreed separately in writing pursuant to section 51 (9) of the Austrian Banking Act. The total amount of subordinated liabilities reported as at 31 Dec. 2018 was EUR 801,121 thou-sand (previous year: EUR 1,035,692 thousand). The portfo-lio consists of EUR 777,621 thousand (previous year: EUR 1,012,192 thousand) of Tier 2 capital instruments pursuant to Part 2, Title I, Chapter 4 of the CRR and 23,500 (previous year: EUR 23,500 thousand) subordinated bonds.

The maturities range from 5 to 20 years. The portfolio in-cludes the following bond, which exceeds 10.0% of the total amount of subordinated liabilities:

In accordance with its articles, Raiffeisenlandesbank Oberös-terreich‘s share capital as at 31 December 2012 was EUR 277,630 thousand (previous year: EUR 277,630 thousand). It consists of 1,942,042 ordinary shares (previous year: EUR 1,942,042 ordinary shares).

A reserve for the “institutional guarantee system” in the amount of EUR 56,235 thousand was formed in retained earnings (previous year: EUR 44,500 thousand).

2.6. Breakdown of Tier 1 capital and additional own funds

Pursuant to section 64 (1) (16) of the Austrian Banking Act, the breakdown of Tier 1 capital and additional own funds as at 31 December 2018 was as follows:

In accordance with section 23 of the Austrian Banking Act, a capital conservation buffer was introduced on 1 Jan. 2016 and this must be maintained in the form of Common Equity Tier 1 capital. This amounted to 1.875% for 2018. From 2019 onwards the capital conservation buffer stands at 2.5%.

A presentation of the consolidation of equity pursuant to Sec-tion 64 (1) (17) of the Austrian Banking Act is given in the consolidated financial statements of Raiffeisenlandesbank Oberösterreich.

IN EUR '000 31.12.2018 31.12.2017

Eligible capital instruments 1,101,861 1,101,861


Other reserves 486,812 486,812

Deductions and transitional adjustments –22,300 –41,116

Common Equity Tier 1 capital 2,934,727 2,816,988

Tier 2 capital 610,032 636,028

Deductions and transitional adjustments – Tier 2 capital –24,525 –15,627

Eligible capital 3,520,234 3,437,389

Tier 1 capital ratio 12.63% 13.02%

Common Equity Tier 1 capital ratio 12.63% 13.02%

Total capital ratio 15.15% 15.89%

Term to maturity IN EUR '000

Amounts owed to banks Amounts owed to non-banks





up to 3 months 981,950 1,196,149 778,265 1,131,815

more than 3 months to 1 year 792,328 870,670 1,909,240 2,398,622

more than 1 year to 5 years 3,838,689 3,656,823 5,348,372 3,816,549

more than 5 years 2,102,186 1,721,454 4,620,513 4,333,486

Total 7,715,152 7,445,096 12,656,390 11,680,472

2.4. Maturity structure of liabilities

Pursuant to section 64 (1) (4) of the Austrian Banking Act, the maturity structure of amounts owed to banks and non-banks not repayable on demand was as follows (in EUR ‘000):

ISIN AT0000A07HC1

Currency EUR

Amount in EUR '000 90,740

Interest rate 0.65%

due on 01.01.2020

extraordinary termination right No





2.7. Derivatives

The fair value is determined for derivatives. Fair value is de-fined as the price that would be received to sell an asset or paid to transfer a liability in an orderly arm's-length transac-tion between knowledgeable, willing and independent par-ties. Where stock exchange prices are available, these prices are used to determine fair value. Internal valuation models using current market parameters, in particular the discounted cash flow method and option price models, are used for fi-nancial instruments if no market price is available.

A credit value adjustment (CVA) and debt value adjustment (DVA) were determined as part of the inclusion of credit risk in the mark-to-model measurement of derivatives. The main factors used in determining the CVA and DVA are the term to maturity, counterparty default risk, own default risk, and collateral.

Derivative financial instruments in the trading book are re-corded at their fair value, with effect on the income state-ment. The negative fair value of all trading book derivatives amounted to EUR 1,289 thousand (previous year: EUR 12,825 thousand).

Banking book derivatives that are not used for interest-rate management or that do not form part of a hedge are gen-erally recognised in profit or loss if the fair value is negative.

For those derivative financial instruments in the banking book that serve to manage interest rates, if there was a negative surplus for a functional unit per currency, then the change was recognised as income at the fair value from the previous year.

The functional units are used in accordance with FMA Cir-culars and serve at Raiffeisenlandesbank Oberösterreich to provide more detailed control of the output of basic transac-tions (e.g. loans and bond issues) in the banking book and allow for a targeted optimisation of interest risk exposure when considering the risk/roll-down context. The total risk of functional units amounted at the reporting date to an inter-est basis point value of EUR +199 thousand (previous year: EUR +212 thousand) and therefore countered the aggregate interest-rate risk in the banking book. The EUR fixed interest rate payer position BPV EUR +54 thousand (previous year: EUR +69 thousand) and the EUR fixed interest rate payer position 2 BPV EUR +165 thousand (previous year: EUR +158 thousand) represent the majority of the functional units’ re-versed interest risk; the remaining sub-portfolios are either completely or nearly closed.

In 2018, the remeasurement of interest-rate management de-rivatives led to negative remeasurement effects because of the flattening of the yield curve.

2018 Functional units IN EUR ‘000 Nominal

Positive fair values

Negative fair values

Gains/losses 2018

Aggre-gate gain or loss on

remea-surement Description

EURO fixed interest rate payer position 170,000 0 10,428 1,220 –2,747 Item hedge against rising interest rates

EURO fixed interest rate payer position 2 180,000 42,614 70,196 –2,671 –13,482

Interest–rate position hedge against a steeper yield curve

EUR closed position 20,000 4 62 84 4,908Swap positions, effect of which offset by reverse swaps, in EUR (no new business)

AUD offset derivatives 40,691 322 324 –1 –1Hedging and closing instruments for underlying transactions originally in the banking book in AUD

EUR offset derivatives 10,897,276 483,564 474,025 0 15,171Hedging and closing instruments for underlying transactions originally in the banking book in EUR

NOK offset derivatives 30,357 114 114 0 –50Hedging and closing instruments for underlying transactions originally in the banking book in NOK

SEK offset derivatives 1,915 22 22 0 0Hedging and closing instruments for underlying transactions originally in the banking book in SEK

USD offset derivatives 152,247 14,933 6,182 0 3,984Hedging and closing instruments for underlying transactions originally in the banking book in USD

CHF cross currency position 186,352 15,129 11,919 0 0

Non–current derivative hedging of the foreign curren-cy base interest rate components of the underlying transaction banking book

CZK cross currency position 235,578 4,446 4,071 0 0


USD cross currency position 110,715 402 1,745 –1,343 –1,343


CHF cross currency position 0 0 0 0 0





In addition, derivative financial instruments in the banking book are assigned to micro-hedges. The main area of ap-plication is the hedging of underlying transactions with fixed interest-rate risk by means of countervailing derivatives (e.g. issue with fixed coupons and receiver swap). The account-ing objective in turn is to reduce the earnings volatility. The effectiveness of each hedge is primarily assessed by provid-ing evidence of a match between the key parameters of the underlying transaction and the hedge, and verifying it with a critical term match test. In this process, the maturity of the derivatives is based on that of the underlying transaction. If there are doubts about the credit quality of the counter-party in a hedge or underlying transaction in a micro-hedge, a review is carried out on a case-by-case basis to establish whether the micro-hedge should be discontinued. If a coun-terparty is classified with a default rating, the hedge is always unwound, accompanied by the recognition of a provision for contingent losses based on the imparity principle. The fair value of all derivatives used in micro-hedges amounted (with-out accrued interest) to EUR 51,847 thousand (previous year: EUR 134,581 thousand).

In addition, banking book derivatives are used in macro hedges of the fixed-interest-rate risk in certain portfolios of underlying transactions. Suitable hedging instruments (mainly interest rate swaps) are used to hedge underlying transactions both on the assets-side of the balance sheet (in particular, loans and bonds) and on the liabilities side (mainly deposits and issues). At Raiffeisenlandesbank Oberösterreich, macro interest-rate hedges are matched with the corresponding un-derlying transactions at maturity band level. If this gives rise to an interest rate hedge surplus in a maturity band in terms of the basis point value, a provision for expected losses is recognised for the maturity band concerned. The account-ing objective in turn is to reduce the earnings volatility. The negative fair value (excluding accrued interest) of derivatives used for the assets-side portfolio of underlying transactions amounted to EUR 47,520 thousand (previous year: EUR 132,396 thousand); the positive fair value (excluding accrued interest) of derivatives used for the liabilities-side portfolio of underlying transactions amounted to EUR 234,645 thousand (previous year: EUR 243,475 thousand).

