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

2018Annual 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 16 InternalControlSystem 20 HumanResources 21 Outlook2019 21 ResearchandDevelopment 22

22 StatementofLegalRepresentatives 22

23–47 FinancialStatements 23 BalanceSheet 24 IncomeStatement 26 DevelopmentofFixedAssets 27 Notes 29 Auditor'sReport 45

48 Publisher'sDetails 48

ThisisatranslationfromGerman.IncaseofanydiscrepanciesbetweentheEnglishandGerman version,theGermantextshallprevailandbebinding.

AnnualFinancialReport2018:AnOverview

TheCompany

KeyDataofRaiffeisenCentrobankAG

in € thousand / in per cent 2018 2017 Change

Key ratios

Operatingincome 59,759 59,248 0.9%

Operatingexpenses (42,366) (40,134) 5.6%

Resultonordinaryactivities 15,728 19,081 (17.6%)

Netprofitfortheyear 13,004 16,576 (21.5%)

Balancesheettotal 3,735,352 3,200,183 16.7%

Return-on-Equitybeforetax 13.8% 17.4% -

Return-on-Equityaftertax 11.4% 15.1% -

Cost/incomeratio 70.9% 67.7% -

Bank-specific information

Corecapital 112,343 106,191 5.8%

Totalrisk-weightedassets 475,262 487,930 (2.6%)

Surplusofownfunds 74,322 67,157 10.7%

Corecapitalratio 23.6% 21.8% -

Corecapitalratio/creditrisk 76.0% 68.2% -

Ownfundsratio 23.6% 21.8% -

Liquiditycoverageratio(LCR) 219.6% 205.2% -

Non-financial performance indicators

Employeesatyear-end 191 181 5.5%

Averagenumberofemployees 186 178 4.5%

Stockexchangememberships 10 111 (9.1%)

Numberofnewlyissuedwarrantsandcertificates 4.869 6,941 (29.9%)1Adjustmentofpreviousyear’sdata

4

DearLadiesandGentlemen,

Duringthe2018financialyear,themembersoftheSupervisoryBoardanditsCommitteeswereinfor-medinatimelyandcomprehensivemannerbytheManagementBoardaboutthedifferentbusinessareas,riskassessmentsandrelevantbusinessdeve-lopmentsatRaiffeisenCentrobankAG.InformationwasprovidedverballyaswellasinwrittenformandenabledtheSupervisoryBoardtofulfillitsdutytosuperviseandadvisetheManagementBoard.

AfterbundlingitsentirerangeofproductsandservicesintheequitiesbusinessbytakingontheEquityCapitalMarkets(ECM)segmentin2017,RaiffeisenCentrobankAGfocusedonfurthersharpeningitsprofileasacentreofcompetenceforequitiesandcertificateslastyear.

Inspiteofahighlyvolatileyear,RaiffeisenCentro-bankAGmanagedtoseeasteadyriseinprofitcontributionsacrossthemajorityofitsbusinessseg-ments.ThiswasparticularlyevidentwiththeStructu-redProductsteam,whichrecordedanotherexcepti-onalyear.Theincreaseinissuingandsalesactivi-tieswasreportedinthepartialprotectionandgua-ranteecertificatessegmentswhich,inthiscurrentlowinterestrateenvironment,representanattractiveinvestmentchoiceforprivateinvestors.Theopeninterestvolumein2018brokethe€ 4billionrecord,confirmingoncemorethatRaiffeisenCentrobankAGistheleadingcertificatesissuerinAustria.

Thisperformancewassupportedbytheincreaseddigitalinitiativesinthepastyear,whichwerecon-ductedwithintheElevatorLabofRaiffeisenBankInternationalAGaswellasinternallyacrossalmost

alldivisions.AnexampleoftheinternaleffortswastherevampingofthewebsiteaswellasthelaunchoftheCertificateFindertool.Togetherwiththeincreaseofwebinars,thesemeasuresservethepurposetomakecertificatesmorewidelyknownand,thus,furtherexpandRaiffeisenCentrobankAG’sleadingpositioninthisfield.

RaiffeisenCentrobankAGwasalsoinvolvedinmajorcapitalmarkettransactioninCEEaswellasaconsortiummemberininternationaltransactions.Inaddition,themarketingactivitiesoftheresearchproductandthenumberofcorporateroadshowswereincreasedsignificantlyasacountermeasuretothenegativeimpactoftheMiFIDII“unbundling”requirement.Thefurtherdevelopmentofthetradingsoftwarewasalsopursuedintensivelyinordertoreducethelatencytimes,increasethecompetitiven-essfororderexecutionsforinternationalbrokers,andcontinuetoenableRaiffeisenCentrobankAG’spositionasleadingmarketmaker.

AsHannesMösenbacherhastakenontheroleofDeputyChairmanoftheSupervisoryBoard,itwasagreathonorformetobecomeChairmanon25April2018.

OnbehalfoftheSupervisoryBoard,IwouldliketoexpressmysinceregratitudetotheBoardMembersandRaiffeisenCentrobankAG’sstafffortheirconti-nuedeffortandaccomplishmentsinthepastyear.

PrefacebytheChairmanoftheSupervisoryBoard

ŁukaszJanuszewskiChairmanoftheSupervisoryBoard

5

LadiesandGentlemen,dearReader,

Thepastfinancialyearwasmarkedbyhighvolatility,politicaltensions,suchasthetradedisputesbetweentheUSandChinaanddemandingregulatoryrequirementsforsecuriti-escompaniesunderMiFIDII.Againsttheback-dropofthischallengingenvironment,westillmanagedtoimproveourperformance.Iwouldliketoexpressmysinceregratitudetoallemplo-yeesfortheirgreateffortandaccomplishmentsinthepastyear.

160roadshowsand12conferencesinEurope,TurkeyandtheUSunderpinnedourintensivemarketingactivities.Moreover,wefurtherstrengthenedourpositiontheleadingAustriancertificatesissuer.Theopeninterestreachedagainarecordlevel.

NumerousawardsconfirmedRaiffeisenCentro-bankAG’ssuccessfulbusinessactivities.AttheCertificatesAwardsAustriathatwereheldinApril2018,wewereawardedbestAustriancertificatesissuerforthetwelfthconsecutiveyearandwontheprize“CertificatesHouseoftheYear“.TheoutstandingperformanceofourCEEStructuredProductsteamwashonororedwithinthecfi.coawards,whichnamedRaiffeisenCent-robankAG"BestStructuredProductsBankCEE"forthesecondtime.Moreover,theBankwasnamedlargestmarketmakerandspecialistbytheBörseSocialmagazine.

DespitethelownumberofIPOsinAustriaandtheCEEregion,RaiffeisenCentrobankAGachievedastrongpositionintheECMbusinessandparticipatedassoleglobalcoordinatorinthesoleRomanianIPO.AmilestoneforourECMteamwastheUSD862millionIPOof

HudsonGroupontheNewYorkStockEx-change,whereweweresuccessfullyinvolvedasaconsortiummember.

“Digitalization“isabuzzwordthroughoutthefinancialsector.RaiffeisenCentrobankAGhaslaunchednumerousinitiativestofurtherenhancetheservicerangeforitscustomersandbusinesspartnersandtoprovidethemwithevenmorecomprehensiveaccesstoinformation.TheCertificateFinder,forexample,enablesinves-torstoinformthemselvesaboutthecertificateuniverseandtoselectandtraderelevantpro-ducts.Inaddition,severaltrainingmeasureshavebeensetupincludingbilingualtutorialvideosandwebinarsforcustomeradvisors.

Anotherdigitalizationprojectwasthecooperationwiththestartup360kompanyintheareaRegTech.Asoperatingmentor,RaiffeisenCentrobankAGhasdevelopedacomplianceconceptjointlywiththestartup360kompanytoenhanceandmakeKnow-Your-Customer(KYC)processesmoreefficient.

Thepastyearfocusedclearlyonincreasingcommunicationandtransparency.Therefore,Iwishyouaninterestingreviewofthe2018financialyear,whichhasbeenoutlinedinthepresentannualfinancialreportofRaiffeisenCentrobankAG.

Kindregards,

CEOEditorial

WilhelmCeledaCEOofRaiffeisenCentrobankAG

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11 May – Turkish Day in WarsawRaiffeisenCentrobankAGinvitesinvestorstomeetthemanagementandIRteamsofTurkishlistedcompaniesinaninformativemeeting.

July – Cooperation “Zweite Gruft“ and “Haus Amadou“Inthecourseofthe“RCBhelps!“socialengagementinitiative,RaiffeisenCentrobankAGsetsupacooperationwiththeCaritasprojects“ZweiteGruft“and“HausAmadou”.RaiffeisenCentrobankAG’semployeesengageinnumeroussponsoringandcorporatevolunteeringactivitiesincludingcookingtogetherfor“ZweiteGruft”.

5 September –Board dinner for potential issuers JointlywithRaiffeisenBankInternationalAGandtheViennaStockExchange,RaiffeisenCentrobankAGorganizesaboarddinnerfor40potentialissuersfocusingprimarilyonfamilyandindustrialcompaniestostrengthenthecooperationwiththeViennaStockExchangeintheIPOsegment.

13 September – Turkey IR day in IstanbulRaiffeisenCentrobankAGorganizestheTurkeyIRdayinIstanbulforinvestorsandIRteamsoftoplistedTurkishcompanies.

19-20 September – Raiffeisen Centrobank exlusive sponsor and exhibitor at the Börsianer Messe TogetherwithRaiffeisenBankInternationalAGandRaiffeisenCapitalManagement,RaiffeisenCentrobankAGparticipatesassponsorattheBörsianerMesse18heldonthepremisesoftheViennaHofburgpalace,discussingmegatrendsanddevelopingnewideasfortheAustriancapitalmarket.

1-2 October – Polish and Austrian days in BucharestRaiffeisenCentrobankAGorganizestwoinvestors’eventsinBucharestbringingtogetherleadingRomanianinvestorswithPolishandAustriancompaniesinmultipleone-on-onemeetings.

18 October – First Romanian investors‘ day in StockholmIncooperationtheBucharestStockExchange,RaiffeisenCentrobankAGinvitesRomaniancompaniestomeetwithScandinavianinvestors.TheeventoffersinvestorstheopportunitytomeetwithfiveRomanianlistedcompaniesonaone-on-onebasis.

18-19 October – GEWINN-fairAtthesummitoftheAustrianfinancialsectorRaiffeisenCentrobankAGpresentsitscertificatesandinformsaboutcurrentinvestmentopportunities.

29 October –cfi.co awardTherenownedLondonprintandonlinemagazinecfi.corewardsRaiffeisenCentrobankAGforthesecondtimeas“BestStructuredProductBankCEE”.

15 November – Russian IR day in MoscowRaiffeisenCentrobankAGorganizestheRussianIRdayinMoscowforinvestorsandleadinglistedRussiancompanies.

21 November – Austrian day in WarsawIncooperationwiththeViennaStockExchange,RaiffeisenCentrobankAGinvitesAustriancompaniestomeetwithPolishinvestors.

26 January – Raiffeisen Centrobank AG once again awarded by Börse Social Network RaiffeisenCentrobankAGreceivesNumberOneAwardsaslargestcertificatesissuerandlargestspecialist/marketmaker.WithatotalofeightawardsinthepastfouryearsRaiffeisenCentrobankAGhaswonmoreBörseSocialNetworkawardsthananyothercompetitor.

7 February – Russian Day in StockholmRaiffeisenCentrobankAGorganizesnumerousone-on-onemeetingsbetweenleadingScandi-navianinvestorsandRussiancompaniesinStockholm.

March – Raiffeisen Centrobank AG sets up a cooperation with 360kompany, winner of the Elevator Lab, to automate compliance processes Withaninnovativecomplianceconcept,thestartup360kompanywinstheElevatorLabforthebestRegTechsolution.AsoperatingmentorRaiffeisenCentrobankAGrefinestheconceptincooperationwiththestartuptospeedupandenhanceKnow-Your-Customer(KYC)processes.

4 April –Raiffeisen Centrobank AG’s ECM team “Best Equity House in Central and Eas-tern Europe“ TheECMteamisawardedbythefinancialmagazineEMEAFinance“BestEquityHouseinCentralandEasternEurope”aspartofthe“AchievementAwards2017“.

9-11 April – Investor Conference ZürsMorethan100institutionalinvestorssuchaspensionfunds,fundsandinsurancecompaniesmeetwithroughly70companiesattheInvestorConferenceinZürs,whichisorganizedbyRaiffeisenCentrobankAGforthe17thtime.13-14 April – Invest StuttgartTheStructuredProductsteamrepresentsRaiffeisenCentrobankAGatthelargestfinancialfairinGermanspeakingcountriesandpresentsinterestinginvestmentopportunitieswithattractiveyieldpotentialinthecurrentmarketenvironment.

25 April – EUSIPA: Heike Arbter re-elected president HeikeArbter,HeadofStructuredProductsatRaiffeisenCentrobankAG,isunanimouslyre-electedpresidentoftheEuropeanumbrellaassociationforstructuredinvestmentproductsinBrusselsforanadditionaltwo-yearterm.

26 April – Overall winner Certificates Award Austria 2018Forthe12thtimeinarowRaiffeisenCentrobankAGisawardedbestnationalcertificatesissuer.Moreover,thebankishonoredas“CertificatesHouseoftheYear”.

4 May – Number one specialist on the Vienna Stock ExchangeRaiffeisenCentrobankAGisagainthenumberoneMarketMakerandSpecialistontheViennaStockExchange.Between2May2018and29March2019RaiffeisenCentrobankAGprovidesliquidityforall38titleslistedonthePrimeMarket.

5 May – Stock exchange day in ViennaRaiffeisenCentrobankAGisrepresentedattheStockExchangeDayViennaandgivesanoverviewofcertificatesprovidingattractiveyieldsinthecurrentmarketenvironment.

7

CorporateBodiesManagement Board WilhelmCeleda ChiefExecutiveOfficer ValerieBrunner MemberoftheManagementBoard Supervisory Board ŁukaszJanuszewski Chairmanasfrom25April2018 MemberoftheManagementBoardasfrom01March2018, RaiffeisenBankInternationalAG,Vienna HannesMösenbacher Chairmanuntil25April2018, MemberoftheManagementBoard, DeputyChairmanasfrom25April2018 RaiffeisenBankInternationalAG,Vienna MichaelHöllerer DeputyChairmanuntil25April2018, Plenipotentiary,RaiffeisenBankInternationalAG Memberasfrom25April2018

AndriiStepanenko Memberasfrom25April2018 MemberoftheManagementBoardasfrom01March2018, RaiffeisenBankInternationalAG,Vienna

WernerKaltenbrunner Memberuntil25April2018

State Commissioners AlfredHacker Karl-HeinzTscheppe

Vienna,4April2019TheManagementBoard

WilhelmCeledaChiefExecutiveOfficer

ValerieBrunnerMemberoftheManagementBoard

8

SupervisoryBoard

TheSupervisoryBoardmonitorsandassiststheManagementBoardinthemanagementofRaiffeisenCentrobankAG,inparticularwithregardtodecisionsoffundamentalimportance.TheSupervisoryBoardhassetupanAuditCommittee.

ThebylawsfortheSupervisoryBoardandtheauditcommitteeformulateinconcretetermsalistofbusinesstransactionsthataresubjecttotheapprovaloftheSupervisoryBoardortheAuditCommittee.

CollaborationbetweentheSupervisoryBoardandManagementBoard

AkeyprincipleofgoodcorporategovernanceistheopendiscussionbetweentheManagementBoardandtheSupervisoryBoardortheAuditCommitteeandwithinthesegoverningbodies.

TheManagementBoardsubmitsregular,timelyandcomprehensivereportstotheSupervisoryBoardaboutallrelevantaspectsoftheBank’sbusinessdevelopment,includingtherisksituationandriskmanagementmeasuresattheBank.TheManagementBoardimmediatelyreportsallimportanteventstotheChairmanoftheSupervisoryBoardandalsoallreportsimmediatelyonallcircumstancesthatareofmaterialrelevancetotheprofitabilityorliquidityoftheCompany.

TheManagementBoardcoordinatesthestrategicorientationoftheCompanywiththeSupervisoryBoardanddiscussesthestatusoftheimplementationofthestrategyatregularintervalswiththisBoard.

TheSupervisoryBoardmeetsatleastfourtimesperfinancialyear.

TransparentInformationPolicy

RaiffeisenCentrobankAGattachesconsiderableimportancetoopenandtransparentcommunicationwithitsshareholdersandtheinterestedpublic.Thus,RaiffeisenCentrobankAGprovidesonitswebsite:

•Pressreleases,keydata•Shareholderstructure•DownloadableannualreportsinPDFformat•DownloadablesecuritiesprospectusesinPDFformat

CriteriafortheIndependenceoftheSupervisoryBoardMembersforthePurposesoftheAustrianCodeofCorporateGovernance

ASupervisoryBoardmemberisconsideredtobeindependentwhenheorsheisnotinanybusinessorpersonalrelationshipwiththeCompanyoritsManagementBoardthatcouldcauseamaterialconflictofinterestandthatcouldthereforeinfluencethebehavioroftheBoardmember.

All members of the Supervisory Board of Raiffeisen Centrobank AG are independent according to the defined criteria for independence.

CorporateGovernanceRaiffeisenCentrobankAG’ssharesarenotlistedonastockexchange.AsleadingAustrianissuerofstructuredproductsandasoneofthemostimpor-tantsecuritiesbrokersinViennaandotherfinancialcenters,RaiffeisenCentro-bankAGorientsitselftowardstherulesandprinciplesofgoodandrespon-siblecorporategovernanceassetforthintheAustrianCodeofCorporateGovernancetotheextentthattheserulesandprinciplesareapplicableforRaiffeisenCentrobankAG.RaiffeisenCentrobankAGhasnot(yet)formallyundertakentocomplywiththeAustrianCodeofCorporateGovernance.

EfficientcollaborationbetweenthevariousbodiesoftheCompanybasedonastrongfoundationoftrust,protectionofitsshareholders'interestsandopenandtransparentcommunicationisakeyelementinRaiffeisenCentro-bankAG’sapproachtogoodcorporategovernance.Thefollowingcom-mentsillustratesomeaspectsofRaiffeisenCentrobankAG’scompliancewiththeCodeinthereportingperiod(1Januaryto31December2018).

ManagementBoard

TheManagementBoardismadeupoftwopeopleandhassoleresponsi-bilitytomanagetheCompanybasedonconcretegoals,conceptsandguidelines.TheManagementBoardpursuesafuture-orientedapproachtakingintoaccountstandardsofgoodcorporatemanagementandtheinterestsofthepublicwell-being.

