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Raiffeisen LandesbankOberösterreich

www.rlbooe.at


www.rlbooe.at

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

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The foundation for a successful future.

Annual Report 2015

2 Annual Report 2015

3Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General information

Contents

General information

Foreword by Heinrich Schaller _____________________________________________________________________________ 5The Managing Board of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft _________________________________ 8Foreword by Jakob Auer __________________________________________________________________________________ 10The Supervisory Board of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft ________________________________ 122015 in retrospect ________________________________________________________________________________________ 26Sustainability management and corporate social responsibility _________________________________________________ 28

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft Group

Group management report ________________________________________________________________________________ 44IFRS consolidated financial statements 2015 _________________________________________________________________ 62

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Management Report 2015 of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft ____________________________ 164Annual financial statements 2015 of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft _______________________ 184

Statement of the Managing Board ____________________________________________________________ 206

Report of the Supervisory Board _____________________________________________________________ 207

Raiffeisen Banking Group Upper Austria

Results 2015 (consolidated)________________________________________________________________________________ 208

Glossary _______________________________________________________________________________________________ 213Imprint _________________________________________________________________________________________________ 214


General information

Foreword by Heinrich Schaller __________________________________________ 5

The Managing Board of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft 8

Foreword by Jakob Auer _______________________________________________ 10

The Supervisory Board of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft ___________________________________________________ 12

2015 in retrospect ____________________________________________________ 26

Sustainability management and corporate social responsibility _______________ 28


Foreword by Heinrich Schaller

Successful strategy for strengths and customer focus

Developing through our own strengths

Raiffeisenlandesbank Oberösterreich uses its capacity for change to benefit its customers. A series of strategic mea-sures that have been introduced and implemented since 2012 have shown encouraging results. In particular, they provide a solid foundation for consistent growth in future. Raiffeisen-landesbank Oberösterreich develops these through its own internal strengths and not through external capital increases.

Outperforming our high standards

The European Central Bank (ECB) sets particularly high stan-dards for the leading banks in Europe. In addition to the reg-ulatory capital requirements, these institutions are bound to comply with a SREP ratio and from 2016 they will also be sub-ject to an additional national capital buffer. As the fourth-larg-est bank in Austria, Raiffeisenlandesbank Oberösterreich wants to exceed every high standard placed on it by the Euro-pean Union as a “significant” bank. This will be done in main-taining the overall high quality of service provision.

Creative force through a strong capital position

As a ECB-audited bank with a strong capital position, Raif-feisenlandesbank Oberösterreich is a reliable, safe and strong partner for its customers. A further objective is to continue to increase efficiency and results in order to take our customer focus to the next level and develop and maintain a solid foun-dation for our existing strong independence.

Raiffeisen Oberösterreich and cooperation

Through working together with the Raiffeisen banks in Upper Austria, the Raiffeisenlandesbank Oberösterreich emphasises cooperation instead of consolidation. The new ways of co-operating are already showing excellent results. The aim of this cooperation is to produce efficiency savings in the various departments that should form the basis of Raiffeisen Oberös-terreich maintaining or strengthening its position as a clear market leader.

Constantly working on efficiency savings

Raiffeisenlandesbank Oberösterreich has also put in place a number of measures over the past year aimed at continuously increasing efficiency. For example, in 2015, PRIVAT BANK and bankdirekt.at were integrated into Raiffeisenlandesbank Oberösterreich and since then have been managed as their own business areas. This way, it is possible to avoid unnec-essary duplication while maintaining high levels of service. Working on improving efforts, organisation and processes is not a one-off at Raiffeisenlandesbank Oberösterreich but a constant.

Further strengthening Tier 1 capital ratio

Sustainable customer relationships and responsible handling of resources helped produce excellent annual results for Raif-feisenlandesbank Oberösterreich in 2015. As was the case in previous years, operational business development remained positive and stable.


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

Heinrich Schaller


The key results in 2015 in summary

The Group's Tier 1 capital ratio increased to 13.8 per cent (+ 2.6 percentage points)Raiffeisenlandesbank Oberösterreich significantly improved its equity capital base in 2015.

¬ In the regulatory-relevant CRR group (banking group), we achieved a CET1 ratio (Common Equity Tier 1 = core Tier 1 capital) of 13.8 per cent (+ 2.6 percentage points) with Tier 1 capital of EUR 3.2 billion.

¬ In terms of the Austrian Commercial Code, Raiffeisenlandes- bank Oberösterreich had, with Tier 1 capital of EUR 2.6 billion, a CET1 ratio of 12.9 per cent. This represents an increase of 1.3%.

¬ As such, both Raiffeisenlandesbank Oberösterreich AG, in accordance with the Austrian Commercial Code, as well as CRR (banking group), in accordance with IFRS, were clearly over the 8.5 per cent Tier 1 capital ratios required starting in 2019 under Basel III capital requirements. They were also clearly over the ratio calculated using the required SREP ratio and the additional capital buffer (from 2016).

Total assets of EUR 37.3 billion ¬ The Raiffeisenlandesbank Oberösterreich Group’s total

assets fell to EUR 37.3 billion from the figure of EUR 38.6 billion recorded in 2014. This can be traced particularly to a fall in money market financing. This refers to short-term, high-volume financing deals for money market clients.

¬ According to the Austrian Commercial Code, Raiffeisen-landesbank Oberösterreich had total assets of EUR 30.3 billion (2014: EUR 30.5 billion). For short-term financing, we continued to be conscious of capital resources and cost efficiency.

Annual profit rose to EUR 318.4 million ¬ The Raiffeisenlandesbank Oberösterreich Group's pre-tax

profit for the year rose to EUR 318.4 million (2014: EUR 40.7 million). For example, the probability of capitalised com-panies defaulting significantly improved in 2015, which led to reversals in portfolio value adjustments from IFRS. Fur-thermore, the results for companies accounted for under the equity method improved by EUR 47.1 million compared to 2014. Gains/losses on remeasurement of designated fi-nancial instruments due to interest rate and spread effects also had a positive impact on the result.

Increases in the operating profit and Group comprehensive income

¬ Raiffeisenlandesbank Oberösterreich Group reported an operating profit of EUR 281.5 million in 2015 according to IFRS (+4.4 per cent) as well as comprehensive income of EUR 213.2 million (2014: EUR 94.8 million).

¬ In 2015, Raiffeisenlandesbank Oberösterreich AG reported an operating profit of EUR 269.6 million (–6.1 per cent), in accordance with the Austrian Commercial Code, and a result from ordinary operations of EUR 135.6 million (+49.0 per cent), which took into account the integration of the PRIVAT BANK Group into Raiffeisenlandesbank Oberösterreich.

Heinrich SchallerChairman of the Managing Board of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Foreword by Heinrich Schaller


Reinhard Schwendtbauer Stefan Sandberger Heinrich Schaller Michaela Keplinger-Mitterlehner Georg Starzer Markus Vockenhuber


Managing Board

Scope of responsibilities of the Managing Board

Heinrich Schaller

Office of the Managing Board

Public Relations and Media

Legal Office

Corporate Governance & Compliance

Public Affairs

Strategy Raiffeisen Banking Group Upper Austria

Corporate customers Raiffeisen banks

Management of Raiffeisen banks

Human resources management

Group accounting and controlling

Group audit

Level 2 (Division)

Level 2 (Subsidiaries)

Staff unit

Michaela Keplinger-Mitterlehner

Treasury Financial Markets

Product management/Sales management Retail and Private Banking/Group marketing

Raiffeisenlandesbank Oberösterreich branches

PRIVAT BANK

bankdirekt.at

KEPLER-FONDS KAG

Stefan Sandberger

Product responsibility Treasury

Cash Management products

Organisation

Operations

GRZ IT Center GmbH

Raiffeisen Software GmbH

Reinhard Schwendtbauer

Tax Office

Collateral

Investment management

REAL-TREUHAND Management GmbH

Georg Starzer

Corporates Market

Product management and Corporates Sales

Factoring

Raiffeisen-IMPULS-Leasing

RVM Raiffeisen-Versicherungsmakler

Markus Vockenhuber

Overall bank risk management

Financing Management


Raiffeisen Banking Group Upper Austria stands with its strong client focus for stability, reliability and expertise, as well as integrity in dealing, quality advice and security.

Jakob Auer


Foreword by President Jakob Auer

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

2015 was not an easy year. The whole banking sector was faced with a number of major challenges, such as continued weak economic growth, increased expense in the area of controlling as well as excessive bureaucratic demands, and last but not least, changing customer behaviour as a result of digitisation. This makes it all the more encouraging that Raiffeisenlandesbank Oberösterreich and the Upper Austrian Raiffeisen banks were able to achieve such good results in this turbulent year marked by frequent upheaval. Making a profit is never an end in itself at Raiffeisen. As the most import-ant financial services provider, based on our strong customer focus, our reliability and competence as well as our serious outlook and the sense of security that comes with it, we are not only responsible for the economic growth of our custom-ers but also actively contribute towards the sustainable suc-cess of our region.

Developing perspectives for the future through common goals

Good results don't just materialise out of nowhere. An open dialogue, clear strategies, common goals and a willingness to change are essential in order to create the right conditions to meet the challenges of the future. The close collaboration in

the “Raiffeisen Banking Group Upper Austria 2020” project has proven to be a key factor for success in the whole Raif-feisen sector in Upper Austria. The results so far, our consis-tency in implementing the necessary measures and our drive to develop this project, are all strong proof that we in Upper Austria are all pulling in unison. We appreciate that we can only achieve our full strength through working together. This clear process primarily strengthens the trust that our cus-tomers have in us. It should be expected of us as the market leader in Upper Austria that we can develop perspectives for the future and bring them to fruition in a determined fashion.

Carrying on the path to success

I would like to give particular thanks to our customers, who have placed their trust in Raiffeisen Oberösterreich as their banking partner. A special thank you also to the members of the Managing Board of Raiffeisenlandesbank Oberösterreich, and especially to Chairman Heinrich Schaller for his open-ness, his focus on teamwork and his clear decisions based on his foresight and expertise. I would also like to thank the members of the Supervisory Board at Raiffeisenlandesbank Oberösterreich, the managers and all employees at Raiffeisen Oberösterreich for their commitment to customer satisfaction.

Jakob AuerPresident of the Supervisory Board


Supervisory Board of the Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Jakob Auer Chairman of the Supervisory Board, National Assembly, Chairman of the Austrian Farmers’ Federation, Deputy Advocate General of the Austrian Raiffeisen Association, Chairman of the South Wels Raiffeisenbank, Agriculturist

Volkmar Angermeier Vice-President of the Supervisory Board, Chairman 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

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

Walter Lederhilger (since 28 May 2015, previously non-registered member), Councillor of the Chamber of Agriculture, Chairman of the Supervisory Board of Raiffeisenbank Kremsmunster, Chairman of the VLV (Association of Agricultural Refinement Producers), Agriculturalist

Walter Mayr Director of Raiffeisenbank Region Freistadt, Chairman of the Association of Managing Partners of Upper Austrian Raiffeisen banks

Robert Oberfrank (since 28 May 2015, previously non-registered member), Deputy Chairman of Raiffeisenbank Inneres Salzkammergut and Chairman of the Bad Ischl branch, Regional Director of the Upper Austrian Chamber of Commerce in Gmunden

Gottfried Pauzenberger (until 28 May 2015) Mayor of Kalham, Chairman of Raiffeisenbank Region Grieskirchen, Agriculturist

Eduard Pesendorfer Director of the Upper Austria Regional Administrative Office, retired Deputy Chairman of Raiffeisenbank Salzkammergut, Chairman of the Traunkirchen branch

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

Gertrude Schatzdorfer Managing Partner of Schatzdorfer Gerätebau GmbH & Co KG

Johann Stockinger Chairman of the Association of Chairpeople of Upper Austrian Raiffeisenbanken, Chairman of Raiffeisenbank Region Gallneukirchen, Agriculturist

Josef Stockinger Chairman of the Managing Board of OÖ Versicherung AG

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

Cornelia Altreiter-Windsteiger (since 28 May 2015), District Governor of Steyr-Land

Rudolf Binder Director, Raiffeisen Association, Upper Austria

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

Annemarie Brunner Member of the State Parliament, Agriculturist

Alois Buchberger (until 28 May 2015) Chairman of Raiffeisenbank Ennstal, Agriculturist

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

Karl Dietachmair Director, Manager of Raiffeisenbank Region Sierning

Karl Fröschl Director, Manager of Raiffeisenbank Perg

Hannes Herndl (until 28 May 2015) President of the Chamber of Agriculture, retired, State Chairman of the Upper Austrian Farmer's Federation, retired, Chairman of Raiffeisenbank Windischgarsten, Agriculturist

Chairman

Deputy Chairman

Registered members

Registered members


Supervisory Board

Helmut Feilmair Chairman of the Staff Council

Gerald Stutz Deputy Chairman of the Staff Council

Dorina Meißl

Dietmar Felber (until 7 January 2016)

Harald John (since 7 January 2016)

Josef Gokl

Karin Hetzmannseder

Christoph Huber

Albert Ruhmer

Authorised representative Hermann Schwarz

Authorised representative Richard Seiser

Josef Nickerl Permanent Secretary, State Commissioner to the Financial Markets, Supervisory Authority

Regina Reitböck Deputy State Commissioner to the Federal Ministry of Finance

Gerhard Ritzberger

Helmut Angermeier

Klaus Ahammer, MBA Director of Raiffeisenbank Salzkammergut

Johann Moser Director, Executive Manager of Raiffeisenbank Region Ried i. I.

Franz Penz (until 28 May 2015) Draper

Non-registered members

Staff Council Representa-tives

State Com-missioners

Honorary presidents


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

Heinrich Schaller


Sustainability and CSR


PROXIMITY TO CUSTOMERS

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

Michaela Keplinger-Mitterlehner


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

Stefan Sandberger

19Raiffeisen Banking Group Upper Austria Raiffeisenlandesbank Oberösterreich Group General Information



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

Reinhard Schwendtbauer


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

Georg Starzer


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

Markus Vockenhuber


2015 in retrospect

Commitment on many fronts

In 2015, Raiffeisenlandesbank Oberösterreich also sup-ported a number of initiatives in the areas of integration, development aid, environmental protection etc. The Raiffeisen Banking Group Upper Austria also launched a major fund-raising campaign for the victims of the major earthquake in Nepal alongside the charity Caritas Upper Austria. A total of EUR 200,000 was raised both from company employees and customers.

Sports day

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

Contactless payment was introduced with the Raif-feisen bank card in 2013 and since 2015, it has also been possible to use your smartphone at NFC (Near Field Communication)-enabled terminals to make pay-ments quickly, easily and safely. This technology was trialled in Linz during the summer. The technology was rolled out across the whole Raiffeisen Oberösterreich network from October 2015 onwards. A total of 2.1 mil-lion NFC payments were made by Raiffeisen Banking Group Upper Austria customers in 2015.

On course for growth in southern Germany

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

Study reveals high level of customer satisfaction

The customer satisfaction survey carried out by Raiff-eisen Oberösterreich in 2015 shows that efficiency also is a sure-fire way to guarantee a high level of customer focus. Around 24,500 respondents gave Raiffeisen Oberösterreich top marks for the quality of advice and customer-friendliness.

Franz Kehrer, Director of Caritas in Upper Austria, and Heinrich Schaller, CEO of Raiffeisenlandesbank Oberösterreich


2015 in retrospect

Efficient structures created by Raiffeisen Software GmbH

In 2015, both major Raiffeisen IT companies RACON Software GmbH (Linz) and Raiffeisen Software Solu-tion and Service GmbH (Vienna) merged to form Raif-feisen Software GmbH. The core owners of this major software company are eight Raiffeisen state banks. Raiffeisenlandesbank Oberösterreich holds 25.5 per cent of the company, which is headquartered in Linz.

Success for fund subsidiary KEPLER-FONDS

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

Traditional World Savings Day

The 90th World Savings Day was celebrated in 2015. This is a special tradition at Raiffeisen Oberösterreich. The Raiffeisen Banking Group Upper Austria used this day at the end of October as an opportunity to empha-sise the personal relationship it has with its customers and to thank them for the confidence they have shown.

New award for our family-friendly policies

For a number of years now, Raiffeisenlandesbank Oberösterreich has had a wide range of measures in place to improve the work-life balance of its employees. In 2015, Raiffeisenlandesbank Oberösterreich and its subsidiaries were given a seal of approval by the Fed-eral Ministry of Family and Youth for the third time for their family-friendly policies.

Realignment of PRIVAT BANK

Raiffeisenlandesbank Oberösterreich stands for cus-tomer focus, efficiency and exploiting synergies. With this strategy in mind, PRIVAT BANK and bankdirekt.at were reorganised in autumn 2015 as independent busi-ness areas of Raiffeisenlandesbank Oberösterreich. This focus of this realignment is on sustainability and continuity.

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Raiffeisenlandesbank Oberösterreich CEO Heinrich Schaller and Austrian national football team manager Marcel Koller

Raiffeisenlandesbank Oberösterreich President of the Supervisory Board Jakob Auer and Raiffeisenlandesbank Oberösterreich CEO Heinrich Schaller with the Sumsi Bee mascot

Sophie Karmasin, Minister of Family and Youth, as well as Raiffeisenlandesbank Oberösterreich HR managers Judith Brandstetter (left) and Johanna Stanek (right)


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

1. Activities in the areas of sustainability and CSR ________________________ 29

2. Sustainability rating ______________________________________________ 30

3. Stakeholder management _________________________________________ 30

4. Efficient for nature and the environment _____________________________ 33

5. Sustainable finance products _______________________________________ 34

6. Responsibility for employees ______________________________________ 36

7. Commitment ____________________________________________________ 38

Sustainability management and corporate social responsibility



Raiffeisenlandesbank Oberösterreich continued to develop the area of “Sustainability and Corporate Social Responsibil-ity (CSR)” in 2015. Stakeholder management was analysed and redesigned. The aim here is to hold a stakeholder dia-logue in the future to expand the development of the sus-tainability management system. A decision was also taken to incorporate an energy management system within the Group

to comply with the legal requirements of the Energy Efficiency Act. A special information page was set up on the Raiffeisen-landesbank Oberösterreich website at www.rlbooe.at/nach-haltigkeit in order to comply with transparency requirements and to be able to report on the latest developments in the area of sustainability management.

The RKI was launched in 2007. It is a platform for 23 member companies from the Austrian Raiffeisen sector

that promotes the exchange of shared knowledge and ex-perience in the fields of sustainability and CSR, coordinates joint activities, and raises awareness of climate protection. As a member, Raiffeisenlandesbank Oberösterreich represents the Upper Austrian Raiffeisen banks and actively participates through work groups and exchange of knowledge and expe-rience to shape the activities of the Raiffeisen Climate Protec-tion Initiative.

www.raiffeisen-klimaschutz.at

Since 2007 respACT has been the lead-ing platform for companies in the area of CSR and sustainable development in

Austria. The name respACT stands for “responsible action” and comes from the purpose of the association, which is to support – from the smallest to the largest company – the aim of achieving self-defined ecological and social objectives. As a member, Raiffeisenlandesbank Oberösterreich benefits from the information provided, as well as participation in various events.

www.respact.at

Promoting a good work/life balance is one of the most important sociopoliti-cal issues of our time. This is why the

Federal Ministry of Family and Youth has set up the “Compa-nies for families” network to create a platform for companies and municipalities who show an interest in family-friendly HR and community policies. As the fourth-largest bank in Austria, Raiffeisenlandesbank Oberösterreich is aware of its respon-sibility and wants to contribute towards the “Companies for Families” network as a supporting partner.

www.unternehmen-fuer-familien.at

The CSR Dialogue Forum developed – as one of the more recent sustain-ability platforms – from an initiative of

Upper Austrian entrepreneurs. The vision of the association is to develop an interdisciplinary platform for CSR as a centre of competence for companies in Austria and neighbouring re-gions. The initiative works, among others, in cooperation with international certification partners on an international CSR and sustainability quality seal. As a charter member, Raiffeisen-landesbank Oberösterreich supports the initiative, in particu-lar, to build and develop the organisational structure.

www.csr-dialogforum.at

UNTERNEHMEN FÜR FAMILIEN

1. Activities in the areas of Sustainability and CSR

Memberships

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

RAIFFEISEN CLIMATE PROTECTION INITIATIVE (RKI)

RESPACT – AUSTRIAN BUSINESS COUNCIL FOR SUSTAINABLE DEVELOPMENT CSR DIALOGUE FORUM

COMPANIES FOR FAMILIES


3. Stakeholder management

The process

A road map was devised for the development of a Group-wide sustainability strategy that follows the international standard ISO 26000 and the Austrian standard ONR 192500, which is derived from it. Raiffeisenlandesbank Oberösterreich AG intends to use this to gain a better understanding of its stake-holder groups and the effects that its decisions and activi-ties have on them. Based on this understanding, and with the knowledge of how relationships between Raiffeisenland-esbank Oberösterreich AG and the individual stakeholders are formed, the expectations of stakeholders should be ascer-tained and managed systematically.

1. Identification

As a first step, potential shareholders were recorded and ar-ranged into groups as necessary. Based on the following six questions it was analysed whether the stakeholders actually belong to an interest group or stakeholder group and how intensive the relationship is:

¬ Who do they have legal or contractual obligations towards? ¬ Who could be positively or negatively affected by the

decisions taken by or the activities performed by the organisation?

¬ Who has an interest in the decisions or the activities of the organisation?

¬ Who can influence the decisions or the activities of the organisation?

¬ Who would be disadvantaged by being excluded? ¬ Who is affected within the value chain?

The analysis is carried out with the help of the internal sustain-ability network. This network is comprised of representatives of the various specialist departments in the Raiffeisenlandes-bank Oberösterreich AG Group and is brought together as an expert panel to analyse and prepare specific topics. The network also serves as a point of contact for department-spe-cific topics. As a consequence, partial strategies can be de-veloped and projects initiated with them.

A detailed definition of each individual stakeholder was then made as a conclusion to this analysis, which served as a basis and an explanation for the valuation analysis of the stakeholders.

Analysing and rating its own stakeholders and engaging in di-alogue with those groups are central cornerstones of a holistic sustainability management system. In its activities Raiffeisen-landesbank Oberösterreich AG is committed to the values of its founder Friedrich Wilhelm Raiffeisen. It therefore places the wellbeing of other people at the centre of its vision and acts based on the values of solidarity, subsidiarity and sus-tainability. Based on this understanding, Raiffeisenlandesbank

Oberösterreich not only takes into account the interests of shareholders, such as in a typical shareholder approach, but also takes care to create a future-oriented restructuring, con-sidering all relevant interest groups. Since the middle of 2013, Raiffeisenlandesbank Oberösterreich AG has also been occu-pied with stakeholder management in the context of building up its own sustainability management system. The individual stakeholders have been analysed as part of this process.

Raiffeisenlandesbank Oberösterreich has been rated by the international ratings agency oekom research AG in the area of sustainability efforts. An extensive rating process was set up by oekom research AG in autumn 2015 that rates the

measures that have been taken and the new method of re-porting on the Raiffeisenlandesbank Oberösterreich website. The final rating is expected in early 2016.

2. Sustainability rating



External stakeholders

all private customers, private banking customers and corporate customers of Raiffeisenlandesbank Oberösterreich

CUSTOMERS

Agencies such as Moody‘s (credit rating), oekom research (sustainability rating), etc.

RATINGS AGENCIES

Advocacy groups which represent the Raiffeisenlandesbank Oberösterreich (e.g. WK, IV, etc.) or the interests of its members towards the Raiffeisenland-esbank Oberösterreich (e.g. AK)

ADVOCACY GROUPS

Education and research institutions in schools, universities and technical colleges

EDUCATION & RESEARCH

Institutions and projects funded in ac-cordance with the sponsoring strategy in place

SPONSOREES

Media that cover the activities of the Raiffeisenlandesbank Oberösterreich Group

MEDIA

Suppliers of Raiffeisenlandesbank Oberösterreich

SUPPLIERS

legally assigned but also voluntary auditory and supervisory bodies (e.g. EBA, OeNB, FMA and auditors)

SUPERVISORY AND MONITORING BODY

All banks that do not belong to the Raiffeisen sector Austria

COMPETITORS

Public as an influential abstract entity

PUBLIC

Public administration as an important point of contact for Raiffeisenlandes-bank Oberösterreich

PUBLIC ADMINISTRATION

Non-profit organisations and NGOs that predominantly focus on the financial sector

NGOS/NPOS

Capital market in its entirety with all its participants

CAPITAL MARKET

in contrast to the internal stakeholder group “Subsidiaries” – all investments held by Raiffeisenlandesbank Oberös-terreich with a holding of under 50%

EQUITY INVESTMENTS

contracted consultancy firms

CONSULTANCY FIRMS

Political systems in the domestic mar-kets Austria and southern Germany

POLITICS

Local residents who are directly affected by the activities of Raiffeisen-landesbank Oberösterreich

RESIDENTS

2. A brief summary of our stakeholders

Board members and directors of the 94 Upper Austrian Raiffeisen banks

RAIFFEISEN SECTOR IN UPPER AUSTRIA

Around 5,000 employees (total of all fully-consolidated companies in financial year 2013)

EMPLOYEES

42 members of the Supervisory Board of Raiffeisenlandesbank Oberösterreich

SUPERVISORY BOARD MEMBERS

GROUP SUBSIDIARIES

Owners of the 94 Upper Austrian Raiffeisen banks

CO-OWNERSRAIFFEISEN

SECTOR AUSTRIA

Internalstakeholders

Raiffeisenlandesbank Oberösterreich subsidiaries who serve the special customer and product groups or provide services to them

All independent Raiffeisen banks, Raiffeisen state banks, RZB, RBI and the corresponding specialised institutions (Raiffeisen Bausparkasse, Raiffeisen Capital Management etc.) and investments (AGRANA etc.)


STAKEHOLDER MATRIX OF RAIFFEISENLANDESBANK OBERÖSTERREICH AG

¬ Internal stakeholders External stakeholders

3. The valuation

As a second step, an online survey was created to assess the stakeholders identified. Senior management were requested

to estimate the interest in and the influence on the Raiffeisen-landesbank Oberösterreich AG on a scale between 0 (very low) and 10 (very high) for each stakeholder. The results were transferred over to the following stakeholder matrix:

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

4. The result

The result serves as the basis for optimis-ing the individual dialogue strategies and the activities derived from them. It also provides the foundation for a planned materiality analysis, an additional step towards the development of a Group-wide sustainability strategy.

EXTERNALSTAKEHOLDERS

Upper Austrian Raiffeisen banks

Supervisory &monitoring

bodies

customers

Ratingsagencies

Capitalmarkets

Raiffeisen sectorAustria

Politics

Media

Public

Local residents

NGOs/NPOs

Education &Research

Spon-sorees

PublicAdministration

Advocacygroups

Compe-titors

Suppl-iers

Consultancycompanies

Invest- ments

Co-owners

SupervisoryBoard members

Staff

Groupsubsidiaries

Inner circle high level of influence on Raiffeisenlandesbank Oberösterreich

Middle circle medium level of influence on Raiffeisenlandesbank Oberösterreich

Low circle low level of influence on Raiffeisenlandesbank Oberösterreich

Partnership-based dialogueDialogue through consultation

Dialogue through observation

0 5

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Dialogue through information

Local residents

NGOs/NPOs

Education & researchPublic administration

Advocacy groups

Sponsorees

SuppliersConsultancy firms

CompetitorsEquity investments

MediaPublic

Politics

Co-owners

Group subsidiaries

Staff

Supervisory Board members

Upper Austrian Raiffeisen banks

Supervisory and monitoring bodies

Customers

Ratings agenciesCapital market

Raiffeisen sector Austria

Shares in Raiffeisenlandesbank Oberösterreich

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Energy Efficiency Act

On 1 January 2015 the En-ergy Efficiency Act (EEffG) came into force in Austria. This law aims to increase energy efficiency across Austria by 20 per cent, to increase the share in re-newable energy sources, to improve the reliability of their supply, and to reduce green-house gas emissions. We also expect a positive stimulus for the economy.

Large companies must either carry out an energy audit every four years or introduce a certified energy management sys-tem. The Managing Board of Raiffeisenlandesbank Oberös-terreich has decided to introduce an energy management system for the whole Group to be able to record energy con-sumption precisely and to realise any savings potential. An energy policy was adopted across the Group at the end of 2015 and all the work in establishing an energy management system was completed. It was certified according to interna-tional standard ISO 50001 at the beginning of February 2016.

Life cycle assessment

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

systematically records the greenhouse gas emissions directly and indirectly caused by the activities of the company. A indi-vidual report was also produced for each federal state, as was the case with the Value Creation Report 2013.

This shows Raiffeisenlandesbank Oberösterreich and the Upper Austrian Raiffeisen banks that environmental responsi-bility has already been assumed, but there is still potential for improvement from both ecological and economical perspec-tives. The majority of emissions are produced as the result of energy consumption, and the Transport department also has further potential for reducing its carbon footprint. The prem-ises are already largely heated in an eco-friendly way. Further information is available at www.rlbooe.at/oekobilanz2014.

ÖBB Green Points

Raiffeisenlandesbank Oberösterreich is also campaigning for nature conservation measures as part of the ÖBB “Green Points” project. The Raiffeisenlandesbank Oberösterreich Group managed to save a total of 166.5 tonnes of CO2 emis-sions in 2014 through the use of rail travel, which corresponds to 1,067,170 “green points”. In 2015, Raiffeisenlandesbank Oberösterreich then invested these in the most popular of the eight projects available for selection as part of the “Austria

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

4. Efficient for nature and the environment

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


Sustainable investing with KEPLER FONDS KAG

KEPLER is one of the pioneers in sustainability funds in Austria. At the end of 2015, EUR 877 million in sustainable cli-ent deposits was being managed. Last year alone, more than EUR 530 million flowed from institutional investors and private investors into ethical portfolios. Three sustainable funds are offered to private investors. The total volume administered is around EUR 13.3 billion. This makes KEPLER the fourth-big-gest domestic fund company among the 24 domestic fund companies.

KEPLER Ethical Funds combine social, ecological and eco-nomic aspects. Investors in these funds assume respon-sibility and play an active role in ensuring a liveable future. Ethics and returns are not a contradiction in this regard. These

value-oriented portfolios are managed based on a clearly structured approach, combing conventional fundamental ratings and ethical criteria. Institutional investors and private investors have put their trust in KEPLER Ethical Funds since 2000.

The strict investment process of KEPLER Ethical Funds en-sures that the fund only invests in socially and ecologically responsible companies and countries. Only those companies with the best social and ecological ratings in their sector are taken into consideration (i.e. best-in-class approach). The re-spected ratings agency oekom research AG is responsible for what is known as the corporate responsibility rating. Addi-tionally, traditional financial analysis is involved in the creation of the investment universe. This analysis subjects companies and countries to a detailed fundamental rating process. This ensures that only financially strong, sustainable companies are held in the portfolios.

The whole process is supported by an ethics committee which meets twice a year (in spring and in autumn). The ethics com-mittee is tasked with discussing new ethical approaches and their impact on the investment and contributing new ideas.

The KEPLER-FONDS KAG also engages in in-depth discus-sions with companies, known as the “commitment process”.

“Negative” commitment takes place if an exclusion criterion is breached. On a quarterly basis, oekom research AG re-ports an investment universe that also contains companies that have recently breached an exclusion criterion. KEPLER then contacts the company in question in writing. The in-fringement is explained and it is pointed out that shares and

5. Sustainable finance products

KEPLER ETHICAL FUNDS MEET NATIONAL AND

INTERNATIONAL QUALITY STANDARDS:

The Eurosif transparency logo indicates that KEPLER-FONDS KAG is recognised as a provider of sustainable funds across Europe.

KEPLER Ethical Funds also bear the Austrian eco-label for sustainable financial products. It is awarded by the Austrian Ministry of Agriculture and is a guarantee for sustainable products and services.

With the “Principles for Responsible Invest-ment of the United Nations” (UNPRI), KEPLER-FONDS KAG commits to compliance with environmental, social and corporate governance issues (international code: ESG) in all its activities.

Gradient

Flat

Grey

Black & White

C 49,5M 35K 31Y 26

C 71,5M 50,5K 44,5Y 37

C 85M 60K 53Y 44

C 2M 0K 47Y 0

C 30M 38K 98Y 3,5

C 17M 31K 94Y 0

C 49,5M 35K 31Y 26

C 71,5M 50,5K 44,5Y 37

C 85M 60K 53Y 44

C 2M 0K 47Y 0

C 30M 38K 98Y 3,5

C 17M 31K 94Y 0

N 64,5 N 76 N 100 N 6 N 49 N 33,5

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KEPLER SRI VOLUMES (IN EUR MILLION)

TOTALMutual funds

OEKOM RESEARCH “Best-in-class criteria” sus-tainability rating Selection criteria

KEPLER FUND MANAGMENT

Investment according to sus-tainability universe and KE-PLER investment process

KEPLER ETHICS ADVISORY BODY

Discussion, dialogue & exchange of experiences

COMMITMENT PROCESS Dialogue with bond issuers regarding breaches of ex-clusion criteria or barriers to investment (“Positive” commitment)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015



bonds will ultimately be sold. Any response from the company is forwarded to oekom research. The maximum time period between the notification of a breach and the actual sale is four months. A “positive” commitment results in the compa-nies becoming motivated to improve themselves as an entity worth investing in. This process is carried out on a half-yearly basis. As part of the process, a list of companies is created with whom a positive commitment should be made. A list of items where there is potential for improvement is sent to each company by oekom research AG.

In 2015 Raiffeisenlandesbank Oberösterreich continued its support of SOS Kindersdorf, with a contribution of EUR 5,000. Flyers printed according to the Austrian eco-label's guidelines were used as were Christmas cards for customers which were designed by the children at SOS Kinderdorf.

New student account = Goats for Burundi

Instead of vouchers or presents, if you opened a student ac-count at Raiffeisen Oberösterreich from the beginning of Sep-tember to the end of November, you received goats – at least in spirit. The animals were given to families in the small African country of Burundi, where they are helping make the lives of many people more secure. This project was carried out jointly with Caritas.

Raiffeisen Oberösterreich donated 30 euros for every new stu-dent account opened and put one of the core principles of cooperative banks into practice: helping people to help them-selves. The 30 euros helped to fund the purchase of a goat, appropriate training for the future owner as well as veterinary costs. After successfully completing the 50-day training pro-gramme, the participants in Burundi each received two goats.

This is an important foundation for generating an income for themselves.

The donation made by Raiffeisen Oberösterreich for each stu-dent account went directly to Caritas, who are carrying out this project. The goats were purchased on site at markets in Africa. A total of 78 students decided to take part in this scheme.

Industry projects and projects in the field of renewable energy

Raiffeisenlandesbank Oberösterreich has a professional team with extensive, long-standing experience in the financing of complex structured industry projects and projects in the area of renewable energy. A number of industrialised nations are faced with the challenge of adapting their energy policy in an era of weak economic growth to meet the prescribed cli-mate protection objectives. In 2015 in Paris, a comprehensive global climate protection agreement was signed which aims to keep global warming to under 2 degrees Celsius – if possible to under 1.5 degrees Celsius. In the near future, this means that the efforts to change how energy is produced must be stepped up and more projects aimed at producing renew-able energy must be implemented. Despite the oil price being very low – at least for now – reducing our dependency on fossil fuels such as oil and coal is still essential. Likewise, the key political decisions must be taken, particularly in Germany, where there are calls for nuclear energy to be phased out. The related need for investments requires efficient solutions in financing.

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6. Responsibility for employees

Raiffeisenlandesbank Oberösterreich therefore provides fi-nancing solutions for projects and investments in biogas/bio-mass, hydropower and photovoltaics in the domestic market and supports clients abroad. In the last few years, a number of financing arrangements for project developments in the energy sector have been made in the European Union and Turkey, and also through the financing of exports. In 2016, Raiffeisenlandesbank Oberösterreich will join forces with the European Investment Bank (EIB) to finance the Pretul wind farm belonging to the Austrian Federal Forestry Company in the Fischbacher Alps in the state of Steiermark. An innovative structure was designed with the EIB that can also be used to support similar projects of its kind in the future.

The Austrian Advertising Council ethical seal of approval

Raiffeisenlandesbank Ober- österreich is well aware of its responsibility to society as a partner to people in the re-gion. As a consequence we place a great emphasis on social responsibility, including in our marketing activities.

In this context, Raiffeisenlandesbank Oberösterreich has committed itself to complying with the Code of Ethics of the

Austrian advertising industry. Companies subject themselves to quality criteria based on these guidelines – which are not legally binding – which have been defined by the Austrian ad-vertising industry for the “Ethics and Morals” department and which exceed current legal requirements.

Raiffeisenlandesbank Oberösterreich was awarded the eth-ical seal of approval after being considered by the Austrian Advertising Council. This seal is a clear sign that a company is compliant with ethical principles in all its advertising activities. It is awarded for a period of two years.

The Austrian Advertising Council awards companies in this way who

¬ support the ethical and moral principles of the Code of Ethics of the Austrian advertising industry (FOR advertising ethics);

¬ share the collective social and ethical beliefs of the com-munications industry (FOR self-regulation);

¬ and in this way, advocate FOR freedom of advertising and AGAINST advertising bans (FOR freedom of advertising)

Further information on the ethical seal of approval and the Code of Ethics of the Austrian advertising industry can be found online at www.werberat.at.

Work/life balance audit

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

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



In the years after that the focus turned to topics like family-ori-ented leadership, the working world of the future, workshops for those returning to the workplace as well as part-time work and management. Likewise, talks were conducted with female employees with special attention given to the topics of “child care provision for school-age children” and “dependant rela-tives” as part of the “Work and Family” information platform created by Raiffeisen Oberösterreich.

The actions taken were reviewed again in 2015. The upgrad-ing of our certification in 2015 was not just a recognition of the good work already done but also an incentive and motivation to carry on towards reconciling the demands of work and fam-ily life in the interests of employees and customers alike.

Employee survey 2015

Banks have been faced with a challenging environment for several years now. Stringent regulations and supervisory red tape as a result of the economic and financial crisis, increased taxes, the low interest-rate environment and the sluggish economy. So far, the Raiffeisenlandesbank Oberösterreich has dealt well with all of this, as well as additional external influences. However, this environment continues to pose chal-lenges. The commitment shown by our employees has been extremely strong in the past few years. This special willingness to get involved will also be needed in the challenging years ahead of us.

The employee survey 2015 was carried out externally by the Jaksch & Partner GmbH institute for statistical analysis. Em-ployees were asked a total of 206 questions about job sat-isfaction, internal cooperation and management as well as workplace health impacts. Further goals were then set based on the results of the survey, and individual measures were developed between management and staff.

Careers – best recruiter

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

Kununu

Raiffeisenlandesbank Ober-österreich welcomes feed-back from competitors as well as employees, and be-cause of this, in March 2015 it was given the accolade of “Open Company” by the company assessment plat-form Kununu.

best recruiter

aut15 |16


7. Commitment

EUROPEAN FORUM ALPBACH

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

UPPER AUSTRIA STATE EXHIBITION 2015DIAKONIEWERK GALLNEUKIRCHEN,

HAUS BETHANIEN

The history of social democracy was documented and staged for visitors in the time-honoured fashion. It also went into the history of social initiatives and institutions such as the Diakoniewerk charitable organisation as well as how culture shapes the solidarity and help we give to people in difficult circumstances.

TEACH FOR LIFE

With the “Teach for Life” initiative, the BezirksRundschau newspaper honours those teachers who go the extra mile every day to bring the best out of our children and who have made a special contribution. Raiffeisenlandesbank Oberösterreich has supported this important initiative for a number of years.

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

Raiffeisenlandesbank Oberösterreich Deputy CEO Michaela Keplinger-Mitterlehner and BezirksRundschau chief editor Thomas Winkler at the awards ceremony honouring committed teachers



HÖHENRAUSCH 2015

The art festival Höhenrausch took place from the end of May to mid-October. It is one of the best-loved cultural events in Austria and also beyond Austria’s borders. This year, the mysterious world of birds was unveiled.

LENTOS KUNSTMUSEUM LINZ

The theme of death and decay brought a new approach and a revolutionary new aesthetic to western fashion in the 1980s. The “LOVE & LOSS – fashion and transience” exhibition delved deeper into the topic. Raiffeisenlandes-bank Oberösterreich has been a partner of the art mu-seum Lentos since it opened.

HARTLAUER FOTOGALERIE

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

KLASSIK AM DOM

Klassik am Dom celebrated its fifth year in 2015 by once again inviting some of the world's biggest stars for three extraordinary concert evenings on the stage in front of the New Cathedral in Linz. 3,300 guests enjoyed the eve-nings beneath the unique backdrop of the New Cathedral with Paolo Conte and Max Raabe and, as part of the “Klassik am Dom” gala, with Angelika Kirchschlager, Mi-chael Schade and Theresa Grabner.

LINZFEST

Austrian musicians took centre stage at LINZFEST, which was held under the slogan of “The Sound of Austria”. Alongside the varied music programme, a wide array of cultural activities was put on for children of all ages.

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Exhibition curator Ursula Guttmann, Raiffeisenlandesbank Oberösterreich Deputy CEO Michaela Keplinger-Mitterlehner, artistic director Stella Rollig and Deputy Mayor Bernhard Baier


20TH RAIFFEISEN SECURITY PRIZE

As part of Raiffeisenlandesbank Oberösterreich’s 20th awarding of the Raiffeisen Security Prize, 11 people from Upper Austria were rewarded for showing cour-age in helping crimes to be solved successfully. In the presence of Minister of the Interior Johanna Mikl-Leit-ner, the prize winners were congratulated for their bravery and courage. The awarding of the Raiffeisen Security Prize was the highlight of the Raiffeisen Secu-rity Day, which represented the start of the wide-rang-ing “Safety starts at home” campaign.

10TH STUDENT OLYMPICS

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

THE CLEVELAND ORCHESTRA

The Upper Austria-born star conductor Franz Wels-er-Möst enjoys a high level of recognition worldwide for his work with the Cleveland Orchestra. Works by Oliv-ier Messiaen, Wolfgang Amadeus Mozart and Richard Strauss were played at the concert held on 23 October 2015 at the Brucknerhaus.

CLOSING EVENT OF THE OÖN STOCK MARKET GAME 2014

In the 13th OÖN stock market game, which was held in cooperation with Raiffeisen Oberösterreich, participants had eight weeks to show their stock market savvy and gain experience. Each of the roughly 15,000 people who took part was able to invest their pretend start-up capital on the international stock markets completely risk-free!

VICE-CHANCELLOR IN TALKS

Reinhold Mitterlehner appeared in his position at Vice-Chancellor of Austria for the first time before around 1,300 guests at the RaiffeisenForum for a discussion with Minister for Economy in the State Government of Upper Austria Michael Strugl, Chief Economist at the Federa-tion of Austrian Industries Christian Helmenstein as well as Raiffeisenlandesbank Oberösterreich CEO Heinrich Schaller.

The winners of the Raiffeisen Security Prize

Star conductor Franz Welser-Möst and the Cleveland Orchestra

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

A Citroën C4 Cactus for the overall winner Martin Laber (second from left), awarded by France Car Managing Director Andreas Parlic (left), Raiffeisenlandesbank Oberösterreich Deputy CEO Michaela Keplinger-Mitterlehner, Kepler-Fonds KAG Managing Director Andreas Lassner-Klein, OÖN Chief Editor Dietmar Mascher

The regional finalists at the Student Olympics



START SCHOLARSHIP PROGRAMME

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

EMPLOYEES SUPPORT ULF

INITIATIVE FOR REFUGEES

Some of the refugees who were temporarily housed in two Linz schools during the summer were lacking even the most basic things. This prompted the Independent State Volunteer Centre, a platform for voluntary social engagement, to launch a collection drive. Employees of the Raiffeisenlandesbank Oberösterreich Group took a very active role. A total of 18 large boxes and 25 travel bags filled with donated goods were handed out.

THE “COMPUTERS FOR CLASSROOMS” CAMPAIGN

As part of the “Computers for classrooms” campaign, Raiffeisenlandesbank Oberösterreich offered 200 used, but fully-functioning PCs free of charge to partner primary schools in the Union of Upper Austrian Schools.

The START scholarship winners in Upper Austria

The dedicated employees of Raiffeisenlandesbank Oberösterreich making a donation.

Raiffeisenlandesbank Oberösterreich CEO Heinrich Schaller handing over a computer.


SPORT

Investing in young people isn't just so that we are seen as being socially responsible. It is essential for the future prospects of society. In sport, both the health benefits as well as the social benefits are key. Raif-feisenlandesbank Oberösterreich is a partner to the Raiffeisen Junior Wings Academy, which is currently in the process of being set up. Soon the ideal condi-tions will be in place for the most promising youngsters from the junior section of the two-time Austrian cham-pions LIWEST Black Wings Linz to become the Aus-trian ice hockey stars of the future. A strong emphasis will be placed on education as well as sports training. Raiffeisenlandesbank Oberösterreich also supports other sports clubs in Upper Austria in their success-ful work with young people, such as for example the Basket Swans Gmunden, the Upper Austria Football Association, LASK Linz, SV Ried, HC Linz AG, Linz AG, Froschberg table tennis and the Upper Austria ski pool.

CELEBRATING 25 YEARS OF THE GENERALI LADIES LINZ

The WTA international tennis tournament was held at the Gugl for the 25th time in 2015. In mid-October, spectators at the TipsArena were treated to top-level international women's tennis. A number of top stars took part in some exciting matches. As a partner of many years, Raiffeisen Oberösterreich was also in at-tendance this year with its own Raiffeisen Oberöster-reich Day, which among other things, gives youngsters the opportunity to meet the pros and have a go for themselves.

LINZ FROSCHBERG TABLE TENNIS

Raiffeisenlandesbank Oberösterreich has been a suc-cessful partner of the Linz Froschberg table tennis tour-nament for many years. The women, with four-time Olympian Liu Jia, have walked away with the Champions League trophy on two occasions.

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Austria's golden girl Lui “Susi” Jia

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



LONG NIGHT OF YOUNG ENTREPRENEURS

Raiffeisenlandesbank Oberösterreich and Young Econ-omy Upper Austria invited young entrepreneurs to at-tend the Long Night event at the Raiffeisen Forum. At the event, the entrepreneurs and company founders of the future were able to develop their business skills and their knowledge by attending informative lectures.

PEGASUS – THE BUSINESS PRIZE OF THE UPPER AUSTRIA NEWS SERVICE

The Pegasus award is now 21 years old and has become a firm fixture in the business calendar. The best com-panies in the country have been honoured. Raiffeisen-landesbank Oberösterreich CEO Heinrich Schaller sang the praises of Michael Teufelberger, who received the Pegasus in crystal for his life's work.

AGRICULTURE FORUM 2015

Austria has been a member of the European Union since 1995. Alongside the core aspects such as peace and freedom, Austria has also benefited economically, ac-cording to calculations made by the Austrian Institute for Economic Research (WIFO). More growth, more jobs, lower unemployment and lower inflation. Agriculture has also been able to grasp the opportunities available de-spite massive cutbacks and a long-term structural trans-formation. The first Austrian EU Commissioner, Franz Fischler, discussed this topic with a high-quality panel at the Raiffeisen Agriculture Forum.

UPPER AUSTRIAN CRAFT PRIZE

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

CORONA

Every year the Federation of Austrian Industries in Upper Austria awards a prize in the categories of improving Upper Austria as a place to do business and CSR. For several years, Raiffeisenlandesbank Oberösterreich has been a valuable partner and has helped to put Upper Austria's top companies into the spotlight.

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Raiffeisenlandesbank Oberösterreich CEO Heinrich Schaller awarding the crystal Pegasus to Michael Teufelberger.

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

Awarding the most sustainable industrial companies in Austria

The winners of the Upper Austrian Craft Prize 2015

The new Chairman of Young Economy Upper Austria Bernhard Aichinger (right) and his team


1. Business development and the economic situation ______________________ 45

2. Report on the company’s prospective trends and risks ________________________________________ 55

3. Research and development __________________________________________ 58

4. Main aspects of the internal control and risk management system _________ 59

Group management report 2015Raiffeisenlandesbank Oberösterreich Aktiengesellschaft


Group management report 2015 _ Business development and the economic situation

1.1. Economic background 2015

2015 was another turbulent financial year. Defining events that characterised international developments included the fall in oil prices as well as the extremely lax monetary policy by the European Central Bank (ECB), while a tighter money market policy was implemented in the USA. There were also consid-erable signs of weakness in China and other emerging na-tions, along with a range of ongoing geopolitical tensions. The crisis in Greece dominated the first six months of the year in Europe. This was then followed by the issue of refugees as a particularly dominant topic.

