half-year report as at 30 june 2018

14 February

2017 group profit: Valiant reported on a successful year. Consolidated net profit stood at CHF 119.2 million, 1.5 % higher than in 2016. Meanwhile, arrangements were made for the future management of the bank: Jürg Bucher will stay on as Chairman until 2020, when he will be succeeded by current CEO Markus Gygax.

21 March

Covered bond programme: Valiant issued a second tranche of its mortgage-backed covered bond. The programme continued to draw considerable interest, and the CHF 500 million tranche was placed within a short space of time.

27 April

Longstanding leader on quality: We came in third place in the private banking ranking compiled by business magazine BILANZ. In addition, we earned the title of “longstanding quality leader” for our consistently strong performance in the annual rankings.

22 May

Merger: Valiant completed the integration of Triba Partner Bank AG over the weekend of 19 – 21 May, when Triba clients became Valiant clients. The necessary changes were made to the commercial register, officially closing the chapter on Triba.

23 May

Higher dividend: At the Annual General Meeting in Bern, our shareholders approved the CHF 0.20 increase in the dividend, to CHF 4 per share. They also gave clear approval to all other motions of the Board of Directors.

At a glance

+ 23.5 %Operating profit Operating profit was up by CHF 15.5 million compared with the first half of 2017.

16.1 %Total capital ratio Valiant has a solid capital base and significantly exceeds FINMA requirements.

+ 0.8 %Growth in client loans Client loans increased by 0.8 % to CHF 23.7 billion.

109 bpNet interest margin Despite difficult conditions, we kept our net interest margin at the same level as the previous quarter.

59.8 mProfit Net profit rose by 14.5 % year on year.

HALF-YEAR REPORT 2018 / VALIANT HOLDING AG 3REPORT BY THE CHAIRMAN AND CEO

Dear Shareholders,

Valiant Bank is well on track in 2018. In the first six months, consolidated net profit rose by 14.5 % year on year to CHF 59.8 million. At the same time, we reined in our growth in view of the increasing risks in the real estate market. In line with our sound principle of putting quality before growth, we managed to keep our net interest margin at 1.09 % in Q2 – the same level as in Q1. Net interest income rose, as did trading income and commission income.

Net interest margin successfully maintained Net interest income came in at CHF 150.9 million, 5.3 % higher than in the year-earlier period. This increase was driven in particular by another sharp fall in interest expense, which we achieved thanks to measures such as our covered bond programme and the repayment of a subordinated bond. The net interest margin remained steady at 1.09 %, the same level as in Q1. The upward trend in our fee and commission business continued, with a 4.4 % increase to CHF 30.2 million. Other operating income was up 82.6 % to CHF 19.7 million. This was due to an extraordinary dividend payment by Aduno. We used this to make a CHF 9 million allocation to the reserves for general banking risks.

Controlled increase in costs Costs rose 4.0 % to CHF 113.9 million. This was due to the integration of Triba Partner Bank AG and our expansion into new regions. The cost / income ratio fell to 55.1 %, compared with 58.1 % in H1 2017. Operating profit was up by a solid CHF 15.5 million to CHF 81.4 million (+23.5%).

GrowthWe are sticking to our cautious risk policy, deliberately reining in growth and not taking on increased fi nancial risks.

Positive first half of 2018

HALF-YEAR REPORT 2018 / VALIANT HOLDING AG4 REPORT CHAIRMAN AND CEO

Controlled growth reflects our cautious risk policy At present, the Swiss real estate market is clearly exposed to increased risk on investment properties. As we do not wish to change our cautious risk policy, we have consciously decided not to enter into certain transactions. We have turned down mortgage applications amounting to CHF 80 – 90 million on investment properties. Our preference is to grow more slowly and therefore more profitably.

Loans were up by a total of 0.8 %, to CHF 23.7 billion. Mortgages rose to CHF 22.2 billion (+1.1 %). Growth from our regional expansion is going to plan.

Given the sustained pressure on the interest margin, we have intentionally accepted out-flows of expensive large client deposits. Overall, client deposits fell by 1.7 %, to CHF 18.4 billion.

Positive outlook for full-year 2018 We are pressing ahead with our 2020 strategy this year, opening new branches in Vevey (November) and Nyon (January 2019) and launch-ing digital services – such as online appointment scheduling – to make our clients’ finan-cial lives easier. In addition, our new, revamped branch concept, offering an innovative combination of digital and personal services in the client zones, has proven successful and will be rolled out to more existing branches.

For full-year 2018, we still expect operating profit to rise significantly and for net profit to be in line with the previous year’s figure. In light of the real estate market risks mentioned above, we expect lending growth to come in at the lower end of the 2 – 3 % target range.

We would like to thank you, our shareholders, for the trust you have placed in Valiant and wish you continued good health and success in 2018.

Jürg Bucher Markus GygaxChairman of the Board of Directors CEO

SimplicityWe want to continue making our clients’ financial lives easier – by offering the latest in digital services, such as online appointment scheduling.