ThebylawsfortheManagementBoardasadoptedbytheSupervisoryBoardstipulatethatmeetingsoftheManagementBoardshallbeheldatregularintervals.TheChairmanoftheManagementBoardshallconveneandchairthemeeting.ThemeetingsoftheManagementBoardfocusonamutualexchangeofinformationanddecision-makinginallmatterssub-jecttoapprovalbytheManagementBoard.TheManagementBoardconductsthebusinessoftheCompanyinaccordancewiththelaw,theCompanybylawsandthebylawsfortheManagementBoard.ThebylawsfortheManagementBoardcontainstipulationsregardingthedisclosureandreportingobligationsoftheManagementBoardandformulateinconcretetermsalistofbusinesstransactionsthataresubjecttoapprovalbytheSupervisoryBoard.

RulesforProprietaryTrading

TheManagementBoardtakesitsdecisionsonthebasisofthemembers’professionalexpertiseandirrespectiveofanypersonalinterests.MembersoftheManagementBoarddiscloseallmaterialpersonalinterestsintran-sactionsofRaiffeisenCentrobankAGtotheSupervisoryBoard.ConflictsofinteresthavetobereportedtoComplianceandtotheSupervisoryBoard.AlltransactionsbetweenRaiffeisenCentrobankAGandthemem-bersoftheManagementBoardorpartiesrelatedtothemareconductedinaccordancewithgenerallyacceptedindustrystandardsandareappro-vedbytheSupervisoryBoardinadvance.

MembersoftheManagementBoardarenotpermittedtooperatebusines-sesorbeofficersinotherbusinessentitieswithouttheapprovaloftheSu-pervisoryBoardunlesstheseentitiesareinagrouprelationshipwithRaiff-eisenCentrobankAGorunlessRaiffeisenCentrobankAGholdsaninte-restintheseentities.Furthermore,membersoftheManagementBoardarenotpermittedtoconductbusinesstransactionsontheirownaccountorthatofanotherpartyortoholdsharesinanothercompanyasapersonallyliablepartnerintheareasinwhichRaiffeisenCentrobankAGisactivewithouttheapprovaloftheSupervisoryBoard.

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9

RaiffeisenCentrobankAGappliesRaiffeisenBankInternationalAG’sGroupComplianceguidelinesasthebasisforitscomplianceguidelines,inadditiontorelevantlegalandregulatoryprovisions.AsasubsidiaryofRaiffeisenBankInternationalAGtheprovisionscontainedinRaiffeisenBankInternationalAG’sCodeofConductarebindingforandshallbeobservedbyallemployeesofRaiffeisenCentrobankAG.TheprovisionshavebeenimplementedwithinRaiffeisenCentrobankAGinabindingsetofrulesincludinge.g.theComplianceandAnti-Money-LaunderingManu-alandorganizationalinstructions.

Corecompliance-relatedissuesinRaiffeisenCentrobankAGincludeproceduresandmeasurestopreventinsidertradingandmarketmanipulation,andperiodicreviewsoftheadherencetotheExecutionPolicywhenexecutingcustomerorders.Moreover,majortasksincludemeasuresandprocedurestopreventmoneylaundering,terroristfinancing,conflictsofinterest,adherenceto(financial)sanctions,implementationandmonitoringofregulationsforemployeetransactionsandacceptanceofgiftsaswellastrainingforemployees.Inaddition,Compliance,OperationalRiskandICSisresponsibleforhandlingthecomplaintmanagementatRaiffeisenCentrobankAG.

MiFIDII/MiFIR(MarketsinFinancialInstrumentsDirectiveII/MarketsinFinancialInstrumentsRegulation)areapplicableasfrom3January2018.BasedonMiFIDI,therulesforequitytradingandinvestmentadvisoryservices(e.g.stricterrulesforOTCtransactions,comprehensivecustomerinformationrequirementsetc.)havebeenamendedandtightened.Asfrom1January2018,thePRIIPregulations(PackagedRetailandInsurance-basedInvestmentProducts)areapplicable,whichextendcustomerinformationobligationsforPRIIPissuers,suchasRaiffeisenCentrobankAG.Retailinvestorsmustbeprovidedwithstandardizedinformation(keyinformationdocuments)onthebasicfeaturesandrisksassociatedwithaproduct.

Compliance

ThedepartmentCompliance,OperationalRiskandICS(InternalControlSystem)assumesresponsibilityformonitoringthenon-financialriskswithinRaiffeisenCentrobankAG.Theseareasofresponsibilityhavebeenbundledintooneorganizationalunitwhichprovidesfortheoverallassess-mentandintegratedcontrolofnon-financiarisks,therapidreactiontonew-lyemergingorchangingrisks,andthesafeguardingoftheefficiencyandefficacyofinternalcontrols.

Theinternalcontrolsystemsandthemanagementofnon-financialrisksarebasedonthreelinesofdefense.Thefirstlineofdefenseisformedbyindividualdepartments,wheredepartmentheadsareresponsibleformonitoringtheprocessesandrisksintheirbusinessareas.Thesecondlineofdefenseisprovidedbyspecialistareasfocusedonspecificissues.TheseincludeinparticularCompliance,OperationalRiskandICS.Theirprimaryaimistodefinestandardsformonitoring,measuringandmanagingrisk,andtosupporttheindividualdepartmentswhencarryingoutcontrolsteps.InternalAuditactsasthethirdlineofdefenseinthemonitoringprocess,overseeingthefirstandsecondlineofdefense.

Compliance,OperationalRiskandICSissubordinatetotheChiefRiskOfficer(CRO),butreportsdirectlytotheentireManagementBoardandtheSupervisoryBoard.Moreover,thereisacontinuousexchangeofinformationwithRaiffeisenBankInternationalAG'sGroupCompliance.Thesecomprehensivemeasuresprovideforaneffectiveimplementationofthehighstandardsrequiredbystatutorydemands.

10

ManagementReportofRaiffeisenCentrobankAGforthe2018FinancialYear

Theadditionofroundednumbersusingautomatedsystems,aswasdoneforthisreport,mayresultinminordifferencesinamounts.Thechangesindicatedinpercentrefertotheactualamountsandnottheroundedamountsshowninthisreport.

Alldesignationsthatareusedtorefertopersonsinthisreportapplyequallytobothgendersunlessreferenceisbeingmadetoaspecificindividual.

11

EconomicEnvironmentFollowingseveralyearsofstronggrowth,theglobaleconomicmomentumdeceleratedinthecourseofthe2018financialyear.Theeconomicgrowthrateintheeurozonecametoplus1.8percentandthusdroppedbelowthe2percentbenchmarkinannualcomparison(plus2.5percentin2017).One-offeffectsnegativelyimpactedeconomicactivityandtheGDPgrowthlackedthetailwindfromnetexportsagainstthebackdropofageneraldecreaseofeconomicactivity.Theslowingmomentumofeco-nomicdynamicswasalsoduetoincreasinguncertaintiesandthewell-ad-vancedeconomiccycle.Theleadingindicatorsdiminishedacrossalleco-nomicregionsoverthecourseoftheyear,exceptfortheUSeconomythatmanagedtointensifythegrowthdynamicsin2018byfiscalpoliticalgrowthstimuli.In2018,therealGDPwentupby2.9percentcomparedto2017whichhadpostedanincreaseof2.2percent.ThetradedisputetriggeredbytheUSwithitsmajortradingpartnersdidnotshowanegativeimpactonUSeconomicdata.InNovember2018,theUSunemploymentratewasat3.7percent,thelowestlevelsincetheendof1969.

Inthepastquarters,theAustrianeconomysloweddownanotchbutthepacetailedofflesssignificantlythanintheeurozone.Thisislargelyduetofactthatthetailwindfromabroadhassofardecreasedonlymoderately.DomesticdemandalsodevelopedsolidlyinAustria.

Theinflationrateintheeurozonewentupmarkedlyuntilthefirsthalfyearandwasatorjustabovethe2percenttargetoftheEuropeanCentralBank(ECB)inthesecondhalfof2018.Attheyear-end,theinflationratefellagainslightlybelowthe2percentbenchmark.

Inannualcomparison,theEURdecreasedslightlyversustheUSdollarfromroughly1.20to1.15,oscillatinginarangebetween1.25and1.12throughouttheyear.

Theeurozonerecordedasharpereconomicslowdownthananticipated,whereasRaiffeisenCentrobankAG’scoremarketsinCEEpostedasoundperformanceandcontinuedtheirstrongupturnforthefifthconsecutiveyear.Privateconsumptionandinvestmentswerethemainpillarsofgrowth.

FinancialMarketsIn2018,theECBkeptthekeyratesunchanged.Inthepastyear,ten-yearGermangovernmentbondsearnedbetween0.2percentand0.55percentandsurpassedthissidewaystrendonlyattheendofFebruary/begin-ningofMarch.ShoredupbytheECB’sexpansivemonetarypolicyandthepositiveeconomicperformanceingeneral,riskpremiumsofmostothereurocountriesversustheGermangovernmentbondsinthe10-yearseg-mentfellslightlyuntilmid-May.Thecorrectionwastriggeredbytheformati-onofthenewgovernmentinItaly.Politicaluncertaintiescausedasubstanti-alincreaseoftheItalianriskpremium.

Theestablishedstockmarketssawapatchyyear2018.TheyearhadastrongstartfueledbythepositiveeffectsoftheUStaxreformandthero-cketingUSgrowthestimates.AsfromFebruarythemoodstartedtoturnoverthemorehawkishstanceoftheFedanddecreasingUSinflationra-tes.Thedownwardtrendgainedtractionagainstthebackdropofthetradedispute.

TheDAXandtheEuroSTOXX50hittheirhighsinJanuaryandlostroughly18percentand15percentinannualcomparison.Towardstheendoftheyear,theS&P500hadtogiveupitsmedium-termpricegainsandlost7percentin2018.ThenegativeinternationalenvironmenthamperedtheATXaswellanddraggedtheindexdownby20percent.

DevelopmentofBusinessandEarnings2018DevelopmentofEarnings

Withanoperatingincomeof€59,759thousand(2017:€59,248thousand)andoperatingexpensesof€42,366thousand(2017:€40,134thousand)anoperatingresultof€17,393thousand(2017:€19,113thousand)wasgeneratedinthe2018financialyear.Takingintoconsiderationnetvaluationsandnetproceedsintheamountof€minus1,665thousand(2017:€minus33thousand)theresultonordinaryactivi-tiescameto€15,728thousand.Thepreviousyear’sresultonordinaryactivitiesof€19,081thousandwasundercutby€3.353thousandor17.6percent.

in€thousand 2018 2017 Change

Netinterestresult (19,398) (13,923) 39.3

Incomefromsecuritiesandfinancialinvestments 11,427 7,947 43.8

Netfeeandcommissionresult (935) 1,994 <(100)

Netprofitonfinancialtradingactivities 67,521 61,338 10.1

Otheroperatingincome 1,144 1,891 (39.5)

Operating income 59,759 59,248 0.9

Staffexpenses (23,907) (22,524) 6.1

Otheradministrativeexpenses (17,084) (15,567) 9.7

Depreciation (1,043) (1,135) (8.1)

Otheroperatingexpenses (332) (907) (63.4)

Operating expenses (42,366) (40,134) 5.6

Operating result 17,393 19,113 (9.0)

Netvaluationsandnetproceeds (1,665) (33) >(100)

Result on ordinary activities 15,728 19,081 (17.6)

Taxes (2,724) (2,505) 8.7

Net income for the year 13,004 16,576 (21.5)

12

Otheradministrativeexpensesincreasedby€1,516thousandto€17,084thousandyoy.TheitemprimarilyincludedITcostscomingto€3,472thousand(2017:€2,632thousand),expensesforinformationservicesintheamountof€3,298thousand(2017:€3,564thousand)aswellascontributionstoassociationsandtotheresolutionfundof€2,224thousand(2017:€1,693thousand).

Depreciationsfellby8.1percentto€1,043thousandcomparedtothepreviousyear(€1,135thousand)duetodecreaseddepreciationsonmodificationsandtechnicalinstallations.

Otheroperatingexpenses,whichprimarilycontainedexpenses,chargedtothirdparties,fellby€575thousandto€332thousandyoyduetoachangeinthereportingmethod.

Thecost/incomeratio,whichhadbeenat67.7percentin2017roseto70.9percentin2018becauseoftheincreaseinoperaitngexpenses,whichwassubstantialinrelationtotheoperatingincome.

Netvaluationsandnetproceedscameto€minus1,665thousandandcontainedmainlyexpensesnotcoveredbyprovisionsinrelationtoasubsidiarycomingto€minus1,442thousand.Inaddition,theitemcontai-nedgeneralimpairmentallowancescalculatedpursuanttothemethodolo-gyaslaiddowninIFRS9addingupto€minus238thousand.In2017,netvaluationsandnetproceedsalmostreachedbreak-even(€minus33thousand).

Inthe2018financialyear,theresultonordinaryactivitiescameto€15,728thousandcomparedto€19,081thousandin2017.

Inthepastfinancialyear,incometaxesamountedto€2,397thousand(2017:€2,115thousand).Theitemincludedexpensesforgroupchargesforthecurrentyearintheamountof€1,046thousand(2017:€1,655thousand)andforpreviousperiodscomingto€216thousand(2017:in-come€397thousand).Moreover,theitemincludedcorporateincometaxrelatingtotheSlovakbranchof€77thousand(2017:€88thousand)andhigherexpensesforforeignwithholdingtaxduetohigherforeigndivi-dendincomeaddingupto€1,059thousand(2017:€769thousand).

In2018,incomefromdeferredtaxescameto€4thousand(2017:taxex-penses€8thousand).

Inthereportingperiod,othertaxesamountedto€331thousand,compa-redto€382thousandinthepreviousyear.Lowertaxexpensesfor2018wereduetoanon-periodictaxincomeinthecourseofataxauditintheamountof€348thousand(2017:taxincomeof€146thousand).ThiswascontrastedwithariseinexpensesforthebanklevyofRaiffeisenCent-robankAGandtheSlovakbranchintheamountof€607thousandand€82thousand(2017:€544thousandand€9thousand).

Thenetincomeforthe2018financialyearcameto€13,004thousand(2017:€16,576thousand).

Comparedtothepreviousyear’sresult,operatingincomeroseby0.9percentor€511thousandto€59,759thousand(2017:€59,248thousand).Thisincreasewasinparticularattributabletohighernetprofitonfinancialtradingactivitiesandhigherincomefromsecurities.

Netprofitonfinancialtradingactivitiesaccountedforthemainpartoftheoperatingincomeandfurtherwentupby10.1percentfrom€61,338thousandin2017to 67,521thousandin2018.Thefavorabledevelop-mentwasattributabletothefurtherriseofissuingactivitiesintheStructuredProductssegment.TheprofitcontributionofGlobalEquityMarketswasbelowthepreviousyear’sresultfollowingthelackofsubstantialprimarymarkettransactions.

Theimprovementwasalsoattributabletohighercouponpaymentsforstructuredproductsandtherelatedhedgingstrategy.Thesepaymentswerehedgedviatradablemoneymarketdeposits,whichwereheldinthetradingbookanddidnotyieldongoingcoupons.Netprofitonfinancialtradingactivities(tradingprofit)comprisedtheoverallresultoftradabledepositsincludinginterest.

Theincreaseinincomefromsecuritiesandfinancialinvestmentsby€3,480thousandto€11,427thousandwasduetohigherdividendin-comefromdomesticandforeignshares.

Netinterestresultroseto€minus19,398thousand.Thiswasrelatedtohighercouponexpensesforsecuritizedliabilities(structuredproducts).Dependingonthehedge,theseexpenseswerecontrastedwithinterestincomefromstructuredproductsaswellaswithapositivevaluationresultfromtradablemoneymarketdepositsinthenetprofitonfinancialtradingactivities(tradingprofit).

Comparedtothepreviousyear,interestexpenseswentupby€17,978thousandto€48,609thousand.Inadditiontocouponpaymentsforsecuritizedliabilities,interestexpensesforcustomerdepositspostedavolume-relatedrise.

Duetohighercouponincomefromstructuredproductsandvolume-relatedhigherinterestincomefromloansandadvancestocreditinstitutions,interestincomeincreasedby€12,503thousandto€29,211thousand.

Incontrasttothepreviousyear,thenetfeeandcommissionresultin2018wasnegativeandfellby€2,930thousandto€minus935thousandduetolowerfeeandcommissionincomefromequitycapitalmarkettransactions.

Otheroperatingincomepostedadecreaseby39.5percentto€1,144thousandfollowingthelackofintragroupincomefromsettlementsandlowerincomefromchargingcoststothirdpartiesfurthertoachangeinthereporting.

Operatingexpensescameto€42,366thousandandsurpassedthepreviousyear’sresult(€40,134thousand)by5.6percentor€2,232thousand.

Theincreaseinheadcountfollowinginteraliathesetting-upoftheEquityCapitalMarketsTeaminQ2/2017translatedintoariseinstaffexpensesto€23,907thousand.Comparedtothepreviousyear,thisrepresentedanincreaseof€1,383thousand.Wagesandsalarieswentupby€833thousandto€18,315thousand,andexpensesforseverancepaymentsandcontributionstoseverancefundsroseby€305thousandto€895thousand.

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BalanceSheetDevelopment

Comparedto31December2017,thebalancesheettotalincreasedby16.7percentfrom€3,200,183thousandto€3,735,352thousand.

Ontheassetside,“Loansandadvancestocreditinstitutions”postedariseof€449,956thousandto€3,035,390thousand.Therisewasprimarilyattributabletotheincreaseintradablemoneymarketdepositsof€351,927thousandto€2,373,943thousand.Moreover,theiteminclu-dedinterbankdeposits(€330,264thousand),collateralforthesecuritiesbusinessandsecuritieslending(€158,641thousand),andunlistedbonds(€166,429thousand).Collateralfortheoptionbusinessandunlistedbondswentupby€106,581thousandand€62,364thousandcompa-redtotheyear-end2017,whereasinterbankdepositsfellby€64,790thousand.“Loansandadvancestocreditinstitutions”roseslightlyfrom80.8percentasat31December2017andaccountedfor81.3percentofthebalancesheettotalasat31December2018.

“Loansandadvancestocustomers"increasedmainlyfurthertoariseincollateralfortheoptionbusinesstootherfinancialinstitutionsby€85,447thousandto€120,213thousand(3.2percentofthebalancesheettotalon31December2018and1.1percenton31December2017).

“Cashinhand,depositswithcentralbanks“(6.3percentofthebalancesheettotalon31December2018and5.7percenton31December2017)wentupby€51.433thousandto€234.905thousandbecausedepositsatOesterreichischeNationalbankincreasedforreasonsofliquiditymanagement.

