INNOVATION AWARD WINNING OUTSTANDING COMPETENCE … · 2020. 4. 30. · INNOVATION AWARD WINNING OUTSTANDING COMPETENCE CENTER FOR EQUITIES AND CERTIFICATES HIGH LEVEL INNOVATION

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-


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-


TES HIGH LEVEL INNOVATION AWARD WINNING OUTSTANTE

2019Annual F inancial Report

03–09 Company 03 AnOverview 03 PrefacebytheChairmanoftheSupervisoryBoard 04 CEOEditorial 05 TheYearinReview 06 CorporateBodies 07 CorporateGovernance/Compliance 08

10–22 ManagementReport 10 EconomicEnvironment 11 DevelopmentofBusinessandEarnings 11 SegmentReporting 14 PerformanceIndicators 16 RiskManagement 18 InternalControlSystem 20 HumanResources 21 Outlook2020 21 ResearchandDevelopment 22

22 StatementofLegalRepresentativespursuantto§124StockExchangeAct 22

23–47 FinancialStatements 23 BalanceSheet 24 IncomeStatement 26 DevelopmentofFixedAssets 27 Notes 29 Auditor'sReport 46

48 Publisher'sDetails 48

ThisisatranslationfromGerman.IncaseofanydiscrepanciesbetweentheEnglishandGerman version,theGermantextshallprevailandbebinding.

Annual Financial Report 2019: An Overview

TheCompany

Key Data of Raiffeisen Centrobank AG

in€ thousand/inpercent 2019 2018 Change

Keyratios

Operatingincome 59,292 59,759 (0.8%)

Operatingexpenses (44,898) (42,366) 6.0%

Resultonordinaryactivities 14,546 15,728 (7.5%)

Netprofitfortheyear 11,573 13,004 (11.0%)

Balancesheettotal 4,440,234 3,735,352 18.9%

Return-on-Equitybeforetax 12.5% 13.8% -

Return-on-Equityaftertax 9.9% 11.4% -

OverallReturn-on-Assets(aftertax) 0.3% 0.3% -

Cost/incomeratio 75.7% 70.9% -

Bank-specificinformation

Corecapital 108,094 112,343 (3.8%)

Totalrisk-weightedassets 520,337 475,262 9.5%

Surplusofownfunds 66,467 74,322 (10.6%)

Corecapitalratio 20.8% 23.6% -

Corecapitalratio/creditrisk 73.1% 76.0% -

Ownfundsratio 20.8% 23.6% -

Liquiditycoverageratio(LCR) 291.1% 219.6% -

Non-financialperformanceindicators

Employeesatyear-end 195 191 2.1%

Averagenumberofemployees 195 186 4.8%

Stockexchangememberships 10 10 -

Numberofnewlyissuedwarrantsandcertificates 4,174 4,869 (14.3%)

4

DearLadiesandGentlemen,

Duringthe2019financialyear,themembersoftheSupervisoryBoardanditsCommitteeswereinfor-medinatimelyandcomprehensivemannerbytheManagementBoardaboutthedifferentbusinessareas,riskassessmentsandrelevantbusinessdeve-lopmentsinRaiffeisenCentrobankAG.InformationwasprovidedverballyaswellasinwrittenformandenabledtheSupervisoryBoardtofulfillitsdutytosuperviseandadvisetheManagementBoard.

Theyear2019broughtchangestoRaiffeisenCentrobankAG:fromaleadershippointofview,theappointmentofHaraldKrögerasCEOandHeikeArbterasMemberoftheManagementBoardasof1May2019shouldbehighlighted.TheysucceededWilhelmCeleda,whobecameCEOofKathreinPrivatbankAktiengesellschaft(Kathrein),andValerieBrunner,whoreturnedtoRaiffeisenBankInternationalAG(RBI).AsCEOMr.KrögerisresponsiblefortheLegal&Participa-tions,HumanResources,Risk,Compliance,Finance,Audit,ITaswellasOperationsdivisionsand,thus,alsoperformsthefunctionsofChiefRiskOfficerandChiefFinancialOfficer.MsArbterisresponsibleforthecorebusinessareasofStructuredProducts,GlobalEquitySales,EquityCapitalMarkets,Trading&TreasuryandInvestmentServices,andbringshermanyyearsofexperienceinRaiffeisenCentrobankAGandexcellentmarketbackgroundtothetable.

Fromabusinesspointofview,astrategicdecisionwastakenregardingtheInvestmentServicesbusinessofRaiffeisenCentrobankAG.FollowingamutuallyagreeddecisionwithRBI,theInvestmentServicesdivisionofRaiffeisenCentrobankAGandthecustomersservedinthissegmentweretransfer-redtoKathreinattheendofQ12020*.Raiffeisen

CentrobankAGwillfocusonitsstrengthinthesecuritiesbusinesssothatitcancontinuetosuccessfullyfulfilitsroleasaleadingcertificatesandequitieshouse.Thisdecisionsupportsthepro-ductfocusofRaiffeisenCentrobankAGasthecerti-ficatesandequitieshouseofRBI,preventsoverlapsintheprivatebankingsector(aclearfocusofKathrein),andensuresthattheinvestmentservicesproductwillonlybeofferedwithinoneunit.

AgainstthebackdropofthechangeswithinRaiffei-senCentrobankAGandtheongoingturbulentmarketenvironment,theperformanceoftheemployeesduringthepastyearwasparticularlypositive.RaiffeisenCentrobankAGremainedthebiggestplayerontheAustrianstockmarketwithamarketshareof11.4percentofthetradingmarketvolumeontheViennaStockExchange,whereitconsolidateditspositionwith17specialistand39marketmakingmandates.TheStructuredProductsdivisionwasabletoclosetheyearwithanabsolu-terecordhighopeninterestvolumeofEUR4.6billion.Intheequitycapitalmarketssegment,Raiffei-senCentrobankAGwasabletomaintainitspositi-onontheViennaStockExchangeandconcludedseveralequitytransactionsinEuropetogetherwiththeRBInetworkbanks.

Asafinalpoint,Iwouldliketothankallthosewhohelpedachievethegoodresultsinthepreviousyear.

*)retroactivelyasat30June2019

Preface by the Chairman of the Supervisory Board

ŁukaszJanuszewskiChairmanoftheSupervisoryBoard

5

LadiesandGentlemen,dearReader,

Theyear2019stoodforbothchangeandstabilityforRaiffeisenCentrobankAG.On1May2019,WilhelmCeledaandValerieBrun-ner,whoaccountedfortheBank’sdevelopmentformanyyears,lefttheManagementBoard.TogetherwithHeikeArbter,whohasmanyye-arsofexperienceinRaiffeisenCentrobankAGandisanoutstandingsecuritiesexpert,ItookovertheManagementBoardagendasinMay2019.Wearecommittedtofulfillingtheseres-ponsibletaskswithprofessionalism,diligenceandentrepreneurialvision.

Thefocusisonourcoreareasofbusiness,StructuredProducts,EquityTradingandSales,EquityCapitalMarketsandCompanyResearch,whicharethepillarsforprovidingcontinuityandgrowthforRaiffeisenCentrobankAG.Inthecourseofastrategicanalysisinco-operationwithRBIitwasdecidedtodemergeourInvestmentServicessegmentandtotransferittoKathreinattheendofQ12020*.Raiffei-senCentrobankAGisnowfocusingonthecoreequitybusinesswithitssoundyieldpoten-tial.AsthecompetencecenterforcertificatesandequitiesinAustriaandtheCEEregionweareconfidenttoseizefavorablebusinessopportunitiesinthesesegments.

ThesechangeswithinRaiffeisenCentrobankAGimplysettingthecoursefortheBank’sfutureandatthesametimepursuingonemajorobjective:tosharpenourprofilebasedonourstrengths,tomotivateouremployeesandtowinnewtalentsforourteams,toserviceourcustomerswithevengreaterproductandservicequality,tocontinuouslyexpandour

marketshare,andtobewell-preparedfortheyearstocome.AllRaiffeisenCentrobankAGemployeesareworkingjointlytoachievethesegoalswithfulldedicationandcommitment.

Thisisreflectedinthe2019annualresultwhichyieldedarecordturnoverintheStructuredProductssegmentandagoodcontributionoftheoverallequitybusinessagainsttheback-dropofapersistentlychallengingbusinessandstockexchangeenvironment.Numerousnatio-nalandinternationalawards,whichwewoninthepastyear,underpinRaiffeisenCentrobankAG’soutstandingachievements.

TheimpactoftheCovid-19crisis,whichtransla-tedintonegativeeconomiceffectsandstockexchangeslumps,posesconsiderablechallen-gesforourbusinessinthe2020financialyear,whichwestrivetocontainbybeingallthemorecommittedtoprovidingourclientswithcusto-mizedproductsinthismarketphase.

Iwouldliketoexpressmythankstoouremplo-yeesfortheirexcellentworkandcommitmentinthepastyear.Moreover,Iwouldalsoliketothankourpartnersandcustomersfortheirgoodcooperationandconfidence.

Bestregards,

*)retroactivelyasat30June2019

CEO Editorial

HaraldKrögerCEOofRaiffeisenCentrobankAG

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8January–CrossSellPartnerAwardForthefourthtimeTatraBankaacknowledgesRaiffeisenCentrobankAGforitscustomizedstructuredproducts,theirperformanceandsuccessrate.

17–18January–FirstTurkishinvestordaysinNewYorkCityForthefirsttimeRaiffeisenCentrobankAG15bringstogetherTurkishlistedcompaniesandtopUSinvestors.Theinvestorconferenceismetwithinterestbybothcompaniesandinvestors.

6February–RaiffeisenCentrobankAGwinsagainNumberOneAwardsbyBörseSocialNetworkRaiffeisenCentrobankAGreceivestheNumberOneAwardsaslargestcertificatesissuerandlargestspecialist/marketmakerforthefifthtimeinarow.

9February–StockexchangedayinViennaRaiffeisenCentrobankAGgivesamarketoverviewandshowswhichtypesofcertificatesprovi-deattractiveyieldsinthecurrentmarketenvironment.

26February–RaiffeisenCentrobankAGawardedCapitalMarketLeaderbyWarsawStockExchangeForthethirdtime,RaiffeisenCentrobankAGishonoredbytheWarsawStockExchangeforitspioneeringroleindevelopingthePolishcertificatesmarket.14March–RaiffeisenCentrobankAGremainslargestdomesticspecialistandmarketmakerontheViennaStockExchangeIntheannualspecialistandmarketmakingtendersontheViennaStockExchange,RaiffeisenCentrobankAGbecomesagainthelargestdomesticmarketparticipantinthesesegments.

1–3April–InvestorconferenceinZürsMorethan70companiesmeetwith125institutionalinvestorssuchaspensionfunds,fundsorinsurancecompaniesattheannualflagshipconferenceinZürs,whichisorganisedbyRaiffeisenCentrobankAGforthe18thtime.

5–6April–InvestStuttgartTheStructuredProductsteamrepresentsRaiffeisenCentrobankAGatthelargestfinancialfairinGermanspeakingcountriesandpresentsinterestinginvestmentopportunitieswithattractiveyieldpotentialinthecurrentmarketenvironment.

1May–HaraldKrögerandHeikeArbternewmembersofRaiffeisenCentrobankAG’sManagementBoardHaraldKrögerbecomesCEOandisresponsiblefortheBank’senablingfunctions.AsmemberoftheManagementBoardandlong-standingstructuredproductsexpertHeikeArbteroverseesallbusinessactivitiesofRaiffeisenCentrobankAG.ThetwosucceedWilhelmCeledaandValerieBrunner,whohaveassumednewmanagementroleswithintheRBIGroup.

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1May–RaiffeisenCentrobankAGhasanewsetupinitsmarketsareaPhilippArnoldandRomanBauerheadtheStructuredProductsareaofthelargestAustriancertificatesprovider.OzgurGuyuldarheadstheEquityCapitalMarkets(ECM)segment.

10May–OverallwinnerCertificateAwardAustria2019RaiffeisenCentrobankAGwinstheawardasbestAustrianissuerinthe13thCertificateAwardceremony,themainawardinthedomesticcertificatesbusiness.Inthenewlyintroducedcategory“InnovationoftheYear“,theBankishonoredforitsonlineinformationandcommunicationtool“CertificateFinder”.

15May–TurkishdayinWarsawRaiffeisenCentrobankAGinvitesinvestorstomeetthemanagementandIRteamsoftopTurkishlistedcompanies.

18–19September–PolishandAustriandaysinBucharestTwoinvestoreventsofRaiffeisenCentrobankAGtakeplaceinBucharest,bringingtogetherRomanianinvestorswithPolishandAustriancompaniesinnumerousone-on-onemeetings.

30September–ManagementBoarddinnerforpotentialissuersTogetherwithRBIandtheViennaStockExchange,RaiffeisenCentrobankAGorganizesaboarddinnerfor30potentialissuersandpresentsthebenefitsandchallengesassociatedwithastockmarketlisting.

15October–RaiffeisenCentrobankAGpresse_talk:focusonsustainableinvestmentsHeikeArbter(MemberoftheManagementBoard),BerndMaurer(HeadofCompanyResearch)andPhilippArnold(HeadofStructuredProductsSales)discusscurrentdevelopmentsininvestmentstrategiesbasedonenvironmental,socialandgovernancecriteria.

18October–Romanianinvestors‘dayinStockholmIncooperationwiththeBucharestStockExchange,RaiffeisenCentrobankAGinvitesRomaniancompaniestomeetwithScandinavianinvestors.

