innovation award winning outstanding competence … · 2020. 4. 30. · innovation award winning...
TRANSCRIPT
INNOVATION AWARD WINNING OUTSTANDING COMPETENCE CENTER FOR EQUITIES AND CERTIFICATES HIGH LEVEL INNOVATION AWARD WINNING OUTSTANDING COMPETENCE CENTER FOR EQUI-
TIES AND CERTIFICATES HIGH LEVEL INNOVATION AWARD WINNING OUTSTANDING COMPETENCE CENTER FOR EQUITIES AND CERTIFICA-
TES HIGH LEVEL INNOVATION AWARD WINNING OUTSTANDING COMPETENCE CENTER FOR EQUITIES AND CERTIFICATES HIGH LE-
VEL INNOVATION AWARD WINNING OUTSTANDING COMPETENCE CENTER FOR EQUITIES AND CERTIFICATES HIGH LEVEL INNOVATION AWARD WINNING OUTSTANDING COMPETENCE CENTER FOR EQUI-
TIES AND CERTIFICATES HIGH LEVEL INNOVATION AWARD WINNING OUTSTANDING COMPETENCE CENTER FOR EQUITIES AND CERTIFICA-
TES HIGH LEVEL INNOVATION AWARD WINNING OUTSTANDING COMPETENCE CENTER FOR EQUITIES AND CERTIFICATES HIGH LE-
VEL INNOVATION AWARD WINNING OUTSTANDING COMPETENCE CENTER FOR EQUITIES AND CERTIFICATES HIGH LEVEL INNOVATION AWARD WINNING OUTSTANDING COMPETENCE CENTER FOR EQUI-
TIES AND CERTIFICATES HIGH LEVEL INNOVATION AWARD WINNING OUTSTANDING COMPETENCE CENTER FOR EQUITIES AND CERTIFICA-
TES HIGH LEVEL INNOVATION AWARD WINNING OUTSTANTE
2019Annual F inancial Report
03–09 Company 03 AnOverview 03 PrefacebytheChairmanoftheSupervisoryBoard 04 CEOEditorial 05 TheYearinReview 06 CorporateBodies 07 CorporateGovernance/Compliance 08
10–22 ManagementReport 10 EconomicEnvironment 11 DevelopmentofBusinessandEarnings 11 SegmentReporting 14 PerformanceIndicators 16 RiskManagement 18 InternalControlSystem 20 HumanResources 21 Outlook2020 21 ResearchandDevelopment 22
22 StatementofLegalRepresentativespursuantto§124StockExchangeAct 22
23–47 FinancialStatements 23 BalanceSheet 24 IncomeStatement 26 DevelopmentofFixedAssets 27 Notes 29 Auditor'sReport 46
48 Publisher'sDetails 48
ThisisatranslationfromGerman.IncaseofanydiscrepanciesbetweentheEnglishandGerman version,theGermantextshallprevailandbebinding.
Annual Financial Report 2019: An Overview
TheCompany
Key Data of Raiffeisen Centrobank AG
in€ thousand/inpercent 2019 2018 Change
Keyratios
Operatingincome 59,292 59,759 (0.8%)
Operatingexpenses (44,898) (42,366) 6.0%
Resultonordinaryactivities 14,546 15,728 (7.5%)
Netprofitfortheyear 11,573 13,004 (11.0%)
Balancesheettotal 4,440,234 3,735,352 18.9%
Return-on-Equitybeforetax 12.5% 13.8% -
Return-on-Equityaftertax 9.9% 11.4% -
OverallReturn-on-Assets(aftertax) 0.3% 0.3% -
Cost/incomeratio 75.7% 70.9% -
Bank-specificinformation
Corecapital 108,094 112,343 (3.8%)
Totalrisk-weightedassets 520,337 475,262 9.5%
Surplusofownfunds 66,467 74,322 (10.6%)
Corecapitalratio 20.8% 23.6% -
Corecapitalratio/creditrisk 73.1% 76.0% -
Ownfundsratio 20.8% 23.6% -
Liquiditycoverageratio(LCR) 291.1% 219.6% -
Non-financialperformanceindicators
Employeesatyear-end 195 191 2.1%
Averagenumberofemployees 195 186 4.8%
Stockexchangememberships 10 10 -
Numberofnewlyissuedwarrantsandcertificates 4,174 4,869 (14.3%)
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DearLadiesandGentlemen,
Duringthe2019financialyear,themembersoftheSupervisoryBoardanditsCommitteeswereinfor-medinatimelyandcomprehensivemannerbytheManagementBoardaboutthedifferentbusinessareas,riskassessmentsandrelevantbusinessdeve-lopmentsinRaiffeisenCentrobankAG.InformationwasprovidedverballyaswellasinwrittenformandenabledtheSupervisoryBoardtofulfillitsdutytosuperviseandadvisetheManagementBoard.
Theyear2019broughtchangestoRaiffeisenCentrobankAG:fromaleadershippointofview,theappointmentofHaraldKrögerasCEOandHeikeArbterasMemberoftheManagementBoardasof1May2019shouldbehighlighted.TheysucceededWilhelmCeleda,whobecameCEOofKathreinPrivatbankAktiengesellschaft(Kathrein),andValerieBrunner,whoreturnedtoRaiffeisenBankInternationalAG(RBI).AsCEOMr.KrögerisresponsiblefortheLegal&Participa-tions,HumanResources,Risk,Compliance,Finance,Audit,ITaswellasOperationsdivisionsand,thus,alsoperformsthefunctionsofChiefRiskOfficerandChiefFinancialOfficer.MsArbterisresponsibleforthecorebusinessareasofStructuredProducts,GlobalEquitySales,EquityCapitalMarkets,Trading&TreasuryandInvestmentServices,andbringshermanyyearsofexperienceinRaiffeisenCentrobankAGandexcellentmarketbackgroundtothetable.
Fromabusinesspointofview,astrategicdecisionwastakenregardingtheInvestmentServicesbusinessofRaiffeisenCentrobankAG.FollowingamutuallyagreeddecisionwithRBI,theInvestmentServicesdivisionofRaiffeisenCentrobankAGandthecustomersservedinthissegmentweretransfer-redtoKathreinattheendofQ12020*.Raiffeisen
CentrobankAGwillfocusonitsstrengthinthesecuritiesbusinesssothatitcancontinuetosuccessfullyfulfilitsroleasaleadingcertificatesandequitieshouse.Thisdecisionsupportsthepro-ductfocusofRaiffeisenCentrobankAGasthecerti-ficatesandequitieshouseofRBI,preventsoverlapsintheprivatebankingsector(aclearfocusofKathrein),andensuresthattheinvestmentservicesproductwillonlybeofferedwithinoneunit.
AgainstthebackdropofthechangeswithinRaiffei-senCentrobankAGandtheongoingturbulentmarketenvironment,theperformanceoftheemployeesduringthepastyearwasparticularlypositive.RaiffeisenCentrobankAGremainedthebiggestplayerontheAustrianstockmarketwithamarketshareof11.4percentofthetradingmarketvolumeontheViennaStockExchange,whereitconsolidateditspositionwith17specialistand39marketmakingmandates.TheStructuredProductsdivisionwasabletoclosetheyearwithanabsolu-terecordhighopeninterestvolumeofEUR4.6billion.Intheequitycapitalmarketssegment,Raiffei-senCentrobankAGwasabletomaintainitspositi-onontheViennaStockExchangeandconcludedseveralequitytransactionsinEuropetogetherwiththeRBInetworkbanks.
Asafinalpoint,Iwouldliketothankallthosewhohelpedachievethegoodresultsinthepreviousyear.
*)retroactivelyasat30June2019
Preface by the Chairman of the Supervisory Board
ŁukaszJanuszewskiChairmanoftheSupervisoryBoard
5
LadiesandGentlemen,dearReader,
Theyear2019stoodforbothchangeandstabilityforRaiffeisenCentrobankAG.On1May2019,WilhelmCeledaandValerieBrun-ner,whoaccountedfortheBank’sdevelopmentformanyyears,lefttheManagementBoard.TogetherwithHeikeArbter,whohasmanyye-arsofexperienceinRaiffeisenCentrobankAGandisanoutstandingsecuritiesexpert,ItookovertheManagementBoardagendasinMay2019.Wearecommittedtofulfillingtheseres-ponsibletaskswithprofessionalism,diligenceandentrepreneurialvision.
Thefocusisonourcoreareasofbusiness,StructuredProducts,EquityTradingandSales,EquityCapitalMarketsandCompanyResearch,whicharethepillarsforprovidingcontinuityandgrowthforRaiffeisenCentrobankAG.Inthecourseofastrategicanalysisinco-operationwithRBIitwasdecidedtodemergeourInvestmentServicessegmentandtotransferittoKathreinattheendofQ12020*.Raiffei-senCentrobankAGisnowfocusingonthecoreequitybusinesswithitssoundyieldpoten-tial.AsthecompetencecenterforcertificatesandequitiesinAustriaandtheCEEregionweareconfidenttoseizefavorablebusinessopportunitiesinthesesegments.
ThesechangeswithinRaiffeisenCentrobankAGimplysettingthecoursefortheBank’sfutureandatthesametimepursuingonemajorobjective:tosharpenourprofilebasedonourstrengths,tomotivateouremployeesandtowinnewtalentsforourteams,toserviceourcustomerswithevengreaterproductandservicequality,tocontinuouslyexpandour
marketshare,andtobewell-preparedfortheyearstocome.AllRaiffeisenCentrobankAGemployeesareworkingjointlytoachievethesegoalswithfulldedicationandcommitment.
Thisisreflectedinthe2019annualresultwhichyieldedarecordturnoverintheStructuredProductssegmentandagoodcontributionoftheoverallequitybusinessagainsttheback-dropofapersistentlychallengingbusinessandstockexchangeenvironment.Numerousnatio-nalandinternationalawards,whichwewoninthepastyear,underpinRaiffeisenCentrobankAG’soutstandingachievements.
TheimpactoftheCovid-19crisis,whichtransla-tedintonegativeeconomiceffectsandstockexchangeslumps,posesconsiderablechallen-gesforourbusinessinthe2020financialyear,whichwestrivetocontainbybeingallthemorecommittedtoprovidingourclientswithcusto-mizedproductsinthismarketphase.
Iwouldliketoexpressmythankstoouremplo-yeesfortheirexcellentworkandcommitmentinthepastyear.Moreover,Iwouldalsoliketothankourpartnersandcustomersfortheirgoodcooperationandconfidence.
Bestregards,
*)retroactivelyasat30June2019
CEO Editorial
HaraldKrögerCEOofRaiffeisenCentrobankAG
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8January–CrossSellPartnerAwardForthefourthtimeTatraBankaacknowledgesRaiffeisenCentrobankAGforitscustomizedstructuredproducts,theirperformanceandsuccessrate.
17–18January–FirstTurkishinvestordaysinNewYorkCityForthefirsttimeRaiffeisenCentrobankAG15bringstogetherTurkishlistedcompaniesandtopUSinvestors.Theinvestorconferenceismetwithinterestbybothcompaniesandinvestors.
6February–RaiffeisenCentrobankAGwinsagainNumberOneAwardsbyBörseSocialNetworkRaiffeisenCentrobankAGreceivestheNumberOneAwardsaslargestcertificatesissuerandlargestspecialist/marketmakerforthefifthtimeinarow.
9February–StockexchangedayinViennaRaiffeisenCentrobankAGgivesamarketoverviewandshowswhichtypesofcertificatesprovi-deattractiveyieldsinthecurrentmarketenvironment.
26February–RaiffeisenCentrobankAGawardedCapitalMarketLeaderbyWarsawStockExchangeForthethirdtime,RaiffeisenCentrobankAGishonoredbytheWarsawStockExchangeforitspioneeringroleindevelopingthePolishcertificatesmarket.14March–RaiffeisenCentrobankAGremainslargestdomesticspecialistandmarketmakerontheViennaStockExchangeIntheannualspecialistandmarketmakingtendersontheViennaStockExchange,RaiffeisenCentrobankAGbecomesagainthelargestdomesticmarketparticipantinthesesegments.
1–3April–InvestorconferenceinZürsMorethan70companiesmeetwith125institutionalinvestorssuchaspensionfunds,fundsorinsurancecompaniesattheannualflagshipconferenceinZürs,whichisorganisedbyRaiffeisenCentrobankAGforthe18thtime.
5–6April–InvestStuttgartTheStructuredProductsteamrepresentsRaiffeisenCentrobankAGatthelargestfinancialfairinGermanspeakingcountriesandpresentsinterestinginvestmentopportunitieswithattractiveyieldpotentialinthecurrentmarketenvironment.
1May–HaraldKrögerandHeikeArbternewmembersofRaiffeisenCentrobankAG’sManagementBoardHaraldKrögerbecomesCEOandisresponsiblefortheBank’senablingfunctions.AsmemberoftheManagementBoardandlong-standingstructuredproductsexpertHeikeArbteroverseesallbusinessactivitiesofRaiffeisenCentrobankAG.ThetwosucceedWilhelmCeledaandValerieBrunner,whohaveassumednewmanagementroleswithintheRBIGroup.
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1May–RaiffeisenCentrobankAGhasanewsetupinitsmarketsareaPhilippArnoldandRomanBauerheadtheStructuredProductsareaofthelargestAustriancertificatesprovider.OzgurGuyuldarheadstheEquityCapitalMarkets(ECM)segment.
10May–OverallwinnerCertificateAwardAustria2019RaiffeisenCentrobankAGwinstheawardasbestAustrianissuerinthe13thCertificateAwardceremony,themainawardinthedomesticcertificatesbusiness.Inthenewlyintroducedcategory“InnovationoftheYear“,theBankishonoredforitsonlineinformationandcommunicationtool“CertificateFinder”.
15May–TurkishdayinWarsawRaiffeisenCentrobankAGinvitesinvestorstomeetthemanagementandIRteamsoftopTurkishlistedcompanies.
18–19September–PolishandAustriandaysinBucharestTwoinvestoreventsofRaiffeisenCentrobankAGtakeplaceinBucharest,bringingtogetherRomanianinvestorswithPolishandAustriancompaniesinnumerousone-on-onemeetings.
30September–ManagementBoarddinnerforpotentialissuersTogetherwithRBIandtheViennaStockExchange,RaiffeisenCentrobankAGorganizesaboarddinnerfor30potentialissuersandpresentsthebenefitsandchallengesassociatedwithastockmarketlisting.
15October–RaiffeisenCentrobankAGpresse_talk:focusonsustainableinvestmentsHeikeArbter(MemberoftheManagementBoard),BerndMaurer(HeadofCompanyResearch)andPhilippArnold(HeadofStructuredProductsSales)discusscurrentdevelopmentsininvestmentstrategiesbasedonenvironmental,socialandgovernancecriteria.
18October–Romanianinvestors‘dayinStockholmIncooperationwiththeBucharestStockExchange,RaiffeisenCentrobankAGinvitesRomaniancompaniestomeetwithScandinavianinvestors.
17–18October–GEWINN-fairAtthesummitoftheAustrianeconomicandfinancialsector,RaiffeisenCentrobankAGpresentsitscertificatesandinformsaboutinvestmentopportunitiesforeverymarketphase.
21November–AustriandayinWarsawIncooperationwiththeViennaStockExchange,RaiffeisenCentrobankAGinvitesAustriancompaniestoone-on-onemeetingswithPolishinvestors.
18December–RaiffeisenCentrobankAGcelebrates10thanniversaryofcooperationwithumbrellaassociationforEuropeancertificatesissuersIn2009,ZertifikateForumAustria,chairedbyHeikeArbter,andEuropeanpartnersfoundedtheEuropeanStructuredInvestmentProductsAssociation(EUSIPA)inBrussels.HeikeArbterhasbeenpresidentofEUSIPAsince2016.
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Corporate BodiesManagementBoard WilhelmCeleda ChiefExecutiveOfficeruntil30April2019 ValerieBrunner MemberoftheManagementBoarduntil30April2019 HaraldKröger ChiefExecutiveOfficerasfrom01May2019 HeikeArbter MemberoftheManagementBoardasfrom01May2019 SupervisoryBoard ŁukaszJanuszewski Chairman MemberoftheManagementBoard, RaiffeisenBankInternationalAG HannesMösenbacher DeputyChairman MemberoftheManagementBoard, RaiffeisenBankInternationalAG MichaelHöllerer Member ChiefFinancialOfficer, RaiffeisenBankInternationalAG
AndriiStepanenko Member MemberoftheManagementBoard, RaiffeisenBankInternationalAG,Vienna
ChristianMoucka Memberasfrom29April2019 GeneralManagement, RaiffeisenbankRegionBaden MatthiasZitzenbacher Memberasfrom29April2019 GeneralManagement, RaiffeisenbankLeoben-BruckeGen(mbH)
StateCommissioners AlfredHacker Karl-HeinzTscheppe
Vienna,03April2020TheManagementBoard
HaraldKrögerChiefExecutiveOfficer
HeikeArbterMemberoftheManagementBoard
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SupervisoryBoard
TheSupervisoryBoardmonitorsandassiststheManagementBoardinthemanagementofRaiffeisenCentrobankAG,inparticularwithregardtodecisionsoffundamentalimportance.TheSupervisoryBoardhassetupanAuditCommittee.
ThebylawsfortheSupervisoryBoardandtheAuditCommitteeformulateinconcretetermsalistofbusinesstransactionsthataresubjecttotheapprovaloftheSupervisoryBoardortheAuditCommittee.
CollaborationbetweentheSupervisoryBoardandManagementBoard
AkeyprincipleofgoodcorporategovernanceistheopendiscussionbetweentheManagementBoardandtheSupervisoryBoardortheAuditCommitteeandwithinthesegoverningbodies.
TheManagementBoardsubmitsregular,timelyandcomprehensivereportstotheSupervisoryBoardaboutallrelevantaspectsoftheBank’sbusinessdevelopment,includingtherisksituationandriskmanagementmeasuresattheBank.TheManagementBoardimmediatelyreportsallimportanteventstotheChairmanoftheSupervisoryBoardandalsoallreportsimmediatelyonallcircumstancesthatareofmaterialrelevancetotheprofitabilityorliquidityoftheCompany.
TheManagementBoardcoordinatesthestrategicorientationoftheCom-panywiththeSupervisoryBoardanddiscussesthestatusoftheimplemen-tationofthestrategyatregularintervalswiththisBoard.TheSupervisoryBoardmeetsatleastfourtimesperfinancialyear.
TransparentInformationPolicy
RaiffeisenCentrobankAGattachesconsiderableimportancetoopenandtransparentcommunicationwithitsshareholdersandtheinterestedpublic.Thus,RaiffeisenCentrobankAGprovidesonitswebsite:
•Pressreleases,keydata•Shareholderstructure•DownloadableannualreportsinPDFformat•DownloadablesecuritiesprospectusesinPDFformat
CriteriafortheIndependenceoftheSupervisoryBoardMembersforthePurposesoftheAustrianCodeofCorporateGovernance
ASupervisoryBoardmemberisconsideredtobeindependentwhenheorsheisnotinanybusinessorpersonalrelationshipwiththeCompanyoritsManagementBoardthatcouldcauseamaterialconflictofinterestandthatcouldthereforeinfluencethebehavioroftheBoardmember.
AllmembersoftheSupervisoryBoardofRaiffeisenCentrobankAGareindependentaccordingtothedefinedcriteriaforindependence.
Moreover,twomembersofRaiffeisenCentrobankAG’sSupervisoryBoardfulfilthecriteriafortheindependenceofSupervisoryBoardMemberspursuantto§28apara5boftheAustrianBankingAct.
Corporate GovernanceRaiffeisenCentrobankAG’ssharesarenotlistedonastockexchange.AsleadingAustrianissuerofstructuredproductsandasoneofthemostimportantsecuritiesbrokersinViennaandotherfinancialcenters,RaiffeisenCentrobankAGorientsitselftowardstherulesandprinciplesofgoodandresponsiblecorporategovernanceassetforthintheAustrianCodeofCorporateGovernancetotheextentthattheserulesandprinciplesareapplicableforRaiffeisenCentrobankAG.RaiffeisenCentrobankAGhasnot(yet)formallyundertakentocomplywiththeAustrianCodeofCorporateGovernance.