Global economic growth turned out to be somewhat weaker in 2015 than it had been in the previous year. Although perfor-mance improved in the industrialised nations and in particular the USA, the emerging nations suffered from cyclical weak-ness coupled with far-reaching structural problems. Brazil and Russia slipped into a deep recession which was accompanied by high inflationary pressure. The slowdown in the Chinese economy continued as the government and central bank im-plemented stimulus measures in an attempt to counteract this.

The USA once again acted as the engine for the global econ-omy in 2015. Figures from the labour market in particular were consistently very positive. The upturn managed to be consol-idated, which ultimately resulted in implementation of a long discussed reversal in interest rates by the Federal Reserve. Private consumption experienced particularly strong growth in the USA, while the export sector suffered from the strong dollar and the oil industry from the low prices.

The eurozone lost some of its steam once again in the sec-ond half of the year compared with the first half. Growth was based almost exclusively on private consumption, while any propensity to make investments remained restrained. How-ever, early indicators in the middle of the year pointed to more robust economic activity towards the end of the year: numer-ous framework conditions such as favourable financing condi-tions, a weak euro as a result of the lax ECB policy, low costs for raw materials (particularly for crude oil) and significant im-provements in the labour market should help to support the economy.

Inflation in the eurozone was very low to negative as a result of the low cost of raw materials. The ECB attempted to fix medium-term inflation expectations at its goal of close to (but below) 2 per cent with an extremely expansionary monetary policy (lowest interest rates and quantitative easing).

Austria also benefited from the general structural conditions that stimulated the economy (price of oil, ECB policy). Never-theless economic growth in Austria was unable to keep up with the eurozone average for 2014/15. Investment activity by companies only recovered very hesitantly from the second quarter of 2015, while private consumption continued to stag-nate. Analysts expect Austria to catch up with the average eurozone growth levels once again for 2016. The private con-sumption stimulated by the income tax reforms and the ad-ditional expenses for asylum seekers will be critical with this.

Industry in Upper Austria which is highly focused around exports recorded a significant upturn in 2015, and was well above the national average of 1.7 per cent with growth in pro-duction of 6.3 per cent in the first three quarters. The service sector was also on course for growth. Production in the con-struction sector on the other hand fell by around 4 per cent in the first three quarters in 2015 compared to 2014. The labour market proved to be comparatively strong with growth in em-ployment above the Austrian average. Upper Austria still has the second lowest unemployment rate of all the federal states. Analysts in the state expect growth of 2 per cent for the 2016 financial year, which is slightly above the national average, al-though this relies above all on increases in consumption levels and higher demand for investment.

The global economy slowed down again somewhat at the end of 2015. The USA recorded a dip in the economy in the fourth quarter with 0.7 per cent growth in GDP, although this is not expected to persist. Figures from the emerging nations remain weak: there is still no end in sight to the recessions in Brazil and Russia, and growth in China in the fourth quarter was a moder-ate 6.8 per cent. The eurozone recorded growth in GDP of 0.3 per cent in the fourth quarter of 2015, with Spain once again recording the strongest growth at 0.8 per cent. Germany was exactly at the average level at 0.3 per cent, while France (0.2 per cent) and Italy (0.1 per cent) lag further behind. Austrian GDP grew by 0.3 per cent in the fourth quarter of 2015, as had also been the case in the second and third quarters. This re-sults in economic growth of 0.9 per cent for the full year 2015. Investments as well as private consumption and government spending provided support towards year end, although there was a trade deficit.

1.2. Business development

Raiffeisenlandesbank Oberösterreich saw the tasks required due to the turbulent 2015 financial year, which involved

1. Business development and the economic situation


historically low interest rates accompanied by a slowdown in the economy, as an opportunity and adapted well to the on-going changes in the structural conditions with a strategy of continuous renewal and sustainable consolidation. Against a backdrop of restrained economic growth and subdued sen-timent among companies and the wider population, it either initiated, continued or implemented a large number of action plans and projects in 2015 with a view to actively managing its costs and risk, providing the basis for the best possible level of support for its customers.

As Austria’s fourth largest bank, Raiffeisenlandesbank Oberösterreich also intends in future to outperform on the high standards imposed on a “significant” bank by the European Central Bank. Particular attention is paid here to compliance with all new statutory regulations, and in laying the foundations for compliance with the statutory requirements that will be im-posed on banks in Austria and the rest of the European Union in future, such as in relation to equity/own funds and risk man-agement. Raiffeisenlandesbank Oberösterreich is also ready to make the appropriate contributions for the deposit guaran-tee and the European resolution funds.

Yet the legal and regulatory framework has not just changed for banks: increasing changes have also been determined in customer behaviour and needs. This will only intensify over the next few years as a result of increased digitisation. Raiffeisen-landesbank Oberösterreich has therefore positioned itself as a modern advisory bank that also sets its future course with the development of the extensive range of the innovative bank-ing technology available, with the aim of ensuring even more convenient processing of banking transactions for custom-ers. Targeted action in the interests of customers also means clear alignment with the Corporate Banking (corporate and institutional customers), Retail Banking (private and commer-cial customers), Private Banking (affluent private customers) and Raiffeisen banks (Investor Relations) customer groups. The broad positioning in various business areas in particular ensures stable development. It ensures that Raiffeisenland-esbank Oberösterreich is also able to offset any external in-fluences effectively. Raiffeisenlandesbank Oberösterreich also sees itself as a hub within the Raiffeisen Banking Group Upper Austria which also has an international network of high-perfor-mance partner banks at its disposal.

Actions aimed at achieving ongoing efficiency improvements play a role in increasing the focus on the customer. PRIVAT BANK AG and bankdirekt.at AG were merged into Raiffeisen-landesbank Oberösterreich in 2015 and established as sep-arate divisions. This enabled duplications and thereby costs to be avoided in administrative tasks. The merger of software company RACON (Linz) and Raiffeisen Solution (RSO, Vienna) with Raiffeisen Software GmbH (RSG) also created new and modern structures.

The cautious risk policy was continued in 2015 in order to allow the organisation to fulfil its responsibility as a reliable and strong partner to customers. Comprehensive ongoing con-trols are provided here via a central early warning mechanism. Attention was also paid to continuous improvements in the risk situation for certain financing transactions.

Raiffeisen Oberösterreich is responding to the requirements of the future with the “Raiffeisen Banking Group Upper Austria 2020” project, which was first launched around three years ago. Clear objectives and actions have been defined with this with the aim of handling the market more effectively, with strategies also developed aimed at optimising the processing and legal tasks in the entire Raiffeisen sector in Upper Austria. The intensive process has been characterised by openness, mutual trust and above all a readiness to embrace change since the project launch. For instance 27 service packages have been jointly developed by representatives from the Upper Austrian Raiffeisen banks and Raiffeisenlandesbank Oberösterreich in the areas of “customers and markets”, “staff and management”, “processing and production” and “bank management and regulation”. The focus with all of these is on improving efficiency in the various areas, which represent the basis for not only maintaining the bank’s position as the clear market leader in Upper Austria but also being able to extend this.

Group structure

As a superordinated banking institute, starting with financial year 2007, Raiffeisenlandesbank Oberösterreich has been obliged to prepare and publish consolidated financial state-ments in accordance with the IAS Regulation (EC) 1606/2002, abiding by the regulations of the International Financial Re-porting 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 accordance with section 267 of the Austrian Commercial Code.

As of 31 December 2015, the consolidated companies, in-cluding the Raiffeisenlandesbank Oberösterreich as the par-ent company, consisted of 154 (previous year: 154) corporate subsidiaries that were fully consolidated into the Group and seven (previous year: seven) companies that were accounted for under the equity method. The fully consolidated compa-nies consist of two credit institutions, 97 are financial institu-tions by virtue of business activities, 19 financial institutions by virtue of holding functions, one financial holding company, three providers of ancillary services and 32 other companies. Please refer to the basis of consolidation section in the Notes for details.


Effects of the Basel III implementation

The new European supervisory provisions for banks (Basel III implementation in the form of the Capital Requirements Regulation (CRR), Capital Requirements Directive (CRD) and resulting EBA standards) mean that reports required by the su-pervisory 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 de-termined 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, finan-cial holding entities and providers of ancillary services, but it does not include any other entities that are also included in the IFRS consolidated financial statements of Raiffeisenlandes- bank Oberösterreich.

Business development in the segments

In the Raiffeisenlandesbank Oberösterreich Group, segment reporting distinguishes between the following four segments:

¬ Corporates & Retail ¬ Financial Markets ¬ Equity investments ¬ Corporate Center

For a qualitative description of the individual segments, please refer to the section on “accounting policies” as well as to the segment reporting in the Notes for details on performance results.

Corporates & Retail segment

The Corporates & Retail segment comprises the Corporates Market division (the main units in which are Corporates 1, Cor-porates 2, Corporates 3, Institutions, International Finance, Real Estate Projects, Industry Projects, Correspondent Bank-ing and Southern Germany) and the Retail division, which in turn comprises the branches of Raiffeisenlandesbank Oberös-terreich, PRIVAT BANK and bankdirekt.at. In fiscal 2015, this segment contributed EUR 82.2 million pre-tax profit for the year (previous year: EUR –8.3 million).

Financial Markets segment

The Financial Markets segment – in which the trade and ser-vice results from customer transactions in foreign exchanges, securities and derivatives are grouped, and which also con-tains revenues from the central interest rate and liquidity man-agement from the banking and trading books – reached a positive contribution to pre-tax profit for the year of EUR 152.6 million in 2015 (previous year: EUR 79.6 million).

Equity Investments segment

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 122.6 million in the 2015 financial year (previous year: EUR 18.9 million). For a quantitative representation, ref-erence 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 Notes for information on those companies accounted for through at equity methods.

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 strengthens Raiffeisenlandesbank Oberösterreich's market position and makes it possible to provide comprehensive customer assistance in existing and new markets.

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. These services are provided by subsidiaries. Among other benefits, the GRZ IT Group – which comprises GRZ IT Center GmbH, and PRO-GRAMMIERFABRIK GmbH, delivered a positive contribution to the segment result.

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 en-tities, etc.) The activities associated with this portfolio lie in structuring investment models and in optimisation measures to ensure sustainable earnings and dividend potential.

The performance of the equity-accounted Beteiligungs- und Wohnungsanlagen Group (Beteiligungs- und Wohnungsanla-gen GmbH and WAG Wohnungsanlagen GmbH) was in line with forecasts, the contribution to earnings remaining static.

The Venture and Partner Capital portfolio comprises equity in-vestments in industrial and foodstuffs sectors, complemented by equities/securities issued by various private equity entities. The main focus with respect to venture and partner capital lies in strengthening the capital base for rapidly expanding com-panies in order to ensure sustainable earnings potential and thus the opportunity for participation in rising corporate value. Support to companies with equity occurs in particular through the execution of corporate acquisitions, corporate succession and expansion financing.



In 2015, voestalpine AG was able to compete successfully in an economic environment that became increasingly diffi-cult over the course of the year. At the start of the new year (2015/16), the global decline in prices for both oil and a number of other raw materials, as well as in the field of steel commodi-ties, reached new levels. Currently, the situation is being further exacerbated by increasing uncertainty about future economic development in China. Voestalpine is unable to escape these trends entirely, but the negative effects remain manageable due to many years of consistent focus on premium products. This encouraging performance reaffirms the fact that con-sistent internationalisation and the extension of a value chain based on premium products in sophisticated areas of technol-ogy can, even under challenging conditions, provide for high levels of stability in terms of company development.

During fiscal 2015, AMAG Austria Metall AG was able to in-crease both sales and EBITDA compared to the previous year by around 11 per cent each. The recycled cast alloys and rolled products produced at the Ranshofen facility produced a significant increase in earnings and more than compensated for the aluminium price-related decline in earnings for the 20 per cent share in the Canadian smelter Alouette. Construc-tion on the site expansion project “AMAG 2014” was success-fully completed in 2015. During 2015, the new plant produced around 18,000 tons of high-quality rolled products.

Sales revenue and earnings generated by the companies in the foodstuffs division – consisting of the VIVATIS Holding AG Group and the efko Frischfrucht und Delikatessen GmbH Group – were affected by a competitive market environment and margins that remained static or in some cases contracted. Despite the challenging market conditions, a modest increase in sales revenue is expected in the coming years.

Corporate Center segment

The Corporate Center segment comprises income and ex-penses that, based on substance, cannot be attributed to any other segment. One-off items that would distort the various segment earnings and are not allocated to individual mar-ket segments in the internal management reporting are also reported in this segment, if required. In 2015, this segment showed a negative pre-tax profit for the year of EUR –39.0 million (previous year: EUR 49.5 million).

Income statement

Despite low interest rates, net interest income excluding the share of profit or loss of equity-accounted investments fell only slightly by EUR –7.1 million, or –1.7 per cent, to EUR 417.1 million (previous year: EUR 424.2 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 de-rivative financial instruments as well as from investments in affiliated companies, investments and other income related to interest. Interest expenses result from Amounts owed to cus-tomers or banks, securitised liabilities, subordinated capital and other interest-like expenses.

The share of profit or loss of equity-accounted investments reflects a EUR 47.1 million higher result of EUR 51.2 mil-lion (previous year: EUR 4.1 million) compared to last year. This is partly due to a positive earnings trend, particularly of voestalpine AG. The RZB Group provided a positive contri-bution to Raiffeisenlandesbank Oberösterreich's annual pre-tax profit for the year from current results compared to the previous year. However, the depreciation on this investment in the amount of EUR –61.4 million (previous year: EUR 0 Million) also affected this asset. Similarly, the depreciation of the Oberösterreichische Landesbank AG in the amount of EUR –35.5 million (previous year: EUR –39.6 million) is in-cluded here as well.

2015 2014 CHANGE

IN EUR M IN EUR M IN EUR M IN %

Interest and interest-related income/expenses 417.1 424.2 –7.1 –1.7

Share of profit or loss of equity-accounted investments 51.2 4.1 47.1 –

Net interest income 468.3 428.3 40.0 9.3

Loan loss allowances –61.1 –180.8 119.7 –66.2

Net interest income after loan loss allowances 407.2

247.5 159.7 64.5

Net fee and commission income 127.8 126.1 1.7 1.3

Net trading income 7.7 15.5 –7.8 –50.3

Net income/loss from designated financial instruments 61.7 –97.1 158.8 –

Net income from investments 36.3 49.0 –12.7 –

Other net finance costs 105.7 –32.6 138.3 –

General administrative expenses –431.4 –402.4 –29.0 7.2

General administrative expenses OÖ Wohnbau –38.5 –36.6 –1.9 5.2

General administrative expenses VIVATIS/efko –263.8 –252.1 –11.7 4.6

Other net operating income 95.0 83.6 11.4 13.6

Other net operating income OÖ Wohnbau 50.1 45.6 4.5 9.9

Other net operating income VIVATIS/efko 266.3 261.6 4.7 1.8

Pre-tax profit for the year 318.4 40.7 277.7 –

Taxes on income and earnings –14.3 –4.3 –10.0 –

After-tax profit for the year 304.1 36.4 267.7 –

Operating profit 281.5 269.6 11.9 4.4


Loan loss allowances declined by EUR 119.7 million or –66.2 per cent to EUR –61.1 million (previous year: EUR –180.8 mil-lion) compared with the previous year. This includes, among other things, additional loan loss allowances in the amount of EUR –12.4 million (previous year: EUR –15.5 million) in connec-tion with the debt moratorium on HETA ASSET RESOLUTION AG (HETA) in the SALZBURGER LANDES-HYPOTHEKEN-BANK AKTIENGESELLSCHAFT. In addition, liquidations re-sulted in particular from changes in default probabilities in IFRS portfolio allowances.

Income from fee and commission income and expenses rose slightly by 1.3 per cent to EUR 127.8 million (previous year: EUR 126.1 million).

The other financial results, consisting of net trading income, net income from investments and net income/loss from desig-nated financial instruments, amounted to EUR –105.7 million in the financial year 2015 (previous year: EUR –32.6 million). The decline in net trading income is largely due to interest and cur-rency-related transactions. Net income/loss from designated financial instruments in the amount of EUR 61.7 million (previ-ous year: EUR –97.1 million) mainly results from the expansion of liquidity spreads related to own issues and a narrowing of credit spreads on asset positions. Net income from invest-ments in fiscal 2015 amounted to EUR 36.3 million (previous year: EUR 49.0 million). The largest single effect can be put down to the sales proceeds from Raiffeisen Bausparkasse Gesellschaft mbH and shares of Valida Holding AG in the RZB Group amounting to EUR 33.7 million.

Personnel expenses, other administrative expenses, deprecia-tion and amortisation are recognised in the income statement under “general administrative expenses”. The general adminis-trative expenses of the “OÖ Wohnbau” companies rose slightly in fiscal 2015 by 5.2 per cent to EUR –38.5 million (previous year: EUR –36.6 million). The general administrative expenses of the companies in the food sector – consisting of the “VIVA-TIS Holding AG” Group and the “efko Frischfrucht und Delika-tessen GmbH” Group – rose at a year-on-year rate of 4.6 per cent to EUR –263.8 million (previous year: EUR –252.1 million). The other Group companies saw a 7.2 per cent increase, to EUR –431.4 million (previous year: EUR –402.4 million).

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 a 9.9 per cent increase of EUR 50.1 million (previous year: EUR 45.6 million) over that of the previous year from other operating profit. The companies of the food sector (VIVATIS / efko) saw a rise in other operating income of 1.8 per cent to EUR 266.3 million (previous year: EUR 261.6 million) while the other group companies rose by 13.6 per cent to EUR 95.0 million (previous year: EUR 83.6 million). Expenses of the in IFRS consolidated

credit institutions for the stabilisation fee in the amount of EUR –35.9 million are likewise shown in other operating result (pre-vious year: EUR –35.5 million), as well as starting 2015 the first ever contribution to the settlement fund and the deposit guarantee in the amount of EUR –14.4 million.

In 2015, pre-tax profit for the year amounted to EUR 318.4 million (previous year: EUR 40.7 million). Taxes on income and earnings rose by EUR –10.0 million compared to the previous year and are reported at EUR –14.3 million (previous year: EUR 4.3 million). This increase is mainly due to changes in deferred taxes.

Overall, after-tax profit for the year rose by EUR 267.7 million and in the just concluded fiscal year of 2015 at EUR 304.1 mil-lion (previous year: EUR 36.4 million). Similarly, operating profit in 2015 was increased by 4.4 per cent to EUR 281.5 million (previous year: EUR 269.6 million).

Statement of comprehensive income

Other results in 2015 are reported at EUR –90.9 million (previ-ous year: EUR 58.4 million). This development is mainly due to changes in valuation and recycling effects of investments and securities in the category “assets available for sale”.

The change in actuarial gains and losses is largely due to changes to parameters.

The remaining other results – consisting of valuation changes from a hedge on a net investment in foreign operations and foreign exchange differences amounted EUR –1.0 million in 2015 (previous year: EUR 0.5 million).

The deferred taxes included in other results decreased to EUR 22.7 million mainly due to valuation changes in the AFS re-serve (previous year: EUR –55.2 million).

In total, a comprehensive income of EUR 213.2 million was generated in 2015 (previous year: EUR 94.8 million).

IN EUR M 2015 2014

After-tax profit for the year 304.1 36.4

Change in value of AfS reserves –101.9 243.4

Share of other comprehensive income of equity-accounted investments –21.5 –106.1

Actuarial gains and losses 10.8 –23.2

Additional other profit or loss –1.0 –0.5

Taxes recognised in respect of this amount 22.7 –55.2

Total other comprehensive income –90.9 58.4

Comprehensive income 213.2 94.8



Changes in the balance sheet

The consolidated total assets of Raiffeisenlandesbank Oberösterreich fell as of 31 December 2015 by –3.3 per cent and show a value of EUR 37,299 million (previous year: EUR 38,574 million).

Loans and advances to banks rose slightly in the course of 2015 by EUR 76 million or 1.1 per cent to EUR 6,855 million (previous year: EUR 6,779 million), while loans and advances to customers fell by EUR –436 million or –2.3 per cent to EUR 18,731 million (previous year: EUR 19,167 million). With respect to loans and advances to banks, EUR 1,094 million (previous year: EUR 1,124 million). of this relates to refinancing to Upper Austrian Raiffeisen banks.

Trading assets – consisting of bonds and other fixed-income securities and positive fair values of derivative transactions – show a carrying amount of EUR 2,469 million as of 31 Decem-ber 2015 (previous year: EUR 2,951 million). This corresponds to a decrease of EUR –482 million or –16.3 per cent compared with the previous year.

Financial assets fell by EUR –503 million or –8.1 per cent to EUR 5,671 million compared to 31 December 2014 (previous year: EUR 6,174 million). This decrease resulted primarily from retirements and sales.

The carrying amount of equity-accounted investments re-ported as of 31 December 2015 was EUR 1,786 million (Pre-vious year: EUR 1,800 million). Please refer to the section Companies accounted for using the equity method in the Notes for details.

Other items – consisting of cash and cash equivalents, intan-gible assets, property and equipment, investment property, current and deferred tax assets and other assets – rose at a year-on-year rate of 4.9 per cent or EUR 84 million to EUR 1,787 million (previous year: EUR 1,703 million).

Compared to the preceding year, amounts owed to banks changed only slightly by EUR –91 million or –0.8 per cent to a level of EUR 11,214 million (previous year: EUR 11,305 million). EUR 4,730 million (previous year: EUR 4,603 million) of this are amounts owed to Upper Austrian Raiffeisen banks.

Amounts owed to customers, however, were increased by EUR 112 million or 1.1 per cent to EUR 10,628 million (previ-ous year: EUR 10,516 million).

Trading liabilities – consisting of interest rate/foreign exchange/equity/index-related and other business – show as of 31 De-cember 2015 a carrying amount of EUR 1,872 million (Previous year: EUR 2,202 million). This amounts to a decrease of EUR –330 million or –15.0 per cent.

Liabilities evidenced by certificates declined as of 31 Decem-ber 2015 by EUR –1,023 million or –11.8 per cent to EUR 7,619 million (previous year: EUR 8,642 million). These consist of previously issued bonds in the amount of EUR 2,731 million (previous year: EUR 3,693 million) listed and unlisted deposit/municipal bonds of EUR 355 million (previous year: EUR 348 million) and other securitised liabilities at EUR 4,533 million (previous year: EUR 4,601 million). Of the securitised liabili-ties, EUR 1,466 million (previous year: EUR 1,472 million) on covered bonds.

Other assets – consisting of provisions, current and deferred tax liabilities and other liabilities – declined slightly to EUR 795 million (previous year: EUR 806 million).

Subordinated capital reported lower by EUR –105 million or –6.8 per cent with a value of EUR 1,432 million as of 31 De-cember 2015 (previous year: EUR 1,537 million).

31 DEC. 2015 31 DEC. 2014 Change

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

Loans and advances to banks 6,855 18.4 6,779 17.6 76 1.1(of which to Raiffeisen banks) (1,094) (2.9) (1,124) (2.9) (–30) (–2.7)

Loans and advances to customers 18,731 50.2 19,167 49.7 –436 –2.3

Trading assets 2,469 6.6 2,951 7.7 –482 –16.3

Financial assets 5,671 15.2 6,174 16.0 –503 –8.1

Companies accounted for using the equity method 1,786 4.8 1,800 4.7 –14 –0.8

Other Assets 1,787 4.8 1,703 4.4 84 4.9

Total 37,299 100.0 38,574 100.0 –1,275 –3.3

EQUITY AND LIABILITIES

31 DEC. 2015 31 DEC. 2014 ChangeIN EUR M IN % IN EUR M IN % IN EUR M IN %

Amounts owed to banks 11,214 30.1 11,305 29.3 –91 –0.8

(of which to Raiffeisen banks) (4,730) (12.7) (4,603) (11.9) (127) (2.8)

Amounts owed to customers 10,628 28.5 10,516 27.3 112 1.1

Trading liabilities 1,872 5.0 2,202 5.7 –330 –15.0

Liabilities evienced by certificates 7,619 20.4 8,642 22.4 –1,023 –11.8

Other Assets 795 2.2 806 2.1 –11 –1.4

Subordinated capital 1,432 3.8 1,537 4.0 –105 –6.8

Equity 3,739 10.0 3,566 9.2 173 4.9

Total 37,299 100.0 38,574 100.0 –1,275 –3.3


The breakdown of equity as at the last two balance sheet date was as follows:

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

1.3. Report on the bank offices, branch offices and subsidiaries

Branches

The Raiffeisenlandesbank Oberösterreich Group has a total of 52 (previous year: 58) branches as at 31 December 2015. This decrease is due to the fact that the two banking subsidiaries, PRIVATE BANK AG of Raiffeisenlandesbank Oberösterreich and bankdirekt.at AG, were integrated into the Raiffeisenland-esbank Oberösterreich and positioned as separate business areas. The financial services on offer, as well as flexibility in consultancy and management, are adapted on an ongoing basis to the current needs of our customers. Along with the constant further development of technological abilities in cus-tomer service, for example, we also offer customer appoint-ments outside of regular banking hours.

Branches and Subsidiaries abroad

Raiffeisenlandesbank Oberösterreich has been operating its own southern Germany office since 1991. At the end of 2015, Raiffeisenlandesbank Oberösterreich had a total of eight lo-cations throughout Bavaria and Baden-Wurttemberg, i.e. in Augsburg, Passau, Nuremberg, Munich, Regensburg, Wurz-burg, Ulm and Heilbronn. This makes Raiffeisenlandesbank Oberösterreich by far the strongest Austrian bank active in this dynamic business region of Southern Germany. The main focus for support activities is on customers from industry, me-dium-sized enterprises and affluent private customers. The registered head office for Raiffeisenlandesbank Oberösterre-ich’s Southern Germany branch was relocated from Passau to Munich on 1 October 2015. This will also further intensify the existing close collaboration with development agencies and banks.

In addition, Raiffeisenlandesbank Oberösterreich also has a branch in the Czech Republic. The head office for the Czech

branch is located in Prague, where support is provided to af-fluent private customers as well as corporate customers with a wide range of professional financial services based on the established high focus on the customer.

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 subsid-iaries for roughly two decades, the IMPULS-LEASING Group has had leasing companies in Romania and Croatia since 2006 and in Poland and Slovakia since 2007. These compa-nies focus on financing of vehicles as well as machinery and technical equipment. The focus is on servicing corporate cus-tomers. PULSE-LEASING Group has six branches in southern Germany, and is represented in Eastern European countries at 26 branch locations. In addition, there are also long-stand-ing partnerships with producers and retailers. The companies have now achieved good market positions in all markets.

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

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

Profitability – key figures

¬ In 2015, Group return on equity – calculated as the per-centage ratio of consolidated net profit before tax and aver-age shareholders' equity – stood at 8.7 per cent (previous year: 1.1 per cent).

¬ The consolidated return on assets for 2015 – calculated as the percentage ratio of consolidated net income before taxes to the Group's average total assets – stood at 0.8 per cent (previous year: 0.2 per cent).

¬ The consolidated return on assets pursuant to § 64 para. 19 BWG for 2015 – calculated as the percentage ratio of consolidated net income after tax to the consolidated bal-ance sheet total – stood at 0.8 per cent (previous year: 0.1 per cent).

Key liquidity figures

¬ The LCR (Liquidity Coverage Ratio) as of 31 December 2015 is at the level of a chief financial holding (CRR of the Raiffeisenbankengruppe OÖ Group eGen) at 98 per cent (previous year: 104 per cent) and therefore clearly exceeds the 60 per cent required as of 31 December 2015.

IN EUR M 31 DEC. 2015 31 DEC. 2014

Share capital 276.5 276.5

Participation capital 1.0 1.0

Capital reserves 972.1 972.1

Aggregate net income 2345.4 2,165.0

Non-controlling interests 144.4 151.7

Total 3,739.4 3,566.3



Key equity and solvency figures

Consolidated capital and reserves at the level of a chief finan-cial holding (CRR Circle Raiffeisenbankengruppe OÖ Group eGen) as per capital requirements regulations (CRR) are as follows:

At the close of 2015, common Tier 1 capital (CET 1) and Tier 1 capital (T 1) amounted to EUR 3,164.6 million (31 December 2014: EUR 2,827.8 million).

Supplementary capital (T 2) as of 31 December 2015 is reported at EUR 680.1 million (31 December 2014: EUR 873.6 million).

Total capital (TC) as of 31 December 2015 stood at EUR 3,844.7 million (31 December 2014: EUR 3,701.4 million).

The total amount at risk (risk-weighted assets, RWA) was re-duced by EUR –2,275.2 million compared to the previous year and is reported as of 31 December 2015 at EUR 22,894.1 million (31 December 2014: EUR 25,169.3 million). The essen-tial effects for reducing the risk-weighted assets (RWA) at the reporting time of 31 December 2015 were achieved through active and central control of the risk-weighted assets (RWA) per claim class and through implementing actions in relation to techniques used to reduce credit risks.

As at the end of the 2015 financial year the Common Equity Tier 1 capital and Tier 1 capital ratio stated was 13.8 per cent (2014: 11.2 per cent) with a total return on assets of 16.8 per cent (2014: 14.7 per cent). The ratios are calculated on the total risk-weighted assets in accordance with Article 92 CRR.

A capital conservation buffer was introduced effective 1 Janu-ary 2016 in accordance with section 23 of the Austrian Bank-ing Act (BWG), and this must be maintained in the form of Common Equity Tier 1 capital. In accordance with the transi-tional provision in section 103q (11) BWG the capital conser-vation buffer for the coming year will be 0.625 per cent. This will be increased to 2.50 per cent by 2019 using the straight-line method.

Similarly, a capital buffer ratio for systemic vulnerability (sys-temic risk buffer) was imposed on the Raiffeisenlandesbank Oberösterreich at the consolidated level of the Raiffeisenban-kengruppe OÖ Group eGen as chief financial holding as per § 7 capital buffer Regulation (KP-V) of the FMA, which accord-ing to § 10 KP-V as of 1 Jan. 2016 is equal to 0.25 per cent and by 2018 will rise to 1 per cent.

Capital Requirements Regulation

As of 1 January 2014, Regulation (EU) No. 575/2013 (Cap-ital Requirements Regulation, CRR) and Directive (EU) No. 36/2013 (Capital Requirement Directive, CRD IV) went into force to implement Basel III. In addition, the supplementary

CRR regulation defines the implementation of transitional pro-visions of CRR for Austria. These statutory regulations mean that banks will have to comply with significantly higher equity ratios and tighter liquidity requirements. Raiffeisenlandesbank Oberösterreich has undertaken various projects in this regard over the past few years and is well prepared for the changes.

Institutional protection scheme

These regulatory changes have also given rise to the need for additional adjustments in decentralised banking groups. The existing institutional protection scheme (IPS) for Upper Austria had to be modified in line with the new requirements under Eu-ropean law. An IPS is a liability or indemnity agreement – cre-ated 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 together and provide mutual solidarity. Pursuant to Ar-ticle 49 CRR, in the determining their capital and reserves credit, institutions must deduct their positions in equity in-struments of other credit institutions, except where exempted under Article 49 (3) CRR in conjunction with Article 113 (7) CRR through an IPS formed with them. Raiffeisenlandesbank Oberösterreich is a member of the regional state IPS, whose members also include all Raiffeisen banks in Upper Austria, as well as the Raiffeisen-Kredit-Garantiegesellschaft m.b.H. Raiffeisen-Einlagensicherung OÖ reg. Gen. m.b.H. acts as the trustee and manages the assets of the scheme.

In addition, Raiffeisenlandesbank Oberösterreich is a mem-ber of the federal IPS, whose members also include Raiffeisen Zentralbank Österreich AG (RZB), all Austrian Raiffeisenland-esbanks, Raiffeisen Wohnbaubank AG, Raiffeisen-Holding Niederösterreich-Wien reg. Gen. m.b.H., Zveza Bank and Raiffeisen Bausparkasse GmbH. In this case, Österreichische Einlagensicherung eGen has assumed the role of trustee. Under Article 113 (7) of the CRR, and subject to consent from the relevant regulatory authorities, banks may give a risk weighting of 0 per cent to risk exposures in respect of coun-terparties 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 IPSs of which Raiffeisenlandesbank Oberösterreich is a member and allowing the exemptions under Articles 49 (3) and 113 (7) of the CRR.


Well-trained and committed employees contribute substan-tially to securing and expanding the long-term success of the Raiffeisen Banking Group Oberösterreich. During finan-cial year 2015, the fully consolidated companies employed an


average workforce of 5,420 (previous year: 5,338). Of these, 2,539 (previous year: 2,560) employees worked for the com-pany in the foodstuffs sector (VIVATIS/efko).

Strong positioning with the career portal enteryourfuture.at

Qualified and committed employees are the most important capital at Raiffeisenlandesbank Oberösterreich. Raiffeisen-landesbank Oberösterreich has adopted a professional em-ployer branding approach involving ensuring a presence on online job platforms as well as at various trade shows with the objective of addressing potential new employees and positioning itself as an attractive employer. Virtual employer branding is absolutely essential nowadays. Particular attention is focused therefore on the career portal enteryourfuture.at, which provides for a transparent and prompt application pro-cess and provides clear and useful information to applicants. enteryourfuture.at is revised on a continuous basis and rep-resents an innovative way of recruiting new employees.

Manifold educational and training opportunities

Raiffeisenlandesbank Oberösterreich also offers a wealth of different options and opportunities in the training it provides for young employees. These options include training based on a job rotation programme, training combined with the higher education entrance qualification, trainee programmes and e-learning modules. One successful example of our for-ward-looking internal human resources policies is the Raif-feisen Oberösterreich Academy, which uses individually designed training programmes to prepare tomorrow’s man-agers for rewarding responsibilities. Training and professional development is offered at the state-of-the-art Raiffeisen Train-ing Centre, which opened in 2012 in the BlumauTower. In addi-tion, the online teaching platform Raiffeisen@Learning is used extensively for internal training and professional development.

Work/life balance

Raiffeisenlandesbank Oberösterreich also emphasises the importance of a work-life balance and is a certified fami-ly-friendly organisation, offering its own kindergarten and tod-dler group/crèche known as “Sumsi's Learning Garden” in which the working languages are both German and English. The bank also offers a special summer kindergarten which is being continuously expanded because of the huge demand for places. Additional features of the family-friendly approach at Raiffeisenlandesbank Oberösterreich include flexible work-ing hours and measures taken to support those returning from parental leave.

Cooperation within the Raiffeisen association providing strength

Close cooperation between the Raiffeisen banks in Upper Austria, whose skills are available locally, and the specialists

at Raiffeisenlandesbank Oberösterreich, results in Raiffeisen Oberösterreich combining its strengths in the interests of its customers. This healthy, strong structure enables an extraor-dinary focus on the customer and highly dynamic assistance to customers with creative financial services.

Successful through the practise of subsidiarity and solidarity

The Raiffeisen banking group in Upper Austria is a strong community. The Raiffeisenbanks in Upper Austria, as owners of Raiffeisenlandesbank Oberösterreich, are also able to ex-ercise their proprietary rights over the registered cooperative society Raiffeisenbankengruppe OÖ Verbund eingetragene Genossenschaft. The decisive factor here is the founding idea of co-operation at Raiffeisen: every co-operative company has a voice, regardless of its size. Raiffeisen Oberösterreich relies on the subsidiarity principle: the superordinated co-operative society should not take over what the local Raiffeisen banks can do on their own. As a public limited company (Aktienge-sellschaft), Raiffeisenlandesbank Oberösterreich therefore as-sumes responsibility for more extensive global functions, but also sees itself as a coordinating hub within the cooperative net-work. It advises the Raiffeisen banks in operational, organisational and legal affairs, supports them in their sales work, and provides a training and further education system.

Bundling our strengths

Our focus on the requirements and needs of our customers is unique. It is the theme that runs from local roots through to global customer support. This networked approach is made possible by the state-of-the-art structure at Raiffeisen Oberös-terreich. The cooperative network can step in and become proactive where the Raiffeisenbanks need assistance, so that customers can be offered the best possible support with all their projects. This means that regional strengths and direct relationships with the customer remain intact and are main-tained. Furthermore, the collaboration within the network en-sures that Raiffeisen will have a secure future as a growing organisation and powerful force in Upper Austria.

Sustainability and Corporate Social Responsibility (CSR)

In 2015, a comprehensive sustainability strategy was devel-oped at Raiffeisenlandesbank Oberösterreich, with further ac-tions agreed in the areas of sustainability and Corporate Social Responsibility (CSR):

¬ the 2015 financial year was characterised in full by energy efficiency. The Managing Board at Raiffeisenlandesbank Oberösterreich has decided to introduce an energy man-agement system for the entire Group in order to allow pre-cise monitoring of energy consumption and to exploit new potentials for savings. Final certification of the system in ac-cordance with ISO 50001 was completed in February 2016.

¬ Stakeholder management was restructured at Raiffeisen-landesbank Oberösterreich in 2015. Up until now it was not



only the interests of the shareholders that were taken into account, in line with a traditional shareholder approach, but rather all interest groups associated with Raiffeisen were addressed within the scope of a sustainable future direction for the company. Efforts are also being focused on the issue of stakeholder management as part of the activities involved in establishing a separate sustainability management system. The individual stakeholders have for instance undergone analysis and stakeholder manage-ment has been concentrated on sustainable dialogue with the stakeholders.

¬ Sustainable business activity is a central theme at Raiff-eisen. Raiffeisen Oberösterreich strives for instance to en-sure that important resources are handled carefully and that the environment is protected. Following the creation of the Value creation report 2013 last year the Ecobalance 2014 was also created based on a proposal from the Raiff-eisen climate protection initiative. The majority of emissions arise from power consumption, and there is potential for improvement here. The transportation area also demon-strates further potential for protecting the environment. In-teriors are already largely heated using green power.

¬ Raiffeisenlandesbank Oberösterreich took part in the work/life balance audit for the first time in 2009 and was awarded the basic certification. In the years after that the focus turned to topics like family-oriented leadership, the working world of the future, workshops for those return-ing to the workplace as well as part-time work and man-agement. The actions taken were reviewed again in 2015. The recertification in 2015 is not only a recognition of past achievements, but also a stimulus and inducement to con-tinue to pursue the successful development of a work-life balance favourable to the interest of both employees and customers.

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

1.5. Events of particular significance after the balance sheet date

There were no events of particular significance after 31 December 2015. The consolidated financial statements were compiled on 5 April 2016 and presented to the Super-visory Board.


Group Management Report 2015 _ Anticipated Development and Future Risks

2.1. Expected development of the economic environment

The restrained global economic performance will also persist in 2016. The International Monetary Fund (IMF) is forecasting growth in real global GDP of 3.4 per cent, but the forecast by the World Bank is 2.9 per cent.

A series of early indicators improved in the eurozone over the course of 2015, meaning that the forecasts for growth in GDP have been continuously revised slightly upwards for 2016, most recently by the IMF in January 2016. The reasons for this include the numerous factors stimulating the economy such as the low oil prices, the extremely expansionary monetary policy of the European Central Bank (ECB), the weaker euro as a result of this, EU investment programmes and a decrease in fiscal braking effects. Nevertheless the eurozone economy ran out of steam towards the end of 2015, primarily as a result of widespread weakness in the emerging nations. Early and sentiment indicators remain at a high level at the start of 2016, although these have been falling somewhat recently. Domes-tic consumption will provide the main stimulus for growth once again in 2016 as a result of the restrained performance of the global economy. The inflation rate in the euro zone may re-main significantly below the ECB target of almost but below 2 per cent, and justify its extremely loose monetary policy. This results both from internal (continued under-utilisation of production capacity) and external factors (moderate prices for raw materials, particularly low price of oil).

Increased economic dynamism is expected in Austria from 2016 onwards following the very weak performance over the past three years. Two special factors should bring some short-term stimulus: the relief on incomes as a result of the tax re-forms along with the expenditure for asylum seekers should boost consumption, which could thereby become the most important driver of growth following four years of stagnation. Leading indicators also provide some hope of a recovery in fixed asset investments in the near future. Performance in the construction sector is expected to remain fairly slow and for-eign trade is also not expected to contribute to growth for the time being. The rate of inflation will also remain well below the European average in 2016, as a result of the higher prices in the service sector.

Upper Austria, as an exporting state with strong connections with German industry, profits on one hand from the stronger performance of its neighbour to the north, and on the other hand continues to feel the effects of weaker global demand. In all, the Department of Statistics for the State of Upper Austria estimates economic growth in the state for 2016 at 2 per cent or slightly above the national average of 1.6-1.9 per cent.

The economies of the central European EU countries, such as Poland, Hungary, the Czech Republic and Slovakia, are performing well. The IMF even revised the growth outlook for these countries slightly upwards once again in January 2016. Russia and Ukraine are currently in a deep recession because of their military conflict and the economic sanctions associ-ated with this.

The USA remains the engine of the global economy with very solid growth, based primarily on private consumption. While leading indicators from the manufacturing sector worsened at 2015 year-end, the service sector which is more signifi-cant in terms of the overall economy should make up for any weakness here. Consumer confidence also remains high, with the labour market in an optimum position and no fiscal policy slowing things down, while lower energy prices are fuelling the economy. Despite the dynamic economy, the expansionary monetary policy is only being tightened very slowly because – thanks also to the low commodity prices – there is still no risk of inflation in sight.

The IMF and World Bank are forecasting growth of between 4.3 per cent and 4.8 per cent in the emerging nations in 2016. It is becoming increasingly difficult to provide a blanket eval-uation for the emerging nations. While oil-importing countries like India profit powerfully from lower oil prices, this affects oil-exporting countries such as Venezuela and Russia, which are struggling with deep recessions in conjunction with very high inflation. Brazil is also in recession while South Africa is barely growing at all, since fundamental structural prob-lems are increasingly having a negative impact on economic performance. China is continuing to undergo a slowdown in growth, which is partly cyclical and partly the result of a de-liberate strategy.

2.2. Expected development of the group

Customer behaviour characterised by further digitisation and the changes associated with this will certainly be one of the major challenges for the future. Raiffeisenlandesbank Oberös-terreich is adjusting to the major upheaval that this means for the banking industry by positioning itself as a pioneer in in-novation and modern advisory bank that also sets its future course with intensive personal support as well as the devel-opment of the extensive range of the innovative banking tech-nology available. Raiffeisenlandesbank Oberösterreich is also revising sections of its business model in order to keep up with the global changes in the internet age. Solutions are being developed for instance related to how an innovative and suc-cessful bank branch concept may look in the future as part of the innovative development of the “Raiffeisen Banking Group Upper Austria 2020” project.

2. Outlook and risks


Intensive work is also taking place in parallel on the “Digital regional bank” project. This is based on an “aggregated busi-ness model” whereby the fixed 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 channels will increasingly be selected for these which are independent of location and time. This concept benefits customers in that they receive active support with differing services and sup-port and care concepts. Raiffeisenlandesbank Oberösterreich benefits from increases in productivity and efficiency based on process harmonisation and simplification.

Based on the Bank's strengths – such as efficient, targeted li-quidity planning and control, comprehensive risk management combined with detailed control – and the close collaboration with the Raiffeisenbanks in Upper Austria, Raiffeisenlandes-bank Oberösterreich is doing everything it can to enable it to continue to justify the confidence of customers in the future and to provide comprehensive support for businesses, insti-tutions and retail customers in their various projects. Numer-ous actions for the future will be implemented above all with the “Raiffeisen Banking Group Upper Austria 2020” project, in order to secure stability and sustainable qualitative growth.

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

SALZBURGER LANDES-HYPOTHEKENBANK AKTIENGE-SELLSCHAFT (Hypo Salzburg) will continue to be a reliable partner for its customers in the future. It has a stable owner-ship structure and possesses the successful business model of a regional bank. The emphasis is on a systematic commit-ment to meeting customer needs and keeping a consistent focus on target groups by providing attractive products as well as the responsible handling of costs and risks. Hypo Salzburg has sound capital adequacy and has made sufficient provision in terms of liquidity to ensure that it can achieve qualitative growth in its customer business.

IMPULS-LEASING Group (ILG) predicts that there will be a stable trend in new business in 2016 in its home markets of Austria and southern Germany and in Central and East-ern Europe (CEE). It will retain its conservative business pol-icy strategy in terms of income and risk. As part of efficiency enhancement measures, interfaces with Raiffeisenlandes-bank Oberösterreich are being continuously evaluated and optimised.

KEPLER-FONDS KAG, with a customer-volume of over 13 billion euros, is one of the TOP 5 investment companies in

Austria. Numerous domestic and international awards (includ-ing winning the “FERI Euro Rating Awards 2016” as best all-round provider in Austria) serve to verify the high quality of its product portfolio. KEPLER is a recognised specialist in man-aging bond funds, ethical funds, dynamic mixed funds and defensively oriented equity funds.

Given the challenging market environment, the budgets for the VIVATIS Holding AG Group and the efko Frischfrucht und Delikatessen GmbH Group are based on a modest increase in sales revenue from the foodstuffs sector in 2016. These groups aim to generate organic growth, notably by increasing the innovation rate and by attracting new customers. Selective acquisitions in the core segments also form part of the cor-porate strategy. Capital investment of approximately EUR 26 million is planned for the foodstuffs division in 2016.

The OÖ Wohnbau Group has planned a construction volume of EUR 77 million for 2016. In the housing management busi-ness, the group plans to expand its portfolio of approximately 40,000 management units by adding units that it constructs itself and by acquiring other housing management portfolios.

In its outlook for the fiscal year ending on 31 March 2016, the voestalpine AG is anticipating stable growth (results incl. one-time effects above previous year, adjusted earnings below previous year), thanks to its strong position in the industrial segments, automotive, rail infrastructure and aircraft manu-facturing, which together constitute some 50 per cent of the group’s segment portfolio, as well as largely stable growth in the areas of machine engineering and consumer goods.

According to the most recent forecasts, AMAG Austria Metall AG will experience the growth in demand for aluminium prod-ucts to continue in 2016 as well. Global growth for primary aluminium is expected to be 5.0 per cent, for rolled aluminium products roughly 5.2 per cent. This continued high level of de-mand offers a sound basis for positive business trend in 2016. Construction of new cold-rolling mill as part of the AMAG 2020 strategy project, including a finalising and annealing facility, will begin in the spring of 2016, with operations planned for the first half of 2017. This will bring production capacity in the rolling segment up to over 300,000 tons. With this expansion in Ranshofen, AMAG is not only on its way to becoming the most up-to-date facility in the European aluminium industry, but also an all-in-one provider for specialty products in the areas of automotive, aerospace, sport articles, electronics and packaging. The future development of aluminium prices is a significant influencing factor with respect to AMAG Group earnings. Owing to recent volatility in aluminium prices, AMAG has not yet released its forecast for 2016.


2.3. Significant risks and uncertainties

Raiffeisenlandesbank Oberösterreich Group’s long-term suc-cess has largely been due to active risk management. In order to realise its goal, risk management has been implemented at Raiffeisenlandesbank Oberösterreich, as the dominant com-pany in the group, making it possible to identify and measure all risks within the group (credit risk, market risk, investment risk, liquidity risk, macro-economic risk and operational risk) and for management to actively control them.

The overall risk strategy approved by the Managing Board en-sures that the risks assumed by the Bank are consistent with the corporate strategy. The Managing Board and the Supervi-sory Board are kept regularly informed.

For more detailed information on all the risks in the Raiffeisen-landesbank Oberösterreich Group and on the objectives and methods used in the risk management system, please refer to the comprehensive risk report in the Notes.

Group Management Report 2015 _ Anticipated Development and Future Risks


3. Research and development

Raiffeisenlandesbank Oberösterreich is considered a pioneer in the development of innovative bank technology. The first electronic banking (ELBA) solution for Raiffeisen corporate customers in Upper Austria was developed in 1988. Private customers became able to complete their banking transac-tions from home online in 1997 with the market launch of the Raiffeisen ELBA internet solution. In addition to Raiffeisen ELBA mobil, the Raiffeisen ELBA app is the mobile all-rounder available today as the online baking solution specifically cus-tomised for smartphones, and which provides a comprehen-sive account overview, financial statuses, transfer options and much more. Raiffeisenlandesbank Oberösterreich also leads the way in projects across Austria related to the digitisation of bank and business processes.