2017 Functional units IN EUR ‘000 Nominal

Positive fair values

Negative fair values

Gains/losses 2017

Aggre-gate gain or loss on

remea-surement Description

EURO fixed interest rate payer position 220,000 0 11,662 4,179 –3,967 Item hedge against rising interest rates

EURO fixed interest rate payer position 2 180,000 42,706 67,753 5,030 –10,811

Interest-rate position hedge against a steeper yield curve

EUR closed position 20,000 34 177 165 4,823Swap positions, effect of which offset by reverse swaps, in EUR (no new business)

AUD offset derivatives 19,242 244 244 0 0Hedging and closing instruments for underlying transactions originally in the banking book in AUD

EUR offset derivatives 12,465,770 569,418 561,172 –57 15,171Hedging and closing instruments for underlying transactions originally in the banking book in EUR

NOK offset derivatives 16,620 141 140 –1 –50Hedging and closing instruments for underlying transactions originally in the banking book in NOK

SEK offset derivatives 1,058 5 5 0 0Hedging and closing instruments for underlying transactions originally in the banking book in SEK

USD offset derivatives 219,225 16,084 7,783 –1 3,984Hedging and closing instruments for underlying transactions originally in the banking book in USD

CHF cross currency position 354,592 23,262 22,041 730 0

Non-current derivative hedging of the foreign curren-cy base interest rate components of the underlying transaction banking book





The following derivative financial instruments were held as at 31 Dec. 2018:


Nominal amount Fair value 1)

up to 1 year


over 5 years Total Positive negative

Interest rate forwards/futures

OTC products

Forward rate agreements 0 6,737 2,000 8,737 18 111





Interest rate futures 0 0 0 0 0 0

Total 4,011,558 14,719,890 17,242,378 35,973,826 1,754,509 1,474,331


OTC products





Total 3,341,176 455,842 244,765 4,041,783 40,112 37,689


OTC products

Credit derivatives 0 0 0 0 0 0

Other transactions 5,000 0 0 5,000 1,264 0

Total 5,000 0 0 5,000 1,264 0


Total exchange-traded products 0 0 0 0 0 0

Total 7,357,734 15,175,732 17,487,143 40,020,609 1,795,885 1,512,020

1) including accrued interest and CVA/DVA




1) including accrued interest and CVA/DVA

The following derivative financial instruments were held as at the 2017 reporting date:

The derivative financial instruments are recognised in the balance sheet with the following carrying amounts:

2018 IN EUR '000

Loans and advances to

banks

Amounts owed to banks

Other assets

Other liabilities

Prepaid expenses

Deferred income

Provisions derivatives

Carrying amounts of trading book/banking book derivatives

a) Interest rate contracts 193,186 131,304 17,448 19,912 7,689 17,866 61,818

b) Foreign exchange contracts 1,535 805 11,523 12,088 0 0 0

2017 IN EUR '000

Loans and advances to

banks

Amounts owed

to banksOther assets

Other liabilities

Prepaid expenses

Deferred income

Provisions derivatives

Carrying amounts of trading book/banking book derivatives

a) Interest rate contracts 172,902 111,010 16,125 19,739 9,323 18,422 63,643

b) Foreign exchange contracts 0 0 6,818 17,289 0 0 0


Nominal amount Fair value 1)

up to 1 year


over 5 years Total Positive negative

Interest rate forwards/futures

OTC products

Forward rate agreements 11,840 10,000 0 21,840 43 647





Interest rate futures 45,310 0 0 45,310 0 0

Total 4,627,894 13,157,280 16,803,863 34,589,037 1,892,508 1,605,001


OTC products





Total 2,389,220 243,087 282,279 2,914,586 30,323 39,256


OTC products

Credit derivatives 10,000 0 0 10,000 1 0

Other transactions 0 5,000 0 5,000 1,322 0

Total 10,000 5,000 0 15,000 1,323 0


Total exchange-traded products 45,310 0 0 45,310 0 0

Total 7,027,114 13,405,367 17,086,142 37,518,623 1,924,154 1,644,257





2.8 Deferred taxes (section 238 (1) (3) of the Austrian Commercial Code)

Deferred tax assets were recognised in connection with dif-ferences in the following: ı Provision for the reverse charge in respect of margin

payment ı Provisions for employee benefits ı Expense provision ı Write-offs pursuant to section 56 (2) of the Austrian Bank-

ing Act ı Undervaluation pursuant to section 57 (1) of the Austrian

Banking Act ı Portfolio valuation allowances ı Distribution of the write-down to the going-concern value

of investments pursuant to section 12 (3) (2) of the Austrian Corporation Tax Act

No deferred tax assets haver been recognised in respect of tax loss carryforwards.

Deferred tax liabilities have been recognised in connection with differences in financial assets.

Deferred taxes relating to Group entities subject to a profit-and-loss transfer agreement (31 entities compared with 32 in the previous year) were recognised through the income statement at Group parent level.

The differences on the assets side exceed deferred tax liabil-ities resulting in a net tax asset.

The calculation of deferred taxes is based on a tax rate of 25%.

As at 31 Dec. 2018, netting resulted in net deferred tax assets amounting to EUR 40,532 thousand. These taxes were rec-ognised in the income statement and reported under asset item number 15 on the statement of financial position.

2.9. Supplementary information

In accordance with “Part 8 – Disclosure by institutions” of the Capital Requirements Regulation (EU) No 575/2013 (CRR), this information is published on Raiffeisenlandesbank Oberösterreich’s website (www.rlbooe.at) .

The statement of financial position includes asset items de-nominated in foreign currency amounting to EUR 1,998,814 thousand (previous year: EUR 1,725,995 thousand) and lia-bilities in foreign currency amounting to EUR 1,095,409 thou-sand (previous year: EUR 1,190,654 thousand).

As at 31 Dec. 2018, trust fund deposits amounting to EUR 12,892 thousand (previous year: EUR 8,645 thousand) were backed by securities with a value of EUR 14,000 thousand (previous year: EUR 10,989 thousand) held as cover assets.

Loans and advances to customers amounting to EUR 270,329 thousand (previous year: EUR 333,277 thousand) were used as collateral for third-party obligations.

Securities with a carrying amount of EUR 35,647 thousand (previous year: EUR 35,748 thousand) and loans and ad-vances to customers amounting to EUR 1,087,393 thousand (previous year: EUR 819,646 thousand) have been pledged as collateral for guaranteed securities issues. In addition, re-ceivables with a carrying amount of EUR 1,403,477 thousand (previous year: EUR 1,714,052 thousand) and securities with a carrying amount of EUR 710,482 thousand (previous year: EUR 436,271 thousand) were pledged as collateral at banks and exchanges. An amount of EUR 636,582 thousand (pre-vious year: EUR 637,143 thousand) has been deposited with banks and customers under collateral agreements. Loans and advances were assigned to banks amounting to EUR 3,536,682 thousand (previous year: EUR 2,941,766 thou-sand). Raiffeisenlandesbank Oberösterreich has entered into netting agreements with correspondent banks.




3. Income statement disclosures

3.1. Expenses for subordinated liabilities

The total amount for expenses for subordinated liabilities in the 2018 financial year totalled EUR 34,733 thousand (previ-ous year: EUR 48,486 thousand).

3.2. Interest income und interest expenses from negative interest

In financial year 2018, interest income decreased by EUR 12,440 thousand (previous year: EUR 10,035 thousand) due to negative interest rates and interest expenses by EUR 17,580 thousand (previous year: EUR 6,651 thousand).

In addition, as a result of negative interest rates, a provision of EUR 3,799 thousand (previous year: EUR 20,645 thou-sand) was recognised in interest income for the recalculation of margins, thereby reducing operating profit.

3.3. Other operating income

Other operating income reported in Item 7 of the income statement amounting to EUR 12,132 thousand (previous year: EUR 12,141 thousand) related to personnel cost reimburse-ments and EUR 28,230 thousand (previous year: EUR 25,259 thousand) related to cost allocations.

3.4. Other operating expenses

The other operating expenses reported in Item 10 of the in-come statement amounting to EUR 12,132 thousand (pre-vious year: EUR 12,141 thousand) related to personnel expenses incurred outside the bank.





Disclosure to the annual financial statements 2018 | Income statement disclosures | Other disclosures

4. Other disclosures

4.1. Information on employees

An average of 1,501 employees worked in banking operations during the 2018 financial year (previous year: 1,495).

4.2. Advances and loans to members of the Managing Board and the Supervisory Board

Advances and loans to members of the Raiffeisenlandesbank Oberösterreich Managing Board and Supervisory Board con-sisted of EUR 43 thousand (previous year: EUR 46 thousand) to members of the Managing Board and EUR 513 thousand (previous year: EUR 711 thousand) to members of the Su-pervisory Board.

Loans to members of the Managing Board and the Supervi-sory Board are granted on standard banking industry terms. Repayments are made as agreed.

4.3. Expenses for long-service awards, severance payments and pensions

Wages and salaries include expenses/income in connection with provisions for long-service awards amounting to EUR 861 thousand (previous year: EUR 250 thousand). Person-nel expenses include severance expenses amounting to EUR 4,134 thousand (previous year: EUR 4,737 thousand) and contributions to employee pension funds amounting to EUR 788 thousand (previous year: EUR 718 thousand). In the financial year under review, pension provisions and other benefits amounted to EUR 6,717 thousand (previous year: EUR 6,823 thousand), and additions to/reversals of pension provisions to EUR 2,084 thousand (previous year: EUR 91 thousand).

Expenses for severance payments (including provisions) and pensions (including provisions) in 2018 amounted to EUR 642 thousand (previous year: EUR 1,481 thousand) for members of the Managing Board and to EUR 8,076 thousand for other employees (previous year: EUR 5,694 thousand). There were also further pension provision expenses of EUR 2,378 thou-sand (previous year: EUR 2,650 thousand) for the Managing Board and EUR 2,626 thousand (previous year: EUR 2,545 thousand) for other employees.

4.4. Remuneration paid to the members of the Managing Board and the Supervisory Board

In 2018, the remuneration paid to members of the Managing Board (including payments in kind and expenses in connec-tion with pensions) totalled EUR 6,510 thousand (previous year: EUR 6,843 thousand).

Section 242 (4) of the Austrian Commercial Code was applied with regard to the expenses for former executive managers (severance and pension payments)

In 2018, remuneration (including reimbursements for travel expenses) amounting to EUR 614 thousand (previous year: EUR 574 thousand) was paid to members of the Supervisory Board.

4.5. Data and key figures by country

A list of data and figures by country is provided on a consoli-dated basis in Raiffeisenlandesbank Oberösterreich’s consol-idated financial statements.

4.6. Return on assets

The return on assets pursuant to section 64 (1) (19) of the Austrian Banking Act (quotient of the after-tax profit or loss for the year divided by the total assets at the reporting date) was 0.43% (previous year: 0.63%).