EfficientcollaborationbetweenthevariousbodiesoftheCompanybasedonastrongfoundationoftrust,protectionofitsshareholders'interestsandopenandtransparentcommunicationisakeyelementinRaiffeisenCentro-bankAG’sapproachtogoodcorporategovernance.Thefollowingcom-mentsillustratesomeaspectsofRaiffeisenCentrobankAG’scompliancewiththeCodeinthereportingperiod(1Januaryto31December2019).
ManagementBoard
TheManagementBoardismadeupoftwopeopleandhassoleresponsibilitytomanagetheCompanybasedonconcretegoals,conceptsandguidelines.TheManagementBoardpursuesafuture-orientedapproachtakingintoaccountstandardsofgoodcorporatemanagementandtheinterestsofthepublicwell-being.
ThebylawsfortheManagementBoardasadoptedbytheSupervisoryBoardstipulatethatmeetingsoftheManagementBoardshallbeheldatregularintervals.TheChairmanoftheManagementBoardshallconveneandchairthemeeting.ThemeetingsoftheManagementBoardfocusonamutualexchangeofinformationanddecision-makinginallmatterssubjecttoapprovalbytheManagementBoard.TheManagementBoardconductsthebusinessoftheCompanyinaccordancewiththelaw,theCompanybylawsandthebylawsfortheManagementBoard.ThebylawsfortheManagementBoardcontainstipulationsregardingthedisclosureandreportingobligationsoftheManagementBoardandformulateinconcretetermsalistofbusinesstransactionsthataresubjecttoapprovalbytheSupervisoryBoard.
RulesforProprietaryTrading
TheManagementBoardtakesitsdecisionsonthebasisofthemembers’professionalexpertiseandirrespectiveofanypersonalinterests.MembersoftheManagementBoarddiscloseallmaterialpersonalinterestsintransactionsofRaiffeisenCentrobankAGtotheSupervisoryBoard.ConflictsofinteresthavetobereportedtoComplianceandtotheSupervisoryBoard.AlltransactionsbetweenRaiffeisenCentrobankAGandthemembersoftheManagementBoardorpartiesrelatedtothemareconductedinaccordancewithgenerallyacceptedindustrystandardsandareapprovedbytheSupervisoryBoardinadvance.
MembersoftheManagementBoardarenotpermittedtooperatebusinessesorbeofficersinotherbusinessentitieswithouttheapprovaloftheSupervisoryBoardunlesstheseentitiesareinagrouprelationshipwithRaiffeisenCentrobankAGorunlessRaiffeisenCentrobankAGholdsaninterestintheseentities.Furthermore,membersoftheManagementBoardarenotpermittedtoconductbusinesstransactionsontheirownaccountorthatofanotherpartyortoholdsharesinanothercompanyasapersonallyliablepartnerintheareasinwhichRaiffeisenCentrobankAGisactivewithouttheapprovaloftheSupervisoryBoard.
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RBI’sCodeofConductarebindingforandshallbeobservedbyallemployeesofRaiffeisenCentrobankAG.TheprovisionshavebeenimplementedwithinRaiffeisenCentrobankAGinabindingsetofrulesincludinge.g.theComplianceandAnti-Money-LaunderingManualandorganizationalinstructions.
Corecompliance-relatedissuesinRaiffeisenCentrobankAGincludeproceduresandmeasurestopreventinsidertradingandmarketmanipula-tion,andperiodicreviewsoftheadherencetotheExecutionPolicywhenexecutingcustomerorders.Moreover,majortasksincludemeasuresandprocedurestopreventmoneylaundering,terroristfinancing,conflictsofinterest,adherenceto(financial)sanctions,implementationandmonitoringofregulationsforemployeetransactionsandacceptanceofgiftsaswellastrainingforemployees.Inaddition,Compliance,OperationalRiskandICSisresponsibleforhandlingthecomplaintmanagementatRaiffeisenCentrobankAG.
WithMiFIDII/MiFIR(MarketsinFinancialInstrumentsDirectiveII/MarketsinFinancialInstrumentsRegulation)whicharebasedonMiFIDI,therulesforequitytradingandinvestmentadvisoryservices(e.g.stricterrulesforOTCtransactions,comprehensivecustomerinformationrequirementsetc.)havebeenamendedandtightened.
ThePRIIPregulations(PackagedRetailandInsurance-basedInvestmentProducts)extendcustomerinformationobligationsforPRIIPissuers,suchasRaiffeisenCentrobankAG.Retailinvestorsmustbeprovidedwithstandardizedinformation(keyinformationdocuments)onthebasicfeaturesandrisksassociatedwithaproduct.
Compliance
ThedepartmentCompliance,OperationalRiskandICS(InternalControlSystem)assumesresponsibilityformonitoringthenon-financialriskswithinRaiffeisenCentrobankAG.Theseareasofresponsibilityhavebeenbundledintooneorganizationalunitwhichprovidesfortheoverallassessmentandintegratedcontrolofnon-financialrisks,therapidreactiontonewlyemergingorchangingrisks,andthesafeguardingoftheefficiencyandefficacyofinternalcontrols.
Theinternalcontrolsystemsandthemanagementofnon-financialrisksarebasedonthreelinesofdefense.Thefirstlineofdefenseisformedbyindividualdepartments,wheredepartmentheadsareresponsibleformonitoringtheprocessesandrisksintheirbusinessareas.Thesecondlineofdefenseisprovidedbyspecialistareasfocusedonspecificissues.TheseincludeinparticularCompliance,OperationalRiskandICS.Theirprimaryaimistodefinestandardsformonitoring,measuringandmanagingrisk,andtosupporttheindividualdepartmentswhencarryingoutcontrolsteps.InternalAuditactsasthethirdlineofdefenseinthemonitoringprocess,overseeingthefirstandsecondlineofdefense.
Compliance,OperationalRiskandICSissubordinatetotheChiefRiskOfficer(CRO)butreportsdirectlytotheentireManagementBoardandtheSupervisoryBoard.Moreover,thereisacontinuousexchangeofinformationwithRBI’sGroupCompliance.Thesecomprehensivemeasuresprovideforaneffectiveimplementationofthehighstandardsrequiredbystatutorydemands.
RaiffeisenCentrobankAGappliesRBI’sGroupComplianceguidelinesasthebasisforitscomplianceguidelines,inadditiontorelevantlegalandregulatoryprovisions.AsasubsidiaryofRBItheprovisionscontainedin
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ManagementReportofRaiffeisenCentrobankAGforthe2019FinancialYear
Theadditionofroundednumbersusingautomatedsystems,aswasdoneforthisreport,mayresultinminordifferencesinamounts.Thechangesindicatedinpercentrefertotheactualamountsandnottheroundedamountsshowninthisreport.
Alldesignationsthatareusedtorefertopersonsinthisreportapplyequallytobothgendersunlessreferenceisbeingmadetoaspecificindividual.
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Economic EnvironmentIn2019,theGrossDomesticProduct(GDP)intheEurozoneroseby1.2percentandfellshortofthepreviousyear’sgrowthrateof1.8percent.Thevariousindustriesdisplayedaveryheterogenousdevelopment.Whiletheindustrialsectorfacedasubstantialdecrease,theservicesandconstructionsectorpostedacontinuedrobustdevelopment.Inthecourseoftheyear,theunemploymentratedroppedfrom4.9percentin2018to4.6percent.Theinflationratecameto1.2percentandclearlyundercutthe2percenttargetrateoftheEuropeanCentralBank(ECB).
Shoredupbythefavorablewinterhalf-yearof2018/19,theAustrianrealGDPgrowthrate2019cameto1.6percent(2018:2.4percent)andsurpassedtheaverageEurozonerateof1.2percent.Nevertheless,theAustrianeconomylostmomentumoverthecourseoftheyear.Sincespring2019,thedomesticindustrialproductionhasdampenedintheglobalcontextthoughuptothenAustriahadmanagedtoremarkablydecouplefromtheGermanindustrialweakness.Foreigntradedynamicsalsoworeoffinviewofthechallengingexternalenvironmentbutshowedpositivestimuli.Companiesnoticeablycutbackcapitalspendingonplantandequipment.Privateconsumptionprovedtobeakeypillaroftheeconomysupportedbythepositivelabormarketsituationandtheincreaseofdisposableincomeofhouseholds.
TheeconomicperformanceoftheCentralandEasternEurope(CEE)region,whichisofparticularimportanceforRaiffeisenCentrobankAG,remainedrobustandshowedasubstantialeconomicupswingforthesixthconsecutiveyear,withthe2019growthratefallingonlymarginallyshortofthepreviousyear’slevel.Themaindriverswereonceagaindomesticdemand,particularlyprivateconsumptionwhichwasbolsteredbysoundsalaryincreasesandlowunemploymentrates.
FinancialMarkets
Untilsummer2019,theECBleftkeyratesunchanged,onlyprincipalpaymentsofthebondportfoliowerereinvested.AtthemeetingbeginningofSeptember,theECBadoptedanewsetofmonetaryeasingmeasures
tosupporttheflaggingeconomy.Measuresincludedthereductionofthedepositrateforcommercialbanksfromminus0.4percenttominus0.5percentandtherelaunchofnetbondpurchases.TheECB’smonetarypolicycausedmoneymarketratesandyieldsofGermangovernmentbondstodroptohistoricallowsinthecourseoftheyear.BetweenAugustandmid-October,30-yearGermangovernmentbondsrecordednegativeyieldsforthefirsttime.
Thestockexchangescanlookbackonanextremelypleasingyear2019.However,itwasaroughroadbecauseofthetradedisputebetweentheUSAandChina,Brexituncertainties,recessionaryfearsintheindustry,mainlytheautomotiveindustry,andtensionsintheNearEast.TheECB’sandUSFederalReserve'smonetaryeasingpolicyprovidedthestockmarketswithstrongtailwind.TheUSstockmarketintermsoftheS&P500gained29percentandrecordedall-timehighs.TheEurozonebenchmarkEuroSTOXX50wentupby25percentandtheATXroseby16percent,and,underconsiderationofdividends,yielded19percent.
Development of Business and Earnings 2019DevelopmentofEarnings
Withanoperatingincomeof€59,292thousand(2018:€59,759thousand)andoperatingexpensesof€ 44,898thousand(2018:€42,366thousand)anoperatingresultof€14,394thousand(2018:€17,393thousand)wasgeneratedinthe2019financialyear.Takingintoconsiderationnetvaluationsandnetproceedsintheamountof€152thousand(2018:€minus1,665thousand)theresultonordinaryactivitiescameto€14,546thousand.Thepreviousyear’sresultonordinaryactivitiesof€15,728thousandwasundercutby€1,182thousandor7.5percent.
in€thousand 2019 2018 Change
Netinterestresult (39,652) (19,398) >100
Incomefromsecuritiesandfinancialinvestments 13,305 11,427 16.4
Netfeeandcommissionresult (1,731) (935) 85.2
Netprofitoffinancialtradingactivities 86,471 67,521 28.1
Otheroperatingincome 898 1,144 (21.5)
Operatingincome 59,292 59,759 (0.8)
Staffexpenses (24,133) (23,907) 0.9
Otheradministrativeexpenses (19,383) (17,084) 13.5
Depreciation (1,040) (1,043) (0.3)
Otheroperatingexpenses (341) (332) 2.7
Operatingexpenses (44,898) (42,366) 6.0
Operatingresult 14,394 17,393 (17.2)
Netvaluationsandnetproceeds 152 (1,665) >100
Resultonordinaryactivities 14,546 15,728 (7.5)
Taxes (2,973) (2,724) 9.1
Netincomefortheyear 11,573 13,004 (11.0)
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supervisoryauthoritiesandpaymentstotheresolutionfundaddingupto€2,260thousand(2018:€2,224thousand).
Depreciationscameto€1.040thousandandremainedalmostun-changedto2018(€1,043thousand).Depreciationsforhardwarepos-tedarise,whereasdepreciationsforlow-valueassetsdecreased.
Otheroperatingexpenses,whichprimarilycontainedexpenseschargedtothirdparties,cameto€341thousandandremainedalmostunchangedto2018(€332thousand).
Thecost/incomeratiowhichhadbeenat70.9percentin2018increa-sedto75.7percenttriggeredbytheriseinoperatingexpensesandroughlyunchangedoperatingincome.
In2019,netvaluationsandnetproceedswerepositiveandcameto€152thousand.Theitemcontainedmainlythecurrentadjustmentofge-neralimpairmentallowancescalculatedpursuanttothemethodologylaiddowninIFRS9andaddedupto€206thousand.Moreover,theitemcontainedexpensesforaliabilityofasubsidiary(€69thousand).Inthepreviousyear,netvaluationsandnetproceedswerenegative(€minus1,665thousand)mainlyduetoexpensesnotcoveredbyprovisionsrela-tingtoaliabilityforasubsidiary.
Inthereportingyear,theresultonordinaryactivitiescameto€14,546thousandcomparedto€15,728thousandachievedinthepreviousyear.
Currentincometaxesamountedto€2,095thousand(2018:€2,397thousand).Theitemcontainedexpensesforgroupchargesforthecurrentbusinessyearaddingupto€859thousand(2018:€1,046thousand)andforpreviousyearsintheamountof€49thousand(2018:€216thousand).Moreover,theitemincludedwithholdingtaxesonforeigndividendincomeintheamountof€1,182thousand(2018:€1,059thousand)andaprovisionforcurrentcorporateincometaxesfortheSlo-vakbranchaddingupto€6thousand(2018:€77thousand).
In2019,incomefromdeferredtaxesroseto€52thousandcomparedto€4thousandinthepreviousyear.
Inthereportingyear,othertaxesincludedprimarilystatutorybankleviesofRaiffeisenCentrobankAGandtheSlovakbranchsummingupto€930thousand(2018:€331thousand).Theriseoftaxexpensescanbeputdowntonon-periodictaxincomefromvalue-addedtaxesinthepreviousyearamountingto€348thousand.StatutorybankleviesofRaiffeisenCentrobankAGandtheSlovakbranchamountedto€919thousandin2019andto€689thousandin2018.
Netincomeforthe2019financialyearcameto€11,573thousand(2018:€13,004thousand).
BalanceSheetDevelopment
Comparedto31December2018,thebalancesheettotalincreasedsignificantlyby18.9percentfrom€3,735,352thousandto€4,440,234thousand.
Ontheassetside,“Loansandadvancestocreditinstitutions”postedariseby€741,465thousandto€3,776,856thousand.Theincreasewasalmostentirelyattributabletotheriseoftradablemoneymarketdepositsof€559,632thousandto€2,933,576thousand.Moreover,theiteminclu-dedinterbankdeposits(€487,043thousand),unlistedbonds(€238,687thousand)andcollateralfortheoptionbusinessandsecuritieslending(€63,673thousand).Comparedtotheyear-end2018,interbankdepo-
Comparedtothepreviousyear’sresult,operatingincomedecreasedslightlyby0.8percentor€468thousandto€59,292thousand(2018:€59,759thousand).Thisdecreasewasinparticularattributabletolowernetinterestincomeandlowernetfeeandcommissionresult.
Netinterestresultroseto€minus39,652thousand(2018:€minus19,398thousand).Thiswasrelatedtohighercouponexpensesforsecuritizedliabilities(structuredproducts).
Dependingonthehedge,theseexpenseswerecontrastedwithinterestincomeand–asdescribedbelowinnetprofitonfinancialtradingactivi-ties–withapositivevaluationresultfromtradablemoneymarketdepositsinthenetprofitonfinancialtradingactivities(tradingprofit).In2019,cou-ponexpensescontainedinthenetinterestresultpostedastrongrisecom-paredtothepreviousyear’sresult,whereascouponincomeroseonlyslightly.In2019,netvaluationsincludedinthenetprofitonfinancialtra-dingactivitiesincreasedaccordingly.
Comparedtothepreviousyear,interestexpenseswentupby€22,699thousandto€71,307thousand.Inadditiontothestrongriseofcouponpaymentsforsecuritizedliabilities,interestexpensesforliabilitiestocreditinstitutionspostedavolume-relatedincrease.
Duetohigherinterestincomefromloansandadvancestocreditinstitu-tions,interestincomeroseby€2,445thousandto€31,656thousand.
Netfeeandcommissionresultwasnegativebothin2019and2018.Thedecreaseby€796thousandto€minus1,731thousandwasduetohigh-erexpensesforsalesfeesandlowerfeeincomefromtheInvestmentServi-cesbusinesswhichwereonlypartlyoffsetbyhigherincomederivedfromequitycapitalmarkettransactions.
Netprofitonfinancialtradingactivitiesaccountedforthemainpartoftheoperatingincomeandwentupsubstantiallyby€18,950thousandfrom€67,521thousandin2018to€86,471thousandin2019.Thisimprove-mentwasattributabletohighercouponpaymentsforstructuredproductsandtherelatedhedgingstrategy.In2019,thesepaymentswerehedgedprimarilybytradablemoneymarketdepositswithoutcurrentcouponsheldinthetradingbook.Inthepreviousyear,optionswhichyieldedcurrentcouponsandwerecontainedininterestincomewereusedmorefrequent-lyashedges.Thetotalresultoftradabledepositsincludinginterestwerecontainedinnetprofitonfinancialtradingactivities(tradingprofit).
Theriseofincomefromsecuritiesandfinancialinvestmentsby€1,878thousandto€13,305thousandwasmainlyduetohigherdividendincomefromdomesticshares.
Otheroperatingincomepostedadecreaseof€246thousandto€898thousandfollowinglowerincomefromthereleaseofprovisionsandlowerincomefromchargingcoststothirdparties.
Operatingexpensescameto€44,898thousandandsurpassedthepreviousyear’sresult(€42,366thousand)by6.0percentor€2,532thousand.
Theincreaseinheadcountandcollectiveadjustmentstranslatedintoariseofstaffexpensesby€226thousandto€24,133thousand.
Comparedtothepreviousyear’speriod,otheradministrativeexpenseswentupby€2,299thousandto€19,383thousand.Theitemincludedmainlyexpensesforinformationservicescomingto€4,670thousand(2018:€3,298thousand),ITcostscomingto€3,595thousand(2018:€3,472thousand)andcontributionstoassociations,domesticandforeign
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sitsandunlistedbondswentupby€156,779thousandand€72,258thousand,respectively,whereascollateralfortheoptionbusinessdroppedby€94,968thousand.“Loansandadvancestocreditinstitutions“accoun-tedfor81.3percentofthebalancesheettotalasat31December2018androseto85.1percentasat31December2019.
“Sharesandothervariable-yieldsecurities“(7.5percentofthebalancesheettotalon31December2019and4.7percenton31December2018)increasedby€158,018thousandto€335,160thousand.Main-lyforeignsharesandothervariable-yieldsecurities(funds)postedarise.
“Otherassets“(4.4percentofthebalancesheettotalon31December2019and3.4percenton31December2018)containedmainlypositi-vefairvaluesfromtradinginderivativefinancialinstrumentsaddingupto€191,192thousand(31December2018:€127,094thousand)andwentupby€65,463thousandto€193,663thousand(31December2018:€128,200thousand).
“Depositswithcentralbanks“(1.2percentofthebalancesheettotalon31December2019and6.3percenton31December2018)decrea-sedby€183,812thousandto€51,093thousandmainlyduetohigherdepositsatcreditinstitutionsforreasonsofliquiditymanagement.
“Loansandadvancestocustomers“(1.0percentofthebalancesheettotalon31December2019and3.2percenton31December2018)decreasedprimarilyfurthertoadropofcollateralfortheoptionbusinesstootherfinancialinstitutionsby€73,947thousandto€46,266thousand.Moreover,loansandadvancestocustomersalsorecordedadecrease.
Inannualcomparison,“Bonds,notesandotherfixed-interestsecurities“(0.4percentofthebalancesheettotalon31December2019and0.5percenton31December2018)fellby€2,115thousandto€18,330thousand.
“Prepaymentsandotherdeferrals”(0.0percentofthebalancesheettotalon31December2019and0.0percenton31December2018)decre-asedby€312thousandto€1,263thousand.