Raiffeisenlandesbank Oberösterreich is continuously improv-ing its services for its customers and is taking the lead with numerous progressive developments in customer care for companies, private customers, and institutions. While con-tactless payments have been possible using Raiffeisen bank cards since 2013, a new phase of payment transactions was started in 2015. Since June 2015 Raiffeisen Oberösterreich customers have been able to make quick and easy payments globally at all NFC (near field communication) enabled point-of-sale terminals using their digital bank card and an Android smartphone. A field test was carried out for this in Linz to-gether with the Passage Shopping Centre and the Linzer City Ring. The digital banking card has been available to all Upper Austrian Raiffeisen customers since October 2015. In addition, two of the Raiffeisenlandesbank’s ATMs have been equipped with NFC technology. Contactless withdrawals can already be made from these using the digital bank card. This addi-tional function will be installed in stages in additional Raiffeisen Oberösterreich self-service terminals from January 2017.

That is why Raiffeisenlandesbank Oberösterreich is playing a leading role in the “IT for Raiffeisen Austria” project. The harmonisation of IT systems for Raiffeisen banks in Austria is a ground-breaking project. Once implemented, it will not only deliver numerous synergies and corresponding cost savings, but will also spawn a range of technical innovations.

As part of its training and professional development activities, Raiffeisenlandesbank Oberösterreich is investing in e-learning, blended-learning modules and web-based training opportu-nities. Raiffeisenlandesbank Oberösterreich has developed its own e-learning platform and serves as a competence centre in this regard for Raiffeisen Österreich.

Two holdings in the IT sector play a significant role in shaping the whole of Raiffeisen’s Austrian sector. Together, they ser-vice the whole range of software and infrastructure issues, primarily for financial service providers.

Raiffeisen Software GmbH was formed in 2015 through the fusion of RACON Software GmbH and Raiffeisen Solution Software and Service GmbH. This brought together two soft-ware development companies in the Raiffeisen sector that had operated for years in parallel into a new, integrated, innovative and broadly based analytical and software unit that is pro-fessionally involved in topics such as software engineering, process models and standardisation. Numerous research projects draw on external networks and institutional partner-ships, such as that with the Johannes Kepler University in Linz and the Software Park in Hagenburg. The advances brought about through this research have been demonstrated in, for example, the software harmonisation that was successfully carried out in 2015 (Project: “One IT”) in the Raiffeisen Banking Group Styria; additional states will follow in 2016.

The GRZ IT Center GmbH serving as a full-service provider of IT infrastructure was able to solidify its position as one of the leading bank data centres in Austria, not least through its long-term constructive partnerships with the Raiffeisen Banking Groups Tirol and Carinthia, the Raiffeisen Association Salz-burg eGen, with all the Raiffeisen banks in the federal state of Salzburg and the DREI-BANKEN-EDV Association m.b.H, the data centre and software company of the 3-bank group. As part of the “Open IT Centre Initiative,” an additional partnership was established in 2015 with the Raiffeisen Infomatik Center Steiermark GmbH. A strategic technical perspective is applied at GRZ to topics such as systems engineering and IT security professionally managed by in-house teams.

In the VIVATIS Holding AG Group, a group innovation man-agement system was installed back in 2013 to safeguard and support the further development of the group's market posi-tion. One of the key areas of management focus in the food-stuffs division is on continuous improvement in recipes and processing technologies as well as on ongoing development of new products and services.

The development of innovative products, the continuous im-provement and enhancement in the productivity of produc-tion facilities and technologies as well as all production-related service areas are the focus of the “efko Frischfrucht und De-likatessen GmbH” Group. Through targeted investments, efko is seeking to secure its competitive strength in the market.


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

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

Raiffeisenlandesbank Oberösterreich perceives an account-ing-related internal control system to consist in the procedure drafted and put in place by the Managing Board and those persons tasked with supervising the company and other per-sons in order to achieve the following goals:

¬ effectiveness and economic viability of the accounting pro-cess (this also includes protecting the assets from losses caused by damage and misappropriation),

¬ reliability in the financial reporting and ¬ 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 goal of this 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 annual fi-nancial statements are pertinent Austrian laws, in particular the Austrian 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 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 ad-dition to the Managing Board.

The Code of Conduct as a binding set of rules governing day-to-day business operations represents the corporate princi-ples that serve as the basis of business conduct at Raiffeisen and the values of the Raiffeisenlandesbank Oberösterreich and those companies associated with it in the Group (Raif-feisenlandesbank Oberösterreich Group) The internal control system is geared to the magnitude and nature of the business transacted (complexity, diversification, risk potential) in the RLB Oberösterreich Group and to the statutory provisions to be applied. The current version of the Code of Conduct was last amended on 29 December 2015 and was 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 board of supervisors, executive management and employees in key functions and complies with the professional values and long-term interests of Raiff- eisenlandesbank Oberösterreich. The principles for the remu-neration policy in accordance with section 39b BWG or Article 92 et seq CRD are adhered to as applicable.

Risk evaluation

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 iden-tified in good time, with appropriate actions introduced. The responsibilities for assessing and controlling the risks in ac-cordance with section 39 BWG or CRR/CRD as well as the CEBS/EBA standards are regulated at Raiffeisenlandesbank Oberösterreich. The requisite functional separation is ensured with this.

The Risk Management division is responsible for the devel-opment and deployment of risk measurement procedures and IT systems at Raiffeisenlandesbank Oberösterreich; it de-velops the results and risk information necessary to carry out active risk control and relays accounting-relevant information accordingly.

Major risks related to Group accounting procedures are evalu-ated and monitored by the Managing Board. This is important to avoid misstatements, for example where complex account-ing principles are involved. 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 deci-sions are set up and published in order to provide safeguards against risks and to achieve the corporate objectives. The ef-fectiveness, 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 decentralised basis in the respective Group units according to the guide-lines issued by Raiffeisenlandesbank Oberösterreich. Those


employees and managers with responsibility for accounting in the Group units are responsible for a complete presentation and proper evaluation of all transactions made known to them.

Appropriate control measures are applied in ongoing busi-ness processes to ensure that potential misstatements or de-viations in financial reporting are prevented or identified and corrected. Control measures range from the review of peri-odic results by management and the specified reconciliation of accounts on through to analysis of ongoing processes in accounting.

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.

The financial statement 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 managers responsible.

The transmission of financial statement data, which are au-dited by an external auditor, is done primarily through direct entry into the IDL Konsis consolidation system. The IT system is protected with respect to IT security through the restric-tions on the issuance of authorisations. The financial state-ments data received from the Group units is first checked in the group accounting system by the employee responsible for the Group unit concerned. The IT system is protected with respect to IT security through the restrictions on the issuance of authorisations.

Information and communication

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

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

The consolidated financial statements, together with the man-agement report, are discussed in the Supervisory Board’s accounting committee. The consolidated financial statements

are also submitted to the Supervisory Board. They are pub-lished in the annual report, on the company’s own website and in the official gazette of the Wiener Zeitung; finally, they 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 ac-cording to Austrian financial market oversight as well as inter-national 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.


Linz, 5 April 2016Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Europaplatz 1a, 4020 Linz

THE MANAGING BOARD

Heinrich SchallerChief Executive and Chairman of the Managing Board

Michaela Keplinger-Mitterlehner Deputy Chief Executive

Stefan Sandberger Member of the Managing Board

Reinhard SchwendtbauerMember of the Managing Board

Georg StarzerMember of the Managing Board

Markus VockenhuberMember of the Managing Board

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


IFRS Consolidated Financial Statements 2015, Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Income statement __________________________________________________ 63

Statement of comprehensive income ___________________________________ 64

Balance sheet _____________________________________________________ 65

Statement of changes in equity _______________________________________ 66

Cash flow statement ________________________________________________ 67

Notes to the consolidated financial statements ___________________________ 68

The company ______________________________________________________ 68

Basis of presentation of the consolidated financial statements in accordance with IFRS ______________________________________________ 68

Accounting policies _________________________________________________ 79

Segment reporting _________________________________________________ 89

Income statement disclosures ________________________________________ 92

Balance sheet disclosures ____________________________________________ 100

Risk report ________________________________________________________ 130

Other disclosures ___________________________________________________ 146

Disclosures required under Austrian accounting standards __________________ 154

Events after the balance sheet date ____________________________________ 158

Members of the boards of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft __________________________________________________ 158

Audit certificates ___________________________________________________ 160


IFRS consolidated financial statements _ Income statement

Income statement

IN EUR ’000 NOTE 2015 2014

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

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

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

Net interest income (1) 468,303 428,250

Loan loss allowances (2) –61,087 –180,744

Net interest income after loan loss allowances 407,216 247,506

Fee and commission income 180,981 169,579

Fee and commission expenses –53,138 –43,531

Net fee and commission income (3) 127,843 126,048

Net trading income (4) 7,722 15,546

Net income/loss from designated financial instruments (5) 61,665 –97,129

Net income from investments (6) 36,290 48,958

Other net finance costs 105,677 –32,625

General administrative expenses (7) –733,715 –690,983

Other net operating income (8) 411,399 390,776

Pre-tax profit for the year 318,420 40,722

Taxes on income and earnings (9) –14,307 –4,353

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

of which attributable to equity holders of the parent 300,325 43,388

of which attributable to non-controlling interests 3,788 –7,019


IN EUR ’000 NOTE 2015 2014


Items that cannot be reclassified to profit or loss

Actuarial gains and losses on defined benefit plans (29) 8,102 –17,412

Amounts recognised in other comprehensive income 10,787 –23,159

Taxes recognised in respect of this amount –2,685 5,747

Share of other comprehensive income of equity-accounted investments (17) –10,742 –4,994

Amounts recognised in other comprehensive income –10,708 –4,994

Taxes recognised in respect of this amount –34 0

Items that can be reclassified to profit or loss

Gain or loss on remeasurement of AfS securities (29) –76,515 182,510

Amounts recognised in other comprehensive income –52,905 249,558

Amounts reclassified to profit or loss –49,007 –6,202

Taxes recognised in respect of this amount 25,397 –60,846

Gain or loss from the hedging of net investments (29) –873 366

Amounts recognised in other comprehensive income –1,164 488

Amounts reclassified to profit or loss 0 0

Taxes recognised in respect of this amount 291 –122

Currency differences (29) 128 –970

Amounts recognised in other comprehensive income 128 –970


Taxes recognised in respect of this amount 0 0

Share of other comprehensive income of equity-accounted investments (17) –10,982 –101,127

Amounts recognised in other comprehensive income –10,762 –101,127


Taxes recognised in respect of this amount –220 0

Total other comprehensive income –90,882 58,373

Comprehensive income 213,231 94,742

of which attributable to equity holders of the parent 210,214 97,950

of which attributable to non-controlling interests 3,017 –3,208

Statement of comprehensive income


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

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

Cash and cash equivalents (10), (11) 90,221 89,086

Loans and advances to banks (10), (12), (14) 6,854,907 6,779,138

Loans and advances to customers (10), (13), (14) 18,731,309 19,166,752

Trading assets (10), (15) 2,468,794 2,951,476

Financial assets (10), (16) 5,670,627 6,173,604

Companies accounted for using the equity method (17) 1,786,116 1,800,077

Intangible assets (18), (21) 44,636 47,900

Property and equipment (19), (21) 419,042 405,852

Investment property (19), (21) 746,402 759,767

Current tax assets (9) 8,800 5,536

Deferred tax assets (9) 35,672 26,762

Other assets (20) 442,046 368,228

Total 37,298,572 38,574,178

EQUITY AND LIABILITIES IN EUR ’000 NOTE 31 DEC. 2015 31 DEC. 2014

Amounts owed to banks (10), (22) 11,214,173 11,304,925

Amounts owed to customers (10), (23) 10,628,115 10,516,033

Trading liabilities (10), (24) 1,871,532 2,202,349

Liabilities evidenced by certificates (10), (25) 7,618,484 8,642,403

Provisions (14), (26) 241,247 259,352

Current tax liabilities (9) 5,682 5,948

Deferred tax liabilities (9) 53,547 61,690

Other liabilities (27) 495,048 478,716

Subordinated capital (10), (28) 1,431,348 1,536,491

Equity (29) 3,739,396 3,566,271

of which attributable to equity holders of the parent 3,595,010 3,414,530

of which attributable to non-controlling interests 144,386 151,741

Total 37,298,572 38,574,178

Balance sheet


Statement of changes in equity

IN EUR ’000

SUBSCRIBED CAPITAL

PARTICI- PATION CAPITAL

CAPITAL RESERVES

RETAINED EARNINGS

SUB- TOTAL

NON-CON-TROLLING INTERESTS TOTAL

Equity 1 Jan. 2015 276,476 1,032 972,095 2,164,927 3,414,530 151,741 3,566,271

Comprehensive income 0 0 0 210,214 210,214 3,017 213,231

After-tax profit for the year 0 0 0 300,325 300,325 3,788 304,113

Total other comprehensive income 0 0 0 –90,111 –90,111 –771 –90,882

Dividends 0 0 0 –24,265 –24,265 –1,093 –25,358

Change in basis of consolidation 0 0 0 0 0 445 445

Shareholding changes, restructuring 0 0 0 –6,486 –6,486 –10,101 –16,587

Capital increases 0 0 0 0 0 360 360

Other changes in capital 0 0 0 1,017 1,017 17 1,034

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

IN EUR ’000

SUBSCRIBED CAPITAL

PARTICI- PATION CAPITAL

CAPITAL RESERVES

RETAINED EARNINGS

SUB- TOTAL

NON-CON-TROLLING INTERESTS TOTAL

Equity 1 Jan. 2014 276,476 1,032 972,095 2,139,984 3,389,587 151,416 3,541,003

Comprehensive income 0 0 0 97,950 97,950 –3,208 94,742

After-tax profit for the year 0 0 0 43,388 43,388 –7,019 36,369

Total other comprehensive income 0 0 0 54,562 54,562 3,811 58,373

Dividends 0 0 0 –28,702 –28,702 –2,782 –31,484

Change in basis of consolidation 0 0 0 0 0 10,777 10,777

Shareholding changes, restructuring 0 0 0 447 447 156 603

Capital increases 0 0 0 0 0 0 0

Other changes in capital 0 0 0 –44,752 –44,752 –4,618 –49,370

Equity 31 Dec. 2014 276,476 1,032 972,095 2,164,927 3,414,530 151,741 3,566,271


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

IN EUR ’000 2015 2014


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

Depreciation and impairment losses on property and equipment and on investment property, amortisation and impairment losses on intangible assets, impairment losses on financial assets and trading securities, reversals of impairment losses 120,478 8,536

Reversal of/additions to reserves and risk provisions 114,511 244,380

Gain or loss on disposal of property, equipment, financial assets, trading securities, intangible assets and investment property –33,913 –38,676

Dividends received –114,655 –112,285

Interest received –838,529 –908,121

Interest paid 479,754 529,928

Share of profit or loss of equity-accounted investments –12,043 64,468

Effects from initial consolidation and deconsolidation –19,187 –43,801

Other adjustments due to non-cash items –34,432 291,245

Subtotal –33,903 72,043

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

Loans and advances to banks and customers 251,297 –178,261

Trading assets –13,958 –16,841

Other assets –45,905 –12,357

Amounts owed to banks and customers 124,957 9,643

Trading liabilities 30,981 20,907

Liabilities evidenced by certificates –858,274 –313,003

Other liabilities –87,785 –50,728

Dividends received 114,655 112,285

Interest received 838,529 908,121

Interest paid –479,754 –529,928

Taxes paid on income –6,168 –3,324

Cash flow from operating activities –165,328 18,557

Cash proceeds from the sale of:

Financial assets and shares in companies 1,059,443 1,959,203

Property and equipment, investment property and intangible assets 49,151 50,753

Payments to acquire:

Financial assets and shares in companies –727,153 –1,838,826

Property and equipment, investment property and intangible assets –123,648 –128,661

Acquisition of subsidiaries (net of acquired cash and cash equivalents) 0 –33

Disposal of subsidiaries (net of sold cash and cash equivalents) 6,017 0

Cash flow from investing activities 263,810 42,436

Capital increase 360 0

Receipt/repayment of subordinated capital –72,349 –31,442

Purchase of non-controlling interests 0 0

Dividends –25,358 –31,484

Cash flow from financing activities –97,347 –62,926

Cash at the end of the previous period 89,086 91,019

Cash flow from operating activities –165,328 18,557

Cash flow from investing activities 263,810 42,436

Cash flow from financing activities –97,347 –62,926

Cash and cash equivalents at the end of the period 90,221 89,086

Cash flow statement

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


Notes to the consolidated financial statements

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 December 2015, the registered co-operative society Raiffeisenbankengruppe OÖ Verbund eGen (hereinafter: RBG OÖ Verbund eGen) held 98.92 per cent of the ordinary shares in Raiffeisenlandesbank Oberösterreich. The RLB Holding registrierte Genossenschaft m.b.H. Oberösterreich (hereinaf-ter: RLB Holding reg. Gen.) owns 1.08 per cent of the ordinary shares in Raiffeisenlandesbank Oberösterreich. As of 31 De-cember 2015, the registered cooperative society Raiffeisen

Banking Group Oberösterreich held over 50 per cent of the shares of RLB Holding registered liability cooperative, making it the uppermost parent company. The Upper Austrian Raiff-eisen banks make up the most important owner groups of the two co-operatives. The individual Raiffeisen banks are sup-ported by Raiffeisenlandesbank Oberösterreich in its role as the regional central institution for all banking matters.

Since the 2007 financial year, Raiffeisenlandesbank Oberös-terreich, as the highest-level bank in the Group, has been sub-ject to the mandatory requirement specified in IAS Regulation (EC) 1606/2002 to prepare consolidated financial statements in accordance with the International Financial Reporting Stan-dards (IFRS). Further disclosures are also required in accor-dance with the regulations under the Austrian Banking Act (BWG) and the Austrian Commercial Code (UGB).

Basic principles

These consolidated financial statements for the 2015 finan-cial year, as well as the comparative figures from 2014, have been prepared in compliance with the International Financial Reporting Standards (IFRSs) as published by the International Accounting Standards Board (IASB) and international ac-counting 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 Austrian 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.

The company

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


IFRS consolidated financial statements _ Notes _ Basis of presentation

First-time adoption of new and revised standards and interpretations

The following new or amended standards and interpreta-tions must be taken into account for the first time in prepar-ing IFRS financial statements relating to an annual reporting

period starting on or after 1 January 2015. The accounting policies applied are, with the exception of the amendments and changes listed here, the same as those of the previous financial year.

IFRIC 21 (Levies)The purpose of this interpretation is to clarify how and when entities will need, in the future, to account in their IFRS financial statements for levies imposed by public authorities. The inter-pretation covers levy liabilities accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets, and also levies for which the timing and amount are known. IFRIC 21 identifies as the obligating event for the rec-ognition of a liability the activity that triggers the payment under the relevant legislation. In the EU, IFRIC 21 came into force for financial years beginning on or after 17 June 2014, although earlier application was permitted. The provisions in IFRIC 21 are relevant in the Raiffeisenlandesbank Oberöster-reich Group, particularly in connection with the preparation of interim financial statements, because levies will now generally need to be recognised at an earlier point.

Improvements to IFRSs 2011-2013On 19 December 2014, the EU formally adopted the changes introduced under the 2011-2013 cycle of the annual improve-ments project. The improvement cycle included changes and clarifications relating to various standards. With regard to IFRS 1 First-time Adoption, the improvements included clarification relating to the definition of IFRSs applicable at the end of a reporting period. The change to IFRS 3 Business Combina-tions provided for the exclusion of joint arrangements from its scope. Adjustments to IFRS 13 Fair Value Measurement addressed the scope of the portfolio exception. The interrela-tionship between IAS 40 and IFRS 3 in connection with the ac-quisition of investment property was clarified in more detail in the changes to IAS 40. The changes were to come into force for financial years beginning on or after 1 January 2015. These changes and adjustments do not have any material impact on the consolidated financial statements of Raiffeisenlandesbank Oberösterreich.

STANDARD/INTERPRETATION

TO BE APPLIED IN FINANCIAL YEARS

FROMALREADY ADOPTED

BY THE EU

IFRIC 21 (Levies) 17 June 2014 Yes

Improvements to IFRSs 2011-2013 (December 2013) 1 Jan. 2015 Yes


IFRSs not yet subject to mandatory application

The following new or amended standards and interpretations had already been published as at the balance sheet date.

However, they had not yet come into force for the financial year beginning 1 January 2015 and have therefore not been applied in these consolidated financial statements:

Amendment to IAS 19 – Defined benefit plans: employee contributionsThe amendments to IAS 19 clarify how businesses need to account for employee contributions, or contributions made by third parties, to defined benefit plans. If employees (or third parties) make contributions to pension commitments, this re-duces the cost to the employer. The amendment to IAS 19.93 now makes it clear that the treatment of these contributions depends on whether these contributions are linked to the pe-riod of service or not. The changes apply for financial years beginning on or after 1 February 2015 and must also be ap-plied retrospectively. These changes do not have any impact on the consolidated financial statements of Raiffeisenlandes-bank Oberösterreich.

Improvements to IFRSs 2010-2012The 2010-2012 cycle of the annual improvements project comprises changes to seven different standards: IFRS 2 Share-based Payment, IFRS 3 Business Combinations, IFRS 8 Operating Segments, IFRS 13 Fair Value Measurement, IAS 16 Property, Plant and Equipment, IAS 24 Related Party Dis-closures and IAS 38 Intangible Assets. The amendments to IFRS 3 address the accounting treatment of contingent con-sideration in a business combination; the changes apply to transactions in which the date of acquisition is on or after 1 February 2015. The changes to IFRS 8 require an entity to disclose the judgements made by management in connec-tion with the aggregation of segments and clarify that a rec-onciliation of segment assets to the corresponding amounts

in the balance sheet is only necessary if the segment assets are regularly reported to the relevant level of the organisation. The clarifications in respect of IAS 24 extend the definition of related parties to include parties that provide corporate man-agement services for the reporting entity. The changes were to be applied for the first time for financial years beginning on or after 1 February 2015. The 2010-2012 cycle of the annual improvements project is not expected to have any significant implications for the consolidated financial statements of Raif-feisenlandesbank Oberösterreich.

IAS 1 – Disclosure InitiativeIn December 2014, the IASB published amendments to IAS 1 as part of an initiative to improve financial reports in terms of presentation and disclosures. These amendments clarify that the principle of materiality should be applied to financial statements as a whole. This principle also applies specifi-cally where an IFRS requires a list of minimum disclosures. Disclosures relating to the aggregation and disaggregaton of items in the balance sheet and statement of comprehensive income also form part of the amendments. In addition, the model structure for the notes to the financial statements has been removed, making it easier for entities to adopt a struc-ture more specific to their own requirements. The changes are to be applied in financial years beginning on or after 1 January 2016. Earlier application is permitted. The principle of material-ity has been consistently taken into account in the preparation of the present consolidated financial statements for Raiffeisen-landesbank Oberösterreich, which is why the changes are not

STANDARD/INTERPRETATION

TO BE APPLIED IN FINANCIAL YEARS

FROMALREADY ADOPTED

BY THE EU

Amendment to IAS 19 – Defined benefit plans: employee contributions 1 Feb. 2015 Yes

Improvements to IFRSs 2010–2012 (December 2013) 1 Feb. 2015 Yes

Amendments to IAS 1 – Disclosure Initiative 1 Jan. 2016 Yes

Amendments to IAS 27 – Equity Method in Separate Financial Statements 1 Jan. 2016 Yes

Amendments to IFRS 11 – Accounting for Acquisitions of Interests in Joint Operations 1 Jan. 2016 Yes

Amendments to IAS 16 and IAS 38 – Clarification of Acceptable Methods of Depreciation and Amortisation 1 Jan. 2016 Yes

Amendments to IAS 16 and IAS 41 – Agriculture: bearer plants 1 Jan. 2016 Yes

Improvements to IFRSs 2012–2014 (September 2014) 1 Jan. 2016 Yes

Amendments to IFRS 10, IFRS 12 and IAS 28 – Investment Entities: 1 Jan. 2016 No

IFRS 14 (“Regulatory Deferral Accounts”) 1 Jan. 2016 No

IFRS 9 (“Financial instruments”) 1 Jan. 2018 No

IFRS 15 (Revenue from Contracts with Customers) 1 Jan. 2018 No

Amendments to IFRS 10 and IAS 28 – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred indefinitely No



expected to have any material impact on future consolidated financial statements.

IAS 27 – Equity Method in Separate Financial StatementsIn August 2014, the IASB published amendments to IAS 27 relating to the application of the equity method in separate financial statements. As a result of these amendments, en-tities are allowed to account for investments in subsidiaries, associates and joint ventures using the equity method in their separate financial statements. The changes come into force for financial years beginning on or after 1 January 2016. Earlier application is permitted.

IFRS 11 – Accounting for Acquisitions of Interests in Joint OperationsThe amendments to IFRS 11 published in May 2014 clarify that the acquisition of an interest in a joint operation that consti-tutes a business as defined in IFRS 3 should be accounted for in accordance with the principles for the accounting treatment of business combinations specified in IFRS 3 and other IFRSs provided that these principles do not conflict with the guid-ance in IFRS 11. The changes apply prospectively to acquisi-tions that take place in reporting periods beginning on or after 1 January 2016. Voluntary earlier application of the amend-ments is permitted. These amendments could only have im-plications for the Raiffeisenlandesbank Oberösterreich Group if a transaction of this nature were to take place in the future.

IAS 16 and IAS 38 – Clarification of Acceptable Methods of Depreciation and AmortisationThe amendments to IAS 16 and IAS 38 were published in May 2014 and apply for financial years starting on or after 1 Jan-uary 2016. The changes particularly relate to revenue-based methods of depreciation and amortisation. Such methods have been prohibited for property, plant and equipment, and severely restricted for intangible assets. These changes do not have any impact on the Raiffeisenlandesbank Oberösterreich Group because the Group does not use any revenue-based methods of depreciation or amortisation.

IAS 16 and IAS 41 – Agriculture: Bearer PlantsAs a result of amendments published in June 2014, bearer plants now fall within the scope of IAS 16. They must there-fore be accounted for in the same way as property, plant and equipment. The changes come into force on 1 January 2016, although they can be applied earlier on a voluntary basis. It is not anticipated that these changes will have any material impact on the consolidated financial statements of Raiffeisen-landesbank Oberösterreich.

Improvements to IFRSs 2012-2014The changes published in September 2014 as part of the IASB's annual improvements project affect various standards.

There are minor adjustments to IFRS 5 concerning changes in methods of disposal and to IFRS 7 in connection with its ap-plicability to servicing contracts. Clarifications in IAS 19 relate to the currency of the bonds used in estimating the discount rate; the wording in IAS 34 is also clarified. The changes come into force for financial years beginning on or after 1 January 2016, but earlier application is permitted. These changes are not expected to have any material impact on the consolidated financial statements of Raiffeisenlandesbank Oberösterreich.

IFRS 10, IFRS 12 and IAS 28 – Investment Entities: Applying the Consolidation ExceptionThe amendments to IFRS 10, IFRS 12 and IAS 28 published in December 2014 clarify the issue of applying the consolidation exception if the parent satisfies the criteria for definition as an investment entity. Investment entities (such as certain invest-ment funds) may then instead recognise their investments in certain subsidiaries at fair value through profit or loss. Adop-tion by the EU is scheduled for the second half of 2016. These changes are not expected to have any material impact on the consolidated financial statements of Raiffeisenlandesbank Oberösterreich.

IFRS 14 Regulatory Deferral AccountsThe interim IFRS 14 is specifically intended only for users adopting IFRSs for the first time. Subject to some limitations, the standard permits users to retain regulatory deferral ac-count balances that they have already recognised in applica-tion of their previous financial reporting standards, even after the transition to IFRS. This standard is only conceived as an interim solution until the IASB completes its comprehensive long-term project on rate-regulated activities. The European Commission has decided not to initiate the endorsement pro-cess for IFRS 14, but instead to wait for publication of the definitive standard.

IFRS 9 Financial InstrumentsIFRS 9 was published in July 2014 and is subject to mandatory application from the 2018 financial year. IFRS 9 replaces the existing guidelines in IAS 39 Financial Instruments: Recog-nition and Measurement. IFRS 9 contains revised guidelines for classifying and measuring financial instruments, deter-mining impairment losses for expected loan defaults, and for accounting for hedges. For the most part, the guidelines for recognising and derocognising financial instruments have been carried across from IAS 39.

Under IFRS 9, the classification of financial assets is based on the characteristics of the contractual cash flows and on the basic principles of the business model used to manage the financial assets concerned. Depending on the character-istics, assets are classified as “at fair value through profit or loss”, “at fair value through other comprehensive income” or “at amortised cost”.


The IAS 39 rules governing the classification and measure-ment of financial liabilities remain largely unchanged. However, changes in the fair value of liabilities designated at fair value through profit or loss attributable to changes in the entity's own credit risk must be recognised in other comprehensive income unless this results in an accounting mismatch in the income statement.

The rules on impairment under IAS 39 are replaced under IFRS 9 by the expected credit loss model. In this model, as soon as a financial asset is recognised for the first time, a loss allow-ance is also recognised based on any credit loss expected at that time to be likely. This approach applies to financial as-sets classified as “at fair value through other comprehensive income” or “at amortised cost”, to lease receivables, trade re-ceivables, contract asset items under IFRS 15 and off-balance-sheet credit risks.

The fundamental hedge accounting methodology under IAS 39 has not been substantially changed in IFRS 9. However, the accounting treatment of hedges is to be harmonised to a greater extent with risk management.

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

IFRS 15 Revenue from Contracts with CustomersIn May 2014, the IASB published the new standard on revenue recognition, the objective of which is to harmonise the rules under IFRS and US GAAP and to enhance transparency and comparability. Almost all contracts with customers fall within the scope of this standard. The most notable exceptions are leases, financial instruments and insurance contracts. Under IFRS 15, the transfer of substantially all the risks and rewards is no longer the critical factor for revenue recognition. The new rules specify that revenue is recognised when the customer acquires control over the agreed goods and services and can obtain benefits from them. The revenue is measured in an amount that reflects the consideration to which the entity ex-pects to be entitled in exchange for those goods or services. In addition, the disclosure requirements have been expanded to include a range of quantitative and qualitative information intended to help the reader of the consolidated financial state-ments 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 interpre-tations. Initial application of the standard has been specified for financial years beginning on or after 1 January 2018, but earlier application is permitted. However, adoption by the EU

is first required, although this is scheduled for the second half of 2016. The effects of the new standard on the consolidated financial statements of Raiffeisenlandesbank Oberösterreich are currently being assessed.

IFRS 10 and IAS 28 – Sale or Contribution of Assets between an Investor and its Associate or Joint VentureThe changes are intended to clarify the issue of the account-ing treatment of a sale or contribution of assets between an investor and its associate or joint venture. In the future, the entire gain or loss from such a transaction should only be rec-ognised if the sold asset constitutes a business as defined in IFRS 3. If the sold asset does not constitute a business, gains or losses should only be recognised on a pro rata basis. The European Financial Reporting Advisory Group (EFRAG) has suspended the EU endorsement process for this change until further notice because a conflict with IAS 28.32 has been identified.



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 uni-form accounting policies applied throughout the Group. The balance sheet date of the fully consolidated companies is 31 December with the exception of 43 companies that have a balance sheet date of 30 September, one entity with 31 Oc-tober as a balance sheet date and one leasing company with 30 November as its balance sheet date. The selection of a date for these companies that differs from that of the par-ent company guarantees that the financial statements can be prepared and audited without delay. Three subsidiaries pre-pare their annual financial statements with reporting dates of 28 February, 30 June and 31 August respectively, and prepare interim financial statements in accordance with IFRS for the periods ending 30 September or 31 December.

The Group accounts for business combinations using the ac-quisition method in accordance with IFRS 3 if the Group has acquired control. The net assets measured at fair value are off-set against the consideration paid or, if necessary, against the fair value of the interest already held and the value of non-con-trolling 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 proportion-ate share of the non-controlling interests in the recognised amounts of the acquiree's identifiable net assets (partial good-will). Generally, the Group uses the partial goodwill 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 immediately as ex-pense, 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 proportionate 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 control begins and until the point in time that the control ends.

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 usu-ally a significant influence when the shareholding is between 20 per cent and 50 per cent. In individual cases, there may still be significant influence even if the shareholding is lower; this may arise through representation on the relevant entity’s executive board or supervisory board. Material investments in associates are recognised using the equity method and re-ported 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 method, the same basic approach is used in accounting for acquisitions as is used for a fully con-solidated company. Equity carrying amounts are, when there are indications that there could be impairment in the sense of IAS 39, 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 asso-ciate 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 contractual agreements. Project companies and leasing property com-panies 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. Expenses and income resulting from transactions between companies in the full basis of consolidation are eliminated in the course of the expense and income consolidation.


NAME

ATTRIBUTED SHARE OF

CAPITAL (%) COUNTRYREPORTING

DATE ADDED IN 2015

Fully consolidated entities

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft Group parent Austria 31 Dec.

activ factoring AG 100.00% Germany 31 Dec.

Am Ölberg Liegenschaftsverwertungs GmbH 100.00% Austria 30 Sept.

Bauen und Wohnen Beteiligungs GmbH 99.97% Austria 31 Dec.

BHG Beteiligungsmanagement und Holding GmbH 100.00% Austria 28 Feb.

Burgenländische Tierkörperverwertungsgesellschaft m.b.H. & Co KG 85.50% Austria 31 Dec.

DAILY SERVICE Tiefkuhllogistik Gesellschaft m.b.H. & Co.KG 95.00% Austria 31 Dec.

DAILY Tiefkuhlhaus ErrichtungsgmbH 100.00% Austria 30 Sept.

EFIS s.r.o. 100.00% Czech Republic 31 Dec.

efko Frischfrucht und Delikatessen GmbH 51.00% Austria 31 Dec.

Eurolease finance d.o.o. 100.00% Slovenia 31 Dec.

EUROPASTEG Errichtungs- und Betriebs GmbH1 47.09% Austria 30 Sept.

Eurotherme Bad Schallerbach Hotelerrichtungsgesellschaft m.b.H. 51.00% Austria 31 Dec.

Finance & Consulting GmbH 100.00% Austria 31 Dec.

Franz Reiter Ges.m.b.H. & Co. OG. 100.00% Austria 31 Dec.

Gesellschaft zur Förderung agrarischer Interessen in Oberösterreich GmbH 95.00% Austria 31 Dec.

Gesellschaft zur Förderung des Wohnbaus GmbH 59.65% Austria 30 Sept.

GMS GOURMET GmbH 95.00% Austria 31 Dec.

GOURMET Beteiligungs GmbH 95.00% Austria 31 Dec.

Grundstucksverwaltung Steyr GmbH 95.00% Austria 31 Dec.

Grundstucksverwaltung Villach-Sud GmbH 51.49% Austria 31 Dec.

GRZ IT Center GmbH 87.24% Austria 31 Dec.

H. Loidl Wurstproduktions- und vertriebsgesellschaft m. b. H. & Co KG 95.00% Austria 31 Dec.

Heimo Loidl + Johann Loidl Gesellschaft m.b.H. 95.00% Austria 31 Dec.

HYPO Beteiligung Gesellschaft m.b.H. 59.65% Austria 30 Sept.

HYPO Grund- und Bau-Leasing Gesellschaft m.b.H. 59.65% Austria 30 Sept.

Hypo Holding GmbH 85.63% Austria 31 Dec.

HYPO-IMPULS-Alpha Immobilien GmbH 51.00% Austria 31 Dec.

HYPO-IMPULS Immobilien GmbH 51.00% Austria 31 Dec.

HYPO IMPULS Immobilien Leasing GmbH 92.33% Austria 30 Sept.

HYPO IMPULS Immobilien Rif GmbH 92.33% Austria 30 Sept.

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 criteria applied uniformly throughout the Group, focusing on the effect of the inclusion or non-inclusion of a subsidiary on the presen-tation of the Group’s financial position and financial perfor-mance. A total of 111 subsidiaries were not fully consolidated and 47 associates were not accounted for using the equity method because of their minor significance for the presenta-tion of financial position and financial performance.

The basis of consolidation for the IFRS consolidated finan-cial statements of Raiffeisenlandesbank Oberösterreich for the year ended 31 December 2015 comprised 154 fully con-solidated entities (including Raiffeisenlandesbank Oberös-terreich). Seven other entities were included using the equity

method. Of the 161 entities, 123 are based in Austria and 38 abroad. Of the fully consolidated entities, two are banks, 97 are financial institutions based on business activities, 19 are financial institutions based on their function as holding com-panies, one is a finance holding company, three are providers of ancillary services and 32 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 min-imum 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


DATE ADDED IN 2015

HYPO IMPULS Mobilien Leasing GmbH 100.00% Austria 30 Sept.

HYPO IMPULS Vital Leasing GmbH 92.33% Austria 30 Sept.

HYPO Liegenschaftsverwertungs Gesellschaft m.b.H. 59.65% Austria 30 Sept.

HYPO Salzburg IMPULS Leasing GmbH 92.33% Austria 30 Sept.

IL 1 Raiffeisen-IMPULS-Mobilienleasing Gesellschaft m.b.H. 100.00% Austria 30 Sept.

IMMOBILIEN Invest Real-Treuhand Portfoliomanagement GmbH & Co OG 99.75% Austria 31 Dec. X

IMPULS Bilina s.r.o. 100.00% Czech Republic 31 Dec.

IMPULS-DELTA d.o.o. 100.00% Croatia 31 Dec.

IMPULS-Immobilien GmbH & Co. Objekt Eitorf KG 51.00% Germany 31 Dec.

IMPULS-Immobilien GmbH & Co. Objekt Gersthofen KG 81.00% Germany 31 Dec.

IMPULS-Immobilien GmbH & Co. Objekt Gilching KG 100.00% Germany 31 Dec.

IMPULS-Immobilien GmbH & Co. Objekt Karlstein KG2 5.10% Germany 31 Dec.

IMPULS-Immobilien GmbH & Co. Objekt Laupheim KG2 5.10% Germany 31 Dec.

IMPULS-Immobilien GmbH & Co. Objekt Offingen KG2 5.40% Germany 31 Dec.

IMPULS-Leasing-AUSTRIA s.r.o. 100.00% Czech Republic 31 Dec.

IMPULS-LEASING d.o.o. 100.00% Croatia 31 Dec.

IMPULS-Leasing GmbH & Co. Objekt Hengersberg KG 100.00% Germany 31 Dec.

IMPULS-Leasing GmbH & Co. Objekt Schkeuditz KG 94.90% Germany 31 Dec.

IMPULS-LEASING International GmbH 100.00% Austria 31 Dec.

IMPULS-LEASING Polska Sp.z o.o. 100.00% Poland 31 Dec.

IMPULS-Leasing-Real-Estate s.r.o. 100.00% Czech Republic 31 Dec.

IMPULS-LEASING Romania IFN S.A. 90.00% Romania 31 Dec.

IMPULS-LEASING Services SRL 90.00% Romania 31 Dec.

IMPULS-LEASING Slovakia s.r.o. 100.00% Slovakia 31 Dec.

IMPULS Malvazinky s.r.o. 100.00% Czech Republic 31 Dec.

IMPULS Milovice s.r.o. 100.00% Czech Republic 31 Dec.

IMPULS Modletice s.r.o. 100.00% Czech Republic 31 Dec.

IMPULS Plzen s.r.o. 100.00% Czech Republic 31 Dec.

IMPULS – Praha spol. s r.o. 100.00% Czech Republic 31 Dec.

IMPULS Rakovnik s.r.o. 100.00% Czech Republic 31 Dec.

IMPULS Sterboholy s.r.o. 100.00% Czech Republic 31 Dec.

IMPULS Teplice s.r.o. 100.00% Czech Republic 31 Dec.

IMPULS Trnavka s.r.o. 100.00% Slovakia 31 Dec.

INCOM Private Equity GmbH 100.00% Germany 31 Dec.

INPROX CSP Kft. 100.00% Hungary 31 Dec.

Invest Holding GmbH 100.00% Austria 31 Dec.

IVH Unternehmensbeteiligungs GmbH & Co OG 100.00% Austria 31 Oct.

Kapsch Financial Services GmbH 74.00% Austria 30 Sept.

KARNERTA GmbH 95.00% Austria 31 Dec.

KEPLER-FONDS Kapitalanlagegesellschaft m.b.H. 64.00% Austria 31 Dec.

LABA-IMPULS-Gebäudeleasing Gesellschaft m.b.H. 100.00% Austria 31 Dec.

LABA-IMPULS-Gebäudeleasing GmbH & Co KG 100.00% Austria 31 Dec.

LABA-IMPULS-IT-Leasing GmbH & Co KG 100.00% Austria 31 Dec.

LANDHOF GesmbH & Co KG 95.00% Austria 31 Dec.

LKW-Zentrum Radfeld Liegenschaftsverwaltung GmbH 100.00% Austria 30 Sept.

machland obst- und gemusedelikatessen gmbh 51.98% Austria 31 Dec.

MARESI Austria GmbH 88.07% Austria 31 Dec.

MARESI Trademark GmbH & Co KG 95.00% Austria 31 Dec.

MH53 GmbH & Co OG 100.00% Austria 31 Dec.

Oberösterreichische Kfz-Leasing Gesellschaft m.b.H. 50.69% Austria 31 Dec.

OÖ HYPO-IMPULS Leasing GmbH 51.00% Austria 31 Dec.

O.Ö. Kommunal-Immobilienleasing GmbH 3 40.00% Austria 31 Dec.


NAME

ATTRIBUTED SHARE OF


DATE ADDED IN 2015

O.Ö. Kommunalgebäude-Leasing Gesellschaft m.b.H.3 40.00% Austria 31 Dec.

OÖ Wohnbau gemeinnutzige Wohnbau und Beteiligung GmbH 83.56% Austria 31 Dec.

OÖ Wohnbau Gesellschaft fur den Wohnungsbau gemeinnutzige GmbH 83.29% Austria 31 Dec.

Privatstiftung der Raiffeisenlandesbank Oberösterreich Aktiengesellschaft 4 n/a Austria 31 Dec.

Projekt Blumau Tower Immobilien GmbH 100.00% Austria 30 Nov.

Projekt Eberstalzell Immobilien GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Alpha Immobilien GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Bautenleasing Gesellschaft m.b.H. 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Beta Immobilien GmbH 51.00% Austria 30 Sept.

Raiffeisen-IMPULS-Delta Immobilien GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Delta Mobilienleasing GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Epsilon Immobilien GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Eta Immobilien GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS Finance & Lease GmbH 100.00% Germany 31 Dec.

Raiffeisen-IMPULS-Fuhrparkmanagement GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS Fuhrparkmanagement GmbH & Co. KG 100.00% Germany 31 Dec.

Raiffeisen-IMPULS-Gamma Immobilien GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Immobilien GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Immobilien GmbH & Co. Objekt Gunzenhausen KG2 5.10% Germany 31 Dec.

Raiffeisen-IMPULS-Immobilien GmbH & Co. Objekt Hilpoltstein KG 100.00% Germany 31 Dec.

Raiffeisen-IMPULS-Immobilienleasing GmbH 75.00% Austria 31 Dec.

Raiffeisen-IMPULS-Immobilienvermögensverwaltung GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS Kfz und Mobilien GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Leasing Gesellschaft m.b.H. 100.00% Austria 31 Dec.

Raiffeisen-IMPULS-Leasing GmbH & Co KG 100.00% Germany 31 Dec.

Raiffeisen-IMPULS-Leasing Schönau GmbH 100.00% Germany 31 Dec.

Raiffeisen-IMPULS-Liegenschaftsverwaltung Gesellschaft m.b.H. 75.00% Austria 31 Dec.

Raiffeisen-IMPULS-Mobilienleasing GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-My Immobilien GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Projekt Atzbach GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Projekt Gänserndorf GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Projekt Graz-Webling GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Projekt Hörsching GmbH 100.00% Austria 30 Sept. X

Raiffeisen-IMPULS-Projekt Kittsee GmbH 95.00% Austria 31 Dec.

Raiffeisen-IMPULS-Projekt Lehen GmbH 95.00% Austria 31 Dec.

Raiffeisen-IMPULS-Projekt Ort GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Projekt Straßwalchen GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Projekt Traunviertel GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Projekt Urstein GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Projekt Wien-Nord GmbH 100.00% Austria 31 Dec.

Raiffeisen-IMPULS-Projekt Wolfsberg GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Rankweil Immobilien GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Realitätenleasing GmbH 100.00% Austria 30 Sept.

Raiffeisen-IMPULS-Rho Immobilien GmbH 100.00% Austria 31 Dec.

Raiffeisen-IMPULS-Rho Immobilien GmbH & Co KG 100.00% Austria 31 Dec.

Raiffeisen-IMPULS-Vermietungsgesellschaft m.b.H. 100.00% Austria 31 Dec.

Raiffeisen-IMPULS-Zeta Immobilien GmbH 60.00% Austria 30 Sept.

Raiffeisen OÖ Immobilien- und Projektentwicklungs GmbH 100.00% Austria 31 Dec. X

RB Prag Beteiligungs GmbH 100.00% Austria 31 Dec.

RealBestand Immobilien GmbH & Co KG (formerly IB-RT IMMOBILIEN Beteiligungs Real-Treuhand Portfoliomanagement GmbH & Co KG) 100.00% Austria 31 Dec.

RealRendite Immobilien GmbH 100.00% Austria 31 Dec.



Changes in the basis of consolidation and their effects

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

FULLY CONSOLIDATED EQUITY METHOD

2015 2014 2015 2014

As at 1 Jan. 154 154 7 9

Included for the first time during the reporting year 8 5 – –

Merged in the reporting year 2 3 – –

Deconsolidated during the reporting year 6 2 – 2

As at 31 Dec. 154 154 7 7

NAME

ATTRIBUTED SHARE OF


DATE ADDED IN 2015

Real-Treuhand Bau- und Facilitymanagement GmbH 100.00% Austria 31 Dec. X

REAL-TREUHAND Management GmbH 100.00% Austria 31 Dec.

Real-Treuhand Projekt- und Bauträger GmbH 100.00% Austria 31 Dec. X

RLB OÖ Alu Invest GmbH 100.00% Austria 31 Dec.

RLB OÖ Sektorholding GmbH 100.00% Austria 31 Dec.

RLB OÖ Unternehmensbeteiligungs GmbH 100.00% Austria 31 Dec.

RLB OÖ Unternehmensholding GmbH 100.00% Austria 31 Dec.

RVD Raiffeisen-Versicherungsdienst Gesellschaft m.b.H. 75.00% Austria 31 Dec.

RVM Raiffeisen-Versicherungsmakler GmbH 100.00% Austria 30 June X

SALZBURGER LANDES-HYPOTHEKENBANK AKTIENGESELLSCHAFT 59.65% Austria 31 Dec.

Select Versicherungsberatung GmbH 93.25% Austria 31 Aug. X

SENNA Nahrungsmittel GmbH & Co KG 95.00% Austria 31 Dec.

Steirische Tierkörperverwertungsgesellschaft m.b.H. & Co KG 95.00% Austria 31 Dec.

TKV Oberösterreich GmbH 95.00% Austria 31 Dec.

VIVATIS Beteiligungs-GmbH 95.00% Austria 31 Dec. X

VIVATIS Capital Invest GmbH 95.00% Austria 31 Dec.

VIVATIS Capital Services eGen 95.00% Austria 31 Dec.

VIVATIS Holding AG 95.00% Austria 31 Dec.

vivo Leasing GmbH & Co KG 75.00% Austria 31 Dec.

WDL Infrastruktur GmbH 51.00% Austria 30 Sept.

Entities accounted for using the equity method

AMAG Austria Metall AG 16.50% Austria 31 Dec.

Beteiligungs- und Wohnungsanlagen GmbH 46.00% Austria 31 Dec.

Oberösterreichische Landesbank Aktiengesellschaft 41.61% Austria 31 Dec.

Österreichische Salinen Aktiengesellschaft 41.25% Austria 30 June

Raiffeisen Zentralbank Österreich Aktiengesellschaft 14.64% Austria 31 Dec.