Comparedto31December2017,“Bonds,notesandotherfixed-interestsecurities“(0.5percentofthebalancesheettotalon31December2018and0.3percenton31December2017)roseby€9,675thousandto€20,445thousand.

“Sharesandothervariable-yieldsecurities“(4.7percentofthebalancesheettotalon31December2018and7.3percenton31December2017)wentdownby€54,960thousandto€177,142thousand,comparedto31December2017,becausevariable-yieldsecurities(funds)fellby€43,124thousandandsharesby€11,836thousand.

FollowingacapitalreductioninCentrotradeHoldingGmbHby€2,800thousandto€1,100thousand“Sharesinaffiliatedcompanies“postedadecrease.Therisein“Equityparticipations“wasduetotheacquisitionofashareholdinginEinlagensicherungAUSTRIAGes.m.b.H.

“Otherassets”(3.4percentofthebalancesheettotalon31December2018and4.1percenton31December2017),whichcontainedmainlypurchasepositionsfromtradinginfinancialinstrumentsintheamountof€127,094thousand(2017:€129,337thousand)remainedstableat€128,200thousandcomparedtothepreviousyear(2017:€131,812thousand).

SharesandfundsheldbyRaiffeisenCentrobankAGintandemwithpurchasedoptions(“Otherassets“),tradablemoneymarketdeposits(“Loansandadvancestocreditinstitutions“)andzerobonds("Loansandadvancestocreditinstitutions"and“Bonds,notesandotherfixed-interestsecurities”)servedashedgesforissuedcertificatesandwarrantsorwerepartoftheBank’smarketmakingactivities.

Ontheequityandliabilitiesside“Securitizedliabilities“(73.6percentofthebalancesheettotalon31December2018and73.3percenton31December2017)wentupby€404,753thousandto€2,749,275thousand.Therisewasattributabletothevolume-relatedincreaseofissuedbonds(guaranteecertificatesandreverseconvertiblebonds)by€301.771thousandaswellasofothersecuritizedliabilities(certificateswithoptioncharacterandwarrants)by€102,981thousand.

“Otherliabilities“(12.5percentofthebalancesheettotalon31December2018and10.7percenton31December2017)increasedby€125,168thousandto€467,538thousand.Thisrisewasattributabletotheincreaseofnegativefairvaluesofderivativefinancialinstruments(options,futuresandforwardexchangecontracts)by€243,346thousand.Theitemalsoincludedtheshort-sellingoftradingassetswhichfellby€126,354thousand.

Short-sellingwaseffectedinconnectionwiththemarketmakeractivitiesofRaiffeisenCentrobankAGandinrelationtopensionplansandrepresen-tedoffsettingitemstoequityandindexfuturesaswellastocashpositionsontheassetsideofthebalancesheet.“Otherliabilities”andsettlementaccountsontheequityandliabilitiessideroseagainstthebackdropofafinancialtransactionattheyear-endintheamountof€8,176thousand.

“Liabilitiestocustomers“(9.8percentofthebalancesheettotalon31December2018and10.4percenton31December2017)wentupby€32,995thousandto€364,975thousandmainlyfurthertohigherdepositsfromforeigncustomers.Contrary,collateralofotherfinancialinstitutionsfortheoptionbusinessfellby€8,088thousand.

Thedecreaseof“Liabilitiestocreditinstitutions“(0.4percentofthebalancesheettotalon31December2018and1.2percenton31December2017)of€24,582thousandto€14,353thousandwasalsoduetothedropofcollateralfortheoptionbusinessattheyear-end.

Zerobonds,unlistedoptionsandtradablemoneymarketdepositspurchasedfromRaiffeisenBankInternationalAGforhedgingpurposeswereincludedin“Loansandadvancesofcreditinstitutions“,“Otherassets“and“Bonds,notesandotherfixed-interestsecurities”ontheassetsideandcametoatotalof€2,393,967thousand(31December2017:€2,021,526thousand).

“Provisions“(0.3percentofthebalancesheettotalon31December2018and0.5percenton31December2017)wentdowninthecomparativeperiodfrom€15,884thousandasat31December2017to€12,153thousandasat31December2018.Thedecreaseresultedmain-lyfromthereductionofotherprovisionsof€4,020thousandandoftaxprovisionsof€185thousand.Incontrast,provisionsforseverancepaymentspostedariseof€475thousand.

“Retainedearnings“(0.9percentofthebalancesheettotalon31December2018and0.9percenton31December2017)rosefrom€28,030thousandasat31December2017to€32,160thousandasat31December2018.Thechangerelatedsolelytootherreservesandwasattributabletotheallocationfromthe2017netprofitcarriedforwardintheamountof€4,131thousand.

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kingin25Austrianand2GermanshareslistedontheXETRAinFrankfurt.OntheexchangeinWarsaw,RaiffeisenCentrobankAGprovidedmarketmakingfor25sharesandtradedsinglestockfuturesof14shares,WIG20derivativesandMWIG40indices.ThenumberofmarketmakermandatesinsharesontheexchangesinBucharestandPraguecameto11and22,respectively.In2018,RaiffeisenCentrobankAGincreaseditsmandatesonbothexchangesby4and5,respectively(2017:7sharesinBucharest,17sharesinPrague).Moreover,RaiffeisenCentrobankAGactedasmar-ketmakerontheEUREXforlistedderivativeson15AustriantitlesaswellasforATX,EasternEuropeanandRussianindices.

Whereasthefirsthalfof2018sawsidewaysmovingmarketsandlowvolatility,thesecondhalfoftheyearwasmorevolatilewithnegativepricedevelopmentsandrisingvolatility.Thus,operatingincomeexcludingotheroperatingincomeforTrading&Treasurycameto€13.1millionandundercutthepreviousyear’sresultof€13.4millionby2percent.

Global Equity Markets & Company Research

In2018,Europesawatotalof81IPOswithanofferingvolumeofover€75millioneach,whichrepresentsadecreasecomparedto2017with98comparableIPOs.InCEE,only2IPOswithover€75milliontookplacewhichwassubstantiallybelowthepreviousyear’slevel.TheViennaStockExchangewasalsocaughtupinthistrendasnoIPOormajorcapi-talmarketplacementswerecarriedoutin2018.

TheECMteamofRaiffeisenCentrobankAGsuccessfullyfinalizedthreemandatesforpublicoffersinAustria.RaiffeisenCentrobankAGaccompa-niedthetakeoveroffersofStarwoodCapitaltotheshareholdersofCAImmobilienandImmofinanz,aswellasthepublictenderofferofOttakrin-gerGetränkeAG.

FollowingthetakeoveroftheRomanianbrokeragebusinessfromRaffeisenBankS.A.(theRomaniannetworkbank),RaiffeisenCentrobankAGfurtherintensifieditstransactionactivitiesinBucharestandwasinvolvedassoleglobalcoordinatorinthesoleIPOontheBucharestStockExchange,theIPOofPurcariWineries.ThetransactionwasoneofonlyafewIPOsintheCEEregion.RaiffeisenCentrobankAG’sinvolvementunderpinstheBank’sstrongpositionintheECMbusinessagainstthebackdropofachallengingregionalcapitalmarketeconomyin2018.

AnothermilestoneforRaiffeisenCentrobankAG2018wastheIPOofHudsonGroup,asubsidiaryoftheSwissDufryAG,ontheNewYorkStockExchangewhichcametoUSD862million.Forthefirsttime,Raiffei-senCentrobankAGsuccessfullyparticipatedasmemberoftheconsortiuminanIPOontheNewYorkStockExchange.

Severaltransactionswhichhadbeenscheduledfor2018hadtobepost-ponedfurthertounfavorabledevelopmentsinsomecountries(Turkey,Rus-sia)andbecauseofincreasedvolatilitiesontheexchangesinthesecondhalfoftheyear.

RaiffeisenCentrobankAGByprovidedcomprehensiveadvisoryservicesandmarketeditscompetenciesincooperationwiththelocalRaiffeisenunitsandthuscreatedasoundbasisforthe2019financialyear.Againstthebackdropofintensivetalkswithcustomersandpreparations,RaiffeisenCentrobankAG’sECMteammaintainsaconfidentoutlookasregardstransactionsinAustriaandtheCEEregioninthe2019financialyear.Tran-sactionsareanticipatedtotakeplacemainlyontheAustrian,RussianandRomanianmarket.

Thenetprofit(0.3percentofthebalancesheettotalon31December2018and0.5percenton31December2017)asat31December2018comingto€13,004thousandwasequaltothenetincomefortheyear.Fromthenetprofitanamountof€10,480thousandistobedistributedtotheshareholdersand€2,524thousandaretobeallocatedtootherreserves.

FinancialInstruments

Pleaserefertothenotes.

RaiffeisenCentrobankAGSlovakBranch

TheestablishmentofabranchinBratislava(RaiffeisenCentrobankAGSlo-vakBranch,pobočkazahraničnejbanky)wasapprovedbytheEuropeanCentralBankandwasregisteredintheCompanyRegisteron26April2017.Thebusinessvolumeaswellasincomeandexpensesattributabletothebranchofficehavebeenincludedinthesefinancialstatements.

In2018,theSlovakBranchplaced5customizedproductswithatotalis-suevolumeof€45million.Inthepreviousyear,thefirsttwoGuaranteeCertificateswithatotalissuevolumeof€32millionweresuccessfullyplacedinthepremiumbankingsegmentofTatraBanka.

ReviewofBusinessSegmentsRaiffeisenCentrobankAGisoneofthelargestplayersinequitiesandstructuredproductsontheViennaStockExchangeandholdsakeypositioninthemarketsinCentralandEasternEurope.

Trading & Treasury Comparedtothe2017financialyear,thespotmarketoftheViennaStockExchangerecordedariseinsalesvolumeof5.6percentto€70.9billion(2017:€67.1billion),whiletheleadingEuropeanexchangesFrankfurtandEuronextroseby15.4percentto€1.5billion(2017:€1.3billion)andby8.4percentto€1.9million(2017:€1.7billion).ThesalesvolumeontheexchangesWarsawandBudapestroseby15.5percentto€48.3millionandby0.2percentto€8.7million,whichwasbelowthepreviousyear’slevelsof€55.8millionand€8.7million,respectively.Theexchan-gesinBucharestandPraguegained5.9percentcomingto€2.3million(2017:€2million)and5.1percentaddingupto€5.5million(2017:€5.3million).

RaiffeisenCentrobankAG’smarketshareonthedomesticspotmarketcameto6.3percentwithasalesvolumeof€4.5billion(2017:6.7percentand€4.5billion).TheshareandsalesvolumeinmarketmakingontheViennaStockExchangewasfurtherexpandedandcameto€2.0billionor13.0percent,respectively(2017:€1.6billionor10.9percent).IntermsofsalesvolumesRaiffeisenCentrobankAGranked4thinmarketmakingontheViennaStockExchange.

IntheannualspecialistandmarketmakingtenderRaiffeisenCentrobankAGreceived20specialistand18marketmakermandatesontheViennaStockExchange.ThusRaiffeisenCentrobankAGfullycoveredtheAustrianPrimeMarketandprovidedliquidityforalltitleslistedonthePrimeMarket.Moreover,RaiffeisenCentrobanktookovermandatesontheStandardMarketContinuousandGlobalMarketoftheViennaStockExchange.RaiffeisenCentrobankAGprovidedliquidityfor2Austrianand20Russiantitles.

Inaddition,RaiffeisenCentrobankAGwasresponsibleforthemarketma-

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InSales & Sales Tradingtherecordvolumeofmarketingactivities(160roadshowsand12conferencesinEuropeandtheUSA)couldnotsetoffthesharpdecreaseoffeeincomefromsecondarymarkettransactions.ThesubstantialriseofResearchfeescouldonlypartlycushionthisdecrease.Themainburdenwasthelackofincomederivedfrommarketingprimarymarkettransactions.The2018financialyearsawverylowprimarymarketactivityinAustriaandtheCEEregion.Forthe2019financialyear,howe-ver,anoticeablerecoveryisanticipated.

Shoredupby13salesroadshows,Execution & Electronic Tradingma-nagedtofurtherexpanditscustomerbase.ThepressureonmarginsinthewakeofMiFIDIIcouldbesetoffandtheincomewasslightlyincreased.Moreover,transactioncostsweresubstantiallyreducedbyimplementingnumerousefficiencyenhancingmeasures.Thiscontributestorisingcompeti-tiveness,acquiringnewcustomersandtoreducingthetransactioncostba-sissustainablyintheforthcomingyears.Thesuccessful"ETFExecution"wasfurtherimprovedbyacquiringnewtradingpartnersandlinkingnewcusto-merstoRaiffeisenCentrobankAG’snetwork.

AnadditionalfocuswasonprovidingtheBestExecutionMonitoringToolandtheservicerangerelatedthereto.Inthisrespect,RaiffeisenCentro-bankAGhasturnedintoamajorMiFIDIIcompetencecenterwithintheRaiffeisenBankingGroup.Anadditionalcoreprojectwastheimplementa-tionofanewbrokerageschemefortheRussianstockmarketincloseco-operationwithRaiffeisenBankRussia.TheprojectwillgoliveinQ1/2019withcorporatecustomers.

TheCompany Researchteamcoversroughly120companiesfromAust-ria,theCEEregionandRussia.AgainstthebackdropofamorefocusedcoverageonRomaniaandCroatia,thenumberofcoveragesslightlyde-creasedinannualcomparison(fromroughly130).ToexpandtheregionalapproachinEmergingEurope,coverageoftheTurkishmarketisprovidedincooperationwiththeTurkishbrokerGlobalSecurities.RaiffeisenCentro-bankAG’sCompanyResearchteamconsistsof20analystsbothinVien-naandseveralCEEcountries.Theanalystsprovidelong-standingsectorexpertiseintandemwithprofoundlocalmarketknowhowandasectoralapproachacrosstheentireregion.

AgainstthebackdropofMiFIDII,researchforSmall&MidCapcompa-niesontheEuropeanmarketdiminished.RaiffeisenCentrobankAG,howe-ver,considersthissegmentthecorebusinessofCompanyResearchandthuskeptthenumberofreportsunchangedatover1,100.ThesuccessfulIPOoftheRomaniancompanyPurcariWineriesinFebruarywassuppor-tedbycomprehensivetransactionresearchandinvestoreducation.

Thenumberofmarketingroadshowswassubstantiallyincreased.Roads-howswereheldforinvestorsinNewYork,Boston,London,Paris,Frankfurt,Zurich,Stockholm,Helsinki,Dublin,Warsaw,Budapest,Bucharest,Tallinn,Prague,Zagreb,ViennaandLinz.

FortheGlobalEquityMarketssegment,operatingincomeexcludingotheroperatingincomeamountedto€6.6millioninthe2018financialyearandundercutthepreviousyear’slevelof€9.0millionbyroughly26percent.

ExpensesofCompanyResearchareincludedintheTrading&Treasury,GlobalEquityMarketsandStructuredProductssegments.

Structured ProductsInthe2018financialyear,theStructuredProductsbusinesssegmentagainachievedarecordresult.Salesvolumeandissuanceactivitybothpostedanincrease.In2018,11,362productswerepubliclyoffered(2017:11,970)and4,869certificateswereissued(2017:6,941).OntheAustri-

ancertificatesmarket,RaiffeisenCentrobankAGonceagainunderpinneditsmarketleadership.Asperyear-end2018,theopeninterestreachedarecordlevelof€4.3billionandrosebyroughly10percentcomparedto€3.9billionon31December2018.Thesalesvolumewentupaswellandcontributedtoafurtherincreaseinthesegment’sprofitforthe2018financialyear.Comparedtothepreviousyear,thesalesvolume(purchasesandsales)gained2percentandcametoover€1.8billion,whichtranslatedintoarecordresultontheincomeside.

IntheAustrianRaiffeisensectorallkeydatawereagainoutperformed.Theteamheldarecordnumberofeducationprogramswith130certificatestrainingsandroughly2,000trainedadvisors.Comparedtothepreviousyear,thevolumeofplacementswasagainincreasedandgainedplus25percent.Moreover,thetotalopeninterestwithRaiffeisencustomersreachedanewrecordlevelgainingplus23percent.Inadditiontostan-dardseminars,thenumberoflivewebinarsstronglyincreasedwithuptoseveralhundredparticipantstakingpartinonewebinar.

IntheRaiffeisennetworkbanksinCEE100customizedproductswereplacedonthePrimeMarketwhichunderpinstherisingdemandforinvest-mentcertificatesintheretailsegmentintheregion.InCEE,theopeninte-restroseby29percentto€1billion.

RaiffeisenCentrobankAG’sSlovakbranchinBratislavadistributesstructu-redproductsontheSlovakmarket.In2018,thebranchplacedfivepro-ductswithatotalissuevolumeof€45million.Inthepreviousyear,thefirsttwoGuaranteeCertificateswithanissuevolumeof€32millionweresuc-cessfullyplacedinthepremiumbankingsegmentofTatraBanka.

RaiffeisenCentrobankAG’sperformanceinthecertificatessegmentwasalsoawardedbyspecialistsandmedia.AttheCertificatesAwardAustriainApril2018,RaiffeisenCentrobankAGwaselectedbestcertificatesissu-erinAustriaforthetwelfthtimeinarow,winningthetoprankineightoutofninecategories.InOctober2018,RaiffeisenCentrobankAGwasawarded“BestStructuredProductsBankCEE“forthesecondtimebytheLondonprintandonlinemagazinecfi.co.

TheStructuredProductssegmentfocusesparticularlyondigitalizationandinnovationinitiatives.ThishasbeentakenaccountofwiththerelaunchofthewebsiteandtheCertificateFinder.RaiffeisenCentrobankAGhassetanewbenchmarkwiththeCertificateFinderwhichprovidesaneasy-to-un-derstandintroductiontotheworldofcertificates.Explanatoryvideosaboutthemajorproductcategories,themonthlycertificatesmagazine,andtheproductbrochure“Zertifikate-WissenKompakt“areavailableinthenewknow-howsectionofthewebsite.

Forthestructuredproductssegment(includingthebranchinSlovakia)ope-ratingincomeexcludingotheroperatingincomecameto€36.6millionandsurpassedthepreviousyear’sresultof€33.1millionby10percent.

Investment ServicesThedepartmentservicescustomersofRaiffeisennetworkbanksinCentralandEasternEurope.AgainstthebackdropofportfolioadjustmentsonthepartofRaiffeisenbankRussia,thedepositvolumeintheInvestmentServi-ces/BookingPlatformsegmentdecreasedfrom€612millionto€596millioncomparedto31December2017.

Theroll-outoftheBookingPlatformbusinessmodelwithinRBIGroupincooperationwithRaiffeisenBankRomaniawassuccessfullyfinalizedin2018.Thenumberofcustomerscomesto247withadepositvolumeof€84million.