“Equityparticipations“postedaslightincreaseby€616duetothepurchaseofaparticipationinRaiffeisen-DigitalGmbH.TheparticipationinÖsterreichischeRaiffeisen-EinlagensicherungeGenwassold(bookvalue€100).
Ontheequityandliabilitiesside“Securitizedliabilities“(78.7percentofthebalancesheettotalon31December2019and73.6percenton31December2018)wentupby€745,281thousandto€3,494,556thousand.Thiswasattributabletoavolume-relatedincreaseofissuedbonds(guaranteecertificatesandreverseconvertiblebonds)by€366,050thousandaswellasofothersecuritizedliabilities(certificateswithoptioncharacterandwarrants)by€379,231thousand.
Theriseof“Liabilitiestocustomers“(10.5percentofthebalancesheettotalon31December2019and9.8percenton31December2018)by€101,514thousandto€466,489thousandwasprimarilyassociatedwithriseindepositsfromforeigncustomersaswellascollateralfortheoptionbusinesstootherfinancialinstitutions.Moreovershort-termdepositsfromdomesticcustomersalsorecordedanincrease.“Liabilitiestocreditinstitutions“(1.2percentofthebalancesheettotalon
31December2019and0.4percenton31December2018)increasedby€37,625thousandto€51,978thousandinparticularduetoariseofcollateralfortheoptionbusiness.
“Otherliabilities“(6.5percentofthebalancesheettotalon31December2019and12.5percenton31December2018)droppedby€179,782thousandto€287,755thousandmainlybecauseofadecreaseofnegativefairvaluesofderivativefinancialinstruments(options,futuresandforwardexchangecontracts)by€182,631thousand.Short-sellingoftradingassetsalsodecreasedby€14,923thousand.Short-sel-lingwaseffectedinconnectionwiththemarketmakingactivitiesofRaiffei-senCentrobankAGandinconnectionwithpensionplansandrepresen-tedoffsettingitemstoequityandindexfuturesaswellastocashpositionsontheassetsideofthebalancesheet.
Sundryotherliabilitiesincludingsettlementaccountsontheequityandliabilitiessidepostedariseinparticularbecauseofhighershort-termchargesfromsecuritiestransactionsnotyetsettledasat31December2019aswellastheliabilityregardinganequitycapitalmarkettransactionaddingupto€17,772thousand.
Tradablemoneymarketdeposits,unlistedoptionsandzerobondspurchasedfromRBIforhedgingpurchaseswereincludedin“Loansandadvancestocreditinstitutions“,“Otherassets“and“Bonds,notesandotherfixed-interestsecurities“ontheassetsideandcameto€2,958,816thousand(31December2018:€2,393,967thousand).
“Provisions“(0.3percentofthebalancesheettotalon31December2019and0.3percenton31December2018)droppedfrom€12,153thousandasat31December2018to€11,183thousandasat31December2019.Thisresultedmainlyfromthedropofotherprovisionsof€1,226thousand.
“Retainedearnings“(0.8percentofthebalancesheettotalon31December2019and0.9percenton31December2018)rosefrom€32,160asat31December2018to€34,685asat31December2019.Thechangerelatedsolelytootherreservesandwasattributabletotheallocationfromthe2018netprofitcarriedforwardintheamountof€2,524thousand.
Thenetprofit(0.3percentofthebalancesheettotalon31December2019and0.3percenton31December2018)wasequaltothenetincomefortheyearandcameto€11,573thousand.
FinancialInstruments
Pleaserefertothenotes.
RaiffeisenCentrobankAGSlovakBranch
TheestablishmentofabranchinBratislava(RaiffeisenCentrobankAGSlovakBranch,pobočkazahraničnejbanky)wasapprovedbytheEuro-peanCentralBankandwasregisteredintheCompanyRegisteron26April2017.ThebusinesspurposeofthebranchistoissueanddistributestructuredproductsontheSlovakmarket.Thebusinessvolumeaswellasincomeandexpensesattributabletothebranchofficeareincludedinthe-sefinancialstatements.
In2019,theSlovakbranchplacedatotalissuevolumeofroughly€29million(2018:roughly€45million).
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reducecorecosts.ThenewentitywasnamedGlobalEquitySalesandcomprisedboththeequitysalesbusiness(formerlySales&SalesTrading)andthenewElectronicSalesTradingteam.Shoredupby22salesroads-hows,ElectronicSalesTradingmanagedtofurtherexpanditscustomerbaseandtoincreaserevenues.Theresultwasfurthersupportedbyimple-mentingefficiency-enhancingmeasurestoreducetransactioncosts.TheBestExecutionMonitoringtoolwassuccessfullymarketedanddevelopedfurther.Inthisrespect,RaiffeisenCentrobankAGhasturnedintoamajorMiFIDIIcompetencecenterwithintheRaiffeisenGroup.
FortheGlobalEquitySalessegment,operatingincomeexcludingotheroperatingincomeamountedto€8.2millioninthe2019financialyearandexceededthepreviousyear’slevelof€6.6millionbyroughly23percent.
In2019,Europesawatotalof40initialpublicofferings(IPOs)withanofferingvolumeofover€75millioneach,whichrepresentsadecreasecomparedto2018with82IPOs.InCentralandEasternEurope(CEE),onlyoneIPOworthmorethan€75milliontookplace.TheViennaStockExchangerecordedthreeIPOsin2019,whichwasthemostactiveIPOyearforalongtime.
RaiffeisenCentrobankAGparticipatedinnineEquityCapitalMarkets(ECM)transactionswhichtookplaceinAustria,CentralandEasternEuropeandWesternEurope.
Animportantmilestonewasthe€1billionIPOofVeralliaS.A.ontheEuronextParis,whichwasamongthelargestEuropeanIPOsin2019.Furthermore,RaiffeisenCentrobankAGparticipatedintheIPOofAluflex-packAGontheSwissExchange.
InCEE,RaiffeisenCentrobankAGexecuteditsfirstECMtransactionontheTurkishcapitalmarket,i.e.theplacementofastakeinaTurkishITcom-pany.
FollowingthePurcariWineriesIPOontheBucharestStockExchangein2018,RaiffeisenCentrobankAGco-managedanacceleratedbookbuildingofthewineexporter’ssharesontheRomanianmarket.
InAustriatheIPOofAddikoBankAGandtheexecutionofthesharebuy-backofBAWAGGroupAG,whichwasthelargestinthehistoryoftheViennaStockExchange,werenotableECMhighlights.
RaiffeisenCentrobankAGprovidedcomprehensiveadvisoryservicesandmarketeditscompetenciesincooperationwiththenationalRaiffeisenunitsandthuscreatedasoundbasisforcollaborationinthe2020financi-alyear.Againstthebackdropofintensivetalkswithcustomersandprepa-rations,RaiffeisenCentrobankAG’sECMteammaintainsaconfidentout-lookregardingtransactionsinAustriaandtheCEEregioninthe2020financialyear.TransactionsareanticipatedtotakeplacemainlyontheAustrian,RussianandTurkishmarkets.
FortheEquityCapitalMarketssegment,operatingincomeexcludingotheroperatingincomeamountedto€1.8millioninthe2019financialyearandexceededthepreviousyear’slevelof€1.4millionby29percent.
TheCompanyResearchteamcoversroughly125companiesfromAustria,theCEEregionandRussia.Inannualcomparison,thenumberofcoveragesslightlyincreasedto125(fromroughly120in2018).Toex-pandtheregionalapproach,coverageoftheTurkishmarketisprovidedincooperationwiththeTurkishbrokerGlobalSecurities.RaiffeisenCentro-bankAG’sCompanyResearchteamconsistsof20analystsbothintheViennaheadquartersandseveralCEEcountries.Theanalystsprovide
Review of Business SegmentsRaiffeisenCentrobankAGisoneofthelargestplayersinequitiesandstructuredproductsontheViennaStockExchangeandholdsakeypositioninthemarketsinCentralandEasternEurope.
Trading&TreasuryComparedtothe2018financialyear,thespotmarketoftheViennaStockExchangerecordedadecreaseinsalesvolumeof10.6percentto€63.4billion(2018:€70.9billion).TheleadingEuropeanexchangesFrankfurtandEuronextalsopostedadropby12.6percentand8.1percentto€1,344billion(2018:€1,538billion)and€1,713billion(2018:€1,864billion).Thesalesvolumeonthespotmarketoftheex-changeinWarsawcameto€44.9billionandwentdownby7percent(2018:€48.3billion).TheCEEexchangesBudapest,BucharestandPraguealsosawdiminishedsalesvolumesreporting€7.9billion(2018:€8.7billion),€1.8billion(2018:€2.1billion)and€4.2billion(2018:€5.5billion),respectively.
InmarketmakingontheViennaStockExchange,RaiffeisenCentrobankAGrecordedavolumeof€1.7billion,whichcorrespondstoadecreaseof13percentcomparedtothepreviousyear’speriod(€2billion).IntermsofsalesvolumesRaiffeisenCentrobankAGranked4thinmarketmakingontheViennaStockExchangeand,withamarketshareof11.4percent,theBankremainsthelargestdomesticmarketmaker(2018:13percent).IntheannualspecialistandmarketmakingtenderRaiffeisenCentrobankAGreceived17specialistand39marketmakermandatesandisthusthesolemarketmakertofullycovertheAustrianPrimeMarket.
Moreover,RaiffeisenCentrobankAGtookovermandatesfor20Russiantitlesand4additionalstocksontheViennaStockExchange(2018:20Russiantitlesand2stocks).OntheexchangeinFrankfurt,RaiffeisenCent-robankAGheld25mandatesforAustrianlistedsharesandactedasmar-ketmakerfor15Germanshares(2018:marketmakingfor25Austrianand2Germanshares).
OntheexchangeinWarsaw,RaiffeisenCentrobankAGsubstantiallyex-pandeditsmandatesandprovidedmarketmakingfor53shares(2018:25shares),6equityindices,42underlyings,futuresandWIG20options.OnthestockexchangeinBucharestRaiffeisenCentrobankAGprovidedliquidityfor10sharesandontheexchangeinPraguemarketmakingwasprovidedfor19stocks(2018:11and22respectively).OntheEUREXRaiffeisenCentrobankAGprovidedliquidityforlistedderivativeson26underlyings.
OperatingincomeexcludingotheroperatingincomeforTrading&Treasu-rycameto€16.5millionandsurpassedthepreviousyear’sresultof€13.1millionby26percent.
EquitybusinessIn2019,RaiffeisenCentrobankAGfocusedonmarketingAustrianandEasternEuropeanlistedcompanieswithinitsequityandequitytradingbusiness.AttheannualinvestorconferenceinZürs,morethan70leadinglistedcompaniespresentedthemselvesto125institutionalinvestors.Inaddition,11conferencesweresuccessfullyorganisedinBucharest,Lon-don,NewYork,StockholmandWarsaw.Inthereportingyear,RaiffeisenCentrobankAGagainintensifieditscorporateaccessactivitieswith116roadshowdaysin17destinationsintheUSAandEuropeaswellas25lunchpresentationsinVienna.
In2019,theteamExecution&ElectronicTradingwasmergedwithSales&SalesTradingtoevenbetterservicecustomers,enhanceefficiencyand
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long-standingsectorexpertiseintandemwithprofoundlocalmarketknowhowandasectoralapproachacrosstheentireregion.
Inthe2019financialyear,theCompanyResearchteampublishedrough-ly1,000researchreportsandmarketedthemtoinstitutionalinvestorsinWesternandEasternEuropeaswellasintheUSA.AnalystsplayedakeyroleinthesuccessfulIPOsofAluflexpackinZurich,VeralliainParisandAddikoontheViennaStockExchange.TheIPOsweresupportedbycom-prehensivetransactionresearchandinvestoreducationprovidedbytheanalystteam.Moreover,“SpotlightResearch“,anewco-sponsoredre-searchproductfocusingonsmallµcapswaslaunched.
ExpensesofCompanyResearchareincludedintheTrading&Treasury,GlobalEquitySales,ECMundStructuredProductssegments.
StructuredProductsInthe2019financialyear,theStructuredProductsbusinesssegmentagainachievedaveryfavorableresult.Salesvolumeandissuanceactivitywereatorabovethe2018recordlevel.In2019,10,369productswerepub-liclyofferedbyRaiffeisenCentrobankAG(2018:11,362)and4,174certificateswereissued(2018:4,869certificates).InNovember2019,theAustriancertificatesmarketreachedanewall-timehighwith€15.1billionandRaiffeisenCentrobankAGagainunderscoreditsmarketlea-dership.Attheendof2019,RaiffeisenCentrobankAG‘sopeninterestcameto€4.6billionandachievedaroughly7percentincreasecompa-redtotherecordlevelof€4.3billiongeneratedin2018.Thesalesvolu-mealsoreachedanall-timehighandrosetoover€1.9billion(2018:€1.8billion).
IntheAustrianRaiffeisensectorallkeydatawereagainoutperformed.Theteamheldarecordnumberofeducationprogramswith170certificates'trainingsessionsandroughly2,500trainedadvisors.Comparedtothepreviousyear,thevolumeofplacementswasagainincreased(plus10percent).Moreover,thetotalopeninterestofRaiffeisencustomersinAust-riareachedanewrecordlevelgaining38percent(2018:plus23percent).Inadditiontostandardseminars,thenumberofwebinarsandmar-ketingservicesforRaiffeisenLandesbankenandlocalRaiffeisenbankswasfurtherexpanded.
IntheCEEregionRaiffeisenCentrobankAGisactiveinninecountriesand,comparedtothepreviousyear,furtherintensifiedthefocusoncustomizedproducts.Morethan90customizedproductsforlocalcusto-mersweresuccessfullyplacedinsixdifferentcurrencieswhichemphasizesRaiffeisenCentrobankAG’sfocusontop-levelservicequalityandflexibilityfordifferentcustomersegmentsintheCEEregion.TheopeninterestintheRaiffeisennetworkbanksroseby7percentto€1.1billion.
RaiffeisenCentrobankAG’sSlovakbranchinBratislavadistributesstructu-redproductsontheSlovakmarket.In2019,thebranchplacedfourcusto-mizedproductswithatotalissuevolumeof€29million.ThebranchinBratislavasupportstheSlovakmarketwithissuingcustomizedcertificatesandprovidingtraining.
InJanuary2019,RaiffeisenCentrobankAGwontheaward”BestCrossSellPartner“inthecourseofthe“TatrabankaPrivateBankingAwards”forthefourthtime.AttheannualawardsceremonyinFebruary,RaiffeisenCentrobankAGreceivedtheaward“CapitalMarketLeader“inthecategory“Certificates“fromtheWarsawstockexchange.BothawardsunderpinnedRaiffeisenCentobankAG’scommitmenttocertificatesintheCEEregion.
AttheCertificateAwardAustriainMay2019,RaiffeisenCentrobankAGwaselectedbestcertificatesissuerinAustriaforthe13thconsecutiveyear,winningthetoprankinsevenoutoftencategories.Thestate-of-the-artCer-tificateFinder,whichprovidesaneasy-to-understandintroductionintotheworldofcertificates,waselectedtheinnovationoftheyear.ThisunderpinstheintensecommitmentoftheStructuredProductssegmenttocontinuouslyexpandtheonlineanddigitalisationproductrangeofcertificates.
Ontheproductside,thetopic“sustainability“reachedanewdimension:boththenumberofissuedsustainabilityproductsandtheopeninterestvolume(plus117percent)forthisproductcategoryrosesignificantly.Forthefirsttime,theBonusCertificate“EuropeUnlimited”withitswell-provenpayoutprofilewasissuedandrolledoutasasavingsplanforselectedRaiffeisenLandesbankenandRaiffeisenbanks,thusenablinginvestorstoinvestwithcertificatesintooneofthemainpillarsoftheequitybusiness.
FortheStructuredProductssegment(includingthebranchinSlovakia)operatingincomeexcludingotheroperatingincomecameto€31.9millionandundercutthepreviousyear’srecordoperatingincomeaddingupto€36.6millionby13percent.Thedecreasewasmainlyattributabletolowerincomebothintheprimaryandsecondarymarketbusinesswhichcanbeputdowninteraliatothedecreaseoftheinterestratelevel.
InvestmentServicesThedepartmentservicescustomersofRaiffeisennetworkbanksinCentralandEasternEurope.
ThedepositvolumeofRussianprivatecustomersintheInvestmentServicessegmentroseby14.4percentfrom€596millionasat31December2018to€682millionasat31December2019.AgainstthebackdropofportfolioadjustmentsonthepartofRaiffeisenbankRussia,thenumberofclientsdecreasedfrom335asat31December2018to321.
AstheBookingPlattformbusinessmodelwassuccessfullyimplementedwithintheRBIGroupincooperationwithRaiffeisenbankRomaniain2018,thedepositvolumeofRomanianprivatecustomersincreasedby24percentto€103million.Thenumberofclientswentupfrom246asat31December2018to273.
FollowingthestrategicdecisionmutuallyagreedwithRBI,theInvestmentServicesbusinessofRaiffeisenCentrobankAGandthecustomersservicedinthissegmentaredemergedbyabsorptionandaretransferredtoKa-threinattheendofQ1/2020becomingeffectiveretroactivelyasat30June2019.ThisdecisionsupportstheproductfocusofRaiffeisenCentrobankAGasthecertificatesandequityhouseofRBIandpreventsoverlapsintheprivatebankingbusinesswhileensuringatthesametimethattheInvestmentServicesproductisbundledwithinoneunit.
Inthepastfinancialyear,operatingincomeexcludingotheroperatingin-comecameto€1.9millionandundercuttheresultachievedin2018addingupto€2,4millionbyroughly21percent.Despiteariseinvolu-mes,investmentsonthepartofRussianprivateindividualsfellshortofex-pectations.Thiswasduetothelowriskappetite,therisingcompetitionontheRussianmarketandintensivepreparatoryworkassociatedwiththetransferoftheInvestmentServicesbusinesstoKathrein.
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Risk ManagementPrinciples
BusinessopportunitiesandearningspotentialarerealizedinRaiffeisenCentrobankAGbasedonactiveriskmanagementbytakingriskoninatargetedandcontrolledmanner.Inallrelevantareasofrisk,efficientmonitoringandcontrollinginstrumentsareavailable,enablingtherelevantbodiestoreacttomarketopportunitiesandspecificbankingbusinessrisk.Activeriskmanagementresultedinastableandlittlevolatiletradingresult.
AsasubsidiaryofRBI,RaiffeisenCentobankAGisintegratedintotheriskmanagementprocessoftheRBICreditInstitutionGroup,safeguardingthatallmajorrisksareidentified,measuredandcontrolledonGroup-levelandensuringthattransactionsareconcludedsolelyifparticularrisk/rewardratiosarecompliedwith.
RiskGovernance
TheManagementBoardofRaiffeisenCentrobankAGisresponsibleforallrisksonthepartoftheBankaswellasfordevelopingandimplemen-tingariskstrategy.TheManagementBoardissupportedinimplementingthesetasksbyanindependentriskmanagementunitseparatedclearlyfromthefrontoffices.OperationalRisk,theInternalControlSystemandCompliancearebundledinonedepartment(Compliance,OperationalRisk&ICS).
RiskmanagementatRaiffeisenCentrobankAGisdividedintotwocategories:
•RiskManagement(interaliamarket,credit,liquidityrisks,overallbank riskmanagement)•OperationalRisk&ICS(non-financialrisks)
ThecentralriskmanagementbodiesaretheRiskManagementCommittee(RMK),theInternalLimitCommittee(ILC),theOperationalRiskManage-mentandControlCommittee(ORMCC)andtheAssetandLiabilityCom-mittee(ALCO).
TheRMK,whichmeetsweekly,addressesallissuesandregulationsrela-tedtotheriskmanagementoftheBankfocusinginparticularoncreditrisk,marketriskandoperationalrisk.Overdrafts,overdueloansandadvancesaswellasnecessaryvalueadjustmentsarereportedinduecourseandrecommendationsfortheManagementBoardaredeveloped.TheRMKisadecision-takingbody,authorizedtoapproverisk-relatedprinciples,mea-sures,processesandparameters.