17–18October–GEWINN-fairAtthesummitoftheAustrianeconomicandfinancialsector,RaiffeisenCentrobankAGpresentsitscertificatesandinformsaboutinvestmentopportunitiesforeverymarketphase.

21November–AustriandayinWarsawIncooperationwiththeViennaStockExchange,RaiffeisenCentrobankAGinvitesAustriancompaniestoone-on-onemeetingswithPolishinvestors.

18December–RaiffeisenCentrobankAGcelebrates10thanniversaryofcooperationwithumbrellaassociationforEuropeancertificatesissuersIn2009,ZertifikateForumAustria,chairedbyHeikeArbter,andEuropeanpartnersfoundedtheEuropeanStructuredInvestmentProductsAssociation(EUSIPA)inBrussels.HeikeArbterhasbeenpresidentofEUSIPAsince2016.

8

Corporate BodiesManagementBoard WilhelmCeleda ChiefExecutiveOfficeruntil30April2019 ValerieBrunner MemberoftheManagementBoarduntil30April2019 HaraldKröger ChiefExecutiveOfficerasfrom01May2019 HeikeArbter MemberoftheManagementBoardasfrom01May2019 SupervisoryBoard ŁukaszJanuszewski Chairman MemberoftheManagementBoard, RaiffeisenBankInternationalAG HannesMösenbacher DeputyChairman MemberoftheManagementBoard, RaiffeisenBankInternationalAG MichaelHöllerer Member ChiefFinancialOfficer, RaiffeisenBankInternationalAG

AndriiStepanenko Member MemberoftheManagementBoard, RaiffeisenBankInternationalAG,Vienna

ChristianMoucka Memberasfrom29April2019 GeneralManagement, RaiffeisenbankRegionBaden MatthiasZitzenbacher Memberasfrom29April2019 GeneralManagement, RaiffeisenbankLeoben-BruckeGen(mbH)

StateCommissioners AlfredHacker Karl-HeinzTscheppe

Vienna,03April2020TheManagementBoard

HaraldKrögerChiefExecutiveOfficer

HeikeArbterMemberoftheManagementBoard

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SupervisoryBoard

TheSupervisoryBoardmonitorsandassiststheManagementBoardinthemanagementofRaiffeisenCentrobankAG,inparticularwithregardtodecisionsoffundamentalimportance.TheSupervisoryBoardhassetupanAuditCommittee.

ThebylawsfortheSupervisoryBoardandtheAuditCommitteeformulateinconcretetermsalistofbusinesstransactionsthataresubjecttotheapprovaloftheSupervisoryBoardortheAuditCommittee.

CollaborationbetweentheSupervisoryBoardandManagementBoard

AkeyprincipleofgoodcorporategovernanceistheopendiscussionbetweentheManagementBoardandtheSupervisoryBoardortheAuditCommitteeandwithinthesegoverningbodies.

TheManagementBoardsubmitsregular,timelyandcomprehensivereportstotheSupervisoryBoardaboutallrelevantaspectsoftheBank’sbusinessdevelopment,includingtherisksituationandriskmanagementmeasuresattheBank.TheManagementBoardimmediatelyreportsallimportanteventstotheChairmanoftheSupervisoryBoardandalsoallreportsimmediatelyonallcircumstancesthatareofmaterialrelevancetotheprofitabilityorliquidityoftheCompany.

TheManagementBoardcoordinatesthestrategicorientationoftheCom-panywiththeSupervisoryBoardanddiscussesthestatusoftheimplemen-tationofthestrategyatregularintervalswiththisBoard.TheSupervisoryBoardmeetsatleastfourtimesperfinancialyear.

TransparentInformationPolicy

RaiffeisenCentrobankAGattachesconsiderableimportancetoopenandtransparentcommunicationwithitsshareholdersandtheinterestedpublic.Thus,RaiffeisenCentrobankAGprovidesonitswebsite:

•Pressreleases,keydata•Shareholderstructure•DownloadableannualreportsinPDFformat•DownloadablesecuritiesprospectusesinPDFformat

CriteriafortheIndependenceoftheSupervisoryBoardMembersforthePurposesoftheAustrianCodeofCorporateGovernance

ASupervisoryBoardmemberisconsideredtobeindependentwhenheorsheisnotinanybusinessorpersonalrelationshipwiththeCompanyoritsManagementBoardthatcouldcauseamaterialconflictofinterestandthatcouldthereforeinfluencethebehavioroftheBoardmember.

AllmembersoftheSupervisoryBoardofRaiffeisenCentrobankAGareindependentaccordingtothedefinedcriteriaforindependence.

Moreover,twomembersofRaiffeisenCentrobankAG’sSupervisoryBoardfulfilthecriteriafortheindependenceofSupervisoryBoardMemberspursuantto§28apara5boftheAustrianBankingAct.

Corporate GovernanceRaiffeisenCentrobankAG’ssharesarenotlistedonastockexchange.AsleadingAustrianissuerofstructuredproductsandasoneofthemostimportantsecuritiesbrokersinViennaandotherfinancialcenters,RaiffeisenCentrobankAGorientsitselftowardstherulesandprinciplesofgoodandresponsiblecorporategovernanceassetforthintheAustrianCodeofCorporateGovernancetotheextentthattheserulesandprinciplesareapplicableforRaiffeisenCentrobankAG.RaiffeisenCentrobankAGhasnot(yet)formallyundertakentocomplywiththeAustrianCodeofCorporateGovernance.

EfficientcollaborationbetweenthevariousbodiesoftheCompanybasedonastrongfoundationoftrust,protectionofitsshareholders'interestsandopenandtransparentcommunicationisakeyelementinRaiffeisenCentro-bankAG’sapproachtogoodcorporategovernance.Thefollowingcom-mentsillustratesomeaspectsofRaiffeisenCentrobankAG’scompliancewiththeCodeinthereportingperiod(1Januaryto31December2019).

ManagementBoard

TheManagementBoardismadeupoftwopeopleandhassoleresponsibilitytomanagetheCompanybasedonconcretegoals,conceptsandguidelines.TheManagementBoardpursuesafuture-orientedapproachtakingintoaccountstandardsofgoodcorporatemanagementandtheinterestsofthepublicwell-being.

ThebylawsfortheManagementBoardasadoptedbytheSupervisoryBoardstipulatethatmeetingsoftheManagementBoardshallbeheldatregularintervals.TheChairmanoftheManagementBoardshallconveneandchairthemeeting.ThemeetingsoftheManagementBoardfocusonamutualexchangeofinformationanddecision-makinginallmatterssubjecttoapprovalbytheManagementBoard.TheManagementBoardconductsthebusinessoftheCompanyinaccordancewiththelaw,theCompanybylawsandthebylawsfortheManagementBoard.ThebylawsfortheManagementBoardcontainstipulationsregardingthedisclosureandreportingobligationsoftheManagementBoardandformulateinconcretetermsalistofbusinesstransactionsthataresubjecttoapprovalbytheSupervisoryBoard.

RulesforProprietaryTrading

TheManagementBoardtakesitsdecisionsonthebasisofthemembers’professionalexpertiseandirrespectiveofanypersonalinterests.MembersoftheManagementBoarddiscloseallmaterialpersonalinterestsintransactionsofRaiffeisenCentrobankAGtotheSupervisoryBoard.ConflictsofinteresthavetobereportedtoComplianceandtotheSupervisoryBoard.AlltransactionsbetweenRaiffeisenCentrobankAGandthemembersoftheManagementBoardorpartiesrelatedtothemareconductedinaccordancewithgenerallyacceptedindustrystandardsandareapprovedbytheSupervisoryBoardinadvance.

MembersoftheManagementBoardarenotpermittedtooperatebusinessesorbeofficersinotherbusinessentitieswithouttheapprovaloftheSupervisoryBoardunlesstheseentitiesareinagrouprelationshipwithRaiffeisenCentrobankAGorunlessRaiffeisenCentrobankAGholdsaninterestintheseentities.Furthermore,membersoftheManagementBoardarenotpermittedtoconductbusinesstransactionsontheirownaccountorthatofanotherpartyortoholdsharesinanothercompanyasapersonallyliablepartnerintheareasinwhichRaiffeisenCentrobankAGisactivewithouttheapprovaloftheSupervisoryBoard.

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RBI’sCodeofConductarebindingforandshallbeobservedbyallemployeesofRaiffeisenCentrobankAG.TheprovisionshavebeenimplementedwithinRaiffeisenCentrobankAGinabindingsetofrulesincludinge.g.theComplianceandAnti-Money-LaunderingManualandorganizationalinstructions.

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

WithMiFIDII/MiFIR(MarketsinFinancialInstrumentsDirectiveII/MarketsinFinancialInstrumentsRegulation)whicharebasedonMiFIDI,therulesforequitytradingandinvestmentadvisoryservices(e.g.stricterrulesforOTCtransactions,comprehensivecustomerinformationrequirementsetc.)havebeenamendedandtightened.

ThePRIIPregulations(PackagedRetailandInsurance-basedInvestmentProducts)extendcustomerinformationobligationsforPRIIPissuers,suchasRaiffeisenCentrobankAG.Retailinvestorsmustbeprovidedwithstandardizedinformation(keyinformationdocuments)onthebasicfeaturesandrisksassociatedwithaproduct.

Compliance

ThedepartmentCompliance,OperationalRiskandICS(InternalControlSystem)assumesresponsibilityformonitoringthenon-financialriskswithinRaiffeisenCentrobankAG.Theseareasofresponsibilityhavebeenbundledintooneorganizationalunitwhichprovidesfortheoverallassessmentandintegratedcontrolofnon-financialrisks,therapidreactiontonewlyemergingorchangingrisks,andthesafeguardingoftheefficiencyandefficacyofinternalcontrols.

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

Compliance,OperationalRiskandICSissubordinatetotheChiefRiskOfficer(CRO)butreportsdirectlytotheentireManagementBoardandtheSupervisoryBoard.Moreover,thereisacontinuousexchangeofinformationwithRBI’sGroupCompliance.Thesecomprehensivemeasuresprovideforaneffectiveimplementationofthehighstandardsrequiredbystatutorydemands.

RaiffeisenCentrobankAGappliesRBI’sGroupComplianceguidelinesasthebasisforitscomplianceguidelines,inadditiontorelevantlegalandregulatoryprovisions.AsasubsidiaryofRBItheprovisionscontainedin

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ManagementReportofRaiffeisenCentrobankAGforthe2019FinancialYear

Theadditionofroundednumbersusingautomatedsystems,aswasdoneforthisreport,mayresultinminordifferencesinamounts.Thechangesindicatedinpercentrefertotheactualamountsandnottheroundedamountsshowninthisreport.

Alldesignationsthatareusedtorefertopersonsinthisreportapplyequallytobothgendersunlessreferenceisbeingmadetoaspecificindividual.

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Economic EnvironmentIn2019,theGrossDomesticProduct(GDP)intheEurozoneroseby1.2percentandfellshortofthepreviousyear’sgrowthrateof1.8percent.Thevariousindustriesdisplayedaveryheterogenousdevelopment.Whiletheindustrialsectorfacedasubstantialdecrease,theservicesandconstructionsectorpostedacontinuedrobustdevelopment.Inthecourseoftheyear,theunemploymentratedroppedfrom4.9percentin2018to4.6percent.Theinflationratecameto1.2percentandclearlyundercutthe2percenttargetrateoftheEuropeanCentralBank(ECB).

Shoredupbythefavorablewinterhalf-yearof2018/19,theAustrianrealGDPgrowthrate2019cameto1.6percent(2018:2.4percent)andsurpassedtheaverageEurozonerateof1.2percent.Nevertheless,theAustrianeconomylostmomentumoverthecourseoftheyear.Sincespring2019,thedomesticindustrialproductionhasdampenedintheglobalcontextthoughuptothenAustriahadmanagedtoremarkablydecouplefromtheGermanindustrialweakness.Foreigntradedynamicsalsoworeoffinviewofthechallengingexternalenvironmentbutshowedpositivestimuli.Companiesnoticeablycutbackcapitalspendingonplantandequipment.Privateconsumptionprovedtobeakeypillaroftheeconomysupportedbythepositivelabormarketsituationandtheincreaseofdisposableincomeofhouseholds.

TheeconomicperformanceoftheCentralandEasternEurope(CEE)region,whichisofparticularimportanceforRaiffeisenCentrobankAG,remainedrobustandshowedasubstantialeconomicupswingforthesixthconsecutiveyear,withthe2019growthratefallingonlymarginallyshortofthepreviousyear’slevel.Themaindriverswereonceagaindomesticdemand,particularlyprivateconsumptionwhichwasbolsteredbysoundsalaryincreasesandlowunemploymentrates.

FinancialMarkets

Untilsummer2019,theECBleftkeyratesunchanged,onlyprincipalpaymentsofthebondportfoliowerereinvested.AtthemeetingbeginningofSeptember,theECBadoptedanewsetofmonetaryeasingmeasures

tosupporttheflaggingeconomy.Measuresincludedthereductionofthedepositrateforcommercialbanksfromminus0.4percenttominus0.5percentandtherelaunchofnetbondpurchases.TheECB’smonetarypolicycausedmoneymarketratesandyieldsofGermangovernmentbondstodroptohistoricallowsinthecourseoftheyear.BetweenAugustandmid-October,30-yearGermangovernmentbondsrecordednegativeyieldsforthefirsttime.