Operatingincomeexcludingotheroperatingincomecameto€2.4millionandsurpassedthepreviousyear’sresultof€1.9millionby26percent.

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RiskManagementPrinciples

BusinessopportunitiesandearningspotentialarerealizedinRaiffeisenCentrobankAGbasedonactiveriskmanagementbytakingriskoninatargetedandcontrolledmanner.Inallrelevantareasofrisk,efficientmoni-toringandcontrollinginstrumentsareavailable,enablingtherelevantbo-diestoreacttomarketopportunitiesandspecificbankingbusinessrisk.Activeriskmanagementresultedinastableandlittlevolatiletradingresult.

AsasubsidiaryofRaiffeisenBankInternationalAG(RBI),RaiffeisenCent-robankAGisintegratedintotheriskmanagementprocessoftheRBICre-ditInstitutionGroup,safeguardingthatallmajorrisksareidentified,measu-redandcontrolledonGroup-levelandensuringthattransactionsarecon-cludedsolelyifparticularrisk/rewardratiosarecompliedwith.

RiskGovernance

TheManagementBoardofRaiffeisenCentrobankAGisresponsibleforallrisksonthepartoftheBankaswellasfordevelopingandimplemen-tingariskstrategy.TheManagementBoardissupportedinimplementingthesetasksbyanindependentriskmanagementunitseparatedclearlyfromthefrontoffices.OperationalRisk,theInternalControlSystemandCompliancearebundledinonedepartment(Compliance,OperationalRisk&ICS).

RiskmanagementatRaiffeisenCentrobankAGisdividedintotwocatego-ries:

•RiskManagement(market,credit,liquidityrisks,overallbankrisk management)•OperationalRisk&ICS(non-financialrisks)

ThecentralriskmanagementbodiesaretheRiskManagementCommittee(RMK),theInternalLimitCommittee(ILC),theOperationalRiskOperationalRiskManagementandControlCommittee(ORMKK)andtheAssetandLiabilityCommittee(ALCO).

TheRMK,whichmeetsweekly,addressesallissuesandregulationsrela-tedtotheriskmanagementoftheBankfocusinginparticularoncreditrisk,marketriskandoperationalrisk.Overdraftsandnecessaryvalueadjust-mentsarereportedinduecourseandrecommendationsfortheManage-mentBoardaredeveloped.TheRMKisadecision-takingbody,autho-rizedtoapproverisk-relatedprinciples,measures,processesandparame-ters.

TheILC,whichmeetseverytwoweeks,decideswithinitscompetency(de-pendingonthetypeandamountofthelimit)oncounterparty,countryandmarketrisklimits.LargeexposuresrequiretheapprovaloftheSupervisoryBoard.Inaddition,theaggregateoflargeexposuresisreportedtotheSu-pervisoryBoardonceayear.

The(ORMKK),whichmeetsonceaquarter,establishesanappropriateframeworkforoperationalriskmanagement,definesandapprovesanadequateriskstrategyandmonitorsandassessestheadequacyofinternalcontrols.Moreover,riskassessments,scenarioanalysesandriskindicatorsarediscussedandapproved,andmaterialcasesofdefaultandtheresul-

PerformanceIndicatorsFinancialPerformanceIndicators

Comparedtothepreviousyear,theresultonordinaryactivitiesdecreasedandtranslatedintoadropofthereturn-on-equitybeforetaxfrom17.4percentto13.8percentandthereturn-on-equityaftertaxfrom15.1percentto11.4percent.

Thecost/incomeratiowhichhadbeenat67.7percentin2017roseto70.9percentduetotheincreaseinoperatingexpenseswhichwassubs-tantialinrelationtotheoperatingincome.

Non-FinancialPerformanceIndicators

AspertheendofDecember2018,thenumberofemployeesatRaiffeisenCentrobankAGamountedto191,which,comparedto31December2017,representedanincreaseof10employees.Inannualcomparison,thestaffroseonaverageby8to186employees.Theincreasewasmain-lyduetotheonboardingofthenon-advisorybrokeragebusinessfromRaiffeisenbankRomaniaaswellastotheadjustmentofstaffresourcesfurthertothefavorablebusinessdevelopment.

Comparedtothe2017financialyear,thenumberofstockandderivativesexchangemembershipsfellto10becausethemembershipof“BATSChi-X”wascancelled(fordetailskindlyseethewebsiteofRaiffeisenCentro-bankAG:https://www.rcb.at/en/the-bank/business-segments/ed/).Thenumberofnewlyissuedwarrantsandcertificateswentdownby2,072or30percentto4,869.Thedropwasmainlyattributabletothedecreaseofissuedwarrants

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in per cent 31/12/2018 31/12/2017

Return-on-equitybeforetax 13.8 17.4

Return-on-equityaftertax 11.4 15.1

Cost/incomeratio 70.9 67.7

Ownfundsratio 23.6 21.8

Corecapitalratio 23.6 21.8

LiquidityCoverageRatio(LCR) 219.6 205.2

31/12/2018 31/12/2017

Employeesatyear-end 191 181

Averagenumberofemployees 186 178

Stockexchangememberships 10 111

Numberofnewlyissuedwarrantsandcertificates 4,869 6,941

1Adjustmentofpreviousyear’sdata

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tingmeasurestobetakenareanalyzed.TheALCO,whichmeetsonceamonth,continuouslyevaluatesthemacro-economicenvironmentandcontrolsandassessesinterestraterisk,liquidityriskandbalancesheetstructuralrisk.

RiskManagementSystematRaiffeisenCentrobankAG

RaiffeisenCentrobankAGemploysacomprehensiveriskmanagementsys-temtakingintoaccountalllegal,businessandregulatoryrequirements.Theappliedprocessesandmodelsaresubjecttoongoingreviewandfurtherdevelopment.Thekeycomponentsoftheriskmanagementsystemsarecompliantwithregulatorycapitalrequirements,limitingspecificban-kingrisksandprovidingadequateriskcoveragesumsaswellasperma-nentsupervisionandcontrolofprocessriskwithinacomprehensiveInter-nalControlSystem.

1.Capital requirements to limit market risk, credit risk and operational risk Tosecureadequatecapitalforcreditrisk,marketriskandoperationalrisk,RaiffeisenCentrobankAGappliesthestandardapproach.Tocalculateoption-relatednon-linearrisksthescenariomatrixmethodisemployed.

Fordetailsonregulatorycapitalrequirementspleaserefertothenotes(page42).

2. Identifying and limiting specific banking business risks (ICAAP) AsasubordinatecompanyofRBI,RaiffeisenCentrobankAGisintegratedintotheICAAPofRBIonaconsolidatedbasis.Therisk-bearingcapacityanalysisispreparedbyRBIonamonthlybasisbothforthegoingconcern(Value-at-Risk(VaR)withaconfidenceintervalof95percent)andtargetratingperspective(VaRwithaconfidenceintervalof99.92percent)andisprovidedtoRaiffeisenCentrobankAGtosupporttheManagementBoardinmanagingtheoverallbankingrisk.

3. Internal Control SystemRaiffeisenCentrobankAGhasimplementedacompany-widemodernInter-nalControlSystemthatmeetsRBIGroupstandards.AllkeyprocessesandimmanentrisksaswellasotherkeyrisksoftheBankaredocumentedandcontrolsaresetupandreviewed,accordingly.Onceayear,thecontrolsarereviewedintermsofimplementation,efficiencyandefficacy.TheresultsarecentrallymonitoredandarereportedtotheManagementBoardandtheSupervisoryBoard.

MajorRisks

Market riskMarketriskisdefinedastheriskofpossiblelossesinonandoff-balancesheetpositionsarisingfromchangesinmarketprices(equityandcommodi-typrices,interestratesorexchangerates).

AsthemainfocusofthebusinessactivitiesofRaiffeisenCentrobankAGisonsecuritiestradingandtheissueofequity-indexbasedderivativesandstructuredproducts,thetoppriorityofRaiffeisenCentrobankAGistocoun-teractmarketrisk.RaiffeisenCentrobankAGmeasures,monitorsandma-nagesmarketriskbysettingavarietyoflimitsthatarereviewedandappro-vedonanannualbasis.Allmarketriskpositionsarecomparedwiththerespectivelimitsinamostlyautomatedprocess.Limitoverdraftsarehandledinanescalationprocess.Currently,over15,000limitsinroughly25categoriesaremonitored.Limitsforsinglesharesaccountforthemajority.

Inmarketriskmanagement,theVaRisemployed,whichprovidesforecastsonpotentiallossesinadversescenariosundernormalmarketconditionsandcontraststhemwithaparticularlimit.Onthebasisofthevariance-co-variancemodel,theVaRforequityandproduct-specificpositionsiscalcu-lateddailywithaconfidenceintervalof99percentandaretentionperi-odofoneday.Asat31December2018,theVaRforequityandproduct-specificpositionscameto€335thousand(31December2017:€470thousand).

TheabovechartdepictstheperformanceoftheVaRandhypotheticalP&L(profitandlossthatwouldhaveoccurredinaconstantportfolioaswellasactuallyrecordedmarketmovements)intheperiodbetween1January2018and31December2018.

Intheperiodunderreview,backtestingrevealedthreeVaRexceedances.Twowererelatedtothe“flashcrash”inFebruary2018whichcausedlos-sesparticularlyontheAmericanmarketswithinashorttimeandstronglyfluctuatingvolatilityindices.ThreeVaRexceedancesinoneyeararestatisti-callyexpectedbythequantile;thisunderlinesthequalityandconservativeparametrizationoftheVaR.

InadditiontotheVaR,RaiffeisenCentrobankAGusesregulatoryanddailymanagement-definedstressteststoevaluatemarketrisk.TheresultsarereportedinthemonthlyRiskManagementCommittee.Stresstestssimu-latetheperformanceoftheportfoliounderabnormalmarketsituationsandatypicalpricemovements.

Credit riskCreditriskrepresentsthedefaultriskthatarisesfromtheinabilityofacusto-mertofulfilcontractuallyagreedfinancialobligations,whenserviceshavebeenrendered(e.g.liquidity,securities,advisoryservices)orwhenunrea-lizedprofitsfrompendingbusinesstransactionscannolongerbereco-vered(counterpartydefaultrisk).

RaiffeisenCentrobankAG’smajorcreditrisksresultfrompositionsofpurchaseddebtinstruments,tradablemoneymarketdepositsandOTCop-tionsservingprimarilytohedgeissuedcertificatesandstructuredproductsaswellasfrommarginpositionsrelatingtoOTCandstockexchangetran-sactions.ThisprimarilyaffectsmembersoftheRBICreditInstitutionGroupandtoalimitedextentotherfinancialinstitutions.ThetraditionalcreditandloanbusinessisnotofmaterialsignificanceforRaiffeisenCentrobankAGduetothelimitedbusinessvolumeandtheCompany'sstrategicorientation(lombardloans,otherloanstoprivateandcorporatecustomers).

Creditriskmanagementisbasedoncounterparty-relatednominallimits,whicharecomprehensivelymonitoredbytheinternallimitsystemforcreditrisk.Thelimitsareapproved-dependingonthetypeandsize-bytherele-vantauthorityinthehierarchy.Creditdecisionsaretakendependingontheassessmentofthecounterpartydefaultrisk,takingintoaccountthera-tingandapplicablecreditriskmitigatingmeasureslikefinancialcollateral(e.g.cashorsecuritiescollateral).IntheGroup-widedefaultandrating

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databasecustomersareregisteredandevaluatedandcasesofdefaultaredocumented.Thewholelendingdecisionadherestoregulatoryrequi-rementsandRBIGroupDirectives.

Operational riskOperationalriskisdefinedastheriskofunexpectedlossesresultingfrominternalprocessesandsystemswhichareinadequateorhavefailed,fromhumanerrororfromexternalevents.Thisdefinitionincludeslegalriskbutexcludesstrategicandreputationalrisk.OperationalriskismanagedonthebasisoftheresultsofregularBank-wideriskassessments,standardizedkeyriskindicators,scenarioanalysesandGroup-internalhistoricaldata.

CasesofdefaultinoperationalriskareregisteredintheGroup-widedatabasisORCA(OperationalRiskControllingApplication)andaregroupedbybusinesssegmentandtypeofevent.Measurestakenarealsodocu-mentedandlinkedwiththecaseofdefault.

Liquidity riskLiquidityriskiscalculatedbasedonaliquiditymodeldevelopedincoope-rationwithRBI.DailybalancesheetitemsofRaiffeisenCentrobankAGaresplitbymaturitybandsandcurrencies,theirinflowsandoutflowsaremo-deledbasedonpre-definedfactors.TheliquidityrequirementindifferentmaturitybandsislimitedbymeansofregulatorylimitsaswellasbylimitsdeterminedbyRBI.Moreover,regularliquiditystresstestsarecarriedoutandthetime-to-wallinthestressscenarioismonitoredindifferentcurrenci-es.Inflowsneedtoexceedoutflowsforaparticularperiodinacrisisscenario(marketcrisis,namecrisisandscenarioinvolvingboth).

Theliquiditycoverageratio(LCR)servestomeasuretheBank’sliquiditysupplyinadefinedstressscenario(combinationofmarketandnamecri-sis).Asat31December2018,theLCRcameto219.6percent(31De-cember2017:205.2percent).SinceJanuary2018,aminimumrateof100percenthasbeenmandatoryonsingle-institutionlevel.

AllkeyindicatorsconfirmedtheadequateliquiditysupplyofRaiffeisenCentrobankAGinthe2018financialyear.

RiskSituation

TheRiskAppetiteFrameworkisaninternaltooltodefineandcommunicatetheriskappetiteofRaiffeisenCentrobankAG.Themanagementofriskisdoneaccordingtoalimitandmonitoringsystempursuanttoparticularwar-ninglevelsandlimits.

Thefollowingtabledepictsthebank-widekeyfiguresasat31December2018comparedto31December2017aswellastherespectiveminimum,maximumandaveragevaluesforthe2018financialyear.

16%

18 %16 %

18 %110 %

130 %

13,0 %15,0 %50,0 %

40,0 %7,5 %

9,0 %20 mn30

20,0 %

25,0 %1,4 %

1,7 %

46.4% 30.0% 39.2%

2.8% 2.2%2.8% 3.5% 2.6%

+44 mn 254 mn 61 mn 154 mn

Risk

rew

ard

pr

ofile

RORAC 46.4%

Pilla

r II

(inte

rnal

cap

ital)

LCR Cash Puffer 137 mn 92 mn

RORWA

23.3%

Net Leverage Ratio 13.8% 13.7% +0.1 PP 13.8% 11.9% 12.8%

29.6% 16.9%Economic Capital Utilization 16.9% 22.6% (5.7) PP

Total Capital Ratio in Stress 23.6% 21.8% +1.9 PP

+14.3 PP 348.3% 156.6% 243.3%

24.1% 20.3% 22.5%

24.1% 20.3% 22.5%

CET 1 Ratio 23.6% 21.8% +1.9 PP 24.1% 20.3%

+1.9 PP

22.5%

Pilla

r I

Total Capital Ratio 23.6% 21.8%

LCR 219.6% 205.2%

53.0% (6.6) PP

(0.7) PP

mn

Key figure Status Limits 12/2018 12/2017 Change Max1 Min1 Avg1

1during2018

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TheNetLeverageRatiolimitsthemaximumbusinessvolumebytheavailablecorecapital.ThecalculationoftheNetLeverageRatioexcludescertainin-tragroupriskpositions(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

RWAs acc. to type of risk (in € million) 31/12/2018 31/12/2017 Change

Creditrisknon-retail 85.9 98.4 (12.8%)

Marketrisk 204.9 218.7 (6.3%)

Operationalrisk 121.8 113.5 7.4%

Equityparticipationrisk 6.2 9.0 (31.0%)

CVArisk 42.3 34.9 21.2%

Otherrisks1 14.0 13.4 4.9%

RWAs Total 475.3 487.9 (2.6%)

Theabovekeyfiguresaredefinedasfollows:

TotalCapitalRatioandCET1Ratioserveasquantitativemeasuretodeterminethecreditinstitution’sownfundsinrelationtotheRisk-WeightedAssets(RWAs).

CET1Ratio=CommonEquityTier1

TotalRisk-WeightedAssetsTotalCapitalRatio=

EligibleownfundsTotalRisk-WeightedAssets

TheLCR(LiquidityCoverageRatio)measurestheliquidityoutflowina30-daystressscenario.

LCR=LiquidassetsNetoutflows

TheLCRCashBuffermeasurestheliquiditysurpluswhichexceedsregulatoryrequirementsandservestosafeguardthattherequiredLCRismet.

TheTotalCapitalRatioinstressmeasurestheTotalCapitalRatiointhegoingconcernscenario(1yearretentionperiod,95percentconfidenceinter-val).EligibleownfundsandexpectedprofitarestressedattheVaRandcontrastedwiththeRisk-WeightedAssets.TheTotalCapitalRatioactsasafloor.

TotalCapitalRatioinStress=Eligibleownfunds+NPAT–ValueatRisk

TotalRisk-WeightedAssets

TheEconomicCapital(EC)Utilizationdepictstheutilizationoftheriskcoveragesuminthetargetratingscenario(1yearretentionperiod,99.92percentconfi-denceinterval).

EconomicCapitalUtilization=EconomicCapital

Risk-takingcapacity

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In2018,themajorchangesintherisksituationwereasfollows:

Equaltothepreviousyear,thecreditriskRWAsdroppedsignificantlydrivenbyafurtherreductionofthecreditportfolioandalowerinvestmentvolumeintoshort-termcapitalmarketinstrumentsasattheduedate.Theutilizationinmarketriskislowbutwellwithinthecommonfluctuationrange.Theequityparticipationriskdecreasedagainstthebackdropofareduc-tioninthecarryingamountofCentrotradeHoldingGmbH.TheriseoftheRWAsoftheCVA(CreditValueAdjustment)riskwasattributabletothehedgingoftheincreasedcertificates’volume.

TheInternalControlSystemasRelevantfortheAccountingSystemRaiffeisenCentrobankAGanditsgoverningbodiesarecommittedtoensu-ringbalancedandcompletefinancialreporting.Afundamentalrequire-mentforthisiscompliancewithallrelevantlegalregulations.Inconnectionwiththeaccountingprocess,theManagementBoardisresponsiblefordesigningandinstallinganinternalcontrolandriskmanagementsystemthatmeetstherequirementsoftheCompany.Theobjectofthisinternalcontrolsystemistosupportthemanagementbymakingcertainthateffecti-veinternalcontrolsareappliedtotheaccountingprocessandthatthesecontrolsareimprovedonwheneverappropriate.Thecontrolsystemisdesi-gnedtoassurecompliancewithguidelinesandregulations,aswellastocreateoptimalconditionsforspecificcontrolmeasures.AninternalcontrolsystemhasalreadyexistedatRaiffeisenCentrobankAGforyearsintheformofdirectivesandinstructionsforstrategicallyimportantsubjectareas.ThefinancialstatementsarepreparedonthebasisofthepertinentAustrianlaws,abovealltheAustrianBankingAct(BWG)inconnectionwithEURegulation575/2013(CapitalRequirementsRegulation“CRR”)andtheAustrianCommercialCode(UGB)asamendedbytheRÄG2014.