4.7. Members of the Managing Board and the Supervisory Board

In the 2018 financial year, the following were Members of the Managing Board and the Supervisory Board:

Chairman of the Managing BoardHeinrich Schaller, Chief Executive Officer

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

Members of the Managing BoardMichael Glaser, Member of the Managing Board (from 1 Oct. 2018)Stefan Sandberger, Member of the Managing Board Reinhard Schwendtbauer, Member of the Managing BoardMarkus Vockenhuber, Member of the Managing Board (until 30 Sept. 2018)

Information on the members of the Raiffeisenlandesbank Oberösterreich Supervisory Board can be found on pages 12 and 13.





THE MANAGING BOARD










Audit Certificate


Report on the annual financial statements

Audit opinion

I examined the attached annual financial statements of


consisting of the balance sheet as at 31 Dec. 2018, the in-come statement for the financial year ending on this reporting date, and the notes.

In my opinion, the annual financial statements comply with the legal regulations and present a true and fair view of the company's assets and financial position as at 31 Dec. 2018 and the company's earnings performance in the financial year ending at that reporting date, in accordance with the provi-sions under Austrian corporate andbanking law.


I conducted my audit in accordance with EU Regulation no. 537/2014 (hereafter the EU Regulation) and with the Austrian principles of orderly accounting. These principles required the application of the International Standards on Auditing (ISA). My responsibilities in accordance with these regulations and standards are described in further detail in the “Responsibili-ties of the auditor for auditing the annual financial statements” section of my Audit Certificate. I am independent of the com-pany in compliance with Austrian company and professional laws and I have fulfilled my other professional obligations in accordance with these requirements. I believe that I have ob-tained sufficient and suitable auditing proof, so that my audit provides a reasonable basis for my audit opinion.

Key Audit Matters

Key audit matters are those matters that, in my professional judgement, were of most significance in my audit of the an-nual financial statements. Key audit matters are selected from the matters communicated with the audit committee, but are not intended to represent all matters that were discussed with them. My audit procedures relating to these matters were de-signed in the context of my audit of the annual financial state-ments as a whole. My audit opinion on the annual financial statements is not modified with respect to any of the key audit matters described below, and I do not express an opinion on these individual matters.

Three key audit matters were identified as part of the audit. They are described as follows:

1. Recoverability of shares held directly in Raiffeisen Bank International AG


The indirectly held shares in Raiffeisen Bank International AG (RBI), which is also the central institution of Raiffeisen-landesbank Oberösterreich AG, are reported at acquisition cost under the items ‘‘Investments in affiliated companies‘‘ in the annual financial statements of Raiffeisenlandesbank Oberösterreich AG for the year ended 31 December 2018. The shares in RBI will be measured subsequently at the lower of cost or market (with the option of not applying any write-down if impairment is temporary) taking into account the his-torical cost convention. Therefore, if the fair value is expected to be less than the carrying amount of the equity investment over the long term, a write-down will be recognised. If, in later years, the reasons for the write-down no longer apply, the amount of the write-down must be reversed taking into ac-count the historical cost convention.

The entity describes the valuation procedure in the Notes in the chapter “Information concerning the accounting policies used in the statement of financial position and the income statement” in the chapter “Investments and shares in affili-ated companies”.

The calculation of the fair value was based on a discounted cash flow method. The valuation by the entity based on an external assessment has shown that the calculated fair value exceeds the carrying amount.

The risk for the financial statements is that the results ob-tained through this valuation depends, to a large extent, on management’s estimates of future cash inflows and the dis-count rate used. Therefore, it is associated with a significant degree of predictive uncertainty.

Audit approach

I have assessed management’s estimates with regard to the presence of indications of impairment and reviewed the valu-ation of shares in RBI based on an external report.



I have examined the bases of this external assessment, in particular, the valuation model and the parameters used, such as the discount rate. I did so by using market data spe-cific to the industry and information and market expectations specific to the company. I checked the parameters used, such as the discount rate, by comparing them with capital market data as well as company-specific information and market expectations.

I compared the future cash inflows used in the external re-port with the Group planning, and analysed and assessed the planning reasonability in particular on the basis of company documentation and the external reports.

2. Valuation of Loans and Advances to Customers


In the annual financial statements of Raiffeisenlandesbank Oberösterreich AG for the year ended 31 Dec. 2018, loans and advances to customers are reported amounting to EUR 20,585,938 thousand taking into account loan loss allow-ances and measurement at lower value permitted in accor-dance with section 57 (1) of the Austrian Banking Act.

The Bank describes the approach for determining loan loss allowances in the Notes in the chapter “Information concern-ing the accounting policies used in the statement of financial position and the income statement” in the chapter “Loans and advances to banks and customers”.

As part of the credit monitoring process, the Bank establishes whether a default risk exists, and whether, as a consequence, individual loan loss allowances need to be recognised. This also includes estimates as to whether customers can fully fulfil the contractually agreed repayments without the need of realizing collaterals. The calculation of the loan loss allowances for significant in-dividual customers in default is based on an analysis of the expected future repayments. This analysis is influenced by the estimate of the financial position and performance of the relevant customer, the valuation of collateral, as well as the estimate of the amount and time of the repayments derived from this.

Risk provisions for defaulted, individually insignificant cus-tomers are calculated on the basis of a statistical valuation model.

To cover the risk associated with all lending not currently deemed to be in default, the Bank recognises a rating-re-lated portfolio loss allowance based on a statistical valuation model.

Customer liabilities and collaterals are included in these mod-els. Parameters, which are based on statistical assumptions particularly include the probability of default based on the customer's credit rating and the loss rate from collaterals.

The risk for the financial statements arises from the fact that the identification of impending loan defaults and the determi-nation of provisions for impairment losses are based to vary-ing degrees on the assumptions and estimates described above, which give rise to discretionary scope and predictive uncertainties as regards to the amount of provisions for im-pairment losses required.

Audit approach

I have analysed and assessed the existing documentation of the processes for the granting and monitoring of customer loans as well as the formation of loan loss allowances in order to see whether these processes are suitable for the purposes of identifying impending loan defaults and ensuring a proper valuation of loans and advances to customers. I also sur-veyed the design and implementation of the process flows and essential controls and key controls and tested the effec-tiveness of these using samples.

For individually significant customers, I examined on a ran-dom basis loans as to whether there indicators of loan de-faults and whether appropriate provisioning had been made for impairment losses. The samples were selected using a risk based approach with particular consideration of indi-vidual customer ratings with a higher probability of default. If indications of default were determined, the assumptions made by the Bank were examined with respect to the tim-ing and amount of the repayments. With regard to the in-ternal collateral valuations, I checked on a random sample basis whether the assumptions made were adequate.

In the area of provisions for defaulted, individually insignificant clients, I have checked the models and the parameters used in them, and assessed them to determine whether they are suitable for calculating adequate provisions.

For the reviews of the portfolio valuation allowances, I evalu-ated the model and the parameters used therein in consid-eration of the results of the backtesting conducted by the bank in order to determine whether the assumptions are ap-propriate with respect to the customer portfolio and whether these are appropriate for calculating loan loss provisions at the right amount.

I analysed the calculations for the provisions. I also assessed whether the disclosures on the measurement of the loans and advances to customers in the notes were appropriate.

3. Valuation of Securities and Derivative Financial Instruments


The fair values used to value securities and derivative finan-cial instruments are based on observable market prices in RLB Oberösterreich AG's annual financial statements, or are





determined using valuation models. Derivative financial in-struments are used to a significant extent to form hedging relationships and functional units.

The entity describes its procedures for measuring securi-ties and derivative financial instruments, hedge accounting and functional units in the Notes in the chapter ‘‘Information concerning the accounting policies used in the statement of financial position and the income statement‘‘ in the chapter ‘‘Securities‘‘ and in the chapter ‘‘Disclosures relating to items in the statement of financial position‘‘ in the chapter ‘‘Secu-rities‘‘. Disclosures on derivatives appear in the ‘‘Disclosures relating to items in the statement of financial position‘‘ in the chapter ‘‘Derivative financial instruments‘‘.

When determining the fair values of securities and derivative financial instruments for which no market prices and no ade-quately observable market data are available for the valuation, the valuation is subject to discretion on account of the use of internal valuation models and their assumptions and param-eters contained therein.

For hedge accounting purposes, the Bank must satisfy doc-umentation requirements relating to the hedges concerned and their effectiveness. In case of an appropriately docu-mented strategy, derivative financial instruments used to manage interest rate risk can be aggregated into functional units.

The risk for the annual financial statements arises from the fact that when valuation models are used to determine fair values, the assumptions and parameters contained therein are highly discretionary and the formal and material require-ments for hedging relationships are met.

Audit approach

I have examined the documentation of the processes set up by the bank for the allocation and valuation of securities and derivative financial instruments. I also examined the ef-fectiveness of the controls set up internally using a sample approach.

I examined the appropriateness of the valuation models and the underlying valuation parameters to determine the fair val-ues. I also analysed the calculation assumptions and calcu-lation of the fair values using sample checks.

As regards to hedging, I specifically assessed whether docu-mentation of the hedging relationship and of the effectiveness of the hedge existed and whether it was consistent with the Bank's internal guidelines. The effectiveness tests carried out by the Bank were evaluated critically by me with respect to their appropriateness. In the case of functional units of derivative financial instru-ments for the purpose of interest rate risk management,

I checked the existence of and compliance with respective necessary strategies on the basis of the available documen-tation, and assessed whether this documentation and risk management meet the requirements for the formation of functional units.

I have also examined whether the disclosures in the Notes concerning the valuation methods and recognition of hedges and functional units are appropriate and complete.

Responsibility of the legal officers and the Audit Committee for the financial statements

The legal representatives of the company are responsible for the content and compilation of the financial statements, pre-senting a true and fair view of the assets, financial position and earnings of the company in compliance with Austrian business and banking laws. The legal representatives of the company are also responsible for the internal controls which they consider to be required in order to enable the prepa-ration of annual financial statements that are free from any material misrepresentations, whether these are intentional or unintentional.

In preparing the annual financial statements the legal rep-resentatives are responsible for assessing the ability of the company to continue its activities as a going concern, stating any circumstances associated with continuing its activities as a going concern as applicable, and for applying the account-ing principle of continuing its activities as a going concern, unless the legal representatives intend either to liquidate the company or discontinue the company's activities or have no realistic alternative to this.