Raiffeisenbank a.s. 25.00% Czech Republic 31 Dec.

Raiffeisenlandesbank Oberösterreich Invest GmbH & Co OG 49.00% Austria 30 Sept.

1 Control based on majority voting rights2 Control based on general partnership with majority voting rights3 Control based on majority of members of the executive board and agreement binding voting rights4 Control based on the right to appoint members to the foundation’s management board


In the 2015 financial year, the following eight fully consolidated companies were included in the basis of consolidation for the first time – see also the relevant first-time consolidation indi-cator in the consolidated group list above. Six of the newly included companies are subsidiaries that were previously deemed to be of minor significance. Two entities were newly established in the year under review.

¬ IMMOBILIEN Invest Real-Treuhand Portfoliomanagement GmbH & Co OG

¬ Raiffeisen-IMPULS-Projekt Hörsching GmbH ¬ Raiffeisen OÖ Immobilien- und Projektentwicklungs GmbH ¬ Real-Treuhand Bau- und Facilitymanagement GmbH ¬ Real-Treuhand Projekt- und Bauträger GmbH ¬ RVM Raiffeisen-Versicherungsmakler GmbH ¬ Select Versicherungsberatung GmbH ¬ VIVATIS Beteiligungs-GmbH

At the time of their initial consolidation, the assets and liabilities of these companies amounted to a total of EUR 150,323 thou-sand and EUR 116,937 thousand respectively.

Further changes compared with the position as at 31 De-cember 2014 arose as a consequence of the disposal and associated deconsolidation of the following previously fully consolidated companies:

¬ INPROX Tabor, s.r.o. ¬ INPROX Plzen s.r.o. ¬ Raiffeisen-IMPULS-Jota Immobilien GmbH ¬ SANCTOR Grundstucks-Vermietungsgesellschaft mbH

& Co. Objekt Germering KG ¬ SEKUNDA-spolecnost pro správu nemovitostí, s.r.o.

Changes to the basis of consolidation also resulted from the merger of bankdirekt.at AG and PRIVAT BANK AG der Raiffeisenlandesbank Oberösterreich into Raiffeisenlandes- bank Oberösterreich Aktiengesellschaft. In addition, the previously fully consolidated subsidiary RACON Software

Gesellschaft m.b.H. was deconsolidated in the second half of 2015. The assignment of shares in RACON Software Gesellschaft m.b.H. and the transfer of the entire assets of Raiffeisen Software Solution und Service GmbH to RACON Software Gesellschaft m.b.H. as a result of a capital increase as part of the merger led to a reduction in the overall percent-age shareholding held by Raiffeisenlandesbank Oberösterre-ich and a loss of control. The name of the absorbing company RACON Software Gesellschaft m.b.H. was changed during the course of the merger to Raiffeisen Software 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 72,880 thousand and EUR 68,912 thousand respectively.

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 liabilities are translated using the relevant closing rates (middle rates of the European Central Bank (ECB) as at the Group balance sheet date). The items on the income statement are translated using the average currency exchange rates of the ECB. Cur-rency differences resulting from the translation of the equity components using historical rates and the translation of the income statement using average rates compared to a trans-lation using closing rates are recognised in the statement of comprehensive income.

RATES IN CURRENCY PER EURO

2015 2014

CLOSING RATE AVERAGE RATE CLOSING RATE AVERAGE RATE

Croatian kuna (HRK) 7.6380 7.6211 7.6580 7.6342

Polish zloty (PLN) 4.2639 4.1909 4.2732 4.1909

Czech koruna CZK 27.0230 27.3053 27.7350 27.5418

Romanian leu (RON) 4.5240 4.4440 4.4828 4.4410

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


IFRS consolidated financial statements _ Notes _ Accounting policies

Accounting policies

Financial instruments

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. In accordance with IAS 39, all financial assets and liabilities including all derivative financial instruments must be included in the balance sheet. A distinc-tion is made between the following categories:

¬ Financial assets or liabilities that are assessed at fair value with an effect on income; and this category is subdivided into: – Financial instruments held for trading – Designated financial instruments

¬ Financial assets available for sale ¬ Held-to-maturity investments ¬ Loans and receivables ¬ Financial liabilities at amortised cost

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 finan-cial 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. The classifica-tion of a financial instrument on initial recognition depends on the characteristics of the instrument concerned as well as on the purpose and intention of management in acquiring the instrument.

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 associ-ated with the liability has been settled, revoked or has expired.

The fair value of financial instruments traded in an active market is measured by reference to the prices quoted in the market (Level 1 of the fair value hierarchy). Essentially, stock exchange prices or external data sources (quotes from trad-ers and brokers in liquid markets) are used for these finan-cial instruments. If there is no active market or market prices can only be obtained for the financial instruments on a limited basis, the fair value is determined using quoted prices from individual traders or by using recognised valuation techniques based on observable market data (Level 2 of the fair value hierarchy). Should there be neither listed prices nor sufficient observable market data available for determining the fair value of financial instruments, then the measurement parameters that are not observable in the market are estimated using ap-propriate assumptions (Level 3 of the fair value hierarchy).


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

LEVEL INSTRUMENT TYPESVALUATION TECHNIQUE INPUT FACTORS

III

Loans and advances to banks NPV-oriented

Cash flows already fixed or determined via forward rates; yield curve; risk premiums on the basis of internal calculations for credit risk of counterparties. * Non-observable input factors are credit spreads of designated loans which fluctuate within a range from 6 to 29 basis points – capital-weighted mean is 9 basis points.

III

Loans and advances to customers NPV-oriented

Cash flows already fixed or determined via forward rates; yield curve; risk premiums on the basis of internal calculations for credit risk of counterparties. * Non-observable input factors are credit spreads of designated loans which fluctuate within a range (mean lowest and highest quantile) from 12 to 367 basis points – capital-weighted mean, taking into account collateral, is 37 basis points.

I Derivatives Exchange-tradedMarket-value- oriented Stock market price

II Derivatives Over the counter NPV-orientedCash flows already fixed or determined using forward rates; observable yield curve; observable credit spreads of counterparties and own credit spread

I Financial assets Listed securitiesMarket-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 securities NPV-oriented

Expected inflows derived from internal calculations; yield curve; credit risk of coun-terparties * The non-observable input factors are credit spreads for corporates. These range within a band of 41 to 982 basis points for financial assets measured at fair value – the capital-weighted mean is 133 basis points.

I Financial assets SharesMarket-value- oriented Stock market price

III Financial assets

Shares in non-consoli-dated subsidiaries, other equity invest-ments and profit participation rights

Income- capitalisation- oriented

Risk-free base rate: interest rate structure of German government bonds using the Svensson method Market price premium: based on the recommendation of the Business Valuation Working Group of the Professional Committee for Business Management and Organisation Beta: based on an analysis of the beta factors of peer group entities Small stock premium: additional risk premium of a maximum 3 per cent Growth factor: maximum 2 per cent growth rate

III Financial assets

Shares in non-consoli-dated subsidiaries, other equity invest-ments and profit participation rights Net asset value

This valuation technique is used for holding companies and their equity invest-ments. The hidden reserves in the equity investments are added to the net asset value of the parent company. In the case of real estate (project) companies, the company valuation is generally determined using an expert market value report.

IIAmounts owed to banks NPV-oriented

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

IIAmounts owed to customers NPV-oriented


II

Liabilities evidenced by certificates NPV-oriented


IISubordinated capital NPV-oriented


Valuation techniques and input factors for determining fair values



Financial instruments held for trading

The financial instruments held for trading category comprises trading securities and derivative financial instruments. They are measured at fair value. A credit value adjustment (CVA) and debt value adjustment (DVA) are 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.

The financial instruments in this category are used to take ad-vantage of short-term price fluctuations on the market or are purchased for economic hedging purposes.

If there are positive market values including deferred interest (“dirty price”), the financial instruments are included in the trading assets. If there are negative fair values then they are recorded under the balance sheet item of “trading liabilities”. Interest and dividend income, refinancing costs, provisions and changes in value of dealing securities are recorded as part of the net trading income with effect on the income state-ment. Changes in the value of derivatives effect the income statement and are shown in the net income/loss from desig-nated financial instruments. Interest relating to such financial instruments is included in interest income or interest expenses from designated and derivative financial instruments under net interest income.

Financial instruments designated at fair value

Financial instruments designated at fair value (designated fi-nancial instruments) are financial assets and liabilities that, on initial recognition, are classified or designated as measured at fair value through profit or loss (fair value option). Financial instruments can only be classified in this way if

¬ the classification eliminates or substantially reduces mis-matches in recognition or measurement,

¬ a portfolio of financial assets and/or financial liabilities and its performance are managed and measured on a fair value basis in accordance with a documented risk management or investment strategy,

¬ a contract contains an embedded derivative requiring bifurcation.

The following balance sheet items contain financial instru-ments designated at fair value through profit or loss:

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

These financial instruments are assessed at fair value. Unre-alised and realised profits and losses are recorded with effect on the income statement as net income/loss from designated financial instruments. Interest income or expenses from des-ignated financial instruments are recognised under net interest income.

Available-for-sale (AfS) financial assets

This category covers non-derivative financial instruments such as bonds and other fixed-income securities, shares and other variable-yield securities. Equity instruments are classified in this category if they are neither held for trading nor classified as at fair value through profit or loss. For debt capital instru-ments that are classified as available for sale, the intention is to hold them for an indefinite period. However, they can be sold if market conditions change or liquidity is needed.

Financial assets in this category are evaluated in accordance with IAS 39 at fair value. They are recognised under financial assets on the balance sheet. Changes in fair value are shown without effect on the income statement. Interest income from available-for-sale debt securities and other fixed-income se-curities is recognised using the effective interest rate method. Changes in fair value recognised in other comprehensive in-come are reclassified to profit or loss when the financial asset in question is derecognised. In the case of impairment, the difference between the fair value and cost (less any repay-ments and amortisation) is also recognised in profit or loss. If the reasons for impairment no longer apply, a reversal of the impairment loss is recognised in profit or loss, provided that the instrument concerned is a debt instrument. However, any increases in fair value that go beyond the amount of the reversal of the impairment loss are recorded with no effect on the income statement. If an equity instrument is held, the im-pairment is not retracted with effect on the income statement. Increases in value in later periods are therefore accounted for with no effect on the income statement. If the fair value of an equity instrument cannot be reliably determined, the instru-ment is recognised at cost net of any impairment losses.


Held-to-maturity investments (HtM)

This category contains non-derivative financial assets that have fixed or determinable payments and a fixed term, that are quoted on an active market and that Raiffeisenlandesbank Oberösterreich intends and has the ability to hold to maturity. The category does not include financial assets that, on ini-tial recognition, are measured and designated as at fair value through profitable loss or classified as available for sale. Fi-nancial assets in this category are measured at amortised cost using the effective interest method. Impairment losses as defined by IAS 39 are recognised in profit or loss. Financial investments assigned to this category are reported under fi-nancial assets on the balance sheet.

Held-to-maturity investments can only be sold in the excep-tional cases specifically listed in IAS 39, otherwise penalty pro-visions known as the “tainting rule” must be observed. Under the IAS 39 provisions, no more than an insignificant amount of held-to-maturity investments may be sold before the invest-ments reach maturity.

Loans and receivables

Financial instruments in the loans and receivables category are non-derivative financial assets with fixed or determinable payments that are not quoted on any active market. The cat-egory does not include financial assets that, on initial recog-nition, are measured and designated as at fair value through profit or loss or classified as available for sale.

Financial assets classified as loans and receivables are mea-sured at amortised cost. Securities classified in this category are measured using the effective interest method. They are mainly recorded under the balance sheet items loans and ad-vances to banks and loans and advances to customers. Secu-rities classified as loans and receivables are recognised under financial assets on the balance sheet

Loan loss allowances

The recognition of loan loss allowances is triggered primarily if losses from payment defaults are incurred as a result of finan-cial difficulties on the part of the debtor or if payments are sig-nificantly in arrears, i.e. more than 90 days past due. Within the internal risk management system, ongoing monitoring of the counterparty and the specific case involved is used to deter-mine whether relevant circumstances exist for the recognition of allowances. In the case of significant customer exposures in the lending business, each individual case is analysed as the basis for recognising specific loan loss allowances or pro-visions for contingent liabilities and lending commitments. The calculation for the amount of the loan loss allowance takes into account the discounted cash inflows expected from interest payments and repayments of principal together with any in-flows that can be obtained from the recovery of collateral. A standardised method is used for customer exposures that are not deemed to be significant.

A portfolio loan loss allowance is recognised for potential losses on loans and advances that cannot be individually as-signed. The calculation of this portfolio loan loss allowance takes into account statistical data derived from past experi-ence of losses. Exposures are grouped by asset and rating class, each class having similar default risk characteristics.

Financial liabilities measured at amortised cost

If financial instruments on the liabilities side are neither held for trading nor designated at fair value, they are measured at amortised cost. The issued securities included in financial lia-bilities are measured using the effective interest rate method. Financial liabilities are mainly reported under amounts owed to banks, amounts owed to customers, liabilities evidenced by certificates or subordinated capital on the balance sheet.



Balance sheetHedge accounting

At Raiffeisenlandesbank Oberösterreich, fair value hedge ac-counting is applied in accordance with the provisions of IAS 39. In such hedging arrangements, the change in the fair value of a recognised hedged item (underlying 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 ef-fectiveness must be demonstrable and documented both pro-spectively and retrospectively.

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. is-sues with fixed coupons and receiver swaps). The objective is to reduce the volatility of results that could occur without hedge accounting both in a mark-to-market measurement

of the derivative alone (recognised in profit or loss) and in a mark-to-market measurement of the derivative and hedged item (under the exercise of the fair value option) as a result of spread changes in the hedged item.

Hedging instruments subject to fair value hedge accounting are recognised in the balance sheet under trading assets or trading liabilities, as in the case of other derivatives.

Hedged items subject to fair value hedge accounting are in-cluded mainly in the following balance sheet items:

¬ Loans and advances to customers ¬ Financial assets ¬ Amounts owed to banks ¬ Amounts owed to customers ¬ Liabilities evidenced by certificates

The gains and losses arising from fair value hedge accounting are reported in the income statement under net income from investments.

ASSETS

MAIN MEASUREMENT BASIS

FAIR VALUE AMORTISED COST OTHER IAS 39 CATEGORY

Cash and cash equivalents x Nominal Loans and receivables

Loans and advances to banks x Loans and receivables

Loans and advances to banks x Fair value option

Loans and advances to customers x Loans and receivables

Loans and advances to customers x Fair value option

Trading assets x Held for trading

Designated financial assets x Fair value option

Financial assets classified as available for sale (AfS) x At cost Available for sale

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

Financial assets classified as loans and receivables x Loans and receivables


MAIN MEASUREMENT BASIS

FAIR VALUE AMORTISED COST OTHER IAS 39 CATEGORY

Amounts owed to banks x Financial liabilities

Amounts owed to banks x Fair value option

Amounts owed to customers x Financial liabilities

Amounts owed to customers x Fair value option

Trading liabilities x Held for trading

Liabilities evidenced by certificates x Financial liabilities

Liabilities evidenced by certificates x Fair value option

Subordinated capital x Financial liabilities

Subordinated capital x Fair value option

Presentation of the balance sheet items by measurement basis and category


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 IAS 39 in conjunction with IFRIC 16. The hedged item in this case is the net invest-ment in a foreign operation; the Group normally uses finan-cial liabilities as the hedging instrument. The effective portion of the hedge is recognised in other comprehensive income whereas the ineffective portion is reported under net trading income in profit or loss.

Offsetting financial assets and financial liabilities

Financial assets and financial liabilities are only offset and re-ported as a net amount in the balance sheet if the Group has a legally enforceable right of set-off and intends either to settle on a net basis or to realise the financial asset and settle the financial liability simultaneously. The legally enforceable right of set-off must not depend on a future event and must be en-forceable in the normal course of business and in the event of default, insolvency or bankruptcy.

Repurchase transactions

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 according 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 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. Under IFRSs, a lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental 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 de-termining 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 rec-ognises the present value of the future lease payments and any residual value as receivables due from the lessee. Under a finance lease, the lessee reports the assets under the rele-vant item of property and equipment and recognises a corre-sponding 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 in-definite 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 im-pairment. The amortisation period and method are reviewed at the end of each financial year as a minimum and adjusted if necessary. Amortisation of intangible assets with finite use-ful 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 otherwise an indication of impairment. In the impairment test, the carrying amount of the intangible asset is compared with the recov-erable 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

IMPAIRMENT/AMORTISATION

METHOD

Goodwill unlimited Impairment test

Brand 15 Straight line

Customer base 3 – 15 Straight line

Other intangible assets 1 – 33 Straight line

Property and equipment, and investment property

Property and equipment, together with investment property, is measured at cost and reduced by depreciation. The follow-ing useful lives are usually taken as the basis for straight-line depreciation:

YEARS

Movable assets 1 – 25

Immovable assets 3 – 65

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 appre-ciation is reported as investment property. If part of the prop-erty is owner-occupied, it is only classified as an investment property if the part used by the owner is insignificant. Build-ings under construction that have the same expected purpose as investment property are treated as investment property. Investment property is also recognised at amortised 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 ex-penses attributable to the property, condition and location of the property, similar assets and interest rates, depending on which valuation method is considered appropriate.

Inventories

Inventories are reported under other assets. They are reported at the lower of cost and net realisable 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 General Social Security Act (Allgemeines Sozialversicherungsgesetz – ASVG) provided that they meet the criteria in section 271/1 of this Act. A surviving dependants' pension is paid if an em-ployee or pension beneficiary dies. For some of the beneficia-ries, the obligations have been transferred to a pension 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 contributions 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 em-ployees or their surviving dependants for a limited period: em-ployees are entitled to an invalidity and retirement pension; in the event of death, the surviving dependants are also entitled to a pension. The ASVG equivalent is paid after retirement 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 invalidity 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 January 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 calculation of pension obligations for the qual-ifying period are based on a discount rate of 1.75 per cent p.a. (previous year: 1.75 per cent p.a.) and a pension-relevant salary increase of 1.75 per cent to 3.0 per cent p.a. (previous year: 2.0 per cent to 3.0 per cent p.a.). The parameters for the benefits period are a discount rate of 1.75 per cent p.a. (previous year: 1.75 per cent p.a.) and an expected pension increase of 1.75 per cent to 2.0 per cent p.a. (previous year: 2.0 per cent to 3.0 per cent p.a.).

A discount rate of 1.75 per cent p.a. (previous year: 1.75 per cent p.a.) and an average, sector-specific salary increase of 2.75 per cent to 4.0 per cent p.a. (previous year: 3.0 per cent to 4.0 per cent p.a.) have also been used for the actuarial cal-culation of severance obligations and long-service awards.Calculations also take into account annual employee turnover rates (related to period of service) based on internal statistics for early termination of employment in addition to invalidity rates, mortality rates and factors resulting from the termina-tion 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.

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 payments. For a group of employees certain payments are transferred to a pension fund that manages the funds and makes the pension payments. For employees whose employment com-menced after 31 December 2002, a defined contribution sys-tem 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 periods. Deferred tax assets are recognised for loss carryforwards 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 corpo-rate 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 Aus-trian Corporation Tax Act (Körperschaftsteuergesetz – 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 taxable items within the same tax unit or corporate group. Future tax obligations from offsetting of losses from foreign subsidiaries are recognised without discounting in the consolidated finan-cial 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, fund units/shares as well as from affiliated companies and other equity investments that are neither fully consolidated nor ac-counted for using the equity method. The share of profit or loss from companies accounted for using the equity method are also reported in a separate item within net interest income.

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 account-ing; dividends are recognised as soon as legal entitlement arises.

Negative interest in connection with financial liabilities is re-ported as a separate item in interest income. Negative interest in connection with financial assets is reported as a separate item in interest expenses.

Loan loss allowances

This item on the income statement is used to report the rec-ognition and reversal of loan loss allowances and provisions relating to the lending 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, recognised in the periods to which the income and expenses apply. Fee and commission income and expenses arise mainly from pay-ment transactions, foreign exchange, notes/coins business, precious metal transactions, securities business, loan pro-cessing and guarantee business.

Net income from investments

Net income from investments comprises gains and losses on remeasurement and disposal recognised in profit or loss in re-lation to securities classified as held-to-maturity investments, available-for-sale (AfS) financial assets or loans and receiv-ables. This item also includes net gains and losses on the remeasurement or disposal of affiliated companies and other equity investments that are neither fully consolidated nor ac-counted for using the equity method. Information on the gains and losses on available-for-sale financial assets recycled to

profit or loss can be found in the statement of comprehensive income and in a separate disclosure in the Notes. The gain or loss arising from hedge accounting are also reported in this item in the income statement.

Credit-quality-related falls in the prices of securities classified as available-for-sale financial assets, held-to-maturity invest-ments or loans and receivables, and that also represent a default event within the meaning of IAS 39, are recognised in profit or loss. Triggering events include substantial finan-cial difficulties of the issuer, significant worsening of ratings and payment defaults in relation to interest or principal. In the case of equity instruments, an impairment loss is recognised in profit or loss if an equity price falls permanently or signifi-cantly below cost.

Net income/loss from designated financial instruments

Unrealised and realised gains and losses from financial in-struments designated at fair value recognised on the balance sheet under financial assets are not reported under net in-come from investments but in a separate item on the income statement (net income/loss from designated financial instru-ments). The latter item also includes the net gains and losses from remeasurement and disposal of all other designated fi-nancial instruments and derivatives.

General administrative expenses

The general administrative expenses include personnel and other administrative expenses as well as depreciation and im-pairment of property and equipment and investment property and amortisation and impairment of intangible assets.

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, empir-ical 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 available-for-sale financial assets and must therefore be measured at fair value. If there are no observable market prices, the income capitalisation approach or other suitable forms of business valuation are used based on the data avail-able (e.g. net-asset-value or sum-of-the-parts methods). If the fair value cannot be reliably determined then the instrument is recognised at cost. There is not generally any intention to sell these equity investments. If there are indications that the cost may be impaired then an expected value is determined and an impairment loss recognised as necessary.

Recognition of loan loss allowances

Financial assets not measured at fair value through profit or loss are subjected to an impairment test at each balance sheet date to determine whether an impairment loss needs to be recognised in profit or loss. In particular, an assessment is carried out to establish whether there is objective evidence of impairment as a result of a loss event that has occurred after initial recognition. In the course of determining the impairment loss, it is also necessary to estimate the amount and timing of future cash flows. In addition, a review is carried out to deter-mine whether there is any requirement to recognise a provi-sion for off-balance-sheet obligations in the lending business.

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.

Impairment of debt instruments and equity securities

Ongoing reviews are used as the basis for deciding whether there are any indicators of impairment. If there is an indicator of potential impairment in accordance with IAS 39.59, then an impairment test must be carried out. In accordance with IAS 39.61, a significant or permanent decrease in the fair value below cost is also objective evidence of impairment for eq-uity instruments. Significant impairment is generally assumed if the price of an equity instrument falls to more than 20 per cent below cost. If the price of equity securities is continuously and permanently below the cost over twelve months then this is taken as a permanent indicator of impairment. Additional disclosures are provided in the Financial instruments section.

Leasing

The extent to which substantially all the risks and rewards in-cidental to ownership of a lease asset lie with the lessor or lessee provides the basis for classifying leases. This requires an estimate of the extent to which the transfer of the risks and rewards is significant. This may change if changes are made to the lease and an adjustment may be required. Detailed ex-planations are provided in the “Leases” section.

Recognition and measurement of deferred taxes

Deferred taxes are recognised and measured on the basis of current assessments and legislation. Deviations from the ex-pected future results from business operations or changes to tax law may impact the tax position and result in a change to the deferred 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 important when determining the need for provisions for contingent liabilities and contingent tax items. The Group measures these potential losses – to the extent that they are probable and can be estimated – in ac-cordance 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 Provisions section.

Useful lives of non-current assets

The useful lives for property and equipment are determined on the basis of assumptions, estimates and empirical values relating to the useful lives of non-current assets. Further de-scriptions are available in the “Property and equipment, and investment property” section.

Actual useful lives may be different from the estimates.


IFRS consolidated financial statements _ Notes _ Segment reporting

Segment reporting in accordance with IFRS 8 is based on the segment approach in the internal management accounts submitted to the Managing Board. This generally follows the requirements in IFRSs and the accounting policies specified in the standards. There are no differences compared with the Group's accounting policies. As part of the reporting sys-tem to the Managing Board, the segment information is reg-ularly presented to the members of the Managing Board to help them make decisions, manage the Bank and allocate resources. The entire Managing Board is the chief operating decision maker within the meaning of IFRS 8.

The earnings for each segment also include earnings from transactions with other segments. The services exchanged between the segments are generally measured on an arm's-length basis; the segments treat each other like external ser-vice providers.

Segment reporting is divided into the four segments de-scribed below.

Corporates & Retail

The Corporates & Retail segment comprises the Corpo-rates Market division (the main units in which are Corporates 1, Corporates 2, Corporates 3, Institutions, International Fi-nance, Real Estate Projects, Industry Projects, Correspon-dent Banking and Southern Germany) and the Retail division, which in turn comprises the branches of Raiffeisenlandesbank Oberösterreich, PRIVAT BANK and bankdirekt.at.

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

The Equity Investments segment includes all direct and indirect holdings of Raiffeisenlandesbank Oberösterreich. Aside from

the most important fully consolidated subsidiaries, this seg-ment also includes associates and other equity investments that are accounted for using the equity method and measured at fair value or, if fair value cannot be reliably determined, at cost. The Equity Investments segment is sub-divided into four equity investment portfolios from an organisational perspec-tive. These are Banks & Financial Institutions, Outsourcing & Bank-related Equity Investments, Real Estate and Venture & Partner Capital.

However, reporting and management within the Equity Invest-ments segment is generally on the basis of an individual entity and/or sub-group approach. As part of the expansion of the basis of consolidation at 31 December 2013 in order to com-ply with supervisory provisions (CRR basis of consolidation), a sub-group structure was introduced with regard to the related reporting purposes, consisting of the sub-groups Hypo Salz-burg, IMPULS-LEASING Group, VIVATIS/efko and the Upper Austrian property development companies (OÖ Wohnbau). The additional subsidiaries not included in sub-groups are also allocated to the Equity Investments segment.

Aside from the sub-groups, the entities accounted for using the equity method also shape the Equity Investments segment. These entities are, in particular, the main equity investments in the RZB Group, RLB OÖ Invest GmbH & Co OG (voestalpine AG), Raiffeisenbank Prag, Oberösterreichische Landesbank AG (Hypo OÖ) and AMAG Austria Metall AG. For quantitative in-formation on the subgroups, please refer to the relevant ta-bles within this segment reporting section. For quantitative information on the entities accounted for using the equity method, please refer to the related figures and disclosures in the Notes.

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.

Segment reporting


Reporting by segment 2015

Reporting by segment 2014

IN EUR ’000

CORPORATES & RETAIL

FINANCIAL MARKETS

EQUITY INVESTMENTS

CORPORATE CENTER TOTAL

Interest and interest-related income/expenses 208,266 124,839 77,879 6,100 417,084

Share of profit or loss of equity-accounted investments 0 0 51,219 0 51,219

Loan loss allowances –62,029 0 942 0 –61,087

Net interest income after loan loss allowances 146,237 124,839 130,040 6,100 407,216

Net fee and commission income 62,208 25,672 36,660 3,303 127,843

Net trading income 3,023 3,890 809 0 7,722

Net income/loss from designated financial instruments 0 60,679 986 0 61,665

Net income from investments –824 –9,087 46,201 0 36,290

General administrative expenses –108,620 –43,388 –527,427 –54,280 –733,715

Other net operating income –19,819 –10,036 435,364 5,890 411,399

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

IN EUR ’000

CORPORATES & RETAIL

FINANCIAL MARKETS

EQUITY INVESTMENTS


Interest and interest-related income/expenses 188,608 146,782 84,982 3,804 424,176

Share of profit or loss of equity-accounted investments 0 0 4,074 0 4,074

Loan loss allowances –145,772 0 –34,972 0 –180,744

Net interest income after loan loss allowances 42,836 146,782 54,084 3,804 247,506

Net fee and commission income 53,297 20,394 46,320 6,037 126,048

Net trading income 1,785 14,101 –340 0 15,546

Net income/loss from designated financial instruments –5,361 –90,417 –1,351 0 –97,129

Net income from investments –1,468 36,592 13,834 0 48,958

General administrative expenses –83,312 –38,656 –510,299 –58,716 –690,983

Other net operating income –16,085 –9,184 416,655 –610 390,776

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

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

The negative contribution to the pre-tax profit for the year by the Corporates & Retail segment in the 2014 financial year was attrib-utable among other things to an increase in the portfolio loan loss allowance and to the considerably higher stability levy for banks.


IFRS consolidated financial statements _ Notes _ Segment reporting

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

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

IN EUR ’000

SUB-GROUP HYPO SALZBURG

IMPULS-LEASING GROUP VIVATIS/EFKO OÖ WOHNBAU

Interest and interest-related income/expenses 43,479 41,155 8,764 –3,940

Share of profit or loss of equity-accounted investments 0 0 0 0

Loan loss allowances 1,155 –3,508 0 0

Net interest income after loan loss allowances 44,634 37,647 8,764 –3,940

Net fee and commission income 15,031 –292 –277 –88

Net trading income 345 85 0 0

Net income/loss from designated financial instruments 2,546 0 350 0

Net income from investments 1,473 3,929 –2,293 0

General administrative expenses –44,830 –64,744 –263,780 –38,457

Other net operating income –9,331 46,108 266,251 50,054

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

IN EUR ’000

SUB-GROUP HYPO SALZBURG

IMPULS-LEASING GROUP VIVATIS/EFKO OÖ WOHNBAU

Interest and interest-related income/expenses 43,750 41,858 2,102 –4,251

Share of profit or loss of equity-accounted investments –3,426 0 0 0

Loan loss allowances –19,152 –9,459 0 0

Net interest income after loan loss allowances 21,172 32,399 2,102 –4,251

Net fee and commission income 14,768 –753 –281 –23

Net trading income –1,100 581 0 0

Net income/loss from designated financial instruments –143 0 –666 0

Net income from investments –833 –3,549 171 8

General administrative expenses –44,391 –62,823 –251,999 –36,592

Other net operating income –2,390 48,597 261,528 45,617

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

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

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


Income statement disclosures

1. Net interest income

IN EUR ’000 2015 2014

Interest income

From financial instruments in the category loans and receivables 425,457 464,657*

From financial instruments classified as available for sale 75,107 79,898

From financial instruments in the category held to maturity 11,331 14,546

From financial liabilities measured at amortised cost 1,822 0

Subtotal 513,717 559,101

From designated and derivative financial instruments 211,863 227,288*

From lease financing 82,411 88,420

Total interest income 807,991 874,809

Current income

From shares and other variable-yield securities 16,356 18,373

From investments in affiliated companies 17,705 14,643

From other investments 19,235 12,994

Current income 53,296 46,010

Other interest-related income 698 12,684

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

Interest expenses

For financial liabilities measured at amortised cost –221,047 –251,679*

For financial assets measured at amortised cost –1,725 0

For designated and derivative financial liabilities –220,365 –253,500*

For designated financial assets –50 0

Total interest expenses –443,187 –505,179

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

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

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

Net interest income 468,303 428,250

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

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


IFRS consolidated financial statements _ Notes _ Income statement disclosures

2. Loan loss allowances

3. Net fee and commission income

4. Net trading income

5. Net income/loss from designated financial instruments

IN EUR ’000 2015 2014

Net gain or loss on designated financial instruments and derivatives 61,665 –97,129

of which on designated hedged items 155,021 –235,528

of which on derivatives –93,356 138,399

IN EUR ’000 2015 2014

Interest-rate-related business 3,374 11,585

Currency-related business –1,646 2,523

Other business 5,994 1,438

Total 7,722 15,546

IN EUR ’000 2015 2014

Fee and commission income

From payment transactions 31,085 30,635

From funding transactions 32,053 40,963

From securities business 96,053 76,518

From foreign exchange, currency and precious metals transactions 3,860 3,854

From other service business 17,930 17,609

Fee and commission expenses

From payment transactions –3,446 –3,478

From funding transactions –10,526 –13,844

From securities business –36,239 –23,129

From foreign exchange, currency and precious metals transactions –12 –14

From other service business –2,915 –3,066

Fee and commission income 180,981 169,579

Fee and commission expenses –53,138 –43,531

Net fee and commission income 127,843 126,048

IN EUR ’000 2015 2014

Addition to loan loss allowances –235,513 –346,392

Reversal of loan loss allowances 185,041 156,649

Direct impairment losses –19,275 –3,282

Amounts received against loans and advances written off 8,660 12,281

Total –61,087 –180,744


IN EUR ’000 2015 2014

Securities classified as held to maturity

Gain or loss on remeasurement 0 0

Gain or loss on disposal 0 0

Securities classified as loans and receivables

Gain or loss on remeasurement –612 –2,172

Gain or loss on disposal 704 2,422

Securities classified as available for sale

Gain or loss on remeasurement –2,504 –10,309

Gain or loss on disposal –2,275 31,188

Shares in companies classified as available for sale

Gain or loss on remeasurement –14,959 –23,272

Gain or loss on disposal 37,346 2,129

Gain or loss arising from hedge accounting

Gains and losses arising on hedging transactions –39,597 208,364

Valuation from underlying transactions 39,000 –203,193

Gain or loss from initial consolidation and deconsolidation 19,187 43,801

Total 36,290 48,958

6. Net income from investments

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

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

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



IN EUR ’000 2015 2014

Personnel expenses

Wages and salaries –284,383 –269,961

Compulsory social security contributions –71,717 –68,439

Voluntary social security contributions –4,384 –4,909

Expenses for severance payments and pensions –15,953 –15,573

Administrative expenses

Rent and leasing expenses –21,962 –20,841

Expenses for office space (operation, maintenance) –74,540 –69,168

IT and communications –46,757 –27,207

Legal and consulting expenses –24,350 –28,589

Advertising and representation expenses –29,501 –29,081

Other administrative expenses –72,461 –78,469

Depreciation and impairment losses on property and equipment and on investment property, amortisation and impairment losses on intangible assets

Property and equipment –65,094 –53,684

Investment property –16,661 –16,231

Goodwill 0 –2,500

Other intangible assets –5,952 –6,331

Total –733,715 –690,983

7. General administrative expenses

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

IN EUR ’000 2015 2014

Pension fund –3,514 –3,759

Employee pension fund –2,048 –1,865

Total –5,562 –5,624

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

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


8. Other net operating income

IN EUR ’000 2015 2014

Other operating income

Income from non-banking activities 995,761 969,124

Miscellaneous operating income 108,257 95,905

Other operating expenses

Expenses from non-banking activities –526,459 –506,685

Other tax and fees –39,231 –39,719

Miscellaneous operating expenses –126,929 –127,849

Total 411,399 390,776

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

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

The Upper Austrian residential building companies (OÖ Wohnbau) contribute about EUR 50.1 million to the “Other operating income” (previous year: EUR 45.6 million).



9. Taxes on income and earnings

Taxes on income by cause:

IN EUR ’000 2015 2014

Current taxes on income –9,875 –10,395

Actual ongoing tax expenditure for the current year –26,414 5,286

Tax adjustments from the previous year –943 –1,376

Consideration of tax losses from earlier periods 17,482 –14,305

Deferred taxes –4,432 6,042

Formation/reversal of temporary differences –7,800 19,872

Effects of tax rate changes 100 –24

Change in the usability of losses carried forward 3,268 –13,806

Total –14,307 –4,353

IN EUR ’000 2015 2014

Current taxes on income –9,875 –10,395

of which in Austria –6,676 –7,839

of which foreign –3,199 –2,556

Deferred taxes –4,432 6,042

Total –14,307 –4,353

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 2015 2014

Pre-tax profit for the year 318,420 40,722

Income tax expense expected for the financial year at the statutory tax rate (25 per cent) –79,605 –10,181

Tax increases/reductions due to tax-exempt income from equity investments 19,464 26,336

Tax reductions due to at-equity profit from companies reported under the equity method 3,011 –16,117

Tax reductions due to other tax-exempt income 10,342 1,943

Tax increase due to non-deductible expenses –3,221 –4,224

Tax credit/charge from previous years –943 –1,376

Effect from different foreign tax rates 218 197

Change in the usability of losses carried forward 19,705 –13,806

Other 16,722 12,875

Effective tax expense –14,307 –4,353


Changes in tax assets

IN EUR ’000 2015 2014

Current tax assets 8,800 5,536

Deferred tax assets 35,672 26,762

Total 44,472 32,298

Changes in tax liabilities

IN EUR ’000 2015 2014

Current tax liabilities 5,682 5,948

Deferred tax liabilities 53,547 61,690

Total 59,229 67,638

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

Of the current tax liabilities, liabilities in the amount of EUR 1,653 thousand (previous year: EUR 4,809 thousand) are due within one year.



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

2015

DEFERRED TAX LIABILITIES

2015

RECOGNISED IN PROFIT OR LOSS

2015

Financial assets classified as available for sale 38,023 110,354 23,938

Financial assets classified as held-to-maturity 775 10,711 310

Securities classified as loans and receivables 11 7,221 1,117

Designated financial instruments and derivatives 180,103 179,216 –17,995

Leases 386,526 384,458 3,152

Social provisions 19,075 456 337

Loan loss allowances 13,315 25 –15,262

Other provisions 2,404 1,714 –737

Tax losses carried forward, not yet utilised 43,916 0 1,399

Other temporary differences 12,441 20,309 –691

Netting of deferred taxes –660,917 –660,917 0

Total 35,672 53,547 –4,432

IN EUR ’000

DEFERRED TAX ASSETS

2014

DEFERRED TAX LIABILITIES

2014

RECOGNISED IN PROFIT OR LOSS

2014

Financial assets classified as available for sale 20,477 143,576 –6,293

Financial assets classified as held-to-maturity 930 10,970 –425

Securities classified as loans and receivables 24 8,338 1,045

Designated financial instruments and derivatives 242,205 222,718 34,523

Leases 405,282 405,385 10,509

Social provisions 22,067 13 824

Loan loss allowances 29,130 0 3,900

Other provisions 1,047 243 –2,628

Tax losses carried forward, not yet utilised 42,490 0 –30,914

Other temporary differences 15,569 22,906 –4,499

Netting of deferred taxes –752,459 –752,459 0

Total 26,762 61,690 6,042

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

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

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

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


Notes to the balance sheet

10. Financial instruments disclosure

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

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

The carrying amount of designated financial liabilities as at 31 December 2015 was EUR 357,430 thousand higher than the repayment sum contractually agreed on.

ASSETS

IN EUR ’000

FINANCIAL INSTRUMENTS

HELD FOR TRADING

DESIGNATED FINANCIAL

INSTRUMENTS

FINANCIAL ASSETS AVAIL-

ABLE FOR S ALE (AFS)

FINANCIAL INVESTMENTS

HELD-TO- MATURITY

LOANS AND RECEIVABLES

CARRYING AMOUNT

TOTAL 31 Dec. 2015

FAIR VALUE TOTAL

31 Dec. 2015

Cash and cash equivalents 0 0 0 0 90,221 90,221 90,221

Loans and advances to banks 0 16,052 0 0 6,838,855 6,854,907 6,838,638

Loans and advances to customers 0 851,829 0 0 17,879,480 18,731,309 19,074,014

Trading assets 2,468,794 0 0 0 0 2,468,794 2,468,794

Financial assets 0 558,520 4,058,309 411,015 642,783 5,670,627 5,705,598

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


IN EUR ’000


HELD FOR TRADING


INSTRUMENTS

FINANCIAL LIABILITIES STATED AT

AMORTISED COST

CARRYING AMOUNT

TOTAL 31 Dec. 2015

FAIR VALUE TOTAL

31 Dec. 2015

Amounts owed to banks 0 1,225,568 9,988,605 11,214,173 11,270,670

Amounts owed to customers 0 937,236 9,690,879 10,628,115 10,686,015

Trading liabilities 1,871,532 0 0 1,871,532 1,871,532

Liabilities evidenced by certificates 0 3,781,825 3,836,659 7,618,484 7,631,447

Subordinated capital 0 843,018 588,330 1,431,348 1,440,755

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

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

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


IFRS Consolidated Statements_Notes_Balance sheet disclosures

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

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

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

ASSETS

IN EUR ’000


HELD FOR TRADING


INSTRUMENTS

FINANCIAL ASSETS AVAIL-

ABLE FOR SALE (AFS)

FINANCIAL INVESTMENTS

HELD-TO- MATURITY

LOANS AND RECEIVABLES

CARRYING AMOUNT

TOTAL 31 Dec. 2014

FAIR VALUE TOTAL

31 Dec. 2014

Cash and cash equivalents 0 0 0 0 89,086 89,086 89,086

Loans and advances to banks 0 14,730 0 0 6,764,408 6,779,138 6,773,186

Loans and advances to customers 0 853,060 0 0 18,313,692 19,166,752 19,533,615

Trading assets 2,951,476 0 0 0 0 2,951,476 2,951,476

Financial assets 0 748,579 4,223,902 489,115 712,008 6,173,604 6,229,495

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


IN EUR ’000


HELD FOR TRADING


INSTRUMENTS

FINANCIAL LIABILITIES STATED AT

AMORTISED COST

CARRYING AMOUNT

TOTAL 31 Dec. 2014

FAIR VALUE TOTAL

31 Dec. 2014

Amounts owed to banks 0 1,433,814 9,871,111 11,304,925 11,402,041

Amounts owed to customers 0 1,005,629 9,510,404 10,516,033 10,587,196

Trading liabilities 2,202,349 0 0 2,202,349 2,202,349

Liabilities evidenced by certificates 0 4,578,404 4,063,999 8,642,403 8,674,115

Subordinated capital 0 995,082 541,409 1,536,491 1,552,026

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

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

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


IN EUR ’000


MEASURED AT FAIR VALUE 31 DEC. 2015

THEREOF MARKET PRICES LISTED IN ACTIVE MARKETS

(LEVEL I)

THEREOF MEASURE-MENT METHODS

BASED ON MARKET DATA

(LEVEL II)

THEREOF MEASURE-MENT METHODS NOT BASED ON MARKET DATA

(LEVEL III)

Financial instruments held for trading 2,468,794 27,243 2,441,551 0

Designated financial instruments 1,426,401 329,053 70,216 1,027,132

Financial assets available for sale (AfS) 3,838,023 3,041,488 390,830 405,705

Total financial assets measured at fair value 7,733,218 3,397,784 2,902,597 1,432,837

Financial instruments held for trading 1,871,532 0 1,871,532 0

Designated financial instruments 6,787,647 0 6,787,647 0

Total financial liabilities measured at fair value 8,659,179 0 8,659,179 0

IN EUR ’000

FINANCIAL ASSETS AVAILABLE FOR SALE (AFS)

DESIGNATED FINANCIAL ASSETS

As at 1 Jan. 498,820 1,046,747

Purchases 0 119,718

Divestments –3,213 –156,286

Change in the consolidated companies –15,139 15,897

Effective results –3,650 1,056

Effect-neutral results –35,180 0

Revalued at fair value 5,928 0

Reclassification to Level III 1,610 0

Reclassification from Level III –43,471 0

As at 31 Dec. 405,705 1,027,132

IN EUR ’000

RECLASSIFICATIONS FROM LEVEL I TO LEVEL II

RECLASSIFICATIONS FROM LEVEL II TO LEVEL I

Financial instruments held for trading 0 0

Designated financial instruments 0 6,285

Financial assets available for sale (AfS) 2,938 15,460

Total financial assets measured at fair value 2,938 21,745


Designated financial instruments 0 0

Total financial liabilities measured at fair value 0 0

Breakdown of the fair value of financial instruments in 2015:

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

Reclassifications between Level I and Level II 2015:

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.



CARRYING AMOUNT CORRESPONDS WITH FAIR VALUE (LEVEL III)

FAIR-VALUE GAIN –100 BASIS POINTS

IN EUR ’000 IN %

Loans and advances 867,882 2.77

Securities 376,679 12.48

Equity investments 176,191 48.14


FAIR VALUE LOSS +100 BASIS POINTS

IN EUR ’000 IN %




Sensitivity analysis 2015

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

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

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

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

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


IN EUR ’000

CARRYING AMOUNTS AS AT

31 DEC. 2015FAIR VALUE 31.12.2015

THEREOF MARKET PRICES LISTED IN ACTIVE

MARKETS (LEVEL I)

THEREOF MEASUREMENT

METHODS BASED ON

MARKET DATA (LEVEL II)

THEREOF MEASUREMENT

METHODS NOT BASED ON MARKET DATA

(LEVEL III)

Financial investments held-to-maturity (HtM) 411,015 426,891 415,999 10,892 0

Loans and receivables 25,361,118 25,706,649 0 608,976 25,097,673

Total financial assets not measured at fair value 25,772,133 26,133,540 415,999 619,868 25,097,673

Financial liabilities stated at amortised cost 24,104,473 24,241,240 0 24,241,240 0

Total financial liabilities not measured at fair value 24,104,473 24,241,240 0 24,241,240 0

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

IN EUR ’000


MEASURED AT FAIR VALUE 31 DEC. 2014

THEREOF MARKET PRICES LISTED

IN ACTIVE MARKETS (LEVEL I)

THEREOF MEASUREMENT

METHODS BASED ON


THEREOF MEASUREMENT


(LEVEL III)

Financial instruments held for trading 2,951,476 50,635 2,900,841 0

Designated financial instruments 1,616,369 456,455 113,167 1,046,747

Financial assets available for sale (AfS) 3,954,796 2,954,429 501,547 498,820

Total financial assets measured at fair value 8,522,641 3,461,519 3,515,555 1,545,567

Financial instruments held for trading 2,202,349 0 2,202,349 0

Designated financial instruments 8,012,929 0 8,012,929 0

Total financial liabilities measured at fair value 10,215,278 0 10,215,278 0

Breakdown of the fair value of financial instruments in 2014:

IN EUR ’000

RECLASSIFICATIONS FROM LEVEL I TO LEVEL II

RECLASSIFICATIONS FROM LEVEL II TO LEVEL I


Designated financial instruments 0 0

Financial assets available for sale (AfS) 3,432 3,116

Total financial assets measured at fair value 3,455 3,116


Designated financial instruments 6,352 0

Total financial liabilities measured at fair value 6,352 0

Reclassifications between Level I and Level II 2014:

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.



The reclassification to Level III in the 2014 financial year es-sentially results from the valuation of an investment which was previously valued based on a previous transaction, and has been revalued in accordance with the earning power method effective at 31 Dec. 2014. The amount of gains and losses effectively recorded from recurring measurements of the fair value in Level III of the assets and liabilities found in the port-folio on the reporting date amounts to EUR 30,078 thousand.