Thedepartment“Finance”isresponsiblefortheBank’saccountingsystemandisdirectlysubordinatedtotheManagementBoard.Thedepartmentisresponsiblefordealingwithallaccountingissuesandhastheauthoritytoprovideforthesafeguardingoftheapplicationofuniformstandards.Orga-nizationalinstructionsandguidelines,whicharecomprisedinamanual,havebeensetupforsupport.

AccountingaccordingtotheAustrianBankingActandAustrianCommer-cialCodeiseffectedviaacentralITsystemusingPAGORO/400,whichisprotectedbytherestrictedassignmentofaccessauthorizations.Thetab-leofaccountsistailoredtotheBank’sindividualrequirements.Transactionsareregisteredbothautomaticallyandmanually.Accountingvouchersarethenfiledsystematicallyandchronologically.

MonthlybalancesheetsarecreatedandpassedontotheManagementBoardandtheseniormanagementbymeansofastandardizedfinancialreportingsystem.AtleastonceperquartertheSupervisoryBoardisinformedinthecourseoftheSupervisoryBoardmeetingsofthecurrentcourseofbusinessincludingtheBank’soperativeplanningandmedium-termstrategy.

TheManagementBoardevaluatesandmonitorsmaterialrisksinconnec-tionwiththeaccountingprocess.Inthis,thefocusisplacedontherisksthataretypicallyfoundtobematerial.Theannualevaluationoftheinternalcontrolmeasuresappliedbyeachoftheresponsibleunitsisbasedonarisk-orientedapproach.Theriskofincorrectfinancialreportingisassessedonthebasisofanumberofdifferentcriteria.Forexample,complexac-countingprinciplescanincreasetheriskoferrors.Differentprinciplesforthemeasurementofassetsandcomplexorchangingbusinessconditionscanalsoleadtosubstantialerrorsinthefinancialreporting.

Estimatesmustregularlybemadeduringthepreparationofthefinancialstatements.Inallofthesecases,thereisaninherentriskthatactualdeve-lopmentsmaydeviatefromtheseestimates.Thisespeciallyappliestotheparametersinvaluationmodelsthatareusedtodeterminethefairvaluesoffinancialinstrumentsforwhichthereisnocurrentpricequotationaswellastosocialcapital,theoutcomeoflegaldisputes,thecollectabilityoflo-ansandadvances,andtheimpairmentofequityparticipations.Insomecases,externalexpertsareinvolvedorpubliclyavailableinformationsour-cesareusedtominimizetheriskofincorrectestimates.

InadditiontotheManagementBoard,thegeneralcontrolframeworkalsoincludesseniormanagement(thedepartmentheads).Allcontrolmeasuresareappliedtothedailybusinessprocessestoensurethatpotentialerrorsordeviationsinthefinancialreportingarepreventedordiscoveredandcorrected.Thecontrolmeasuresthatareappliedatregularintervalsrangefromthereviewoftheperiodicresultsbythemanagementtothespecificreconciliationandcoordinationofaccountsandtheanalysisandfurtheroptimizationofaccountingprocesses.TheInternalAuditdepartmentisalsoinvolvedinthemonitoringprocess.ItsactivitiesarebasedontheAustrianFinancialMarketAuthority’sminimumstandardsforinternalauditingandinternationalbestpractice.TheInternalAuditdepartmentreportsdirectlytotheManagementBoard.

“Controlling”(partofthe“Finance”department)isresponsibleforprepa-ringthenotestotheannualfinancialstatementsdraftedaccordingtotheAustrianBankingActandtheAustrianCommercialCode.Inaddition,amanagementreportisdrawnupwhichexplainstheresultsinlinewithstatu-toryrequirements.TheannualfinancialstatementsandthemanagementreportareforwardedtoandreviewedbytheAuditCommitteeoftheSu-pervisoryBoardandarethenpresentedtotheSupervisoryBoardforitsapproval.TheannualfinancialstatementsarepublishedontheCompany’swebsite,intheOfficialGazetteoftheWienerZeitung,andarealsofiledwiththeAustrianCompanyRegister.KeyemployeesandtheManagementBoardreviewtheannualfinancialstatementspriortotheirdistributiontotheSupervisoryBoard.Moreover,analysesoftheannualfinancialstatementsarepreparedspeciallyforthemanagement.

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HumanResourcesAsat31December2018RaiffeisenCentrobankAGhad191employees,which,comparedto31December2017,representedanincreaseof10employees.In2018,RaiffeisenCentrobankAGhadonaverage186employees.

Thismodestriseisattributabletotheonboardingofthenon-advisorybro-keragebusinessfromRaiffeisenBankRomaniaaswellastotheadjustmentofstaffresourcesfurthertothefavorablebusinessdevelopment.Inthere-portingperiod,thefluctuationratecameto5percent.

Follow up employee surveyTheemployeesurveywascarriedoutinOctober2018andrecordedaparticipationrateof90percent.Attheendof2018,beginningof2019,theresultswereanalyzedandwillbeevaluatedindetailininterdisciplina-ryworkshopsinthecourseoftheyear.

DiversityAttheendofDecember2017,RaiffeisenCentrobankAGachievedthetargetrateof30percentfortheunder-representedgenderinSupervisoryBoard,ManagementBoardandseniormanagementfunctions(B-1andB-2).Asat31December2018,thepercentageofwomeninleadershippositionscameto30percent.

TrainingEmployeeshaverespondedverypositivelytoagileworkingmethodsandhaveintegratedthemintotheirworkingroutine.Furthertopertinenttrai-nings,abroadspectrumofagileworkingpracticeshasbeenadoptedthroughoutvariousdepartments.

Inthecourseofthe“OutoftheBox“initiative,expertsgavelecturesoncur-renttopics.Inthepastyear,4topicswerepresentedcoveringbehavioralfinance,healthydietattheworkplace,e-mobilityandsalesmethodsusingtheIERmodel.Morethan200employeestookpartinthelecturesandthediscussions.Becauseoftheverypositivefeedbackandtheactivepartici-pationonthepartoftheemployees,additionallectureswillbeorganizedinthecourseoftheforthcomingyear.

Outlookfor2019Eventhoughtheeconomicindicatorspartlyfellshortofexpectations,theprospectsfortheeurozoneremainsolid.Theeurozoneshouldcontinueitseconomicupswing.However,thepaceofgrowthshouldbeslackening.In2019,theeconomicgrowthrateshouldcometo1.5percentcomparedto1.1percentin2018.Shoredupbystrongdomesticdemand,Austria(plus1.7percent)andtheCEEregion(plus3.4percent)shouldgrowmorevigorouslythantheentirecurrencyunion.Thepoliticalissuesthatdo-minatedtheheadlinesin2018(tradeconflicts,Brexitscenarios,geopoliti-caltensions,effortstoconsolidatenationalbudgets),willfurtherimpactthefinancialmarkets.Withtheendofthequantitativeeasingprogramattheendof2018,theEuropeanCentralBank’smonetarypolicybecamemorerestrictive.Nevertheless,theEuropeanCentralBankindicatedtoleavein-terestratesunchangeduntilandbeyondsummer2019.TheUSeconomicmomentum,whichisakeydriverfortheNewYorkStockExchange,isexpectedtotaperoffoverthecourseoftheyear.Inmid-2019,thetailwindsofthetaxreformthatwasadoptedattheendof2017andthepublicspendingpackagethatwaspassedatthebeginningof2018,shouldbewaning.Thus,dynamicsareanticipatedtoweakeninthesecondhalfof2019and2020.USeconomicgrowthisexpectedtogain2.3percentfurthertoariseof2.9percentin2018.Againsttheback-dropofslowingdowndynamics,theFedshouldreachtheinterestratepeakin2019.

Followingthelongerthanaverageupswingontheexchanges,themarketsingeneralareinanadvancedstageofthecycle.

Asthecompetencecenterforequitiesandcertificates,RaiffeisenCentro-bankAGiswellpreparedandmaintainsapositiveoutlookasregardsbusinessopportunitiesintheexpectedmarketenvironment.AgainstthebackdropoftheBank’sstrongmarketpositionandcuttingedgeproductportfolio,RaiffeisenCentrobankAGexpectsthebusinesssegmentsTrading&Treasury,StructuredProducts,InvestmentServices,GlobalEquityMar-ketsandCompanyResearchtopostastableresultinthe2019financialyear.

Intheforthcomingbusinessyear,thefocuswillbeonthesustaineddeve-lopmentofbothexistingandnewbusinessactivitiesintandemwithstrictcostdisciplineandfurtherefficiencyenhancement.In2019,RaiffeisenCentrobankAGexpectstomaintainorslightlysurpassthebusinessresultachievedinthe2018financialyear.

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WilhelmCeledaChiefExecutiveOfficer

ValerieBrunnerMemberoftheManagementBoard

WilhelmCeledaChiefExecutiveOfficer

ValerieBrunnerMemberoftheManagementBoard

ResearchandDevelopmentRaiffeisenCentrobankAGwithitscoreareaofbusinessfocusingonequi-tiesandstructuredproductsdoesnotengageinresearchanddevelop-ment.

Vienna,4April2019TheManagementBoard

StatementofLegalRepresentativespursuantto§82StockExchangeActWeconfirmtothebestofourknowledgethattheannualfinancialstate-mentsgiveatrueandfairviewoftheassets,liabilities,financialposition,andprofitorlossofRaiffeisenCentrobankAGasrequiredbytheappli-cableaccountingstandardsandthatthemanagementreportgivesatrueandfairviewofthedevelopmentandperformanceofthebusinessandthepositionoftheCompany,togetherwithadescriptionoftheprincipalrisksanduncertaintiestheCompanyfaces.

Wien,4April2019TheManagementBoard

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FinancialStatementsofRaiffeisenCentrobankAGasat31December2018accordingtotheAustrianBankingAct

Theadditionofroundednumbersusingautomatedsystems,aswasdoneforthisreport,mayresultinminordifferencesinamounts.

Thechangesindicatedinpercentrefertotheactualamountsandnottheroundedamountsshowninthisreport.

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BalanceSheetasat31December2018 Assets 31/12/2018 31/12/2018 31/12/2017 31/12/2017 in € in € in € thousand in € thousand

1. Cashinhand,depositswithcentralbanks 234,904,704.24 183,472

2. Loansandadvancestocreditinstitutions

a)repayableondemand 164,753,913.89 64,298

b)otherloansandadvances 2,870,636,491.34 3,035,390,405.23 2,521,136 2,585,434

3. Loansandadvancestocustomers 120,212,876.36 34,766

4. Bonds,notesandotherfixed-interestsecurities

a)issuedbypublicbodies 4,280,612.09 2,348

b)issuedbyotherborrowers 16,164,464.30 20,445,076.39 8,422 10,770

5. Sharesandothervariable-yieldsecurities 177,142,167.41 232,102

6. Equityparticipations 5,139,498,88 5,138

7. Sharesinaffiliatedcompanies 1,100,000.00 3,900

8. Intangiblefixedassets 105,018,01 54

9. Tangiblefixedassets 10,969,882.63 11,309 thereoflandandbuildingsusedbythecreditinstitution forownpurposes:€9,276,463.92 previousyear:€9,528thousand

10.Otherassets 128,199,705.82 131,812

11.Prepaymentsandotherdeferrals 1,575,339.70 1,263

12.Deferredtaxassets 167,066.00 163

Total assets 3,735,351,740.67 3,200,183

Off-balance sheet items

1. Foreignassets 488,583,523.70 325,048

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Equity and liabilities 31/12/2018 31/12/2018 31/12/2017 31/12/2017 in € in € in € thousand in € thousand

1. Liabilitiestocreditinstitutions

a)repayableondemand 3,181,333.96 36,833

b)withagreedmaturitydatesorperiodsofnotice 11,171,449.66 14,352,783.62 2,103 38,935

2. Liabilitiestocustomers

a)repayableondemand 134,486,340.48 94,015

b)withagreedmaturitydatesorperiodsofnotice 230,488,688.16 364,975,028.64 237,966 331,980

3. Securitizedliabilities

a)issuedsecuritizedliabilities 1,460,555,635.32 1,158,784

b)othersecuritizedliabilities 1,288,718,926.90 2,749,274,562.22 1,185,737 2,344,522

4. Otherliabilities 467,537,655.32 342,370

5. Accrualsanddeferreditems 104,722.78 98

6. Provisions

a)forseverancepayments 4,436,050.00 3,962

b)taxprovisions 189,649.33 375

c)otherprovisions 7,527,311.08 12,153,010.41 11,547 15,884

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 31,129,480.61 32,160,417.44 26,999 28,030

10.LiabilityreservepursuanttoArticle57para5AustrianBankingAct 13,538,860.00 13,539

11.Netprofitfortheyear 13,004,429.53 16,576

Total equity and liabilities 3,735,351,740.67 3,200,183

Off-balance sheet items

1. Contingentliabilities 0.07 0

2. Commitmentsarisingfromfiduciarybusinesstransactions 7,091,121.47 7,091

3. EligibleownfundspursuanttoPart2ofRegulation(EU)No575/2013 112,342,566.64 106,191

4. CapitalrequirementspursuanttoArticle92ofRegulation(EU) 475,262,345.75 487,930 No575/2013(TotalRisk-WeightedAssets) hereof:capitalrequirementspursuanttoArticle92para1lit(a)to(c) ofRegulation(EU)No575/2013 hereof:capitalrequirementspursuanttoArticle92para1lit(a) 23.64% 21.76% hereof:capitalrequirementspursuanttoArticle92para1lit(b) 23.64% 21.76% hereof:capitalrequirementspursuanttoArticle92para1lit(c) 23.64% 21.76%

5. Foreignequityandliabilities 696,106,851.33 477,670

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IncomeStatementforthe2018FinancialYear

2018 2018 2017 2017 in € in € in € thousand in € thousand

1. Interestandinterest-likeincome 29,210,855.03 16,708

thereoffixed-interestsecurities 98,796.72 236

2. Interestandinterest-likeexpenses (48,608,914.29) (30,631)

I. Net interest result (19,398,059.26) (13,923)

3. Incomefromsecuritiesandfinancialinvestments 11,426,712.45 7,947

4. Feeandcommissionincome 12,828,333.08 14,058

5. Feeandcommissionexpenses (13,763,228.08) (12,064)

6. Netprofitonfinancialtradingactivities 67,521,483.39 61,338

7. Otheroperatingincome 1,144,097.57 1,891

II. Operating income 59,759,339.15 59,248

8. Generaladministrativeexpenses (40,990,487.71) (38,092)

a)staffexpenses

aa)salaries (18,315,191.89) (17,482)

bb)expensesforstatutorysocialcontributionsandcompulsorycontributionsrelated towagesandsalaries (3,891,434.88) (3,694)

cc) othersocialexpenses (383,058.08) (380)

dd)expensesforpensionsandassistance (422,143.68) (379)

ee)provisionsforseverancepaymentsandcontributionstoseverancefunds (895,075.37) (590)

(23,906,903.90) (22,524)

b)otheradministrativeexpenses (17,083,583.81) (15,567)

9. Valueadjustments onassetitems8and9 (1,043,308.54) (1,135)

10.Otheroperatingexpenses (332,265.53) (907)

III. Operating expenses (42,366,061.78) (40,134)

IV. Operating result 17,393,277.37 19,113

11.Loanlossprovisionsandexpendituresarisingfromthevaluation anddisposalofsecuritiesheldasother currentassets (237,945.32) (5)

12.Incomearisingfromthevaluationanddisposalofloansandadvances andofsecuritiesheldasother asothercurrentassets 15,000.00 111

13.Expendituresarisingfromthevaluationofequityinvestments heldasfinancialinvestments (1,442,036.74) (139)

V. Result on ordinary activities 15,728,295.31 19,081

14.a)currentincometaxes (2,396,907.53) (2,115) thereofpassedonfromparentcompanyfortheyear: € (1,045,500.00); previous year: € (1,655thousand) b)deferredtaxes 4,378.43 (2,392,529.10) (8) (2,123)

15.Othertaxesunlessincludedinitem14 (331,336.68) (382)

VI. Net income (=Net porfit) for the year 13,004,429.53 16,576

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DevelopmentofFixedAssetsinthe2018FinancialYear Amounts in € Cost of acquisition Cost of acquisition Cost of acquisition Cost of acquisition Accumulated depr. Accumulated depr. Accumulated depr. Accumulated depr. Accumulated depr. Carrying amount Carrying amount Balance as at 1/1/2018 Additions Disposals Balance as at 31/12/2018 Balance as at 1/1/2018 Additions / Depreciation Write-up Disposals 31/12/2018 31/12/2018 31/12/2017

I. Intangible fixed assets

Softwarelicenses 1,974,462.53 120,524.40 523,001.27 1,571,985.66 1,920,259.52 69,709.40 0.00 523,001.27 1,466,967.65 105,018.01 54,203.01

II. Tangible fixed assets

1.Landandbuildingsusedbythecreditinstitution forownpurposes thereofvalueofproperty:€ 2,637,765.92; previousyear:€ 2,638thousand 12,694,367.11 0.00 0.00 12,694,367.11 3,166,487.19 251,416.00 0.00 0.00 3,417,903.19 9,276,463.92 9,527,879.92

2.Officefurnitureandequipment 13,964,038.30 634,650.14 370,761.60 14,227,926.84 12,183,086.59 722,183.14 0.00 370,761.60 12,534,508.13 1,693,418.71 1,780,951.71

26,658,405.41 634,650.14 370,761.60 26,922,293.95 15,349,573.78 973,599.14 0.00 370,761.60 15,952,411.32 10,969,882.63 11,308,831.63

III. Financial investments

1.Sharesinaffiliatedcompanies thereofincreditinstitutions:€0.00 3,900,000.00 0.00 2,800,000.00 1,100,000.00 0.00 0.00 0.00 0.00 0.00 1,100,000.00 3,900,000.00

2.Equityparticipations thereofcreditinstitutions:€0.00 5,138,934.88 1000.00 0.00 5,139,934.88 436.00 0.00 0.00 0.00 436.00 5,139,498.88 5,138,498.88

9,038,934.88 1,000.0 2,800,000.00 6,239,934.88 436.00 0.00 0.00 0.00 436.00 6,239,498.88 9,038,498.88