The Audit Committee is responsible for monitoring the com-pany's accounting process.

Responsibilities of the auditor for auditing the annual financial statements

My objectives include obtaining sufficient certainty regarding whether the annual financial statements are as a whole free from intentional or unintentional material representations, and issuing an Audit Certificate which includes my audit opinion. Adequate certainty is a high degree of certainty, but not a guarantee, that any audit of the financial statements carried out in accordance with the EU Regulation and the Austrian principles of proper auditing requiring application of the ISA will always reveal a material misrepresentation if one has been made. Misrepresentations may be the result of fraudulent ac-tivity or of mistakes and are seen as material if individually or as a whole they could sensibly be expected to influence the economic decisions of readers made based on these annual financial statements.

Audit Certificate



As part of any audit in accordance with the EU Regulation and the Austrian principles of proper accounting which re-quire application of the ISA, I exercise due diligence and maintain a critical approach during the entire audit.

The following also applies: ı I identify and assess the risks of material representations

in the financial statements, whether intentional or uninten-tional ones, plan audit actions in response to these risks, implement these and obtain audit evidence which is ade-quate and appropriate to be used as a basis for my audit opinion. The risk that material misrepresentations resulting from fraudulent activity are not uncovered is higher than one resulting from a mistake, since fraudulent activity may involve fraudulent co-operation by accomplices, counter-feiting, intentional incompleteness, misleading representa-tions or the bypassing of internal controls.

ı In assessing these risks the banking auditor must take into account the relevant internal control system implemented by the company for the preparation and appropriate over-all presentation of the financial statements, in order to plan audit activities that are appropriate under the given cir-cumstances, but not with the objective of providing an assessment on the effectiveness of the company’s internal control system.

ı I assess the appropriateness of the accounting methods applied by the legal representatives and the feasibility of the values estimated by the legal representatives in the accounting and disclosures made in this regard.

ı I draw conclusions on the appropriateness of the ap-plication of the accounting principle of continuing the company's activities as a going concern by the legal rep-resentatives, and on whether there is any material uncer-tainty associated with the events or facts which may give rise to significant doubt regarding whether the company can continue as a going concern based on the audit ev-idence obtained. If I do draw conclusions which point to material uncertainty, I am under an obligation to draw at-tention to the associated statements in the annual financial statements in my Audit Certificate, or to amend my audit opinion if these statements are inappropriate. I draw my conclusions based on the audit evidence obtained by the date of my Audit Certificate. Future events or facts may, however, result in the company discontinuing its activities as a going concern.

ı I assess the overall presentation, the structure and content of the annual financial statements including the Notes, and also assess whether the annual financial statements rep-resent the underlying transactions and events in a manner that achieves a picture that is as faithful as possible.

I discuss inter alia the planned scope and planned temporal arrangement of the audit with the Audit Committee, along with the significant audit findings, including any significant defects in the internal control system which I identify during my audit.

I also make a declaration to the Audit Committee that I have complied with the relevant professional requirements on inde-pendence, and discuss all relations and other circumstances with it which it is reasonable to assume may affect my in-dependence and any associated safeguards as applicable.

Based upon the circumstances which I have discussed with the Audit Committee, I determine those circumstances that were most significant for the audit of the annual financial statements for the financial year and are therefore the audit circumstances that are of particular importance. I describe these circumstances in my Audit Certificate, unless statutes or other legal regulations prohibit public disclosure of the rel-evant facts, or in extremely rare cases if I determine that a circumstance should not be communicated in my Audit Cer-tificate as it can be reasonably expected that the negative consequences of any such communication would exceed the benefits of this to the public interest.

Other statutory and legal requirements

Statement concerning the Management Report

According to the Austrian legal regulations, the management report is to be audited as to whether it is consistent with the financial statements and whether or not other details given in the management report give a misleading impression of the company’s financial position.

The legal representatives of the company are responsible for the compilation of the financial statements, presenting a true and fair view of the assets, financial position and earnings of the company in compliance with Austrian business and banking laws.

I carried out my audit in compliance with the professional principles associated with audits of a Management Report.

Opinion

In my assessment the Management Report has been pre-pared in accordance with the applicable legal requirements, contains the appropriate statements in accordance with sec-tion 243a (2) of the Austrian Commercial Code and is in con-cordance with the annual financial statements.

Declaration

No material misstatements were determined in the Manage-ment Report given the findings obtained in the audit of the annual financial statements and understanding gained of the company and its environment.





Other information

The legal representatives are responsible for the other in-formation. Other information includes all information in the Annual Report, with the exception of the annual financial statements, the Management Report and the Audit Certifi-cate. The Annual Report is expected to be provided to me after the date of the Audit Certificate.

My audit opinion on the annual financial statements does not cover this other information and I will not be providing any type of warranty regarding this.

In association with my audit of the annual financial statements it is my responsibility to read this other information once it is available and to determine whether it materially contradicts the annual financial statements given the understanding ob-tained in the audit, or otherwise appears to include material misrepresentations.

Additional statements in accordance with Article 10 of the EU Regulation

I was appointed by the Austrian Raiffeisen Association, as the audit association responsible for the company, as the bank’s auditor for the 2018 financial year with responsibility for the statutory audit of the annual financial statements pursuant to the Austrian Banking Act. I have been the bank auditor of the company without interruption since the audit of the 2016 annual financial statements.

I declare that the audit opinion in the section “Report on the annual financial statements” is in accordance with the addi-tional report to the Audit Committee pursuant to Article 11 of the EU Regulation.

I declare that I have not provided any prohibited non-audit services (Article 5 (1) of the EU Regulation) and that I have maintained my independence from the company audited which carrying out the audit.


The accountant and auditor responsible for the audit of the financial statements is Andreas Gilly.

Vienna, 2 April 2019

As auditor for Österreichischer Raiffeisenverband:

Andreas GillyChartered Accountant and Auditor

The Audit Certificate refers to the complete annual financial statements, including the management report. This Annual Report in-cludes the section of the notes that is subject to statutory disclosure.

Audit Certificate




Audit opinion

We examined the annual financial statements of


consisting of the balance sheet as at 31 Dec. 2018, the in-come statement for the financial year ending on this reporting date, and the notes.

In our judgement the financial statements comply with the legal regulations and present a true and fair view of the com-pany's net assets and financial position as of 31 December 2018 and the company's results of operations for the financial year ended on this reporting date in accordance with the pro-visions under Austrian corporate and banking law.


We were engaged by management as an additional (volun-tary) auditor and conducted our audit in accordance with In-ternational Standards on Auditing (ISA). Our responsibilities in accordance with these standards are described in further detail in the “Responsibilities of the auditor for auditing the annual financial statements” section of our report. We are independent of the company in accordance with the Code of Ethics for Professional Accountants of the International Eth-ics Standards Board for Accountants (IESBA Code) and the Austrian Code of Ethics for Professional Accountants under the Wirtschaftstreuhandberufsgesetz 2017 (“WTBG 2017”) together with relevant ordinances (“Guidelines on the Prac-tice of Public Accounting Professions”) and guidelines, and we have complied with our other professional duties in accor-dance with these requirements and the IESBA Code. In terms of our responsibility and liability as auditors to the company and to third parties, the statutory liability provisions pursu-ant to section 62a of the Austrian Banking Act in conjunction with section 275 (2) of the Austrian Commercial Code apply. Those powers should be exercised in accordance with Reg-ulation (EU) No 537/2014. We are of the opinion that the audit evidence obtained by us is adequate and appropriate for the purposes of serving as a basis for our audit opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the an-nual financial statements for the financial year. These matters were considered in association with our audit of the annual financial statements as a whole and for the purposes of form-ing our audit opinion, and we do not give any separate audit assessment on these matters.

Recoverability of loans and advances to customers and measurement of the provisions for contingent liabilities and credit risks


The loans and advances to customers, offset against the cor-responding loan loss allowances, include an amount of EUR 20,586 million in the balance sheet. Provisions are also made for contingent liabilities and credit risks.

The Managing Board at Raiffeisenlandesbank Oberösterre-ich Aktiengesellschaft explains the accounting and valuation methods used to form these allowances in the Notes under point 1.3.

The risk for the financial statements relates to the fact that the bank's identification of default events and ascertainment of individual value adjustments as well as the valuation of provi-sions for contingent liabilities and credit risks are all subject to essential uncertainties in terms of the estimates and to significant discretionary leeway. This affects in particular the determination of the amount for value adjustment, which is dependent on the assessment of the economic position and performance of the borrower and on the valuation of loan collateral, and thereby the amount and time of the expected future repayments derived from this.

The provisions formed in accordance with statistical methods for flat-rate individual value adjustments for insignificant bor-rowers in default, and for the portfolio valuation allowances for loans and credit risks not on the balance sheet, where no individual impairment has yet been identified, are based on models and statistical parameters, and therefore also include significant decisions based on discretion and uncertainties in terms of the estimates.






Our audit approach

ı We ascertained the rating process and early warning sys-tem at Raiffeisenlandesbank Oberösterreich Aktienge-sellschaft and judged whether these are suitable for the purposes of identifying required impairments in good time. We reviewed the methodology stipulated in guidelines for calculating the value adjustments for loans or for calculat-ing the provisions for contingent liabilities and credit risks for compliance with the accounting concept. We tested the key controls in this area in terms of their design and implementation and also their effectiveness, using sample tests.

ı We used individual cases from the loan portfolio to review whether the ratings were applied based on internal guide-lines and whether default events were identified in good time. The samples were selected using a risk based ap-proach with particular weighting for ratings with a higher risk of default. The appropriateness of management as-sessments related to the amount and time of future pay-ments, and the assumptions made, were reviewed based on evidence of the borrower's economic position and per-formance, and on valuation of the loan collateral, for the purposes of evaluating the provisions for significant bor-rowers in default.