TheILC,whichmeetseverytwoweeks,decideswithinitscompetency(de-pendingonthetypeandamountofthelimit)oncounterparty,countryandmarketrisklimits.LargeexposuresrequiretheapprovaloftheSupervisoryBoard.Inaddition,theaggregateoflargeexposuresisreportedtotheSupervisoryBoardonceayear.
TheORMCC,whichmeetsonceaquarter,establishesanappropriateframeworkforoperationalriskmanagement,definesandapprovesanadequateriskstrategyandmonitorsandassessestheadequacyofinter-nalcontrols.Moreover,riskassessments,scenarioanalysesandriskindica-torsarediscussedandapproved,andmaterialcasesofdefaultandtheresultingmeasurestobetakenareanalyzed.
TheALCO,whichmeetsonceamonth,continuouslyevaluatesthemacro-economicenvironmentandcontrolsandassessesinterestraterisk,liquidityriskandbalancesheetstructuralrisk.
Performance IndicatorsFinancialPerformanceIndicators
Comparedtothepreviousyear,theresultonordinaryactivitiesdecreasedand,intandemwithhigherequity,translatedintoadropoftheReturn-on-Equitybeforetaxfrom13.8percentto12.5percentandtheReturn-on-Equityaftertaxfrom11.4percentto9.9percent.
Thecost/incomeratio,whichhadbeenat70.9percentin2018,deterioratedto75.7percentduetoincreasedoperatingexpensesandalmostunchangedoperatingincome.
In2019,OverallReturn-on-Assetswasat0.3percentandremainedunchangedcomparedto31December2018.
Non-FinancialPerformanceIndicators
AspertheendofDecember2019,thenumberofemployeesatRaiffeisenCentrobankAGamountedto195,which,comparedto31December2018,representedanincreaseof4employees.Inannualcomparison,thestaffroseonaverageby9to195employees.
Thenumberofstockexchangemembershipscameto10andremainedunchangedtothe2018financialyear(fordetailskindlyseethewebsiteofRaiffeisenCentrobankAG:www.rcb.at/en/).
Thenumberofnewlyissuedwarrantsandcertificateswentdownby695or14percentto4,174.Thedropwasmainlyattributabletodownsizingtherangeofflowproducts.Thenumberofsubscriptionandtailor-madeproducts,whicharemorerelevantintermsofvolumes,remainedstableandcameto256(2018:258).
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inpercent 31/12/2019 31/12/2018
Return-on-Equitybeforetax 12.5 13.8
Return-on-Equityaftertax 9.9 11.4
Cost/incomeratio 75.7 70.9
Ownfundsratio 20.8 23.6
Corecapitalratio 20.8 23.6
OverallReturn-on-Assets(aftertax) 0.3 0.3
LiquidityCoverageRatio(LCR) 291.1 219.6
31/12/2019 31/12/2018
Employeesatyear-end 195 191
Averagenumberofemployees 195 186
Stockexchangememberships 10 10
Numberofnewlyissuedwarrantsandcertificates 4,174 4,869
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Risk Management System at Raiffeisen Centrobank AGRaiffeisenCentrobankAGemploysacomprehensiveriskmanagementsystemtakingintoaccountalllegal,businessandregulatoryrequirements.Theappliedprocessesandmodelsaresubjecttoongoingreviewandfurtherdevelopment.Thekeycomponentsoftheriskmanagementsystemsarecompliantwithregulatorycapitalrequirements,limitingspecificbankingrisksandprovidingadequateriskcoveragesumsaswellaspermanentsupervisionandcontrolofprocessriskwithinacomprehensiveInternalControlSystem. 1.Capitalrequirementstolimitmarketrisk,creditriskand operationalriskTosecureadequatecapitalforcreditrisk,marketriskandoperationalrisk,RaiffeisenCentrobankAGappliesthestandardapproach.Tocalculateoption-relatednon-linearrisksthescenariomatrixmethodisemployed.
Fordetailsonregulatorycapitalrequirementspleaserefertothenotes(page42). 2.Identifyingandlimitingspecificbankingbusinessrisks (ICAAP)AsasubordinatecompanyofRBI,RaiffeisenCentrobankAGisintegratedintotheICAAPofRBIonaconsolidatedbasis.Therisk-bearingcapacityanalysisispreparedbyRBIonamonthlybasisbothforthegoingconcern(Value-at-Risk(VaR)withaconfidenceintervalof95percent)andtargetratingperspective(VaRwithaconfidenceintervalof99.92percent)andisprovidedtoRaiffeisenCentrobankAGtosupporttheManagementBoardinmanagingtheoverallbankingrisk. 3.InternalControlSystemRaiffeisenCentrobankAGhasimplementedacompany-widemodernInter-nalControlSystemthatmeetsRBIGroupstandards.AllkeyprocessesandimmanentrisksaswellasotherkeyrisksoftheBankaredocumentedandcontrolsaresetupandreviewedaccordingly.Onceayear,thecontrolsarereviewedintermsofimplementation,efficiencyandefficacy.TheresultsarecentrallymonitoredandarereportedtotheManagementBoardandtheSupervisoryBoard.
Major Risks
MarketriskMarketriskisdefinedastheriskofpossiblelossesinonandoff-balancesheetpositionsarisingfromchangesinmarketprices(equityandcommo-dityprices,interestratesorexchangerates).Asthemainfocusofthebusi-nessactivitiesofRaiffeisenCentrobankAGisonsecuritiestradingandtheissueofequity-indexbasedderivativesandstructuredproducts,thetoppriorityofRaiffeisenCentrobankAGistocounteractmarketrisk.RaiffeisenCentrobankAGmeasures,monitorsandmanagesmarketriskbysettingavarietyoflimitsthatarereviewedandapprovedonanannualbasis.Allmarketriskpositionsarecomparedwiththerespectivelimitsinamostlyautomatedprocess.Limitoverdraftsarehandledinanescalationprocess.Currently,over15,000limitsinroughly25categoriesaremonitored.Limitsforsinglesharesaccountforthemajority.
Inmarketriskmanagement,theVaRisemployed,whichprovidesforecastsonpotentiallossesinadversescenariosundernormalmarketconditionsandcontraststhemwithaparticularlimit.Onthebasisofthevariance-covariancemodel,theVaRforequityandproduct-specificpositionsiscalculateddailywithaconfidenceintervalof99percentandaretentionperiodofoneday.Asat31December2019,theVaRforequityandproduct-specificpositionscameto€288thousand(31December2018:€335thousand).
TheabovechartdepictstheperformanceoftheVaRandhypotheticalP&L(profitandlossthatwouldhaveoccurredinaconstantportfolioaswellasactuallyrecordedmarketmovements)intheperiodbetween1January2019and31December2019.Intheperiodunderreview,backtestingrevealedoneVaRexceedance.TheVaRexceedancedidnotcoincidewithaparticularmarketeventbutwasattributabletodailymovementsintandemwiththedailyportfolio.Theexceedancewasinlinewithexpecta-tionsataconfidencelevelof99percent.
InadditiontotheVaR,RaiffeisenCentrobankAGusesregulatoryandmanagement-definedstressteststoevaluatemarketrisk.TheresultsareevaluateddailyonoperationallevelandarereportedintheweeklyRiskManagementCommittee.Stresstestssimulatetheperformanceoftheport-foliounderabnormalmarketsituationsandatypicalpricemovements.
CreditriskCreditriskrepresentsthedefaultriskthatarisesfromtheinabilityofacoun-terpartytofulfilcontractuallyagreedfinancialobligations,whenserviceshavebeenrendered(e.g.liquidity,securities)orwhenunrealizedprofitsfrompendingbusinesstransactionscannolongerberecovered(counter-partydefaultrisk).
RaiffeisenCentrobankAG’smajorcreditrisksresultfrompositionsofpurchaseddebtinstruments,tradablemoneymarketdepositsandOTCoptionsservingprimarilytohedgeissuedcertificatesandstructuredproductsaswellasfrommarginpositionsrelatingtoOTCandstockex-changetransactions.ThisprimarilyaffectsmembersoftheRBICreditInstitu-tionGroupandtoalimitedextentotherfinancialinstitutions.ThetraditionalcreditandloanbusinessisnotofmaterialsignificanceforRaiffeisenCent-robankAGduetothelimitedbusinessvolumeandtheCompany'sstrate-gicorientation(lombardloans,otherloanstoprivateandcorporatecusto-mers),inparticularwithregardtotheretroactivetransferoftheInvestmentServicesbusinesstoKathreinasatthedemergerdate30June2019.
Creditriskmanagementisbasedoncounterparty-relatednominallimits,whicharecomprehensivelymonitoredbytheinternallimitsystemforcreditrisk.Thelimitsareapproved-dependingonthetypeandsize-bytherelevantauthorityinthehierarchy.Creditdecisionsaretakendependingontheassessmentofthecounterpartydefaultrisk,takingintoaccounttheratingandapplicablecreditriskmitigatingmeasureslikefinancialcollate-ral(e.g.cashorsecuritiescollateral).IntheGroup-widedefaultandratingdatabasecustomersareregisteredandevaluatedandcasesofdefaultaredocumented.Thewholelendingdecisionadherestoregulatoryrequi-rementsandRBIGroupDirectives.
Value at Risk backtesting
P&L hypothetic VaR 1 day, 99%
Jan 19 Feb19 Mar19 Apr19 May19 Jun19 Jul19 Aug19 Sep19 Oct19 Nov19 Dec19
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OperationalriskOperationalriskisdefinedastheriskofunexpectedlossesresultingfrominternalprocessesandsystemswhichareinadequateorhavefailed,fromhumanerrororfromexternalevents.Thisdefinitionincludeslegalriskbutexcludesstrategicandreputationalrisk.OperationalriskismanagedonthebasisoftheresultsofregularBank-wideriskassessments,standardizedkeyriskindicators,scenarioanalysesandGroup-internalhistoricaldata.
CasesofdefaultinoperationalriskareregisteredintheGroup-widedatabasisORCA(OperationalRiskControllingApplication)andaregroupedbybusinesssegmentandtypeofevent.Measurestakenarealsodocu-mentedandlinkedwiththecaseofdefault.
LiquidityriskLiquidityriskiscalculatedbasedonaliquiditymodeldevelopedincooperationwithRBI.DailybalancesheetitemsofRaiffeisenCentrobankAGaresplitbymaturitybandsandcurrencies,theirinflowsandoutflowsaremodeledbasedonpre-definedfactors.TheliquidityrequirementindifferentmaturitybandsislimitedbymeansofregulatorylimitsaswellasbylimitsdeterminedbyRBI.Moreover,regularliquiditystresstestsarecar-riedoutandthetime-to-wallinthestressscenarioismonitoredindifferentcurrencies.Inflowsneedtoexceedoutflowsforaparticularperiodinacrisisscenario(marketcrisis,namecrisisandscenarioinvolvingboth).
TheLiquidityCoverageRatio(LCR)servestomeasuretheBank’sliquiditysupplyinadefinedstressscenario(combinationofmarketandnamecrisis).Asat31December2019,theLCRcameto291.1percent(31December2018:219.6percent).SinceJanuary2018,aminimumrateof100percenthasbeenmandatoryonsingle-institutionlevel.AllkeyindicatorsconfirmedtheadequateliquiditysupplyofRaiffeisenCentro-bankAGinthe2019financialyear.
Risk Situation
TheRiskAppetiteFrameworkisaninternaltooltodefineandcommunicatetheriskappetiteofRaiffeisenCentrobankAG.Themanagementofriskisdoneaccordingtoalimitandmonitoringsystempursuanttoparticularwarninglevelsandlimits.
Thefollowingtabledepictsthebank-widekeyfiguresasat31December2019comparedto31December2018aswellastherespectiveminimum,maximumandaveragevaluesforthe2019financialyear.
Key figure Status Limits 12/2019 12/2018 Change Max1 Min1 Avg1
16%18%16%18%110%130%
13.0%15.0%45.0%35.0%7.5%9.0%60 mn120 mn
25.0%30.0%1.55%2.00%
(2,9) PP
(2,9) PP
71,5 PP
Risk
rew
ard
pr
ofile
RORAC 44.2% 46.4%
RORWA 2.4% 2.8%
Pilla
r I
Total Capital Ratio 20.8%
Pilla
r II
(inte
rnal
cap
ital) Total Capital Ratio in Stress
Economic Capital Ut ilizat ion 21.3%
LCR Cash Puffer 125 mn
CET1 Ratio 20.8%
12.9%
20.8%
LCR 291.1%
Net Leverage Ratio
23.6%
16.9%
11.8%
23.0% 20.4% 21.7%
23.0% 20.4% 21.7%
21.1%
291.1% 158.8% 240.5%
23.0% 20.4% 21.7%
24.5%
(0,9) PP
23.6%
23.6%
2.9% 2.3%
219.6%
(12) mn
(0,4) PP
(2,1) PP
13.8%
137 mn
4,4 PP
(2,9) PP
18.8%
13.9% 10.7%
2.6%
55.9% 42.5% 48.4%
261 mn 124 mn 169 mn
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TheNetLeverageRatiolimitsthemaximumbusinessvolumebytheavailablecorecapital.ThecalculationoftheNetLeverageRatioexcludescertainintragroupriskpositions(e.g.fundingpassedon).
NetLeverageRatio=Corecapital
Balancesheetvolume(excl.RBI)
TheRORAC(ReturnonRisk-AdjustedCapital)andtheRORWA(ReturnonRisk-WeightedAssets)arekeyfiguresofrisk-adjustedreturnmanagement.Thenetincomeisrelatedtotheallocatedriskcapital.Projectswithhigherriskprofilestieupmorecapitalandshouldbemoreprofitable.
RORAC=NPAT
EconomicCapital(ytdavg)+prudentvaluation(ytdavg)
RORWA=NPAT
Risk-WeightedAssets(ytdavg)
Onoverallbanklevel,allkeyfigureswerestableandwereabovetherespectiveinternallimitsandwarninglevels.Theinternalwarninglevelsandlimitsaredefinedconservatively,i.e.eveniftheyareundercut,theregulatorylevelsarestillcompliedwith.
Risk-WeightedAssetsbyrisktypesaredepictedinthebelowtable:
1incl.settlementriskandownedpropertyrisk
RWAsacc.totypeofrisk(in€million) 31/12/2019 31/12/2018 Change
Creditrisknon-retail 79.8 85.9 (7.1%)
Marketrisk 240.3 204.9 17.3%
Operationalrisk 132.2 121.8 8.5%
Equityparticipationrisk 6.2 6.2 0.0%
CVArisk 48.2 42.3 13.9%
Otherrisks1 13.6 14.0 (3.5%)
RWAsTotal 520.3 475.3 9.5%
Theabovekeyfiguresaredefinedasfollows:
TotalCapitalRatioandCET1Ratioserveasquantitativemeasuretodeterminethecreditinstitution’sownfundsinrelationtotheRisk-WeightedAssets(RWAs).
CET1Ratio=CommonEquityTier1
TotalRisk-WeightedAssetsTotalCapitalRatio=
EligibleownfundsTotalRisk-WeightedAssets
TheLCR(LiquidityCoverageRatio)measurestheliquidityoutflowina30-daystressscenario.
LCR=LiquidassetsNetoutflows
TheLCRCashBuffermeasurestheliquiditysurpluswhichexceedsregulatoryrequirementsandservestosafeguardthattherequiredLCRismet.
TheTotalCapitalRatioinstressmeasurestheTotalCapitalRatiointhegoingconcernscenario(1yearhorizon,95percentconfidenceinterval).Eligib-leownfundsandexpectedprofitarestressedattheVaRandcontrastedwiththeRisk-WeightedAssets.TheTotalCapitalRatioactsasafloor.
TotalCapitalRatioinStress=Eligibleownfunds+NPAT–VaR
TotalRisk-WeightedAssets
TheEconomicCapital(EC)Utilizationdepictstheutilizationoftheriskcoveragesuminthetargetratingscenario(1yearhorizon,99.92percentconfidenceinterval).
EconomicCapitalUtilization=EconomicCapitalRisk-takingcapacity
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In2019,themajorchangesintherisksituationwereasfollows:
Creditriskdecreasedmainlyduetoafurtherreductionoftheloanportfolio.Incontrast,counterpartydefaultriskroseduetothehedgingfortheincreasedcertificates’volume.TheriseassociatedwithhedgingrequirementsforcertificatesissuedbyRaiffeisenCentrobankAGwasalsoreflectedintheRWAsoftheCreditValueAdjustments(CVA).Marketriskutilizationwasonamediumlevel,changescomparedtothepreviousyear’syear-endwerewithinthenormalfluctuationrange.TheriseofRWAsinoperationalriskwasattributabletotheincreaseoftheaverageprofitderivedinthepastthreebusinessyears(pursuanttotheCRRstandardapproach).
The Internal Control System as Relevant for the Accounting SystemRaiffeisenCentrobankAGanditsgoverningbodiesarecommittedtoensuringbalancedandcompletefinancialreporting.Afundamentalrequirementforthisiscompliancewithallrelevantlegalregulations.Inconnectionwiththeaccountingprocess,theManagementBoardisresponsiblefordesigningandinstallinganinternalcontrolandriskmanagementsystemthatmeetstherequirementsoftheCompany.Theobjectofthisinternalcontrolsystemistosupportthemanagementbymakingcertainthateffectiveinternalcontrolsareappliedtotheaccountingprocessandthatthesecontrolsareimprovedonwheneverappropriate.Thecontrolsystemisdesignedtoassurecompliancewithguidelinesandregulations,aswellastocreateoptimalconditionsforspecificcontrolmeasures.AninternalcontrolsystemhasalreadyexistedatRaiffeisenCentrobankAGforyearsintheformofdirectivesandinstructionsforstrategicallyimportantsubjectareas.
ThefinancialstatementsarepreparedonthebasisofthepertinentAustrianlaws,abovealltheAustrianBankingAct(BWG)inconnectionwithEURegulation575/2013(CapitalRequirementsRegulation“CRR”)andtheAustrianCommercialCode(UGB)asamendedbytheRÄG2014.
Thedepartment“Finance”isresponsiblefortheBank’saccountingsystemandisdirectlysubordinatedtotheManagementBoard.Thedepartmentisresponsiblefordealingwithallaccountingissuesandhastheauthoritytoprovideforthesafeguardingoftheapplicationofuniformstandards.Organizationalinstructionsandguidelines,whicharecomprisedinamanual,havebeensetupforsupport.
AccountingaccordingtotheAustrianBankingActandAustrianCommer-cialCodeiseffectedviaacentralITsystemusingPAGORO/400,whichisprotectedbytherestrictedassignmentofaccessauthorizations.Thetab-leofaccountsistailoredtotheBank’sindividualrequirements.Transac-tionsareregisteredbothautomaticallyandmanually.Accountingvouchersarethenfiledsystematicallyandchronologically.
MonthlybalancesheetsarecreatedandpassedontotheManagementBoardandtheseniormanagementbymeansofastandardizedfinancialreportingsystem.AtleastonceperquartertheSupervisoryBoardisinfor-medinthecourseoftheSupervisoryBoardmeetingsofthecurrentcourseofbusinessincludingtheBank’soperativeplanningandmedium-termstrategy.
TheManagementBoardevaluatesandmonitorsmaterialrisksinconnec-tionwiththeaccountingprocess.Inthis,thefocusisplacedontherisksthataretypicallyfoundtobematerial.Theannualevaluationoftheinternalcontrolmeasuresappliedbyeachoftheresponsibleunitsisbasedonarisk-orientedapproach.Theriskofincorrectfinancialreportingisassessedonthebasisofanumberofdifferentcriteria.Forexample,complexaccountingprinciplescanincreasetheriskoferrors.Differentprinciplesforthemeasurementofassetsandcomplexorchangingbusinessconditionscanalsoleadtosubstantialerrorsinthefinancialreporting.