Thestockexchangescanlookbackonanextremelypleasingyear2019.However,itwasaroughroadbecauseofthetradedisputebetweentheUSAandChina,Brexituncertainties,recessionaryfearsintheindustry,mainlytheautomotiveindustry,andtensionsintheNearEast.TheECB’sandUSFederalReserve'smonetaryeasingpolicyprovidedthestockmarketswithstrongtailwind.TheUSstockmarketintermsoftheS&P500gained29percentandrecordedall-timehighs.TheEurozonebenchmarkEuroSTOXX50wentupby25percentandtheATXroseby16percent,and,underconsiderationofdividends,yielded19percent.

Development of Business and Earnings 2019DevelopmentofEarnings

Withanoperatingincomeof€59,292thousand(2018:€59,759thousand)andoperatingexpensesof€ 44,898thousand(2018:€42,366thousand)anoperatingresultof€14,394thousand(2018:€17,393thousand)wasgeneratedinthe2019financialyear.Takingintoconsiderationnetvaluationsandnetproceedsintheamountof€152thousand(2018:€minus1,665thousand)theresultonordinaryactivitiescameto€14,546thousand.Thepreviousyear’sresultonordinaryactivitiesof€15,728thousandwasundercutby€1,182thousandor7.5percent.

in€thousand 2019 2018 Change

Netinterestresult (39,652) (19,398) >100

Incomefromsecuritiesandfinancialinvestments 13,305 11,427 16.4

Netfeeandcommissionresult (1,731) (935) 85.2

Netprofitoffinancialtradingactivities 86,471 67,521 28.1

Otheroperatingincome 898 1,144 (21.5)

Operatingincome 59,292 59,759 (0.8)

Staffexpenses (24,133) (23,907) 0.9

Otheradministrativeexpenses (19,383) (17,084) 13.5

Depreciation (1,040) (1,043) (0.3)

Otheroperatingexpenses (341) (332) 2.7

Operatingexpenses (44,898) (42,366) 6.0

Operatingresult 14,394 17,393 (17.2)

Netvaluationsandnetproceeds 152 (1,665) >100

Resultonordinaryactivities 14,546 15,728 (7.5)

Taxes (2,973) (2,724) 9.1

Netincomefortheyear 11,573 13,004 (11.0)

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supervisoryauthoritiesandpaymentstotheresolutionfundaddingupto€2,260thousand(2018:€2,224thousand).

Depreciationscameto€1.040thousandandremainedalmostun-changedto2018(€1,043thousand).Depreciationsforhardwarepos-tedarise,whereasdepreciationsforlow-valueassetsdecreased.

Otheroperatingexpenses,whichprimarilycontainedexpenseschargedtothirdparties,cameto€341thousandandremainedalmostunchangedto2018(€332thousand).

Thecost/incomeratiowhichhadbeenat70.9percentin2018increa-sedto75.7percenttriggeredbytheriseinoperatingexpensesandroughlyunchangedoperatingincome.

In2019,netvaluationsandnetproceedswerepositiveandcameto€152thousand.Theitemcontainedmainlythecurrentadjustmentofge-neralimpairmentallowancescalculatedpursuanttothemethodologylaiddowninIFRS9andaddedupto€206thousand.Moreover,theitemcontainedexpensesforaliabilityofasubsidiary(€69thousand).Inthepreviousyear,netvaluationsandnetproceedswerenegative(€minus1,665thousand)mainlyduetoexpensesnotcoveredbyprovisionsrela-tingtoaliabilityforasubsidiary.

Inthereportingyear,theresultonordinaryactivitiescameto€14,546thousandcomparedto€15,728thousandachievedinthepreviousyear.

Currentincometaxesamountedto€2,095thousand(2018:€2,397thousand).Theitemcontainedexpensesforgroupchargesforthecurrentbusinessyearaddingupto€859thousand(2018:€1,046thousand)andforpreviousyearsintheamountof€49thousand(2018:€216thousand).Moreover,theitemincludedwithholdingtaxesonforeigndividendincomeintheamountof€1,182thousand(2018:€1,059thousand)andaprovisionforcurrentcorporateincometaxesfortheSlo-vakbranchaddingupto€6thousand(2018:€77thousand).

In2019,incomefromdeferredtaxesroseto€52thousandcomparedto€4thousandinthepreviousyear.

Inthereportingyear,othertaxesincludedprimarilystatutorybankleviesofRaiffeisenCentrobankAGandtheSlovakbranchsummingupto€930thousand(2018:€331thousand).Theriseoftaxexpensescanbeputdowntonon-periodictaxincomefromvalue-addedtaxesinthepreviousyearamountingto€348thousand.StatutorybankleviesofRaiffeisenCentrobankAGandtheSlovakbranchamountedto€919thousandin2019andto€689thousandin2018.

Netincomeforthe2019financialyearcameto€11,573thousand(2018:€13,004thousand).

BalanceSheetDevelopment

Comparedto31December2018,thebalancesheettotalincreasedsignificantlyby18.9percentfrom€3,735,352thousandto€4,440,234thousand.

Ontheassetside,“Loansandadvancestocreditinstitutions”postedariseby€741,465thousandto€3,776,856thousand.Theincreasewasalmostentirelyattributabletotheriseoftradablemoneymarketdepositsof€559,632thousandto€2,933,576thousand.Moreover,theiteminclu-dedinterbankdeposits(€487,043thousand),unlistedbonds(€238,687thousand)andcollateralfortheoptionbusinessandsecuritieslending(€63,673thousand).Comparedtotheyear-end2018,interbankdepo-

Comparedtothepreviousyear’sresult,operatingincomedecreasedslightlyby0.8percentor€468thousandto€59,292thousand(2018:€59,759thousand).Thisdecreasewasinparticularattributabletolowernetinterestincomeandlowernetfeeandcommissionresult.

Netinterestresultroseto€minus39,652thousand(2018:€minus19,398thousand).Thiswasrelatedtohighercouponexpensesforsecuritizedliabilities(structuredproducts).

Dependingonthehedge,theseexpenseswerecontrastedwithinterestincomeand–asdescribedbelowinnetprofitonfinancialtradingactivi-ties–withapositivevaluationresultfromtradablemoneymarketdepositsinthenetprofitonfinancialtradingactivities(tradingprofit).In2019,cou-ponexpensescontainedinthenetinterestresultpostedastrongrisecom-paredtothepreviousyear’sresult,whereascouponincomeroseonlyslightly.In2019,netvaluationsincludedinthenetprofitonfinancialtra-dingactivitiesincreasedaccordingly.

Comparedtothepreviousyear,interestexpenseswentupby€22,699thousandto€71,307thousand.Inadditiontothestrongriseofcouponpaymentsforsecuritizedliabilities,interestexpensesforliabilitiestocreditinstitutionspostedavolume-relatedincrease.

Duetohigherinterestincomefromloansandadvancestocreditinstitu-tions,interestincomeroseby€2,445thousandto€31,656thousand.

Netfeeandcommissionresultwasnegativebothin2019and2018.Thedecreaseby€796thousandto€minus1,731thousandwasduetohigh-erexpensesforsalesfeesandlowerfeeincomefromtheInvestmentServi-cesbusinesswhichwereonlypartlyoffsetbyhigherincomederivedfromequitycapitalmarkettransactions.

Netprofitonfinancialtradingactivitiesaccountedforthemainpartoftheoperatingincomeandwentupsubstantiallyby€18,950thousandfrom€67,521thousandin2018to€86,471thousandin2019.Thisimprove-mentwasattributabletohighercouponpaymentsforstructuredproductsandtherelatedhedgingstrategy.In2019,thesepaymentswerehedgedprimarilybytradablemoneymarketdepositswithoutcurrentcouponsheldinthetradingbook.Inthepreviousyear,optionswhichyieldedcurrentcouponsandwerecontainedininterestincomewereusedmorefrequent-lyashedges.Thetotalresultoftradabledepositsincludinginterestwerecontainedinnetprofitonfinancialtradingactivities(tradingprofit).

Theriseofincomefromsecuritiesandfinancialinvestmentsby€1,878thousandto€13,305thousandwasmainlyduetohigherdividendincomefromdomesticshares.

Otheroperatingincomepostedadecreaseof€246thousandto€898thousandfollowinglowerincomefromthereleaseofprovisionsandlowerincomefromchargingcoststothirdparties.

Operatingexpensescameto€44,898thousandandsurpassedthepreviousyear’sresult(€42,366thousand)by6.0percentor€2,532thousand.

Theincreaseinheadcountandcollectiveadjustmentstranslatedintoariseofstaffexpensesby€226thousandto€24,133thousand.

Comparedtothepreviousyear’speriod,otheradministrativeexpenseswentupby€2,299thousandto€19,383thousand.Theitemincludedmainlyexpensesforinformationservicescomingto€4,670thousand(2018:€3,298thousand),ITcostscomingto€3,595thousand(2018:€3,472thousand)andcontributionstoassociations,domesticandforeign

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sitsandunlistedbondswentupby€156,779thousandand€72,258thousand,respectively,whereascollateralfortheoptionbusinessdroppedby€94,968thousand.“Loansandadvancestocreditinstitutions“accoun-tedfor81.3percentofthebalancesheettotalasat31December2018androseto85.1percentasat31December2019.

“Sharesandothervariable-yieldsecurities“(7.5percentofthebalancesheettotalon31December2019and4.7percenton31December2018)increasedby€158,018thousandto€335,160thousand.Main-lyforeignsharesandothervariable-yieldsecurities(funds)postedarise.

“Otherassets“(4.4percentofthebalancesheettotalon31December2019and3.4percenton31December2018)containedmainlypositi-vefairvaluesfromtradinginderivativefinancialinstrumentsaddingupto€191,192thousand(31December2018:€127,094thousand)andwentupby€65,463thousandto€193,663thousand(31December2018:€128,200thousand).

“Depositswithcentralbanks“(1.2percentofthebalancesheettotalon31December2019and6.3percenton31December2018)decrea-sedby€183,812thousandto€51,093thousandmainlyduetohigherdepositsatcreditinstitutionsforreasonsofliquiditymanagement.

“Loansandadvancestocustomers“(1.0percentofthebalancesheettotalon31December2019and3.2percenton31December2018)decreasedprimarilyfurthertoadropofcollateralfortheoptionbusinesstootherfinancialinstitutionsby€73,947thousandto€46,266thousand.Moreover,loansandadvancestocustomersalsorecordedadecrease.

Inannualcomparison,“Bonds,notesandotherfixed-interestsecurities“(0.4percentofthebalancesheettotalon31December2019and0.5percenton31December2018)fellby€2,115thousandto€18,330thousand.

“Prepaymentsandotherdeferrals”(0.0percentofthebalancesheettotalon31December2019and0.0percenton31December2018)decre-asedby€312thousandto€1,263thousand.

“Equityparticipations“postedaslightincreaseby€616duetothepurchaseofaparticipationinRaiffeisen-DigitalGmbH.TheparticipationinÖsterreichischeRaiffeisen-EinlagensicherungeGenwassold(bookvalue€100).

Ontheequityandliabilitiesside“Securitizedliabilities“(78.7percentofthebalancesheettotalon31December2019and73.6percenton31December2018)wentupby€745,281thousandto€3,494,556thousand.Thiswasattributabletoavolume-relatedincreaseofissuedbonds(guaranteecertificatesandreverseconvertiblebonds)by€366,050thousandaswellasofothersecuritizedliabilities(certificateswithoptioncharacterandwarrants)by€379,231thousand.

Theriseof“Liabilitiestocustomers“(10.5percentofthebalancesheettotalon31December2019and9.8percenton31December2018)by€101,514thousandto€466,489thousandwasprimarilyassociatedwithriseindepositsfromforeigncustomersaswellascollateralfortheoptionbusinesstootherfinancialinstitutions.Moreovershort-termdepositsfromdomesticcustomersalsorecordedanincrease.“Liabilitiestocreditinstitutions“(1.2percentofthebalancesheettotalon

31December2019and0.4percenton31December2018)increasedby€37,625thousandto€51,978thousandinparticularduetoariseofcollateralfortheoptionbusiness.

“Otherliabilities“(6.5percentofthebalancesheettotalon31December2019and12.5percenton31December2018)droppedby€179,782thousandto€287,755thousandmainlybecauseofadecreaseofnegativefairvaluesofderivativefinancialinstruments(options,futuresandforwardexchangecontracts)by€182,631thousand.Short-sellingoftradingassetsalsodecreasedby€14,923thousand.Short-sel-lingwaseffectedinconnectionwiththemarketmakingactivitiesofRaiffei-senCentrobankAGandinconnectionwithpensionplansandrepresen-tedoffsettingitemstoequityandindexfuturesaswellastocashpositionsontheassetsideofthebalancesheet.

Sundryotherliabilitiesincludingsettlementaccountsontheequityandliabilitiessidepostedariseinparticularbecauseofhighershort-termchargesfromsecuritiestransactionsnotyetsettledasat31December2019aswellastheliabilityregardinganequitycapitalmarkettransactionaddingupto€17,772thousand.

Tradablemoneymarketdeposits,unlistedoptionsandzerobondspurchasedfromRBIforhedgingpurchaseswereincludedin“Loansandadvancestocreditinstitutions“,“Otherassets“and“Bonds,notesandotherfixed-interestsecurities“ontheassetsideandcameto€2,958,816thousand(31December2018:€2,393,967thousand).

“Provisions“(0.3percentofthebalancesheettotalon31December2019and0.3percenton31December2018)droppedfrom€12,153thousandasat31December2018to€11,183thousandasat31December2019.Thisresultedmainlyfromthedropofotherprovisionsof€1,226thousand.

“Retainedearnings“(0.8percentofthebalancesheettotalon31December2019and0.9percenton31December2018)rosefrom€32,160asat31December2018to€34,685asat31December2019.Thechangerelatedsolelytootherreservesandwasattributabletotheallocationfromthe2018netprofitcarriedforwardintheamountof€2,524thousand.