Effective results from financial assets are essentially rec-ognised in the income statement in the following items:

¬ Net income/loss from designated financial instruments ¬ Net income from investments

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

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

IN EUR ’000

FINANCIAL ASSETS

AVAILABLE FOR SALE (AFS) DESIGNATED

FINANCIAL ASSETS

As at 1 Jan. 119,431 1,134,699

Purchases 105 97,404

Divestments –3,700 –228,109

Change in the consolidated companies 0 0

Effective results –19,623 42,753

Effect-neutral results 83,613 0

Revalued at fair value 275,509 0

Reclassification to Level III 43,485 0

Reclassification from Level III 0 0

As at 31 Dec. 498,820 1,046,747



FAIR-VALUE GAIN –100 BASIS POINTS

IN EUR ’000 IN %





FAIR VALUE LOSS +100 BASIS POINTS

IN EUR ’000 IN %




Sensitivity analysis 2014

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

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


IN EUR ’000

CARRYING AMOUNTS AS AT

31 DEC. 2014FAIR VALUE

31 DEC. 2014

THEREOF MARKET PRICES

LISTED IN ACTIVE

MARKETS (LEVEL I)

THEREOF MEASUREMENT

METHODS BASED ON


THEREOF MEASUREMENT


(LEVEL III)

Financial investments held-to-maturity (HtM) 489,115 513,796 466,400 47,396 0

Loans and receivables 25,790,108 26,182,229 0 690,538 25,491,691

Total financial assets not measured at fair value 26,279,223 26,696,025 466,400 737,934 25,491,691

Financial liabilities stated at amortised cost 23,986,923 24,202,449 0 24,202,449 0

Total financial liabilities not measured at fair value 23,986,923 24,202,449 0 24,202,449 0

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

Reclassifications of financial assets

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

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



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

NOMINAL AMOUNT FAIR VALUE

TERM TO MATURITY

IN EUR ’000 UP TO 1 YEAROVER 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 4,488,281 12,293,640 15,246,893 32,028,814 2,377,308 1,830,578

Interest rate options – purchases 46,430 328,721 244,387 619,538 12,989 697

Interest rate options – sales 38,714 277,483 1,150,349 1,466,546 2,505 16,248

Other interest rate swaps 0 0 0 0 0 0

Exchange-traded products

Interest rate futures 39,189 0 0 39,189 0 0

Interest rate options – purchases 0 0 0 0 0 0

Interest rate options – sales 0 0 0 0 0 0

Total 4,612,614 12,899,844 16,641,629 34,154,087 2,392,802 1,847,523

Foreign exchange-dependent futures

OTC products

Spot exchange and forward transactions 695,883 76,064 0 771,947 14,360 7,741

Currency and interest rate swaps involving several currencies 1,672,135 172,356 13,555 1,858,046 21,578 14,316

Foreign exchange options – purchases 37,313 3,946 0 41,259 1,705 0

Foreign exchange options – sales 37,313 3,946 0 41,259 0 1,714

Other foreign exchange contracts 0 0 0 0 0 0


Foreign exchange futures 0 0 0 0 0 0

Foreign exchange options 0 0 0 0 0 0

Total 2,442,644 256,312 13,555 2,712,511 37,643 23,771

Other futures

OTC products

Structured shares/index products 0 0 0 0 0 0

Shares options – purchases 5,000 14,595 0 19,595 3,715 0

Shares options – sales 0 1,000 0 1,000 0 237

Credit derivatives 0 10,000 0 10,000 0 1

Precious metal transactions 0 0 0 0 0 0

Commodity options – purchases 0 0 0 0 0 0

Commodity options – sales 0 0 0 0 0 0

Other business 0 0 0 0 0 0


Shares futures 0 0 0 0 0 0

Shares options 0 0 0 0 0 0

Other futures 0 0 0 0 0 0

Other options 0 0 0 0 0 0

Total 5,000 25,595 0 30,595 3,715 238

Total OTC products 7,021,069 13,181,751 16,655,184 36,858,004 2,434,160 1,871,532

Total exchange-traded products 39,189 0 0 39,189 0 0

Total 7,060,258 13,181,751 16,655,184 36,897,193 2,434,160 1,871,532


NOMINAL AMOUNT FAIR VALUE

TERM TO MATURITY

IN EUR ’000 UP TO 1 YEAROVER 1 YEAR TO 5 YEARS


Interest rate-dependent futures

OTC products

Forward rate agreements 0 0 0 0 0 0


Interest rate options – purchases 234,028 1,127,403 522,119 1,883,550 23,676 1,029


Other interest rate swaps 0 0 0 0 0 0



Interest rate options – purchases 0 0 0 0 0 0

Interest rate options – sales 0 0 0 0 0 0

Total 3,469,590 15,180,412 18,395,732 37,045,734 2,851,044 2,172,922


OTC products



Foreign exchange options - purchases 40,741 3,555 0 44,296 1,587 0


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 1,855,285 196,982 7,006 2,059,273 38,103 29,249

Other futures

OTC products

Structured shares/index products 0 0 0 0 0 0

Shares options – purchases 0 20,734 0 20,734 3,578 0

Shares options – sales 0 1,000 0 1,000 0 172


Precious metal transactions 0 0 0 0 0 0

Commodity options – purchases 0 0 0 0 0 0

Commodity options – sales 0 0 0 0 0 0

Other business 0 0 0 0 0 0


Shares futures 0 0 0 0 0 0

Shares options 0 0 0 0 0 0

Other futures 0 0 0 0 0 0

Other options 0 0 0 0 0 0

Total 0 31,734 0 31,734 3,578 178



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

The following derivative financial instruments existed on the 2014 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 implica-tions of a set-off in the case of instruments which are subject to a framework netting agreement or similar agreement as well as to cash collateral.

UNRECOGNISED AMOUNTS

IN EUR ’000

FINANCIAL ASSETS (GROSS) = RECOGNISED FINANCIAL ASSETS (NET)

OFFSETTING EFFECT OF

FRAMEWORK AGREEMENTS CASH COLLATERAL NET AMOUNT

Loans and advances to banks 6,854,907 –650,068 0 6,204,839

Positive fair values generated from derivative financial instruments 2,434,160 –1,340,098 –564,273 529,789

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


IN EUR ’000

FINANCIAL ASSETS (GROSS) = RECOGNISED FINANCIAL ASSETS (NET)



Loans and advances to banks 6,779,138 –693,512 0 6,085,626

Positive fair values generated from derivative financial instruments 2,892,725 –1,589,504 –669,293 633,928

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


IN EUR ’000

FINANCIAL LIABILITIES (GROSS) = RECOGNISED

FINANCIAL LIABILITIES (NET)



Amounts owed to banks 11,214,173 –650,068 0 10,564,105

Negative market values from derivative financial instruments 1,871,532 –1,340,098 –478,195 53,239

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


IN EUR ’000

FINANCIAL LIABILITIES (GROSS) = RECOGNISED

FINANCIAL LIABILITIES (NET)



Amounts owed to banks 11,304,925 –693,512 0 10,611,413

Negative market values from derivative financial instruments 2,202,349 –1,589,504 –510,519 102,326

Total 31 Dec. 2014 13,507,274 –2,283,016 –510,519 10,713,739

Liabilities


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

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

11. Cash and cash equivalents

12. Loans and advances to banks

13. Loans and advances to customers

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Cash in hand 37,664 34,586

Balances at central banks 52,557 54,500

Total 90,221 89,086

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Loans and advances payable on demand 3,409,395 3,453,848

Money market transactions 2,069,055 1,933,013

Loans to banks 1,055,478 970,463

Purchased loans and advances 320,979 421,814

Total 6,854,907 6,779,138

In Austria 5,794,326 5,521,128

Abroad 1,060,581 1,258,010

Total 6,854,907 6,779,138

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Money-market transactions 1,048,269 1,262,205

Loan transactions 14,503,288 14,777,387

Mortgage loans 201,951 233,534

Covering loans 518,636 436,096

Purchased loans and advances 405,997 373,194

Lease financing 2,022,237 2,039,374

Other 30,931 44,962

Total 18,731,309 19,166,752

In Austria 12,395,581 12,525,046

Abroad 6,335,728 6,641,706

Total 18,731,309 19,166,752



Loan loss allowances 2015

Loan loss allowances 2014

14. Loan loss allowances

IN EUR ’000

AS AT 1 JAN. 2015

CHANGE IN BASIS OF CONSOLI-

DATIONCURRENCY

DIFFERENCESALLO-

CATIONS REVERSALS UTILISEDAS AT

31 DEC. 2015

Loans and advances to banks 913 0 0 164 0 –783 294

of which in Austria 0 0 0 0 0 0 0

of which foreign 913 0 0 164 0 –783 294

Loans and advances to customers 929,927 0 –33 184,368 –63,893 –260,579 789,790

of which in Austria 641,166 0 0 121,935 –40,910 –193,571 528,620

of which foreign 288,761 0 –33 62,433 –22,983 –67,008 261,170

Revaluations in the portfolio 93,491 0 19 18,964 –75,698 0 36,776

Subtotal 1,024,331 0 –14 203,496 –139,591 –261,362 826,860

Provision for credit risks 34,764 0 0 29,772 –21,876 –4,114 38,546

Risks for off-balance-sheet transactions 27,285 0 0 2,245 –23,574 0 5,956

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

IN EUR ’000

AS AT 1 JAN. 2014

CHANGE IN BASIS OF CONSOLI-

DATIONCURRENCY

DIFFERENCESALLO-

CATIONS REVERSALS UTILISEDAS AT

31 DEC. 2014

Loans and advances to banks 896 0 0 29 –12 0 913

of which in Austria 0 0 0 0 0 0 0

of which foreign 896 0 0 29 –12 0 913

Loans and advances to customers 978,194 –22,363 –450 248,289 –66,515 –207,228 929,927

of which in Austria 639,661 0 0 154,647 –35,840 –117,302 641,166

of which foreign 338,533 –22,363 –450 93,642 –30,675 –89,926 288,761

Revaluations in the portfolio 80,664 –183 –28 58,158 –45,120 0 93,491

Subtotal 1,059,754 –22,546 –478 306,476 –111,647 –207,228 1,024,331

Provision for credit risks 46,845 0 0 21,019 –31,809 –1,291 34,764

Risks for off-balance-sheet transactions 21,581 0 0 18,897 –13,193 0 27,285

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

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

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

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


15. Trading assets

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Bonds and other fixed-income securities

Municipal bonds that can be refinanced 3,310 29,724

Other public-sector debt instruments 1,116 1,132

Bonds and debt securities from other issuers 30,208 27,895

Positive market value from derivative transactions

Interest rate transactions 2,392,802 2,851,044

Currency exchange transactions 37,643 38,103

Stock and index related business 3,715 3,578

Total 2,468,794 2,951,476

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


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

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

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

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


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

Financial assets classified as loans and receivables

IN EUR ’000 31 DEC. 2015 31 DEC. 2014




Total 411,015 489,115

IN EUR ’000 31 DEC. 2015 31 DEC. 2014



Total 642,783 712,008

Financial assets classified as available for sale (AfS)

IN EUR ’000 31 DEC. 2015 31 DEC. 2014


Municipal bonds that can be refinanced 1,502,085 1,479,148

Bonds and debt securities from other issuers 1,799,517 1,858,599

Shares and other variable-yield securities

Shares 22,626 26,172

Investment fund units/shares 3,313 4,246

Other variable yield securities 383,536 401,929

Shares in companies

Investments in affiliated companies 155,817 162,138

Other investments 191,415 291,670

Total 4,058,309 4,223,902

16. Financial assets

Designated financial assets

IN EUR ’000 31 DEC. 2015 31 DEC. 2014



Other public-sector debt instruments 0 7,930


Shares and other variable-yield securities

Shares 0 5,671

Other variable yield securities 30,387 30,912

Total 558,520 748,579


17. Companies accounted for using the equity method

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Banks 1,067,602 1,124,899

Non-banks 718,514 675,178

Total 1,786,116 1,800,077

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

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

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

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

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

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



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

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

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

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

A list of the companies that reported under the equity method can be found under the heading “Basis of consolidation”. The following table shows the financial data on the companies reported under the equity method. Operating income was included as earnings for banks.


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

IN EUR ’000 2014/2015 2013/2014

Assets 1,478,552 1,456,958

Liabilities 1,118,580 984,689

Earnings 813,720 778,255

Result 8,700 2,433

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

IN EUR ’000

AMAG AUSTRIA METALL AG

OBERÖSTER- REICHISCHE

LANDES- BANKEN AG

RAIFFEISEN ZENTRALBANK ÖSTERREICH

AG

RAIFFEISEN-BANK A.S., PRAGUE

RAIFFEISEN-LANDESBANK OBERÖSTER-REICH INVEST

GMBH & CO OG

OTHER COMPANIES ACCOUNTED FOR USING THE EQUITY

METHOD

Assets 1,102,530 8,937,733 138,425,830 9,115,384 651,945 974,975

Liabilities 459,083 8,546,547 129,129,704 8,212,605 17,392 755,718

Equity 643,447 391,186 9,296,126 902,779 634,553 219,257

Earnings 913,331 100,425 5,332,903 342,178 0 240,441

Result 42,697 35,869 465,354 92,962 88,657 12,410

Total other comprehensive income 19,177 1,179 –141,981 27,164 –19,335 –1,685

Comprehensive income 61,874 37,048 323,373 120,126 69,322 10,725

Net assets (owners) 643,447 391,275 5,387,967 831,194 634,543 –

Proportionate net assets 106,169 190,121 788,626 207,799 473,623 –

Adjustments** 34,536 –75,126 –59,579 15,760 26,109 –

Carrying amount in Raiffeisenlandes-bank Oberösterreich* 140,705 114,995 729,047 223,559 499,732 78,078

Market value (Stock Market value)* 186,165 – – – 518,315 –

Dividends received* 6,982 427 0 9,689 18,246 3,832

IN EUR ’000

AMAG AUSTRIA METALL AG

OBERÖSTER- REICHISCHE

LANDES- BANKEN AG

RAIFFEISEN ZENTRALBANK ÖSTERREICH

AG***

RAIFFEISEN-BANK A.S., PRAGUE

RAIFFEISEN-LANDESBANK OBERÖSTER-REICH INVEST

GMBH & CO OG

OTHER COMPANIES ACCOUNTED FOR USING THE EQUITY

METHOD

Assets 1,092,501 9,400,500 144,804,791 8,149,577 602,219 1,003,188

Liabilities 468,611 9,045,582 135,597,301 7,324,927 16,552 787,086

Equity 623,890 354,918 9,207,490 824,650 585,667 216,103

Earnings 822,956 71,562 5,732,455 316,722 0 233,014

Result 59,212 5,998 –556,403 74,397 71,583 19,516

Total other comprehensive income 1,400 8,869 –1,223,478 –7,620 9 0

Comprehensive income 60,612 14,867 –1,779,881 66,777 71,593 19,516

Net assets (owners) 623,890 354,986 5,327,545 754,902 585,667 –

Proportionate net assets 102,942 172,488 779,782 188,726 437,142 –

Adjustments** 34,536 –39,578 7,416 16,067 23,893 –

Carrying amount in Raiffeisenlandes-bank Oberösterreich* 137,478 132,910 787,198 204,792 461,035 76,664

Market value (Stock Market value)* 160,010 – – – 599,688 –

Dividends received* 3,491 427 35,708 7,885 17,346 4,095

Companies accounted for using the equity method at 31 December 2015

Companies accounted for using the equity method at 31 Dec. 2014



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

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

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

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

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

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

The goodwill of “IMPULS-LEASING International” Group still has value.

18. Intangible assets

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Customer base 194 388

Brand 18,606 20,751

Goodwill 13,622 13,622

Other intangible assets 12,214 13,139

Total 44,636 47,900


20. Other assets

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

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

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

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

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

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

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Receivables from non-bank activities 141,022 132,489

Prepaid expenses 20,223 20,088

Inventories 141,188 53,660

Other assets 139,613 161,991

Total 442,046 368,228

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Property and equipment

Land and buildings used for bank operations 237,260 239,176

Other property and equipment 179,157 164,377

Property under construction 2,625 2,299

Investment property

Investment property 666,623 664,853

Property under construction 79,779 94,914

Total 1,165,444 1,165,619

19. Property and equipment, and investment property



Schedule of changes in non-current assets 2015

Schedule of changes in non-current assets 2014

21. Schedule of changes in non-current assets

PURCHASE AND PRODUCTION COSTS PURCHASE AND PRODUCTION COSTS APPRECIATION AND DEPRECIATIONCARRYING AMOUNT

IN EUR ’000

AS AT 1 JAN. 2015

CHANGE IN BASIS OF

CONSOLIDATIONCURRENCY

DIFFERENCES ADDITIONS DISPOSALSRECLASSIFI-

CATIONSAS AT

31 DEC. 2015ACCUMULATED DEPRECIATION

OF WHICH NON-SCHEDULED

DEPRECIATION IN THE FINANCIAL

YEAR

OF WHICH SCHEDULED


YEAR

CHANGE IN BASIS OF

CONSOLIDATIONAS AT

31 DEC. 2015

Intangible assets 123,636 2,714 10 2,932 2,262 0 127,030 80,086 242 5,710 2,308 44,636

Goodwill 32,474 0 0 0 0 0 32,474 18,852 0 0 0 13,622

Other intangible assets 91,162 2,714 10 2,932 2,262 0 94,556 61,234 242 5,710 2,308 31,014

Property and equipment 927,603 43,512 138 77,930 47,176 172 1,002,179 558,103 8,850 56,244 25,034 419,042

Land and buildings used for operations 447,223 14,888 –13 6,356 2,173 613 466,894 226,758 8,263 11,935 2,876 237,260

Other property and equipment 478,081 28,624 151 68,488 44,788 2,104 532,660 331,345 587 44,309 22,158 179,157

Property under construction 2,299 0 0 3,086 215 –2,545 2,625 0 0 0 0 2,625

Investment property 920,691 –12,925 177 42,788 40,085 –172 910,474 165,855 0 16,661 –1,783 746,402

Investment property 824,537 –12,933 177 15,469 39,827 42,588 830,011 165,171 0 16,162 –1,783 666,623


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


IN EUR ’000

AS AT 1 JAN. 2014

CHANGE IN BASIS OF



CATIONSAS AT


OF WHICH NON-SCHEDULED DEPRECIATION IN THE FINANCIAL

YEAR

OF WHICH SCHEDULED


YEAR

CHANGE IN BASIS OF

CONSOLIDATIONAS AT

31 DEC. 2014

Intangible assets 124,124 169 –157 3,602 4,102 0 123,636 75,488 2,500 6,331 248 47,900

Goodwill 32,474 0 0 0 0 0 32,474 18,852 2,500 0 0 13,622

Other intangible assets 91,650 169 –157 3,602 4,102 0 91,162 56,636 0 6,331 248 34,278

Property and equipment 897,151 3,164 –697 95,156 67,171 0 927,603 521,116 39 53,606 635 405,852

Land and buildings used for operations 429,619 1,292 –512 14,766 3,447 5,505 447,223 208,052 0 12,227 –5 239,176

Other property and equipment 458,061 1,872 –185 77,308 63,724 4,749 478,081 313,064 39 41,379 640 164,377


Investment property 373,331 540,097 –88 49,982 42,631 0 920,691 95,882 0 16,270 65,042 759,767

Investment property 278,388 540,097 –88 14,575 40,692 32,257 824,537 94,642 0 15,786 65,042 664,853

Property under construction 94,943 0 0 35,407 1,939 –32,257 96,154 1,240 0 484 0 94,914

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



IN EUR ’000

AS AT 1 JAN. 2015

CHANGE IN BASIS OF



CATIONSAS AT


OF WHICH NON-SCHEDULED


YEAR

OF WHICH SCHEDULED


YEAR

CHANGE IN BASIS OF

CONSOLIDATIONAS AT

31 DEC. 2015

Intangible assets 123,636 2,714 10 2,932 2,262 0 127,030 80,086 242 5,710 2,308 44,636

Goodwill 32,474 0 0 0 0 0 32,474 18,852 0 0 0 13,622

Other intangible assets 91,162 2,714 10 2,932 2,262 0 94,556 61,234 242 5,710 2,308 31,014

Property and equipment 927,603 43,512 138 77,930 47,176 172 1,002,179 558,103 8,850 56,244 25,034 419,042

Land and buildings used for operations 447,223 14,888 –13 6,356 2,173 613 466,894 226,758 8,263 11,935 2,876 237,260

Other property and equipment 478,081 28,624 151 68,488 44,788 2,104 532,660 331,345 587 44,309 22,158 179,157


Investment property 920,691 –12,925 177 42,788 40,085 –172 910,474 165,855 0 16,661 –1,783 746,402

Investment property 824,537 –12,933 177 15,469 39,827 42,588 830,011 165,171 0 16,162 –1,783 666,623


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


IN EUR ’000

AS AT 1 JAN. 2014

CHANGE IN BASIS OF



CATIONSAS AT


OF WHICH NON-SCHEDULED DEPRECIATION IN THE FINANCIAL

YEAR

OF WHICH SCHEDULED


YEAR

CHANGE IN BASIS OF

CONSOLIDATIONAS AT

31 DEC. 2014

Intangible assets 124,124 169 –157 3,602 4,102 0 123,636 75,488 2,500 6,331 248 47,900

Goodwill 32,474 0 0 0 0 0 32,474 18,852 2,500 0 0 13,622

Other intangible assets 91,650 169 –157 3,602 4,102 0 91,162 56,636 0 6,331 248 34,278

Property and equipment 897,151 3,164 –697 95,156 67,171 0 927,603 521,116 39 53,606 635 405,852

Land and buildings used for operations 429,619 1,292 –512 14,766 3,447 5,505 447,223 208,052 0 12,227 –5 239,176

Other property and equipment 458,061 1,872 –185 77,308 63,724 4,749 478,081 313,064 39 41,379 640 164,377


Investment property 373,331 540,097 –88 49,982 42,631 0 920,691 95,882 0 16,270 65,042 759,767

Investment property 278,388 540,097 –88 14,575 40,692 32,257 824,537 94,642 0 15,786 65,042 664,853

Property under construction 94,943 0 0 35,407 1,939 –32,257 96,154 1,240 0 484 0 94,914

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



24. Trading liabilities

25. Liabilities evidenced by certificates

22. Amounts owed to banks

23. Amounts owed to customers

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Interest rate transactions 1,847,523 2,172,922

Currency exchange transactions 23,771 29,249

Stock and index related business 237 172

Other transactions 1 6

Total 1,871,532 2,202,349

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Bonds issued 2,730,944 3,693,441

Listed mortgage bonds/municipal bonds 86,829 90,134

Non-listed mortgage bonds/municipal bonds 268,323 258,026

Other securitised liabilities 4,532,388 4,600,802

Total 7,618,484 8,642,403

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Demand deposits 4,827,284 4,571,852

Term deposits 4,188,535 4,160,350

Savings deposits 1,442,900 1,574,341

Other 169,396 209,490

Total 10,628,115 10,516,033

In Austria 7,802,245 7,455,701

Abroad 2,825,870 3,060,332

Total 10,628,115 10,516,033

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Liabilities payable on demand 3,811,819 3,601,607

Money market transactions 3,892,850 3,886,277

Long-term financing 3,247,810 3,533,598

Other 261,694 283,443

Total 11,214,173 11,304,925

In Austria 8,508,882 8,130,969

Abroad 2,705,291 3,173,956

Total 11,214,173 11,304,925

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


26. Provisions

Severance provisions

Changes in severance obligations

IN EUR ’000 2015 2014

Present value (DBO) 1 Jan. 95,968 78,052

Change in basis of consolidation –5,456 607

Current service cost 3,998 3,624

Past service cost 0 –65

Interest cost 1,603 2,468

Payments –1,681 –4,084

Actuarial profit/loss –5,426 15,366

of which adjustments based on past experience –1,127 224

of which changes in demographic assumptions –83 –157

of which changes in financial assumptions –4,216 15,299

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

IN EUR ’000 2015 2014

Fair value 1 Jan. 0 0

Change in basis of consolidation 69 0

Interest income 0 0

Contributions 0 0

Payments 0 0

Other profits/losses 0 0

Fair value 31 Dec. 69 0

IN EUR ’000 2015 2014

Present Value (DBO) of the severance obligations as at 31 Dec. 89,006 95,968

Fair value of plan assets as at 31 Dec. 69 0

Net obligations 31 Dec. (= provisions) 88,937 95,968

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Provisions for personal expenses 159,502 173,783

of which severance provisions 88,937 95,968

of which pension provisions 52,657 59,509

of which bonus fund provisions 17,908 18,306

Other provisions 81,745 85,569

Total 241,247 259,352

Change in plan assets

Reconciliation of severance provisions



Classification of pension obligations by beneficiaries

Pension provisions

Changes in pension provisions

IN EUR ’000 2015 2014

Present Value (DBO) of the pension obligations as at 31 Dec. 54,582 61,081

of which obligations to active beneficiary employees 8,793 11,079

of which obligations to retired beneficiary employees with vested claims 169 88

of which obligations to pensioners 45,620 49,914

IN EUR ’000 2015 2014



Current service cost 589 487

Past service cost 0 0

Interest cost 1,038 1,758

Payments –3,741 –4,147

Actuarial profit/loss –5,345 7,863

of which adjustments based on past experience –675 62

of which changes in demographic assumptions 0 0

of which changes in financial assumptions –4,670 7,801

Other change 960 0

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

IN EUR ’000 2015 2014

Fair value 1 Jan. 1,572 1,480

Interest income 30 49

Contributions 75 71

Payments 0 -98

Other profits/losses 16 70

Other change 232 0

Fair value 31 Dec. 1,925 1,572

Change in plan assets

IN EUR ’000 2015 2014

Present Value (DBO) of the pension obligations as at 31 Dec. 54,582 61,081

Fair value of plan assets as at 31 Dec. 1,925 1,572

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

Change in pension provisions

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


Investment of plan assets for severance and pension obligations

IN % 2015 2014

Bonds and other fixed-income securities 45.8 48.3

Shares and other variable-yield securities 21.2 33.2

Other 33.0 18.5

Total 100.0 100.0

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

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

Sensitivities

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

CHANGE IN THE PARAMETER OF

EFFECT ON DBO IN %

CHANGE IN THE PARAMETER OF

EFFECT ON DBO IN %

Severance provisions

Interest rate + 1.0% –10.7 –1.0% 12.8

Increasing the bases for assessment + 0.5% 6.0 –0.5% –5.5

Fluctuation + 0.5% –2.9 –0.5% 1.0

Pension provisions

Interest rate + 1.0% –10.2 –1.0% 12.5

Increasing the bases for assessment + 0.5% 0.6 –0.5% –0.6

Increase in future pensions + 0.5% 5.0 –0.5% –4.5

Mortality table/Life expectancy + 1 year 6.0

Weighted residual maturity of the financial liabilities

IN YEARS 2015

Severance obligations 12

Pension obligations 12

Changes in staff anniversary provisions

IN EUR ’000 2015 2014


Change in basis of consolidation –1,199 394

Current service cost 1,631 1,299

Past service cost 0 0

Interest cost 304 471

Payments –1,013 –918

Actuarial profit/loss –121 2,460

Present value (DBO) 31 Dec. (= provisions) 17,908 18,306



27. Other liabilities

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Liabilities from non-bank activities 143,333 117,467

Deferred income 13,238 12,452

Other liabilities 338,477 348,797

Total 495,048 478,716

Changes in other provisions

LOAN LOSS ALLOWANCES OTHER PROVISIONS

IN EUR ’000 2015 2014 2015 2014

As at 1 Jan. 62,049 68,426 23,520 13,650

Allocations 32,017 39,916 24,101 10,216

Reversals –45,450 –45,002 –2,280 –647

Utilised –4,114 –1,291 –8,098 –14,783

Change in basis of consolidation 0 0 0 15,084

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

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

28. Subordinated capital

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Supplementary capital and subordinated liabilities 1,414,048 1,519,191

Profit-sharing rights 17,300 17,300

Total 1,431,348 1,536,491

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Total of other provisions 37,243 23,520

up to 1 year 29,957 15,756

from 1 to 5 years 4,453 3,804

over 5 years 2,833 3,960

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


29. Equity

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Share capital 276,476 276,476

Participation capital 1,032 1,032

Capital reserves 972,095 972,095

Aggregate net income 2,345,407 2,164,927

Non-controlling interests 144,386 151,741

Total 3,739,396 3,566,271

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

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

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

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

Changes in AfS reserves

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

IN EUR ’000 2015 2014

As at 1 Jan. 295,180 112,670


Changes in the valuation of AfS securities –52,905 249,558

Amounts transferred into the income statement –49,007 –6,202

of which through impairment loss of AfS assets –378 336

of which through sale of AfS assets –49,502 –7,577

of which from reclassified AfS assets 873 1,039

Taxes recognised in respect of this amount 25,397 –60,846

As at 31 Dec. 218,665 295,180



Significant non-controlling interests

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

Hedging of net investments in a foreign business

Changes in foreign currency translation reserves

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

NON- CONTROLLING

INTERESTS EQUITY

AFTER-TAX PROFIT FOR THE YEAR

TOTAL OTHER COMPREHENSIVE

INCOMETOTAL

RESULT

COMPANY

COUNTRY OF REGIS- TRATION 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014

IN % IN % IN EUR ’000 IN EUR ’000 IN EUR ’000 IN EUR ’000 IN EUR ’000 IN EUR ’000 IN EUR ’000 IN EUR ’000

Hypo Holding subgroup Austria 14.37 20.63 92,026 103,664 –1,270 –11,929 –123 3,983 –1,393 –7,946

OÖ Wohnbau gemeinnutzige Wohnbau subgroup Austria 16.44 16.44 12,631 11,310 1,211 744 26 0 1,237 744

Gesellschaft zur Förderung agrarischer Interessen in Oberösterreich GmbH Austria 5.00 5.00 3,569 4,556 –35 445 –858 751 –893 1,196

Other 36,160 32,211 3,882 3,721 184 –923 4,066 2,798

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

IN EUR ’000 2015 2014

As at 1 Jan. 1,380 1,014

Gain or loss from the hedging of net investments –1,164 488

Taxes recognised in respect of this amount 291 –122

As at 31 Dec. 507 1,380

IN EUR ’000 2015 2014

As at 1 Jan. –1,919 –949

Gain or loss from foreign currency translation 128 –970

As at 31 Dec. –1,791 –1,919

IN EUR ’000 2015 2014

As at 1 Jan. –23,948 –6,536

Change in basis of consolidation 1,350 0

Changes in the valuation of reserves of actuarial gains/losses on defined benefit plans 10,787 –23,159

Taxes recognised in respect of this amount –2,685 5,747

As at 31 Dec. –14,496 –23,948

Due to an option on non-controlling interests in Hypo Holding GmbH, which is presented according to the “anticipated acqui-sition method”, in the 2015 financial year, an increase in the holding of shares in the Hypo Holding GmbH has been secured of about 6.3 per cent and therewith a corresponding reduction in non-controlling interests.


Companies with substantial non-controlling interests in 2015

Companies with substantial non-controlling interests in 2014

IN EUR ’000

HYPO HOLDING SUBGROUP

GESELLSCHAFT ZUR FÖRDERUNG AGRARISCHER

INTERESSEN IN OBERÖSTERREICH GMBH

OÖ WOHNBAU GEMEINNÜTZIGE WOHNBAU

SUBGROUP

Assets 4,596,624 375,726 601,232

Liabilities and provisions 4,329,419 212,448 524,352

Equity 267,205 163,278 76,880

Earnings 31,338 663,720 75,037

After-tax profit for the year –7,059 –2,334 7,560

Total other comprehensive income 55 –17,311 163

Comprehensive income –7,004 –19,645 7,723

Dividends paid to non-controlling shareholders 0 95 31

Cash flow from operating activities –96,294 13,792 14,937

Cash flow from investing activities 106,374 –13,643 –14,554

Cash flow from financing activities 0 –180 –381

Change in cash levels 10,080 –31 2

IN EUR ’000

HYPO HOLDING SUBGROUP

GESELLSCHAFT ZUR FÖRDERUNG AGRARISCHER

INTERESSEN IN OBERÖSTERREICH GMBH

OÖ WOHNBAU GEMEINNÜTZIGE WOHNBAU

SUBGROUP

Assets 4,926,009 404,587 579,101

Liabilities and provisions 4,651,856 221,484 509,562

Equity 274,153 183,103 69,539

Earnings 90,808 648,075 64,727

After-tax profit for the year –53,854 6,568 4,718

Total other comprehensive income 9,037 15,584 –161

Comprehensive income –44,817 22,152 4,557

Dividends paid to non-controlling shareholders 999 144 31

Cash flow from operating activities 102,508 8,678 24,990

Cash flow from investing activities –102,427 –8,348 –24,608

Cash flow from financing activities –3,010 –278 –381

Change in cash levels –2,929 52 0



Summary

Raiffeisenlandesbank Oberösterreich Group’s long-term suc-cess has largely been due to active risk management. In order to achieve this target, Raiffeisenlandesbank Oberösterreich, as the dominant group company, has implemented risk man-agement with structures that facilitate the identification and measurement of all risks in the group in accordance with sec-tions 39, 39a, Austrian Banking Act (BWG) and the Bank Risk Management Regulation (KI-RMV) (credit risks, market risks, equity risks, liquidity risks, macroeconomic risks, and opera-tional risks) and their active managerial counteraction.

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 that conflicts of interest both on a personal level and at the organisation units level are avoided.

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 sim-ilar structure and size (best practice principle) and is primarily 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 the 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, objective reports. All the quantifiable risks (credit risks, market risks, equity risks, liquidity risks, macroeconomic risks, and oper-ational risks) to which Raiffeisenlandesbank Oberösterreich 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 working procedures, processes and internal controls.

Modifications and enhancements of risk management are continuously documented in the Risk Management Manual.

The supervisory Group of the Raiffeisenlandesbank Oberös-terreich 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 Raiffeisen-landesbank Oberösterreich in the “Facts and Figures” domain.

Risk management organisation

The Managing Board of Raiffeisenlandesbank Oberösterre-ich 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 con-trolling all the quantifiable risks, including in particular credit risk, market risk, equity risk, liquidity risk, macroeconomic risk and operational risks that Raiffeisenlandesbank Oberösterre-ich is exposed to and for developing and implementing the overall risk strategy.

An organisational separation between front and back offices has been implemented.

The Overall Bank Risk Management organisational unit is re-sponsible for the identification and measurement of risks in cooperation with the organisational units charged with the tasks.

Risk Management is also responsible for the development and provision of risk measurement methods and IT systems and provides the result and risk information required for active risk management.

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

Risk report


IFRS Consolidated Statements_Notes_Risk report

Oberösterreich for approval before the first transaction is com-pleted – 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 limit.

The further development of the existing risk management sys-tem (identification, measurement, control) is the responsibility of the Risk Management business area in coordination with the Chief Risk Officer, the Managing Board and the employees 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 ad-dition to credit risk, the subgroup is confronted with purchas-ing and sales related price risks. These result from the global supply and demand situation in the commodities markets and the industry-related intensity of competition.

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 ob-ligations 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.

In terms of the risk associated with the debt moratorium for HETA ASSET RESOLUTION AG (“HETA”) and the related pro-visions established in the Group for this purpose, we refer to the descriptions regarding loan loss allowances.

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 de-fault 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 representation of the standards valid for Raiffeisenlandesbank Oberösterre-ich. They are oriented on international standards (Basel) and on supervisory recommendations.

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 accord-ingly comprises two dimensions – recording and assessing 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.

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 small vol-ume business with employed retail customers.

The rating roadmap was thoroughly revised in the non-retail area. The new Regular and Large Corporates as well as Proj-ect Finance rating models were introduced in April 2015. In-troduction of the new low-default models Financial Institutions, Insurances, Collective Investment Undertakings, Local and Regional Governments and Sovereigns followed in June 2015. Further developments planned relate to the scoring models in the Retail division and the SME models.

This credit rating system is constantly being validated and developed.


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 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. Raiffeisenland-esbank Oberösterreich calculates unexpected loss at proba-bilities of 95 per cent and 99.9 per cent.

The calculation is carried out by the credit manager software from the Risk-Metrics company. The risks/opportunities from loan defaults or changes in creditworthiness are determined 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.

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 Manag-ing 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 per cent probability, will not be exceeded during a one-month holding period.

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

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

10 POINT SCALE SUBCLASSES TEXT

0.5 0.5 risk-free

1.0 1.0 outstanding creditworthiness

1.5 1.5 very good creditworthiness

2.02 +

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


The market risks are managed using a limit system based on the value at risk. All market risk activities are assigned a risk limit which is included in full in the risk-bearing capacity analysis.

In addition to value-at-risk, stop-loss limits and scenario anal-yses are used to limit risk.

The other fully consolidated group companies minimise their market risks through maturity-matched funding via Raiffeisen-landesbank Oberösterreich.

The following table shows the value-at-risk figures for the Raif-feisenlandesbank Oberösterreich Group (confidence level 99 per cent, holding period one month) as at 31 December 2015.

RAIFFEISENLANDESBANK OBERÖSTERREICH GROUP

31 DEC. 2015 IN EUR ’000

31 DEC. 2014 IN EUR ’000

Total 95,699 100,210

Interest 80,411 83,936

Spread 59,592 46,732

Currency 714 693

Shares 2,830 2,895

Volatility 2,939 1,392

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

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

A stress test with a 200 basis point interest rate shift was per-formed for the trading and banking book.

The following table shows the results of the stress test as at 31 December 2015:

31 DEC. 2015 31 DEC. 2014

IN EUR ’000 + 200 BP –200 BP + 200 BP –200 BP

EUR –297,020 259,835 –335,174 328,191

USD –1,689 1,952 –2,052 2,416

GBP 896 –940 2,001 –2,140

CHF –1,051 1,110 –4,249 4,854

JPY –898 1,180 –465 485

CZK –13,115 15,539 –11,020 13,404

Other currencies 556 –559 –382 477

The stress test shows the change in present value when the yield curve is shifted in parallel by one and two percentage points respectively.



Overall structure by balance sheet item

Maximum credit risk exposure pursuant to IFRS 7.36 a

Collateral values pursuant to IFRS 7.36 b

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 December 2015, the total collateral values consisted of 44.9 per cent* (previous year: 44.6 per cent*) collateral on im-movable goods (i.e. mortgages, rankings).

* Taking into consideration shares held as collateral in housing loans from Oberösterreichische Landesbank Aktiengesellschaft

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Loans and advances to banks 1,573,149 1,582,149

Loans and advances to customers 10,312,565 9,878,994

Trading assets 2,019,928 2,074,056

Financial assets 823,131 997,295

Total 14,728,773 14,532,494

Contingent liabilities* 1,414,964 1,605,632

Credit risks 942,536 920,595

Total 2,357,500 2,526,227

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

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Cash and cash equivalents (credit balance at central banks) 52,557 54,500

Loans and advances to banks 6,854,907 6,779,138


Trading assets 2,468,794 2,951,476

Financial assets 4,886,846 5,255,112

Total 32,994,413 34,206,978

Contingent liabilities 3,217,796 3,424,218

Credit risks 3,916,035 4,594,948

Total 7,133,831 8,019,166

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


Industry structure/Concentration risk

Maximum credit risk exposure by industry

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

Geographic distribution of the loans and advances to customers

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

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Banks in Austria 7,581,436 7,385,293

Public households and non-profit organisations 3,822,677 3,504,113

Private households 2,979,631 2,997,749

Banks in the EU, excluding Austria 2,558,516 2,932,014

Construction and supplementary construction trade 2,320,278 2,354,394

Commercial and other real estate projects 2,298,602 2,480,047

Real estate project operators 2,271,201 2,621,113

Engine and plant construction 1,584,299 1,516,827

Banks other 1,229,261 1,502,618

Transport and warehousing 1,146,297 1,002,514

Metal production and processing 1,072,988 1,056,731

Motor vehicles 1,043,085 1,125,952

Residential building management 874,187 736,161

Consumer goods 848,480 830,464

Plastics, chemical products 702,703 757,608

Foodstuffs 674,107 664,407

Electronic/electrical 644,252 664,327

Other economic services 643,374 659,061

Tourism, accommodation, gastronomy 610,625 619,041

Energy supplies 600,334 685,861

Financial and insurance services 551,282 507,522

Subtotal 36,057,615 36,603,817

Other sectors 4,070,629 5,622,327

TOTAL 40,128,244 42,226,144

Austria: 66.2% (previous year: 65.3%)

Germany: 19.1% (previous year: 20.2%)

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

Croatia: 1.9% (previous year: 1.8%)

Romania: 1.4% (previous year: 1.4%)

Hungary: 1.4% (previous year: 1.4%)

Slovakia: 1.2% (previous year: 1.1%)

Poland: 1.2% (previous year: 1.1%)

Others: 2.9% (previous year: 3.5%)



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

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

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

Disclosures on government bonds from selected European countries

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

VERY LOW OR LOW RISK NORMAL RISK INCREASED RISK

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

Cash and cash equivalents 52,557 54,500 0 0 0 0

Loans and advances to banks 5,678,373 6,056,733 1,169,882 689,976 5,499 30,867

Loans and advances to customers 4,697,615 5,183,445 10,010,078 9,213,344 2,626,133 3,243,067

Trading assets 2,370,232 1,781,413 91,703 1,156,297 6,859 13,766

Financial assets 4,623,976 4,047,649 236,258 1,146,480 25,696 58,405

Contingent liabilities 1,010,541 1,063,466 1,933,288 2,000,106 204,416 301,078

Credit risks 1,417,184 1,613,970 2,026,724 2,437,239 394,730 457,328

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

CARRYING AMOUNTS

IN EUR M


INSTRUMENTS

FINANCIAL ASSETS AVAILABLE FOR

SALE (AFS)FINANCIAL ASSETS

“HELD-TO-MATURITY” TOTAL

12/2015 12/2014 12/2015 12/2014 12/2015 12/2014 12/2015 12/2014

Spain 0 0 11.7 0 0 0 11.7 0

Greece 0 0 0 0 0 0 0 0

Ireland 0 0 12.3 12.5 50.0 49.9 62.3 62.4

Italy 89.9 87.2 0 0 0 0 89.9 87.2

Ukraine 0 0 0 0.8 0 0 0 0.8

Portugal 0 0 0 0 15.0 15.1 15.0 15.1

Total 89.9 87.2 24.0 13.3 65.0 65.0 178.9 165.5

The shifts within the individual credit ratings are influenced by the conversion to new IRB rating models which has already taken place to some extent.


Structure of overdue or impaired credit risk exposure

Carrying amounts of overdue or impaired financial assets:

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Loans and advances to banks 1,153 1,562


Financial assets 916 2,578

Contingent liabilities 69,551 59,568

Credit risks 77,397 86,411

Total 1,546,500 1,677,015

Collateral relating to overdue or impaired credit risk exposure

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

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

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

Appropriated collateral

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

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Loans and advances to customers 889,453 885,380

Contingent liabilities 19,886 24,473

Credit risks 34,206 10,051

Total collateral values 943,545 919,904

31 DEC. 2015 31 DEC. 2014

CARRYING AMOUNT

IN EUR '000 NUMBER

CARRYING AMOUNT

IN EUR '000 NUMBER

Undeveloped land 204 1 146 1

Residential buildings 618 1 603 1

Commercial properties 0 0 6,411 1

Mixed use buildings 1,656 1 1,087 1

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

Of which taken into possession in 2015

Mixed use buildings 1,656 1



Age structure of overdue credit risk exposure

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

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

Impaired credit risk exposure

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

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

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

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

Credit-rating-related impairment of securities in the category “financial assets available for sale (AfS),” “financial assets held to maturity” and “loans and receivables” are recognised as valuation allowances. In 2015, these valuation allowances on debt capital

* Amounts without portfolio value adjustment

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

up to 30 days 536,868 565,763

31 to 60 days 80,619 89,251

61 to 90 days 10,833 13,715

over 90 days 39,012 32,367

Total 667,332 701,096

LOANS AND ADVANCES TO BANKS

LOANS AND ADVANCES TO CUSTOMERS

EVENTUAL- LIABILITIES CREDIT RISKS

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

Gross value 294 922 1,521,094 1,757,280 77,129 67,527 108,364 97,716

Loan loss allowances –294 –913 –789,790 –929,927 –7,578 –7,959 –30,967 –11,305

Carrying amount 0 9 731,304 827,353 69,551 59,568 77,397 86,411

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


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

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

Forbearance

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

PERFORMING

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

Loans and advances to customers 266,886 147,672 –170,720 243,838

Credit risks 13,232 36,981 –1,880 48,333

Total 280,118 184,653 –172,600 292,171

Loan loss allowances 0 0 0 0

NON-PERFORMING

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

Loans and advances to customers 569,090 245,812 –201,103 613,799

Credit risks 58,498 33,434 –37,152 54,780

Total 627,588 279,246 –238,255 668,579

Loan loss allowances 604,321 210,445 –215,536 599,230

“Forbearance” refers to measures that are characterised by an alteration of conditions included in the credit agreement to the borrower’s advantage (e.g., deferments) or the refinancing of the loan because the borrower can no longer fulfill the exist-ing conditions due to financial hardship. A borrower’s financial hardship and alterations to the credit agreement do not nec-essarily result in losses for the lending institution in every case.

The designation refers to financial instruments that have for-bearance measures applied to them in accordance with Im-plementation Regulation (EU) 680/2014. This is primarily a matter of deferring interest or instalment payments or of bridge financing. Should the lending institution experience losses as a result of forbearance measures, appropriate value adjust-ment measures in accordance with IAS 39 will be undertaken.

Other changes to credit agreements that are not related to the borrower’s experience of financial hardship will not be consid-ered forbearance measures.

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.

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 Manage-ment department is responsible for liquidity control with this, while the Market Risk Control department is responsible for liquidity risk management. The Asset/Liability Management 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 Raiffeisenlandes- bank 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 Raiffeisenland-esbank plans and manages the liquidity for the sector as the central institution 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 the Raiffeisenlandesbank, the Raiffeisen banks and the association of Raiffeisen banks, and which deals with current topics and/or develops countermeasures when the liquidity position is strained.

In Raiffeisenlandesbank Oberösterreich, in addition to the uni-form sector liquidity emergency plan defined for the Austrian Raiffeisen sector, Raiffeisenlandesbank Group Oberösterreich also has its own liquidity emergency plan, which governs pro-cesses, responsibilities and actions in the event of a liquidity crisis.

Liquidity and liquidity risk are managed under a standardised model which, besides normal circumstances, also encom-passes stress scenarios arising from reputational risk, sys-temic risk, a non-performing loan or a crisis involving several risks. To this end the following key figures are determined with associated limits:

¬ 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.

¬ For the structural liquidity maturity transformation (“S-LFT”), the key figure is formed by taking the ratios of assets to liabilities calculated by going backwards from the end of the maturity band.

¬ The GBS (German abbreviation for the gap between the ratio total and total assets) ratio is formed by taking the ratios of the net positions per maturity band to total assets and shows any excessive funding risks.

The following are also the key pillars for managing liquidity and liquidity risk at Raiffeisenlandesbank Oberösterreich:

¬ Operational liquidity is also measured, in addition to the aforementioned O-LFT, against the LCR (Liquidity Cover-age Ratio) as well as a survival period.

¬ The structural liquidity is also measured against the NSFR. ¬ 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 per cent certainty – be exceeded within 250 trading days.

¬ Raiffeisenlandesbank Oberösterreich has a broad basis of funding. It proceeds in accordance with the principles of diversification and balance.

¬ A quantitative liquidity emergency plan is prepared on a weekly basis.

LCR (Liquidity Coverage Ratio) at 31 December 2015 was at Group level at 98 per cent and therefore significantly exceeded the 60 per cent level required as at 31 December 2015.

In terms of its Long Term Issue Ratings, Raiffeisenlandesbank Oberösterreich has been rated by Moody’s at Baa2 from 01 July 2015.


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. 2015

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 4,148,135 1,051,175 839,154 3,630,619 1,820,019 11,489,102

Amounts owed to customers 5,006,780 1,382,667 1,029,959 1,331,369 2,096,783 10,847,558

Liabilities evidenced by certificates 365 749,701 962,812 3,515,788 3,066,861 8,295,527

Trading liabilities 0 136,580 224,442 1,190,167 2,530,920 4,082,109

Subordinated capital 0 5,445 78,555 1,054,159 490,618 1,628,777

Total 9,155,280 3,325,568 3,134,922 10,722,102 10,005,201 36,343,073

Contingent liabilities 3,217,796 0 0 0 0 3,217,796

Credit risks 3,916,035 0 0 0 0 3,916,035

31 DEC. 2014

IN EUR ’000

PAYMENT ON DEMAND/WITHOUT A

TERMUP TO

3 MONTHS3 MONTHS TO 1 YEAR

1 TO 5 YEARS




Liabilities evidenced by certificates 10,000 499,400 1,172,842 4,236,934 3,335,643 9,254,819

Trading liabilities 0 157,623 280,461 1,377,239 2,567,135 4,382,458

Subordinated capital 0 5,007 203,970 987,960 486,934 1,683,871

Total 8,639,721 2,998,016 3,994,308 11,626,618 10,607,832 37,866,495

Contingent liabilities 3,424,218 0 0 0 0 3,424,218

Credit risks 4,594,948 0 0 0 0 4,594,948

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

1,200

800

400

0

–400

–800

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

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



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 loss caused by the inappropriateness or failure of internal processes, people or systems, or caused by external events. Raiffeisenlandesbank Oberösterreich uses the basis in-dicator approach to quantify operational risk. Raiffeisenlandes- bank 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, com-petence regulations, a risk-adequate internal control system, a comprehensive security manual as a behaviour code and directive, as well as scheduled and unscheduled audits by In-ternal Auditing. The operative management of this type of risk involves risk discussions and analyses with managers (early warning system). And the systematic 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.