ı In individual cases we reviewed valuation reports and in-ternal bank valuations for real estate collateral with the in-volvement of our real estate surveyors, using market data in order to assess whether the valuation parameters used are adequate, in particular the real estate prices, rents and interest rates.

ı In terms of calculating the flat-rate individual value adjust-ment and the need for loan loss allowances at the portfolio level, the underlying calculation models were evaluated, including the internal approval and validation processes, in order to assess whether these are suitable for determin-ing provisions at portfolio level at a sufficient amount. The development of the input parameters was analysed using rating validations and historical cases of default. Correct use of the input parameters as well as the mathematical accuracy of the provision calculations were reviewed, based on the data provided.

ı The information in the Notes was then evaluated in order to assess whether the required statements are appropri-ate in terms of the credit risk provisions.

Recoverability of equity investments and investments in affiliated companies


Investments include an amount of EUR 454 million in the bal-ance sheet while shares in affiliated companies amount to EUR 1,738 million.

The Managing Board at Raiffeisenlandesbank Oberösterre-ich Aktiengesellschaft explains the accounting and valuation

methods for investments and shares in affiliated companies in the Notes under point 1.5.

The Bank assesses whether there is an impairment or write-up required on a case-by-case basis, and at least quar-terly if there is a trigger event. Unless there are observable market prices, company valuations by external experts or in-ternal bank company valuations are used for the assessment. The risk for the financial statements is that the results of these valuations are to a large extent dependent on future expected cash flows and valuation parameters, in particular discount-ing factors, growth assumptions and corporate planning, and are therefore subject to uncertainties in terms of the estimates and to discretionary leeway.

Our audit approach

ı We analysed the process and the internal documentation for determining trigger events which lead to a valuation, and reviewed whether corresponding valuations were carried out by the Bank if one of these trigger events is applicable.

ı We consulted with our own valuation experts for the val-uation analyses. We reviewed the appropriateness of the valuation models and valuation parameters used for the most essential investments and shares in affiliated com-panies. In individual cases the corporate planning under-lying the cash flow assessments was also reconciled with the relevant internal budgetary planning approved by the Supervisory Board. The ability to keep to the planning was evaluated by comparing the previous year's planning with the results of the current financial year. We evaluated the appropriateness of the assumptions used to determine the interest rates by reconciling these with capital market data.

ı Finally we assessed whether the statements in the Notes to the annual financial statements on the valuation of invest-ments and shares in affiliated companies are appropriate.

Responsibility of the legal officers and the Audit Committee for the financial statements

The legal representatives of the company are responsible for the content and compilation of the financial statements, pre-senting a true and fair view of the assets, financial position and earnings of the company in compliance with Austrian business and banking laws. The legal representatives of the company are also responsible for the internal controls which they consider to be required in order to enable the prepa-ration of annual financial statements that are free from any material misrepresentations, whether these are intentional or unintentional.

In preparing the annual financial statements the legal rep-resentatives are responsible for assessing the ability of the company to continue its activities as a going concern, stating any circumstances associated with continuing its activities as



a going concern as applicable, and for applying the account-ing principle of continuing its activities as a going concern, unless the legal representatives intend either to liquidate the company or discontinue the company's activities or have no realistic alternative to this.

The Audit Committee is responsible for monitoring the com-pany's accounting process.

Responsibilities of the auditor for auditing the annual financial statements

Our objectives include obtaining sufficient certainty regarding whether the annual financial statements are as a whole free from intentional or unintentional material representations, and issuing an Auditor’s report which includes our audit opinion. Adequate certainty is a high degree of certainty, but not a guarantee, that any audit of the financial statements carried out in accordance with Austrian principles requiring applica-tion of the ISA will always reveal a material misrepresentation if one has been made. Misrepresentations may be the result of fraudulent activity or of mistakes and are seen as material if individually or as a whole they could sensibly be expected to influence the economic decisions of readers made based on these annual financial statements.

As part of any audit in accordance with the Austrian princi-ples of proper accounting which require application of ISA we exercise due diligence and maintain a critical approach during the entire audit.


ı We identify and assess the risks of material representa-tions in the financial statements, whether intentional or un-intentional ones, plan audit actions in response to these risks, implement these and obtain audit evidence which is adequate and appropriate to be used as a basis for our audit opinion. The risk that material misrepresentations re-sulting from fraudulent activity are not uncovered is higher than one resulting from a mistake, since fraudulent activ-ity may involve fraudulent co-operation by accomplices, counterfeiting, intentional incompleteness, misleading representations or the bypassing of internal controls.

ı We gain an understanding of the internal control system to the extent that it is relevant for the financial statements, in order to plan audit activities that are appropriate under the given circumstances, but not with the objective of provid-ing an assessment on the effectiveness of the company’s internal control system.

ı Our audit also includes an assessment of the appropriate-ness of the accounting methods applied and the tenability of the estimated values provided by the legal representa-tives in the accounts and associated statements.

ı We draw conclusions on the appropriateness of the ap-plication of the accounting principle of continuing the company's activities as a going concern by the legal rep-resentatives, and on whether there is any material uncer-tainty associated with the events or facts which may give rise to significant doubt regarding whether the company can continue as a going concern based on the audit evi-dence obtained. If we do draw conclusions which point to material uncertainty, we are under an obligation to draw attention to the associated statements in the annual fi-nancial statements in our Auditor’s report, or to amend our audit opinion if these statements are inappropriate. We draw our conclusions based on the audit evidence obtained by the date of our Audit Certificate. Future events or facts may, however, result in the company discontinuing its activities as a going concern.

ı We assess the overall presentation, the structure and content of the annual financial statements including the Notes, and also assess whether the annual financial state-ments represent the underlying transactions and events in a manner that achieves a picture that is as faithful as possible.

ı We discuss inter alia the planned scope and planned tem-poral arrangement of the audit with the Audit Committee, along with the significant audit findings, including any sig-nificant defects in the internal control system which we identify during our audit.

ı We also make a declaration to the Audit Committee that we have complied with the relevant professional require-ments on independence, and that we discuss with it all relations and other circumstances which can be sensibly assumed to affect our independence and hence, if rele-vant, associated protective measures.

ı Based upon the circumstances which we have discussed with the Audit Committee, we determine those circum-stances that were most significant for the audit of the annual financial statements for the financial year and are therefore the audit circumstances that are of particular im-portance. We describe these circumstances in our Audit Certificate, unless statutes or other legal regulations pro-hibit public disclosure of the relevant facts, or in extremely rare cases if we determine that a circumstance should not be communicated in our Audit Certificate as it can be rea-sonably expected that the negative consequences of any such communication would exceed the benefits of this to the public interest.





Other information

The legal representatives are responsible for the other infor-mation. Other information includes all information contained in the Management Report.

Our audit opinion on the annual financial statements does not cover this other information and we do not provide any type of warranty regarding this.

In connection with our audit of the annual financial state-ments, it is our responsibility to read this other information and to consider whether there are material discrepancies be-tween the other information and the annual financial state-ments or whether there are material misstatements with the knowledge we have obtained during the audit or otherwise appear to be material misstatements. If, based on the work performed, we conclude that the other information is mate-rially misrepresented, we must report it. We have nothing to report on that.


The accountant and auditor responsible for the audit of the financial statements is Martha Kloibmüller.

Linz, 2 April 2019

KPMG Austria GmbHWirtschaftsprüfungs- und Steuerberatungsgesellschaft

Martha KloibmüllerChartered Accountant and Auditor

The report of the independent auditors refers to the complete annual financial statements, including the Management Report. This Annual Report includes the section of the notes that is subject to statutory disclosure.




Statement of the Managing Board

We confirm to the best of our knowledge that these con-solidated financial statements, prepared according to proper accounting standards, present a true and fair view of the group’s assets, financial position and earnings and that the Group Management Report presents the business develop-ment, performance and position of the Group so as to give a true and fair view of its net assets, financial position and earnings, and the Group Management Report provides a de-scription of the principal risks and uncertainties to which the Group is exposed.

We confirm to the best of our knowledge that these financial statements of the parent company, prepared according to proper accounting standards, present a true and fair view of the company’s assets, financial position and earnings and that the management report presents the business devel-opment, performance and position of the company so as to give a true and fair view of its net assets, financial position and earnings, and the management report provides a de-scription of the principal risks and uncertainties to which the company is exposed.

The responsibilities of the individual Board members are shown on pages 8 and 9.



THE MANAGING BOARD










Statement of the Managing Board | Report of the Supervisory Board

The Supervisory Board of Raiffeisenlandesbank Oberöster-reich Aktiengesellschaft has fulfilled the tasks for which it is responsible according to the law and the company articles for the 2018 financial year. The Managing Board has reported regularly, promptly and comprehensively about important business transactions and the situation and performance of the bank and the group.

Six committees (nomination, management, information, risk, accounting, and personnel and remuneration committees) have effectively supported the entire Supervisory Board in the completion of its work.

At meetings of the Supervisory Board and its committees, the Managing Board was charged with undertaking certain tasks, the implementation and outcomes of which were re-ported at subsequent meetings.

Outside the regular meetings, the Chairman of the Supervi-sory Board also held numerous discussions with the Managing Board to strengthen communications and information-sharing between the Management Board and the Supervisory Board.

Prior to the scheduled meetings, the members of the Supervi-sory Board enjoyed regular opportunities to hold discussions with experts regarding the content of agenda items at forth-coming meetings. This enabled them to make sound deci-sions and satisfy their monitoring obligations diligently.

The Managing Board has prepared a separate consolidated non-financial report for 2018 in accordance with section 267a of the Austrian Commercial Code including the information for the parent company in accordance with section 243b of the Austrian Commercial Code and submitted it to the Su-pervisory Board. which has reviewed the report to ensure it is complete and meets legal requirements.