Total 37,671,802.82 756,174.54 3,693,762.87 34,734,214.49 17,270,269.30 1,043,308.54 0.00 893,762.87 17,419,814.97 17,314,399.52 20,401,533.52

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DevelopmentofFixedAssetsinthe2018FinancialYear Amounts in € Cost of acquisition Cost of acquisition Cost of acquisition Cost of acquisition Accumulated depr. Accumulated depr. Accumulated depr. Accumulated depr. Accumulated depr. Carrying amount Carrying amount Balance as at 1/1/2018 Additions Disposals Balance as at 31/12/2018 Balance as at 1/1/2018 Additions / Depreciation Write-up Disposals 31/12/2018 31/12/2018 31/12/2017

I. Intangible fixed assets

Softwarelicenses 1,974,462.53 120,524.40 523,001.27 1,571,985.66 1,920,259.52 69,709.40 0.00 523,001.27 1,466,967.65 105,018.01 54,203.01

II. Tangible fixed assets

1.Landandbuildingsusedbythecreditinstitution forownpurposes thereofvalueofproperty:€ 2,637,765.92; previousyear:€ 2,638thousand 12,694,367.11 0.00 0.00 12,694,367.11 3,166,487.19 251,416.00 0.00 0.00 3,417,903.19 9,276,463.92 9,527,879.92

2.Officefurnitureandequipment 13,964,038.30 634,650.14 370,761.60 14,227,926.84 12,183,086.59 722,183.14 0.00 370,761.60 12,534,508.13 1,693,418.71 1,780,951.71

26,658,405.41 634,650.14 370,761.60 26,922,293.95 15,349,573.78 973,599.14 0.00 370,761.60 15,952,411.32 10,969,882.63 11,308,831.63

III. Financial investments

1.Sharesinaffiliatedcompanies thereofincreditinstitutions:€0.00 3,900,000.00 0.00 2,800,000.00 1,100,000.00 0.00 0.00 0.00 0.00 0.00 1,100,000.00 3,900,000.00

2.Equityparticipations thereofcreditinstitutions:€0.00 5,138,934.88 1000.00 0.00 5,139,934.88 436.00 0.00 0.00 0.00 436.00 5,139,498.88 5,138,498.88

9,038,934.88 1,000.0 2,800,000.00 6,239,934.88 436.00 0.00 0.00 0.00 436.00 6,239,498.88 9,038,498.88

Total 37,671,802.82 756,174.54 3,693,762.87 34,734,214.49 17,270,269.30 1,043,308.54 0.00 893,762.87 17,419,814.97 17,314,399.52 20,401,533.52

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A.AccountingPolicies

General principlesThefinancialstatementsofRaiffeisenCentrobankAGforthe2018financi-alyearhavebeenpreparedinaccordancewiththegeneralaccountingprinciplesstipulatedinthemostrecentversionoftheAustrianCommercialCodeandthespecificsectoralregulationsasspecifiedbytheAustrianBankingAct.Inaccordancewiththeprinciplesofproperaccounting,andtakingintoaccountstandardpracticeasdescribedinArticle222section2oftheAustrianCommercialCode,theannualfinancialstatementsgiveatrueandfairviewofthecompany’snetassets,financialpositionandearnings.

Thevaluationofassetsandequityandliabilitiesisbasedontheprincipleofindividualvaluationassumingagoingconcernperspective.Theprincip-leofprudenceisapplied,takingaccountofthespecificcharacteristicsofthebankingbusiness.

Thefinancialstatementshavebeenpreparedincompliancewiththecon-sistencyprinciple.Comparedtotheannualfinancialstatementsasat31December2017,theaccountingandvaluationmethodshavechangedasaresultoftheimplementationofgeneralimpairmentallowancesforloansandadvancestocreditinstitutionsandcustomers.Thecalculationofthegeneralimpairmentallowancesisgroup-widebasedonIFRS9.Theimple-mentationoftheregulationshasresultedinaone-offadjustmenteffectof€198thousand,whichhasbeenexpensedimmediatelyinthefinancialyearunderreview.

Thebalancesheetandtheincomestatementhavebeenstructuredaccor-dingtoAppendix2oftheformscontainedinArticle43AustrianBankingAct.

Since26April2017,RaiffeisenCentrobankAGhasbeenoperatingabranchofficeinBratislava(RaiffeisenCentrobankAGSlovakBranchpobočkazahraničnejbanky).Thebusinessvolumeaswellasincomeandexpensesattributabletothebranchofficehavebeenincludedinthefinan-cialstatements.

Foreign currency translationAssetsandliabilitiesdenominatedinforeigncurrenciesarereportedattheratesofexchangesfixedbytheEuropeanCentralBank.Amountsdenomi-natedincurrenciesforwhichtheEuropeanCentralBankpublishednora-tesareconvertedatthemiddleratesofexchangepublishedbyRaiffeisenBankInternationalAGonthebalancesheetdate.

Atyear-end,foreigncurrencypositionsareconvertedattheratespublis-hedbytheViennaStockExchangeonthelasttradingday.Ifnorateisavailableforaparticularcurrency,ratespublishedbytheEuropeanCen-tralBank,RaiffeisenBankInternationalAGortherespectivemarketratesareused.

Forwardforeignexchangecontractsarecapitalizedattheforwardex-changerates.Anydifferencesinratesresultingfromcurrencyconversionarereportedasaprofitorlossintheincomestatement.

Trading portfolio – valuation of securities, futures and options Intermsofsecuritiesheldfortradingpurposesorasothercurrentassets,thecompany’sportfolioofsharesinpubliclylistedcompaniesaswellasfixed-interestsecuritiesisreportedatthesharepriceprevailingontheba-lancesheetdate.Ifnoquotesorsharepricesareavailable,thevalueisdeterminedbymeansofvaluationmodels.

Bondsheldbythecompanyfortradingpurposesarevaluedatquotesprovidedbyothercreditinstitutions,brokersoratReutersquotes,incasestockexchangequotesarenotavailableorarenotconclusive.Ifsuchquotesarenotavailable,pricesarecalculatedinternallyonthebasisofthenetpresentvaluemethod.Thismethodisbasedonaninterestratecur-vecomprisedofmoneymarket,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(AmericanandEuropeansty-le),theBlack-ScholesmodelandthebinomialpricingmodelaccordingtoCox-Ross-Rubinsteinareapplied.TheCurranapproximationisappliedtoAsianoptions,whereasbarrieroptionsusetheHeynen-KatmodelandspreadoptionsrelyontheKirkmodel.

Banking book — valuation of derivativesThederivativesvolumeinthebankingbookrelatesexclusivelytoFXfor-wardstohedgeforeigncurrencyrisks.Theyarevaluedatfairvaluerelyingonobservablemarketparameters.

Loans and advances to credit institutions and customersLoansandadvancestocreditinstitutionsandcustomersareshownattheirnominalvalue.Individualloanlossprovisionsaremadeinthecaseofanidentifiablerecognizableriskofdefaultonthepartofborrowers.Inadditi-on,generalimpairmentallowanceshavebeenmadefrom2018onwardsforexpectedcreditlosses(ECL),wherebyRaiffeisenCentrobankAGhastakentheopportunitytoapplytheregulationsofIFRS9tocalculategene-ralimpairmentallowancesundercompanylaw.

ThegeneralimpairmentallowancespursuanttoIFRS9havebeenimple-mentedbasedonatwo-stageprocedure.Ifthecreditdefaultriskforcurrentassetsdoesnotincreasesignificantlysinceinitialrecognition,theimpair-mentlossforeachassetismeasuredatthepresentvalueofanexpectedtwelve-monthlossasatthereportingdate(ECLStage1).Inthecaseofas-setswhosecreditriskdoesnotincreasesignificantlysinceinitialrecognitionandwhicharenotclassifiedastransactionswithalowcreditriskatthere-portingdate,theexpectedcreditlossiscalculatedovertheasset’sentire

FinancialStatementsasat31December2018

Notes

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remainingterm(ECLStage2).Theexpectedlossesforbothstagesarecal-culatedonanindividualtransactionbasisapplyingstatisticalriskparame-terssuchasProbabilityofDefault(PD),ExposureatDefault(EAD)aswellasLossGivenDefault(LGD).Theestimationofriskparametersincludesnotonlyhistoricaldefaultinformationbutalsothecurrenteconomicenvironment(point-in-timeorientation)andforward-lookinginformation.

Equity participations and shares in affiliated companiesEquityparticipationsandsharesinaffiliatedcompaniesarevaluedatcostunlesspermanentlossesordecreasedequityrequireanon-scheduledde-preciationofthefairvalue(subjectiveorobjectifiedcompanyvalue).Incase,reasonsforimpairmentarenolongerapplicable,awrite-uptothecostofacquisitioniscarriedout.

Intangible and tangible fixed assetsThevaluationofintangibleandtangiblefixedassets(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.

Liabilities to credit institutions and customersLiabilitiestocreditinstitutionsandcustomersarereportedattheamountofrepayment,takingintoconsiderationtheprincipleoffinancialprudence.

Securitized liabilitiesSecuritizedliabilitiesaremeasuredatfairvaluewhichequalsthepresent

valuemethod,orthecommonoptionvaluemethodsfortheoptioncompo-nent.Securitizedliabilitiesincludecapitalguaranteedstructuredproducts,whoserateofinterestdependsontheequitypriceorequityindexperfor-mance,reverseconvertiblebondsandcertificateswithoptioncharacter(turbo,discount,open-endandbonuscertificates)andwarrants.

Provisions for severance paymentsTheprovisionsforseverancepaymentsaredesignedtofulfillegalde-mands,aswellasthosearisingfromindividualorcollectivecontractualag-reements.Provisionsarecalculatedinaccordancewiththeguidelinesspe-cifiedbyIAS19,applyingtheProjectedUnitCreditMethodandassumingacalculatoryinterestrateof1.8percent(31/12/2017:1.5percent),aswellasanunchangedannualsalaryincreaseamountingto3.5percent(31/12/2017:2.7percent).TheAVÖ(Austrianactuaries’association)2018-P-basisforcalculatingretirementpensioninsurances–Pagler&Pag-lerforsalariedemployeeswastakenasbiometricbasisforcalculation.

Theunderlyingpresumptionisadecreasingfluctuationrateinconnectionwiththeearliestpossibleretirementdate,attheageof60forwomenand65formen,takingintoaccountthechangestoAustria’sGeneralSocialSecurityLawinaccordancetotheBudgetaryAmendment2003.Thepre-miumreserveamountsto77.5percent(31/12/2017:75.9percent)ofthestatisticalterminationbenefitobligationsonthebalancesheetdate.

Other provisionsOtherprovisionshavebeenmadeaccordingtoexpecteddemands.Theycompriseidentifiablerisksandliabilities,theextentofwhichhasnotyetbeendetermined.Long-termprovisionsarediscounted.Theinterestrateamountsto1.8percent(31/12/2017:1.5percent).

B.NotestoBalanceSheetItems

I. Cash in hand, deposits with central banksThebalancesheetitemA1,whichencompassescashinhandanddepo-sitswiththeAustrianNationalBank,amountedto€234,905thousand(31/12/2017:€183,472thousand).Prevailingregulationspertainingtoliquidityandminimumreserveswereobserved.

II.1. Classification of loans and advances and securities positions according to their remaining term

II. Loans and advances

31/12/2018 repayable 0-3 3-12 1-5 >5 Total in€thousand on demand / without maturity 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 44,307 2,068 10,147 60,870 10,807 128,200

497,070 152,716 379,464 1,961,197 490,943 3,481,390

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31/12/2017 repayable 0-3 3-12 1-5 >5 Total in€thousand on demand / without maturity months months years years

Loansandadvancestocreditinstitutions 64,298 378,623 336,119 1,633,995 172,399 2,585,434

Loansandadvancestocustomers 22,443 2,604 0 2,768 6,950 34,766

Bonds,notesandotherfixed-interestsecurities 0 0 1 10,769 0 10,770

Sharesandothervariable-yieldsecurities 232,102 0 0 0 0 232,102

Otherassets 22,573 2,209 10,525 89,606 6,898 131,812

341,417 383,437 346,644 1,737,140 186,247 2,994,885

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II.2. Loans and advances to affiliated companies and equity participations

31/12/2018 Loans and advances to Loans and advances to equity in€thousand affiliated companies participations in which Raiffeisen (direct/indirect >50%) Centrobank AG has a direct shareholding (<50%)

Loansandadvancestocreditinstitutions 2,692,527 0

Loansandadvancestocustomers 0 514

Bonds,notesandotherfixed-interestsecurities 8,441 0

Sharesandothervariable-yieldsecurities 105 0

Otherassets 450 8

2,701,522 522

31/12/2017 Loans and advances to Loans and advances to equity in€thousand affiliated companies participations in which Raiffeisen (direct/indirect >50%) Centrobank AG has a direct shareholding (<50%)

Loansandadvancestocreditinstitutions 2,383,236 0

Loansandadvancestocustomers 2,041 514

Bonds,notesandotherfixed-interestsecurities 8,422 0

Sharesandothervariable-yieldsecurities 83 0

Otherassets 977 8

2,394,759 522

III. Securities

Figures supplied pursuant to Article 64 section 1 no 10 and 11 Austrian Banking Act

31/12/2018 Unlisted Listed Total Valued at in€thousand market price

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

31/12/2017 Unlisted Listed Total Valued at in€thousand market price

Bonds,notesandotherfixed-interestsecurities,A4 0 10,770 10,770 10,770

Sharesandothervariable-yieldsecurities,A5 55,767 176,335 232,102 232,102

Equityparticipations,A6 5,138 0 5,138 x

Sharesinaffiliatedcompanies,A7 3,900 0 3,900 x

“Loansandadvancestocreditinstitutions”includedtradablemoneymarketdepositsintheamountof€2,373,943thousand(31/12/2017:€2,022,017thousand)servingashedgesforcertificatesandwarrantsissuedbyRaiffeisenCentrobankAG.Thereof€2,369,340thousandwereattributabletoRaiffeisenBankInternationalAG(31/12/2017:€2,013,932thousand).

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Asat31/12/2018,balancesheetitemA4includedfixed-interestsecuritiesheldfortradingamountingto€20,445thousand(31/12/2017:€10,770thousand)ofwhich€1,287thousand(31/12/2017:€1thousand)willfalldueintheforthcomingyear.

Thefairvalueofsecuritiesofthetradingbook(excludinghedgepositions)exceededtheacquisitioncostsby€95thousandasat31/12/2018(31/12/2017:€81thousand).

IV. Equity participations and shares in affiliated companiesAsat31/12/2018,theBankdirectlyheldaminimumof20percentofthesharesinthesubsequentcompanies:

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in€thousand Name Shareholding in % Equity Annual results 2018 Domicile 31/12/2018

1CentrotradeHoldingGmbH,Vienna 100 1,131 (12)1

2SyrenaImmobilienHoldingAG,Spittal/Drau 21 27,688 (567)1unauditedfigures

V. Fixed assetsThecompositionanddevelopmentoffixedassetsiscontainedinthetableoutliningthedevelopmentoffixedassets.

Furthertothesaleofthecommoditytradingsubsidiaries,CentrotradeHoldingGmbHdidnotperformanyoperationalactivities.InNovember2018,areductionofthecompany’spaid-incapital(from€3millionto€200thousand)wasfinalizedbypayingbackthecapitalinvestedtothesolesharehol-der(RaiffeisenCentrobankAG).

VI. Other assetsBalancesheetitemA10“Otherassets“totaling€128,200thousand(31/12/2017:€131,812thousand)referredprimarilytopurchasecontractsfromtradinginderivativefinancialinstrumentsreportedatfairvalueasat31/12/2018:

in€thousand 31/12/2018 31/12/2017

Positive fair values of derivative financial instruments

fromOTCoptionsandforwardexchangetransactions 83,634 108,620

fromtradinginEUREXoptionsandfutures 39,034 6,013

fromtradinginotheroptionandfutures 4,425 14,704

127,094 129,337

Inaddition,loansandadvancestoforeigntaxauthoritiesintheamountof€747thousand(31/12/2017:€1,269thousand)wereincluded.Intheprevi-ousyeartheitemcontainedthesettlementofGroupcharges(includingcapitalyieldstaxchargedtotheGroup)intheamountof€808thousandwhichwerepartlysettledinthe2018financialyear.

in€thousand Name Shareholding in % Equity Annual results 2017 Domicile 31/12/2017

1CentrotradeHoldingGmbH,Vienna 100 3,944 (25)

2SyrenaImmobilienHoldingAG,Spittal/Drau 21 28,256 (790)

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V II. Deferred tax assets“Deferredtaxassets”pursuanttotheapplicationofRÄGamountedto€167thousand(31/12/2017:€163thousand)asat31/12/2018.

Balance sheet items Deferred tax assets Deferred tax liabilities

Sharesandothervariable-yieldsecurities 0 (95)

Sharesinaffiliatedcompanies 3

Prepaymentsandotherdeferrals 14

Provisionsforseverancepayments 1,390

Otherprovisions 25

Total 1,432 (95)

Balance 1,337

Deferredtaxassetsasat31/12/2018(12.5%) 167

“Deferredtaxassets”wererecognizedatataxrateof12.5percentas,basedontheprevailinggroupassessmentagreement,thispercentageprovidesfortaxreliefinthefuture.AnytaxreliefbeyondthisratecannotbeassessedbytheGroupmemberasnoinfluencecanbeexertedontheamountoftheuntaxableportionofthetaxableprofitonGrouplevel.

VIII. Liabilities

VIII.1. Classification of liabilities according to their remaining term

31/12/2018 repayable 0-3 3-12 1-5 >5 Total in€thousand on demand / without maturity 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

31/12/2017 repayable 0-3 3-12 1-5 >5 Total in€thousand on demand / without maturity months months years years

Liabilitiestocreditinstitutions 36,833 2,054 0 0 48 38,935

Liabilitiestocustomers 94,014 0 159,678 78,288 0 331,980

Securitizedliabilities 0 74,044 218,422 1,691,417 360,640 2,344,522

Otherliabilities 244,666 1,354 5,263 85,863 5,223 342,370

375,513 77,452 383,363 1,855,568 365,911 3,057,807

Balance sheet items Deferred tax assets Deferred tax liabilities

Sharesandothervariable-yieldsecurities 0 (81)

Sharesinaffiliatedcompanies 5

Prepaymentsandotherdeferrals 14

Provisionsforseverancepayments 1,242

Otherprovisions 122

Total 1,383 (81)

Balance 1,302

Deferredtaxassetsasat31/12/2017(12.5%) 163

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VIII.2. Liabilities to affiliated companies and equity participations

31/12/2018 Liabilities to affiliated Liabilities to equity in€thousand companies (direct/indirect >50%) participations in which Raiffeisen Centrobank AG has a direct shareholding (<50%)

Liabilitiestocreditinstitutions 10,291 0

Liabilitiestocustomers 1,139 0

Otherliabilities 7,164 2

18,594 2

31/12/2017 Liabilities to affiliated Liabilities to equity in€thousand companies (direct/indirect >50%) participations in which Raiffeisen Centrobank AG has a direct shareholding (<50%)

Liabilitiestocreditinstitutions 1,866 0

Liabilitiestocustomers 3,950 0

Otherliabilities 21,485 1

27,301 1

VIII.3. Securitized liabilitiesThebalancesheetitemP3“Securitizedliabilities”includedissuedandothersecuritizedliabilitiestotaling€2,749,275thousand(31/12/2017:€2,344,522thousand),heldfortradingandallocatedtothefollowingproductcategories:

in€thousand 31/12/2018 31/12/2017

Negative fair values of derivative financial instruments 368,257 124,911

fromOTCoptionsandforwardexchangetransactions 332,173 96,624

fromtradinginEUREXoptionsandfutures 3,792 16,195

fromtradinginotheroptionsandfutures 32,291 12,092

Short-selling of trading assets 89,376 215,730

457,633 340,642

“Securitizedliabilities”intheamountof€486,397thousand(31/12/2017:€292,465thousand)wouldfalldueinthenextyear.