Investment portfolio risk

Investment portfolio risk covers potential losses caused by dividends not paid, adjustments, disposal losses, regulatory funding obligations, strategic financial restructuring responsi-bilities, 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 Proj-ects & Structured Financing provides a risk evaluation state-ment 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, Supervisory 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. The investment rating is a cen-tral component when measuring equity risk in the risk-bearing capacity analysis. The equity risk is determined on the basis of expert assessments that take into account the current rating classification of the respective investment company.

The bases for the determination of equity risk are the risk fac-tors (= haircuts) that are derived from the rating classification of the respective investment company, and the exposure value of the investment. The investment portfolio risk results from the respective exposure and the haircuts applied to it.

The following table presents the carrying amount of equity investments held by the Raiffeisenlandesbank Oberösterreich Group as at 31 December 2015 and 31 December 2014, or-ganised by risk classes:

VERY LOW OR LOW RISK NORMAL RISK INCREASED RISK

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

Banks 1,079,066 1,189,202 12,848 12,025 1,557 5,675

Non-banks 553,257 617,705 871,293 831,902 51,854 56,365

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

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


CORPORATES & RETAIL

FINANCIAL MARKETS

EQUITY INVESTMENTS


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

Market risk 1 469.4 469.4 44.7 38.9 514.1 508.3

Credit risk 2 1,144.3 1,385.6 128.2 144.9 171.6 262.7 43.2 35.1 1,487.3 1,828.3

Investment portfolio risk 914.7 931.3 914.7 931.3

Refinancing risk 5.4 0.0 5.4 0.0

Operational risk 33.8 43.3 23.5 23.2 38.9 29.6 2.5 1.8 98.7 97.9

Macroeconomic risks 221.3 299.4 7.2 16.3 31.8 52.9 2.3 3.6 262.6 372.2

Others risks/buffers 3 3.4 4.4 2.4 2.4 3.9 3.0 0.3 0.2 10.0 10.0

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

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

1) Market risks are incurred in the Financial Markets and Investments segments. Reason: The SALZBURGER LANDES-HYPOTHEKENBANK AKTIENGESELLSCHAFT is included in its entirety in the Investments section of the IFRS statements.

2) Credit risks are also incurred in the Corporate Centre, because financing is also allocated to this segment in the IFRS statements.3) Operational risks and the risk buffer were distributed aliquot to income.

Details regarding risk capital

SEGMENTTYPE OF RISK

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, eq-uity capital risks, and profit risks) to risk coverage (= operat-ing profit, hidden reserves, reserves, and equity capital). This comparison of the group risks with the available coverage de-picts 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 per cent within one year.

Procedures and methods for supervisory monitoring and evaluation.

There is no requirement from the authority responsible to pub-lish the result of the bank’s own procedure for evaluating the suitability of the internal capital. Raiffeisenlandesbank Oberös-terreich significantly overachieves at all times the SREP ratio stipulated by the authority. The business model, governance and risk management are all assessed within the SREP pro-cess. Assessment of risks and liquidity or funding respectively are also undertaken.

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 the P&L as well as on the capital resources, and also present the impact on the risk utilisation.

Impact on the P&L

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 P&L is considered and the resulting capital re-sources are ascertained for the end of the stress test period. The analysis is based on a stress test covering multiple peri-ods, 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.

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



Impact on the 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 investment risk is determined by simulating deteriorations in the ratings of individual borrow-ers that are in an industry that is significant to Raiffeisenland-esbank Oberösterreich. A negative trend for the interest rate curve or the credit spread is assumed in the Market Risk area. Three defined scenarios (problem, reputational risk and sys-temic crisis) are simulated with the refinancing risk resulting from this then defined. Default on the part of the biggest bor-rowers is also simulated with an illustration of the operational harm.

EBA or SSM-SREP stress test

The impact on the P&L and therefore on the capital ratios is also considered within the scope of the EBA or SSM-SREP stress test. The time frame is 3 years and is implemented in accordance with the methods stipulated by the authority.


Raiffeisen Banking Group Upper Austria

The Austrian Raiffeisen Banking Group (RBG Ö) is the larg-est banking group in Austria with about 504 locally operating Raiffeisen branches, eight regional Raiffeisen headquarters, and Raiffeisen Zentralbank Österreich AG as central institution in Vienna. Some 1.7 million Austrians are members and thus owners of Raiffeisen banks.

The Raiffeisen Banking Group Upper Austria (RBG OÖ) is made up of a central institution, Raiffeisenlandesbank Oberös-terreich AG, and 94 Raiffeisen banks with a total of 442 bank branches.

About 310,000 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 institutional 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 (RBG Ö), the development of the IPS was designed in two stages (Federal- and State-wide IPS). Raiffeisenlandesbank Oberös-terreich is a member of both the Federal and the State IPS.

The risk council that has been established monitors and manages the development of the entire L-IPS and of the in-dividual members within the institutional guarantee system at state level. The institutional guarantee system is represented at state level by the Chief Executive of Raiffeisenlandesbank Oberösterreich AG, Heinrich Schaller. Approval for the insti-tutional guarantee system was obtained from the FMA by a decision dated 3 November 2014.

Aid association of the Raiffeisen Banking Group Upper Austria Raiffeisen-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 Oberöster- reich und Raiffeisen-Kredit-Garantiegesellschaft m.b.H.), which ensures that in case of economic problems the distressed institutions receive help through adequate measures.

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 (Raiffeisen-Kundengarantiegemeinschaft Österreich, RKÖ)

This association, whose members comprise participating Raiffeisen banks and Raiffeisenlandesbanks, Raiffeisen Zentr-albank Österreich AG (RZB) and Raiffeisen Bank International AG (RBI), guarantees all customer deposits and securities issues of participating banks, regardless of the individual amounts involved, up to the joint financial risk-bearing capac-ity of the participating banks. The structure of the Customer Guarantee Association has two tiers: first, the Raiffeisen Cus-tomer Guarantee Fund Upper Austria at state level, and then the Raiffeisen Customer Guarantee Association Austria at fed-eral level. Thus, the Customer Guarantee Association guar-antees protection for customers that goes beyond the legal deposit guarantee.

Deposit guarantee NEW

The new Austrian Deposit Guarantee and Investor Compen-sation Act (ESAEG), which implements a European Directive, came into force in mid-August. All member institutions of RBG Upper Austria are joint members of the “Austrian Raiff- eisen-Einlagensicherung eGen” via the Upper Austrian state deposit guarantee.


The Act anticipates the establishment of a deposit guaran-tee fund that is stocked by annual contributions from banks. The target volume to be reached by 2024 is 0.8 per cent of covered deposits. If these funds are not sufficient, the banks may be required to provide an additional 0.5 per cent of the covered deposits annually.

The amount of the protection for the customer does not change as a result of the new Act: deposits continue to be guaranteed at up to EUR 100,000 per customer and bank. The dispelling of some of the assumptions held to date has, however, led to the scope of customer protection being ex-panded, with major corporations, deposits in a foreign cur-rency as well as deposits from managing directors, members of the supervisory authority and auditors of the bank now also being protected.

The guaranteed deposits should be reimbursed within seven working days as of 1 January 2024 (gradual reduction in the periods by then).

The Austrian deposit guarantee system is currently broken down into sectors and should be retained in this form until 2018. A new uniform system (run by the Economic Chambers) is then due to be set up as of 2019.

Deposit guarantee outlook

The European Commission is planning an EU-wide deposit guarantee that should be implemented in full by 2024. By this time, all of the existing national deposit guarantee systems should have been transferred to this EU deposit guarantee in stages. This is still a proposal from the European Commission which requires agreement from the European Council and the European Parliament for it to be implemented.

Bank Recovery and Resolution Act (BaSAG)

The Banking Recovery and Resolution Directive (BRRD) came into force with effect from 1 January 2015 with the establish-ment of a Europe-wide banking union by the European Union. Following on from this EU Directive (BRRD), the Banking In-tervention and Bank Restructuring Act (BIRG) in Austria was repealed and replaced by the Bank Recovery and Resolution Act (BaSAG) which implemented the BRRD into Austrian law with effect from 1 January 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 com-pany, the RBG OÖ Verbund eGen created the 2015 group re-covery plan based on the new legal position, and this includes the specifics related to Raiffeisenlandesbank Oberösterreich.

A resolution plan must 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 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 of 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 implement-ing suitable countermeasures. The set of indicators selected meets the minimum requirements for qualitative and quantita-tive indicators in accordance with the EBA Guidelines. Addi-tional indicators were also selected by the organisation itself, meaning monitoring of a total set of 22 indicators is undertaken and regular reports are submitted to the Managing Board.

Raiffeisenlandesbank Oberösterreich AG is obliged by statute to make an annual contribution to the Single Resolution Fund (“SRF”) at the European level. The contribution to the resolu-tion 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.

Hypo-Haftungsgesellschaft m.b.H.

Raiffeisenlandesbank Oberösterreich holds a minority interest in Oberösterreichische Landesbank AG (Hypo OÖ) and a ma-jority interest in SALZBURGER LANDESHYPOTHEKENBANK AG (Hypo Salzburg), which belongs to the protection scheme “Hypo Haftungsgesellschaft m.b.H.” under the framework of the association of mortgage banks, as required by law. Fur-thermore, Hypo Oberösterreich and Hypo Salzburg are also affected because of their membership in the Pfandbriefstelle by the FMA mandate of 1 March 2015, which imposed a debt moratorium on HETA ASSET RESOLUTION AG (“HETA”) that will be in force until 31 May 2016. The moratorium imposed by the financial supervisory authority also affects the liabilities of HETA owed to the Pfandbriefstelle (the bond division of the association of Austrian state mortgage banks). An agreement was entered into between the mortgage lending agency of the Austrian Landes-Hypothekenbanken, Pfandbriefbank (Öster-reich) AG, the individual member banks and the federal state of Carinthia with the aim of securing the provision of liquid-ity. Corresponding payments were made by Hypo Salzburg amounting to EUR 84.0 million (half on own account and half for the account of the guarantors) for the purposes of imple-menting this agreement. Payments are still outstanding until the moratorium expires.



Breakdown of remaining maturities

Information regarding associated companies and persons

Breakdown of remaining maturities as at 31 Dec. 2015


Other information

IN EUR ’000

PAYMENT ON DEMAND/

WITHOUT A TERM

UP TO 3 MONTHS

3 MONTHS TO 1 YEAR

1 TO 5 YEARS


Cash and cash equivalents 90,221 0 0 0 0 90,221

Loans and advances to banks 3,396,842 755,047 507,203 1,501,949 693,866 6,854,907


Trading assets 207,152 20,391 53,335 581,603 1,606,313 2,468,794

Financial assets 787,249 91,624 251,354 1,570,013 2,970,387 5,670,627

Companies accounted for using the equity method

1,786,116

0

0

0

0

1,786,116


Amounts owed to customers 4,858,109 1,504,296 975,863 1,181,128 2,108,719 10,628,115

Trading liabilities 111,549 14,552 18,884 369,824 1,356,723 1,871,532

Liabilities evidenced by certificates 65,756 749,378 836,264 3,219,764 2,747,322 7,618,484

Subordinated capital 21,397 25,358 19,786 1,002,795 362,012 1,431,348

IN EUR ’000

PAYMENT ON DEMAND/

WITHOUT A TERM

UP TO 3 MONTHS

3 MONTHS TO 1 YEAR

1 TO 5 YEARS


Cash and cash equivalents 89,086 0 0 0 0 89,086

Loans and advances to banks 3,436,390 1,008,250 626,142 995,394 712,962 6,779,138


Trading assets 223,445 20,308 43,548 664,188 1,999,987 2,951,476

Financial assets 930,131 235,606 260,809 1,642,487 3,104,571 6,173,604

Companies accounted for using the equity method

1,800,077

0

0

0

0

1,800,077



Trading liabilities 118,918 15,576 31,983 386,656 1,649,216 2,202,349

Liabilities evidenced by certificates 93,833 498,349 1,065,135 3,907,394 3,077,692 8,642,403

Subordinated capital 20,024 5,003 160,589 893,657 457,218 1,536,491

The ultimate parent company is a cooperative registered as Raiffeisenbankengruppe OÖ Verbund which is not, aside from its function as a holding company, operationally active.

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, incl. the companies reported under the equity method. The category

of “Members of the Management in Key Positions” covers the Managing Board and Supervisory Board members of Raiff- eisenlandesbank Oberösterreich. The category of “Other as-sociated companies and persons” shows details of close fam-ily members of the Management in key positions (incl. their companies). No joint enterprises in which the Raiffeisenlandes- bank Oberösterreich is a partner company are in existence at the reported reference dates.


IFRS Consolidated Statements_Notes_Other information

Information regarding associated companies and persons as at 31 December 2015

IN EUR ’000

PARENT COMPANY

SUBSIDIARIES (NON-CONSOLIDATED)

ASSOCIATED COMPANIES

Loans and advances to banks 0 0 4,438,100

of which loan loss allowances 0 0 1,721

Loans and advances to customers 0 406,712 752,496

of which loan loss allowances 0 8,614 2,946

Trading assets 0 37,140 363,741

Financial assets 0 224,743 677,106

Companies accounted for using the equity method 0 0 1,786,116

Other assets 0 18,729 15,708

Amounts owed to banks 0 0 1,359,461

Amounts owed to customers 74 103,037 153,999

Trading liabilities 0 1,701 74,487

Provisions 0 496 2,484

Other liabilities 0 2,496 2,591

Guarantees given 0 17,941 445,386

Guarantees received 0 0 527,967

Net interest income 0 29,965 95,181

Additions to loan loss allowances 0 1,271 2,728

IN EUR ’000

PARENT COMPANY

SUBSIDIARIES (NON-CONSOLIDATED)

ASSOCIATED COMPANIES

Loans and advances to banks 0 0 4,331,278

of which loan loss allowances 0 0 0

Loans and advances to customers 0 554,119 793,378

of which loan loss allowances 0 16,670 2,595

Trading assets 0 43,373 428,442

Financial assets 0 250,625 663,399

Companies accounted for using the equity method 0 0 1,800,077

Other assets 0 30,489 49,391

Amounts owed to banks 0 0 1,343,446

Amounts owed to customers 81 136,182 112,217

Trading liabilities 0 1,920 93,141

Provisions 0 1,124 198

Other liabilities 0 4,707 509

Guarantees given 0 21,599 357,001

Guarantees received 0 0 346,098

Net interest income 2 77,364 88,515

Additions to loan loss allowances 0 9,282 4,427

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

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


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

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

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

Remuneration of the Managing Board and the Supervisory Board

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

In 2015, remuneration (including reimbursements for travel expenses) of EUR 632 thousand (previous year: EUR 543 thousand) were paid to members of the Supervisory Board.

IN EUR ’000 2015 2014

Ongoing payments 3,698 3,791

Post-employment benefits 1,742 1,788

Other long-term benefits due 18 44

Total 5,458 5,623


IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Assets 5,062 15,519


Trading assets 1,594 5,880


Liabilities 211,453 148,847

Amounts owed to customers 133,390 87,209

Liabilities evidenced by certificates 72,592 60,559

Trading liabilities 3,413 63

Subordinated capital 2,058 1,016

IN EUR ’000 31 DEC. 2015 31 DEC. 2014


Trading assets 1,594 5,880


IN EUR ’000 2015 2014

Scope 4,088,151 3,533,866

Non-consolidated structured companies

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

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

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

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.

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

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



Contingent liabilities

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

Collateral

As at 31 December 2015, securities to the amount of EUR 11,231 thousand (previous year: EUR 11,449) were held as cover assets for trust fund deposits of EUR 14,787 thousand (previous year: EUR 16,696). Securities to the amount of EUR 59,049 thousand (previous year: EUR 64,301 thousand) were held as cover for mortgage bonds, municipal bonds and cov-ered bonds, together with loans and advances to customers amounting to EUR 1,985,254 thousand (previous year: EUR 1,759,022 thousand). Loans and advances to customers and banks amounting to EUR 390,346 thousand (previous year: EUR 296,750 thousand) were used as collateral for third-party obligations.

In addition, receivables with a carrying amount of EUR 450,000 thousand (previous year: EUR 150,000 thousand) and securities with a carrying amount of EUR 288,185 thou-sand (previous year: EUR 358,244 thousand) were pledged as collateral at banks and exchanges.

An amount of EUR 629,075 thousand (previous year: EUR 687,315 thousand) had been lodged with banks and custom-ers under collateral agreements. Loans and advances were assigned to banks amounting to EUR 2,285,276 thousand (previous year: EUR 2,015,016).

The related contractual provisions are customary in the industry.

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Contingent liabilities 3,217,796 3,424,218

of which endorsed bills sold 0 0

of which other indemnity agreements 3,215,140 3,420,966

of which other contingent liabilities 2,656 3,252

Credit risks 3,916,035 4,594,948

of which loan approvals/stand-by facilities 3,916,035 4,594,948

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


31 DEC. 2015 31 DEC. 2014

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 0 0 6,059 6,128

Financial assets available for sale (AfS) 0 0 66,831 67,597

Financial assets “held-to-maturity” 0 0 9,340 9,447

Total 0 0 82,230 83,172

31 DEC. 2015 31 DEC. 2014

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 0 0 6,059 6,129

Financial assets available for sale (AfS) 0 0 66,831 67,603

Financial assets “held-to-maturity” 0 0 11,766 9,448

Total 0 0 84,656 83,180

Transfers of financial assets

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

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



Lease financing (lessor)

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

Leasing

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

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

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

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Vehicle leasing 750,863 863,659

Real estate leasing 617,478 695,324

Equipment leasing 624,745 558,718

Total 1,993,086 2,117,701

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Real estate leasing 17,087 19,510

Equipment leasing 2,914 4,250

Other forms of leasing 0 2,122

Total 20,001 25,882

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Investment (gross) 2,181,614 2,345,452

Minimum lease payments 2,049,936 2,168,976

up to 1 year 585,958 670,278

1-5 years 1,069,329 1,064,822

over 5 years 394,649 433,876

Non-guaranteed residual values 131,678 176,476

Unrealised net financial income 188,528 227,751

up to 1 year 61,981 63,537

1-5 years 86,871 103,605

over 5 years 39,676 60,609

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

Lease financing (lessee)

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

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Minimum lease payments 20,538 26,970

up to 1 year 4,055 4,566

1-5 years 11,790 15,084

over 5 years 4,693 7,320

Interest portion 537 1,088

Investment (net) 20,001 25,882


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 (lessor)

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

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

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

up to 1 year 34,164 32,431

1-5 years 93,585 86,546

over 5 years 91,730 108,944

Total 219,479 227,921

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

up to 1 year 3,884 3,848

1-5 years 7,642 6,817

over 5 years 636 582

Total 12,162 11,247



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

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Securities 34,992 60,494

Other financial instruments 3,123,086 1,856,343

Total 3,158,078 1,916,837

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

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

Disclosures required under Austrian accounting standards

Foreign currency volumes

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

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 1,847,972 thousand (previous year: EUR 2,102,383 thousand) can be allocated to the fixed assets.

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

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Assets 1,923,231 2,267,680

Equity and liabilities 1,891,819 2,143,949

LISTED NON-LISTED

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

Bonds and other fixed-income securities 1,917,174 2,178,952 0 0

Shares and other variable-yield securities 61,031 83,529 0 0


IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Capital instruments and the premium linked to them 1,018,857 1,018,857

Retained earnings 2,427,688 2,214,077

Accumulated other net gains/losses –75,371 –2,296

Other reserves 4,406 4,406

Eligible minority Common Equity Tier (CET) 1 minority holdings (incl. transitional regulations) 96,469 110,405

Common Equity Tier (CET) 1 capital prior to regulatory adjustments (corrections and deductions) 3,472,049 3,345,449

Prudential filters correction –98,770 –90,236

Intangible assets deduction (incl. goodwill) –58,179 –65,291

Deductions for deferred taxes –4,921 –6,329

Deduction of core Tier 1 capital instruments from companies in the financial sector –36,376 –128,204

Items to be deducted from the items of additional Tier 1 capital, exceeding the additional Tier 1 capital –38,024 –33,888

Other transition adjustments to common Tier 1 capital –71,172 –193,655

Common Tier 1 capital (CET 1) 3,164,607 2,827,846

Additional Tier 1 capital (AT 1) – –

Tier 1 capital (Tier 1 = CET 1 + AT 1) 3,164,607 2,827,846

Grandfathering of capital instruments of Tier 2 capital and subordinated loans 26,233 44,800

Eligible minority Common Equity Tier 2 minority holdings (incl. transitional regulations) 662,995 861,549

Tier 2 capital (T 2) before regulatory adjustments 689,228 906,349

Deductions as well as other transitional adjustments of Tier 2 capital –9,169 –32,764

Tier 2 capital (T 2) 680,059 873,585

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

IN EUR ’000 31 DEC. 2015 31 DEC. 2014

Capital requirements for credit, counter-party, or dilution risk 21,412,643 23,493,875

Capital requirements for item, foreign currency, and commodity risks 116,445 259,006

Capital requirements for operational risks 1,234,220 1,223,177

Capital requirements for adjustments to credit evaluation (CVA) 130,796 193,245

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

IN % 31 DEC. 2015 31 DEC. 2014

Common Tier 1 capital ratio (CET-1 ratio) 13.82 11.24

Tier 1 capital ratio 13.82 11.24

Total capital ratio (TC ratio) 16.79 14.71

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

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

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

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

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

IFRS consolidated financial statements_Notes_Information required under Austrian accounting standards


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

2015 2014

Salaried employees 3,663 3,539

of which VIVATIS/efko 802 781

Other employees 1,757 1,799

of which VIVATIS/efko 1,737 1,779

Total 5,420 5,338

of which VIVATIS/efko 2,539 2,560

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

2015 2014

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 1,503 735 1,600 632

Other attestation services 73 58 34 88

Tax consultancy services 90 0 275 0

Other services 80 0 98 28

In accordance with section 237 (14) of the Austrian Commercial Code, the fee for auditing the financial statements of subsidiary companies is published in the notes to the consolidated financial statements. This is the cumulative fee for auditing the group's financial statement (gross amounts) and those of the subsidiaries.

* incl. network companies

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

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

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

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

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

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


NET INTEREST INCOME IN EUR ’000

OPERATING INCOME IN EUR ’000

PRE-TAX PROFIT FOR THE YEAR

IN EUR ’000

TAXES ON INCOME AND EARNINGS

IN EUR ’000

EMPLOYEES- NUMBER

Austria 400,043 926,143 307,517 –10,509 4,913

Czech Republic 3,719 6,039 1,100 –326 47

Germany 41,291 45,777 1,666 –2,169 200

Croatia 3,498 13,341 1,816 –416 38

Hungary 26 –388 –404 –55 0

Poland 5,737 7,232 908 –394 78

Romania 9,490 12,040 5,277 –569 96

Slovenia 30 46 13 –12 0

Slovakia 4,470 5,038 528 142 48

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

NET INTEREST INCOME IN EUR ’000

OPERATING INCOME IN EUR ’000

PRE-TAX PROFIT FOR THE YEAR

IN EUR ’000

TAXES ON INCOME AND EARNINGS

IN EUR ’000

EMPLOYEES- NUMBER

Austria 356,540 873,791 26,392 296 4,830

Czech Republic 3,636 6,177 1,101 –146 51

Germany 45,524 43,488 6,412 –3,085 204

Croatia 3,288 13,557 952 –320 37

Hungary 92 271 219 –2 0

Poland 5,395 5,862 –456 211 74

Romania 9,257 12,333 5,382 –766 96

Slovenia 30 60 21 –4 0

Slovakia 4,488 5,081 699 –537 46

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

Additional information on maturities as required by section 64 of the Austrian Banking Act

In 2016, bonds and other fixed-income securities held by the bank to the amount of EUR 119,345 thousand (2015: EUR 224,319 thousand), along with bond issues of EUR 701,523 thousand (2015: 975,916 thousand).

Subordinated liabilities

In the case of subordinated liabilities, the subordination is al-ways agreed separately in writing pursuant to section 51 para. 9 of the Austrian Banking Act.

Expenses for subordinated liabilities

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

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

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

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

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



IFRS consolidated financial statements_Notes_Information required under Austrian accounting standards


The members of the boards of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Chairman of the Managing BoardHeinrich Schaller, Chief Executive

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

Members of the Managing BoardStefan Sandberger, Member of the Managing BoardReinhard Schwendtbauer, Member of the Managing BoardGeorg Starzer, Member of the Managing BoardMarkus Vockenhuber, Member of the Managing Board

Information on the members of the Raiffeisenlandesbank Oberösterreich Supervisory Board can be found on pages 12 and 13.

Events after the balance sheet date

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




THE MANAGING BOARD







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


Audit Certificate

Report on the consolidated financial statements

I have audited the attached consolidated financial statements of

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft,Linz,

consisting of the consolidated balance sheet as at 31 De-cember 2015, the consolidated statement of comprehen-sive income, the group cash flow statement and the group statement of changes in equity for the financial year ending 31 December 2015, plus the disclosures to the consolidated financial statements.

Responsibility of the legal representatives of the consolidated financial statements

The legal representatives of the company are responsible for the Group accounting and for compiling consolidated financial statements in accordance with the International Financial Re-porting Standards (IFRSs) as they are applied in the EU as well as with additional requirements stipulated in sections 245a of the Austrian Commercial Code and 59a of the Austrian Bank-ing Act. This responsibility includes an internal control system, to the extent that the legal representatives consider neces-sary for the preparation of the consolidated statements and to present as true a picture as possible of the group's net assets, financial position and profit situation so that these consoli-dated statements are free from material misrepresentations, whether due to intentional or unintentional mistakes.

Responsibility of the auditor

My responsibility lies in the submission of an audit opinion on these consolidated financial statements on the basis of our inspection. I conducted my audit in accordance with the Aus-trian principles of orderly accounting. These principles require

the application of the international standards on auditing. These standards require that I abide by the professional stan-dards and plan and perform the audit in such a manner that I can form a reasonable opinion as to whether the consolidated financial statements are free of material misstatement. An audit includes the implementation of auditing actions to ob-tain auditing proof in respect of the amounts and other details given in the consolidated financial statements. The choice of auditing actions is left to the professional discretion of the au-ditor of the annual financial statements, taking into account his assessment of the risk of material misstatements occurring, whether due to intended or unintended errors. In assessing this risk, the auditor of the consolidated financial statements takes into account the internal control system, insofar as it is important for compiling the consolidated financial statements and presenting a true and fair view of the assets, financial position and earnings of the company, in order to determine suitable auditing actions taking account of the framework conditions, not however to submit an auditing opinion about the effectiveness of the company’s internal control system. The audit also included my evaluation of the adequacy of the applied accounting and valuation methods and the essential estimates made by the legal representatives of the company as well as an assessment of the overall tenor of the consoli-dated financial statements.

I believe that I have obtained sufficient and suitable auditing proof, so that my audit provides a reasonable basis for my opinion.


Audit Certificate

Auditor’s opinion

The results of my audit gave no reason for objection. On the basis of the knowledge gained during the audit, in my judge-ment 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 December 2015 and the group’s earnings and cash flow in the financial year from 1 January 2015 to 31 December 2015, in accordance with section 245a of the Austrian Commercial Code (UGB) and the special statutory provisions of the International Financial Re-porting Standards (IFRSs), as they are applied in the EU.

Statement concerning the Group management report

According to the Austrian legal regulations, the group man-agement report is to be audited as to whether it is consistent with the consolidated financial statements and whether or not other details given in the group management report give a mis-leading impression of the group’s financial position. The audit certificate must also include a statement as to whether the group management report is consistent with the consolidated financial statements and whether or not the details according to section 243a (2) of the Austrian Commercial Code apply.

In my opinion, the group management report is consistent with the consolidated financial statements. The details according to section 243a (2) of the Austrian Commercial Code apply.

Vienna, 5 April 2016

As auditor for Österreichischer Raiffeisenverband:

Michael LamingerChartered Accountant and Auditor


Audit certificate

Report on the consolidated financial statements

We have examined the attached consolidated financial statements of


consisting of the consolidated balance sheet as at 31 De-cember 2015, the consolidated statement of comprehen-sive income, the group cash flow statement and the group statement of changes in equity for the financial year ending 31 December 2015, plus the disclosures to the consolidated financial statements. In terms of our responsibility and liability as auditors to the company and to third parties, section 275 of the Austrian Commercial Code shall apply.

Responsibility of the legal representatives of the consolidated financial statements

The legal representatives of the company are responsible for the Group accounting and for compiling consolidated finan-cial 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 they are applied in the EU as well as with additional require-ments stipulated in sections 245a of the Austrian Commercial Code and 59a of the Austrian Banking Act.


My responsibility lies in the submission of an audit opinion on these consolidated financial statements on the basis of our inspection. I conducted my audit in accordance with the Aus-trian principles of orderly accounting. These principles require the application of the international standards on auditing (ISA). According to these principles we are required to comply with

the professional code of conduct and to plan and carry out the audit so that there is adequate certainty that the consolidated financial statements are free from material misrepresentations.

An audit includes the implementation of auditing actions to ob-tain auditing proof in respect of the amounts and other details given in the consolidated financial statements. The choice of auditing actions is left to the professional discretion of the au-ditor of the annual financial statements, taking into account his assessment of the risk of material misstatements occurring, whether due to intended or unintended errors. In assessing this risk, the auditor of the consolidated financial statements takes into account the internal control system, insofar as it is important for compiling the consolidated financial statements and presenting a true and fair view of the assets, financial position and earnings of the company, in order to determine suitable auditing actions taking account of the framework conditions, not however to submit an auditing opinion about the effectiveness of the company’s internal control system. The audit also included my evaluation of the adequacy of the applied accounting and valuation methods and the essential estimates made by the legal representatives of the company as well as an assessment of the overall tenor of the consoli-dated financial statements.

We believe that we have obtained sufficient and suitable au-diting proof, so that my audit provides a reasonable basis for my opinion.


Audit Certificate

Auditor’s opinion

The results of our audit gave no reason for objection. On the basis of the knowledge gained during the audit, in our judge-ment 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 December 2015 and the group’s earnings and cash flow in the financial year from 1 January 2015 to 31 December 2015, in accordance with the special statutory provisions of the International Financial Reporting Standards (IFRSs), as they are applied in the EU.

Statement concerning the Group management report

According to the Austrian legal regulations, the group man-agement report is to be audited as to whether it is consistent with the consolidated financial statements and whether or not other details given in the group management report give a mis-leading impression of the group’s financial position. The audit certificate must also include a statement as to whether the group management report is consistent with the consolidated financial statements and whether or not the details according to section 243a of the Austrian Commercial Code apply.

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

Linz, 5 April 2016

KPMG Austria GmbHWirtschaftsprufungs- und Steuerberatungsgesellschaft

Martha KloibmullerChartered Accountant and Auditor


Management Report 2015 of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

1. Business development and the economic situation _____________________ 165

2. Report on the company’s prospective trends and risks __________________ 172

3. Research and development ________________________________________ 179

4. Reporting on the most important aspects of the internal control and risk management system with regard to the accounting process ________________________________________________ 180

5. Miscellaneous ____________________________________________________ 182


Management Report 2015 _ Business development and the economic situation

1.1. Economic background 2015

2015 was another turbulent financial year. Defining events that characterised international developments included the fall in oil prices as well as the extremely lax monetary policy by the European Central Bank (ECB), while a tighter money market policy was implemented in the USA. There were also consid-erable signs of weakness in China and other emerging na-tions, along with a range of ongoing geopolitical tensions. The crisis in Greece dominated the first six months of the year in Europe. This was then followed by the issue of refugees as a particularly dominant topic.

Global economic growth turned out to be somewhat weaker in 2015 than it had been in the previous year. Although perfor-mance improved in the industrialised nations and in particular the USA, the emerging nations suffered from cyclical weak-ness coupled with far-reaching structural problems. Brazil and Russia slipped into a deep recession which was accompanied by high inflationary pressure. The slowdown in the Chinese economy continued as the government and central bank im-plemented stimulus measures in an attempt to counteract this.

The USA once again acted as the engine for the global econ-omy in 2015. Figures from the labour market in particular were consistently very positive. The upturn managed to be consol-idated, which ultimately resulted in implementation of a long discussed reversal in interest rates by the Federal Reserve. Private consumption experienced particularly strong growth in the USA, while the export sector suffered from the strong dollar and the oil industry from the low prices.

The eurozone lost some of its steam once again in the sec-ond half of the year compared with the first half. Growth was based almost exclusively on private consumption, while any propensity to make investments remained restrained. How-ever, early indicators in the middle of the year pointed to more robust economic activity towards the end of the year: numer-ous framework conditions such as favourable financing condi-tions, a weak euro as a result of the lax ECB policy, low costs for raw materials (particularly for crude oil) and significant im-provements in the labour market should help to support the economy.

Inflation in the eurozone was very low to negative as a result of the low cost of raw materials. The ECB attempted to fix medium-term inflation expectations at its goal of close to (but below) 2 per cent with an extremely expansionary monetary policy (lowest interest rates and quantitative easing).

Austria also benefited from the general structural conditions that stimulated the economy (price of oil, ECB policy). Never-theless economic growth in Austria was unable to keep up with the eurozone average for 2014/15. Investment activity by companies only recovered very hesitantly from the second quarter of 2015, while private consumption continued to stag-nate. Analysts expect Austria to catch up with the average eurozone growth levels once again for 2016. The private con-sumption stimulated by the income tax reforms and the ad-ditional expenses for asylum seekers will be critical with this.

Industry in Upper Austria which is highly focused around exports recorded a significant upturn in 2015, and was well above the national average of 1.7 per cent with growth in pro-duction of 6.3 per cent in the first three quarters. The ser-vice sector also grew, while production in the construction industry fell by around 4 per cent in the first three quarters of 2015 compared with 2014. The labour market proved to be comparatively strong with growth in employment above the Austrian average. Upper Austria still has the second lowest unemployment rate of all the federal states. Analysts in the state expect growth of 2 per cent for the 2016 financial year, which is slightly above the national average, although this re-lies above all on increases in consumption levels and higher demand for investment.

The global economy slowed down again somewhat at the end of 2015. The USA recorded a dip in the economy in the fourth quarter with 0.7 per cent growth in GDP, although this is not expected to persist. Figures from the emerging nations remain weak: there is still no end in sight to the recessions in Brazil and Russia, and growth in China in the fourth quarter was a moderate 6.8 per cent. The eurozone recorded growth in GDP of 0.3 per cent in the fourth quarter of 2015, with Spain once again recording the strongest growth at 0.8 per cent. Ger-many was exactly at the average level at 0.3 per cent, while France (0.2 per cent) and Italy (0.1 per cent) lag further behind. Austrian GDP grew by 0.3 per cent in the fourth quarter of 2015, as had also been the case in the second and third quar-ters. This results in economic growth of 0.9 per cent for the full year 2015. Investments as well as private consumption and government spending provided support towards year end, al-though there was a trade deficit.

1.2. Business development

Raiffeisenlandesbank Oberösterreich saw the tasks required due to the turbulent 2015 financial year, which involved

1. Business development and the economic situation


historically low interest rates accompanied by a slowdown in the economy, as an opportunity and adapted well to the on-going changes in the structural conditions with a strategy of continuous renewal and sustainable consolidation. Against a backdrop of restrained economic growth and subdued sen-timent among companies and the wider population, it either initiated, continued or implemented a large number of action plans and projects in 2015 with a view to actively managing its costs and risk, providing the basis for the best possible level of support for its customers.

As Austria’s fourth largest bank, Raiffeisenlandesbank Oberösterreich also intends in future to outperform on the high standards imposed on a “significant” bank by the European Central Bank. Particular attention is paid here to compliance with all new statutory regulations, and in laying the foundations for compliance with the statutory requirements that will be im-posed on banks in Austria and the rest of the European Union in future, such as in relation to equity/own funds and risk man-agement. Raiffeisenlandesbank Oberösterreich is also ready to make the appropriate contributions for the deposit guaran-tee and the European resolution funds.

Yet the legal and regulatory framework has not just changed for banks: increasing changes have also been determined in customer behaviour and needs. This will only intensify over the next few years as a result of increased digitisation. Raiffeisen-landesbank Oberösterreich has therefore positioned itself as a modern advisory bank that also sets its future course with the development of the extensive range of the innovative bank-ing technology available, with the aim of ensuring even more convenient processing of banking transactions for custom-ers. Targeted action in the interests of customers also means clear alignment with the Corporate Banking (corporate and institutional customers), Retail Banking (private and commer-cial customers), Private Banking (affluent private customers) and Raiffeisen banks (Investor Relations) customer groups. The broad positioning in various business areas in particular ensures stable development. It ensures that Raiffeisenland-esbank Oberösterreich is also able to offset any external in-fluences effectively. Raiffeisenlandesbank Oberösterreich also sees itself as a hub within the Raiffeisen Banking Group Upper Austria which also has an international network of high-perfor-mance partner banks at its disposal.

Actions aimed at achieving ongoing efficiency improvements play a role in increasing the focus on the customer. PRIVAT BANK AG and bankdirekt.at AG were merged into Raiffeisen-landesbank Oberösterreich in 2015 and established as sep-arate divisions. This enabled duplications and thereby costs to be avoided in administrative tasks. The merger of software company RACON (Linz) and Raiffeisen Solution (RSO, Vienna) with Raiffeisen Software GmbH (RSG) also created new and modern structures.

The cautious risk policy was continued in 2015 in order to allow the organisation to fulfil its responsibility as a reliable and strong partner to customers. Comprehensive ongoing con-trols are provided here via a central early warning mechanism. Attention was also paid to continuous improvements in the risk situation for certain financing transactions.

Raiffeisen Oberösterreich is responding to the requirements of the future with the “Raiffeisen Banking Group Upper Austria 2020” project, which was first launched around three years ago. Clear objectives and actions have been defined with this with the aim of handling the market more effec-tively, with strategies also developed aimed at optimising the processing and legal tasks in the entire Raiffeisen sector in Upper Austria. The intensive process has been character-ised by openness, mutual trust and above all a readiness to embrace change since the project launch. For instance 27 service packages have been jointly developed by represen-tatives from the Upper Austrian Raiffeisen banks and Raif-feisenlandesbank Oberösterreich in the areas of “customers and markets”, “staff and management”, “processing and pro-duction” and “bank management and regulation”. The focus with all of these is on improving efficiency in the various areas, which represent the basis for not only maintaining the bank’s position as the clear market leader in Upper Austria but also being able to extend this.

Source of funds/capital structure

Amounts owed to banks fell year-on-year by EUR –1,288 mil-lion to EUR 11,277 million (31 December 2014: EUR 12,565 million). This fall is overwhelmingly due to the merger of both bank subsidiaries PRIVAT BANK AG and bankdirekt.at AG into Raiffeisenlandesbank Oberösterreich. Amounts owed to banks are comprised as follows as at 31 December 2015:

¬ Amounts owed to Upper Austrian Raiffeisen banks: EUR 4,671 million.

¬ Amounts owed to banks in the Raiffeisen Banking Group (RBG) of Austria, not including Upper Austrian Raiffeisen banks: EUR 563 million.

31 DEC. 2015 31 DEC. 2014 CHANGEIN EUR M IN % IN EUR M IN % IN EUR M IN %

Amounts owed to banks 11,277 37.2 12,565 41.1 –1,288 –10.3

Savings and giro deposits 8,950 29.6 7,384 24.2 1,566 21.2

Own issues 6,991 23.1 7,619 25.0 –628 –8.2

Equity 2,684 8.9 2,595 8.5 89 3.4

Other liabilities 365 1.2 380 1.2 –15 –3.9

Total equity and liabilities

30,267

100.0

30,543

100.0

–276

–0.9


¬ Amounts owed to mortgage banks (e. g. Oberöster- reichische Landesbank Aktiengesellschaft and SALZ-BURGER LANDES-HYPOTHEKENBANK AKTIEN- GESELLSCHAFT): EUR 1,128 million.

¬ Amounts owed to development agencies and banks (e. g. Österreichische Kontrollbank, European Investment Bank): EUR 2,611 million.

¬ Other amounts owed to banks: EUR 2,304 million.

Customer deposits (savings and giro deposits) and own is-sues increased year-on-year by EUR 938 million, or 6.3 per cent, to EUR 15,941 million (31 December 2014: EUR 15,003 million):

¬ Customer deposits, comprising savings deposits of EUR 866 million (31 December 2014: EUR 869 million), as well as fixed-term deposits and deposits repayable on demand of EUR 8,084 million (31 December 2014: EUR 6,515 mil-lion) amounted to EUR 8,950 million as at the 2015 re-porting date (31 December 2014: EUR 7,384 million). The merger of both bank subsidiaries PRIVAT BANK AG and bankdirekt.at AG into Raiffeisenlandesbank Oberösterreich resulted in the latter directly acquiring all existing customer deposits in the former subsidiaries, which accounts for the majority of the increase.

¬ Issuing volumes fell on the previous year by EUR –628 mil-lion or –8.2 per cent and amounted to a total of EUR 6,991 million as at 31 December 2015 (31 December 2014: EUR 7,619 million). Of this amount EUR 1,009 million (31 De-cember 2014: EUR 1,003 million) is attributable to covered bonds. The securities sales to retail customers performed largely to plan in 2015. However, there was a heavy fall in demand from international institutional customers in re-sponse to the HETA moratorium, which in combination with scheduled repayments resulted in a fall in issuing volumes.

Equity capital rose year-on-year by EUR 89 million or 3.4 per cent and is stated at EUR 2,684 million (31 December 2014: EUR 2,595 million) as at the 2015 reporting date.

Application of funds/assets structure

Loans and advances to customers rose year-on-year by EUR 378 million or 2.3 per cent to EUR 16,645 million as at the 2015 reporting date (31 December 2014: EUR 16,267 million).

Raiffeisenlandesbank Oberösterreich has enough liquidity to be able to continue actively and aggressively supporting its customers with their successful projects.

¬ Investment finance provided increased negligibly by 0.1 per cent in 2015 and remained at a high level.

¬ Loans and advances to banks fell during the course of 2015 by EUR –327 million or –4.5 per cent to EUR 7,004 million (31 December 2014: EUR 7,331 million). EUR 1,094 million (31 December 2014: EUR 1,230 million) of this re-lates to refinancing to Upper Austrian Raiffeisen banks. The total includes loans and advances to Raiffeisen Zentral- bank AG in the amount of EUR 3,106 million (31 December 2014: EUR 3,142 million). This fall is also essentially due to the loss of the amounts owed to the bank subsidiaries PRIVAT BANK AG and bankdirekt.at AG with their merger into Raiffeisenlandesbank Oberösterreich.

High level of liquidity and credit quality in the securities portfolio

The volume of securities held by Raiffeisenlandesbank Oberösterreich fell by EUR –229 million or –4.7 per cent in 2015 to EUR 4,629 million (31 December 2014: EUR 4,858 million), although these remain at a high level. These securities were subdivided as at the 2015 reporting date into public-sec-tor debt instruments and similar securities at EUR 1,097 mil-lion (31 December 2014: EUR 1,079 million), bonds and other fixed-income securities at EUR 1,561 million (31 December 2014: EUR 1,776 million) and shares and other variable-yield securities (e.g. pension funds) at EUR 1,971 million) (31 De-cember 2014: EUR 2,003 million). As an additional liquidity reserve, Raiffeisenlandesbank Oberösterreich holds a large portfolio of unrestricted loan collateral instruments which has been provided to the Österreichische Nationalbank as collateral.

As in previous years, all securities held as fixed assets were measured according to the strict lower of cost or market principle.

Equity investments and shares in affiliated companies fell by EUR –107 million or –5.9 per cent to EUR 1,696 million com-pared with the previous year (31 December 2014: EUR 1,803 million). This fall is attributable in particular to changes in share-holdings, value adjustments and internal group restructuring.

Other assets, consisting of cash and cash on hand and bal-ances at central banks, intangible fixed assets, property and equipment, other fixed assets and prepaid expenses, in-creased year-on-year by EUR 9 million or 3.1 per cent to EUR 293 million (31 December 2014: EUR 284 million).

31 DEC. 2015 31 DEC. 2014 CHANGEIN EUR M IN % IN EUR M IN % IN EUR M IN %

Loans and advances to customers 16,645 55.0 16,267 53.2 378 2.3

Loans and advances to banks 7,004 23.1 7,331 24.0 –327 –4.5

Securities 4,629 15.3 4,858 15.9 –229 –4.7

Investments and shares in affiliated companies 1,696 5.6 1,803 5.9 –107 –5.9

Other assets 293 1.0 284 1.0 9 3.1

Total assets 30,267 100.0 30,543 100.0 –276 –0.9



Results of operations

Net interest income increased in 2015 at EUR 263.6 million (2014: EUR 258.4 million) and therefore by 2.0 per cent.

Income from securities and equity investments amounted to EUR 120.1 million (2014: EUR 132.3 million). This fall of –9.2 per cent is primarily attributable to the reduction in earnings from investments.

Other income amounted to EUR 165.8 million (2014: EUR 157.3 million), up by 5.4 per cent compared with the previous year’s figure. This increase is largely due to the higher net fee and commission income for Raiffeisenlandesbank Oberöster- reich and from the integration of both bank subsidiaries PRI-VAT BANK AG and bankdirekt.at AG into Raiffeisenlandes-bank Oberösterreich.

Operating income continued at a very high level of EUR 549.5 million in 2015 (2014: EUR 548.0 million), thereby resulting in a slight increase.

General administrative expenses in 2015 comprised EUR –123.5 million in personnel expenses (2014: EUR –101.2 mil-lion) and EUR –94.1 million (2014: EUR –94.3 million) in other administrative expenses. The increase in personnel expenses is overwhelmingly due to the integration of Raiffeisenlandes-bank Oberösterreich’s subsidiaries PRIVAT BANK AG and bankdirekt.at AG along with sections of GDL Handels- und Dienstleistungs GmbH.

Other expenses fell on the previous year by –4.6 per cent and amounted to EUR –62.3 million in 2015 (2014: EUR –65.3 mil-lion). This includes expenses for the resolution fund and de-posit guarantee of EUR –12.2 million.

Total operating expenditure rose by 7.3 per cent compared with 2014 and is stated at EUR –279.9 million for 2015 (2014: EUR –260.8 million). This results primarily from the increase in personnel expenses described above.

The operating profit – calculated as the difference between operating income and operating expenses – stood at EUR 269.6 million in 2015 (2014: EUR 287.2 million).

Profit (loss) from ordinary activities is stated at EUR 135.6 mil-lion for 2015 (2014: EUR 91.0 million). This increase is largely due to the merger profit amounting to EUR 36.4 million from the integration of the bank subsidiaries PRIVAT BANK AG and bankdirekt.at AG into Raiffeisenlandesbank Oberösterreich.

Other taxes and taxes on income fell by –18.6 per cent to EUR –31.7 million (2014: EUR –38.9 million). This fall is attributable to effects from group taxation (positive distributions of the tax burden). The stability levy payable by banks (including special contribution) rose on 2014 by EUR 0.9 million to EUR –32.6 million.

Overall, profit for the successful year 2015 amounted to EUR 103.9 million, almost double the level of net profit generated in 2014 (2014: EUR 52.1 million).

1.3. Branches and regional branch offices

Branches

The financial services on offer, as well as flexibility in consul-tancy and management, are adapted on an ongoing basis to the current needs of our customers. Along with the constant further development of technological abilities in customer ser-vice, for example, we also offer customer appointments out-side of regular banking hours. In addition to its headquarters, Raiffeisenlandesbank Oberösterreich had 17 bank branches in Upper Austria as of 31 December 2015 (previous year: 17). The bank branches had a total of 81,601 customers (previous year: 81,533*), which was a 26.7 per cent share of customers in the market area (previous year: 27.1 per cent*). Roughly 200 employees with appropriate skills and qualifications are avail-able to provide comprehensive support for retail and business customers.

2015 2014 CHANGE

IN EUR M IN % Ø BS IN EUR M IN % Ø BS IN %

Net interest income 263.6 0.87 258.4 0.85 2.0

Income from securities and equity investments 120.1 0.40 132.3 0.43 –9.2

Other income 165.8 0.55 157.3 0.51 5.4

Operating income 549.5 1.81 548.0 1.79 0.3

Personnel expenses –123.5 –0.41 –101.2 –0.33 22.0

Administrative expenses –94.1 –0.31 –94.3 –0.31 –0.2

Other expenses –62.3 –0.20 –65.3 –0.21 –4.6

Operating expenses –279.9 –0.92 –260.8 –0.85 7.3

Operating profit 269.6 0.89 287.2 0.94 –6.1

Profit from ordinary activities 135.6 0.45 91.0 0.30 49.0

Other taxes and taxes on income and earnings –31.7 –0.10 –38.9 –0.13 –18.6

Profit for the year 103.9 0.34 52.1 0.17 99.5

Ø Total assets 30,405 30,564

* The database for determining customers and products in sales and distribution control has changed with harmonisation of the product catalogues and introduc-tion of a “uniform product system”. The figures for the previous year have been adjusted as a result of this change for better comparison.