Thenetprofit(0.3percentofthebalancesheettotalon31December2019and0.3percenton31December2018)wasequaltothenetincomefortheyearandcameto€11,573thousand.

FinancialInstruments

Pleaserefertothenotes.

RaiffeisenCentrobankAGSlovakBranch

TheestablishmentofabranchinBratislava(RaiffeisenCentrobankAGSlovakBranch,pobočkazahraničnejbanky)wasapprovedbytheEuro-peanCentralBankandwasregisteredintheCompanyRegisteron26April2017.ThebusinesspurposeofthebranchistoissueanddistributestructuredproductsontheSlovakmarket.Thebusinessvolumeaswellasincomeandexpensesattributabletothebranchofficeareincludedinthe-sefinancialstatements.

In2019,theSlovakbranchplacedatotalissuevolumeofroughly€29million(2018:roughly€45million).

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reducecorecosts.ThenewentitywasnamedGlobalEquitySalesandcomprisedboththeequitysalesbusiness(formerlySales&SalesTrading)andthenewElectronicSalesTradingteam.Shoredupby22salesroads-hows,ElectronicSalesTradingmanagedtofurtherexpanditscustomerbaseandtoincreaserevenues.Theresultwasfurthersupportedbyimple-mentingefficiency-enhancingmeasurestoreducetransactioncosts.TheBestExecutionMonitoringtoolwassuccessfullymarketedanddevelopedfurther.Inthisrespect,RaiffeisenCentrobankAGhasturnedintoamajorMiFIDIIcompetencecenterwithintheRaiffeisenGroup.

FortheGlobalEquitySalessegment,operatingincomeexcludingotheroperatingincomeamountedto€8.2millioninthe2019financialyearandexceededthepreviousyear’slevelof€6.6millionbyroughly23percent.

In2019,Europesawatotalof40initialpublicofferings(IPOs)withanofferingvolumeofover€75millioneach,whichrepresentsadecreasecomparedto2018with82IPOs.InCentralandEasternEurope(CEE),onlyoneIPOworthmorethan€75milliontookplace.TheViennaStockExchangerecordedthreeIPOsin2019,whichwasthemostactiveIPOyearforalongtime.

RaiffeisenCentrobankAGparticipatedinnineEquityCapitalMarkets(ECM)transactionswhichtookplaceinAustria,CentralandEasternEuropeandWesternEurope.

Animportantmilestonewasthe€1billionIPOofVeralliaS.A.ontheEuronextParis,whichwasamongthelargestEuropeanIPOsin2019.Furthermore,RaiffeisenCentrobankAGparticipatedintheIPOofAluflex-packAGontheSwissExchange.

InCEE,RaiffeisenCentrobankAGexecuteditsfirstECMtransactionontheTurkishcapitalmarket,i.e.theplacementofastakeinaTurkishITcom-pany.

FollowingthePurcariWineriesIPOontheBucharestStockExchangein2018,RaiffeisenCentrobankAGco-managedanacceleratedbookbuildingofthewineexporter’ssharesontheRomanianmarket.

InAustriatheIPOofAddikoBankAGandtheexecutionofthesharebuy-backofBAWAGGroupAG,whichwasthelargestinthehistoryoftheViennaStockExchange,werenotableECMhighlights.

RaiffeisenCentrobankAGprovidedcomprehensiveadvisoryservicesandmarketeditscompetenciesincooperationwiththenationalRaiffeisenunitsandthuscreatedasoundbasisforcollaborationinthe2020financi-alyear.Againstthebackdropofintensivetalkswithcustomersandprepa-rations,RaiffeisenCentrobankAG’sECMteammaintainsaconfidentout-lookregardingtransactionsinAustriaandtheCEEregioninthe2020financialyear.TransactionsareanticipatedtotakeplacemainlyontheAustrian,RussianandTurkishmarkets.

FortheEquityCapitalMarketssegment,operatingincomeexcludingotheroperatingincomeamountedto€1.8millioninthe2019financialyearandexceededthepreviousyear’slevelof€1.4millionby29percent.

TheCompanyResearchteamcoversroughly125companiesfromAustria,theCEEregionandRussia.Inannualcomparison,thenumberofcoveragesslightlyincreasedto125(fromroughly120in2018).Toex-pandtheregionalapproach,coverageoftheTurkishmarketisprovidedincooperationwiththeTurkishbrokerGlobalSecurities.RaiffeisenCentro-bankAG’sCompanyResearchteamconsistsof20analystsbothintheViennaheadquartersandseveralCEEcountries.Theanalystsprovide

Review of Business SegmentsRaiffeisenCentrobankAGisoneofthelargestplayersinequitiesandstructuredproductsontheViennaStockExchangeandholdsakeypositioninthemarketsinCentralandEasternEurope.

Trading&TreasuryComparedtothe2018financialyear,thespotmarketoftheViennaStockExchangerecordedadecreaseinsalesvolumeof10.6percentto€63.4billion(2018:€70.9billion).TheleadingEuropeanexchangesFrankfurtandEuronextalsopostedadropby12.6percentand8.1percentto€1,344billion(2018:€1,538billion)and€1,713billion(2018:€1,864billion).Thesalesvolumeonthespotmarketoftheex-changeinWarsawcameto€44.9billionandwentdownby7percent(2018:€48.3billion).TheCEEexchangesBudapest,BucharestandPraguealsosawdiminishedsalesvolumesreporting€7.9billion(2018:€8.7billion),€1.8billion(2018:€2.1billion)and€4.2billion(2018:€5.5billion),respectively.

InmarketmakingontheViennaStockExchange,RaiffeisenCentrobankAGrecordedavolumeof€1.7billion,whichcorrespondstoadecreaseof13percentcomparedtothepreviousyear’speriod(€2billion).IntermsofsalesvolumesRaiffeisenCentrobankAGranked4thinmarketmakingontheViennaStockExchangeand,withamarketshareof11.4percent,theBankremainsthelargestdomesticmarketmaker(2018:13percent).IntheannualspecialistandmarketmakingtenderRaiffeisenCentrobankAGreceived17specialistand39marketmakermandatesandisthusthesolemarketmakertofullycovertheAustrianPrimeMarket.

Moreover,RaiffeisenCentrobankAGtookovermandatesfor20Russiantitlesand4additionalstocksontheViennaStockExchange(2018:20Russiantitlesand2stocks).OntheexchangeinFrankfurt,RaiffeisenCent-robankAGheld25mandatesforAustrianlistedsharesandactedasmar-ketmakerfor15Germanshares(2018:marketmakingfor25Austrianand2Germanshares).

OntheexchangeinWarsaw,RaiffeisenCentrobankAGsubstantiallyex-pandeditsmandatesandprovidedmarketmakingfor53shares(2018:25shares),6equityindices,42underlyings,futuresandWIG20options.OnthestockexchangeinBucharestRaiffeisenCentrobankAGprovidedliquidityfor10sharesandontheexchangeinPraguemarketmakingwasprovidedfor19stocks(2018:11and22respectively).OntheEUREXRaiffeisenCentrobankAGprovidedliquidityforlistedderivativeson26underlyings.

OperatingincomeexcludingotheroperatingincomeforTrading&Treasu-rycameto€16.5millionandsurpassedthepreviousyear’sresultof€13.1millionby26percent.

EquitybusinessIn2019,RaiffeisenCentrobankAGfocusedonmarketingAustrianandEasternEuropeanlistedcompanieswithinitsequityandequitytradingbusiness.AttheannualinvestorconferenceinZürs,morethan70leadinglistedcompaniespresentedthemselvesto125institutionalinvestors.Inaddition,11conferencesweresuccessfullyorganisedinBucharest,Lon-don,NewYork,StockholmandWarsaw.Inthereportingyear,RaiffeisenCentrobankAGagainintensifieditscorporateaccessactivitieswith116roadshowdaysin17destinationsintheUSAandEuropeaswellas25lunchpresentationsinVienna.

In2019,theteamExecution&ElectronicTradingwasmergedwithSales&SalesTradingtoevenbetterservicecustomers,enhanceefficiencyand

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long-standingsectorexpertiseintandemwithprofoundlocalmarketknowhowandasectoralapproachacrosstheentireregion.

Inthe2019financialyear,theCompanyResearchteampublishedrough-ly1,000researchreportsandmarketedthemtoinstitutionalinvestorsinWesternandEasternEuropeaswellasintheUSA.AnalystsplayedakeyroleinthesuccessfulIPOsofAluflexpackinZurich,VeralliainParisandAddikoontheViennaStockExchange.TheIPOsweresupportedbycom-prehensivetransactionresearchandinvestoreducationprovidedbytheanalystteam.Moreover,“SpotlightResearch“,anewco-sponsoredre-searchproductfocusingonsmall&microcapswaslaunched.

ExpensesofCompanyResearchareincludedintheTrading&Treasury,GlobalEquitySales,ECMundStructuredProductssegments.

StructuredProductsInthe2019financialyear,theStructuredProductsbusinesssegmentagainachievedaveryfavorableresult.Salesvolumeandissuanceactivitywereatorabovethe2018recordlevel.In2019,10,369productswerepub-liclyofferedbyRaiffeisenCentrobankAG(2018:11,362)and4,174certificateswereissued(2018:4,869certificates).InNovember2019,theAustriancertificatesmarketreachedanewall-timehighwith€15.1billionandRaiffeisenCentrobankAGagainunderscoreditsmarketlea-dership.Attheendof2019,RaiffeisenCentrobankAG‘sopeninterestcameto€4.6billionandachievedaroughly7percentincreasecompa-redtotherecordlevelof€4.3billiongeneratedin2018.Thesalesvolu-mealsoreachedanall-timehighandrosetoover€1.9billion(2018:€1.8billion).

IntheAustrianRaiffeisensectorallkeydatawereagainoutperformed.Theteamheldarecordnumberofeducationprogramswith170certificates'trainingsessionsandroughly2,500trainedadvisors.Comparedtothepreviousyear,thevolumeofplacementswasagainincreased(plus10percent).Moreover,thetotalopeninterestofRaiffeisencustomersinAust-riareachedanewrecordlevelgaining38percent(2018:plus23percent).Inadditiontostandardseminars,thenumberofwebinarsandmar-ketingservicesforRaiffeisenLandesbankenandlocalRaiffeisenbankswasfurtherexpanded.

IntheCEEregionRaiffeisenCentrobankAGisactiveinninecountriesand,comparedtothepreviousyear,furtherintensifiedthefocusoncustomizedproducts.Morethan90customizedproductsforlocalcusto-mersweresuccessfullyplacedinsixdifferentcurrencieswhichemphasizesRaiffeisenCentrobankAG’sfocusontop-levelservicequalityandflexibilityfordifferentcustomersegmentsintheCEEregion.TheopeninterestintheRaiffeisennetworkbanksroseby7percentto€1.1billion.

RaiffeisenCentrobankAG’sSlovakbranchinBratislavadistributesstructu-redproductsontheSlovakmarket.In2019,thebranchplacedfourcusto-mizedproductswithatotalissuevolumeof€29million.ThebranchinBratislavasupportstheSlovakmarketwithissuingcustomizedcertificatesandprovidingtraining.

InJanuary2019,RaiffeisenCentrobankAGwontheaward”BestCrossSellPartner“inthecourseofthe“TatrabankaPrivateBankingAwards”forthefourthtime.AttheannualawardsceremonyinFebruary,RaiffeisenCentrobankAGreceivedtheaward“CapitalMarketLeader“inthecategory“Certificates“fromtheWarsawstockexchange.BothawardsunderpinnedRaiffeisenCentobankAG’scommitmenttocertificatesintheCEEregion.

AttheCertificateAwardAustriainMay2019,RaiffeisenCentrobankAGwaselectedbestcertificatesissuerinAustriaforthe13thconsecutiveyear,winningthetoprankinsevenoutoftencategories.Thestate-of-the-artCer-tificateFinder,whichprovidesaneasy-to-understandintroductionintotheworldofcertificates,waselectedtheinnovationoftheyear.ThisunderpinstheintensecommitmentoftheStructuredProductssegmenttocontinuouslyexpandtheonlineanddigitalisationproductrangeofcertificates.

Ontheproductside,thetopic“sustainability“reachedanewdimension:boththenumberofissuedsustainabilityproductsandtheopeninterestvolume(plus117percent)forthisproductcategoryrosesignificantly.Forthefirsttime,theBonusCertificate“EuropeUnlimited”withitswell-provenpayoutprofilewasissuedandrolledoutasasavingsplanforselectedRaiffeisenLandesbankenandRaiffeisenbanks,thusenablinginvestorstoinvestwithcertificatesintooneofthemainpillarsoftheequitybusiness.

FortheStructuredProductssegment(includingthebranchinSlovakia)operatingincomeexcludingotheroperatingincomecameto€31.9millionandundercutthepreviousyear’srecordoperatingincomeaddingupto€36.6millionby13percent.Thedecreasewasmainlyattributabletolowerincomebothintheprimaryandsecondarymarketbusinesswhichcanbeputdowninteraliatothedecreaseoftheinterestratelevel.

InvestmentServicesThedepartmentservicescustomersofRaiffeisennetworkbanksinCentralandEasternEurope.

ThedepositvolumeofRussianprivatecustomersintheInvestmentServicessegmentroseby14.4percentfrom€596millionasat31December2018to€682millionasat31December2019.AgainstthebackdropofportfolioadjustmentsonthepartofRaiffeisenbankRussia,thenumberofclientsdecreasedfrom335asat31December2018to321.