VIII.4. Other liabilitiesThebalancesheetitemP4“Otherliabilities“amountingto€467,538thousand(31/12/2017:€342,370thousand)referredprimarilytoliabilitiesreportedatfairvalueaswellaspremiumsreceivedfromtradinginsecuritiesandderivativefinancialinstruments.

“Otherliabilities“asat31/12/2018includedinparticularshort-termchargesderivedfromsecuritytradesnotyetsettledat31/12/2018comingto€5,003thousand(31/12/2017:€114thousand)andaliabilityrelatingtoanequitycapitalmarkettransactiontotaling€1,461thousand(31/12/2017:€0thousand).Inaddition,theitemincludedvariousliabilitiesinrelationtocostschargedcomingto€447thousand(31/12/2017:€875thousand),groupchargesintheamountof€938thousand(31/12/2017:€0thousand),liabilitiestodomestictaxauthoritiesaddingupto€996thousand(31/12/2017:€126thousand),andliabilitiesrelatedtopayrollaccountingintheamountof€573thousand(31/12/2017:€555thousand).

in€thousand 31/12/2018 31/12/2017

Issued securitized liabilities 1,460,556 1,158,784

GuaranteeCertificates 1,094,088 804,1431

ReverseConvertibleBonds 366,467 354,6421

Other securitized liabilities 1,288,719 1,185,738

Certificateswithoptioncharacter 1,280,236 1,173,098

Warrants 8,483 12,639

2,749,275 2,344,5221Adjustmentofpreviousyear’sdataduetoashiftbetweenGuaranteeCertificatesandReverseConvertibleBonds

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in€thousand 31/12/2018 31/12/2017

Provisions for severance payments 4,436 3,962

Provisions for taxes 190 375

Other provisions 7,527 11,547

Provisionsforbonuspayments 3,016 2,787

Provisionsforlitigationrisks 0 4,216

Provisionsforoverduevacation 1,308 1,171

Provisionsforlegal,auditingandconsultingexpenses 347 231

Provisionsforoutstandinginvoicesinthesecuritiessegment 310 370

ProvisionsforoutstandinginvoicesintheInvestmentServicessegment 326 22

Provisionsforoutstandinginvoices(others) 450 364

Provisionsforsecuritiessupervision 350 240

Provisionsformarketingcosts 290 156

ProvisionsforchargedManagementBoardexpenses 1,043 1,307

Provisionsforoutstandinglicensefees 0 325

Provisionsforchargedthirdpartyfees 0 120

Sundry 87 238

12,153 15,884

XI. Obligations arising from the use of tangible fixed assets not recognized in the balance sheetTherentalandleasingexpensesduringtheperiodunderreviewamountedto€451thousand(2017:€447thousand),thereof€123thousand(2017:€99thousand)toaffiliatedcompanies.Forthe2019financialyear,rentalandleasingexpensesareexpectedtototal€419thousandand€2,314thousandforthe2019-2023financialyears,ofwhichtherentalandleasingexpensestoaffiliatedcompanieswilltotal€66thousandand€366thousand,respectively.

IX. Provisions“Provisions”wereasfollows:

Capital reservesamountedto€20,651thousandasat31/12/2018,remainedunchangedtothepreviousyear(31/12/2017:€20,651thousand)andcontaincommittedanduncommittedcapitalreservesaddingupto€6,561thousandand€14,000thousand,respectively.

Retained earningsincludelegalreservesintheamountof€1,031thousand(31/12/2017:€1,031thousand)andotherreservestotaling€31,129thousand(31/12/2017:€26,999thousand).Theincreaseofotherreservesamountingto€4,131thousandisattributabletotheallocationoftheundis-tributedbalancesheetprofitfor2017tootherreserves.

Liability reservepursuanttoArticle57section5AustrianBankingActremainedunchangedtothepreviousyear,totaling€13,539thousand.

X. Share capital and reservesTheshare capitalremainedunchangedandiscomprisedof655,000no-par-valueshares.

ThesharesinRaiffeisenCentrobankAGareownedbythefollowingcompanies:

% Shares

RBIIBBeteiligungsGmbH,Vienna 100.00 654,999

LexxusServicesHoldingGmbH,Vienna 0.00 1

100.00 655,000

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Trading bookAtradingbookismaintained.Atthebalancesheetdate,thetradingvolumeatfairvalues(positiveandnegativefairvaluesoffset)estimatedpursuanttointernalriskcalculationamountedto:

in€thousand 31/12/2018 31/12/2017

Shares/mutualfunds 41,151 (16,940)

Listedoptions 7,445 (6,720)

Futures 286 (754)1

Warrants/certificates (1,287,876) (1,184,806)

OTCoptions (249,464) 9,638

Purchasedbonds 2,583,238 2,189,367

Issuedguaranteebondandreverseconvertiblebondss (1,461,113) (1,160,000)

-366,333 -170,215

Data on transactions with derivative financial instruments and unsettled forward transactionsRaiffeisenCentrobankAG’stradinginderivativefinancialinstrumentsfocusesonoptionsandforwardtransactions(mainlyfutures).

ThefinancialinstrumentsissuedbyRaiffeisenCentrobankAGcanbeclassifiedaswarrants,certificatesmainlyonequitiesandequityindices(turbo,discount,bonusandopen-endcertificates),andguaranteecertificatesandreverseconvertiblebondswithapaymentstructurerelatedtoequityorequityindices.

EquitiesheldbyRaiffeisenCentrobankAGrepresent,togetherwithpurchasedoptions,tradablemoneymarketdepositsandzerobondsdepictedinotherbalancesheetitems,thehedgepositionstoissuedcertificatesandwarrants,andarepartoftheBank’smarketmakeractivities.

Volume of the securities trading book Asatthebalancesheetdatethesecuritiestradingbook(notionalamount)wasmadeupasfollows:

in€thousand 31/12/2018 31/12/20171

Securities 3,554,790 3,272,283

Otherfinancialinstruments 6,909,103 6,369,023

10,463,893 9,641,3061Adjustmentofpreviousyear’sdata

XII. Supplementary data

Assets and liabilities in foreign currenciesThefollowingamountswerecontainedinthebalancesheettotalinforeigncurrencies:

in€thousand 31/12/2018 31/12/2017

Assets 1,179,190 1,182,145

Liabilities 1,127,785 1,002,294

1Adjustmentofpreviousyear’sdata

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Thevolumesofderivativefinancialinstrumentsandunsettledforwardtransactionsasat31/12/2018wereasfollows:

in€thousandNotional amount thereof Fair value 31/12/2018 Purchase Sale Trading Book Positive Negative

1. Interest rate contracts 0 0 0 0 0

1.1. OTC products 0 0 0 0 0

Interestrateoptions 0 0 0 0 0

1.2. Products traded on stock exchange 0 0 0 0 0

Interestratefutures 0 0 0 0 0

2. Foreign exchange contracts 160,366 875 71,020 2,987 0

2.1. OTC products 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

2.2. Products traded on stock exchange 24,307 0 24,307 1,143 0

Currencyfutures 24,307 0 24,307 1,143 0

3. Equity contracts 2,100,476 2,165,382 4,265,858 121,157 (365,702)

3.1. OTC products 1,640,188 1,883,938 3,524,126 80,408 (331,712)

Equity/index-basedoptions 1,640,188 1,883,938 3,524,126 80,408 (331,712)

3.2. Products traded on stock exchange 460,288 281,444 741,732 40,750 (33,990)

Equity/index-basedfuturecontracts 251,185 63,890 315,075 23,831 (24,163)

Equity/index-basedoptions 209,103 217,554 426,657 16,919 (9,827)

4. Commodities/precious metals 94,511 4,444 98,955 2,949 (2,555)

4.1 OTC products 43,163 4,444 47,607 1,382 (462)

Commodityandpreciousmetalfuturecontracts 43,163 4,444 47,607 1,382 (462)

4.2. Products traded on stock exchange 51,348 0 51,348 1,568 (2,093)

Commodityandpreciousmetalfuturecontracts 51,348 0 51,348 1,568 (2,093)

Total OTC products 1,819,410 1,889,256 3,618,446 83,633 (332,173)

Total stock exchange traded products 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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Comparativefiguresasat31/12/2017

in€thousandNotional amount thereof Fair value 31/12/2017 Purchase Sale Trading Book Positive Negative

1. Interest rate contracts 200 9,000 9,000 69 0

1.1.OTC products 200 0 0 0 0

Interestrateoptions 200 0 0 0 0

1.2. Products traded on stock exchange 0 9,000 9,000 69 0

Interestratefutures 0 9,000 9,000 69 0

2. Foreign exchange contracts 145,425 93,753 53,443 1,942 (355)

2.1. OTC products 120,467 93,753 28,485 1,545 (355)

Forwardforeignexchangecontracts 92,690 93,045 0 0 (355)

Currencyoptions/goldcontracts 27,777 708 28,485 1,545 0

2.2. Products traded on stock exchange 24,958 0 24,958 397 0

Currencyfutures 24,958 0 24,958 397 0

3. Equity contracts1 1,775,304 2,118,596 3,893,901 124,148 (123,487)

3.1. OTC products 1,172,206 1,719,281 2,891,487 105,966 (96,070)

Equity/index-basedoptions 1,172,206 1,719,281 2,891,487 105,966 (96,070)

3.2. Products traded on stock exchange 603,098 399,315 1,002,413 18,182 (27,417)

Equity/index-basedfuturecontracts 379,772 62,275 442,047 9,650 (12,069)

Equity/index-basedoptions 223,326 337,040 560,366 8,532 (15,348)

4. Commodities/precious metals 116,023 2,166 118,190 3,178 (1,069)

4.1. OTC products 40,227 2,166 42,393 1,109 (199)

Commodityandpreciousmetaloptions 40,227 2,166 42,393 1,109 (199)

4.2. Products traded on stock exchange 75,796 0 75,796 2,069 (870)

Commodityandpreciousmetalfuturecontracts 75,796 0 75,796 2,069 (870)

Total OTC products1 1,333,100 1,815,200 2,962,365 108,620 (96,624)

Total stock exchange traded products1 703,851 408,315 1,112,166 20,717 (28,287)

2,036,951 2,223,515 4,074,533 129,337 (124,911) 1Adjustmentofpreviousyear’sdataduetoashiftbetweenOTCandstockexchangetradedproducts

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C.NotestotheIncomeStatement

I. Interest and similar income

“Netinterestresult”intheamountof€19,398thousandwasnegativebothin2018and2017(€13,923thousand).

Furthertohighercouponincomefromstructuredproductsandavolume-relatedriseininterestincomefromloansandadvancestocreditinstitutions,interestincomewentupby€12,503thousandto€29,211thousand.

Comparedtothepreviousyear,interestexpensesroseby€17,978thousandto€48,609thousandandcontainedmainlycouponpaymentsforsecuritizedliabilities.Theincreasewasstillbelowtheriseininterestincomefromstructuredproducts.Moreover,interestexpensesforcustomerdepositswentupduetoavolume-relatedrise.

“Netinterestresult”decreasedby€5,475thousandto€minus19,398thousandduetotheriseincouponpaymentsforsecuritizedliabilities(structuredproducts).Theexpenseswerecontrastedwithinterestincomefromstructuredproductsaswellaswithapositivevaluationresultfromtradablemoneymarketdepositsandfromderivativefinancialinstrumentsinthe“Netprofitonfinancialtradingactivities”(tradingresult).

Theliquidityderivedfromissuesisprimarilyinvestedintotradablemoneymarketdepositswithoutcurrentcouponswhichareincludedinthetradingbook.Theresultfromtradablemoneymarketdepositsincludedinthetradingbookisshownin“Netprofitonfinancialtradingactivities”.

Furthertothelowinterestrateenvironment,item“Netinterestresult”includedexpensesresultingfromnegativeinterestforloansandadvancesintheamountof€1,169thousand(2017:€936thousand).Incontrast,theitemincludedincomederivedfromnegativeinterestforliabilitiesintheamountof€172thousand(2017:€152thousand).

III. Income from securities and financial investmentsInthe2018financialyear,“Incomefromsecuritiesandfinancialinvestments”comingto€11,427thousand(2017:€7,947thousand)includedprimarilyincomefromdomesticandforeignsecurities.

in€thousand 2018 2017

fromloansandadvancestocreditinstitutions 10,351 4,101

fromloansandadvancestocustomers 549 800

fromfixed-interestsecurities 99 236

fromstructuredproducts 18,211 11,571

29,211 16,708

II. Interest and similar expenses

in€thousand 2018 2017

forliabilitiestocreditinstitutions (4,668) (2,958)

forliabilitiestocustomers (6,163) (1,876)

forsecuritizedliabilities (37,778) (25,796)

(48,609) (30,631)

IV. Fee and commission income

in€thousand 2018 2017

fromsecuritiesbusiness 9,782 9,341

fromECMtransactions 1,706 4,451

frompaymenttransactions 1,340 266

12,828 14,058

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VI. Net profit on financial trading activities”Netprofitonfinancialtradingactivities”accountedforthemajorpartoftheoperatingincomeandwentupfrom€61,338thousandin2017to€67,521thousandin2018.Thisfavorabledevelopmentresultedfrompositivenetvaluationsandnetproceedsofcertificatesandsharesaddingupto€154,362thousand.Incontrast,therewasanegativeresultfromthevaluationanddisposalofderivativesandmoneymarketdepositsheldforhedgingpurposesintheamountof€minus92,238thousand.Thevaluationofspotandfuturespositionscameto€plus€5,398thousand.

VII. Other operating incomeTheitemincludedmainlyincomefromthereleaseofprovisionsintheamountof€658thousand(2017:€614thousand).Inaddition,theitemincludedincomefromchargespassedontothirdpartiesintheamountof€315thousand(2017:€730thousand)aswellasotherincomeintheamountof€171thousand(2017:€546thousand).Thedecreasewasmainlyattributabletothelackofintra-groupincomefromchargesaswellastolowerincometochargespassedontothirdpartiesfurthertoachangeinthereportingmethod.

VIII. Other administrative expenses

in€thousand 2018 2017

Officespaceexpenses(maintenance,operation,administration,insurance) (1,003) (964)

Officesupplies,printedmatter,literature (322) (286)

ITcosts (3,472) (2,632)

Communicationcosts (1,063) (1,038)

Informationservices (3,298) (3,564)

Carexpensesandtravellingexpenses (652) (644)

Advertisingandpromotionalexpenses (1,491) (1,301)

Legal,advisoryandconsultancyservices (1,379) (1,045)

Contributionstoassociations (1,502) (1,151)

Resolutionfund (723) (541)

Sundry (2,179) (2,401)

(17,084) (15,567)

“Sundry”intheamountof€2,179thousand(2017:€2,401thousand)mainlyincludedexpenseschargedfortheManagementBoard.Therisein“Con-tributionstoassociations”wasattributabletohigherfeespayabletotheFinancialMarketAuthoritystemmingfromanincreaseinRaiffeisenCentrobankAG’sissuanceactivity.

IX. Other operating expenses“Otheroperatingexpenses“intheamountof€332thousand(2017:€907thousand)primarilyrelatedtoexpenseschargedintheamountof€311thousand(2017:€734thousand).Thedecreasewasattributabletoachangeinthereporting.

X. Net valuations and net proceeds Inthe2018financialyear,“Netvaluationsandnetproceeds”amountedto€minus1,665thousand(2017:€minus33thousand)andincludedmainlyadditionalexpensesnotcoveredbyprovisionsrelatingtoaliabilityforasubsidiaryamountingto€1,442thousand.Inaddition,theitemcontainedage-neralimpairmentallowancepursuanttoIFRS9addingupto€238thousand.

V. Fee and commission expenses

Thenetfeeandcommissionresultintheamountof€minus935thousand(2017:€plus1,994thousand)wascomprisedoffeeandcommissionincometotaling€12,828thousand(2017:€14,058thousand)andfeeandcommissionexpensesintheamountof€13,763thousand(2017:€12,064thousand).In2018,thedecreaseinnetfeeandcommissionresultwasmainlyattributabletolowerincomederivedfromequitycapitalmarkettransactions.

in€thousand 2018 2017

fromsecuritiesbusiness (12,365) (11,520)

fromECMtransactions 0 (232)

frompaymenttransactions (1,398) (312)

(13,763) (12,064)

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D.OtherDisclosuresContingent liabilitiesInaccordancewithArticle93oftheAustrianBankingAct,theBankislegallyobligedtoprovideforproportionatedepositinsuranceaspartofitsmem-bershipinaprofessionalassociation.RaiffeisenCentrobankAGisamemberoftheFachverbandderRaiffeisenbanken(professionalassociationoftheRaiffeisenBankingGroup).ThisalsoentailsanaffiliationwithÖsterreichischeRaiffeisenEinlagensicherungreg.GenmbH,Vienna.Inthefinancialyear,thetheoreticalclaimonthisinsurancewaslimitedtoarateof1.5percentoftheassessmentbasisinaccordancewithArticle22para2oftheAustrianBan-kingActatthebalancesheetdate,plustheweighteditemsofthesecuritiestradingbook,alsoinaccordancewithpart3CapitalRequirementRegulation(CRR).Thesecontingentliabilitieswerereportedatamarketvalueof€0.07.