Estimatesmustregularlybemadeduringthepreparationofthefinancialstatements.Inallofthesecases,thereisaninherentriskthatactualdeve-lopmentsmaydeviatefromtheseestimates.Thisespeciallyappliestotheparametersinvaluationmodelsthatareusedtodeterminethefairvaluesoffinancialinstrumentsforwhichthereisnocurrentpricequotationaswellastosocialcapital,theoutcomeoflegaldisputes,thecollectabilityofloansandadvances,andtheimpairmentofequityparticipations.Insomecases,externalexpertsareinvolvedorpubliclyavailableinformationsourcesareusedtominimizetheriskofincorrectestimates.
InadditiontotheManagementBoard,thegeneralcontrolframeworkalsoincludesseniormanagement(thedepartmentheads).Allcontrolmeasuresareappliedtothedailybusinessprocessestoensurethatpotentialerrorsordeviationsinthefinancialreportingarepreventedordiscoveredandcorrected.Thecontrolmeasuresthatareappliedatregularintervalsrangefromthereviewoftheperiodicresultsbythemanagementtothespecificreconciliationandcoordinationofaccountsandtheanalysisandfurtheroptimizationofaccountingprocesses.TheInternalAuditdepartmentisalsoinvolvedinthemonitoringprocess.ItsactivitiesarebasedontheAustrianFinancialMarketAuthority’sminimumstandardsforinternalauditingandinternationalbestpractice.TheInternalAuditdepartmentreportsdirectlytotheManagementBoard.
“Controlling”(partofthe“Finance”department)isresponsibleforprepa-ringthenotestotheannualfinancialstatementsdraftedaccordingtotheAustrianBankingActandtheAustrianCommercialCode.Inaddition,amanagementreportisdrawnupwhichexplainstheresultsinlinewithstatutoryrequirements.Theannualfinancialstatementsandthemanage-mentreportareforwardedtoandreviewedbytheAuditCommitteeoftheSupervisoryBoardandarethenpresentedtotheSupervisoryBoardforitsapproval.TheannualfinancialstatementsarepublishedontheCompany’swebsite,intheOfficialGazetteoftheWienerZeitung,andarealsofiledwiththeAustrianCompanyRegister.KeyemployeesandtheManagementBoardreviewtheannualfinancialstatementspriortotheirdistributiontotheSupervisoryBoard.Moreover,analysesoftheannualfinancialstatementsarepreparedspeciallyforthemanagement.
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Human ResourcesAsat31December2019RaiffeisenCentrobankAGhad195employeeswhich,comparedto31December2018,representedanincreaseof4employees.In2019,RaiffeisenCentrobankAGhadonaverage195employeeswhichrepresentsafluctuationrangeof10.53percent.
TrainingThepositivetrendoftrainingandeducationcoursessuccessfullycomple-tedbyemployeescontinuedin2019andwasaugmentedbyonlinetrainingprograms.
Forthefirsttime,anautogenictrainingcoursetolearnrelaxationtech-niqueswasheldoveraperiodofeightweeks.Thecoursewasverywellattendedandwillthereforebeofferedagainandbefurtherexpandedintheforthcomingbusinessyear.
The“LeadershipCircle“hasprovenanefficienttoolforbest-practice-sharingandexchangeamongthemanagementanddepartmentheadsandwillalsobeorganisedregularlyin2020.
Work-LifeBalanceThenew“sabbatical“guidelinesprovideforflexibleworkingtimemodels.Employeescantakeinsurance-protectedextendedtime-offperiodsatpro-ratedincome.Sabbaticalsofferanattractiveandflexibleopportunitytorelaxbeyondthelegalleaveentitlement.Prerequisitesanddifferentsabbaticalmodelsweredrawnupinautumn2019.RaiffeisenCentrobankAG’semployeeshavebeeninformedrespectively.
Performancemanagement&trainingguidelinesTherevisedperformancemanagementguidelinegovernstheannualobjectivesettingandperformanceprocessandprovidesformoreflexibilitywithregardtoindividualprerequisitesofdepartmentsandpositionswhileobservingregulatoryrequirements.Thehandlingofreimbursementobliga-tionsfortrainingcostsaswellastheapprovalprocessoftrainingandeducationhavebeensubstantiallyrevisedandsimplified.HumanResour-cesisstillinchargeofevaluatingtrainingneedsandtakingcareoftheregistrationandorganisationalprocessoftrainingmeasures.
Outlook for 2020AgranulareconomicassessmentoftheconsequencesoftheimposedrestrictionstocombattheCovid19virusishardlypossibleandanyfiguresaresubjecttohighuncertainty.Thecurrentsituationisanextraordinaryeventoccurringintimeofpeace,markedbyanalmostcompletereductionineconomicactivityimposedbygovernmentsandpublicinstitutions.Onapositivenote,ofcourse,itshouldbenotedthatanendtothestandstillimposedbygovernmentscouldleadtoasharpreboundineconomicactivity-especiallyasmassivemonetaryandfiscalsupportmeasuresareemerging.Theextentoftheslump,thelengthoftheeconomiccontractionandtheultimatemacroeconomiccostsdependonseveralfactors.Firstly,thelengthofthestateofeconomicstandstillinEuropeisdecisive.Second-ly,thesecond-roundeffectsareofgreatimportance.Thirdly,itiscurrentlyimpossibletoassesstheextenttowhichthecurrentcrisiswillhaveamorelastingimpactonconsumerconfidenceanddemandpatterns.InourindicationsforGDPgrowth,weassumethateconomicpolicywilluseallavailablemeansandthatitwillbepossibletolargelycontainsecondroundeffectsoftheeconomicstandstillattheendofthesecondquarter.For2020,weexpecttheEurozonetopostadecreaseof4percentandareboundof3.2percentin2021.InAustria,weanticipateamorepronouncedeconomicdevelopment(2020:minus4.5percent,2021:plus4percent).
Thestockmarketssufferedasevereslumpagainstthebackdropoftheeconomicramificationsoftheepidemic.Ifthecontainmentmeasuresagainstthevirusprovesuccessfulandthereareprospectsofaslowdownofthepandemic,weexpectthefinancialmarketstostabilizeandshowaneconomicreboundthereafter.DespitethechallengingmarketenvironmentRaiffeisenCentrobankAGiswellpreparedtomakethemostoftheoppor-tunitiesinthisextraordinarysituation.Thefocuswillbeonthesustainedde-velopmentofexistingbusinessactivitiesintandemwithstrictcostdisciplineandfurtherdigitalizationandefficiencyenhancement.GiventhecurrentlyvolatilesituationRaiffeisenCentrobankAGcannotgiveareliableforecastforthe2020financialyear.ForRaiffeisenCentrobankAGthereis,amongstothers,ariskofabusinessvolumedecrease.
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Research and DevelopmentRaiffeisenCentrobankAGwithitscoreareaofbusinessfocusingonequitiesandstructuredproductsdoesnotengageinresearchanddevelopment.
Vienna,03April2020TheManagementBoard
Statement of Legal Representatives pursuant to §124 Stock Exchange ActWeconfirmtothebestofourknowledgethattheannualfinancialstate-mentsgiveatrueandfairviewoftheassets,liabilities,financialposition,andprofitorlossofRaiffeisenCentrobankAGasrequiredbytheappli-cableaccountingstandardsandthatthemanagementreportgivesatrueandfairviewofthedevelopmentandperformanceofthebusinessandthepositionoftheCompany,togetherwithadescriptionoftheprincipalrisksanduncertaintiestheCompanyfaces.
Vienna,03April2020TheManagementBoardHaraldKröger
ChiefExecutiveOfficerHeikeArbter
MemberoftheManagementBoard
HaraldKrögerChiefExecutiveOfficer
HeikeArbterMemberoftheManagementBoard
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FinancialStatementsofRaiffeisenCentrobankAGasat31December2019accordingtotheAustrianBankingAct
Theadditionofroundednumbersusingautomatedsystems,aswasdoneforthisreport,mayresultinminordifferencesinamounts.
Thechangesindicatedinpercentrefertotheactualamountsandnottheroundedamountsshowninthisreport.
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Balance Sheet as at 31 December 2019 Assets 31/12/2019 31/12/2019 31/12/2018 31/12/2018 in€ in€ in€thousand in€thousand
1. Depositswithcentralbanks 51,092,980.58 234,905
2. Loansandadvancestocreditinstitutions
a)repayableondemand 117,549,886.36 164,754
b)otherloansandadvances 3,659,305,876.28 3,776,855,762.64 2,870,636 3,035,390
3. Loansandadvancestocustomers 46,266,073.13 120,213
4. Bonds,notesandotherfixed-interestsecurities
a)issuedbypublicbodies 3,119,519.33 4,281
b)issuedbyotherborrowers 15,210,146.55 18,329,665.88 16,164 20,445
5. Sharesandothervariable-yieldsecurities 335,159,990.55 177,142
6. Equityparticipations 5,140,014.88 5,139
7. Sharesinaffiliatedcompanies 1,100,000.00 1,100
8. Intangiblefixedassets 136,799.01 105
9. Tangiblefixedassets 11,007,752.63 10,970 thereoflandandbuildingsusedbythecreditinstitution forownpurposes:€9,025,047.92 previousyear:€9,276thousand
10.Otherassets 193,662,975.13 128,200
11.Prepaymentsandotherdeferrals 1,262,993.23 1,575
12.Deferredtaxassets 219,487.00 167
Totalassets 4,440,234,494.66 3,735,352
Off-balancesheetitems
1. Foreignassets 548,201,032.74 488,584
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Equityandliabilities 31/12/2019 31/12/2019 31/12/2018 31/12/2018 in€ in€ in€thousand in€thousand
1. Liabilitiestocreditinstitutions
a)repayableondemand 45,977,048.95 3,181
b)withagreedmaturitydatesorperiodsofnotice 6,000,630.78 51,977,679.73 11,172 14,353
2. Liabilitiestocustomers
a)repayableondemand 210,861,176.47 134,486
b)withagreedmaturitydatesorperiodsofnotice 255,627,414.06 466,488,590.53 230,489 364,975
3. Securitizedliabilities
a)issuedsecuritizedliabilities 1,826,605,898.26 1,460,556
b)othersecuritizedliabilities 1,667,950,141.86 3,494,556,040.12 1,288,719 2,749,275
4. Otherliabilities 287,755,362.80 467,538
5. Accrualsanddeferreditems 226,240.50 105
6. Provisions
a)forseverancepayments 4,763,294.00 4,436
b)taxprovisions 118,544.33 190
c)otherprovisions 6,301,581.57 11,183,419.90 7,527 12,153
7. Subscribedcapital 47,598,850.00 47,599
8. Capitalreserves
a)committed 6,651,420.71 6,651
b)uncommitted 14,000,000.00 20,651,420.71 14,000 20,651
9. Retainedearnings
a)legalreserve 1,030,936.83 1,031
b)otherreserves 33,653,910.14 34,684,846.97 31,129 32,160
10.LiabilityreservepursuanttoArticle57para5AustrianBankingAct 13,538,860.00 13,539
11.Netprofitfortheyear 11,573,183.40 13,004
Totalequityandliabilities 4.440.234.494,66 3,735,352
Off-balancesheetitems
1. Contingentliabilities 0.07 0
2. Commitmentsarisingfromfiduciarybusinesstransactions 7,091,121.47 7,091
3. EligibleownfundspursuanttoPart2ofRegulation(EU)No575/2013
4. CapitalrequirementspursuanttoArticle92ofRegulation(EU) 108,093,565.03 112,343 No575/2013(TotalRisk-WeightedAssets) hereof:capitalrequirementspursuanttoArticle92para1lit(a)to(c) 520,337,468.01 475,262 ofRegulation(EU)No575/2013 hereof:capitalrequirementspursuanttoArticle92para1lit(a) 20.77% 23.64% hereof:capitalrequirementspursuanttoArticle92para1lit(b) 20.77% 23.64% hereof:capitalrequirementspursuanttoArticle92para1lit(c) 20.77% 23.64%
5. Foreignequityandliabilities 689,549,522.55 696,107
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Income Statement for the 2019 Financial Year
2019 2019 2018 2018 in€ in€ in€thousand in€thousand
1. Interestandinterest-likeincome 31,655,771.38 29,211
thereoffixed-interestsecurities 266,917.39 99
2. Interestandinterest-likeexpenses (71,307,467.64) (48,609)
I. Netinterestresult (39,651,696.26) (19,398)
3. Incomefromsecuritiesandfinancialinvestments 13,305,114.64 11,427
4. Feeandcommissionincome 12,138,281.97 12,828
5. Feeandcommissionexpenses (13,869,387.21) (13,763)
6. Netprofitonfinancialtradingactivities 86,471,140.70 67,521
7. Otheroperatingincome 898,240.35 1,144
II. Operatingincome 59,291,694.19 59,759
8. Generaladministrativeexpenses (43,516,057.62) (40,990)
a)staffexpenses
aa)salaries (18,314,163.54) (18,315)
bb)expensesforstatutorysocialcontributionsandcompulsorycontributionsrelated towagesandsalaries (4,044,628.34) (3,891)
cc) othersocialexpenses (405,675.69) (383)
dd)expensesforpensionsandassistance (415,336.08) (422)
ee)provisionsforseverancepaymentsandcontributionstoseverancefunds (953,450.24) (895)
(24,133,253.89) (23,907)
b)otheradministrativeexpenses (19,382,803.73) (17,084)
9. Valueadjustments onassetitems8and9 (1,040,378.84) (1,043)
10.Otheroperatingexpenses (341,390.60) (332)
III.Operatingexpenses (44,897,827.06) (42,366)
IV.Operatingresult 14,393,867.13 17,393
11.Loanlossprovisions 205,818.83 (238)
12.Incomearisingfromthevaluationofloansandadvances 15,000.00 15
13.Expendituresarisingfromthevaluationofequityinvestments heldasfinancialinvestments (68,692.78) (1,442)
V. Resultonordinaryactivities 14,545,993.18 15,728
14.a)currentincometaxes (2,095,423.81) (2,397) thereofpassedonfromparentcompanyfortheyear: € (859,116.05); previous year: € (1,046thousand) b)deferredtaxes 52,421.00 (2,043,002.81) 4 (2,393)
15.Othertaxesunlessincludedinitem14 (929,806.97) (331)
VI. Netincome(=Netprofit)fortheyear 11,573,183.40 13,004
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Development of Fixed Assets in the 2019 Financial Year
Amountsin€ Costofacquisition Costofacquisition Costofacquisition Costofacquisition Accumulateddepr. Accumulateddepr. Accumulateddepr. Accumulateddepr. Accumulateddepr. Carryingamount Carryingamount Balanceasat1/1/2019 Additions Disposals Balanceasat31/12/2019 Balanceasat1/1/2019 Additions/Depreciation Write-up Disposals 31/12/2019 31/12/2019 31/12/2018
I. Intangiblefixedassets
Softwarelicenses 1,571,985.66 103,143.19 0.00 1,675,128.85 1,466,967.65 71,362.19 0.00 0.00 1,538,329.84 136,799.01 105,018.01
II. Tangiblefixedassets
1.Landandbuildingsusedbythecreditinstitution forownpurposes thereofvalueofproperty:€ 2,637,765.92; previousyear:€ 2,638thousand 12,694,367.11 0.00 0.00 12,694,367.11 3,417,903.19 251,416.00 0.00 0.00 3,669,319.19 9,025,047.92 9,276,463.92
2.Officefurnitureandequipment 14,227,926.84 1,092,976.65 819,257.81 14,501,645.68 12,534,508.13 717,600.65 0.00 733,167.81 12,518,940.97 1,982,704.71 1,693,418.71
26,922,293.95 1,092,976.65 819,257.81 27,196,012.79 15,952,411.32 969,016.65 0.00 733,167.81 16,188,260.16 11,007,752.63 10,969,882.63
III. Financialinvestments
1.Sharesinaffiliatedcompanies thereofincreditinstitutions:€0.00 1,100,000.00 0.00 0.00 1,100,000.00 0.00 0.00 0.00 0.00 0.00 1,100,000.00 1,100,000.00
2.Equityparticipations thereofcreditinstitutions:€0.00 5,139,934.88 616.00 100.00 5,140,450.88 436.00 0.00 0.00 0.00 436.00 5,140,014.88 5,139,498.88
6,239,934.88 616.00 100.00 6,240,450.88 436.00 0.00 0.00 0.00 436.00 6,240,014.88 6,239,498.88
Total 34,734,214.49 1,196,735.84 819,357.81 35,111,592.52 17,419,814.97 1,040,378.84 0.00 733,167.81 17,727,026.00 17,384,566.52 17,314,399.52
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Development of Fixed Assets in the 2019 Financial Year
Amountsin€ Costofacquisition Costofacquisition Costofacquisition Costofacquisition Accumulateddepr. Accumulateddepr. Accumulateddepr. Accumulateddepr. Accumulateddepr. Carryingamount Carryingamount Balanceasat1/1/2019 Additions Disposals Balanceasat31/12/2019 Balanceasat1/1/2019 Additions/Depreciation Write-up Disposals 31/12/2019 31/12/2019 31/12/2018
I. Intangiblefixedassets
Softwarelicenses 1,571,985.66 103,143.19 0.00 1,675,128.85 1,466,967.65 71,362.19 0.00 0.00 1,538,329.84 136,799.01 105,018.01
II. Tangiblefixedassets
1.Landandbuildingsusedbythecreditinstitution forownpurposes thereofvalueofproperty:€ 2,637,765.92; previousyear:€ 2,638thousand 12,694,367.11 0.00 0.00 12,694,367.11 3,417,903.19 251,416.00 0.00 0.00 3,669,319.19 9,025,047.92 9,276,463.92
2.Officefurnitureandequipment 14,227,926.84 1,092,976.65 819,257.81 14,501,645.68 12,534,508.13 717,600.65 0.00 733,167.81 12,518,940.97 1,982,704.71 1,693,418.71
26,922,293.95 1,092,976.65 819,257.81 27,196,012.79 15,952,411.32 969,016.65 0.00 733,167.81 16,188,260.16 11,007,752.63 10,969,882.63
III. Financialinvestments
1.Sharesinaffiliatedcompanies thereofincreditinstitutions:€0.00 1,100,000.00 0.00 0.00 1,100,000.00 0.00 0.00 0.00 0.00 0.00 1,100,000.00 1,100,000.00
2.Equityparticipations thereofcreditinstitutions:€0.00 5,139,934.88 616.00 100.00 5,140,450.88 436.00 0.00 0.00 0.00 436.00 5,140,014.88 5,139,498.88
6,239,934.88 616.00 100.00 6,240,450.88 436.00 0.00 0.00 0.00 436.00 6,240,014.88 6,239,498.88
Total 34,734,214.49 1,196,735.84 819,357.81 35,111,592.52 17,419,814.97 1,040,378.84 0.00 733,167.81 17,727,026.00 17,384,566.52 17,314,399.52
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A.AccountingPolicies
GeneralprinciplesThefinancialstatementsofRaiffeisenCentrobankAGforthe2019financi-alyearhavebeenpreparedinaccordancewiththegeneralaccountingprinciplesstipulatedintheAustrianCommercialCodeandthespecificsectoralregulationsasspecifiedbytheAustrianBankingAct.InaccordancewiththeprinciplesofproperaccountingandtakingintoaccountstandardpracticeasdescribedinArticle222section2oftheAustrianCommercialCode,theannualfinancialstatementsgiveatrueandfairviewofthecompany’snetassets,financialpositionandearnings.
Thevaluationofassetsandequityandliabilitiesisbasedontheprincipleofindividualvaluationassumingagoingconcernperspective.Theprincip-leofprudenceisapplied,takingaccountofthespecificcharacteristicsofthebankingbusiness.
Comparedtothefinancialstatementsasat31December2018,nochangeshavebeenmadeintheaccountingpolicies.Thefinancialstate-mentshavebeenpreparedincompliancewiththeconsistencyprinciple.
Thebalancesheetandtheincomestatementhavebeenstructuredaccor-dingtoAppendix2oftheformscontainedinArticle43AustrianBankingAct.
Since26April2017,RaiffeisenCentrobankAGhasbeenoperatingabranchofficeinBratislava(RaiffeisenCentrobankAGSlovakBranchpobočkazahraničnejbanky).Thebusinessvolumeaswellasincomeandexpensesattributabletothebranchofficehavebeenincludedinthefinan-cialstatements.