AstheBookingPlattformbusinessmodelwassuccessfullyimplementedwithintheRBIGroupincooperationwithRaiffeisenbankRomaniain2018,thedepositvolumeofRomanianprivatecustomersincreasedby24percentto€103million.Thenumberofclientswentupfrom246asat31December2018to273.

FollowingthestrategicdecisionmutuallyagreedwithRBI,theInvestmentServicesbusinessofRaiffeisenCentrobankAGandthecustomersservicedinthissegmentaredemergedbyabsorptionandaretransferredtoKa-threinattheendofQ1/2020becomingeffectiveretroactivelyasat30June2019.ThisdecisionsupportstheproductfocusofRaiffeisenCentrobankAGasthecertificatesandequityhouseofRBIandpreventsoverlapsintheprivatebankingbusinesswhileensuringatthesametimethattheInvestmentServicesproductisbundledwithinoneunit.

Inthepastfinancialyear,operatingincomeexcludingotheroperatingin-comecameto€1.9millionandundercuttheresultachievedin2018addingupto€2,4millionbyroughly21percent.Despiteariseinvolu-mes,investmentsonthepartofRussianprivateindividualsfellshortofex-pectations.Thiswasduetothelowriskappetite,therisingcompetitionontheRussianmarketandintensivepreparatoryworkassociatedwiththetransferoftheInvestmentServicesbusinesstoKathrein.

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Risk ManagementPrinciples

BusinessopportunitiesandearningspotentialarerealizedinRaiffeisenCentrobankAGbasedonactiveriskmanagementbytakingriskoninatargetedandcontrolledmanner.Inallrelevantareasofrisk,efficientmonitoringandcontrollinginstrumentsareavailable,enablingtherelevantbodiestoreacttomarketopportunitiesandspecificbankingbusinessrisk.Activeriskmanagementresultedinastableandlittlevolatiletradingresult.

AsasubsidiaryofRBI,RaiffeisenCentobankAGisintegratedintotheriskmanagementprocessoftheRBICreditInstitutionGroup,safeguardingthatallmajorrisksareidentified,measuredandcontrolledonGroup-levelandensuringthattransactionsareconcludedsolelyifparticularrisk/rewardratiosarecompliedwith.

RiskGovernance

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

RiskmanagementatRaiffeisenCentrobankAGisdividedintotwocategories:

•RiskManagement(interaliamarket,credit,liquidityrisks,overallbank riskmanagement)•OperationalRisk&ICS(non-financialrisks)

ThecentralriskmanagementbodiesaretheRiskManagementCommittee(RMK),theInternalLimitCommittee(ILC),theOperationalRiskManage-mentandControlCommittee(ORMCC)andtheAssetandLiabilityCom-mittee(ALCO).

TheRMK,whichmeetsweekly,addressesallissuesandregulationsrela-tedtotheriskmanagementoftheBankfocusinginparticularoncreditrisk,marketriskandoperationalrisk.Overdrafts,overdueloansandadvancesaswellasnecessaryvalueadjustmentsarereportedinduecourseandrecommendationsfortheManagementBoardaredeveloped.TheRMKisadecision-takingbody,authorizedtoapproverisk-relatedprinciples,mea-sures,processesandparameters.

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

TheORMCC,whichmeetsonceaquarter,establishesanappropriateframeworkforoperationalriskmanagement,definesandapprovesanadequateriskstrategyandmonitorsandassessestheadequacyofinter-nalcontrols.Moreover,riskassessments,scenarioanalysesandriskindica-torsarediscussedandapproved,andmaterialcasesofdefaultandtheresultingmeasurestobetakenareanalyzed.

TheALCO,whichmeetsonceamonth,continuouslyevaluatesthemacro-economicenvironmentandcontrolsandassessesinterestraterisk,liquidityriskandbalancesheetstructuralrisk.

Performance IndicatorsFinancialPerformanceIndicators

Comparedtothepreviousyear,theresultonordinaryactivitiesdecreasedand,intandemwithhigherequity,translatedintoadropoftheReturn-on-Equitybeforetaxfrom13.8percentto12.5percentandtheReturn-on-Equityaftertaxfrom11.4percentto9.9percent.

Thecost/incomeratio,whichhadbeenat70.9percentin2018,deterioratedto75.7percentduetoincreasedoperatingexpensesandalmostunchangedoperatingincome.

In2019,OverallReturn-on-Assetswasat0.3percentandremainedunchangedcomparedto31December2018.

Non-FinancialPerformanceIndicators

AspertheendofDecember2019,thenumberofemployeesatRaiffeisenCentrobankAGamountedto195,which,comparedto31December2018,representedanincreaseof4employees.Inannualcomparison,thestaffroseonaverageby9to195employees.

Thenumberofstockexchangemembershipscameto10andremainedunchangedtothe2018financialyear(fordetailskindlyseethewebsiteofRaiffeisenCentrobankAG:www.rcb.at/en/).

Thenumberofnewlyissuedwarrantsandcertificateswentdownby695or14percentto4,174.Thedropwasmainlyattributabletodownsizingtherangeofflowproducts.Thenumberofsubscriptionandtailor-madeproducts,whicharemorerelevantintermsofvolumes,remainedstableandcameto256(2018:258).

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inpercent 31/12/2019 31/12/2018

Return-on-Equitybeforetax 12.5 13.8

Return-on-Equityaftertax 9.9 11.4

Cost/incomeratio 75.7 70.9

Ownfundsratio 20.8 23.6

Corecapitalratio 20.8 23.6

OverallReturn-on-Assets(aftertax) 0.3 0.3

LiquidityCoverageRatio(LCR) 291.1 219.6

31/12/2019 31/12/2018

Employeesatyear-end 195 191

Averagenumberofemployees 195 186

Stockexchangememberships 10 10

Numberofnewlyissuedwarrantsandcertificates 4,174 4,869

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Risk Management System at Raiffeisen Centrobank AGRaiffeisenCentrobankAGemploysacomprehensiveriskmanagementsystemtakingintoaccountalllegal,businessandregulatoryrequirements.Theappliedprocessesandmodelsaresubjecttoongoingreviewandfurtherdevelopment.Thekeycomponentsoftheriskmanagementsystemsarecompliantwithregulatorycapitalrequirements,limitingspecificbankingrisksandprovidingadequateriskcoveragesumsaswellaspermanentsupervisionandcontrolofprocessriskwithinacomprehensiveInternalControlSystem. 1.Capitalrequirementstolimitmarketrisk,creditriskand operationalriskTosecureadequatecapitalforcreditrisk,marketriskandoperationalrisk,RaiffeisenCentrobankAGappliesthestandardapproach.Tocalculateoption-relatednon-linearrisksthescenariomatrixmethodisemployed.

Fordetailsonregulatorycapitalrequirementspleaserefertothenotes(page42). 2.Identifyingandlimitingspecificbankingbusinessrisks (ICAAP)AsasubordinatecompanyofRBI,RaiffeisenCentrobankAGisintegratedintotheICAAPofRBIonaconsolidatedbasis.Therisk-bearingcapacityanalysisispreparedbyRBIonamonthlybasisbothforthegoingconcern(Value-at-Risk(VaR)withaconfidenceintervalof95percent)andtargetratingperspective(VaRwithaconfidenceintervalof99.92percent)andisprovidedtoRaiffeisenCentrobankAGtosupporttheManagementBoardinmanagingtheoverallbankingrisk. 3.InternalControlSystemRaiffeisenCentrobankAGhasimplementedacompany-widemodernInter-nalControlSystemthatmeetsRBIGroupstandards.AllkeyprocessesandimmanentrisksaswellasotherkeyrisksoftheBankaredocumentedandcontrolsaresetupandreviewedaccordingly.Onceayear,thecontrolsarereviewedintermsofimplementation,efficiencyandefficacy.TheresultsarecentrallymonitoredandarereportedtotheManagementBoardandtheSupervisoryBoard.

Major Risks

MarketriskMarketriskisdefinedastheriskofpossiblelossesinonandoff-balancesheetpositionsarisingfromchangesinmarketprices(equityandcommo-dityprices,interestratesorexchangerates).Asthemainfocusofthebusi-nessactivitiesofRaiffeisenCentrobankAGisonsecuritiestradingandtheissueofequity-indexbasedderivativesandstructuredproducts,thetoppriorityofRaiffeisenCentrobankAGistocounteractmarketrisk.RaiffeisenCentrobankAGmeasures,monitorsandmanagesmarketriskbysettingavarietyoflimitsthatarereviewedandapprovedonanannualbasis.Allmarketriskpositionsarecomparedwiththerespectivelimitsinamostlyautomatedprocess.Limitoverdraftsarehandledinanescalationprocess.Currently,over15,000limitsinroughly25categoriesaremonitored.Limitsforsinglesharesaccountforthemajority.

Inmarketriskmanagement,theVaRisemployed,whichprovidesforecastsonpotentiallossesinadversescenariosundernormalmarketconditionsandcontraststhemwithaparticularlimit.Onthebasisofthevariance-covariancemodel,theVaRforequityandproduct-specificpositionsiscalculateddailywithaconfidenceintervalof99percentandaretentionperiodofoneday.Asat31December2019,theVaRforequityandproduct-specificpositionscameto€288thousand(31December2018:€335thousand).

TheabovechartdepictstheperformanceoftheVaRandhypotheticalP&L(profitandlossthatwouldhaveoccurredinaconstantportfolioaswellasactuallyrecordedmarketmovements)intheperiodbetween1January2019and31December2019.Intheperiodunderreview,backtestingrevealedoneVaRexceedance.TheVaRexceedancedidnotcoincidewithaparticularmarketeventbutwasattributabletodailymovementsintandemwiththedailyportfolio.Theexceedancewasinlinewithexpecta-tionsataconfidencelevelof99percent.

InadditiontotheVaR,RaiffeisenCentrobankAGusesregulatoryandmanagement-definedstressteststoevaluatemarketrisk.TheresultsareevaluateddailyonoperationallevelandarereportedintheweeklyRiskManagementCommittee.Stresstestssimulatetheperformanceoftheport-foliounderabnormalmarketsituationsandatypicalpricemovements.

CreditriskCreditriskrepresentsthedefaultriskthatarisesfromtheinabilityofacoun-terpartytofulfilcontractuallyagreedfinancialobligations,whenserviceshavebeenrendered(e.g.liquidity,securities)orwhenunrealizedprofitsfrompendingbusinesstransactionscannolongerberecovered(counter-partydefaultrisk).

RaiffeisenCentrobankAG’smajorcreditrisksresultfrompositionsofpurchaseddebtinstruments,tradablemoneymarketdepositsandOTCoptionsservingprimarilytohedgeissuedcertificatesandstructuredproductsaswellasfrommarginpositionsrelatingtoOTCandstockex-changetransactions.ThisprimarilyaffectsmembersoftheRBICreditInstitu-tionGroupandtoalimitedextentotherfinancialinstitutions.ThetraditionalcreditandloanbusinessisnotofmaterialsignificanceforRaiffeisenCent-robankAGduetothelimitedbusinessvolumeandtheCompany'sstrate-gicorientation(lombardloans,otherloanstoprivateandcorporatecusto-mers),inparticularwithregardtotheretroactivetransferoftheInvestmentServicesbusinesstoKathreinasatthedemergerdate30June2019.

Creditriskmanagementisbasedoncounterparty-relatednominallimits,whicharecomprehensivelymonitoredbytheinternallimitsystemforcreditrisk.Thelimitsareapproved-dependingonthetypeandsize-bytherelevantauthorityinthehierarchy.Creditdecisionsaretakendependingontheassessmentofthecounterpartydefaultrisk,takingintoaccounttheratingandapplicablecreditriskmitigatingmeasureslikefinancialcollate-ral(e.g.cashorsecuritiescollateral).IntheGroup-widedefaultandratingdatabasecustomersareregisteredandevaluatedandcasesofdefaultaredocumented.Thewholelendingdecisionadherestoregulatoryrequi-rementsandRBIGroupDirectives.

Value at Risk backtesting

P&L hypothetic VaR 1 day, 99%

Jan 19 Feb19 Mar19 Apr19 May19 Jun19 Jul19 Aug19 Sep19 Oct19 Nov19 Dec19

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OperationalriskOperationalriskisdefinedastheriskofunexpectedlossesresultingfrominternalprocessesandsystemswhichareinadequateorhavefailed,fromhumanerrororfromexternalevents.Thisdefinitionincludeslegalriskbutexcludesstrategicandreputationalrisk.OperationalriskismanagedonthebasisoftheresultsofregularBank-wideriskassessments,standardizedkeyriskindicators,scenarioanalysesandGroup-internalhistoricaldata.

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

LiquidityriskLiquidityriskiscalculatedbasedonaliquiditymodeldevelopedincooperationwithRBI.DailybalancesheetitemsofRaiffeisenCentrobankAGaresplitbymaturitybandsandcurrencies,theirinflowsandoutflowsaremodeledbasedonpre-definedfactors.TheliquidityrequirementindifferentmaturitybandsislimitedbymeansofregulatorylimitsaswellasbylimitsdeterminedbyRBI.Moreover,regularliquiditystresstestsarecar-riedoutandthetime-to-wallinthestressscenarioismonitoredindifferentcurrencies.Inflowsneedtoexceedoutflowsforaparticularperiodinacrisisscenario(marketcrisis,namecrisisandscenarioinvolvingboth).

TheLiquidityCoverageRatio(LCR)servestomeasuretheBank’sliquiditysupplyinadefinedstressscenario(combinationofmarketandnamecrisis).Asat31December2019,theLCRcameto291.1percent(31December2018:219.6percent).SinceJanuary2018,aminimumrateof100percenthasbeenmandatoryonsingle-institutionlevel.AllkeyindicatorsconfirmedtheadequateliquiditysupplyofRaiffeisenCentro-bankAGinthe2019financialyear.