The auditor of the Austrian Raiffeisen Association and KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungs-gesellschaft have audited the accounting system, the annual financial statements in accordance with the provisions of the Austrian Commercial Code and the Austrian Banking Act, the consolidated financial statements according to the Interna-tional Financial Reporting Standards (IFRS) – as adopted by

the EU – for the year ended 31 Dec. 2018, the Management Report and the Group Management Report for the 2018 fi-nancial year. The audits did not give cause for any reserva-tions and all legal regulations were complied with in full. The Austrian Raiffeisen Association issued the unqualified audit certificate of the independent auditor; KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft is-sued the opinions of the independent auditor.

The Accounting Committee has reviewed the annual financial statements and the consolidated financial statements for the year ended 31 Dec. 2018 as well as the Management Report and the Group Management Report for the 2018 financial year. The review did not give rise to any reservations whatso-ever. The findings of the review by the Accounting Committee therefore resulted in a recommendation that the Supervisory Board concur with the findings of the independent auditors and approve the annual financial statements for the year ended 31 Dec. 2018 pursuant to section 96 (4) of the Austrian Stock Corporation Act, agree to the proposal of the Managing Board concerning the appropriation of profit and note with approval the consolidated financial statements for the year ended 31 Dec. 2018, including the Group Management Report.

At a meeting held on 29 April 2019, the Supervisory Board itself also reviewed the annual financial statements and con-solidated financial statements for the year ended 31 Dec. 2018 as well as the Management Report and the Group Man-agement Report for the 2018 financial year.

The Supervisory Board agreed with the Accounting Commit-tee's review findings and the Managing Board's proposal re-garding the appropriation of profit, approved the 2018 annual financial statements for Raiffeisenlandesbank Oberösterre-ich Aktiengesellschaft, which were thereby formally adopted pursuant to section 96 (4) of the Austrian Stock Corporation Act, and noted with approval the consolidated financial state-ments for the year ended 31 Dec. 2018 including the Group Management Report.

The Supervisory Board would like to thank the Managing Board and all employees of Raiffeisenlandesbank Oberösterreich Ak-tiengesellschaft as well as the whole group for their commit-ment and successful performance in the 2018 financial year.

Report of the Supervisory Board pursuant to section 96 of the Austrian Stock Corporation Act (AktG)

Linz, 29 April 2019

The Supervisory Board

Jakob AuerPresident of the Supervisory Board of Raiffeisenlandesbank Oberösterreich



Raiffeisen Banking Group Upper Austria 2018 results (consolidated)

Report on business performance and the results 2018 ____________________________________________ 239

Consolidated statement of financial position as at 31 December 2018 ________________________ 241

Consolidated income statement 2018 __________________________________________________________________ 242



General informationThe Group


Report on business performance and the results 2018

The Raiffeisen Banking Group Upper Austria consists of Raiffeisenlandesbank Oberösterreich AG and 80 indepen-dent Upper Austrian Raiffeisen banks with more than 400 bank branches. As the most important local supplier of finan-cial services in Upper Austria, the Raiffeisen Banking Group Upper Austria is a reliable and readily available partner that offers its customers close personalised support with inno-vative financial and business services. Customer orientation is the focus of all strategic decisions. Our declared aim is to justify our customer’s high level of trust in us and to not only maintain, but to solidify and expand our position as a market leader.

Customer proximity – also in the future

Raiffeisen Oberösterreich grew strongly from its roots in this region and is firmly embedded in its municipalities and cities like no other banking group. Many economic developments were supported directly with the customers or even initiated jointly. This proximity to customers is a characteristic that dis-tinguishes Raiffeisen Oberösterreich and which is to be main-tained by all means.

Network of expertise

The Raiffeisen Banking Group Upper Austria has positioned itself as a modern consulting bank in order to best meet the needs of its customers. The close cooperation between the Upper Austrian Raiffeisen banks, which are present through-out the federal state with their expertise, and Raiffeisenland-esbank Oberösterreich, which acts as a coordinating entity for customers operating not only in Upper Austria, but also in the international business, is important. With its special network of expertise, the Raiffeisen Banking Group Upper Austria achieves a balance between maintaining its local roots and providing global support for customers.

Innovation driver in the mega-context of digitisation

The Raiffeisen Banking Group Upper Austria success-fully sets standards in the Austrian banking sector and can demonstrate innovative solutions within the framework of cus-tomer-centric product and service development. The ultimate goal is to simplify the business life of our customers with a maximum of customer orientation. This means being a trend-setter and innovation driver at the same time and performing innovative pioneering work in the mega-context of digitisation by implementing and developing new technologies.

“Digital Regional Bank”

Digitisation has a huge impact on the financial industry as a whole and brings about major changes in customer be-haviours and needs. With the implementation of the “Digital Regional Bank” project, the Raiffeisen Banking Group Upper Austria is building even more intensively in the coming years on the optimal interplay of personal consultation in the local bank branches and digital products and services that can be used via computers and smartphones.

“Raiffeisen Banking Group 2020 4.0”

With the project “Digital Regional Bank” and the comprehen-sive strategy and organisation concept “Raiffeisen Banking Group 2020 4.0”, the role as a strong regional banking group will be met even more strongly in the future. The aim is to in-crease efficiency within the Raiffeisen Banking Group Upper Austria and in particular to focus on developments in the area of digitisation – without diluting the character of the cooper-ative banking model or the personal and regional proximity to customers.

Modern associate activities

A regional approach, connectivity with the local area, subsid-iarity and solidarity as well as the special focus on the cus-tomer are the most important principles that have made the Raiffeisen Banking Group Upper Austria so successful. Its enormous creative energy for customers and for Austria as a business location also lies primarily in its strong, modern as-sociate work, which focuses on co-operative action. Taking decisions together, and then also consistently implementing them: this is a strength throughout the entire Raiffeisen Bank-ing Group Upper Austria. This is the only way to remain ca-pable of meeting the constantly changing challenges of the global economy, now and in future.

Excellent results

These excellent results for the 2018 financial year are clear evidence that the entire Raiffeisen Banking Group Upper Austria has made the right strategic decisions, is providing sustained support for its retail, business and institutional cus-tomers, and is offering professional assistance for its custom-ers’ plans and projects.

On average throughout the year, 3,940 people were em-ployed by the Raiffeisen Banking Group Upper Austria.

Report on business performance and the results 2018Successful trendsetter and innovation leader



Balance sheet

As at 31 Dec. 2018, the consolidated total assets of Raiff-eisen Banking Group Upper Austria amounted to EUR 50.5 billion. For the total L-IPS, total assets even amounted to EUR 56.2 billion (+2.4% compared to the previous year) based on the Austrian Commercial Code. This represents an increase of EUR 3.1 billion or 6.5 % over the previous year's report-ing date. Of the total assets, an amount of EUR 34.1 billion (67.4%) was accounted for by loans and advances to custom-ers. There was an increase of 9.9% over the previous year.

The purpose of the banking group's own holdings of securi-ties amounting in total to EUR 5.7 billion is primarily to safe-guard liquidity and to provide a source of collateral for use in obtaining funding from the central bank. In total, at the end of the year, 11.4% of total assets was invested in securities.

The largest item on the liabilities side was the amounts owed to customers at EUR 30.9 billion or 61.2% of the total as-sets. This figure represented a year-on-year increase of EUR 2.3 billion (7.9%). Securitised and subordinated liabil-ities amounted to EUR 8.0 billion or 15.9% of total assets. These items contribute significantly towards long-term liquid-ity protection.

As at the end of 2018, the total eligible equity capital of the institutional protection scheme (IPS) for Upper Austria in ac-cordance with the Capital Requirements Regulation (CRR) amounted to EUR 4,995.1 million. The statutory equity capi-tal requirement as at 31 Dec. 2018 was EUR 3,344.0 million, giving rise to excess equity capital as at the reporting date of EUR 1,651.1 million.

Income statement

The 2018 income statement of the Raiffeisen Banking Group Upper Austria was again very satisfactory, given the general economic conditions. Consolidated operating income came to EUR 1,128.9 million, with operating expenses amounting to EUR 697.4 million. The consolidated operating profit for the 2018 financial year was reported at EUR 431.5 million.

Raiffeisen Banking Group Upper Austria achieved a solid op-erating profit in 2018, with a value of 0.88% of the average total assets.

Based on a rigorously implemented risk policy and a tightly operated risk management system, the Raiffeisen Banking Group Upper Austria kept risk under control and was able to generate profit on ordinary activities (POA) of EUR 364.8 million or 0.74% of the average total assets.





Report on business performance and the results 2018 | Consolidated statement of financial position

Consolidated statement of financial position as at 31 Dec. 2018ASSETS IN M 31.12.2018 31.12.2017

Cash in hand and balances at central banks 270.1 263.7

Public-sector debt instruments and bills of exchange eligible for refinancing at the central bank. 1,445.6 1,356.5

Loans and advances to banks 7,598.4 7,652.9

Loans and advances to customers 34,071.2 30,991.5

Bonds and other fixed-income securities 1,460.0 1,518.4

Shares and other variable-yield securities 2,828.8 2,894.0

Equity investments 478.7 476.7

Investments in affiliated companies 1,742.2 1,738.3

Intangible assets 17.3 18.5

Property, plant and equipment 315.9 283.3

Other assets 212.8 155.4

Prepaid expenses 29.3 31.1

Deferred tax assets 52.6 45.4

Total assets 50,522.9 47,425.7

Equity and liabilities IN EUR M M 31.12.2018 31.12.2017

Amounts owed to banks 6,678.6 6,780.9

Amounts owed to customers a) of which savings deposits b) of which term deposits

30,923.6 10,534.7

8,001.1

28,653.2 10,224.9

7,429.2

Liabilities evidenced by certificates 7,311.6 6,444.6

Other liabilities 226.6 265.7

Prepaid expenses 145.0 155.5

Provisions 443.5 441.5

Tier 2 capital according to Part 2 Chapter 4 of EU Regulation No. 575/2013 714.7 869.5

Subscribed capital 13.2 12.9

Retained earnings 3,461.4 3,201.8

Liability reserve pursuant to section 57 (5) of the Austrian Banking Act 542.9 537.0

Net income for the year 61.8 63.1

Total equity and liabilities 50,522.9 47,425.7



IN MILLIONS EUR 2018 2017

NET INTEREST INCOME 592.0 516.3

Income from securities and equity investments 175.9 187.2

Fee and commission income 334.8 307.9

Fee and commission expenses –61.3 –50.3

Income from/expenses in financial operations 7.1 7.9

Other operating income 80.4 104.6

OPERATING INCOME 1,128.9 1,073.6

Personnel expenses –377.7 –365.7

Other administrative expenses –235.1 –217.7

Valuation allowances for assets in asset items 9 and 10 –20.0 –20.1

Other operating expenses –64.6 –82.2

OPERATING EXPENSES –697.4 –685.7

OPERATING PROFIT 431.5 387.9

Reversals of/additions to loan loss allowances –48.6 –77.9

Reversals of/additions to write-downs on securities and equity investments –18.1 70.5

PROFIT ON ORDINARY ACTIVITIES 364.8 380.5

PROFIT FOR THE YEAR (prior to movements in reserves) 262.8 337.1

Consolidated income statement 2018





Consolidated income statement



GLOSSARY A

Amortised cost “AC”: Financial assets or liabilities measured at amortised cost.