ForeigncurrencytranslationAssetsandliabilitiesdenominatedinforeigncurrenciesarereportedattheratesofexchangesfixedbytheECB.Duringtheyear,amountsdenomina-tedincurrencies,forwhichtheECBpublishednorates,areconvertedatthemiddleratesofexchangepublishedbyRBIonthebalancesheetdate.Atyear-end,foreigncurrencypositionsareconvertedattheratespublis-hedbytheViennaStockExchangeonthelasttradingday.Ifnorateisavailableforaparticularcurrency,ratespublishedbytheECB,RBIortherespectivemarketratesareused.
Forwardforeignexchangecontractsarecapitalizedattheforwardexchangerates.Anydifferencesinratesresultingfromcurrencyconversionarereportedasprofitorlossintheincomestatement.
Tradingportfolio–valuationofsecurities,futuresandoptionsIntermsofsecuritiesheldfortradingpurposes,thecompany’sportfolioofsharesinpubliclylistedcompaniesaswellasfixed-interestsecuritiesisre-portedatthesharepriceprevailingatthebalancesheetdate.Ifnoquotesorsharepricesareavailable,thevalueisdeterminedbymeansofvaluati-onmodels.
Bondsheldbythecompanyfortradingpurposesarevaluedatquotesprovidedbyothercreditinstitutions,brokersoratReutersquotes,incasestockexchangequotesarenotavailableorarenotconclusive.Ifsuchquotesarenotavailable,pricesarecalculatedinternallybasedonthenetpresentvaluemethod.Thismethodisbasedonaninterestratecurvecom-prisedofmoneymarket,futuresandswapratesaswellasspreads.
Certificatesacquiredbasedonanequity-basedorindex-basedperfor-mancearevaluedwiththesharepricesprevailingonthebalancesheetdate,andifnosharepricesareavailable,withtheassistanceofvaluationmodelstoillustratestochasticdevelopmentprocesses.
Derivativesarereportedinthebalancesheetatfairvalue,whichequalsthemarketpriceorasyntheticvalue.Adjustmentsinvaluearerecognizedthroughprofitorlossintheincomestatement.Thesyntheticvaluesarede-terminedaccordingtotheBank’sownevaluationmethods,whichareexa-minedandapprovedbyriskmanagementandwhicharebasedonrecog-nizedoption-theoreticalmodels.
Optionsonsecuritiesofpubliclylistedcompaniesandoptionsonsecurityindices(i.e.purchasedandsoldcallsandputs,primarilyEUREXoptions)aswellasfuturesheldfortradingpurposesarevaluedaccordingtothemarketpricesprevailingonthebalancesheetdate.Valueadjustmentsweremadetotaketemporaldifferencesintoaccount.
OTCoptionsareprimarilyvaluedattradablepricesquotedbythecoun-terparty.Optionsforwhichnotradablepricesareavailablearevaluedbyadequatemodels.Forplainvanillaoptions(AmericanandEuropeanstyle),theBlack-ScholesmodelandthebinomialpricingmodelaccordingtoCox-Ross-Rubinsteinareapplied.TheCurranapproximationisappliedtoAsianoptions,whereasbarrieroptionsusetheHeynen-KatmodelandspreadoptionsrelyontheKirkmodel.
Bankingbook—valuationofderivativesThederivativesvolumeinthebankingbookrelatesexclusivelytoforeignexchangeforwardtransactionstohedgeforeigncurrencyrisks.Theyarevaluedatfairvaluerelyingonobservablemarketparameters.
LoansandadvancestocreditinstitutionsandcustomersLoansandadvancestocreditinstitutionsandcustomersareshownattheirnominalvalue.Individualloanlossprovisionsaremadeinthecaseofanidentifiablerecognizableriskofdefaultonthepartofborrowers.Inaddition,generalimpairmentallowanceshavebeenmadefrom2018on-wardsforexpectedcreditlosses(ECL),wherebyRaiffeisenCentrobankAGhastakentheopportunitytoapplytheregulationsofIFRS9tocalculategeneralimpairmentallowancesundercompanylaw.
ThegeneralimpairmentallowancespursuanttoIFRS9havebeenimple-mentedbasedonatwo-stageprocedure.Ifthecreditdefaultriskforcur-rentassetsdoesnotincreasesignificantlysinceinitialrecognition,theim-pairmentlossforeachassetismeasuredatthepresentvalueofanexpec-tedtwelve-monthlossasatthereportingdate(ECLStage1).Inthecaseofassetswhosecreditriskdoesnotincreasesignificantlysinceinitialrecogniti-onandwhicharenotclassifiedastransactionswithalowcreditriskatthereportingdate,theexpectedcreditlossiscalculatedovertheasset’sentireremainingterm(ECLStage2).TheexpectedlossesforbothstagesarecalculatedonanindividualtransactionbasisapplyingstatisticalriskparameterssuchasProbabilityofDefault(PD),ExposureatDefault(EAD)aswellasLossGivenDefault(LGD).
Theestimationofriskparametersincludesnotonlyhistoricaldefaultinforma-tionbutalsothecurrenteconomicenvironment(point-in-timeorientation)andforward-lookinginformation.
Financial Statements as at 31 December 2019
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EquityparticipationsandsharesinaffiliatedcompaniesEquityparticipationsandsharesinaffiliatedcompaniesarevaluedatcostunlesspermanentlossesordecreasedequityrequireanon-scheduleddepreciationofthefairvalue(subjectiveorobjectifiedcompanyvalue).Incase,reasonsforimpairmentarenolongerapplicable,awrite-uptothecostofacquisitioniscarriedout.
IntangibleandtangiblefixedassetsThevaluationofintangibleandtangiblefixedassets(i.e.landandbuil-dings,officefurnitureandequipmentaswellasothertangiblefixedassets)iscarriedoutatthecostofacquisitionlesstheirscheduled,lineardepre-ciation.
Depreciationratesappliedare33.3percentp.a.forintangiblefixedas-sets,2.5percentand10.0percentp.a.forimmovablefixedassets,and10.0percent–33.0percentformovablefixedassets.Afullyear’sde-preciationistakeninthecaseofadditionsmadeduringthefirsthalfofthefinancialyear,whereashalf-yeardepreciationappliestoadditionsinthesecondhalfofthefinancialyear.Lowvalueassets(costofacquisitionperitemlessthan€0.4thousand)arefullydepreciatedintheyearofacquisiti-on.
LiabilitiestocreditinstitutionsandcustomersLiabilitiestocreditinstitutionsandcustomersarereportedattheamountofrepayment,takingintoconsiderationtheprincipleoffinancialprudence.
SecuritizedliabilitiesSecuritizedliabilitiesaremeasuredatfairvaluewhichequalsthepresentvaluemethod,orthecommonoptionvaluemethodsfortheoptioncompo-nent.Securitizedliabilitiesincludecapitalguaranteedstructuredproducts,whoserateofinterestdependsontheequitypriceorequityindexperfor-mance,reverseconvertiblebondsandcertificateswithoptioncharacter(turbo,discount,open-endandbonuscertificates)andwarrants.
ProvisionsforseverancepaymentsTheprovisionsforseverancepaymentsaredesignedtofulfillegaldemands,aswellasthosearisingfromindividualorcollectivecontractualagreements.ProvisionsarecalculatedinaccordancewiththeguidelinesspecifiedbyIAS19,applyingtheProjectedUnitCreditMethodandassumingacalculatoryinterestrateof0.9percent(31/12/2018:1.8percent),aswellasanunchangedannualsalaryincreaseamountingto3.5percent(31/12/2018:3.5percent).TheAVÖ(Austrianactuaries’association)2018-P-basisforcalculatingretirementpensioninsurances–Pagler&Paglerforsalariedemployeeswastakenasbiometricbasisforcalculation.
Theunderlyingpresumptionisadecreasingfluctuationrateinconnectionwiththeearliestpossibleretirementdate,attheageof60forwomenand65formen,takingintoaccountthechangestoAustria’sGeneralSocialSecurityLawinaccordancetotheBudgetaryAmendment2003.Thepre-miumreserveamountsto89.9percent(31/12/2018:77.5percent)ofthestatisticalterminationbenefitobligationsonthebalancesheetdate.
OtherprovisionsOtherprovisionshavebeenmadeaccordingtoexpecteddemands.Theycompriseidentifiablerisksandliabilities,theextentofwhichhasnotyetbeendetermined.Long-termprovisionsarediscounted.Theinterestrateamountsto0.9percent(31/12/2018:1.8percent).
B.NotestoBalanceSheetItems
I.DepositswithcentralbanksThebalancesheetitemA1,whichencompassesdepositswiththeAustrianNationalBank,amountedto€51,093thousand(31/12/2018:€234,905thousand).Prevailingregulationspertainingtoliquidityandminimumreserveswereobserved.
II.1.Classificationofloansandadvancesandsecuritiespositionsaccordingtotheirremainingterm
II.Loansandadvances
31/12/2019 repayable 0-3 3-12 1-5 >5 Total in€thousand ondemand/withoutmaturity months months years years
Loansandadvancestocreditinstitutions 117,550 347,883 406,571 2,215,654 689,199 3,776,856
Loansandadvancestocustomers 3,680 35,506 0 6,991 90 46,266
Bonds,notesandotherfixed-interestsecurities 0 0 7,518 10,811 0 18,330
Sharesandothervariable-yieldsecurities 335,160 0 0 0 0 335,160
Otherassets 30,234 2,573 5,194 119,927 35,734 193,663
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31/12/2018 repayable 0-3 3-12 1-5 >5 Total in€thousand ondemand/withoutmaturity months months years years
Loansandadvancestocreditinstitutions 164,754 150,084 366,354 1,881,283 472,916 3,035,390
Loansandadvancestocustomers 110,867 564 1,676 7,017 90 120,213
Bonds,notesandotherfixed-interestsecurities 0 0 1,287 12,028 7,130 20,445
Sharesandothervariable-yieldsecurities 177,142 0 0 0 0 177,142
Otherassets 44,2901 2,0851 10,147 60,870 10,807 128,200
497,053 152,733 379,464 1,961,197 490,943 3,481,3901Adjustmentofremainingtermtomaturity
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II.2.Loansandadvancestoaffiliatedcompaniesandequityparticipations
31/12/2019 Loansandadvancesto Loansandadvancestoequity in€thousand affiliatedcompanies participationsinwhichRaiffeisen (direct/indirect>50%) CentrobankAGhasadirect shareholding(<50%)
Loansandadvancestocreditinstitutions 3,490,332 0
Loansandadvancestocustomers 0 506
Bonds,notesandotherfixed-interestsecurities 7,518 0
Sharesandothervariable-yieldsecurities 110 0
Otherassets 688 8
3,498,649 514
31/12/2018 Loansandadvancesto Loansandadvancestoequity in€thousand affiliatedcompanies participationsinwhichRaiffeisen (direct/indirect>50%) CentrobankAGhasadirect shareholding(<50%)
LLoansandadvancestocreditinstitutions 2,692,527 0
Loansandadvancestocustomers 0 514
Bonds,notesandotherfixed-interestsecurities 8,441 0
Sharesandothervariable-yieldsecurities 105 0
Otherassets 450 8
2,701,522 522
III.Securities
FiguressuppliedpursuanttoArticle64section1no10and11AustrianBankingAct
31/12/2019 Unlisted Listed Total Valuedat in€thousand marketprice
Bonds,notesandotherfixed-interestsecurities,A4 0 18,330 18,330 18,330
Sharesandothervariable-yieldsecurities,A5 60,795 274,367 335,160 335,160
Equityparticipations,A6 5,140 0 5,140 x
Sharesinaffiliatedcompanies,A7 1,100 0 1,100 x
31/12/2018 Unlisted Listed Total Valuedat in€thousand marketprice
Bonds,notesandotherfixed-interestsecurities,A4 0 20,445 20,445 20,445
Sharesandothervariable-yieldsecurities,A5 42,119 135,023 177,142 177,142
Equityparticipations,A6 5,139 0 5,139 x
Sharesinaffiliatedcompanies,A7 1,100 0 1,100 x
“Loansandadvancestocreditinstitutions”includedtradablemoneymarketdepositsintheamountof€2,933,576thousand(31/12/2018:€2,373,943thousand)servingashedgesforcertificatesandwarrantsissuedbyRaiffeisenCentrobankAG.Thereof€2,933,576thousandwereattributabletoRBI(31/12/2018:€2,369,340thousand).
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Asat31/12/2019,balancesheetitemA4includedfixed-interestsecuritiesheldfortradingamountingto€18,330thousand(31/12/2018:€20,445thousand)ofwhich€7,518thousand(31/12/2018:€1,287thousand)wouldfalldueintheforthcomingyear.
Thefairvalueofsecuritiesofthetradingbook(excludinghedgepositions)exceededtheacquisitioncostsby€267thousandasat31/12/2019(31/12/2018:€95thousand).
IV.EquityparticipationsandsharesinaffiliatedcompaniesUnchangedtothepreviousyear’speriod,theBankdirectlyheldaminimumof20percentofthesharesinthesubsequentcompaniesasat31/12/2019:
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in€thousand Name Shareholdingin% Equity Annualresults2019 Domicile 31/12/2019
1CentrotradeHoldingGmbH,Vienna 100 1,131 (12)1
2SyrenaImmobilienHoldingAG,Spittal/Drau 21 27,320 (369)11unauditedfigures
V.FixedassetsThecompositionanddevelopmentoffixedassetsiscontainedinthetableoutliningthedevelopmentoffixedassets.
Furthertothesaleofthecommoditytradingsubsidiaries,CentrotradeHoldingGmbHdidnotperformanyoperationalactivities.
VI.OtherassetsBalancesheetitemA10“Otherassets“totaling€193,663thousand(31/12/2018:€128,200thousand)referredprimarilytopurchasecontractsfromtradinginderivativefinancialinstrumentsreportedatfairvalueasat31/12/2019:
in€thousand 31/12/2019 31/12/2018
Positivefairvaluesofderivativefinancialinstruments
fromOTCoptions 162,650 83,634
fromtradinginEUREXoptionsandfutures 14,809 39,034
fromtradinginotheroptionandfutures 13,733 4,425
191,192 127,094
Inaddition,loansandadvancestoforeigntaxauthoritiesintheamountof€1,040thousand(31/12/2018:€747thousand)wereincludedaswellasthesettlementofGroupcharges(includingcapitalyieldstaxchargedtotheGroup)intheamountof€556thousand(31/12/2018:liabilityfromGroupchargescomingto€938thousand).
in€thousand Name Shareholdingin% Equity Annualresults2018 Domicile 31/12/2018
1CentrotradeHoldingGmbH,Vienna 100 1,143 (12)
2SyrenaImmobilienHoldingAG,Spittal/Drau 21 27,688 (567)
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VII.Deferredtaxassets“Deferredtaxassets”amountedto€219thousand(31/12/2018:€167thousand)asat31/12/2019.
31/12/2019 Deferredtaxassets Deferredtaxliabilities in€thousand
Loansandadvancestocreditinstitutions 8 0
Loansandadvancestocustomers 25 0
Sharesandothervariable-yieldsecurities 0 (267)
Prepaymentsandotherdeferrals 14 0
Provisionsforseverancepayments 1,926 0
Otherprovisions 50 0
Total 2,023 (267)
Balance 1,756 0
Deferredtaxassetsasat31/12/2019(12.5%) 219 0
“Deferredtaxassets”wererecognizedatataxrateof12.5percentas,basedontheprevailinggroupassessmentagreement,thispercentageprovidesfortaxreliefinthefuture.AnytaxreliefbeyondthisratecannotbeassessedbytheGroupmemberasnoinfluencecanbeexertedontheamountoftheuntaxableportionofthetaxableprofitonGrouplevel.
VIII.Liabilities
VIII.1.Classificationofliabilitiesaccordingtotheirremainingterm
31/12/2019 repayable 0-3 3-12 1-5 >5 Total in€thousand ondemand/withoutmaturity months months years years
Liabilitiestocreditinstitutions 45,978 5,370 0 0 630 51,978
Liabilitiestocustomers 210,861 4,129 6,631 244,867 0 466,489
Securitizedliabilities 0 129,343 417,125 1,984,660 963,427 3,494,556
Otherliabilities 106,756 39,651 33,552 105,790 2,006 287,755
363,595 178,493 457,309 2,335,318 966,063 4,300,778
31/12/2018 repayable 0-3 3-12 1-5 >5 Total in€thousand ondemand/withoutmaturity months months years years
Liabilitiestocreditinstitutions 3,181 11,070 0 0 101 14,353
Liabilitiestocustomers 134,486 575 11,557 218,357 0 364,975
Securitizedliabilities 0 75,383 411,014 1,604,430 658,448 2,749,275
Otherliabilities 132,557 8,130 89,830 226,074 10,946 467,538
270,225 95,158 512,401 2,048,861 669,496 3,596,140
31/12/2018 Deferredtaxassets Deferredtaxliabilities in€thousand
Sharesandothervariable-yieldsecurities 0 (95)
Sharesinaffiliatedcompanies 3 0
Prepaymentsandotherdeferrals 14 0
Provisionsforseverancepayments 1,390 0
Otherprovisions 25 0
Total 1,432 (95)
Balance 1,337 0
Deferredtaxassetsasat31/12/2018(12.5%) 167 0
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VIII.2.Liabilitiestoaffiliatedcompaniesandequityparticipations
31/12/2019 Liabilitiestoaffiliated Liabilitiestoequity in€thousand companies(direct/indirect>50%) participationsinwhich RaiffeisenCentrobankAGhasa directshareholding(<50%)
Liabilitiestocreditinstitutions 4,931 0
Liabilitiestocustomers 1,131 0
Otherliabilities 2,976 2
9,038 2
31/12/2018 Liabilitiestoaffiliated Liabilitiestoequity in€thousand companies(direct/indirect>50%) participationsinwhich RaiffeisenCentrobankAGhasa directshareholding(<50%)
Liabilitiestocreditinstitutions 10,291 0
Liabilitiestocustomers 1,139 0
Otherliabilities 7,164 2
18,594 2
VIII.3.SecuritizedliabilitiesThebalancesheetitemP3“Securitizedliabilities”includedissuedandothersecuritizedliabilitiestotaling€3,494,556thousand(31/12/2018:€2,749,275thousand),heldfortradingandallocatedtothefollowingproductcategories:
in€thousand 31/12/2019 31/12/2018
Negativefairvaluesofderivativefinancialinstruments 185,626 368,257
fromOTCoptionsandforwardexchangetransactions 168,459 332,173
fromtradinginEUREXoptionsandfutures 5,364 3,792
fromtradinginotheroptionsandfutures 11,803 32,291
Short-sellingoftradingassets 74,453 89,376
260,079 457,633
“Securitizedliabilities”intheamountof€546,468thousand(31/12/2018:€486,397thousand)willfalldueinthenextyear.
VIII.4.OtherliabilitiesThebalancesheetitemP4“Otherliabilities“amountingto€287,755thousand(31/12/2018:€467,538thousand)referredprimarilytoliabilitiesreportedatfairvalueaswellaspremiumsreceivedfromtradinginsecuritiesandderivativefinancialinstruments.