Risk Situation

TheRiskAppetiteFrameworkisaninternaltooltodefineandcommunicatetheriskappetiteofRaiffeisenCentrobankAG.Themanagementofriskisdoneaccordingtoalimitandmonitoringsystempursuanttoparticularwarninglevelsandlimits.

Thefollowingtabledepictsthebank-widekeyfiguresasat31December2019comparedto31December2018aswellastherespectiveminimum,maximumandaveragevaluesforthe2019financialyear.

Key figure Status Limits 12/2019 12/2018 Change Max1 Min1 Avg1

16%18%16%18%110%130%

13.0%15.0%45.0%35.0%7.5%9.0%60 mn120 mn

25.0%30.0%1.55%2.00%

(2,9) PP

(2,9) PP

71,5 PP

Risk

rew

ard

pr

ofile

RORAC 44.2% 46.4%

RORWA 2.4% 2.8%

Pilla

r I

Total Capital Ratio 20.8%

Pilla

r II

(inte

rnal

cap

ital) Total Capital Ratio in Stress

Economic Capital Ut ilizat ion 21.3%

LCR Cash Puffer 125 mn

CET1 Ratio 20.8%

12.9%

20.8%

LCR 291.1%

Net Leverage Ratio

23.6%

16.9%

11.8%

23.0% 20.4% 21.7%

23.0% 20.4% 21.7%

21.1%

291.1% 158.8% 240.5%

23.0% 20.4% 21.7%

24.5%

(0,9) PP

23.6%

23.6%

2.9% 2.3%

219.6%

(12) mn

(0,4) PP

(2,1) PP

13.8%

137 mn

4,4 PP

(2,9) PP

18.8%

13.9% 10.7%

2.6%

55.9% 42.5% 48.4%

261 mn 124 mn 169 mn

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TheNetLeverageRatiolimitsthemaximumbusinessvolumebytheavailablecorecapital.ThecalculationoftheNetLeverageRatioexcludescertainintragroupriskpositions(e.g.fundingpassedon).

NetLeverageRatio=Corecapital

Balancesheetvolume(excl.RBI)

TheRORAC(ReturnonRisk-AdjustedCapital)andtheRORWA(ReturnonRisk-WeightedAssets)arekeyfiguresofrisk-adjustedreturnmanagement.Thenetincomeisrelatedtotheallocatedriskcapital.Projectswithhigherriskprofilestieupmorecapitalandshouldbemoreprofitable.

RORAC=NPAT

EconomicCapital(ytdavg)+prudentvaluation(ytdavg)

RORWA=NPAT

Risk-WeightedAssets(ytdavg)

Onoverallbanklevel,allkeyfigureswerestableandwereabovetherespectiveinternallimitsandwarninglevels.Theinternalwarninglevelsandlimitsaredefinedconservatively,i.e.eveniftheyareundercut,theregulatorylevelsarestillcompliedwith.

Risk-WeightedAssetsbyrisktypesaredepictedinthebelowtable:

1incl.settlementriskandownedpropertyrisk

RWAsacc.totypeofrisk(in€million) 31/12/2019 31/12/2018 Change

Creditrisknon-retail 79.8 85.9 (7.1%)

Marketrisk 240.3 204.9 17.3%

Operationalrisk 132.2 121.8 8.5%

Equityparticipationrisk 6.2 6.2 0.0%

CVArisk 48.2 42.3 13.9%

Otherrisks1 13.6 14.0 (3.5%)

RWAsTotal 520.3 475.3 9.5%

Theabovekeyfiguresaredefinedasfollows:

TotalCapitalRatioandCET1Ratioserveasquantitativemeasuretodeterminethecreditinstitution’sownfundsinrelationtotheRisk-WeightedAssets(RWAs).

CET1Ratio=CommonEquityTier1

TotalRisk-WeightedAssetsTotalCapitalRatio=

EligibleownfundsTotalRisk-WeightedAssets

TheLCR(LiquidityCoverageRatio)measurestheliquidityoutflowina30-daystressscenario.

LCR=LiquidassetsNetoutflows

TheLCRCashBuffermeasurestheliquiditysurpluswhichexceedsregulatoryrequirementsandservestosafeguardthattherequiredLCRismet.

TheTotalCapitalRatioinstressmeasurestheTotalCapitalRatiointhegoingconcernscenario(1yearhorizon,95percentconfidenceinterval).Eligib-leownfundsandexpectedprofitarestressedattheVaRandcontrastedwiththeRisk-WeightedAssets.TheTotalCapitalRatioactsasafloor.

TotalCapitalRatioinStress=Eligibleownfunds+NPAT–VaR

TotalRisk-WeightedAssets

TheEconomicCapital(EC)Utilizationdepictstheutilizationoftheriskcoveragesuminthetargetratingscenario(1yearhorizon,99.92percentconfidenceinterval).

EconomicCapitalUtilization=EconomicCapitalRisk-takingcapacity

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In2019,themajorchangesintherisksituationwereasfollows:

Creditriskdecreasedmainlyduetoafurtherreductionoftheloanportfolio.Incontrast,counterpartydefaultriskroseduetothehedgingfortheincreasedcertificates’volume.TheriseassociatedwithhedgingrequirementsforcertificatesissuedbyRaiffeisenCentrobankAGwasalsoreflectedintheRWAsoftheCreditValueAdjustments(CVA).Marketriskutilizationwasonamediumlevel,changescomparedtothepreviousyear’syear-endwerewithinthenormalfluctuationrange.TheriseofRWAsinoperationalriskwasattributabletotheincreaseoftheaverageprofitderivedinthepastthreebusinessyears(pursuanttotheCRRstandardapproach).

The Internal Control System as Relevant for the Accounting SystemRaiffeisenCentrobankAGanditsgoverningbodiesarecommittedtoensuringbalancedandcompletefinancialreporting.Afundamentalrequirementforthisiscompliancewithallrelevantlegalregulations.Inconnectionwiththeaccountingprocess,theManagementBoardisresponsiblefordesigningandinstallinganinternalcontrolandriskmanagementsystemthatmeetstherequirementsoftheCompany.Theobjectofthisinternalcontrolsystemistosupportthemanagementbymakingcertainthateffectiveinternalcontrolsareappliedtotheaccountingprocessandthatthesecontrolsareimprovedonwheneverappropriate.Thecontrolsystemisdesignedtoassurecompliancewithguidelinesandregulations,aswellastocreateoptimalconditionsforspecificcontrolmeasures.AninternalcontrolsystemhasalreadyexistedatRaiffeisenCentrobankAGforyearsintheformofdirectivesandinstructionsforstrategicallyimportantsubjectareas.

ThefinancialstatementsarepreparedonthebasisofthepertinentAustrianlaws,abovealltheAustrianBankingAct(BWG)inconnectionwithEURegulation575/2013(CapitalRequirementsRegulation“CRR”)andtheAustrianCommercialCode(UGB)asamendedbytheRÄG2014.

Thedepartment“Finance”isresponsiblefortheBank’saccountingsystemandisdirectlysubordinatedtotheManagementBoard.Thedepartmentisresponsiblefordealingwithallaccountingissuesandhastheauthoritytoprovideforthesafeguardingoftheapplicationofuniformstandards.Organizationalinstructionsandguidelines,whicharecomprisedinamanual,havebeensetupforsupport.

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

MonthlybalancesheetsarecreatedandpassedontotheManagementBoardandtheseniormanagementbymeansofastandardizedfinancialreportingsystem.AtleastonceperquartertheSupervisoryBoardisinfor-medinthecourseoftheSupervisoryBoardmeetingsofthecurrentcourseofbusinessincludingtheBank’soperativeplanningandmedium-termstrategy.

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

Estimatesmustregularlybemadeduringthepreparationofthefinancialstatements.Inallofthesecases,thereisaninherentriskthatactualdeve-lopmentsmaydeviatefromtheseestimates.Thisespeciallyappliestotheparametersinvaluationmodelsthatareusedtodeterminethefairvaluesoffinancialinstrumentsforwhichthereisnocurrentpricequotationaswellastosocialcapital,theoutcomeoflegaldisputes,thecollectabilityofloansandadvances,andtheimpairmentofequityparticipations.Insomecases,externalexpertsareinvolvedorpubliclyavailableinformationsourcesareusedtominimizetheriskofincorrectestimates.

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

“Controlling”(partofthe“Finance”department)isresponsibleforprepa-ringthenotestotheannualfinancialstatementsdraftedaccordingtotheAustrianBankingActandtheAustrianCommercialCode.Inaddition,amanagementreportisdrawnupwhichexplainstheresultsinlinewithstatutoryrequirements.Theannualfinancialstatementsandthemanage-mentreportareforwardedtoandreviewedbytheAuditCommitteeoftheSupervisoryBoardandarethenpresentedtotheSupervisoryBoardforitsapproval.TheannualfinancialstatementsarepublishedontheCompany’swebsite,intheOfficialGazetteoftheWienerZeitung,andarealsofiledwiththeAustrianCompanyRegister.KeyemployeesandtheManagementBoardreviewtheannualfinancialstatementspriortotheirdistributiontotheSupervisoryBoard.Moreover,analysesoftheannualfinancialstatementsarepreparedspeciallyforthemanagement.

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Human ResourcesAsat31December2019RaiffeisenCentrobankAGhad195employeeswhich,comparedto31December2018,representedanincreaseof4employees.In2019,RaiffeisenCentrobankAGhadonaverage195employeeswhichrepresentsafluctuationrangeof10.53percent.

TrainingThepositivetrendoftrainingandeducationcoursessuccessfullycomple-tedbyemployeescontinuedin2019andwasaugmentedbyonlinetrainingprograms.

Forthefirsttime,anautogenictrainingcoursetolearnrelaxationtech-niqueswasheldoveraperiodofeightweeks.Thecoursewasverywellattendedandwillthereforebeofferedagainandbefurtherexpandedintheforthcomingbusinessyear.

The“LeadershipCircle“hasprovenanefficienttoolforbest-practice-sharingandexchangeamongthemanagementanddepartmentheadsandwillalsobeorganisedregularlyin2020.

Work-LifeBalanceThenew“sabbatical“guidelinesprovideforflexibleworkingtimemodels.Employeescantakeinsurance-protectedextendedtime-offperiodsatpro-ratedincome.Sabbaticalsofferanattractiveandflexibleopportunitytorelaxbeyondthelegalleaveentitlement.Prerequisitesanddifferentsabbaticalmodelsweredrawnupinautumn2019.RaiffeisenCentrobankAG’semployeeshavebeeninformedrespectively.

Performancemanagement&trainingguidelinesTherevisedperformancemanagementguidelinegovernstheannualobjectivesettingandperformanceprocessandprovidesformoreflexibilitywithregardtoindividualprerequisitesofdepartmentsandpositionswhileobservingregulatoryrequirements.Thehandlingofreimbursementobliga-tionsfortrainingcostsaswellastheapprovalprocessoftrainingandeducationhavebeensubstantiallyrevisedandsimplified.HumanResour-cesisstillinchargeofevaluatingtrainingneedsandtakingcareoftheregistrationandorganisationalprocessoftrainingmeasures.

Outlook for 2020AgranulareconomicassessmentoftheconsequencesoftheimposedrestrictionstocombattheCovid19virusishardlypossibleandanyfiguresaresubjecttohighuncertainty.Thecurrentsituationisanextraordinaryeventoccurringintimeofpeace,markedbyanalmostcompletereductionineconomicactivityimposedbygovernmentsandpublicinstitutions.Onapositivenote,ofcourse,itshouldbenotedthatanendtothestandstillimposedbygovernmentscouldleadtoasharpreboundineconomicactivity-especiallyasmassivemonetaryandfiscalsupportmeasuresareemerging.Theextentoftheslump,thelengthoftheeconomiccontractionandtheultimatemacroeconomiccostsdependonseveralfactors.Firstly,thelengthofthestateofeconomicstandstillinEuropeisdecisive.Second-ly,thesecond-roundeffectsareofgreatimportance.Thirdly,itiscurrentlyimpossibletoassesstheextenttowhichthecurrentcrisiswillhaveamorelastingimpactonconsumerconfidenceanddemandpatterns.InourindicationsforGDPgrowth,weassumethateconomicpolicywilluseallavailablemeansandthatitwillbepossibletolargelycontainsecondroundeffectsoftheeconomicstandstillattheendofthesecondquarter.For2020,weexpecttheEurozonetopostadecreaseof4percentandareboundof3.2percentin2021.InAustria,weanticipateamorepronouncedeconomicdevelopment(2020:minus4.5percent,2021:plus4percent).

Thestockmarketssufferedasevereslumpagainstthebackdropoftheeconomicramificationsoftheepidemic.Ifthecontainmentmeasuresagainstthevirusprovesuccessfulandthereareprospectsofaslowdownofthepandemic,weexpectthefinancialmarketstostabilizeandshowaneconomicreboundthereafter.DespitethechallengingmarketenvironmentRaiffeisenCentrobankAGiswellpreparedtomakethemostoftheoppor-tunitiesinthisextraordinarysituation.Thefocuswillbeonthesustainedde-velopmentofexistingbusinessactivitiesintandemwithstrictcostdisciplineandfurtherdigitalizationandefficiencyenhancement.GiventhecurrentlyvolatilesituationRaiffeisenCentrobankAGcannotgiveareliableforecastforthe2020financialyear.ForRaiffeisenCentrobankAGthereis,amongstothers,ariskofabusinessvolumedecrease.