Accounting mismatch: This is an inconsistent valuation of the asset and liability sides of the balance sheet, for example, the asset side is valued at fair value, while the liability side is valued at amortised cost. This means that changes in market value only affect one side of the balance sheet.

Additional Tier 1 capital (AT 1): Additional Tier 1 (AT 1) describes supplementary Tier 1 capital under →CRR.

AFRAC: The Austrian Financial Reporting and Au-diting Committee is the privately organised Austrian standard-setter in the field of financial reporting and auditing supported by the competent authorities. The members of the association “Österreichisches Rech-nungslegungskomitee“ (Austrian Accounting Commit-tee), whose operational body is the AFRAC, are made up of Austrian federal ministries and official specialist organisations. The members of AFRAC are preparers of financial statements, auditors, tax consultants, sci-entists, investors, analysts and employees of supervi-sory authorities.

AfS: Available for Sale refers to a category of finan-cial assets in accordance with IAS 39. This includes all non-derivative financial assets that have been explicitly allocated to this category or have not been allocated to any of the other categories.

AfS reserves: Financial assets in the “Available for sale” category (→AfS) in accordance with IAS 39 are principally assessed at → fair value and have no effect on the income statement. Changes in fair value which are not due to → impairment are reflected directly in equity under the AfS reserves.

Associated companies: Companies on whose business and financial policies significant influence can be exercised.

Austrian Banking Act: The Austrian Banking Act (Bankwesengesetz, BWG) is the legal basis for the or-ganisation and supervision of Austrian banking sector and, as a result, a special set of trading regulations for the operation of banking businesses.

Austrian Commercial Code: The Austrian Com-mercial Code (Unternehmensgesetzbuch, UGB) regu-lates the legal relationships of entrepreneurs, contains stipulations about company structures and accounting standards.

Austrian Public Housing Act (WGG): Compa-nies that operate in the public housing sector are sub-ject to special legal regulations of the Austrian Public Housing Act.

B

Banking book: All items not allocated to the →se-curities trading book.

Basel III: Basel III refers to the changes or supple-ments to the framework created in 2004 for capital requirements for the banking sector (Basel II) by the Basel Committee on Banking Supervision. The reforms regulate both the capital base and liquidity and came into effect in the European Union on 1 Jan. 2014.

C

CAPM: The Capital Asset Pricing Model seeks to explain, via the comparison of a portfolio’s returns to (market) risk, how risky investment opportunities in the capital market are measured.

Cash flow statement: Calculation and presenta-tion of cash flows generated from or used for opera-tional transactions, investment and financing activities, as well as reconciliation of cash and cash equivalents at the beginning and the end of the financial year.

CDS: A Credit Default Swap (CDS) is a credit deriva-tive where the buyer pays a premium to the seller of the CDS and the seller agrees to compensate the buyer in the event of certain credit events (e.g. loan default) in respect to one or more particular assets.

CR I: The Coverage Ratio I is a risk ratio for assessing the share of non-performing loans covered by reserves (→NPL) and compares the reserves established for non-performing loans (→NPL) to the latter.

CR II: The Coverage Ratio II is a risk ratio for assess-ing the share of non-performing loans covered by re-serves and collaterals (→NPL) and compares the re-serves and collaterals established for non-performing loans (→NPL) to the latter.

Common Equity Tier 1 capital (CET 1): Common Equity Tier 1 capital, according to →CRR, in-cludes certain capital instruments as well as associated premiums, retained earnings, accumulated other com-prehensive income, other reserves, funds for general bank risks, as well as deductible items and corrections.

Common Equity Tier 1 capital ratio (CET 1 ratio): The Common Equity Tier 1 capital ratio is →Common Equity Tier 1 capital expressed as a per-centage of the → risk-weighted assets.

Companies accounted for using the equity method: The equity method is used for balancing the accounts of → associated companies and →joint ven-tures in consolidated financial statements. Essentially, the proportionate equity of companies accounted for using the equity method is shown in the consolidated statement of financial position, and the proportionate net income in the consolidated income statement.

CRD: The Capital Requirements Directive is the por-tion of the →Basel III regulations that must be imple-mented into national law in each country. The Directive lays down rules for the internal corporate assessment of capital adequacy and mechanisms for supervisory cooperation. Like the →CRR, it is part of the “Single Rulebook” for European banking supervisory law.

Credit risk: The risk that one party to a financial in-strument will cause a financial loss to another party by not fulfilling an obligation.

CRR: The Capital Requirements Regulation refers to a regulation of the EU that regulates the central capi-tal and liquidity requirements according to →Basel III. It contains the quantitative requirements for the capital adequacy of banks and disclosure requirements. Like the →CRD, it is part of the “Single Rulebook” for Euro-pean banking supervisory law.

CVA: The Credit Value Adjustment is the difference between the risk-free portfolio value and the true port-folio value that takes into account the possibility of a counterparty’s default.

D

DBO: Defined Benefit Obligation is the obligation to cover projected future payments as part of defined benefit plans. The present value of the obligations de-termines the amount of the provisions for post-employ-ment and other employee benefits, taking into account any other relevant factors (e.g. plan assets).

DCF: Discounted Cash Flow describes a method for determining value that is based on the mathematical finance concept of discounting cash flows in order to determine the net present value.

Derivatives: Derivatives are financial instruments whose value changes as a result of changes to the un-derlying basic instrument (e.g. interest rate, securities price, exchange rate and similar items). They require no or minimal initial net investment, and are settled at a later date (→forward transactions). →swaps, →options and →futures are among the best-known derivatives.

Designation / de-designation: IFRS 9 – like IAS 39 – contains the option of designating financial assets as “at fair value”.

Dirty Price: The dirty price is the price of an inter-est-rate instrument including accumulated interest claims (accrued interest).

DVA: Debt Value Adjustment considers the effect of the bank’s own creditworthiness when performing the fair value assessment of →derivatives and shows the difference between the risk-free value and the value when taking the own creditworthiness risk into consid-eration.

E

EBA: The task of the European Banking Authority is to develop effective and consistent regulations for the supervision of the European banking sector. The overall objectives are to safeguard financial stability in the EU, protect integrity and ensure the proper functioning of the banking sector.

EFRAG: The European Financial Reporting Adviso-ry Group was founded in 2001 with the objective of providing professional expertise related to application of the →IFRS in Europe to the European Commission, participating in the process for setting standards on the →IASB and coordinating the development of perspec-tives in relation to international accounting standards in the EU.

Exchange rate risk: The risk that the →fair value or future cash flow of a financial instrument will fluctuate due to exchange rate changes.

Expected credit loss model: Rules for record-ing expected losses due to credit risk.

Expected Loss “EL” or Expected Credit Loss “ECL”: This is the expected loss of a financial instrument that is expected to occur over one year (12 months) or over the entire term (lifetime), starting at the balance sheet date.

F

Fair Value: The fair value is the amount at which an asset can be exchanged or a debt paid between com-petent, contractually willing and mutually independent business partners, at market conditions.

Fair value option “FVO”: Financial assets or lia-bilities for which there is an option to designate them at fair value through profit or loss.

Fair Value through Other Comprehensive Income “FVOCI”: Financial assets that are mea-sured at fair value with no impact on profit or loss.

Fair value through profit or loss “FVTPL”: Financial assets or liabilities that are measured at fair value and recognised in profit or loss.

Forwards: Forwards are individually designed for-ward transactions not traded on the stock exchange and with a strict obligation to be fulfilled.

Forward transactions: Forward transactions are transactions in which mutual contractual fulfilment takes place at a later date and at a previously agreed price. A distinction is made between unconditional fu-ture/forward transactions (e.g. → futures) and condi-tional future/forward transactions (→ options).

Fully consolidated companies: Fully consol-idated companies include the parent company and significant → subsidiaries that are presented in the consolidated financial statements as if they were one single company.

Futures: Futures are forward transactions which are standardised, traded on the stock market and have a strict obligation to be fulfilled. A specific price and point in time is agreed in advance at which the object that is traded (from the money, capital, precious metals or for-eign exchange market) must be delivered or accepted.


General Information



Glossary

H

HtM: Held to Maturity refers to a category of financial assets according to IAS 39. It includes non-derivative financial assets with fixed or determinable payments to-gether with a fixed duration that are quoted in an active market and are being held, and are eligible to be held, to maturity.

I

IASB: The International Accounting Standards Board is a private sector organisation that passes international financial reporting standards (→ IFRS). The aim is to create high-quality, enforceable and globally applicable accounting standards.

ICAAP: The Internal Capital Adequacy Assessment Process (ICAAP) is the process of assessing the ap-propriate capital adequacy in relation to the risk profile and the strategy aimed at preserving the level of equity.

IFRIC: Interpretations are passed by the International Financial Reporting Interpretations Committee on im-portant issues of →IFRS accounting.