“Otherliabilities“asat31/12/2019includedinparticularshort-termchargesderivedfromsecuritytradesnotyetsettledat31/12/2019comingto€13,437thousand(31/12/2018:€5,003thousand)andaliabilityrelatingtoanequitycapitalmarkettransactiontotaling€11,512thousand(31/12/2018:€1,461thousand).Inaddition,theitemincludedvariousliabilitiesinrelationtocostschargedcomingto€529thousand(31/12/2018:€447thousand),groupchargesintheamountof€44thousand(31/12/2018:€938thousand),liabilitiestodomestictaxauthoritiesaddingupto€787thousand(31/12/2018:€996thousand)andliabilitiesrelatedtopayrollaccountingintheamountof€610thousand(31/12/2018:€573thousand).
in€thousand 31/12/2019 31/12/2018
Issuedsecuritizedliabilities 1,826,606 1,460,556
GuaranteeCertificates 1,541,5721,094,088
ReverseConvertibleBonds 285,034 366,467
Othersecuritizedliabilities 1,667,950 1,288,719
Certificateswithoptioncharacter 1,654,733 1,280,236
Warrants 13,217 8,483
3,494,556 2,749,275
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in€thousand 31/12/2019 31/12/2018
Provisionsforseverancepayments 4,763 4,436
Provisionsfortaxes 119 190
Otherprovisions 6,302 7,527
Provisionsforbonuspayments 2,449 3,016
Provisionsforoverduevacation 1,293 1,308
Provisionsforlegal,auditingandconsultingexpenses 212 347
Provisionsforlitigationrisks 233 0
Provisionsforoutstandinginvoicesinthesecuritiessegment 247 310
ProvisionsforoutstandinginvoicesintheInvestmentServicessegment 43 326
Provisionsforoutstandinginvoices(others) 173 450
Provisionsforsecuritiessupervision 0 350
Provisionsformarketingcosts 209 290
ProvisionsforchargedManagementBoardexpenses 983 1,043
Provisionsformarketdatarisks 365 0
Sundry 95 87
11,183 12,153
XI.ObligationsarisingfromtheuseoftangiblefixedassetsnotrecognizedinthebalancesheetTherentalandleasingexpensesduringtheperiodunderreviewamountedto€431thousand(2018:€451thousand),thereof€60thousand(2018:€123thousand)toaffiliatedcompanies.Forthe2020financialyear,rentalandleasingexpensesareexpectedtototal€394thousandand€1,773thousandforthe2020-2024financialyears,ofwhichtherentalandleasingexpensesforaffiliatedcompanieswilltotal€36thousandand€186thousand,respectively.
IX.Provisions“Provisions”wereasfollows:
Asofthemergercontractdated27/05/2019,LexxusServicesHoldingGmbH,Vienna,astransferredcompanywasmergedwithRaiffeisenInternationalInvestHoldingGmbH,Viennaastransferringcompany.
Capitalreservesamountedto€20,651thousandasat31/12/2019,remainedunchangedtothepreviousyear(31/12/2018:€20,651thousand)andcontaincommittedanduncommittedcapitalreservesaddingupto€6,651thousandand€14,000thousand,respectively.
Retainedearningsincludedlegalreservesintheamountof€1,031thousand(31/12/2018:€1,031thousand)andotherreservestotaling€33,654thousand(31/12/2018:€31,129thousand).Theincreaseofotherreservesamountingto€2,524thousandisattributabletotheallocationoftheundistributedbalancesheetprofitfor2018tootherreserves.
LiabilityreservepursuanttoArticle57section5AustrianBankingActremainedunchangedtothepreviousyear,totaling€13,539thousand.
X.SharecapitalandreservesThesharecapitalremainedunchangedandiscomprisedof655,000no-par-valueshares.
ThesharesinRaiffeisenCentrobankAGareownedbythefollowingcompanies:
% Shares
RBIIBBeteiligungsGmbH,Vienna 100.00 654,999
RaiffeisenInternationalInvestHoldingGmbH,Vienna(previouslyLexxusServicesHoldingGmbH,Vienna) 0.00 1
100.00 655,000
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TradingbookAtradingbookismaintained.Atthebalancesheetdate,thetradingvolumeatfairvalues(positiveandnegativefairvaluesoffset)estimatedpursuanttointernalriskcalculationamountedto:
in€thousand 31/12/2019 31/12/2018
Shares/mutualfunds 266,706 41,151
Listedoptions 11,508 7,445
Futures 10,667 286
Warrants/certificates (1,575,382) (1,287,876)
OTCoptions (2,622) (249,464)
Purchasedbonds/tradablemoneymarketdeposits 3,260,011 2,583,238
Issuedguaranteebondsandreverseconvertiblebonds (1,759,507) (1,461,113)
DataontransactionswithderivativefinancialinstrumentsandunsettledforwardtransactionsRaiffeisenCentrobankAG’stradinginderivativefinancialinstrumentsfocusesonoptionsandforwardtransactions(mainlyfutures).
ThefinancialinstrumentsissuedbyRaiffeisenCentrobankAGcanbeclassifiedaswarrants,certificatesmainlyonequitiesandequityindices(turbo,discount,bonusandopen-endcertificates),andguaranteecertificatesandreverseconvertiblebondswithapaymentstructurerelatedtoequityorequityindices.
EquitiesheldbyRaiffeisenCentrobankAGrepresent,togetherwithpurchasedoptions,tradablemoneymarketdepositsandzerobondsdepictedinotherbalancesheetitems,thehedgepositionstoissuedcertificatesandwarrants,andarepartoftheBank’smarketmakeractivities.
VolumeofthesecuritiestradingbookAsatthebalancesheetdatethesecuritiestradingbook(notionalamount)wasmadeupasfollows:
in€thousand 31/12/2019 31/12/2018
Securities 3,757,989 3,554,790
Otherfinancialinstruments 8,711,147 6,909,103
12,469,136 10,463,893
XII.Supplementarydata
AssetsandliabilitiesinforeigncurrenciesThefollowingamountswerecontainedinthebalancesheettotalinforeigncurrencies:
in€thousand 31/12/2019 31/12/2018
Assets 1,415,100 1,179,190
Liabilities 1,217,538 1,127,785
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Thevolumesofderivativefinancialinstrumentsandunsettledforwardtransactionsasat31/12/2019wereasfollows:
in€thousandNotionalamount thereofFairvalue 31/12/2019 Purchase Sale TradingBook Positive Negative
1.Foreignexchangecontracts 71,982 117,361 73,008 5,018 (156)
1.1.OTCproducts 44,658 117,361 45,684 4,272 (156)
Forwardforeignexchangecontracts 0 116,335 0 0 (156)
Currencyoptions/goldcontracts 44,658 1,026 45,684 4,272 0
1.2.Productstradedonstockexchange 27,324 0 27,324 747 0
Futureforeignexchangecontracts 27,324 0 27,324 747 0
2.Equitycontracts 2,954,755 2,442,255 5,397,010 179,865 (185,401)
2.1.OTCproducts 2,029,634 1,817,926 3,847,559 154,968 (168,303)
Equity/index-basedoptions 2,029,634 1,817,926 3,847,559 154,968 (168,303)
2.2.Productstradedonstockexchange 925,121 624,330 1,549,451 24,897 (17,098)
Sharesandotherequity/index-basedoptionsandfuturecontracts 189,056 76,879 265,935 9,321 (2,258)
Equity/index-basedoptions 736,065 547,451 1,283,516 15,576 (14,840)
3.Commodities/preciousmetals 98,744 6,000 104,744 5,142 (69)
3.1.OTCproducts 30,507 6,000 36,507 2,244 0
Commodityandpreciousmetaloptions 30,507 6,000 36,507 2,244 0
3.2.Productstradedonstockexchange 68,237 0 68,237 2,898 (69)
Othercommodityandpreciousmetalfuturecontracts 68,237 0 68,237 2,898 (69)
4.Othertransactions 41,450 0 41,450 1,167 0
4.1.OTCproducts 41,450 0 41,450 1,167 0
Otheroptions 41,450 0 41,450 1,167 0
TotalOTCproducts 2,146,249 1,941,287 3,971,201 162,650 (168,459)
Totalstockexchangetradedproducts 1,020,682 624,330 1,645,012 28,542 (17,167)
3,166,931 2,565,617 5,616,213 191,193 (185,627)
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Thevolumesofderivativefinancialinstrumentsandunsettledforwardtransactionsasat31/12/2018wereasfollows:
1Adjustmentofpreviousyear’sdataduetotheimplementationofthecategory“Othertransactions”.
in€thousandNotionalamount thereofFairvalue 31/12/2018 Purchase Sale TradingBook Positive Negative
1.Foreignexchangecontracts 160,366 875 71,020 2,987 0
1.1.OTCproducts 136,059 875 46,713 1,844 0
Forwardforeignexchangecontracts 90,221 0 0 293 0
Currencyoptions/goldcontracts 45,839 875 46,713 1,551 0
1.2.Productstradedonstockexchange 24,307 0 24,307 1,143 0
Futureforeignexchangecontracts 24,307 0 24,307 1,143 0
2.Equitycontracts 2,100,476 2,165,382 4,265,858 121,157 (365,702)
2.1.OTCproducts 1,640,188 1,883,938 3,524,126 80,408 (331,712)
Equity/index-basedoptions1 1,640,188 1,883,938 3,524,126 80,408 (331,712)
2.2.Productstradedonstockexchange 460,288 281,444 741,732 40,750 (33,990)
Sharesandotherequity/index-basedoptionsandfuturecontracts 251,185 63,890 315,075 23,831 (24,163)
Equity/index-basedoptions 209,103 217,554 426,657 16,919 (9,827)
3.Commodities/preciousmetals 94,511 4,444 98,955 2,949 (2,555)
3.1.OTCproducts 43,163 4,444 47,607 1,382 (462)
Commodityandpreciousmetaloptions 43,163 4,444 47,607 1,382 (462)
3.2.Productstradedonstockexchange 51,348 0 51,348 1,568 (2,093)
Othercommodityandpreciousmetalfuturecontracts 51,348 0 51,348 1,568 (2,093)
4.Othertransactions 41,450 0 41,450 1,925 0
4.1.OTCproducts 41,450 0 41,450 1,925 0
Otheroptions1 41,450 0 41,450 1,925 0
TotalOTCproducts 1,819,410 1,889,256 3,618,446 83,633 (332,173)
Totalstockexchangetradedproducts 535,943 281,444 817,386 43,460 (36,083)
2,355,353 2,170,700 4,435,833 127,094 (368,257)
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C.NotestotheIncomeStatement
I.Interestandsimilarincome
“Netinterestresult”intheamountof€39,652thousandwasnegativebothin2019and2018(€19,398thousand).
Therisein“netinterestresult”from€minus39,652thousand(2018:€19,398thousand)wasduetohighercouponpaymentsforsecuritizedliabilities(structuredproducts).
Dependingonthehedge,theseexpenseswerecontrastedwithinterestincomeand–asdescribedbelowinnetprofitonfinancialtradingactivities–withapositivevaluationresultfromtradablemoneymarketdepositsinthenetprofitonfinancialtradingactivities(tradingprofit).In2019,couponexpensescontainedinthenetinterestresultpostedastrongrisecomparedtothepreviousyear’sresult,whereascouponincomeroseonlyslightly.In2019,netvaluationsincludedinthenetprofitonfinancialtradingactivitiesincreasedaccordingly.
Comparedtothepreviousyear,interestexpenseswentupby€22,699thousandto€71,307thousand.Inadditiontothestrongriseofcouponpay-mentsforsecuritizedliabilities,interestexpensesforliabilitiestocreditinstitutionspostedavolume-relatedincrease.
Duetohigherinterestincomefromloansandadvancestocreditinstitutions,interestincomeroseby€2,445thousandto€31,656thousand.
Theliquidityderivedfromissuesisprimarilyinvestedintotradablemoneymarketdepositswithoutcurrentcouponswhichareincludedinthetradingbook.Theresultfromtradablemoneymarketdepositsincludedinthetradingbookisshownin“Netprofitonfinancialtradingactivities”.
Furthertothelowinterestrateenvironmentin2019item“Netinterestresult”includedexpensesresultingfromnegativeinterestforloansandadvancesintheamountof€1,291thousand(2018:€1,169thousand).Incontrast,theitemincludedincomederivedfromnegativeinterestforliabilitiesintheamountof€238thousand(2018:€172thousand).
III.IncomefromsecuritiesandfinancialinvestmentsInthe2019financialyear,“Incomefromsecuritiesandfinancialinvestments”comingto€13,305thousand(2018:€11,427thousand)includedprimari-lyincomefromdomesticandforeignsecurities.
in€thousand 2019 2018
fromloansandadvancestocreditinstitutions 12,228 10,351
fromloansandadvancestocustomers 386 549
fromfixed-interestsecurities 267 99
fromstructuredproducts 18,774 18,211
31,656 29,211
II.Interestandsimilarexpenses
in€thousand 2019 2018
forliabilitiestocreditinstitutions (6,474) (4,668)
forliabilitiestocustomers (6,193) (6,163)
forsecuritizedliabilities (58,640) (37,778)
(71,307) (48,609)
IV.Feeandcommissionincome
in€thousand 2019 2018
fromsecuritiesbusiness 8,280 9,782
fromECMtransactions 2,172 1,706
frompaymenttransactions 1,686 1,340
12,138 12,828
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VI.Netprofitonfinancialtradingactivities”Netprofitonfinancialtradingactivities”accountedforthemajorpartoftheoperatingincomeandwentupfrom€67,521thousandin2018to€86,471thousandin2019.Thisdevelopmentresultedfrompositivenetvaluationsandnetproceedsofderivativesheldforhedgingpurposesandmoneymarketdepositsaddingupto€133,788thousand.Incontrast,therewasanegativeresultfromthevaluationanddisposalofcertificatesandsharesintheamountof€minus50,590thousand.Thevaluationofspotandfuturespositionscameto€plus3,273thousand.
Inthecomparativeperiod,“Netprofitonfinancialtradingactivities”wascomprisedofpositivenetvaluationsandnetproceedsofcertificatesandsharesintheamountof€154,362thousandandnegativenetvaluationsandnetproceedsofderivativesheldforhedgingpurposesandmoneymarketdepositsaddingupto€minus92,238thousand.Thevaluationofspotandfuturespositionscameto€plus5,398thousand.
VII.OtheroperatingincomeTheitemincludedmainlyincomefromthereleaseofprovisionsintheamountof€466thousand(2018:€658thousand).Inaddition,theitemincludedincomefromchargespassedontothirdpartiesintheamountof€254thousand(2018:€315thousand)aswellasotherincomeintheamountof€161thousand(2018:€171thousand).Thedecreasewasmainlyattributabletolowerincomeformthereleaseofprovisionsandlowertochargespassedontothirdparties.
VIII.Otheradministrativeexpenses
in€thousand 2019 2018
Officespaceexpenses(maintenance,operation,administration,insurance) (1,175) (1,003)
Officesupplies,printedmatter,literature (332) (322)
ITcosts (3,595) (3,472)
Communicationcosts (1,061) (1,063)
Informationservices (4,670) (3,298)
Carexpensesandtravellingexpenses (640) (652)
Advertisingandpromotionalexpenses (1,721) (1,491)
Legal,advisoryandconsultancyservices (1,972) (1,379)
Contributionstoassociations (1,287) (1,502)
Resolutionfund (973) (723)
Sundry (1,956) (2,179)
(19,383) (17,084)
Therisein“Otheradministrativeexpenses”wasmainlyduetohigherexpensesformarketingandinformationservicesaswellasforadvisoryandconsul-tancyservices.“Sundry”intheamountof€1,956thousand(2018:€2,179thousand)mainlyincludedexpenseschargedfortheManagementBoard.
IX.Otheroperatingexpenses“Otheroperatingexpenses“intheamountof€341thousand(2018:€332thousand)primarilyrelatedtoexpenseschargedintheamountof€248thousand(2018:€311thousand).
X.NetvaluationsandnetproceedsInthe2019financialyear,“Netvaluationsandnetproceeds”amountedto€152thousand(2018:€minus1,665thousand).TheitemcontainedmainlythecurrentadjustmentofgeneralimpairmentallowancescalculatedpursuanttothemethodologylaiddowninIFRS9.Inthepreviousyear,theitemincludedmainlyadditionalexpensesnotcoveredbyprovisionsrelatingtoaliabilityforasubsidiaryamountingto€1,442thousand.
V.Feeandcommissionexpenses
“Netfeeandcommissionresult”intheamountof€minus1,731thousand(2018:€plus935thousand)wascomprisedoffeeandcommissionincometotaling€12,138thousand(2018:€12,828thousand)andfeeandcommissionexpensesintheamountof€13,869thousand(2018:€13,763thousand).In2019,thedecreaseinnetfeeandcommissionresultwasmainlyduetohigherexpensesforsalesfeesandlowerfeeincomefromtheIn-vestmentServicesbusinesswhichwereonlypartlyoffsetbyhigherincomederivedfromequitycapitalmarkettransactions.
in€thousand 2019 2018
fromsecuritiesbusiness (12,141) (12,365)
frompaymenttransactions (1,728) (1,398)
(13,869) (13,763)
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D.OtherDisclosuresContingentliabilitiesInaccordancewithArticle93oftheAustrianBankingAct,theBankislegallyobligedtoprovideforproportionatedepositinsuranceaspartofitsmem-bershipinaprofessionalassociation.RaiffeisenCentrobankAGisamemberofEinlagensicherungAUSTRIAGesmbH.Thecontingentliabilitiesderivedfromtheoreticalclaimswerereportedatamarketvalueof€0.07.
OthercontractualbankguaranteeobligationsThefollowingassetswerepledgedassecurityforobligationsasat31/12/2019:
ItemA2Loansandadvancestocreditinstitutions
€ 425,516 thousand (31/12/2018:€397,971thousand) Collateraldepositedwithbanksforthesecuritiesandoptionsbusinessandsecuritieslending
ItemA3Loansandadvancestocustomers
€ 3,451thousand (31/12/2018:€98,432thousand) Collateraldepositedwithstockexchangesandotherfinancialinstitutionsforthesecuritiesandoptionbusiness
ItemA4Fixed-interestsecurities€3,078thousand (31/12/2018:€4,223thousand) Collateraldepositedwithbanksforthesecuritiesandoptionsbusiness
LettersofcomfortAsatthebalancesheetdateRaiffeisenCentrobankAGhadnotissuedanylettersofcomfort.
CommitmentsarisingfromfiduciarybusinessCommitmentsarisingfromfiduciarybusinesstransactionsnotincludedinthebalancesheetreferredtooneequityparticipationheldintrustintheamountof€7,091thousandon31/12/2019and31/12/2018.
XII.DeferredtaxesIn2019,incomefromdeferredtaxassetscameto€52thousand(2018:€4thousand)
XIII.Expensesforauditingthefinancialstatements“Expensesforauditingthefinancialstatements”werecontainedinlegal,advisoryandconsultancyservices.Thereof€183thousandwereattributabletotheauditor(2018:€110thousand)andalsoincludetheauditoftheclosingbalanceasat30/06/2019inrelationtothedemergeroftheInvestmentServicessegmentofRaiffeisenCentrobankAG.€68thousandwereattributabletootherconsultancyservices(2018:€23thousand).
XI.IncometaxesandothertaxesIncometaxeswereasfollows:
in€thousand 2019 2018
Grouptaxation (859) (1,046)
Corporateincometax/Slovakbranch (6) (77)
Taxesforformerperiods(settlementofGroupcharge) (49) (216)
Notrecognizedasforeignwithholdingtax (1,182) (1,059)
Currentincometaxes (2,095) (2,397)
Deferredincometaxes 52 4
(2,043) (2,393)
“Taxesforformerperiods”comingto€49thousand(2018:€216thousand)wereattributabletothesettlementoftheGroupchargefrompreviousye-arsatRBI.Duetoariseinforeigndividendincome,higherforeignwithholdingtaxexpensesaddingupto€1,182thousand(2018:€1,059thousand)wereduein2019.
Inthe2019financialyear,“Othertaxes”cameto€930thousand(2018:€331thousand).Theriseoftaxexpenseswasattributabletonon-periodicVATtaxincomeinthepreviousyearfollowingataxauditintheamountof€348thousand.Inaddition,theitemcontainedariseinexpensesforthebanklevyofRaiffeisenCentrobankAGandtheSlovakbranchintheamountof€753thousandand€166thousand(2018:€607thousandand€82thousand).