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Research and DevelopmentRaiffeisenCentrobankAGwithitscoreareaofbusinessfocusingonequitiesandstructuredproductsdoesnotengageinresearchanddevelopment.


Statement of Legal Representatives pursuant to §124 Stock Exchange ActWeconfirmtothebestofourknowledgethattheannualfinancialstate-mentsgiveatrueandfairviewoftheassets,liabilities,financialposition,andprofitorlossofRaiffeisenCentrobankAGasrequiredbytheappli-cableaccountingstandardsandthatthemanagementreportgivesatrueandfairviewofthedevelopmentandperformanceofthebusinessandthepositionoftheCompany,togetherwithadescriptionoftheprincipalrisksanduncertaintiestheCompanyfaces.

Vienna,03April2020TheManagementBoardHaraldKröger

ChiefExecutiveOfficerHeikeArbter

MemberoftheManagementBoard



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FinancialStatementsofRaiffeisenCentrobankAGasat31December2019accordingtotheAustrianBankingAct

Theadditionofroundednumbersusingautomatedsystems,aswasdoneforthisreport,mayresultinminordifferencesinamounts.

Thechangesindicatedinpercentrefertotheactualamountsandnottheroundedamountsshowninthisreport.

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Balance Sheet as at 31 December 2019 Assets 31/12/2019 31/12/2019 31/12/2018 31/12/2018 in€ in€ in€thousand in€thousand

1. Depositswithcentralbanks 51,092,980.58 234,905

2. Loansandadvancestocreditinstitutions

a)repayableondemand 117,549,886.36 164,754

b)otherloansandadvances 3,659,305,876.28 3,776,855,762.64 2,870,636 3,035,390

3. Loansandadvancestocustomers 46,266,073.13 120,213

4. Bonds,notesandotherfixed-interestsecurities

a)issuedbypublicbodies 3,119,519.33 4,281

b)issuedbyotherborrowers 15,210,146.55 18,329,665.88 16,164 20,445

5. Sharesandothervariable-yieldsecurities 335,159,990.55 177,142

6. Equityparticipations 5,140,014.88 5,139

7. Sharesinaffiliatedcompanies 1,100,000.00 1,100

8. Intangiblefixedassets 136,799.01 105

9. Tangiblefixedassets 11,007,752.63 10,970 thereoflandandbuildingsusedbythecreditinstitution forownpurposes:€9,025,047.92 previousyear:€9,276thousand

10.Otherassets 193,662,975.13 128,200

11.Prepaymentsandotherdeferrals 1,262,993.23 1,575

12.Deferredtaxassets 219,487.00 167

Totalassets 4,440,234,494.66 3,735,352

Off-balancesheetitems

1. Foreignassets 548,201,032.74 488,584

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Equityandliabilities 31/12/2019 31/12/2019 31/12/2018 31/12/2018 in€ in€ in€thousand in€thousand

1. Liabilitiestocreditinstitutions


b)withagreedmaturitydatesorperiodsofnotice 6,000,630.78 51,977,679.73 11,172 14,353

2. Liabilitiestocustomers


b)withagreedmaturitydatesorperiodsofnotice 255,627,414.06 466,488,590.53 230,489 364,975

3. Securitizedliabilities

a)issuedsecuritizedliabilities 1,826,605,898.26 1,460,556

b)othersecuritizedliabilities 1,667,950,141.86 3,494,556,040.12 1,288,719 2,749,275

4. Otherliabilities 287,755,362.80 467,538

5. Accrualsanddeferreditems 226,240.50 105

6. Provisions

a)forseverancepayments 4,763,294.00 4,436

b)taxprovisions 118,544.33 190

c)otherprovisions 6,301,581.57 11,183,419.90 7,527 12,153

7. Subscribedcapital 47,598,850.00 47,599

8. Capitalreserves

a)committed 6,651,420.71 6,651

b)uncommitted 14,000,000.00 20,651,420.71 14,000 20,651

9. Retainedearnings

a)legalreserve 1,030,936.83 1,031

b)otherreserves 33,653,910.14 34,684,846.97 31,129 32,160

10.LiabilityreservepursuanttoArticle57para5AustrianBankingAct 13,538,860.00 13,539

11.Netprofitfortheyear 11,573,183.40 13,004

Totalequityandliabilities 4.440.234.494,66 3,735,352

Off-balancesheetitems

1. Contingentliabilities 0.07 0

2. Commitmentsarisingfromfiduciarybusinesstransactions 7,091,121.47 7,091

3. EligibleownfundspursuanttoPart2ofRegulation(EU)No575/2013

4. CapitalrequirementspursuanttoArticle92ofRegulation(EU) 108,093,565.03 112,343 No575/2013(TotalRisk-WeightedAssets) hereof:capitalrequirementspursuanttoArticle92para1lit(a)to(c) 520,337,468.01 475,262 ofRegulation(EU)No575/2013 hereof:capitalrequirementspursuanttoArticle92para1lit(a) 20.77% 23.64% hereof:capitalrequirementspursuanttoArticle92para1lit(b) 20.77% 23.64% hereof:capitalrequirementspursuanttoArticle92para1lit(c) 20.77% 23.64%

5. Foreignequityandliabilities 689,549,522.55 696,107

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Income Statement for the 2019 Financial Year

2019 2019 2018 2018 in€ in€ in€thousand in€thousand

1. Interestandinterest-likeincome 31,655,771.38 29,211

thereoffixed-interestsecurities 266,917.39 99

2. Interestandinterest-likeexpenses (71,307,467.64) (48,609)

I. Netinterestresult (39,651,696.26) (19,398)

3. Incomefromsecuritiesandfinancialinvestments 13,305,114.64 11,427

4. Feeandcommissionincome 12,138,281.97 12,828

5. Feeandcommissionexpenses (13,869,387.21) (13,763)

6. Netprofitonfinancialtradingactivities 86,471,140.70 67,521

7. Otheroperatingincome 898,240.35 1,144

II. Operatingincome 59,291,694.19 59,759

8. Generaladministrativeexpenses (43,516,057.62) (40,990)

a)staffexpenses

aa)salaries (18,314,163.54) (18,315)

bb)expensesforstatutorysocialcontributionsandcompulsorycontributionsrelated towagesandsalaries (4,044,628.34) (3,891)

cc) othersocialexpenses (405,675.69) (383)

dd)expensesforpensionsandassistance (415,336.08) (422)

ee)provisionsforseverancepaymentsandcontributionstoseverancefunds (953,450.24) (895)

(24,133,253.89) (23,907)

b)otheradministrativeexpenses (19,382,803.73) (17,084)

9. Valueadjustments onassetitems8and9 (1,040,378.84) (1,043)

10.Otheroperatingexpenses (341,390.60) (332)

III.Operatingexpenses (44,897,827.06) (42,366)

IV.Operatingresult 14,393,867.13 17,393

11.Loanlossprovisions 205,818.83 (238)

12.Incomearisingfromthevaluationofloansandadvances 15,000.00 15

13.Expendituresarisingfromthevaluationofequityinvestments heldasfinancialinvestments (68,692.78) (1,442)

V. Resultonordinaryactivities 14,545,993.18 15,728

14.a)currentincometaxes (2,095,423.81) (2,397) thereofpassedonfromparentcompanyfortheyear: € (859,116.05); previous year: € (1,046thousand) b)deferredtaxes 52,421.00 (2,043,002.81) 4 (2,393)

15.Othertaxesunlessincludedinitem14 (929,806.97) (331)

VI. Netincome(=Netprofit)fortheyear 11,573,183.40 13,004

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Development of Fixed Assets in the 2019 Financial Year

Amountsin€ Costofacquisition Costofacquisition Costofacquisition Costofacquisition Accumulateddepr. Accumulateddepr. Accumulateddepr. Accumulateddepr. Accumulateddepr. Carryingamount Carryingamount Balanceasat1/1/2019 Additions Disposals Balanceasat31/12/2019 Balanceasat1/1/2019 Additions/Depreciation Write-up Disposals 31/12/2019 31/12/2019 31/12/2018

I. Intangiblefixedassets

Softwarelicenses 1,571,985.66 103,143.19 0.00 1,675,128.85 1,466,967.65 71,362.19 0.00 0.00 1,538,329.84 136,799.01 105,018.01

II. Tangiblefixedassets

1.Landandbuildingsusedbythecreditinstitution forownpurposes thereofvalueofproperty:€ 2,637,765.92; previousyear:€ 2,638thousand 12,694,367.11 0.00 0.00 12,694,367.11 3,417,903.19 251,416.00 0.00 0.00 3,669,319.19 9,025,047.92 9,276,463.92

2.Officefurnitureandequipment 14,227,926.84 1,092,976.65 819,257.81 14,501,645.68 12,534,508.13 717,600.65 0.00 733,167.81 12,518,940.97 1,982,704.71 1,693,418.71

26,922,293.95 1,092,976.65 819,257.81 27,196,012.79 15,952,411.32 969,016.65 0.00 733,167.81 16,188,260.16 11,007,752.63 10,969,882.63

III. Financialinvestments

1.Sharesinaffiliatedcompanies thereofincreditinstitutions:€0.00 1,100,000.00 0.00 0.00 1,100,000.00 0.00 0.00 0.00 0.00 0.00 1,100,000.00 1,100,000.00

2.Equityparticipations thereofcreditinstitutions:€0.00 5,139,934.88 616.00 100.00 5,140,450.88 436.00 0.00 0.00 0.00 436.00 5,140,014.88 5,139,498.88

6,239,934.88 616.00 100.00 6,240,450.88 436.00 0.00 0.00 0.00 436.00 6,240,014.88 6,239,498.88

Total 34,734,214.49 1,196,735.84 819,357.81 35,111,592.52 17,419,814.97 1,040,378.84 0.00 733,167.81 17,727,026.00 17,384,566.52 17,314,399.52

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Development of Fixed Assets in the 2019 Financial Year

Amountsin€ Costofacquisition Costofacquisition Costofacquisition Costofacquisition Accumulateddepr. Accumulateddepr. Accumulateddepr. Accumulateddepr. Accumulateddepr. Carryingamount Carryingamount Balanceasat1/1/2019 Additions Disposals Balanceasat31/12/2019 Balanceasat1/1/2019 Additions/Depreciation Write-up Disposals 31/12/2019 31/12/2019 31/12/2018

I. Intangiblefixedassets

Softwarelicenses 1,571,985.66 103,143.19 0.00 1,675,128.85 1,466,967.65 71,362.19 0.00 0.00 1,538,329.84 136,799.01 105,018.01

II. Tangiblefixedassets

1.Landandbuildingsusedbythecreditinstitution forownpurposes thereofvalueofproperty:€ 2,637,765.92; previousyear:€ 2,638thousand 12,694,367.11 0.00 0.00 12,694,367.11 3,417,903.19 251,416.00 0.00 0.00 3,669,319.19 9,025,047.92 9,276,463.92

2.Officefurnitureandequipment 14,227,926.84 1,092,976.65 819,257.81 14,501,645.68 12,534,508.13 717,600.65 0.00 733,167.81 12,518,940.97 1,982,704.71 1,693,418.71

26,922,293.95 1,092,976.65 819,257.81 27,196,012.79 15,952,411.32 969,016.65 0.00 733,167.81 16,188,260.16 11,007,752.63 10,969,882.63

III. Financialinvestments

1.Sharesinaffiliatedcompanies thereofincreditinstitutions:€0.00 1,100,000.00 0.00 0.00 1,100,000.00 0.00 0.00 0.00 0.00 0.00 1,100,000.00 1,100,000.00

2.Equityparticipations thereofcreditinstitutions:€0.00 5,139,934.88 616.00 100.00 5,140,450.88 436.00 0.00 0.00 0.00 436.00 5,140,014.88 5,139,498.88

6,239,934.88 616.00 100.00 6,240,450.88 436.00 0.00 0.00 0.00 436.00 6,240,014.88 6,239,498.88

Total 34,734,214.49 1,196,735.84 819,357.81 35,111,592.52 17,419,814.97 1,040,378.84 0.00 733,167.81 17,727,026.00 17,384,566.52 17,314,399.52

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A.AccountingPolicies

GeneralprinciplesThefinancialstatementsofRaiffeisenCentrobankAGforthe2019financi-alyearhavebeenpreparedinaccordancewiththegeneralaccountingprinciplesstipulatedintheAustrianCommercialCodeandthespecificsectoralregulationsasspecifiedbytheAustrianBankingAct.InaccordancewiththeprinciplesofproperaccountingandtakingintoaccountstandardpracticeasdescribedinArticle222section2oftheAustrianCommercialCode,theannualfinancialstatementsgiveatrueandfairviewofthecompany’snetassets,financialpositionandearnings.

Thevaluationofassetsandequityandliabilitiesisbasedontheprincipleofindividualvaluationassumingagoingconcernperspective.Theprincip-leofprudenceisapplied,takingaccountofthespecificcharacteristicsofthebankingbusiness.

Comparedtothefinancialstatementsasat31December2018,nochangeshavebeenmadeintheaccountingpolicies.Thefinancialstate-mentshavebeenpreparedincompliancewiththeconsistencyprinciple.

Thebalancesheetandtheincomestatementhavebeenstructuredaccor-dingtoAppendix2oftheformscontainedinArticle43AustrianBankingAct.

Since26April2017,RaiffeisenCentrobankAGhasbeenoperatingabranchofficeinBratislava(RaiffeisenCentrobankAGSlovakBranchpobočkazahraničnejbanky).Thebusinessvolumeaswellasincomeandexpensesattributabletothebranchofficehavebeenincludedinthefinan-cialstatements.