IFRS: International Financial Reporting Standards (IFRS) is the general term for international accounting standards (IFRS, formerly IAS) and their interpretations (→ IFRIC, formerly SIC).

Impairment: Impairment refers to the decrease in value, with an effect on the income statement, of finan-cial assets and of (long term) intangible assets, proper-ty, plant and equipment, and investment property, as long as the latter are valued at amortised cost.

Interest-rate risk: The risk that the →fair value or future cash flow of a financial instrument will fluctuate due to changes in the market interest rate.

Interest margin: The interest margin is calculat-ed from the net interest income (→ IFRS, →Austrian Commercial Code) for the financial year in relation to the average assets.

IPS: An Institutional Protection Scheme is a contrac-tual or statutory liability agreement that provides pro-tection for member banks of decentralised banking groups. A distinction can be drawn between an insti-tutional protection system at the state level (L-IPS) and federal level (B-IPS).

J

Joint venture: A joint venture is a mutual arrange-ment in which the parties jointly run a company within the context of the arrangement and possess rights to the arrangement’s resulting net assets.

L

LCR: The Liquidity Coverage Ratio is a performance indicator for assessing short-term →liquidity risks. The portfolio of high-quality liquid assets is compared to the total net liquidity outflows in the following 30 calendar days.

Lifetime Expected Loss “LEL”: Loan loss al-lowances in the amount of the expected losses over the total life of an instrument.

LGD: Loss Given Default describes the loss ratio in case of a default.

Liquidity risk: The risk that a company has difficul-ty in fulfilling its obligations resulting from its financial liabilities.

N

NPL: Non-performing loans are loans where it is as-sumed that the customer will not be able to pay back the debt to the bank in full. Various indicators are used to determine bad debt, such as that the customer has filed for bankruptcy or a significant delay in payment in at least 90 days (default according to Article 178 CRR). The NPL ratio is the proportion of the total portfolio of loans accounted for by non-performing loans.

NSFR: The Net Stable Funding Rate is a key figure in evaluating medium and long-term →liquidity risk. It is calculated by comparing the available amount of stable financing to the required amount of stable financing.

O

OCI: Other Comprehensive Income takes into ac-count all changes in value for assets and liabilities that are not recorded in the income statement.

Operational risk: Operational risk is the risk of losses caused by the inadequacies or failure of internal procedures, people, systems or external events.

Operating profit: Operating profit is the difference between operating income and operating expenses. At group level, it is calculated by deducting general administrative expenses from the sum of net interest income, net income from companies accounted for us-ing the equity method, net fee and commission income, income from trading transactions, and other operating income.

Options: The buyer of an option acquires the right to purchase (call option) or sell (put option) the underlying option object from a contract partner at a certain price and at a certain time agreed in advance, or during a particular period. i.e. it is a conditional future.

OTC: Over The Counter describes transactions be-tween financial market participants that are not settled on the stock exchange.

P

PD: Probability of Default describes the likelihood that a receivable will go into default.

Purchased or Originated Credit Impair-ment “POCI”: Financial assets that are already classified as impaired when recognised.

R

Rating (external): Assessment of creditworthiness of issuers and debt instruments by international rating agencies (e.g. Moody's, Standard & Poor's).

Rating (internal): Assessment of creditworthiness of borrowers by banks.

Recycling in conjunction with IFRS 9: Re-classification of OCI entries in the course of impairment or disposal of a financial instrument through profit or loss.

Return on Assets (RoA): Reflects the total re-turn on capital. It is calculated by comparing the profit for the year before or after taxes to the average total assets.

Return on Equity “RoE”: This reflects the return on equity. It is calculated by comparing the profit for the year before or after taxes to the average equity.

Risk-weighted assets (RWA): Risk-weight-ed assets refer to the total risk value according to → CRR, including components from Article 92 (3) CRR. The most important components are risk-weighted amounts due for credit risk, counterparty default and dilution risks; total amounts due for position risks, for-eign currency risks, settlement risks and commodity risks; risk positions for operational risk, and risk posi-tions for adjustment of credit assessments.

S

Securities trading book: In accordance with the →Austrian Banking Act, the securities trading book in-cludes items that are held by a bank for the purpose of short-term resale, in order to exploit price and inter-est-rate fluctuations.

SPPI: Where a financial instrument meets the Sole-ly Payment of Principle and Interest (SPPI) criteria, the cash flows of that instrument may consist only of interest and principal payments on the outstanding principal.

SREP: Supervisory Review and Evaluation Process is the supervisory process for review and monitoring by the →EBA.

Stage 1: In accordance with the distinction in IFRS 9, these are financial instruments whose credit risk has not deteriorated materially since initial recognition or those that have a low risk at the reporting date.

Stage 2: In accordance with the distinction in IFRS 9, these are financial instruments whose credit risk has deteriorated materially since initial recognition, but which are not yet considered credit impaired.

Stage 3: Financial instruments that are considered credit impaired.

Subsidiary: Company on whose business and fi-nancial policies a controlling influence can be exercised.

Swaps: Swaps are →derivatives in which future payment flows are exchanged. The most important examples are the exchange of interest obligations (in-terest swap) and/or foreign currency positions (foreign currency swap).

T

Tier 1 capital (T1): Tier 1 capital according to CRR →describes core capital and includes → Common Eq-uity Tier 1 capital (CET1) as well as → Additional Tier 1 capital (AT1).

Tier 1 Capital Ratio: The Tier 1 capital ratio results from the →Tier 1 capital expressed as a percentage of → risk-weighted assets. Tier 2 capital (T 2): Under →CRR, supplementary capital is referred to as Tier 2 capital.

Total capital (TC): Total capital as defined by →CRR includes →Tier 1 capital (T1) as well as →Tier 2 capital (T2) after adjustments and corrections.

Total capital ratio (TC ratio):The total capital ra-tio is →total capital expressed as a percentage of the →total risk-weighted assets.

U

Unexpected loss: The unexpected loss defines a potential loss amount that exceeds the expected loss.

Unwinding: Interest recognition based on the net carrying amount of impaired financial assets.

V

VaR: Value at Risk is the potential future loss which, with a certain probability (e.g. 99 per cent), will not be exceeded within a certain time period.

W

WACC: Der Weighted Average Cost of Capital is an average total capital cost approach resulting from a weighted average of the equity and borrowed capital cost rate.

Imprint

Owner, editor and publisher:Raiffeisenlandesbank Oberösterreich AktiengesellschaftEuropaplatz 1a, 4020 LinzPhone: +43 732 65 96-0FN 247579 m, Linz District CourtDVR: 2110419 www.rlbooe.at/impressum

Responsible for content:Michael Huber Otto Steininger Florian Brunner Sabine Felhoferwith contributions from virtually every department at Raiffeisenlandesbank Oberösterreich

Layout: Raiffeisenlandesbank Oberösterreich, Service ManagementPhotos: Michael Huber; Thomas Smetana, Linz; Foto Strobl, Linz; Erwin Wimmer, Linz; istockphotoPrint: TRAUNER DRUCK GmbH & Co KG, 4020 Linz

Notes: Gender-neutral language: In order to facilitate legibility, we have largely dispensed with gender-specific differentiation. In terms of non-discrimination, all terms used are valid for both genders. ©: 2019 Raiffeisenlandesbank Oberösterreich Aktiengesellschaft The Annual Report of Raiffeisenlandesbank Oberösterreich 2018 is also available in German. If there are discrepancies, the German original shall apply. No liability is assumed for typographical or printing errors.

This document is a marketing communication that was prepared by Raiffeisenlandesbank Oberösterreich AG exclusively for informational purposes. It was not pre-pared in compliance with legal regulations regarding the independence of investment research, nor is it subject to any prohibition on trade connected with the dissem-ination of investment research. This marketing communication represents neither investment advice, nor an offer or invitation to make an offer for the purchase or sale of financial instruments or investments. The information, analyses and forecasts contained herein are based on the knowledge and market assessment at the time of its preparation – subject to amendments and additions. Raiffeisenlandesbank Oberösterreich AG assumes no liability for the accuracy, timeliness or completeness of the contents, or for the accuracy of forecasts. The contents are non-binding and do not represent a recommendation to buy or sell. Because every investment deci-sion requires an individual determination based on the investor’s personal characteristics (such as risk tolerance), this information is no substitute for the personalised advice and risk disclosure provided by a customer advisor in the course of a consultation. We expressly note that financial instruments and investments have major inherent risks. Performance is determined in accordance with the OeKB method, based on data from the custodian bank. We explicitly note that the composition of fund assets can change in accordance with legal regulations. Information about performance is related to the past and therefore does not represent a reliable indica-tor of future performance. Currency fluctuations in non-euro currencies can affect performance positively and negatively. Investments may result in tax obligations that depend on the customer’s personal circumstances and can be subject to changes in future. This information can therefore not replace the personalised support provided to an investor by a tax advisor. The limited tax obligations imposed by Austria on non-resident taxpayers do not imply freedom from taxation in the investor’s country of residence. Prospectuses and any endorsements of the issue of shares in Raiffeisenlandesbank Oberösterreich AG, which must be published in accordance with the Austrian Capital Market Act, are the responsibility of Raiffeisenlandesbank Oberösterreich AG. In the event of other share issues, the prospectus and any en-dorsements lie with the respective issuer of shares. Investment strategies for investment funds can focus primarily on investment funds, bank deposits and derivatives, or the emulation of an index. Funds may exhibit significant fluctuations in value (volatility). In the funds regulations approved by the Financial Supervisory Authority (FMA), issuers can be identified if they can be weighted as holding more than 35% of fund assets. The current sales prospectus, as well as the Key Investor Information – Customer Information Document (KID) are available in German and English at the relevant capital investment company (KAG), pay-ment authority, or tax representative in Austria. Detailed risk information and exclusion of liability at www.boerse-live.at/Disclaimer

Europaplatz 1a, 4020 LinzTel. +43 732 65 96-0E-Mail: [email protected]

www.rlbooe.at

a perfect connection banking business...banking+business a perfect connection “in order to ensure...

Documents