International branches

Raiffeisenlandesbank Oberösterreich has been operating its own southern Germany office since 1991. At the end of 2015, Raiffeisenlandesbank Oberösterreich had a total of eight lo-cations throughout Bavaria and Baden-Wurttemberg, i.e. in Augsburg, Passau, Nuremberg, Munich, Regensburg, Wurz-burg, Ulm and Heilbronn. This makes Raiffeisenlandesbank Oberösterreich by far the strongest Austrian bank active in this dynamic business region of Southern Germany. The main focus for support activities is on customers from industry, me-dium-sized enterprises and affluent private customers. The registered head office for Raiffeisenlandesbank Oberösterre-ich’s Southern Germany branch was relocated from Passau to Munich on 1 October 2015. This will also further intensify the existing close collaboration with development agencies and banks.

Raiffeisenlandesbank Oberösterreich has also had a branch in the Czech Republic since 2015 as a result of the merger of PRIVAT BANK AG der Raiffeisenlandesbank Oberösterre-ich into Raiffeisenlandesbank Oberösterreich. The head office for the Czech branch is located in Prague, where support is provided to affluent private customers as well as corporate customers with a wide range of professional financial services based on the established high focus on the customer.

1.4. Financial and non-financial performance indicators

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

Profitability – key figures

¬ Return on equity for 2015, calculated as the ratio of pre-tax profit for the year to average equity came to 3.8 per cent (2014: 2.2 per cent).

¬ Return on assets for 2015, calculated as the ratio of pre-tax profit for the year to average total assets came to 0.3 per cent (2014: 0.2 per cent).

¬ Return on assets for 2015 in accordance with section 64 (19) of the Austrian Banking Act, calculated as the ratio of profit for the year after taxes, also came to 0.3 per cent (2014: 0.2 per cent).

Key liquidity figures

¬ The Liquidity Coverage Ratio (LCR) as at 31 December 2015 was 95 per cent at the individual bank level (31 December 2014: 95 per cent) and therefore significantly exceeded the 60 per cent level required as at 31 December 2015.

¬ The survival period as at 31 December 2015 was greater than 90 days, and therefore significantly exceeded the min-imum period of 30 days required in the CEBS guidelines.

Key equity and solvency figures

The Common Equity Tier 1 capital (CET 1) and Tier 1 capital (T 1) of Raiffeisenlandesbank Oberösterreich in accordance with the Capital Requirements Regulation (CRR) at 2015 year-end was EUR 2,585.8 million (31 December 2014: EUR 2,481.8 million).

The supplementary capital (T 2) stated as at 31 December 2015 was EUR 711.1 million (31 December 2014: EUR 853 million).

The total equity capital (TC) fell as at 31 December 2015 to EUR 3,296.9 million (31 December 2014: EUR 3,334.8 million).

The total risk value (risk-weighted assets, RWA) fell on the pre-vious year by EUR –1,302.6 million and as at 31 December 2015 is stated at EUR 20,099.8 million (31 December 2014: EUR 21,402.4 million). The essential effects for reducing the risk-weighted assets (RWA) at the reporting time of 31 Decem-ber 2015 were achieved through active and central control of the risk-weighted assets (RWA) per claim class and through implementing actions in relation to techniques used to reduce credit risks.

As at the end of the 2015 financial year, in accordance with CRR the Common Equity Tier 1 capital and Tier 1 capital ratio stated was 12.9 per cent (2014: 11.6 per cent) with a total capi-tal ratio stated of 16.4 per cent (2014: 15.6 per cent). The ratios are calculated on the total risk-weighted assets in accordance with Article 92 CRR.

A capital conservation buffer was introduced effective 1 Janu-ary 2016 in accordance with section 23 of the Austrian Bank-ing Act (BWG), and this must be maintained in the form of Common Equity Tier 1 capital. In accordance with the transi-tional provision in section 103q (11) BWG the capital conser-vation buffer for the coming year will be 0.625 per cent. This will be increased to 2.50 per cent by 2019 using the straight-line method.

Capital Requirements Regulation

As of 1 January 2014, Regulation (EU) No. 575/2013 (Cap-ital Requirements Regulation, CRR) and Directive (EU) No. 36/2013 (Capital Requirement Directive, CRD IV) went into force to implement Basel III. In addition, the supplementary CRR regulation defines the implementation of transitional pro-visions of CRR for Austria. The statutory regulations mean that banks will have to comply with significantly higher equity ra-tios and tighter liquidity requirements. Raiffeisenlandesbank Oberösterreich has however prepared itself well with various projects in past years.




These regulatory changes have also given rise to the need for additional adjustments in decentralised banking groups. The previously existing Institutional Protection Scheme (IPS) for Upper Austria had to be adjusted to the particulars of newly promulgated European law. An IPS is a liability or indemnity agreement – created by means of a contractual agreement or through articles of association, statutes or charters – that pro-vides protection for member banks in a decentralised banking group. Such an agreement sets out the terms on which the member banks stand together and provide mutual solidar-ity. Under Article 49 of the Capital Requirements Regulation (CRR) banks must, when determining their capital adequacy, deduct the equity instruments of other banks that they hold unless there is the exemption pursuant to Article 49 (3) of the CRR in connection with Article 113 (7) of the CRR based on an IPS signed with the banks concerned. Raiffeisenlandes-bank Oberösterreich is a member of the regional state IPS, whose members also include all Raiffeisen banks in Upper Austria, as well as the Raiffeisen-Kredit-Garantiegesellschaft m.b.H. Raiffeisen-Einlagensicherung OÖ reg. Gen. m.b.H acts as the trustee and manages the assets of the scheme. In addi-tion, Raiffeisenlandesbank Oberösterreich is a member of the federal IPS, whose members also include Raiffeisen Zentral-bank Österreich AG (RZB), all Austrian Raiffeisenlandesbanks, Raiffeisen Wohnbaubank AG, Raiffeisen-Holding Niederös-terreich-Wien reg. Gen. m.b.H., Zveza Bank and Raiffeisen Bausparkasse GmbH. In this case, Österreichische Einlagen-sicherung eGen has assumed the role of trustee. Under Article 113 (7) of the CRR, and subject to consent from the relevant regulatory authorities, banks may give a risk weighting of 0 per cent 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 IPSs of which Raiffeisenlandesbank Oberösterreich is a member and allowing the exemptions under Articles 49 (3) and 113 (7) of the CRR.


In the 2015 financial year, Raiffeisenlandesbank Oberösterre-ich had on average a banking staff of 1,039 (2014: 918) and thus offered a large number of top quality, attractive full and part-time jobs (part-time ratio: 11.1 per cent). The average in-crease in the number of employees is overwhelmingly due to the integration of Raiffeisenlandesbank Oberösterreich’s sub-sidiaries PRIVAT BANK AG and bankdirekt.at AG along with sections of GDL Handels- und Dienstleistungs GmbH during the year.

Strong positioning with the career portal enteryourfuture.at

Qualified and committed employees are the most important capital at Raiffeisenlandesbank Oberösterreich. The Bank has adopted a professional employer branding approach involv-ing ensuring a presence on online job platforms as well as at various trade shows with the objective of addressing po-tential new employees and positioning itself as an attractive employer. Virtual employer branding is absolutely essential nowadays. Particular attention is focused therefore on the ca-reer portal enteryourfuture.at, which provides for a transparent and prompt application process and provides clear and useful information to applicants. enteryourfuture.at is revised on a continuous basis and represents an innovative way of recruit-ing new employees.

Manifold educational and training opportunities

Raiffeisenlandesbank Oberösterreich also offers a wealth of different options and opportunities in the training it provides for young employees. These options include training based on a job rotation programme, as well as training combined with the higher education entrance qualification, trainee pro-grammes and e-learning modules. One successful example of our forward-looking internal human resources policies is the Raiffeisen Oberösterreich Academy, which uses individ-ually designed training programmes to prepare tomorrow’s managers for rewarding responsibilities. Training and profes-sional development is offered at the state-of-the-art Raiffeisen Training Centre, which opened in 2012 in the Blumau Tower. In addition, the online teaching platform Raiffeisen@Learn-ing is used extensively for internal training and professional development.

Work/life balance

Raiffeisenlandesbank Oberösterreich also emphasises the importance of a work-life balance and is a certified fami-ly-friendly organisation, offering its own kindergarten and tod-dler group/crèche known as “Sumsi's Learning Garden" in which the working languages are both German and English. The bank also offers a special summer kindergarten which is being continuously expanded because of the huge demand for places. Additional features of the family-friendly approach at Raiffeisenlandesbank Oberösterreich include flexible work-ing hours and measures taken to support those returning from parental leave.

Cooperation within the Raiffeisen association providing strength

Close cooperation between the Raiffeisen banks in Upper Austria, whose skills are available locally, and the specialists at Raiffeisenlandesbank Oberösterreich, results in Raiffeisen


Oberösterreich combining its strengths in the interests of its customers. This healthy, strong structure enables an extraor-dinary focus on the customer and highly dynamic assistance to customers with creative financial services.

Successful through the practise of subsidiarity and solidarity

The Raiffeisen banking group in Upper Austria is a strong community. The Raiffeisen banks in Upper Austria, as owners of Raiffeisenlandesbank Oberösterreich, are also able to ex-ercise their proprietary rights over the registered cooperative society Raiffeisenbankengruppe OÖ Verbund eingetragene Genossenschaft. The decisive factor here is the founding idea of co-operation at Raiffeisen: every co-operative company has a voice, regardless of its size. Raiffeisen Oberösterreich relies on the subsidiarity principle: the superordinated co-operative society should not take over what the local Raiffeisen banks can do on their own. As a public limited company (Aktienge-sellschaft), Raiffeisenlandesbank Oberösterreich therefore as-sumes responsibility for more extensive global functions, but also sees itself as a coordinating hub within the cooperative network. It advises the Raiffeisen banks in operational, organ-isational and legal affairs, supports them in their sales work, and provides a training and further education system.

Bundling our strengths

Our focus on the requirements and needs of our customers is unique. It is the theme that runs from local roots through to global customer support. This networked approach is made possible by the state-of-the-art structure at Raiffeisen Oberös-terreich. The cooperative network can step in and become proactive where the Raiffeisenbanks need assistance, so that customers can be offered the best possible support with all their projects. This means that regional strengths and direct relationships with the customer remain intact and are main-tained. Furthermore, the collaboration within the network en-sures that Raiffeisen will have a secure future as a growing organisation and powerful force in Upper Austria.

Sustainability and Corporate Social Responsibility (CSR)

In 2015, a comprehensive sustainability strategy was devel-oped at Raiffeisenlandesbank Oberösterreich, with further ac-tions agreed in the areas of sustainability and Corporate Social Responsibility (CSR):

¬ the 2015 financial year was characterised in full by energy efficiency. The Managing Board at Raiffeisenlandesbank Oberösterreich has decided to introduce an energy man-agement system for the entire Group in order to allow pre-cise monitoring of energy consumption and to exploit new potentials for savings. Final certification of the system in accordance with ISO 50001 was completed in February 2016.

¬ Stakeholder management was restructured at Raiffeisen-landesbank Oberösterreich in 2015. Up until now it was not

only the interests of the shareholders that were taken into account, in line with a traditional shareholder approach, but rather all interest groups associated with Raiffeisen were addressed within the scope of a sustainable future direction for the company. Efforts are also being focused on the issue of stakeholder management as part of the activities involved in establishing a separate sustainability management system. The individual stakeholders have for instance undergone analysis and stakeholder manage-ment has been concentrated on sustainable dialogue with the stakeholders.

¬ Sustainable business activity is a central theme at Raiff-eisen. Raiffeisen Oberösterreich strives for instance to en-sure that important resources are handled carefully and that the environment is protected. Following the creation of the Value creation report 2013 last year the Ecobalance 2014 was also created based on a proposal from the Raif-feisen climate protection initiative. The majority of emissions arise from power consumption, and there is potential for improvement here. The transportation area also demon-strates further potential for protecting the environment. In-teriors are already largely heated using green power.

¬ Raiffeisenlandesbank Oberösterreich took part in the “work/life balance” audit for the first time in 2009 and achieved basic certification. In subsequent years the focus was placed on issues such as family-oriented manage-ment, working environments of the future, return to work workshops as well as part time and management. The ac-tivities implemented were reviewed again in 2015. The 2015 recertification is not just a recognition of the performance so far, but also provides an incentive and motivation to con-tinue the successful approach of balancing work and family life to the benefit of employees and customers.

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

1.5. Events of particular significance after the balance sheet date

There were no events of particular significance after 31 De-cember 2015. The annual financial statements were compiled on 5 April 2016 and presented to the Supervisory Board.



2.1. Expected development of the economic environment

The restrained global economic performance will also persist in 2016. The International Monetary Fund (IMF) is forecasting growth in real global GDP of 3.4 per cent, but the forecast by the World Bank is 2.9 per cent.

A series of early indicators improved in the eurozone over the course of 2015, meaning that the forecasts for growth in GDP have been continuously revised slightly upwards for 2016, most recently by the IMF in January 2016. The reasons for this include the numerous factors stimulating the economy such as the low oil prices, the extremely expansionary monetary policy of the European Central Bank (ECB), the weaker euro as a result of this, EU investment programmes and a decrease in fiscal braking effects. Nevertheless the eurozone economy ran out of steam towards the end of 2015, primarily as a result of widespread weakness in the emerging nations. Early and sentiment indicators remain at a high level at the start of 2016, although these have been falling somewhat recently. Domes-tic consumption will provide the main stimulus for growth once again in 2016 as a result of the restrained performance of the global economy. The inflation rate in the euro zone may re-main significantly below the ECB target of almost but below 2 per cent, and justify its extremely loose monetary policy. This results both from internal (continued under-utilisation of production capacity) and external factors (moderate prices for raw materials, particularly low price of oil).

Increased economic dynamism is expected in Austria from 2016 onwards following the very weak performance over the past three years. The relief on incomes as a result of the tax reforms along with the expenditure for asylum seekers should boost consumption, which could thereby become the most important driver of growth following four years of stagnation. Leading indicators also provide some hope of a recovery in fixed asset investments in the near future. Performance in the construction sector is expected to remain fairly slow and for-eign trade is also not expected to contribute to growth for the time being. The rate of inflation will also remain well below the European average in 2016, as a result of the higher prices in the service sector.

Upper Austria, as an exporting state with strong connections with German industry, profits on one hand from the stron-ger performance of its neighbour to the north, and on the other hand continues to feel the effects of weaker global de-mand. Overall the statistics office for the federal state of Upper

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

The economies of the central European EU countries, such as Poland, Hungary, the Czech Republic and Slovakia, are performing well. The IMF even revised the growth outlook for these countries slightly upwards once again in January 2016. Russia and Ukraine are currently in a deep recession because of their military conflict and the economic sanctions associ-ated with this.

The USA remains the engine of the global economy with very solid growth, based primarily on private consumption. While leading indicators from the manufacturing sector worsened at 2015 year-end, the service sector which is more signifi-cant in terms of the overall economy should make up for any weakness here. Consumer confidence also remains high, with the labour market in an optimum position and no fiscal policy slowing things down, while lower energy prices are fuelling the economy. Despite the dynamic economy, the expansionary monetary policy is only being tightened very slowly because – thanks also to the low commodity prices – there is still no risk of inflation in sight.

The IMF and World Bank are forecasting growth of between 4.3 and 4.8 per cent in the emerging nations in 2016. It is be-coming increasingly difficult to provide a blanket evaluation for the emerging nations. While oil-importing countries such as India profit significantly from lower oil prices, this affects oil-exporting countries such as Venezuela and Russia, which are struggling with deep recessions in conjunction with very high inflation. Brazil is also in recession while South Africa is barely growing at all, since fundamental structural problems are increasingly having a negative impact on economic perfor-mance. China is continuing to undergo a slowdown in growth, which is partly cyclical and partly the result of a deliberate strategy.

2.2. Expected development of the company

Customer behaviour characterised by further digitisation and the changes associated with this will certainly be one of the major challenges for the future. Raiffeisenlandesbank Oberös-terreich is adjusting to the major upheaval that this means for the banking industry by positioning itself as a pioneer in in-novation and modern advisory bank that also sets its future course with intensive personal support as well as the de-velopment of the extensive range of the innovative banking technology available. Raiffeisenlandesbank Oberösterreich is

2. Outlook and risks


also revising sections of its business model in order to keep up with the global changes in the internet age. Solutions are being developed for instance related to how an innovative and successful bank branch concept may look in the future as part of the innovative development of the “Raiffeisen Banking Group Upper Austria 2020” project. Intensive work is also tak-ing place in parallel on the “Digital regional bank” project. This is based on an “aggregated business model” whereby the fixed 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 rele-vant need. The support and service approaches will change, however, and digital channels will increasingly be selected for these which are independent of location and time. This con-cept benefits customers in that they receive active support with differing services and support and care concepts. Raif-feisenlandesbank Oberösterreich benefits from increases in productivity and efficiency based on process harmonisation and simplification.

Based on the Bank's strengths – such as efficient, targeted li-quidity planning and control, comprehensive risk management combined with detailed control – and the close collaboration with the Raiffeisenbanks in Upper Austria, Raiffeisenlandes-bank Oberösterreich is doing everything it can to enable it to continue to justify the confidence of customers in the future and to provide comprehensive support for businesses, insti-tutions and retail customers in their various projects. Numer-ous actions for the future will be implemented above all with the “Raiffeisen Banking Group Upper Austria 2020” project, in order to secure stability and sustainable qualitative growth.

2.3. Significant risks and uncertainties

The overall risk strategy approved by the Managing Board en-sures that the risks assumed by the Bank are consistent with the corporate strategy. The Managing Board and the Supervi-sory Board are kept regularly informed.

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 Manag-ing 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.

STRATEGY AND PROCEDURE FOR MANAGING RISK

Market risks

Ongoing quantitative controls using defined limits for risk and provisional profits and losses; daily calculation of the value at risk based on historical simulation as well as crisis tests; risk/earnings management via return on risk adjusted capital (RoRAC); Treasury Rulebook as central regulatory framework

Credit risk

Quantitative controls by limiting the asset volume for each division, as well as via individual and industry-based limitations; monthly determination of the credit value at risk within the scope of the ICAAP (expected and un-expected loss, as well as stress tests); risk/earnings management via RoRAC; Risk Management Manual and Finance Manual as central regulatory frameworks


Risk calculation using haircuts based on current investment ratings for the relevant investment; risk/earnings management via RoRAC; early identification guidelines from the Austrian Raiffeisen deposit guarantee (ÖRE) as central regulatory framework

Liquidity risk

Quantitative controls of the structural liquidity risk using structural liquidity maturity transformation ratios and gaps with the total assets for normal and stress cases; refinancing risk using funding liquidity value at risk; operational liquidity risk through daily calculation of the liquidity coverage ratio (LCR) and the survival period as well as through the operational liquidity maturity transformation ratios; “Liquidity Risk Management and Emergency Plan Manual” as central regulatory framework

Operational risk (Self-)assessments as well as database for damage cases; risk assessment via basic indicator approach

Macroeconomic riskQuantification 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; risk/earnings management via RoRAC

Other risksRisk 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 different types of risks are quantified and managed as follows:

Management Report 2015 _ Outlook and risks for the company


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 per cent probability, will not be exceeded during a one-month holding period.

In addition to value-at-risk, stop-loss limits and scenario anal-yses are used to limit risk.

In addition, stress tests are conducted to take account of risks in the event of extreme market movements. The crisis scenar-ios include the simulation of large fluctuations in the risk fac-tors 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.

The Raiffeisenlandesbank Oberösterreich Group 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 ex-clusively with banks with which collateral agreements are in place. Derivatives are used to hedge both against interest rate risks at the micro-hedge and macro-hedge levels. Open de-rivative items are taxed and valued as assets.

Both the value at risk as well as standardised shock scenarios are limited using 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. The market risk has been calculated in Front Arena/Risk Cube (previously KVaR+) since 21 November 2015. 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 hypothetical results (portfolio value 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 representation

of the standards valid for Raiffeisenlandesbank Oberöster- reich. They are oriented on international standards (Basel) and on supervisory recommendations.

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 accord-ingly comprises two dimensions – recording and assessing 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.

The rating roadmap was thoroughly revised in the non-retail area. The new Regular and Large Corporates as well as Proj-ect Finance rating models were introduced in April 2015. In-troduction of the new low-default models Financial Institutions, Insurances, Collective Investment Undertakings, Local and Regional Governments and Sovereigns followed in June 2015. Further developments planned relate to the scoring models in the Retail division and the SME models.

This credit rating system is constantly being validated and de-veloped. A validation report is compiled for this every quarter with a summary of the validation results. The qualitative and quantitative validation form elements of the overall validation. The qualitative validation focuses on reviewing and improv-ing data quality and an analysis of compliance with the rating standards. The quantitative validation involves an examination of the accuracy and the stability of the rating models.

Business transactions that result in a country risk/country ex-posure may only be carried out when the resulting country


risk/country exposure is within the approved country risk and country exposure 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 deduction of 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.

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 reduction 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. Raif-feisenlandesbank Oberösterreich calculates unexpected loss at probabilities of 95 per cent and 99.9 per cent.

The calculation is carried out by the Credit Manager software from RiskMetrics. The risks/opportunities from loan defaults or changes in creditworthiness are determined using a mar-ket valuation model. The market data required for the portfolio value distribution (interest rates, credit spreads and sector in-dices) 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.

Structured presentation of the counterparty risk by Raiffeisen-landesbank Oberösterreich for internal risk controls for the purposes of the minimum standards for credit business or 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 subsidiar-ies. The Risk Report is sent out 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:

¬ Risk of dividend default ¬ Risk of current value depreciation ¬ Rusk of impairment losses ¬ Risk of additional regulatory contributions ¬ Risk of strategic (ethical) responsibility for

restructuring ¬ Risks resulting from the reduction of hidden reserves

The basis for the determination of equity risk are the risk fac-tors (= haircuts) that are derived from the rating classification of the respective investment company, and the exposure value of the investment. The investment portfolio risk results from the respective exposure and the haircuts applied to it.

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.

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 Manage-ment department is responsible for liquidity control with this, while the Market Risk Control department is responsible for liquidity risk management. The Asset/Liability Management 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 Raiffeisenland-esbank plants and manages the liquidity for the sector as the central institution for the Raiffeisen Banking Group Upper Austria. Communication with the Raiffeisen banks takes place via the Raiffeisen Bank Business Administration depart-ment. A liquidity committee is also set up which is made up of



representatives from the Raiffeisenlandesbank, the Raiffeisen banks and the association of Raiffeisen banks, and which deals with current topics and/or develops countermeasures when the liquidity position is under pressure.

In addition to the harmonised sector liquidity emergency plan defined for the Austrian Raiffeisen sector, Raiffeisenlandes-bank Oberösterreich also has its own liquidity emergency plan, which governs the processes, responsibilities and ac-tions 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 involving several risks. To this end the following key figures are deter-mined with associated limits:

¬ 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.

¬ For the structural liquidity maturity transformation (“S-LFT”), the key figure is formed by taking the ratios of assets to liabilities calculated by going backwards from the end of the maturity band.

¬ The GBS (German abbreviation for the gap between the ratio total and total assets) ratio is formed by taking the ratios of the net positions per maturity band to total assets and shows any excessive funding risks.

The following are also the key pillars for managing liquidity and liquidity risk at Raiffeisenlandesbank Oberösterreich:

¬ Operational liquidity is also measured, in addition to the aforementioned O-LFT, against the LCR (Liquidity Cover-age Ratio) as well as a survival period.

¬ The structural liquidity is also measured against the NSFR. ¬ 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 per cent certainty – be exceeded within 250 trading days.

¬ Raiffeisenlandesbank Oberösterreich has a broad basis of funding. It proceeds in accordance with the principles of diversification and balance.

¬ 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 process structure for the liquidity buffer does not feature any essential concentration of expiring securities within the next three years. The vast majority of securities held as a liquidity buffer have a residual term of more than five years.

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, or caused by external events. Raiffeisenlandesbank Oberösterreich uses the basis indicator approach to quantify operational risk.

Raiffeisenlandesbank Oberösterreich uses both organ-isational 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-ade-quate internal control system, a comprehensive security man-ual as a behaviour code and directive, as well as scheduled and unscheduled audits by Internal Auditing. The operative

1,200

800

400

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up to 1 year 1 to 3 years 3 to 5 years 5 to 7 years 7 to 10 years over 10 years

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31 Dec. 2015 31 Dec. 2014

LIQUIDITY GAPS RAIFFEISENLANDESBANK OBERÖSTERREICH IN MILLION EUR 1)

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


management 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).

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.

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 per cent), or even in the very unlikely case of an extreme situation (gone concern – confidence level of 99.9 per cent), 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 review and evaluation

There is no requirement from the authority responsible to pub-lish the result of the bank’s own procedure for evaluating the suitability of the internal capital. Raiffeisenlandesbank Oberös-terreich significantly overachieves at all times the SREP ratio stipulated 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 the P&L as well as on the capital resources, and also present the impact on the risk utilisation.

Impact on the P&L

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 P&L is considered and the resulting capital re-sources are ascertained for the end of the stress test period. The analysis is based on a stress test covering multiple peri-ods, 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 the 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 investment risk is determined by simu-lating deteriorations in the ratings of individual borrowers that are in an industry that is significant to Raiffeisenlandesbank Oberösterreich. A negative trend for the interest rate curve or the credit spread is assumed in the Market Risk area. Three defined scenarios (problem, reputational risk and systemic cri-sis) 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 or SSM-SREP stress test

The impact on the P&L and therefore on the capital ratios is also considered within the scope of the EBA or SSM-SREP stress test. The time frame is 3 years and is implemented 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 Cus-tomer Guarantee Fund Upper Austria ensures that the depos-its of our customers at Raiffeisen Oberösterreich 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.

Even then, there is a further level of protection at federal level from the Raiffeisen Customer Guarantee Association Austria (Raiffeisen-Kundengarantiegemeinschaft Österreich, RKÖ), which protects customer deposits if the regional (state) pro-tection proves to be inadequate.



Raiffeisen Customer Guarantee Association Austria (Raiffeisen-Kundengarantiegemeinschaft Österreich, RKÖ)

This association, whose members comprise participating Raiff-eisen banks and Raiffeisenlandesbanks, Raiffeisen Zentral- bank Österreich AG (RZB) and Raiffeisen Bank International AG (RBI), guarantees all customer deposits and securities issues of participating banks, regardless of the individual amounts involved, up to the joint financial risk-bearing capac-ity of the participating banks. The structure of the Customer Guarantee Association has two tiers: first, the Raiffeisen Cus-tomer Guarantee Fund Upper Austria at state level, and then the Raiffeisen Customer Guarantee Association Austria at fed-eral level. Thus, the Customer Guarantee Association guar-antees protection for customers that goes beyond the legal deposit guarantee.

Deposit guarantee NEW

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 RBG Upper Austria are joint members of the “Austrian Raiff- eisen-Einlagensicherung eGen” via the Upper Austrian state deposit guarantee.

The Act anticipates the establishment of a deposit guaran-tee fund that is stocked by annual contributions from banks. The target volume to be reached by 2024 is 0.8 per cent of covered deposits. If these funds are not sufficient, the banks may be required to provide an additional 0.5 per cent of the covered deposits annually.

The amount of the protection for the customer does not change as a result of the new Act: deposits continue to be guaranteed at up to EUR 100,000 per customer and bank. However, the scope of the customer protection has widened as a result of the inapplicability of a few existing exceptions. Major corporations, deposits in a foreign currency as well as deposits from managing directors, members of the supervi-sory authority and auditors of the bank are now also protected.

The guaranteed deposits should be reimbursed within seven working days as of 1 January 2024 (gradual reduction in the periods by then).

The Austrian deposit guarantee system is currently broken down into sectors and should be retained in this form until 2018. A new uniform system (run by the Economic Chambers) is then due to be set up as of 2019.

Deposit guarantee outlook

The European Commission is planning an EU-wide deposit guarantee that should be implemented in full by 2024. By this

time all of the existing national deposit guarantee systems should have been transferred to this EU deposit guarantee in stages. This is still a proposal from the European Commission which requires agreement from the European Council and the European Parliament prior to implementation.

BaSAG

The Banking Recovery and Resolution Directive (BRRD) came into force effective 1 January 2015 with the establishment of a Europe-wide banking union by the European Union. Following on from this EU Directive (BRRD) the Banking Intervention and Bank Restructuring Act (BIRG) in Austria was repealed and replaced by the Bank Recovery and Resolution Act (BaSAG) which implemented the BRRD into Austrian law effective 1 January 2015. This Act requires every bank domiciled in Austria, and that is not part of a group which is subject to con-solidated 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 OÖ Verbund eGen created the 2015 group recovery plan based on the new legal position, and this includes the specifics re-lated to Raiffeisenlandesbank Oberösterreich. A resolution plan must 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 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 characteris-tics 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 countermeasures. The set of indicators selected meets the minimum requirements for qual-itative and quantitative indicators in accordance with the EBA Guidelines. Additional indicators were selected by the organi-sation itself, meaning monitoring of a total set of 22 indicators.

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 resolu-tion 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.


Raiffeisenlandesbank Oberösterreich is considered a pioneer in the development of innovative bank technology. The first electronic banking (ELBA) solution for Raiffeisen corporate customers in Upper Austria was developed in 1988. Private customers became able to complete their banking transac-tions from home online in 1997 with the market launch of the Raiffeisen ELBA internet solution. In addition to Raiffeisen ELBA mobil, the Raiffeisen ELBA app is the mobile all-rounder available today as the online baking solution specifically cus-tomised for smartphones, and which provides a comprehen-sive account overview, financial statuses, transfer options and much more. Raiffeisenlandesbank Oberösterreich also leads the way in projects across Austria related to the digitisation of bank and business processes.

Raiffeisenlandesbank Oberösterreich is continuously improv-ing its services for its customers and is taking the lead with numerous progressive developments in customer care for companies, private customers, and institutions. While con-tactless payments have been possible using Raiffeisen bank cards since 2013, a new phase of payment transactions was started in 2015. Since June 2015 Raiffeisen Oberösterreich customers have been able to make quick and easy payments globally at all NFC (near field communication) enabled point-of-sale terminals using their digital bank card and an Android

smartphone. A field test was carried out for this in Linz to-gether with the Passage Shopping Centre and the Linzer City Ring. The digital banking card has been available to all Upper Austrian Raiffeisen customers since October 2015. Two ATMs from Raiffeisenlandesbank Oberösterreich have also been equipped with NFC technology. Contactless withdrawals can already be made from these using the digital bank card. This additional function will be installed in stages in additional Raiffeisen Oberösterreich self-service terminals from January 2017.

Raiffeisenlandesbank Oberösterreich also plays a leading role in the project known as "One IT system for Raiffeisen Österreich". The harmonisation of IT systems for Raiffeisen banks in Austria is a ground-breaking project. Once implemented, it will not only deliver numerous synergies and corresponding cost savings, but will also spawn a range of technical innovations.

As part of its training and professional development activities, Raiffeisenlandesbank Oberösterreich is investing in e-learning, blended-learning modules and web-based training opportu-nities. Raiffeisenlandesbank Oberösterreich has developed its own e-learning platform and serves as a competence centre in this regard for Raiffeisen Österreich.

Hypo Haftungsgesellschaft m.b.H.

Raiffeisenlandesbank Oberösterreich holds a minority interest in Oberösterreichische Landesbank AG (Hypo OÖ) and a ma-jority interest in SALZBURGER LANDES-HYPOTHEKENBANK AG (Hypo Salzburg), which belongs to the protection scheme “Hypo Haftungsgesellschaft m.b.H.” under the framework of the association of mortgage banks, as required by law. Fur-thermore, Hypo Oberösterreich and Hypo Salzburg are also affected because of their membership in the Pfandbriefstelle by the FMA mandate of 1 March 2015, which imposed a debt moratorium on HETA ASSET RESOLUTION AG (“HETA”) that will be in force until 31 May 2016. The moratorium imposed

by the financial supervisory authority also affects the liabilities of HETA owed to the Pfandbriefstelle (the bond division of the association of Austrian state mortgage banks). An agreement was entered into between the mortgage lending agency of the Austrian Landes-Hypothekenbanken, Pfandbriefbank (Öster-reich) AG, the individual member banks and the federal state of Carinthia with the aim of securing the provision of liquid-ity. Corresponding payments were made by Hypo Salzburg amounting to EUR 84.0 million (half on own account and half for the account of the guarantors) for the purposes of imple-menting this agreement. Payments are still outstanding until the moratorium expires.

3. Research and development

Management Report 2015 _ Outlook and risks for the company _ Research and development


4. Reporting on the most important aspects of the internal control and risk management system with regard to the accounting process

The accounting-related internal controls systems at Raif-feisenlandesbank Oberösterreich relate to the process drafted and executed by the Managing Board and those individuals entrusted with monitoring the company and any other people, with the aim of achieving the following objectives:

¬ effectiveness and economic viability of the accounting pro-cess (this also includes protecting the assets from losses caused by damage and misappropriation),

¬ reliability in the financial reporting and ¬ 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 goal 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 relevant Austrian legislation, primarily the Austrian Commercial Code (UGB) and the Aus-trian Banking Act (BWG), 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 deter-mined 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 ad-dition to the Managing Board.

As a binding legal framework in everyday business activ-ities the Code of Conduct forms the cooperative principles at Raiffeisen and the value propositions of Raiffeisenlandes-bank Oberösterreich as the basis for business conduct. The internal control system is geared towards the size and type of business operated at Raiffeisenlandesbank Oberösterre-ich (in terms of complexity, diversification, risk potential) and towards the regulations to be followed. The current version of the Code of Conduct was last amended on 29 December 2015 and was published on the Raiffeisenlandesbank Oberös-terreich website.

The Fit & Proper Policy represents the written stipulation of the strategy for selecting and the process of assessing the suitability of the members of the Supervisory Board, the com-pany management and employees in key functions, and is in line 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 iden-tified in good time, with appropriate actions introduced. The responsibilities for assessing and controlling the risks in ac-cordance with section 39 BWG or CRR/CRD as well as the CEBS/EBA standards are regulated at Raiffeisenlandesbank Oberösterreich. The requisite functional separation is ensured with this.

The Risk Management division is also responsible for the de-velopment and provision of risk measurement methods and IT systems at Raiffeisenlandesbank Oberösterreich and pro-vides the result and risk information required for active risk management and forwards the accounting-related information accordingly.

Major risks related to accounting procedures are assessed and monitored by the Managing Board. This is important to avoid misstatements, for example where complex accounting principles are involved.

Control measures

Principles and procedures for complying with company deci-sions are set up and published in order to provide safeguards against risks and to achieve the corporate objectives. The ef-fectiveness, traceability and efficiency of the internal control system essentially depend on the balanced mixture and proper documentation of the different control activities. Specific con-trol 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 de-viations in financial reporting are prevented or identified and corrected.


Controlling measures range from examination of period results by management and the specific reconciliation of accounts and an analysis of ongoing accounting processes.

The annual financial statements are prepared by group ac-counting with the help of the respective organisational units. The employees responsible for accounting and the manager of the organisational unit for group accounting are responsible for the complete disclosure and correct evaluation of all trans-actions brought to their attention.

Information and communication

The basis for single financial statements are processes that are standardised and uniform throughout the company. Balancing and evaluation standards are defined by Raiffeisenlandesbank Oberösterreich and are binding for the preparation of state-ment data.

Functional information and communication channels are set up and are supported, recorded and processed using suitable

IT applications, so that information can be identified, recorded 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 an ICS organisational unit set up for this purpose in 2015.

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 ac-cording to Austrian financial market oversight as well as inter-national best practices.

Management Report 2015 _ Features of the internal control and risk management system


Accounting Amendment Act 2014

There have been a number of changes to the accounting reg-ulations from the 2016 financial year following the introduc-tion of the Austrian Accounting Amendment Act (RÄG) 2014. Specifically the changes to the assessment and valuation rules have had an impact on the statement of the earnings

and financial position as of the next financial year. Essential changes include for instance the change to the assessment and valuation rules for deferred taxes, the abolition of the ex-ception justified under tax law of the requirement to restate original values, the introduction of the “settlement amount” for the valuation of liabilities and provisions as well as the intro-duction of a discounting obligation for non-current provisions.

5. Miscellaneous


Management Report 2015 _ Miscellaneous



THE MANAGING BOARD








Balance sheet as at 31 December 2015 _________________________________ 185

Income Statement 2015 ______________________________________________ 188

Notes to the 2015 Financial Statements _________________________________ 190

1. Information concerning the reporting and valuation methods used in the balance sheet and the income statement __________________ 190

2. Balance sheet disclosures ________________________________________ 193

3. Income statement disclosures _____________________________________ 199

4. Other information _______________________________________________ 200

Auditors' opinion ___________________________________________________ 202

Financial Statements 2015 of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft


Financial Statements 2015 _ Balance sheet

Balance sheet as at 31 December 2015

ASSETS

31 DEC. 2015 31 DEC. 2014

IN EUR IN EUR IN EUR '000 IN EUR '000

1. Cash in hand and balances at central banks 37,924,156.87 45,656

2. Public-sector debt instruments and bills of exchange eligible for refinancing at the Austrian Central Bank: a) Public sector debt issues and similar securities b) Bills of exchange eligible for refinancing at central banks

1,097,109,266.81

0.00

1,097,109,266.81

1,079,197

0

1,079,197

3. Loans and advances to banks: a) payable on demand b) Other loans and advances

3,729,565,050.26 3,274,595,056.12

7,004,160,106.38

3,789,278 3,541,905

7,331,183

4. Loans and advances to customers 16,645,310,163.84 16,266,649

5. Bonds and other fixed-income securities: a) from public issuers b) from other issuers including: own debt securities

1,115,801.37 1,559,828,918.65

524,325.87

1,560,944,720.02

8,046 1,767,509

3,267

1,775,555

6. Shares and other variable-yield securities 1,970,427,408.78 2,002,868

7. Equity investments including: in banks

4,787,462.34

126,950,605.31

6,648

161,085

8. Investments in affiliated companies including: in banks

20,273,145.11

1,568,770,324.04

54,714

1,642,022

9. Intangible assets 12,441,219.82 6,000

10. Property and equipment including: Land and buildings used by the bank in the course of its own operations

12,398,123.17

17,891,064.84

13,121

18,974

11. Own shares or interests and shares in companies with a controlling or majority holding including: nominal value

0.00

0.00

0

0

12. Other assets 202,375,557.92 185,533

13. Subscribed capital (for which payment has been requested but not yet paid)

0.00

0

14. Prepaid expenses 22,705,847.19 27,918

Total assets 30,267,010,441.82 30,542,640

1. Foreign assets 8,852,018,924.95 8,984,396



31 DEC. 2015 31 DEC. 2014


1. Amounts owed to banks: a) Payable on demand b) With fixed term or withdrawal date

4,376,411,231.08 6,900,576,722.13

11,276,987,953.21

4,497,141

8,068,236

12,565,377

2. Amounts owed to customers: a) savings deposits including: aa) payment on demand ab) with a fixed term or withdrawal date b) other liabilities including: ba) payable on demand bb) with a fixed term or withdrawal date

865,710,815.54

149,232,198.76 716,478,616.78

8,084,483,653.98

4,333,915,859.83 3,750,567,794.15

8,950,194,469.52

868,877

83,184 785,693

6,515,173

3,164,768 3,350,404

7,384,050

3. Liabilities evidenced by certificates: a) debt securities b) other liabilities evidenced by certificates

2,119,162,390.57

3,633,416,205.53

5,752,578,596.10

2,700,714 3,533,464

6,234,178

4. Other liabilities 151,769,635.21 189,886

5. Deferred income 19,999,600.64 21,909

6. Provisions: a) Provisions for severance payments b) Provisions for pensions c) Tax provisions d) Other

28,143,433.01 17,921,058.22 27,049,789.97

119,783,651.86

192,897,933.06

25,498 18,496 21,652

101,244

166,891

6.A Fund for general bank risks 0.00 0

7. Supplementary capital according to Part 2 Title I Chapter 4 of EU Regulation No. 575/2013

1,238,471,683.34 1,384,955

8. Additional Tier 1 capital according to Part 2 Title I Chapter 3 of EU Regulation No. 575/2013

0.00 0

8.A Compulsory convertible bonds in accordance with Section 26 of the Austrian Banking Act

0.00 0

8.B Instruments without voting rights according to Section 26a of the Austrian Banking Act

0.00 0

9. Subscribed capital 277,507,626.25 277,508

10. Capital reserves: a) non-distributable b) distributable

824,353,524.45 149,991,600.00

974,345,124.45

824,354 149,991

974,345

11. Retained earnings: a) legal reserve b) reserves under articles of association c) other retained earnings

0.00 0.00

1,050,655,846.09

1,050,655,846.09

0 0

983,119

983,119

12. Liability reserve pursuant to section 57 (5) of the Austrian Banking Act 336,820,421.78 326,256

13. Net income for the year 37,160,423.78 25,052

14. Untaxed reserves: a) valuation reserve due to special depreciation b) other untaxed reserves including: ba) investment tax credit under Section 10 of the Austrian Income Tax Act 1988 bb) Transfer reserves pursuant to Section 12 of the Austrian Income Tax Act 1988

7,621,128.39

0.00

0.00

0.00

7,621,128.39

9,115

0

0

0

9,115

Total equity and liabilities 30,267,010,441.82 30,542,640


Financial Statements 2015 _ Balance sheet


31 DEC. 2015 31 DEC. 2014


1. Contingent liabilities including: a) Acceptances and endorsed bills sold b) Liabilities from indemnity agreements and guarantees from the ordering of collateral

0.00

3,251,730,523.68

3,251,877,364.38

0

3,370,006

3,370,152

2. Credit risks including: Liabilities from repurchase transactions

0.00

3,590,080,541.65

0

4,749,703

3. Liabilities from trust fund transactions 14,906,796.81 13,998

4. Eligible capital according to Part 2 of EU Regulation No. 575/2013 including: supplementary capital pursuant to Part 2 Title I Chapter 4 of EU Regulation No. 575/2013

711,073,936.93

3,296,916,558.24

852,983

3,334,820

5. Equity 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

12.86%

12.86%

16.40%

20,099,827,991.34

11.60%

11.60%

15.58%

21,402,370

6. Foreign liabilities 6,002,029,095.84 6,662,198


Income statement 2015

31 DEC. 2015 31 DEC. 2014


1. Interest and interest-related income including: from fixed-interest securities

77,327,123.13

647,063,671.51

93,040

701,349

2. Interest and interest-related expenses –383,463,166.62 –442,969

I. NET INTEREST INCOME 263,600,504.89 258,380

3. Income from securities and investments: a) Income from shares, other equity interests and variable-yield securities b) Income from investments c) Income from investments in affiliated companies

60,101,688.79 4,998,993.68

55,001,891.86

120,102,574.33

58,239 5,388

68,651

132,278

4. Fee and commission income 129,837,173.06 116,082

5. Fee and commission expenses –38,264,964.78 –35,960

6. Income from/expenses in financial operations 6,792,767.02 9,261

7. Other operating income 67,372,816.58 67,985

II. OPERATING INCOME 549,440,871.10 548,026

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)

–123,530,220.51

–94,099,530.00

–20,601,232.77 –1,280,166.60

–5,274,646.12

651,204.31

–2,925,849.33

–93,994,215.63

–217,524,436.14

–101,206

–73,732

–16,564 –1,178

–4,985

–429

–4,318

–94,260

–195,466

9. Valuation allowances for assets in asset items 9 and 10

–3,043,231.35

–1,931

10. Other operating expenses –59,306,600.57 –63,401

III. OPERATING EXPENSES –279,874,268.06 –260,799

IV. OPERATING PROFIT 269,566,603.04 287,227


Financial statements 2015 _ Income statement

31 DEC. 2015 31 DEC. 2014


IV. OPERATING PROFIT (carryover) 269,566,603.04 287,227

11./12. Balance from reversals/additions, or value adjustments to loans and certain securities and provisions for contingent liabilities and credit risks

–134,979,961.36

–137,828

13./14. Balance from value adjustments or income from value adjustments to securities measured as financial assets, as well as to investments and shares in associated companies including: merger profit 36,435,857.11

973,421.31

0

–58,423

V. PROFIT FROM ORDINARY ACTIVITIES

135,560,062.99

90,975

15. Extraordinary income including: Withdrawals from the fund for general bank risks

0.00

0.00

0

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 2,618,932.31 –5,631

19. Other taxes, unless reported under item 18 –34,286,822.25 –33,246

VI. PROFIT FOR THE YEAR 103,892,173.05 52,098

20. Movements in reserves including: allocation to the statutory reserve reversal from the statutory reserve

0.00 0.00

–66,731,749.27

0 0

–27,047

VII. NET PROFIT FOR THE YEAR 37,160,423.78 25,052

21. Profit/loss carried forward 0.00 0

VIII. NET INCOME FOR THE YEAR 37,160,423.78 25,052


Notes to the 2015 Financial Statements

These 2015 financial statements have been prepared in accor-dance with the provisions of the Austrian Banking Act (BWG) and the Austrian Commercial Code (UGB), insofar as they are applicable to banks, as well as EU Regulation No. 575/2013 (CRR), insofar as this is relevant for these 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 generally accepted accounting principles and on the standard require-ment 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 reported. All identifiable risks and impending losses have been recognised in the financial statements.

PRIVAT BANK AG der Raiffeisenlandesbank Oberösterreich and bankdirekt.at AG were merged into Raiffeisenlandesbank Oberösterreich Aktiengesellschaft as the acquiring company in the financial year. The figures for the previous year 2014 show the values for Raiffeisenlandesbank Oberösterreich prior to the merger and can therefore be compared without restric-tion. The effects of the mergers are explained in point 2.4.

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 BWG. 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 bonds and other fixed-income securities 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.

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 were re-garded as fixed assets and valued according to the strict lower of cost or market method pursuant to section 2 para 3 of the Austrian Trustees Securities Directive.

Stock market prices or trader quotes observable on the mar-ket are used as the basis for determining the value of secu-rities. If adequate market quotes are not available, prices are determined 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. Loan loss allowances

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 circum-stances arise that indicate a probability of default based on regulatory standards. Within the internal risk management sys-tem, ongoing monitoring of the counterparty and the specific case involved is used to determine whether relevant circum-stances exist. In the case of significant customer exposures in the lending business, each individual case is analysed as the basis for recognising specific loan loss allowances or provi-sions for contingent liabilities and lending commitments. The calculation for the amount of the loan loss allowances takes into account the discounted cash inflows expected from inter-est payments and repayments of principal together with any inflows that can be obtained from the recovery of collateral.

1. Information concerning the reporting and valuation methods used in the balance sheet and the profit and loss account


Notes to the financial statements 2015 _ Notes regarding accounting and valuation principles

A standardised method is used for customer exposures that are not deemed to be significant.

1.4. Special valuation pursuant to section 57 (1) of the Austrian Banking Act

A special valuation amounting to EUR 5,000 thousand was posted for the first time in the financial year pursuant to sec-tion 57 (1) of the Austrian Banking Act.

1.5. Investments

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 and/or a fall in discounted earnings.

1.6. Property and equipment and intangible assets

Pursuant to section 55 (1) of the Austrian Banking Act in conjunction with section 204 of the Austrian Commercial Code, property and equipment, as well as intangible fixed assets, is carried at cost and reduced by depreciation. Low-value assets are written off in full in the year of acquisition.

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 intan-gible assets.

If an item of property or equipment is expected to be perma-nently 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

Issue costs, add-on fees and commissions, premiums and discounts are amortised/unwound on a pro rata basis over the maturity of the instrument concerned.

1.9. Pension provisions

Defined benefit obligations are calculated using the Austrian entry-age normal method based on the AVÖ 2008 P. Pagler & Pagler mortality tables. A discount rate of 2 per cent was used to calculate the obligation (previous year: 2 per cent).