ExpansionIn the months ahead, Valiant will open new branches in Vevey and Nyon. Further branch openings in eastern and northern Switzerland, will follow in 2019.

CONSOLIDATED BALANCE SHEET 5HALF-YEAR REPORT 2018 / VALIANT HOLDING AG

Consolidated balance sheet

Assets30 / 06 / 2018

in CHF thousands31 / 12 / 2017

in CHF thousandsChange

in CHF thousandsChange

as %

Cash and cash equivalents 2,618,104 2,558,070 60,034 2.3 

Due from banks 183,455 124,791 58,664 47.0 

Due from customers 1,549,248 1,608,815 – 59,567 – 3.7 

Mortgage loans 22,149,707 21,911,710 237,997 1.1 

Trading portfolio assets 2,640 10,261 – 7,621 – 74.3 

Positive replacement values of derivative financial instruments 8,860 17,194 – 8,334 – 48.5 

Financial investments 862,373 941,437 – 79,064 – 8.4 

Accrued income and prepaid expenses 24,378 23,329 1,049 4.5 

Non-consolidated holdings 212,136 203,139 8,997 4.4 

Tangible fixed assets 132,688 140,149 – 7,461 – 5.3 

Intangible assets 2,134 2,615 – 481 – 18.4 

Other assets 24,539 22,077 2,462 11.2 

Total assets 27,770,262 27,563,587 206,675 0.7 

Total subordinated claims 0 0 0 0.0 

of which subject to mandatory conversion and / or conditional write-off 0 0 0 0.0 

Liabilities and equity

Due to banks 804,237 755,443 48,794 6.5 

Customer deposits 18,198,672 18,479,867 – 281,195 – 1.5 

Negative replacement values of derivative financial instruments 23,144 20,944 2,200 10.5 

Medium-term notes 205,227 243,085 – 37,858 – 15.6 

Bond issues and central mortgage institution loans 6,112,068 5,641,162 470,906 8.3 

Accrued expenses and deferred income 112,232 124,986 – 12,754 – 10.2 

Other liabilities 74,910 59,749 15,161 25.4 

Provisions 33,658 35,769 – 2,111 – 5.9 

Reserves for general banking risks 34,786 25,786 9,000 34.9 

Share capital 7,896 7,896 0 0.0 

Capital reserve 592,676 592,750 – 74 – 0.0 

Retained earnings reserve 1,510,995 1,454,964 56,031 3.9 

Treasury shares 0 0 0 0.0 

Consolidated net profit 59,761 119,201 – 59,440 – 49.9 

Total equity capital (excluding minority interests) 2,206,114 2,200,597 5,517 0.3 

Minority interests in equity capital 0 1,985 – 1,985 – 100.0 

of which minority interests in consolidated net profit 0 35 – 35 – 100.0 

Total equity capital (including minority interests) 2,206,114 2,202,582 3,532 0.2 

Total liabilities and equity 27,770,262 27,563,587 206,675 0.7 

Total subordinated liabilities 0 150,000 – 150,000 – 100.0 

of which subject to mandatory conversion and / or debt waiver 0 0 0 0.0 

Off-balance-sheet transactions30 / 06 / 2018

in CHF thousands31 / 12 / 2017

in CHF thousandsChange

in CHF thousandsChange

as %

Contingent liabilities 296,771 307,108 – 10,337 – 3.4 

Irrevocable commitments 707,034 680,624 26,410 3.9 

Commitments relating to calls on shares and other equities 50,295 50,296 – 1 – 0.0 

Credit commitments 0 0 0 0.0 

6 HALF-YEAR REPORT 2018 / VALIANT HOLDING AGCONSOLIDATED FINANCIAL STATEMENTS

Interest income30 / 06 / 2018

in CHF thousands30 / 06 / 2017

in CHF thousandsChange

in CHF thousandsChange

as %

Interest and discount income 176,538 175,074 1,464 0.8 

Interest and dividend income from trading portfolios 0 0 0 0.0 

Interest and dividend income from financial investments 11,839 13,229 – 1,390 – 10.5 

Interest expense – 37,461 – 44,931 7,470 – 16.6 

Net interest income before value adjustments for credit risk, and loan losses 150,916 143,372 7,544 5.3 

Value adjustments for credit risk, and loan losses – 176 – 921 745 – 80.9 

Net interest income after value adjustments for credit risk, and loan losses 150,740 142,451 8,289 5.8 

Fee and commission income

Commission income from securities trading and investment activities 19,755 19,713 42 0.2 