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OwnfundsTheownfundspursuanttopart2CRRwereasfollows:
in€thousand 31/12/2019 31/12/2018
Risk-weightedassetsaccordingtostandardapproach 99,577 105,450
Governmentsandcentralbanks 16 0
Institutions 50,978 53,106
Corporates 28,864 32,898
Equityparticipations 6,240 6,240
Otherpositions 13,479 13,206
CVArisk 48,241 42,349
147,818 147,799
in€thousand 31/12/2019 31/12/2018
Capitalpaid-in 47,599 47,599
Earnedcapital 68,875 66,351
Corecapital(tier1capital)beforedeductions 116,474 113,950
Intangiblefixedassets (137) (105)
Prudentvaluation (1.252) (917)
Holdingsinnon-significantinvestmentsinfinancialsectorentities (6.992) (585)
Corecapital(tier1capital)afterdeductions 108,094 112,343
Supplementaryownfunds 0 0
Corecapital 108,094 112,343
Supplementarycapital 0 0
Supplementaryownfunds(afterdeductions) 0 0
Totalownfunds 108,094 112,343
Totalrisk-weightedassets 520,337 475,262
Corecapitalratio,creditrisk 73.1% 76.0%
Corecapitalratio,total 20.8% 23.6%
Ownfundsratio 20.8% 23.6%
OwnfundsrequirementspursuanttoArticle92ofRegulation(EU)No575/2013(totalrisk-weightedassets)wereasfollows:
Risk-weightedassetsforthecreditriskaccordingtoassetclasseswereasfollows:
in€thousand 31/12/2019 31/12/2018
Risk-weightedassets(creditrisk) 147,818 147,799
Standardapproach 99,577 105,450
CVA(creditvalueadjustment)risk 48,241 42,349
Risk-weightedassets(positionriskinbonds,equities,commoditiesandforeigncurrencies) 240,312 204,926
Risk-weightedassets(settlementanddeliveryrisks) 16 696
Risk-weightedassets(operationalrisk) 132,191 121,842
Totalrisk-weightedassets 520,337 475,262
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Numberofstaff
31/12/2019 Annual 31/12/2018 Annual average average
Salariedemployees 195 195 191 186
thereofpart-time 40 41 40 41
AdvancesandloanstomembersoftheManagementBoardandSupervisoryBoardAtthebalancesheetdatenoadvancesandloanshadbeengrantedtomembersoftheManagementBoard.Noadvances,loansorguaranteeshadbeengrantedtomembersoftheSupervisoryBoard.
Expensesforseverancepaymentsandretirementbenefits“Expensesforseverancepaymentsandretirementbenefits”(includingcontributionstopensionfundsandstaffretirementbenefitplans,aswellasprovisionsforseverancepayments)fortheManagementBoard(includedin“Otheradministrativeexpenses”)andthestaffamountedto€1,364thousand(2018:€1,477thousand).Paymentstoemployeepensionfundstotaled€225thousand(2018:€211thousand).
Nobreak-downpursuanttoArticle239section1no3accordingtoArticle242section4wasprovided.
RemunerationformembersoftheManagementBoardandSupervisoryBoardNobreak-downpursuanttoArticle239section1no4accordingtoArticle242section4wasprovided.
In2019,attendingfeesintheamountof€95thousandwerepaidtomembersoftheSupervisoryBoard(2018:€70thousand).
RemunerationsandexpensesonseverancepaymentsandretirementbenefitsformembersoftheManagementBoardwerebornebyRBI(anaffiliatedcom-pany)andwerechargedtoRaiffeisenCentrobankAG(includedin“Otheradministrativeexpenses”).
GrouprelationsThecompanyisanaffiliatedcompanyofRaiffeisenBankInternationalAG(ultimateholdingcompany),Vienna,andisintegratedinitsconsolidatedfinancialstatements.TheconsolidatedfinancialstatementsaredepositedwiththeCommercialCourtinViennaandareavailableattherespectiveparentcompany.
Since17December2008,thecompanyhasbeenamemberofthecorporategroupRaiffeisenZentralbankÖsterreichAktiengesellschaft(nowRaiffeisenBankInternationalAG)pursuanttoArticle9AustrianCorporationTaxAct.TheapplicationsubmittedbythecompanytobecomeagroupmemberofthecorporategroupRZBasofthebusinessyear2008pursuanttoArticle9AustrianCorporationTaxActwasnotifiedtothefinancialauthoritieson19Decem-ber2008andwasapprovedbynoticeon22April2009.
Thetaxableresultsofthemembersofthegroupareattributedtotheparentcompany.Anytaxadjustmentsbetweentheparentcompanyandtheindividualmembersofthecorporategroupareregulatedintheformofataxallocationagreement.
in€thousandorinpercent 31/12/2019 31/12/2018
Annualresultaftertax 11,573 13,004
Balancesheettotal 4,440,234 3,735,352
OverallReturn-on-Assets 0.3% 0.3%
OverallReturn-on-Assets
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MembersoftheManagementBoard,theSupervisoryBoardandStateCommissioners
ManagementBoard WilhelmCeleda ChiefExecutiveOfficeruntil30April2019 ValerieBrunner MemberoftheManagementBoarduntil30April2019 HaraldKröger ChiefExecutiveOfficerasfrom01May2019 HeikeArbter MemberoftheManagementBoardasfrom01May2019 SupervisoryBoard ŁukaszJanuszewski Chairman MemberoftheManagementBoard, RaiffeisenBankInternationalAG HannesMösenbacher DeputyChairman MemberoftheManagementBoard, RaiffeisenBankInternationalAG MichaelHöllerer Member ChiefFinancialOfficer, RaiffeisenBankInternationalAG
AndriiStepanenko Member MemberoftheManagementBoard, RaiffeisenBankInternationalAG,Vienna
ChristianMoucka Memberasfrom29April2019 GeneralManagement, RaiffeisenbankRegionBaden MatthiasZitzenbacher Memberasfrom29April2019 GeneralManagement, RaiffeisenbankLeoben-BruckeGen(mbH)
StateCommissioners AlfredHacker Karl-HeinzTscheppe
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DistributionoftheProfit2019
The2019financialyearclosedwithanetprofitof€11,573,183.40.
TheManagementBoardproposestotheSupervisoryBoardthatadividendintheamountor€17.00persharebedistributedfromthenetprofitasat31December2019.Thiscorrespondstoatotaldividendamountingto€11,135,000.00for655,000shares.TheManagementBoardfurtherproposestoallocateanamountof€438,183.40tobecarriedforward.
Vienna,03April2020TheManagementBoard
HaraldKrögerChiefExecutiveOfficer
HeikeArbterMemberoftheManagementBoard
SignificantEventsaftertheBalanceSheetDate
On13January2020ademergerandabsorptionagreementwasconcludedinwhichRaiffeisenCentrobankAGasassigningcompanyintends,intheformofademergerbyabsorption,totransferitsInvestmentServicesdivisiontoKathreinPrivatbankAktiengesellschaftasacquiringcompanypursuantto§1para2Z2DemergerAct(Spaltungsgesetz)andArticleVIReorganizationTaxAct(Umgründungssteuergesetz)byuniversalsuccessionwiththeef-fectivedateasof30June2019(demergerdate)andonthebasisoftheauditedclosingbalancesheetofRaiffeisenCentrobankAGasat30June2019KathreinPrivatbankAktiengesellschaftshallnotissueanynewsharesinthecourseofthedemergerbyabsorption.IntheExtraordinaryGeneralAssemblyofRaiffeisenCentrobankAGheldon13January2020thedemergerbyabsorptionwasapproved.
TheEuropeanCentralBankapprovedthedemergerbyabsorptionoftheInvestmentServicesdivisionofRaiffeisenCentrobankAGtoKathreinPrivatbankAktiengesellschaftbydecisiondated27February2020.Uponentryintothecommercialregisteron01April2020thedemergerbyabsorptionbecamelegallyeffective.
Thepre-taxresultoftheInvestmentServicesdivisionfromJulytoDecember2019cameto€305,089.54andhasbeenincludedinthe2019annualfinancialreportofRaiffeisenCentrobankAG.Thisamountissubjecttoadistributionprohibition.
ThemeasurestakenbytheAustriangovernmenttocombattheCovid-19virushaveasubstantialimpactonthebusinessofRaiffeisenCentrobankAG.Thestockmarketssufferedasevereslumpagainstthebackdropoftheeconomicramificationsoftheepidemic,translatingintoanoticeableriseintradingac-tivitiesandvolatilityontheexchanges.Over90percentofRaiffeisenCentrobankAG’semployeesareworkingremotelyviateleworkingsolutions.CorestaffintheTrading&TreasuryandElectronicSalesTradingbusinessesareworkingontheBank’spremisesoratthebackupdatacenter.TheimpactonRaiffeisenCentrobankAG’sfrontofficeshingesonthedurationandintensityoftheeconomicslowdownandpotentialsecond-roundeffects,andcancurrentlynotbeassessed.
Vienna,03April2020TheManagementBoard
HaraldKrögerChiefExecutiveOfficer
HeikeArbterMemberoftheManagementBoard
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Auditor’s Report ReportontheFinancialStatements
AuditOpinion
Wehaveauditedthefinancialstatementsof
RaiffeisenCentrobankAG,Vienna,Austria,
whichcomprisetheBalanceSheetasat31December2019,theIncomeStatementfortheyearthenended,andtheNotes.
Inouropinion,thefinancialstatementspresentfairly,inallmaterialre-spects,thefinancialpositionoftheCompanyasat31December2019,anditsfinancialperformancefortheyearthenendedinaccordancewithAustrianGenerallyAcceptedAccountingPrinciplesandotherlegalrequirements(AustrianBankingAct).
BasisforOurOpinion
WeconductedourauditinaccordancewiththeRegulation(EU)No537/2014("APRegulation")andAustrianStandardsonAuditing.ThesestandardsrequiretheaudittobeconductedinaccordancewithInter-nationalStandardsonAuditing(ISAs).Ourresponsibilitiesunderthosestandardsarefurtherdescribedinthe"Auditor´sResponsibilities"sectionofourreport.WeareindependentoftheCompany,inaccordancewithAustriancompanylawandprofessionalregulations,andwehavefulfilledourotherresponsibilitiesunderthoserelevantethicalrequirements.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.
KeyAuditMatters
Keyauditmattersarethosemattersthat,inourprofessionaljudgment,wereofmostsignificanceinourauditofthefinancialstatements.Thesematterswereaddressedinthecontextofourauditofthefinancialstatementsasawhole,however,wedonotprovideaseparateopinionthereon.
Valuationofcertificates,warrantsandotherfinancialinstrumentsaswellasdynamichedging
Theissuanceofcertificatesandwarrantswithatotalvolumeofroughly3.5billionEUR,ieroughly78percentofthebalancesheettotal,aswellascontinualadjustmentsofhedgingpositions(dynamichedging)connectedtothisactivityrepresentthemajorbusinessactivitiesofRaiffeisenCentrobankAG.RaiffeisenCentrobankAGcalculatespricesforissuedcertificates,warrantsandstructuredproductsbasedoninternalvaluationmodels.Marketpricerisksandinterestraterisksresultingfromtheissueofcertificatesarehedgeddynamically.Structuredproductsissuedontheliabilitiessidearereplicatedbycounter-positionsontheas-setsside.Hedgingpositionsarecontinuallyadjustedtomarketconditions.Financialproductswithouttradablepricesarereportedinthebalancesheetatfairvaluewhichisdeterminedbyvaluationmodelsor,inindividualcases,byexternal(indicative)quotesofbrokersorothercreditinstitutions.
TheManagementBoarddescribestheprocessofvaluatingassets-relatedandliabilities-relatedproductsunder"AccountingPolicies"withinthenotes.
TheFinancialStatementRiskTherisktothefinancialstatementsresultsfromdiscretionaryassumptionsandparametersappliedintheinternalmodelsandthuspotentialmisjudg-mentforthevaluationoffinancialinstrumentsreportedatfairvaluewithouttradablepricesandobservablemarketdata.Thesameappliestothedeterminationofthefairvaluebasedonexternal(indicative)pricingmethodsandvalueadjustments.
OurResponseWehavetestedtheprocessesforvaluingthesefinancialproducts,in-cludingdepositoryreconciliation.Wetestedkeycontrolswithintheseprocessesfortheirdesign,implementationandoperationaleffectiveness.Furthermore,wesurveyedtheimplementationofriskmanagementinthetradingbook,inparticularforlimitmonitoring,marketconformitychecksandproductlaunches.Wehaveidentifiedandtestedthedesignandim-plementationoftherelatedkeycontrols.
Wehaveinvolvedourinternalvaluationspecialiststoassessthefairvalues.Further,wehavereviewedthevaluationmodelsusedandtheun-derlyingvaluationparameterstoensuretheirappropriateness.Inaddition,wecomparedtheparametersusedwithmarketdataonasamplebasisandexaminedwhethertheyaresuitableinputfactors.Wealsoassessedwhethertheexternal(indicative)pricequotationscanbeusedasfairvaluesbyquestioningtheresponsibleemployeesandinspectingthedocumentsprovidedbytheBank.Wetookrandomsamplestocheckwhethertheassumptionsmadeinthecalculationwereconclusiveandrecalculatedthefairvalues.
Finally,weassessedwhetherthedisclosuresinthenotesregardingthevaluationmethodswerecompliantwithlegalrequirements.
ResponsibilitiesofManagementandtheAuditCommitteefortheFinancialStatements
ManagementisresponsibleforthepreparationandfairpresentationofthefinancialstatementsinaccordancewithAustrianGenerallyAcceptedAccountingPrinciplesandotherlegalrequirements(AustrianBankingAct)andforsuchinternalcontrolsasmanagementdeterminesarenecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.
ManagementisalsoresponsibleforassessingtheCompany’sabilitytocontinueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoingconcernbasisofaccounting,unlessmanagementeitherintendstoliquidatetheCompanyortoceaseopera-tions,orhasnorealisticalternativebuttodoso.
TheauditcommitteeisresponsibleforoverseeingtheCompany´sfinancialreportingprocess.
Auditors’Responsibilities
Ourobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsasawholearefreefrommaterialmisstatement–whetherduetofraudorerror–andtoissueanauditor’sreportthatincludesourauditopinion.Reasonableassurancerepresentsahighlevelofassurance,butprovidesnoguaranteethatanauditconductedinaccordancewiththeAPRegulationandAustrianStandardsonAuditing(andthereforeISAs),willalwaysdetectamaterialmisstatement,ifany.Misstatementsmayresultfromfraudorerrorandareconsideredmaterialif,individuallyorinaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthesefinancialstatements.
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AspartofanauditinaccordancewiththeAPRegulationandAustrianStandardsonAuditing,weexerciseprofessionaljudgmentandmaintainprofessionalskepticismthroughouttheaudit.
Moreover:
— Weidentifyandassesstherisksofmaterialmisstatementsinthe financialstatements,whetherduetofraudorerror,wedesignand performauditproceduresresponsivetothoserisksandobtain sufficientandappropriateauditevidencetoserveasabasisforour auditopinion.Theriskofnotdetectingmaterialmisstatementsresulting fromfraudishigherthanforoneresultingfromerror,asfraudmay involvecollusion,forgery,intentionalomissions,misrepresentationsor theoverrideofinternalcontrol.
— Weobtainanunderstandingofinternalcontrolrelevanttotheaudit inordertodesignauditproceduresthatareappropriateinthe circumstances,butnotforthepurposeofexpressinganopinionon theeffectivenessoftheentity'sinternalcontrol.
— Weevaluatetheappropriatenessofaccountingpoliciesusedand thereasonablenessofaccountingestimatesandrelateddisclosures madebymanagement.
— Weconcludeontheappropriatenessofmanagement’suseofthe goingconcernbasisofaccountingand,basedontheauditevidence obtained,whetheramaterialuncertaintyexistsrelatedtoeventsor conditionsthatmaycastsignificantdoubtontheCompany’sability tocontinueasagoingconcern.Ifweconcludethatamaterial uncertaintyexists,wearerequiredtodrawattentioninouraudit reporttotherespectivenoteinthefinancialstatements.Ifsuch disclosuresarenotappropriate,wewillmodifyourauditopinion.Our conclusionsarebasedontheauditevidenceobtaineduptothedate ofourauditor’sreport.However,futureeventsorconditionsmay causetheCompanytoceasetocontinueasagoingconcern.
— Weevaluatetheoverallpresentation,structureandcontentofthe financialstatements,includingthenotes,andwhetherthefinancial statementsrepresenttheunderlyingtransactionsandeventsina mannerthatachievesfairpresentation.
— Wecommunicatewiththeauditcommitteeregarding,amongstother matters,theplannedscopeandtimingofourauditaswellas significantfindings,includinganysignificantdeficienciesininternal controlthatweidentifyduringouraudit.
— Wecommunicatetotheauditcommitteethatwehavecomplied withtherelevantprofessionalrequirementsinrespectofour independence,thatwewillreportanyrelationshipsandotherevents thatcouldreasonablyaffectourindependenceand,where appropriate,therelatedsafeguards.
— Fromthematterscommunicatedwiththeauditcommittee,wedeter- minethosemattersthatwereofmostsignificanceintheauditi.e.key auditmatters.Wedescribethesekeyauditmattersinourauditor’s reportunlesslawsorotherlegalregulationsprecludepublic disclosureaboutthematterorwheninveryrarecases,wedetermine thatamattershouldnotbeincludedinourauditreportbecausethe negativeconsequencesofdoingsowouldreasonablybeexpected tooutweighthepublicbenefitsofsuchcommunication.
ReportonOtherLegalRequirements
ManagementReportInaccordancewithAustrianCompanylawthemanagementreportistobeauditedastowhetheritisconsistentwiththefinancialstatementsandpreparedinaccordancewithlegalrequirements.
KPMGAustriaGmbHWirtschaftsprüfungs-undSteuerberatungsgesellschaft
signedbyWilhelmKovscaWirtschaftsprüfer
(AustrianCharteredAccountant)
ManagementisresponsibleforthepreparationofthemanagementreportinaccordancewithAustriancompanylawandotherlegalrequirements(AustrianBankingAct).
WehaveconductedourauditinaccordancewithgenerallyacceptedstandardsontheauditofmanagementreportsasappliedinAustria.OpinionInouropinion,themanagementreportisconsistentwiththefinancialstate-mentsandhasbeenpreparedinaccordancewithlegalrequirements.ThedisclosurespursuanttoSection243aUGB(AustrianCommercialCode)areappropriate.
StatementBasedonourknowledgegainedinthecourseoftheauditofthefinancialstatementsandourunderstandingoftheCompanyanditsenvironment,wedidnotnoteanymaterialmisstatementsinthemanagementreport.
OtherInformationManagementisresponsibleforotherinformation.Otherinformationisallinformationprovidedintheannualreport,otherthanthefinancialstate-ments,themanagementreportandtheauditor’sreport.
Ouropiniononthefinancialstatementsdoesnotcoverotherinformationandwedonotprovideanykindofassurancethereon.
Inconjunctionwithouraudit,itisourresponsibilitytoreadthisotherinfor-mationandtoassesswhether,basedonknowledgegainedduringouraudit,itcontainsanymaterialinconsistencieswiththefinancialstatementsoranyapparentmaterialmisstatementoffact.Ifweconcludethatthereisamaterialmisstatementoffactinotherinformation,wemustreportthatfact.Wehavenothingtoreportinthisregard.
AdditionalinformationinaccordancewithArticle10EURegulationAttheAnnualGeneralMeetingdated25April2018,wewereelectedasauditors.Wewereappointedbythesupervisoryboardon30May2018.WehavebeentheCompany’sauditorsformorethan20yearswithoutinterruption.
Wedeclarethatouropinionexpressedinthe"ReportontheFinancialStatements"sectionofourreportisconsistentwithouradditionalreporttotheauditcommittee,inaccordancewithArticle11APRegulation.
Wedeclarethatwehavenotprovidedanyprohibitednon-auditservices(Article5Paragraph1APRegulation)andthatwehaveensuredourinde-pendencethroughoutthecourseoftheaudit,fromtheauditedCompany.
EngagementPartnerTheengagementpartnerisMrWilhelmKovsca.
Vienna,3April2020
ThisreportisatranslationoftheoriginalreportinGerman,whichissolelyvalid.Thefinancialstatements,togetherwithourauditor'sopinion,mayonlybepublishedifthefinancialstatementsandthemanagementre-portareidenticalwiththeauditedversionattachedtothisreport.Section281Paragraph2UGB(AustrianCommercialCode)applies.
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