1.10. Provisions for severance and similar obligations

A provision is recognised for severance obligations. The pro-vision as at the reporting date was calculated using accrual

and actuarial measurement methods, a discount rate of 2 per cent (previous year: 2 per cent) and an assumed rate of em-ployment termination.

A provision is also recognised to cover long-service bonus obligations. The provision was calculated using accrual and actuarial measurement methods applying a discount rate of 2 per cent (previous year: 2 per cent).

An employee turnover markdown in the amount of 5 per cent (previous year: 5 per cent) is applied to both the severance payment obligation and the long-service bonus provision.

The calculations are based on an imputed pensionable age of 60 for women (previous year: 60) and 65 for men (previous year: 65) and factor in the transitional provisions as specified in the Austrian Budget Accompanying Act of 2003.

1.11. 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 rec-ognized in an amount dictated by prudent business practice.

1.12. Derivative financial instruments

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 parties. 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 financial 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 were the term to maturity, counter-party default risk, own default risk and col-lateralisation, with consideration only taking place in the event of a surplus with the CVA.

Derivative financial instruments in the trading book are re-corded at their fair value, with effect on the income statement. The positive fair value of all trading book derivatives amounted to EUR 4,822 thousand (previous year: EUR 9,876 thousand).

Banking book derivatives that are not used for interest-rate management or that do not form part of a hedge are generally 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 serve in Raiffeisenlandesbank Oberöster-reich for the detailed output of basic transactions (e.g., loans and bond issues) in the investment book and must therefore be observed in the aggregate portfolio. The reduction of inter-est-rate risk by means of derivative strategies at non-lucrative interest rate curve points enables holding open basic trans-actions on steep curve points with a high roll-down effect, thereby yielding, at constant interest-rate risk utilisation, a sig-nificant optimisation of the chance-to-risk ratio for the entire position. The uncoupled total risk of functional units amounted as at December 2015 to an interest basis point value of EUR +258 thousand and therefore countered the aggregate inter-est-rate risk in the investment book. The EUR fixed interest rate payer position BPV EUR +98 thousand and/or the EUR steepener position BPV EUR +154 thousand represent the majority of opposed interest risk of the functional units; the re-maining sub-portfolios are either completely or nearly closed. Derivatives were reclassified from the functional units in the current financial year and these are now stated in micro valu-ation units. The resulting negative effect on the income state-ment amounts to EUR 8,738 thousand.

There were highly positive valuation effects for the interest control derivatives valued in the 2015 financial year as a result of a steeper interest rate curve over the course of the year.

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 that are largely identical in terms of key parameters (e. g. issue with fixed coupons and receiver swap). The objective of such hedge accounting is to reduce the earnings volatility that, if the micro-hedges were not recognised, would occur as a

result of the measurement of derivative financial instruments on the basis of the imparity principle without having the op-tion to recognise equal and opposite effects in the underlying transactions. The effectiveness of each hedge is primarily as-sessed by providing evidence of harmonisation between the key parameters of the underlying transaction and the hedge (Critical Term Match), as well as via the cumulative dollar off-set method with micro-hedges with an essential CVA in the derivative. If there is a creditworthiness level of 4.0 or 4.5 for the collateral or underlying transaction with a micro-hedge, then an individual review takes place as to whether this mi-cro-hedge needs to be released. A release takes place in any case where the creditworthiness level is 5.0 or above and a provision for pending losses is thereby formed based on the imparity principle. The fair value of all derivatives used in mi-cro-hedges amounted to EUR 176,290 thousand (previous year: EUR 255,639 thousand).

In addition, banking book derivative financial instruments are used in order to safeguard the fixed interest risk of certain global underlying transaction portfolios . Suitable hedging in-struments (mainly interest rate swaps) are used to hedge un-derlying transactions both on the assets-side of the balance sheet (in particular, loans and bonds) and on the liabilities side (mainly deposits and issues). To analyse the portfolio risk, the open item is presented using a weekly assessment for each portfolio and currency. When open risk gap thresholds are exceeded in a portfolio within a maturity band, derivatives are used as a corrective measure. Effectiveness is also measured by means of interest-rate hedging simulations for each ma-turity band. The accounting objective in turn is to reduce the earnings volatility that would occur as a result of the mea-surement of derivatives on the basis of the imparity principle. The negative fair value of derivatives used for the assets-side portfolio of underlying transactions amounted to EUR 174,332 thousand (previous year: EUR 229,818 thousand); the positive fair value of derivatives used for the liabilities-side portfolio of underlying transactions amounted to EUR 377,141 thousand (previous year: EUR 473,748 thousand).

FUNCTIONAL UNIT

POSITIVE FAIR VALUES

IN EUR ‘000

NEGATIVE FAIR VALUES

IN EUR ‘000

GAIN OR LOSS ON REMEA-SUREMENT

2015 IN EUR ‘000

AGGREGATE GAIN OR LOSS

ON REMEA-SUREMENT

IN EUR ‘000 DESCRIPTION

EURO fixed interest rate payer position – 14,309 2,112 –6,697 Item hedge against rising interest rates

EURO steepener position 44,523 67,948 1,255 –9,186Interest-rate position hedge against a steeper yield curve

Foreign exchange steepener – 2,759 1,920 5,982Positioning in terms of steeper foreign currency yield curves

Quanto convergence swaps 24 659 381 4,360Swap positions, effect of which offset by reverse swaps

Derivative macro 875,680 859,140 6,657 19,150Hedging of derivative positions using derivatives

CCS FW Liqui Macro 579 537 –533 –533

Non-current derivative hedging of the foreign currency base interest rate components of the underlying transaction investment book


Notes to the financial statements 2015 _ Balance sheet disclosures

2.2. Securities and investments

The securities admitted to trading shown in asset items 5 and 6 consist of bonds and other fixed-income securities at EUR 1,538,618 thousand (previous year: EUR 1,747,929 thousand) and shares and other variable-yield securities at EUR 55,371 thousand (previous year: EUR 74,304 thousand).

The items do not include any unlisted shares, bonds, shares and other variable-yield securities, or any equity investments 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 1,512,725 thousand (previous year: EUR 1,722,992 thousand) and bonds and other fixed-in-come securities held as current assets with a value of EUR 25,893 thousand (previous year: EUR 24,937 thousand).

The shares and other variable-yield securities consist of fixed assets amounting to EUR 24,751 thousand (previous year: EUR 35,805 thousand) and current assets amounting to EUR 30,620 thousand (previous year: EUR 38,499 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 securities trading book pursuant to Article 92 CRR. The trading book contained securities totalling EUR 34,992 thousand (previous year: EUR 60,494 thousand) and other financial instruments

2. Balance sheet disclosures

2.1. Presentation of maturities

The maturity structure of both loans and advances to banks and non-banks and amounts owed to banks and non-banks not repayable on demand was as follows:

In 2016, bonds and other fixed-income securities held by Raiffeisenlandesbank Oberösterreich will mature to the amount of EUR 93,076 thousand (2015: EUR 188,275 thousand), along with bond issues of EUR 465,296 thousand (2015: EUR 687,120 thousand).

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 572,860 1,099,356 1,944,082 2,139,230

more than 3 months to 1 year 494,234 651,375 2,831,187 2,677,986

more than 1 year to 5 years 1,510,243 1,019,556 5,774,625 5,536,584

more than 5 years 697,258 771,618 4,284,674 4,104,306

Total 3,274,595 3,541,905 14,834,568 14,458,106

TERM TO MATURITY

AMOUNTS OWED TO BANKS AMOUNTS OWED TO NON-BANKS


IN EUR ‘000


IN EUR ‘000


IN EUR ‘000


IN EUR ‘000

up to 3 months 1,055,907 1,329,947 1,899,272 1,595,457

more than 3 months to 1 year 830,594 1,316,097 1,617,025 1,694,124

more than 1 year to 5 years 3,564,461 3,812,236 3,540,769 3,826,976

more than 5 years 1,449,613 1,609,956 3,108,129 3,184,451

Total 6,900,577 8,068,236 10,165,195 10,301,008


2.3. Fixed assets

The changes in the fixed assets held by Raiffeisenlandesbank Oberösterreich were as follows:

ACQUISITION COST/ COST OF GOODS

DEPRECIA-TION CARRYING AMOUNTS

DEPRECIA-TION

BALANCE SHEET ITEMS

IN EUR '000

AS AT 1 JAN. OF

THE FINAN-CIAL YEAR

ADDITIONS IN THE

FINANCIAL YEAR 1

DISPOSALS IN THE

FINANCIAL YEAR TOTAL

AS AT 31 DEC. OF THE FINAN-CIAL YEAR

AS AT 31 DEC. OF THE PREVI-OUS YEAR

IN THE FINANCIAL

YEAR

Public-sector debt instruments and similar securities 1,061,549 198,385 141,869 46,351 1,071,714 1,024,176 3,757

Loans and advances to banks 9,934 2,222 2,222 13 9,922 9,922 0

Loans and advances to customers 331,713 9,884 50,709 31,904 258,984 299,876 735

Public-sector bonds and other fixed-income securities 7,500 0 7,500 0 0 6,911 0

Bonds and other fixed-income securities from other issuers including: own bonds

1,767,149

(0)

108,915

(0)

318,368

(0)

44,970

(0)

1,512,725

(0)

1,716,082

(0)

1,780

(0)

Shares and other variable-yield securities 2,071,463 34,339 79,592 118,716 1,907,494 1,929,527 2,318

Equity investments including: in banks

181,497

(7,684)

2,553

(2,515)

34,364

(0)

22,735

(5,411)

126,951

(4,787)

161,085

(6,648)

4,486

(4,376)

Investments in affiliated companies including: in banks

1,705,435

(54,714)

679

(640)

35,136

(35,081)

102,208

(0)

1,568,770

(20,273)

1,642,022

(54,714)

38,795

(0)

Intangible assets 6,000 7,666 0 1,225 12,441 6,000 1,225

Property and equipment including: Land and buildings used by the bank in the course of its own operations

78,346

(56,387)

1,206

(128)

1,206

(826)

60,455

(43,291)

17,891

(12,398)

18,974

(13,121)

1,818

(563)

Total 7,220,586 365,850 670,967 428,577 6,486,891 6,814,574 54,914

amounting to EUR 3,123,086 (previous year: EUR 1,856,343 thousand).

Securities with a carrying amount of EUR 0 thousand (previ-ous year: EUR 73,498 thousand) were sold under repurchase agreements and an amount of EUR 0 thousand (previous year: EUR 9,580 thousand).

Raiffeisen Bank International AG (RBI) has adjusted its strategy in individual markets. In doing this, it reacted to changed oper-ating conditions arising, for example, from the political crisis in Russia and Ukraine. In 2015, the European Bank for Recovery and Development (EBRD) intervened to become a 30 per cent shareholder in the RBI subsidiary Raiffeisen Bank Aval JSC (RBA), a leading universal bank in Ukraine.

In the context of ZUNO BANK AG direct bank operating in the Czech Republic and Slovakia, RBI is reviewing whether any further internal and external steps need to be taken, such as the purchase of Zuno in its entirety, full incorporation into other RBI Group units or a partial sale. Solutions are also being developed for subsidiary banks in other countries, such as Poland.

No direct risks stemming from these countries exist for Raiff- eisenlandesbank Oberösterreich. In the evaluation and fur-ther development of Raiffeisen Zentralbank AG – which holds a 60.7 per cent share of Raiffeisen Bank International AG – events in these countries continued to cause risks and uncertainties.

1 including profits from merger


2.4. 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. In accordance with its articles, Raiffeisenlandesbank Oberösterreich Aktiengesellschaft’s share capital as at 31 December 2015 was EUR 276,476 thousand (previous year: EUR 276,476 thousand). It consists of 1,933,965 ordinary shares (previous year: EUR 1,933,965 ordinary shares). Furthermore, participation capital amounting to EUR 1,032 thousand (previous year: EUR 1,032 thousand) has been issued.

A hedge reserve for the “institutional guarantee system” in the amount of EUR 19,637 thousand was formed in retained earn-ings (previous year: EUR 7,887 thousand).

Pursuant to Section 64 (1) no. 16 of the Austrian Banking Act (BWG), Tier 1 capital and additional capital broke down as follows in the 2015 financial year.

A capital conservation buffer was introduced effective 1 Janu-ary 2016 in accordance with section 23 of the Austrian Bank-ing Act (BWG), and this must be maintained in the form of Common Equity Tier 1 capital. In accordance with the transi-tional provision in section 103q no. 11 BWG the capital con-servation buffer for the coming year will be 0.625 per cent. This will be increased to 2.50 per cent by 2019 using the straight-line method.

A presentation of the consolidation of equity pursuant to Sec-tion 64 (1) no. 17 of the Austrian Banking Act is given in the consolidated financial statements of Raiffeisenlandesbank Oberösterreich.

2.5. 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 Oberös-terreich’s website (www.rlbooe.at) .

Balance sheet item Assets 4 includes trustee liabilities amounting to EUR 299,509 thousand (previous year: EUR 317,223 thousand), with trustee deposits included in Balance sheet item Liabilities 1 at the same amount.

The balance sheet includes asset items denominated in for-eign currency amounting to EUR 1,682,601 (previous year: EUR 1,991,824 thousand) and liability items in a foreign cur-rency amounting to EUR 1,688,203 thousand (previous year: EUR 2,004,739 thousand).IN EUR '000 31 Dec. 2015 31 Dec. 2014

Eligible capital instruments 1,100,829 1,100,829

Retained earnings 1,031,019 975,232

Other reserves 494,433 485,362

Deductions and transitional adjust-ments –40,438 –79,586

Common Equity Tier 1 capital 2,585,843 2,481,837

Supplementary capital 701,592 844,152

Deductions and transitional adjustments – supplementary capital 9,482 8,831

Eligible capital 3,296,917 3,334,820

Required equity 1,607,986 1,712,190

Equity surplus 1,688,931 1,622,630

Tier 1 capital ratio 12.86% 11.60%

Common Equity Tier 1 capital ratio 12.86% 11.60%

Total capital ratio 16.40% 15.58%

Return on assets 0.34% 0.17%



The following derivative financial instruments were held as at the 2015 reporting date:

TERM TO MATURITY

IN EUR '000

NOMINAL AMOUNT FAIR VALUE 1

UP TO 1 YEAR

OVER 1 YEAR TO 5 YEARS


Interest rate futures

OTC products

Forward rate agreements 17,575 26,000 0 43,575 0 3,031


Interest rate options – purchases 43,430 328,721 244,386 616,537 12,989 697




Total 4,974,553 13,929,591 17,877,614 36,781,758 2,482,181 2,047,482


OTC products





Total 2,551,164 286,846 26,620 2,864,630 38,315 28,254

Other futures

OTC products


Shares options – purchases 5,000 14,595 0 19,595 3,715 0

Shares options – sales 0 18,924 0 18,924 0 3,419

Total 5,000 43,519 0 48,519 3,715 3,420



Total 7,530,717 14,259,956 17,904,234 39,694,907 2,524,211 2,079,156

1including accrued interest and CVA/DVA


TERM TO MATURITY

IN EUR '000

NOMINAL AMOUNT FAIR VALUE 1

UP TO 1 YEAR

OVER 1 YEAR TO 5 YEARS


Interest rate futures

OTC products

Forward rate agreements 21,717 34,000 0 55,717 0 4,470


Interest rate options – purchases 234,028 1,124,403 522,119 1,880,550 23,676 1,029




Total 3,659,839 16,355,534 19,720,795 39,736,168 2,953,912 2,421,413


OTC products





Total 1,892,817 233,458 14,522 2,140,797 45,895 33,969

Other futures

OTC products


Shares options – purchases 0 20,734 0 20,734 3,578 0

Shares options – sales 0 19,575 0 19,575 0 3,299

Total 0 50,309 0 50,309 3,578 3,305



Total 5,552,656 16,639,301 19,735,317 41,927,274 3,003,385 2,458,687

1including accrued interest and CVA/DVA

The following derivative financial instruments were held as at the 2014 reporting date:



The derivative financial instruments are recognised in the balance sheet with the following carrying amounts:

2015

IN EUR '000


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 233,427 151,406 24,755 24,069 5,324 12,604 66,031

b) Exchange-rate-related agreements 0 0 17,037 6,801 0 0 0

2014

IN EUR '000


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 255,335 165,139 21,177 25,284 9,798 14,169 62,055

b) Exchange-rate-related agreements 0 0 17,469 5,963 0 0 0

As at 31 December 2015, trust fund deposits amounting to EUR 8,667 thousand (previous year: EUR 7,321 thousand) were backed by securities with a value of EUR 9,772 thousand (previous year: EUR 8,893 thousand) held as cover assets.

Loans and advances to customers and banks amounting to EUR 381,202 thousand (previous year: EUR 286,339 thou-sand) were used as collateral for third-party obligations.

As at the reporting date, covered securities with a car-rying amount of EUR 59,016 thousand (previous year: EUR 64,263 thousand) and loans and advances to customers amounting to EUR 1,295,643 thousand (previous year: EUR

1,140,248 thousand) had been pledged as collateral for certain securities issues. In addition, liabilities with a carrying amount of EUR 390,000 thousand (previous year: EUR 150,000 thou-sand) and securities with a carrying amount of EUR 260,825 thousand (previous year: EUR 312,640 thousand) had been furnished as collateral to banks and exchanges. An amount of EUR 629,075 thousand (previous year: EUR 687,315 thou-sand) had been lodged with banks and customers under col-lateral agreements. Loans and advances were assigned to banks amounting to EUR 2,272,963 thousand (previous year: EUR 2,000,184 thousand). Raiffeisenlandesbank Oberösterre-ich has entered into netting agreements with correspondent banks.


Notes to the financial statements 2015 _ Income statement disclosures

3. Income statement disclosures

3.1. Expenses for subordinated liabilities

The total amount for expenses for subordinated liabilities in the 2015 financial year totalled EUR 52,005 thousand (previous year: EUR 49,400 thousand).

3.2. Interest income und interest expenses from neg-ative interest

The negative interest included in the interest income and inter-est expenses is insignificant.

3.3. Other operating income

The other operating income reported in Item 7 of the income statement amounting to EUR 12,896 thousand (previous year: EUR 22,884 thousand) related to cost allocations to non-bank subsidiaries. This fall is attributable to the mergers and reinte-gration and other restructuring activities in the cost allocations.

3.4. Other operating expenses

The other operating expenses reported in Item 10 of the in-come statement amounting to EUR 12,892 thousand (previous year: EUR 22,769 thousand) related to personnel expenses in-curred outside the bank. This fall is attributable to the mergers and reintegration and other restructuring activities in the cost allocations.

3.5. Tax savings

As in the previous year, the change in untaxed reserves did not result in any material change in taxes on income.


4. Other information

4.1. Information on employees

An average of 1,039 employees worked in banking operations during the 2015 financial year (previous year: 918).

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 the Supervisory Board consisted of EUR 372 thousand (previous year: EUR 569 thou-sand) to members of the Managing Board, and EUR 786 thou-sand (previous year: EUR 846 thousand) to members of the Supervisory 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 severance payments and pensions

The personnel expenses included severance expenses amounting to EUR 2,298 thousand (previous year: EUR 3,821 thousand) and contributions to occupational pension funds for employees amounting to EUR 628 thousand (previous year: EUR 497 thousand).

Expenses for severance payments (including provisions) and pensions (including provisions) in 2015 amounted to EUR 268 thousand (previous year: EUR 408 thousand) for members of the Managing Board and to EUR 3,439 thousand for other employees (previous year: EUR 5,759 thousand). There were also further pension provision expenses of EUR 1,795 thou-sand (previous year: EUR 1,322 thousand) for the Managing Board and EUR 2,047 thousand (previous year: EUR 2,244 thousand) for other employees.

4.4. Remuneration paid to the members of the Managing Board and the Supervisory Board

In 2015, the remuneration paid to members of the Manag-ing Board (including payments in kind and expenses in con-nection with pensions) totalled EUR 5,493 thousand (previous year: EUR 5,113 thousand).

Section 241 (4) of the Austrian Commercial Code was applied with regard to the expenses for former executive managers (severance and pension payments) (previous year: EUR 0 thousand).

In 2015, remuneration (including reimbursements for travel ex-penses) of EUR 632 thousand (previous year: EUR 543 thou-sand) were paid to members of the Supervisory Board.

4.5. Members of the Managing Board and the Supervisory Board

In the 2015 financial year, the following were Members of the Managing Board and the Supervisory Board:

CEO and Chairman of the Managing BoardHeinrich Schaller, Chief Executive and Chairman of the Man-aging Board

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

Members of the Managing BoardStefan Sandberger, Member of the Managing BoardReinhard Schwendtbauer, Member of the Managing BoardGeorg Starzer, Member of the Managing BoardMarkus Vockenhuber, Member of the Managing Board

Information on the members of the Raiffeisenlandesbank Oberösterreich Supervisory Board can be found on pages 12 and 13.


Notes to the financial statements 2015 _ Other information



THE MANAGING BOARD








Audit Certificate

Report on the annual financial statements

I examined the attached annual financial statements of


for the financial year from 1 January to 31 December 2015, taking the accounting into consideration. These financial statements include the balance sheet as at 31 December 2015, the income statement for the financial year ending on 31 December 2015, and the Notes.

Responsibility of the legal representatives of the consolidated financial statements and the accounts

The legal representatives of the company are responsible for the accounts and also the compilation of the financial state-ments, presenting a true and fair view of the assets, financial position and earnings of the company in compliance with Aus-trian business and banking laws. This responsibility includes: the design, implementation and maintenance of an internal control system, to the extent that this is necessary for the preparation of the annual statements, and to present as true a picture as possible of the group's net assets, financial posi-tion and profit situation so that these financial statements are free from material misrepresentations, whether due to inten-tional or unintentional mistakes. This also includes choosing and applying suitable accounting and valuation methods and making estimates that appear appropriate under the existing circumstances.

Responsibility of the auditor of the consolidated financial statements and a description of the type and scope of the statutory audit

My responsibility lies in the submission of an audit opinion on these financial statements on the basis of my inspection.

My audit was conducted in accordance with the applicable Austrian legal regulations and fundamental auditing prin-ciples. These standards require that I plan and perform the audit in such a manner that I can form a reasonable opin-ion as to whether the financial statements are free of material misstatement.

An audit includes the implementation of auditing actions to obtain auditing proof in respect of the amounts and other de-tails given in the annual financial statements. The choice of auditing actions is left to the obligatory discretion of the audi-tor of the annual financial statements, taking into account his assessment of the risk of material misstatements occurring, whether due to intended or unintended errors. In assessing this risk, the auditor of the annual financial statements takes into account the internal control system, insofar as it is im-portant for compiling the annual financial statements and pre-senting a true and fair view of the assets, financial position and earnings of the company, in order to determine suitable auditing actions taking account of the framework conditions, not however to submit an auditing opinion about the effec-tiveness of the company’s internal control system. The audit also included an evaluation of the adequacy of the applied ac-counting and valuation methods and the essential estimates made by the legal representatives of the company as well as an assessment of the overall tenor of the financial statements.

I believe that I have obtained sufficient and suitable auditing proof, so that my audit provides a reasonable basis for my opinion.


Audit Certificate

Vienna, 5 April 2016

As auditor for Österreichischer Raiffeisenverband:

Michael LamingerChartered Accountant and Auditor

Auditor’s opinion

The results of my audit gave no reason for objection. On the basis of the knowledge gained during the audit, in our judge-ment the financial statements comply with the legal regula-tions and present a true and fair view of the company's assets and financial position as of 31 December 2015 and the com-pany's earnings and cash flow in the financial year from 1 Jan-uary to 31 December 2015, in accordance with the Austrian principles of orderly accounting.

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 auditor's opinion must also include a statement as to whether the management report is consistent with the financial statements and whether or not the details according to section 243a (2) of the Austrian Com-mercial Code apply.

In my opinion, the management report is consistent with the financial statements. The details according to section 243a (2) of the Austrian Commercial Code apply.

The audit certificate refers to the complete financial statements.

This annual report includes the section of the notes that is subject to statutory disclosure.


Audit Certificate

Report on the annual financial statements

We examined the annual financial statements of


consisting of the balance sheet as at 31 December 2015, the consolidated statement of comprehensive income for the fi-nancial year ending on this reporting date along with the Notes. In terms of our responsibility and liability as auditors to the company and to third parties, section 275 of the Austrian Commercial Code shall apply.

Responsibility of the legal representatives for the financial statements

The legal representatives of the company are responsible for preparing and for appropriate overall presentation of these fi-nancial statements in accordance with Austrian business and banking laws, and for the internal controls which the legal rep-resentatives consider to be required in order to allow annual financial statements to be prepared which are free from any material misrepresentations, whether these are intentional or unintended.


Our responsibility is to provide an assessment of these finan-cial statements based on our audit. We completed our audit in accordance with the Austrian principles of orderly accounting. These principles required the application of the International Standards on Auditing (ISA). According to these principles we are required to comply with the professional code of conduct

and to plan and carry out the audit so that there is adequate certainty that the financial statements are free from material misrepresentations.

An audit involves carrying out audit activities in order to obtain audit evidence for the valuations and other information con-tained in the financial statements. The choice of auditing ac-tivities is left to the obligatory discretion of the banking auditor. This includes an assessment of the risks of material intentional or unintentional misrepresentations in the financial state-ments. 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 overall presentation of the financial statements, in order to plan audit activities that are appropriate under the given circumstances, but not with the objective of providing an assessment on the effectiveness of the company’s internal control system. An audit also includes an assessment on the accounting princi-ples applied and the reasonableness of the estimated values ascertained by the legal representatives in the accounting sys-tem, along with an assessment of the overall presentation of the financial statements.

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 assessment.


Audit Certificate

Auditor’s opinion

The results of our audit gave no reason for objection. In our judgement the financial statements comply with the legal reg-ulations and present a true and fair view of the company's assets and financial position as of 31 December 2015 and the company's earnings and cash flow in the financial year, in accordance with Austrian corporate law regulations and other special statutory provisions.

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 auditor's opinion must also include a statement as to whether the management report is consistent with the financial statements and whether or not the details according to section 243a of the Austrian Com-mercial Code apply.

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

The audit certificate refers to the complete financial statements.This annual report includes the section of the notes that is subject to statutory disclosure.

Linz, 5 April 2016

KPMG Austria GmbHWirtschaftsprufungs- und Steuerberatungsgesellschaft

Martha KloibmullerChartered Accountant and Auditor




The Managing Board

Statement of the Managing Board

We confirm to the best of our knowledge that these consol-idated 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 finan-cial 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 develop-ment, 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 description 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.


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 2015 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.

Seven committees (nomination, approval, information, audit-ing, risk, accounting, and personnel & remuneration commit-tees) have effectively supported the entire Supervisory Board in the completion of its work.

The Österreichischer Raiffeisenverband and KPMG Austria AG have audited the bookkeeping system, the annual financial statements in accordance with the provisions of the Austrian Commercial Code (UGB) and Austrian Banking Act (BWG), the consolidated financial statements according to the In-ternational Financial Reporting Standards (IFRS) for the year ended 31 December 2015 and the management report and the group management report for the 2015 financial year. The audits did not give cause for any reservations and all legal regulations were complied with in full. Consequently, the inde-pendent auditors issued an unqualified audit opinion.

The accounting committee has audited the annual financial statements and the consolidated financial statements for the year ended 31 December 2015, the management report and the group management report for the 2015 financial year. The audit did not give cause for any reservations in any way whatsoever. The outcome of the audit by the accounting

committee is therefore a recommendation that the Supervi-sory Board concur with the findings of the independent audi-tors and approve the annual financial statements for the year ended 31 December 2015 pursuant to section 96 (4) of the Austrian Stock Corporation Act (AktG), agree to the proposal of the Managing Board concerning the appropriation of earn-ings and note with approval the consolidated financial state-ments for the year ended 31 December 2015, including the group management report.

At a meeting held on 25 April 2016, the Supervisory Board itself also reviewed the annual financial statements and con-solidated financial statements for the year ended 31 Decem-ber 2015 as well as the management report and the group management report for the 2015 financial year.

The Supervisory Board agreed with the accounting commit-tee's audit findings and the Managing Board's recommen-dations regarding the appropriation of profit, approved the 2015 annual financial statements for Raiffeisenlandesbank Oberösterreich Aktiengesellschaft, which were thereby for-mally adopted pursuant to section 96 (4) of the AktG, and noted with approval the consolidated financial statements for the year ended 31 December 2015 including the group man-agement report.

The Supervisory Board would like to thank the Manag-ing Board and all employees of the Raiffeisenlandesbank Oberösterreich Aktiengesellschaft and the whole group for their commitment and successful performance in the 2015 financial year.

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

Linz, 25 April 2016

The Supervisory Board

Jakob AuerChairman of the Supervisory Board


Raiffeisen Banking Group Upper Austria Results 2015 (consolidated)

Report on business development 2015 _________________________________ 209

Consolidated balance sheet as at 31 December 2015 ______________________ 211

Consolidated income statement 2015 ___________________________________ 212


Report on business performance

Raiffeisen Banking Group Upper Austria implements some important measures for the future

The Raiffeisen Banking Group Upper Austria consists of Raif-feisenlandesbank Oberösterreich AG and 94 independent Upper Austrian Raiffeisen banks with 414 bank branches. As the most important local supplier of financial services in Upper Austria, the Raiffeisen Banking Group Upper Austria is a re-liable and readily available partner that offers its customers personalised support for targeted and customised financial and business services.

Clear strategies for success

With its clear strategies and targeted approach, the Raiffeisen Banking Group Upper Austria has adapted well to current framework conditions and continues to implement numer-ous measures aimed at securing stability and durable qual-itative growth. The success of this approach can be seen from the very positive results from 2015. Another important primary factor here has been the close cooperation between the Upper Austrian Raiffeisen banks, which offer their exper-tise and services throughout Austria, and Raiffeisenlandes-bank Oberösterreich, which, as a coordinating entity, offers creative financial services in Upper Austria as well as the rest of the country. With its special network of expertise, the Raif-feisen Banking Group Upper Austria has achieved a balance between maintaining its local roots and providing global sup-port for 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 associate work, which focuses on co-operative action. Taking decisions together, and then also consistently implementing these, is a strength throughout the entire Raiffeisen Banking Group Upper Austria. This is the only way to remain capable of meeting the constantly changing challenges of the global economy, now and in future.

Transformation through digitisation

It is not just the banking industry as a whole that is faced with ever broader legal and regulatory rules on a continuous basis. Customer behaviour is also going through a massive

transformation that will intensify further over the next few years as a result of increasing digitisation. In order to be able to meet current and, in particular, future customer requirements, the Raiffeisen Banking Group Upper Austria has positioned itself as a modern advisory bank that in the future will draw on the latest banking technology to ensure the even more convenient processing of banking transactions for customers. The famil-iar business model also needs to be revised as a result of the global changes that have happened in the Internet age, while still retaining the focus on customers, on personal consultancy expertise, and on our regional roots and responsibility as core brand values of the Raiffeisen Banking Group Upper Austria.

“Digital regional bank” – the branch of the future

Solutions are being developed as to how an innovative and successful bank branch concept may look in the future. This is being done as part of the innovative development of the “Raiffeisen Banking Group Upper Austria 2020” project. In-tensive work is also taking place in parallel on the “Digital regional bank” project. This is based on an “aggregated busi-ness model” whereby the fixed and digital channels no longer co-exist separately, but are in fact intertwined. The physical proximity of the branch is retained, based on the relevant need. The support and service approaches will change, however, in accordance with customer behaviour, and digital channels will increasingly be selected for these that are independent of lo-cation and time. The Raiffeisen Banking Group Upper Austria benefits from increases in productivity and efficiency here based on process harmonisation and simplification.

Continuing to win over customer confidence in the future

As clear market leaders in Upper Austria, the Raiffeisenlandes- bank Oberösterreich and the Upper Austrian Raiffeisen banks have a lot of responsibility for the finances of companies, private customers and institutions in the state. The compre-hensive projects of the future are aimed at ensuring that the Raiffeisen Banking Group Upper Austria will continue to be able to live up to these expectations.

On average throughout the year, 3,584 people were employed by the Raiffeisen Banking Group Upper Austria.

Balance sheet

The consolidated total assets of the Raiffeisen Banking Group Upper Austria were EUR 42.0 billion as at 31 December 2015. This equated to a year-on-year decrease of EUR 0.3 billion or

Report on business performance 2015


0.8 per cent. Of the total assets, assets worth EUR 27.8 billion (66.1 per cent) were accounted for by loans and advances to customers. There was a slight increase over the previous year of 0.4 per cent.

The proprietary possession of securities amounting in total to EUR 5.8 billion is held primarily in order to ensure liquidity and as security for central bank refinancing initiatives. Overall, at the end of the year, 13.8 per cent of total assets were invested in securities.

The largest item on the liabilities side was the amounts owed to customers at EUR 24.9 billion or 59.2 per cent of the total assets. This equated to a year-on-year increase in this item of EUR 0.8 billion or 3.1 per cent. Liabilities evidenced by certifi-cates and subordinated liabilities amounted to EUR 6.7 billion or 15.9 per cent of the total assets. These items contribute significantly towards long-term liquidity protection.

At the end of 2015, the total equity eligible for inclusion under IPS (Institutional Protection Scheme) for Upper Austria accord-ing to the CRR (Capital Requirements Regulations) amounted to EUR 3,343.8 million. The statutory capital requirement was

EUR 2,555.5 million as at 31 December 2015. The banking group was able, therefore, to report a capital surplus as at the balance sheet date amounting to EUR 788.3 million.

Income statement

The 2015 income statement of the Raiffeisen Banking Group Upper Austria was very pleasing, given the general economic conditions. Consolidated operating income amounted to EUR 1,069.2 million and total operating expenses to EUR 647.6 mil-lion. Operating profit of EUR 421.6 million was reported for 2015.

In 2015, Raiffeisen Banking Group Upper Austria achieved an operating profit of 1.00 per cent of the average total assets and thereby a very good result that was above the average for Austrian banks.

Based on a rigorously implemented risk policy and a tightly operated risk management system, the Raiffeisen Banking Group Upper Austria has kept risk under control and been able to generate a profit from ordinary activities (POA) of EUR 274.7 million or 0.65 per cent of the average total assets.


Consolidated balance sheet

Consolidated balance sheet as at 31 December 2015

ASSETS

IN EUR M 31 DEC. 2015 31 DEC. 2014

Cash in hand and balances at central banks 217.2 220.7

Public-sector debt instruments and bills of exchange eligible for refinancing at the central bank. 1,098.0 1,080.1

Loans and advances to banks 5,949.1 6,159.0

Loans and advances to customers 27,802.6 27,684.6

Bonds and other fixed-income securities 1,638.5 1,857.7

Shares and other variable-yield securities 3,051.1 2,998.3

Investments 151.6 184.8

Investments in affiliated companies 1,570.4 1,622.2

Intangible assets 13.7 7.1

Property and equipment 276.0 282.5

Other assets 256.2 243.0

Prepaid expenses 23.4 28.8

Total assets 42,047.8 42,368.8


IN EUR M 31 DEC. 2015 31 DEC. 2014

Amounts owed to banks 6,661.4 7,282.3

Amounts owed to customers a) of which savings deposits b) of which term deposits

24,879.6 10,096.3

5,706.4

24,124.9 10,410.2 5,416.9

Liabilities evidenced by certificates 5,737.3 6,169.9

Other liabilities 209.9 251.5

Deferred income 20.6 23.1

Provisions 349.2 303.0

Tier 2 capital according to Part 2 Chapter 4 of EU Regulation No. 575/2013 944.6 1,123.8

Instruments without voting rights according to section 26a of the Austrian Banking Act 0.0 13.7

Subscribed capital 12.7 11.9

Retained earnings 2,582.8 2,419.2

Liability reserve pursuant to section 57 (5) of the Austrian Banking Act 532.2 530.9

Net income for the year 81.1 75.7

Untaxed reserves 36.4 38.9

Total equity and liabilities 42,047.8 42,368.8


IN EUR M 2015 2014

NET INTEREST INCOME 556.3 554.6

Income from securities and equity investments 181.7 173.3

Fee and commission income 280.9 278.6

Fee and commission expenses –43.3 –42.7

Income from/expenses in financial operations 8.1 11.1

Other operating income 85.5 85.6

OPERATING INCOME 1,069.2 1,060.5

Personnel expenses –352.6 –325.9

Other administrative expenses –203.6 –205.3

Valuation allowances for assets in asset items 9 and 10 –19.6 –17.0

Other operating expenses –71.8 –69.2

OPERATING EXPENSES –647.6 –617.4

OPERATING PROFIT 421.6 443.1

Reversals/additions of value adjustments to liabilities –156.2 –163.8

Reversals/additions of value adjustments to securities and equity investments 9.3 –50.1

PROFIT FROM ORDINARY ACTIVITIES 274.7 229.2

PROFIT FOR THE YEAR (prior to movements in reserves) 215.0 165.5

Consolidated income statement 2015


Consolidated Income Statement _ Glossary

Glossary A

Additional Tier 1 capital ( (AT1): Additional Tier 1 (AT1) describes supplementary Tier 1 capital under →CRR.

AfS: “Available for Sale” assets refers to a category of financial assets in accordance with IAS 39. This includes all non-derivative financial assets that have been explicitly allocated to this catego-ry or have not been allocated to any of the other categories.

AfS reserves: Financial assets in the “Available for sale” (→AfS) category 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 un-der the AfS reserves.

Associates: 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 organisation and supervision of Austrian bank-ing and, as a result, a special set of trading regula-tions for the operation of banking businesses.

Austrian Commercial Code (UGB): On 1 January 2007, the Handelsgesetzbuch (HGB) was renamed Unternehmensgesetzbuch (UGB); both are now generally known in English as the Aus-trian Commercial Code. The Austrian Commercial Code regulates the legal relationships of entrepre-neurs, contains stipulations about company struc-tures and accounting standards.

B

Bank book: All items not allocated to the →secu-rities trading book.

Basel III: Basel III refers to the changes or sup-plements to the framework created in 2004 for capital adequacy requirements for banks (Basel II) by the Basel Committee on Banking Supervision. The reforms regulate both the capital base and li-quidity And are in effect in the European Union as of 1 January 2014.

C

Cash flow statement: Calculation and pre-sentation of cash flows achieved and utilised from operational transactions, investment and financing activities as well as reconciliation of cash and cash equivalents at the beginning and end of the finan-cial year.

CDS: A Credit Default Swap (CDS) is a credit deriv-ative 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.

Common Equity Tier 1 capital (CET 1): Common Equity Tier 1 capital (CET1), according to →CRR, includes certain capital instruments as well as associated premiums, retained earnings, accumulated other comprehensive income, other reserves, funds for general bank risks, and adjust-ments and corrections.

Common Equity Tier 1 capital ratio (CET-1-ratio): The Common Equity Tier 1 Capital ratio is →Common Equity Tier 1 capital ex-pressed as a percentage of the →total risk-weight-ed assets.

Companies accounted for using the equity method: The equity method is used for balancing the accounts of → associates in consol-idated financial statements. Essentially, the propor-tionate equity of companies accounted for under the equity method is shown in the consolidated balance sheet and the proportionate profit in the consolidated income statement.

Credit risk: The risk that one party to a financial instrument will cause a financial loss to another par-ty by not fulfilling an obligation.

CRD: The Capital Requirements Directive is the portion of the →Basel III regulations that must be implemented 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.

CRR: The Capital Requirements Regulation refers to a regulation of the EU that deals with the cen-tral capital and liquidity requirements according to →Basel III. It contains the quantitative requirements for the capital adequacy of banks and disclosure re-quirements. Like the →CRD, it is part of the “Single Rulebook” for European banking supervisory law.

CVA: The Credit Value Adjustment is the difference between the risk-free portfolio value and the true portfolio value that takes into account the possibility of a counterparty’s default.

D

DBO: Defined Benefit Obligation is the obliga-tion to forecast future payments as part of perfor-mance-oriented planning. The cash value of the obligations determines the total amount of social provisions, taking into account any further fac-tors (e.g. plan assets).

DCF: Discounted Cash Flow describes a method for determining value that is based on the arithmeti-cal concept of discounting cash flows in order to determine the capital value.

Derivatives: Derivatives are financial instruments whose value changes as a result of changes to the underlying 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.

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 perform-ing the fair value measurement of →derivatives and shows the difference between the risk-free value and the value when taking the own creditworthiness risk into consideration.

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 Advi-sory Group was founded in 2001 with the objec-tive 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 de-velopment of perspectives in relation to international accounting standards in the EU.

Exchange rate risk: The risk that the →fair val-ue or future cash flow of a financial instrument will fluctuate due to exchange rate changes.

F

Fair Value: The fair value is the amount at which an asset was exchanged or a debt paid between competent, contractually willing and mutually inde-pendent business partners, at market conditions.

Forwards: Forwards are individually developed futures which are not traded on the stock exchange and with an obligation to be fulfilled.

Fully consolidated companies: Fully con-solidated companies include the parent company and important → subsidiaries that are presented in the consolidated financial statements as if they were one single company.

Futures: Futures are standardised, future trans-actions which are traded on the stock market and have an obligation to be fulfilled. A particular price and point in time is agreed in advance at which the object that is traded (from the money, capital, pre-cious metals or foreign exchange market) must be delivered or accepted.

H

HtM: “Held to Maturity” refers to a category of finan-cial assets according to IAS 39. It includes non-de-rivative financial assets with fixed or determinable payments and with a fixed term that are quoted on 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.

IFRIC: Interpretations are passed by the Interna-tional Financial Reporting Interpretations Committee on important issues of →IFRS accounting.

IFRS: International Financial Reporting Standards (IFRS) is the general term for international account-ing standards (IFRS, formerly IAS) and their interpre-tations (→ IFRIC, formerly SIC).

Impairment: Impairment refers to the decrease in value of financial assets with effect on the income statement and of (long term) intangible assets, property and equipment, and investment property, as long as the latter are valued at amortised cost.

Interest-rate risk: The risk that the →fair val-ue 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 liability or indemnity agreement – created by means of a contractual agreement or through articles of asso-ciation, statutes or charters – that provides protec-tion for member banks in a decentralised banking group. A distinction can be drawn between an insti-tutional protection system at the state level (L-IPS) and federal level (B-IPS).

L

LGD: Loss Given Default describes the ratio of the loss on an exposure due to default.

Liquidity risk: The risk that a company has difficulty in fulfilling its obligations resulting from its financial liabilities.

N

NPL: Non-performing loans are loans where it is assumed that the customer will not be able to pay the debt back to the bank in full. Various indicators are used to determine the exposure, such as that the customer has filed for bankruptcy or has not made a payment in at least 90 days.

O

OCI: Other Comprehensive Income takes into ac-count all changes in value for assets and liabilities that are not covered via the income statement.

Operating profit: Operating profit is the dif-ference between operating income and operating expenses. At group level, it is calculated by deduct-ing general administrative expenses from the sum of net interest income, net fee and commission income, net trading income, and other operating income.

Operational risk: Operational risk is the risk of losses caused by the inadequacies or failure of internal procedures, people, systems or external events.

Options: The buyer of an option acquires the right to purchase (call option) or sell (put option) the underlying option object from a contract part-ner 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 between 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.

R

Rating (external): Assessment of creditwor-thiness of issuers and debt issues by international rating agencies (e.g. Moody’s, Standard & Poor’s).

Rating (internal): Assessment of creditworthi-ness of borrowers by banks.

Risk-weighted assets (RWA): Risk-weight-ed assets (RWA) refer to the total risk value ac-cording to CRR, including components from Article 92 (3) CRR. The most important components are risk-weighted exposure amounts for credit, coun-terparty default and dilution risks; total exposure amounts for risks related to items, foreign curren-cies, wind-ups and commodities; risk positions for operational risks, and risk positions for adjustment of credit scores.

S

Securities trading book: In accordance with the Austrian Banking Act, the securities trading book includes items that are held by a bank for the purpose of short-term resale, in order to exploit price and interest-rate fluctuations.

SREP: Supervisory Review and Evaluation Pro-cess – this is the supervisory process for review and monitoring by the →EBA.

Subsidiaries: Companies on whose business and financial 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 (interest swap) and/or foreign currency items (for-eign currency swap).

T

Tier 1 capital (T1): Tier 1 capital according to CRR →describes core capital and includes → Common Equity Tier 1 capital (CET1) as well as → Additional Tier 1 capital (AT1).

Tier 1 capital ratio: The Tier 1 capital ratio re-sults from the →Tier 1 capital expressed as a per-centage of →the total risk-weighted assets.

Tier 2 capital: 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 correc-tions.

Total capital ratio (TC ratio): The total capital ratio is →total capital expressed as a percentage of the →total risk-weighted 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 WACC (Weighted Average Cost of Capital) is an average total capital cost rate that arises as a weighted average of the equity and bor-rowed capital cost rate.

Legal notice

Owner, editor and publisher:Raiffeisenlandesbank Oberösterreich AktiengesellschaftEuropaplatz 1a, 4020 LinzTel. +43 (0) 732/6596-0FN 247579 m, District Court, LinzDVR: 2110419 www.rlbooe.at/impressum

Responsible for content:Harald WetzelsbergerMichael Huber Otto Steininger Florian Brunner Christina Pramhas-Dietscher Carola Berer with contributions from virtually every department at Raiffeisenlandesbank Oberösterreich

Layout: Raiffeisenlandesbank Oberösterreich, Service ManagementPhotos: Thomas Smetana, Linz; Foto Strobl, Linz, istockphotoPrint: Trauner Verlag + Buchservice GmbH, 4020 Linz

©: 2016 Raiffeisenlandesbank Oberösterreich Aktiengesellschaft This annual financial report of Raiffeisenlandesbank Oberösterreich 2015 is an English translation. If there are discrepancies, the German original shall apply. No liability is assumed for typographical or printing errors.

This document is a marketing communication that was prepared by the Raiffeisenlandesbank Oberösterreich AG exclusively for informational purposes. It was not prepared in compli-ance with legal regulations regarding the independence of investment research, nor is it subject to any prohibition on trade connected with the dissemination of investment research. This marketing communication represents neither investment advice, nor an offer or invitation to make an offer for the purchase or sale of financial instruments or investments. The infor-mation, analyses and forecasts contained herein are based on the knowledge and market assessment at the time of its preparation – subject to amendments and additions. Raiffeisen-landesbank Oberösterreich AG assumes no liability for the accuracy, timeliness or completeness of the contents, or for the accuracy of forecasts. The contents are non-binding and do not represent a recommendation to buy or sell. Because every investment decision requires an individual determination based on the investor’s personal characteristics (such as risk tolerance), this information is no substitute for the personalised advice and risk disclosure provided by a customer advisor in the course of a consultation. We expressly note that financial instruments and investments have major inherent risks. Performance is determined in accordance with the OeKB method, based on data from the custodian bank. We explicitly note that the composition of fund assets can change in accordance with legal regulations. Information about performance is related to the past and therefore does not represent a reliable indicator of future performance. Currency fluctuations in non-euro currencies can affect performance positively and negatively. Investments may result in tax obligations that depend on the cus-tomer’s personal circumstances and can be subject to changes in future. This information can therefore not replace the personalised support provided to an investor by a tax advisor. The limited tax obligations imposed by Austria on non-resident taxpayers does not imply freedom from taxation in the investor’s country of residence. Prospectuses and any endorsements of the issue of shares in Raiffeisenlandesbank Oberösterreich AG, which must be published in accordance with the KMG, are the responsibility of Raiffeisenlandesbank Oberösterreich AG. In the event of other share issues, the prospectus and any endorsements lie with the respective issuer of shares. Investment strategies for investment funds can focus primarily on investment funds, bank deposits and derivatives, or the emulation of an index. Funds may exhibit significant fluctuations in value (volatility). In the funds regulations approved by the Financial Supervisory Authority (FMA), issuers can be identified if they can be weighted as holding more than 35 per cent of fund assets. The current sales prospectus, as well as the Key Investor Information – Customer Information Document (KID) are available in German and English at the relevant capital investment company (KAG), payment authority, or tax representative in Austria. More information on risk and liability exclusion is available at www.boerse-live.at/Disclaimer; disclosure in accordance with section 48 of the Stock Exchange Act [Börsegesetz] at www.boerse-live.at/Offenlegung


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

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