Commission income from lending activities 1,874 1,678 196 11.7 

Commission income from other services 14,948 13,793 1,155 8.4 

Commission expense – 6,328 – 6,220 – 108 1.7 

Net fee and commission income 30,249 28,964 1,285 4.4 

Net trading income and fair-value adjustments 5,742 5,330 412 7.7 

Other operating income

Income from the disposal of financial investments 569 141 428 303.5 

Income from holdings 17,705 9,548 8,157 85.4 

of which holdings recognised using the equity method 14,966 6,836 8,130 118.9 

of which from other non-consolidated holdings 2,739 2,712 27 1.0 

Net income on real estate 1,080 1,105 – 25 – 2.3 

Other ordinary income 353 8 345 4,312.5 

Other ordinary expenses – 17 – 20 3 – 15.0 

Net other operating income 19,690 10,782 8,908 82.6 

Total operating income 1 206,597 188,448 18,149 9.6 

Operating expenses

Personnel expenses – 62,508 – 59,155 – 3,353 5.7 

General and administrative expenses – 51,408 – 50,411 – 997 2.0 

Total operating expenses – 113,916 – 109,566 – 4,350 4.0 

Depreciation and amortisation of tangible fixed and intangible assets, and impairments of holdings – 11,015 – 11,936 921 – 7.7 

Other provisions and losses – 113 – 122 9 – 7.4 

Operating profit 81,377 65,903 15,474 23.5 

Group profit

Extraordinary income 2,416 0 2,416 n / a

Extraordinary expenses 0 0 0 0.0 

Changes in reserves for general banking risks – 9,000 0 – 9,000 n / a

Taxes – 15,032 – 13,725 – 1,307 9.5 

Consolidated net profit (including minority interests) 59,761 52,178 7,583 14.5 

Minority interests in consolidated net profit 0 0 0 0.0 

Consolidated net profit 59,761 52,178 7,583 14.5 

1 Before value adjustments for credit risk, and loan losses.

Consolidated income statement

HALF-YEAR REPORT 2018 / VALIANT HOLDING AG 7STATEMENT OF CHANGES IN EQUITIYAND CONDENSED NOTES

Statement of changes in equity and condensed notes

Share capital in CHF

thousands

Capital reserve in CHF

thousands

Retained earnings

reserve in CHF

thousands

Reserves for general

banking risks

in CHF thousands

Treasury shares in CHF

thousands

Minority interests

in CHF thousands

Profit for the period in CHF

thousands

Total in CHF

thousands

Equity at the beginning of the reporting period 7,896 592,750 1,454,964 25,786 0 1,985 119,201 2,202,582

Appropriation of previous year’s net profit 56,031 – 56,031 0

Acquisition of treasury shares 2,710 2,710

Sale of treasury shares – 2,710 – 2,710

Gain (loss) from the sale of treasury shares – 107 – 107

Dividends and other distributions 33 – 63,170 – 63,137

Other allocations to (withdrawals from) the reserves for general banking risks 9,000 9,000

Purchase of minority shares – 1,985 – 1,985

Consolidated net profit 59,761 59,761

Equity at the end of the reporting period 7,896 592,676 1,510,995 34,786 0 0 59,761 2,206,114

Changes to the principles of consolidation as well as any error corrections and their impact on the interim financial statementsThere were no changes to the principles of consolidation or corrections of errors.

Information on factors that influenced the economic position of the bank during the current period or compared with the previous periodThere were no material factors that influenced the bank's financial situation during the reporting period or compared with the previous period.

Material events after the date of the half-year financial statementsSince the balance-sheet date, no extraordinary events have occurred that might have a material impact on Valiant’s assets, financial position or income situation during the r eporting period.

Notes on the methods used to identify credit risk and to determine impairmentsClient credit ratings are carried out by means of a credit rating system that is used to estimate clients’ probability of default. Since January 2018, Valiant has been using the Creditmaster system from RSN Risk Solution Network AG, which replaces the RASY credit rating system. The use of Creditmaster as the new rating system has no material impact on value adjustments or provisions for credit risk. The loans listed as impaired as at 31 December 2017 were migrated and maintained as such. The new credit rating system resulted in changes to the value adjustments / provi-sions at client level within the individual value adjustments for latent credit risks, which were for the most part neutral-ised at portfolio level.

Extraordinary income30 / 06 / 2018

in CHF thousands30 / 06 / 2017

in CHF thousands

Gain from the sale of properties 2,156 0

Reversal of negative goodwill 260 0

Total extraordinary income 2,416 0

Extraordinary expenses

Total extraordinary expenses 0 0

Financial calendar

8 November 2018 Interim financial statements at 30 September 2018

13 February 2019 2018 full-year results

16 May 2019 Annual General Meeting of Valiant Holding AG in Lucerne

Publication details

PublisherValiant Holding AG

ContactValiant Holding AGInvestor RelationsP.O. Box, 3001 Bernvaliant.chir@valiant.ch

Editorial teamValiant Holding AGGeneral Secretariat, Finance and Corporate Communication

Concept, design, productionCrafft Kommunikation AGPhotography Title page: Reto Andreoli; ValiantManagement of Valiant Holding AG: Markus BertschiPrint Suter&Gerteis34, 000 copies total print run (DE: 32, 000 copies, FR: 2,000 copies)

This text is a translation of the original text in German (“Halbjahresbericht per 30. Juni 2018, Valiant Holding AG”). Only the German version is authoritative.