Other contractual bank guarantee obligationsThefollowingassetswerepledgedassecurityforobligationsasat31/12/2018:

ItemA2Loansandadvancestocreditinstitutions

€ 397,971 thousand (31/12/2017:€ 358,265 thousand) Collateraldepositedwithbanksforthesecuritiesandoptionsbusinessandsecuritieslending

ItemA3Loansandadvancestocustomers

€ 98,432thousand (31/12/2017:€8,502thousand) Collateraldepositedwithstockexchangesandotherfinancialinstitutionsforthesecuritiesandoptionbusiness

ItemA4Fixed-interestsecurities€4,223thousand (31/12/2017:€2,348thousand) Collateraldepositedwithbanksforthesecuritiesandoptionsbusiness

Letters of comfortAsatthebalancesheetdateRaiffeisenCentrobankAGhadnotissuedanylettersofcomfort.

Commitments arising from fiduciary businessCommitmentsarisingfromfiduciarybusinesstransactionsnotincludedinthebalancesheetreferredtooneequityparticipationheldintrustintheamountof€7,091thousandon31/12/2018and31/12/2017.

XII. Deferred taxesIn2018,incomefromdeferredtaxassetscameto€4thousand(2017:taxexpensesof€8thousand).

XIII. Expenses for auditing the financial statements“Expensesforauditingthefinancialstatements”werecontainedinlegal,advisoryandconsultancyservices.Thereof€110thousandwereattributabletotheauditor(2017:€133thousand)and€23thousandtootherconsultancyservices(2017:€20thousand).

XI. Income taxes and other taxesIncometaxeswereasfollows:

in€thousand 2018 2017

Grouptaxation (1,046) (1,655)

Corporateincometax/Slovakbranch (77) (88)

Taxesforformerperiods(settlementofGroupcharge) (216) 397

Notrecognizedasforeignwithholdingtax (1,059) (769)

Current income taxes (2,397) (2,115)

Deferredincometaxes 4 (8)

(2,393) (2,123)

“Taxesforformerperiods”comingto€216thousand(2017:taxincome,of€397thousand)wereattributabletothesettlementoftheGroupchargefrompreviousyearsatRaiffeisenBankInternationalAG.Duetoariseinforeigndividendincomehigherforeignwithholdingtaxexpensesaddingupto€1,059thousand(2017:€769thousand)wereduein2018.

Inthe2018financialyear,“Othertaxes”cameto€331thousand(2017:€382thousand).Lowtaxexpenseswereattributabletonon-periodicVATtaxincomefollowingataxauditintheamountof€348thousand(2017:taxincome€146thousand).ThiswascontrastedwithariseinexpensesforthebanklevyofRaiffeisenCentrobankAGandtheSlovakbranchintheamountof€607thousandand€82thousand(2017:€544thousandand€9thousand).

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Own fundsTheownfundspursuanttopart2CRRwereasfollows:

in€thousand 31/12/2018 31/12/2017

Risk-weighted assets according to standard approach 105,450 120,793

Institutions 53,106 65,743

Corporates 32,898 33,031

Equityparticipations 6,240 9,038

Otherpositions 13,206 12,980

CVA risk 42,349 34,945

147,799 155,738

in€thousand 31/12/2018 31/12/2017

Capitalpaid-in 47,599 47,599

Earnedcapital 66,351 62,220

Core capital (tier 1 capital) before deductions 113,950 109,819

Intangiblefixedassets (105) (54)

Prudentvaluation (917) (2,119)

Holdingsinnon-significantinvestmentsinfinancialsectorentities (585) (1,455)

Core capital (tier 1 capital) after deductions 112,343 106,191

Supplementaryownfunds 0 0

Core capital 112,343 106,191

Supplementary capital 0 0

Supplementary own funds (after deductions) 0 0

Total own funds 112,343 106,191

Total risk-weighted assets 475,262 487,930

Corecapitalratio,creditrisk 76.0% 68.2%

Corecapitalratio,total 23.6% 21.8%

Ownfundsratio 23.6% 21.8%

OwnfundsrequirementspursuanttoArticle92ofRegulation(EU)No575/2013(totalrisk-weightedassets)wereasfollows:

Risk-weightedassetsforthecreditriskaccordingtoassetclasseswereasfollows:

in€thousand 31/12/2018 31/12/2017

Risk-weightedassets(creditrisk) 147,799 155,738

Standardapproach 105,450 120,793

CVA(creditvalueadjustment)risk 42,349 34,945

Risk-weightedassets(positionriskinbonds,equities,commoditiesandforeigncurrencies) 204,926 218,664

Risk-weightedassets(settlementanddeliveryrisks) 696 68

Risk-weightedassets(operationalrisk) 121,842 113,460

Total risk-weighted assets 475,262 487,930

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Number of staff

31/12/2018 Annual 31/12/2017 Annual average average

Salariedemployees 191 186 181 178

thereofpart-time 40 41 39 35

Advances and loans to members of the Management Board and Supervisory BoardAtthebalancesheetdatenoadvancesandloanshadbeengrantedtomembersoftheManagementBoard.Noadvances,loansorguaranteeshadbeengrantedtomembersoftheSupervisoryBoard.

Expenses for severance payments and retirement benefits“Expensesforseverancepaymentsandretirementbenefits”(includingcontributionstopensionfundsandstaffretirementbenefitplans,aswellasprovisionsforseverancepayments)fortheManagementBoard(includedin“Otheradministrativeexpenses”)andthestaffamountedto€1,477thousand(2017:€ 1,048thousand).Paymentstoemployeepensionfundstotaled€211thousand(2017:€181thousand).

Nobreak-downpursuanttoArticle239section1no3accordingtoArticle242section4wasprovided.

Remuneration for members of the Management Board and Supervisory BoardNobreak-downpursuanttoArticle239section1no4accordingtoArticle242section4wasprovided.

In2018,attendingfeesintheamountof€70thousandwerepaidtomembersoftheSupervisoryBoard(2017:€75thousand).

RemunerationsandexpensesonseverancepaymentsandretirementbenefitsformembersoftheManagementBoardwerebornebyRaiffeisenBankInternationalAG(anaffiliatedcompany)andwerechargedtoRaiffeisenCentrobankAG(includedin“Otheradministrativeexpenses”).

Group relationsThecompanyisanaffiliatedcompanyofRaiffeisenBankInternationalAG(ultimateholdingcompany),Vienna,andisintegratedinitsconsolidatedfinancialstatements,TheconsolidatedfinancialstatementsaredepositedwiththeCommercialCourtinViennaandareavailableattherespectiveparentcompany.

Since17December2008,thecompanyhasbeenamemberofthecorporategroupRaiffeisenZentralbankÖsterreichAktiengesellschaft(nowRaiffeisenBankInternationalAG)pursuanttoArticle9AustrianCorporationTaxAct.TheapplicationsubmittedbythecompanytobecomeagroupmemberofthecorporategroupRZBasofthebusinessyear2008pursuanttoArticle9AustrianCorporationTaxActwasnotifiedtothefinancialauthoritieson19December2008andwasapprovedbynoticeon22April2009.

Thetaxableresultsofthemembersofthegroupareattributedtotheparentcompany.Anytaxadjustmentsbetweentheparentcompanyandtheindividualmembersofthecorporategroupareregulatedintheformofataxallocationagreement.

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Distribution of the Profit 2018

The2018financialyearclosedwithanetprofitof€13,004,429.53.

TheManagementBoardproposestotheSupervisoryBoardthatadividendintheamountor€16.00persharebedistributedfromthenetprofitasat31December2018.Thiscorrespondstoatotaldividendamountingto€10,480,000.00for655,000shares.TheManagementBoardfurtherproposestoallocateanamountof€2,524,429.53tootherreserves.Otherreserveswillchangefrom€31,129,480.61to€33,653,910.14.

Significant Events after the Balance Sheet Date

Therewerenosignificanteventsafterthebalancesheetdate.

Members of the Management Board, the Supervisory Board and State Commissioners

Management Board WilhelmCeleda ChiefExecutiveOfficer ValerieBrunner MemberoftheManagementBoard Supervisory Board ŁukaszJanuszewski Chairmanasfrom25April2018 MemberoftheManagementBoardasfrom01March2018, RaiffeisenBankInternationalAG,Vienna HannesMösenbacher Chairmanuntil25April2018, MemberoftheManagementBoard, DeputyChairmanasfrom25April2018 RaiffeisenBankInternationalAG,Vienna MichaelHöllerer DeputyChairmanuntil25April2018, Plenipotentiary,RaiffeisenBankInternationalAG Memberasfrom25April2018

AndriiStepanenko Memberasfrom25April2018 MemberoftheManagementBoardasfrom01March2018, RaiffeisenBankInternationalAG,Vienna

WernerKaltenbrunner Memberuntil25April2018

State Commissioners AlfredHacker Karl-HeinzTscheppe

Vienna,4April2019TheManagementBoard

WilhelmCeledaChiefExecutiveOfficer

ValerieBrunnerMemberoftheManagementBoard

Vienna,4April2019TheManagementBoard

WilhelmCeledaChiefExecutiveOfficer

ValerieBrunnerMemberoftheManagementBoard

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Auditor’sReportReportontheFinancialStatements

AuditOpinion

Wehaveauditedthefinancialstatementsof

RaiffeisenCentrobankAG,Vienna,Austria,

whichcomprisetheBalanceSheetasat31December2018,theIncomeStatementfortheyearthenended,andtheNotes.

Inouropinion,thefinancialstatementspresentfairly,inallmaterialre-spects,thefinancialpositionoftheCompanyasat31December2018,anditsfinancialperformancefortheyearthenendedinaccordancewithAustrianGenerallyAcceptedAccountingPrinciplesandotherlegalrequi-rements(AustrianBankingAct).

BasisforOurOpinion

WeconductedourauditinaccordancewiththeRegulation(EU)No537/2014("APRegulation")andAustrianStandardsonAuditing.ThesestandardsrequiretheaudittobeconductedinaccordancewithInter-nationalStandardsonAuditing(ISAs).Ourresponsibilitiesunderthosestandardsarefurtherdescribedinthe"Auditor´sResponsibilities"sectionofourreport.WeareindependentoftheCompany,inaccordancewithAustriancompanylawandprofessionalregulations,andwehavefulfilledourotherresponsibilitiesunderthoserelevantethicalrequirements.Webelievethattheauditevidencewehaveobtainedissufficientandappro-priatetoprovideabasisforourauditopinion.

KeyAuditMatters

Keyauditmattersarethosemattersthat,inourprofessionaljudgment,wereofmostsignificanceinourauditofthefinancialstatements.Thesematterswereaddressedinthecontextofourauditofthefinancialstatementsasawhole,however,wedonotprovideaseparateopinionthereon.

Valuationofcertificates,warrantsandotherfinancialinstrumentsaswellasdynamichedging

The Financial Statement RiskTheissuanceofcertificatesandwarrantswithatotalvolumeofroughly2.7billionEUR,ieroughly73percentofthebalancesheettotal,aswellascontinualadjustmentsofhedgingpositions(dynamichedging)con-nectedtothisactivityrepresentthemajorbusinessactivitiesofRaiffeisenCentrobankAG.

TheManagementBoarddescribestheprocessofvaluatingassets-relatedandliabilities-relatedproductsunder"AccountingPolicies"withinthenotes.RaiffeisenCentrobankAGcalculatespricesforissuedcertificates,war-rantsandstructuredproductsbasedoninternalvaluationmodels.Marketpricerisksandinterestraterisksresultingfromtheissueofcertificatesarehedgeddynamically.Structuredproductsissuedontheliabilitiessidearereplicatedbycounter-positionsontheassetsside.Hedgingpositionsarecontinuallyadjustedtomarketconditions.Financialproductswithout

tradablepricesarereportedinthebalancesheetatfairvaluewhichisdeterminedbyvaluationmodelsor,inindividualcases,byexternal(indica-tive)quotesofbrokersorothercreditinstitutions.Followingtheprincipleofprudentvaluation,valueadjustmentsaremadeinthedeterminationofthefairvalueofparticularfinancialproducts.

Therisktothefinancialstatementsresultsfromdiscretionaryassumptionsandparametersappliedintheinternalmodelsandthuspotentialmisjudg-mentforthevaluationoffinancialinstrumentsreportedatfairvaluewithouttradablepricesandobservablemarketdata.Thesameappliestothede-terminationofthefairvaluebasedonexternal(indicative)pricingmethodsandvalueadjustments.

Our ResponseWetestedtheprocessesofvaluationoffinancialproducts,reconciliationofdepositoriesandadjustmentofgeneralledgerandsub-ledger.Inad-dition,weassessedtheimplementationofriskmanagementinthetradingbook,inparticularlimitreviews,marketconformitycheckandproductintroduction.Wetestedsignificantkeycontrolsinrespecttotheirdesign,implementationandoperatingeffectiveness.

Weinvolvedvaluationspecialiststoassesstheappropriatenessofthefairvaluesdeterminedbythebankaswellasofthevaluationmodels,valueadjustmentsandtheunderlyingparametersapplied.Wecomparedtheparameterswithmarketdataonasamplebasisandverifiedwhethertheyrepresentedadequateinputfactors.Further,weanalyzedthevaluead-justmentassumptionsandcriticallyassessedifthevalueadjustmentswereappropriatetodeterminethefairvalue.Inaddition,weassessedwhetherexternal(indicative)quoteswereadequatetobeusedasfairvaluesba-sedontheinquiriesoftheresponsibleemployeesandtheinspectionofdocumentsprovidedtous.Onasamplebasiswetestedwhethertheun-derlyingassumptionsforthecalculationwereconclusiveandrecalculatedthefairvalue.

Finally,weassessedwhetherthedisclosuresinthenotesregardingthevaluationmethodswereappropriateandcomplete.

ResponsibilitiesofManagementandtheAuditCommitteefortheFinancialStatements

ManagementisresponsibleforthepreparationandfairpresentationofthefinancialstatementsinaccordancewithAustrianGenerallyAcceptedAccountingPrinciplesandotherlegalrequirements(AustrianBankingAct)andforsuchinternalcontrolsasmanagementdeterminesarenecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

ManagementisalsoresponsibleforassessingtheCompany’sabilitytocontinueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoingconcernbasisofaccounting,unlessmanagementeitherintendstoliquidatetheCompanyortoceaseopera-tions,orhasnorealisticalternativebuttodoso.

TheauditcommitteeisresponsibleforoverseeingtheCompany´sfinancialreportingprocess.

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Auditors’Responsibilities

Ourobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsasawhole,arefreefrommaterialmisstatement–whetherduetofraudorerror–andtoissueanauditor’sreportthatincludesourauditopinion.Reasonableassurancerepresentsahighlevelofassurance,butprovidesnoguaranteethatanauditconductedinaccordancewiththeAPRegulationandAustrianStandardsonAuditing(andthereforeISAs),willalwaysdetectamaterialmisstatement,ifany.Misstatementsmayresultfromfraudorerrorandareconsideredmaterialif,individuallyorinaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthesefinancialstatements.

AspartofanauditinaccordancewiththeAPRegulationandAustrianStandardsonAuditing,weexerciseprofessionaljudgmentandmaintainprofessionalskepticismthroughouttheaudit.

Moreover:

— Weidentifyandassesstherisksofmaterialmisstatementsinthe financialstatements,whetherduetofraudorerror,wedesign andperformauditproceduresresponsivetothoserisksandobtain 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 withtherelevantprofessionalrequirementsinrespectofourinde- pendence,thatwewillreportanyrelationshipsandothereventsthat couldreasonablyaffectourindependenceand,whereappropriate, therelatedsafeguards.

— Fromthematterscommunicatedwiththeauditcommittee,we determinethosemattersthatwereofmostsignificanceintheauditi.e. keyauditmatters.Wedescribethesekeyauditmattersinour auditor’sreportunlesslawsorotherlegalregulationsprecludepublic disclosureaboutthematterorwheninveryrarecases,wedetermine thatamattershouldnotbeincludedinourauditreportbecausethe negativeconsequencesofdoingsowouldreasonablybeexpected tooutweighthepublicbenefitsofsuchcommunication.

ReportonOtherLegalRequirements

Management ReportInaccordancewithAustrianCompanylawthemanagementreportistobeauditedastowhetheritisconsistentwiththefinancialstatementsandpreparedinaccordancewithlegalrequirements.

ManagementisresponsibleforthepreparationofthemanagementreportinaccordancewithAustriancompanylawandotherlegalrequirements(AustrianBankingAct).

WehaveconductedourauditinaccordancewithgenerallyacceptedstandardsontheauditofmanagementreportsasappliedinAustria.OpinionInouropinion,themanagementreportisconsistentwiththefinancialstate-mentsandhasbeenpreparedinaccordancewithlegalrequirements.ThedisclosurespursuanttoSection243aUGB(AustrianCommercialCode)areappropriate.

StatementBasedonourknowledgegainedinthecourseoftheauditofthefinancialstatementsandourunderstandingoftheCompanyanditsenvironment,wedidnotnoteanymaterialmisstatementsinthemanagementreport.

Other InformationManagementisresponsibleforotherinformation.Otherinformationisallinformationprovidedintheannualreport,otherthanthefinancialstate-ments,themanagementreportandtheauditor’sreport.

Ouropiniononthefinancialstatementsdoesnotcoverotherinformationandwedonotprovideanykindofassurancethereon.

Inconjunctionwithouraudit,itisourresponsibilitytoreadthisotherinfor-mationandtoassesswhether,basedonknowledgegainedduringouraudit,itcontainsanymaterialinconsistencieswiththefinancialstatementsoranyapparentmaterialmisstatementoffact.Ifweconcludethatthereisamaterialmisstatementoffactinotherinformation,wemustreportthatfact.Wehavenothingtoreportinthisregard.

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Additional information in accordance with Article 10 EU RegulationAttheAnnualGeneralMeetingdated26April2017,wewereelectedasauditors.Wewereappointedbythesupervisoryboardon31July2017.WehavebeentheCompany’sauditorsformorethan20yearswithoutinterruption.

Wedeclarethatouropinionexpressedinthe"ReportontheFinancialStatements"sectionofourreportisconsistentwithouradditionalreporttotheauditcommittee,inaccordancewithArticle11APRegulation.

Wedeclarethatwehavenotprovidedanyprohibitednon-auditservices(Article5Paragraph1APRegulation)andthatwehaveensuredourinde-pendencethroughoutthecourseoftheaudit,fromtheauditedCompany.

Engagement Partner TheengagementpartnerisMrWilhelmKovsca..

Vienna,4April2019

ThisreportisatranslationoftheoriginalreportinGerman,whichissolelyvalid.Thefinancialstatements,togetherwithourauditor'sopinion,mayonlybepublishedifthefinancialstatementsandthemanagementreportareidenticalwiththeauditedversionattachedtothisreport.Article281section2UGB(AustrianCommercialCode)applies.

KPMGAustriaGmbHWirtschaftsprüfungs-undSteuerberatungsgesellschaft

signedbyWilhelmKovscaWirtschaftsprüfer

(AustrianCharteredAccountant)

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