ForeigncurrencytranslationAssetsandliabilitiesdenominatedinforeigncurrenciesarereportedattheratesofexchangesfixedbytheECB.Duringtheyear,amountsdenomina-tedincurrencies,forwhichtheECBpublishednorates,areconvertedatthemiddleratesofexchangepublishedbyRBIonthebalancesheetdate.Atyear-end,foreigncurrencypositionsareconvertedattheratespublis-hedbytheViennaStockExchangeonthelasttradingday.Ifnorateisavailableforaparticularcurrency,ratespublishedbytheECB,RBIortherespectivemarketratesareused.

Forwardforeignexchangecontractsarecapitalizedattheforwardexchangerates.Anydifferencesinratesresultingfromcurrencyconversionarereportedasprofitorlossintheincomestatement.

Tradingportfolio–valuationofsecurities,futuresandoptionsIntermsofsecuritiesheldfortradingpurposes,thecompany’sportfolioofsharesinpubliclylistedcompaniesaswellasfixed-interestsecuritiesisre-portedatthesharepriceprevailingatthebalancesheetdate.Ifnoquotesorsharepricesareavailable,thevalueisdeterminedbymeansofvaluati-onmodels.

Bondsheldbythecompanyfortradingpurposesarevaluedatquotesprovidedbyothercreditinstitutions,brokersoratReutersquotes,incasestockexchangequotesarenotavailableorarenotconclusive.Ifsuchquotesarenotavailable,pricesarecalculatedinternallybasedonthenetpresentvaluemethod.Thismethodisbasedonaninterestratecurvecom-prisedofmoneymarket,futuresandswapratesaswellasspreads.

Certificatesacquiredbasedonanequity-basedorindex-basedperfor-mancearevaluedwiththesharepricesprevailingonthebalancesheetdate,andifnosharepricesareavailable,withtheassistanceofvaluationmodelstoillustratestochasticdevelopmentprocesses.

Derivativesarereportedinthebalancesheetatfairvalue,whichequalsthemarketpriceorasyntheticvalue.Adjustmentsinvaluearerecognizedthroughprofitorlossintheincomestatement.Thesyntheticvaluesarede-terminedaccordingtotheBank’sownevaluationmethods,whichareexa-minedandapprovedbyriskmanagementandwhicharebasedonrecog-nizedoption-theoreticalmodels.

Optionsonsecuritiesofpubliclylistedcompaniesandoptionsonsecurityindices(i.e.purchasedandsoldcallsandputs,primarilyEUREXoptions)aswellasfuturesheldfortradingpurposesarevaluedaccordingtothemarketpricesprevailingonthebalancesheetdate.Valueadjustmentsweremadetotaketemporaldifferencesintoaccount.

OTCoptionsareprimarilyvaluedattradablepricesquotedbythecoun-terparty.Optionsforwhichnotradablepricesareavailablearevaluedbyadequatemodels.Forplainvanillaoptions(AmericanandEuropeanstyle),theBlack-ScholesmodelandthebinomialpricingmodelaccordingtoCox-Ross-Rubinsteinareapplied.TheCurranapproximationisappliedtoAsianoptions,whereasbarrieroptionsusetheHeynen-KatmodelandspreadoptionsrelyontheKirkmodel.

Bankingbook—valuationofderivativesThederivativesvolumeinthebankingbookrelatesexclusivelytoforeignexchangeforwardtransactionstohedgeforeigncurrencyrisks.Theyarevaluedatfairvaluerelyingonobservablemarketparameters.

LoansandadvancestocreditinstitutionsandcustomersLoansandadvancestocreditinstitutionsandcustomersareshownattheirnominalvalue.Individualloanlossprovisionsaremadeinthecaseofanidentifiablerecognizableriskofdefaultonthepartofborrowers.Inaddition,generalimpairmentallowanceshavebeenmadefrom2018on-wardsforexpectedcreditlosses(ECL),wherebyRaiffeisenCentrobankAGhastakentheopportunitytoapplytheregulationsofIFRS9tocalculategeneralimpairmentallowancesundercompanylaw.

ThegeneralimpairmentallowancespursuanttoIFRS9havebeenimple-mentedbasedonatwo-stageprocedure.Ifthecreditdefaultriskforcur-rentassetsdoesnotincreasesignificantlysinceinitialrecognition,theim-pairmentlossforeachassetismeasuredatthepresentvalueofanexpec-tedtwelve-monthlossasatthereportingdate(ECLStage1).Inthecaseofassetswhosecreditriskdoesnotincreasesignificantlysinceinitialrecogniti-onandwhicharenotclassifiedastransactionswithalowcreditriskatthereportingdate,theexpectedcreditlossiscalculatedovertheasset’sentireremainingterm(ECLStage2).TheexpectedlossesforbothstagesarecalculatedonanindividualtransactionbasisapplyingstatisticalriskparameterssuchasProbabilityofDefault(PD),ExposureatDefault(EAD)aswellasLossGivenDefault(LGD).

Theestimationofriskparametersincludesnotonlyhistoricaldefaultinforma-tionbutalsothecurrenteconomicenvironment(point-in-timeorientation)andforward-lookinginformation.

Financial Statements as at 31 December 2019

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EquityparticipationsandsharesinaffiliatedcompaniesEquityparticipationsandsharesinaffiliatedcompaniesarevaluedatcostunlesspermanentlossesordecreasedequityrequireanon-scheduleddepreciationofthefairvalue(subjectiveorobjectifiedcompanyvalue).Incase,reasonsforimpairmentarenolongerapplicable,awrite-uptothecostofacquisitioniscarriedout.

IntangibleandtangiblefixedassetsThevaluationofintangibleandtangiblefixedassets(i.e.landandbuil-dings,officefurnitureandequipmentaswellasothertangiblefixedassets)iscarriedoutatthecostofacquisitionlesstheirscheduled,lineardepre-ciation.

Depreciationratesappliedare33.3percentp.a.forintangiblefixedas-sets,2.5percentand10.0percentp.a.forimmovablefixedassets,and10.0percent–33.0percentformovablefixedassets.Afullyear’sde-preciationistakeninthecaseofadditionsmadeduringthefirsthalfofthefinancialyear,whereashalf-yeardepreciationappliestoadditionsinthesecondhalfofthefinancialyear.Lowvalueassets(costofacquisitionperitemlessthan€0.4thousand)arefullydepreciatedintheyearofacquisiti-on.

LiabilitiestocreditinstitutionsandcustomersLiabilitiestocreditinstitutionsandcustomersarereportedattheamountofrepayment,takingintoconsiderationtheprincipleoffinancialprudence.

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

ProvisionsforseverancepaymentsTheprovisionsforseverancepaymentsaredesignedtofulfillegaldemands,aswellasthosearisingfromindividualorcollectivecontractualagreements.ProvisionsarecalculatedinaccordancewiththeguidelinesspecifiedbyIAS19,applyingtheProjectedUnitCreditMethodandassumingacalculatoryinterestrateof0.9percent(31/12/2018:1.8percent),aswellasanunchangedannualsalaryincreaseamountingto3.5percent(31/12/2018:3.5percent).TheAVÖ(Austrianactuaries’association)2018-P-basisforcalculatingretirementpensioninsurances–Pagler&Paglerforsalariedemployeeswastakenasbiometricbasisforcalculation.

Theunderlyingpresumptionisadecreasingfluctuationrateinconnectionwiththeearliestpossibleretirementdate,attheageof60forwomenand65formen,takingintoaccountthechangestoAustria’sGeneralSocialSecurityLawinaccordancetotheBudgetaryAmendment2003.Thepre-miumreserveamountsto89.9percent(31/12/2018:77.5percent)ofthestatisticalterminationbenefitobligationsonthebalancesheetdate.

OtherprovisionsOtherprovisionshavebeenmadeaccordingtoexpecteddemands.Theycompriseidentifiablerisksandliabilities,theextentofwhichhasnotyetbeendetermined.Long-termprovisionsarediscounted.Theinterestrateamountsto0.9percent(31/12/2018:1.8percent).

B.NotestoBalanceSheetItems

I.DepositswithcentralbanksThebalancesheetitemA1,whichencompassesdepositswiththeAustrianNationalBank,amountedto€51,093thousand(31/12/2018:€234,905thousand).Prevailingregulationspertainingtoliquidityandminimumreserveswereobserved.

II.1.Classificationofloansandadvancesandsecuritiespositionsaccordingtotheirremainingterm

II.Loansandadvances

31/12/2019 repayable 0-3 3-12 1-5 >5 Total in€thousand ondemand/withoutmaturity months months years years

Loansandadvancestocreditinstitutions 117,550 347,883 406,571 2,215,654 689,199 3,776,856

Loansandadvancestocustomers 3,680 35,506 0 6,991 90 46,266

Bonds,notesandotherfixed-interestsecurities 0 0 7,518 10,811 0 18,330

Sharesandothervariable-yieldsecurities 335,160 0 0 0 0 335,160

Otherassets 30,234 2,573 5,194 119,927 35,734 193,663

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Loansandadvancestocreditinstitutions 164,754 150,084 366,354 1,881,283 472,916 3,035,390

Loansandadvancestocustomers 110,867 564 1,676 7,017 90 120,213

Bonds,notesandotherfixed-interestsecurities 0 0 1,287 12,028 7,130 20,445

Sharesandothervariable-yieldsecurities 177,142 0 0 0 0 177,142

Otherassets 44,2901 2,0851 10,147 60,870 10,807 128,200

497,053 152,733 379,464 1,961,197 490,943 3,481,3901Adjustmentofremainingtermtomaturity

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II.2.Loansandadvancestoaffiliatedcompaniesandequityparticipations

31/12/2019 Loansandadvancesto Loansandadvancestoequity in€thousand affiliatedcompanies participationsinwhichRaiffeisen (direct/indirect>50%) CentrobankAGhasadirect shareholding(<50%)

Loansandadvancestocreditinstitutions 3,490,332 0

Loansandadvancestocustomers 0 506

Bonds,notesandotherfixed-interestsecurities 7,518 0

Sharesandothervariable-yieldsecurities 110 0

Otherassets 688 8

3,498,649 514

31/12/2018 Loansandadvancesto Loansandadvancestoequity in€thousand affiliatedcompanies participationsinwhichRaiffeisen (direct/indirect>50%) CentrobankAGhasadirect shareholding(<50%)

LLoansandadvancestocreditinstitutions 2,692,527 0


Bonds,notesandotherfixed-interestsecurities 8,441 0

Sharesandothervariable-yieldsecurities 105 0

Otherassets 450 8

2,701,522 522

III.Securities

FiguressuppliedpursuanttoArticle64section1no10and11AustrianBankingAct

31/12/2019 Unlisted Listed Total Valuedat in€thousand marketprice

Bonds,notesandotherfixed-interestsecurities,A4 0 18,330 18,330 18,330

Sharesandothervariable-yieldsecurities,A5 60,795 274,367 335,160 335,160

Equityparticipations,A6 5,140 0 5,140 x

Sharesinaffiliatedcompanies,A7 1,100 0 1,100 x

31/12/2018 Unlisted Listed Total Valuedat in€thousand marketprice

Bonds,notesandotherfixed-interestsecurities,A4 0 20,445 20,445 20,445

Sharesandothervariable-yieldsecurities,A5 42,119 135,023 177,142 177,142

Equityparticipations,A6 5,139 0 5,139 x

Sharesinaffiliatedcompanies,A7 1,100 0 1,100 x

“Loansandadvancestocreditinstitutions”includedtradablemoneymarketdepositsintheamountof€2,933,576thousand(31/12/2018:€2,373,943thousand)servingashedgesforcertificatesandwarrantsissuedbyRaiffeisenCentrobankAG.Thereof€2,933,576thousandwereattributabletoRBI(31/12/2018:€2,369,340thousand).

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Asat31/12/2019,balancesheetitemA4includedfixed-interestsecuritiesheldfortradingamountingto€18,330thousand(31/12/2018:€20,445thousand)ofwhich€7,518thousand(31/12/2018:€1,287thousand)wouldfalldueintheforthcomingyear.

Thefairvalueofsecuritiesofthetradingbook(excludinghedgepositions)exceededtheacquisitioncostsby€267thousandasat31/12/2019(31/12/2018:€95thousand).

IV.EquityparticipationsandsharesinaffiliatedcompaniesUnchangedtothepreviousyear’speriod,theBankdirectlyheldaminimumof20percentofthesharesinthesubsequentcompaniesasat31/12/2019:

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in€thousand Name Shareholdingin% Equity Annualresults2019 Domicile 31/12/2019

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

2SyrenaImmobilienHoldingAG,Spittal/Drau 21 27,320 (369)11unauditedfigures

V.FixedassetsThecompositionanddevelopmentoffixedassetsiscontainedinthetableoutliningthedevelopmentoffixedassets.

Furthertothesaleofthecommoditytradingsubsidiaries,CentrotradeHoldingGmbHdidnotperformanyoperationalactivities.

VI.OtherassetsBalancesheetitemA10“Otherassets“totaling€193,663thousand(31/12/2018:€128,200thousand)referredprimarilytopurchasecontractsfromtradinginderivativefinancialinstrumentsreportedatfairvalueasat31/12/2019:

in€thousand 31/12/2019 31/12/2018

Positivefairvaluesofderivativefinancialinstruments

fromOTCoptions 162,650 83,634

fromtradinginEUREXoptionsandfutures 14,809 39,034

fromtradinginotheroptionandfutures 13,733 4,425

191,192 127,094

Inaddition,loansandadvancestoforeigntaxauthoritiesintheamountof€1,040thousand(31/12/2018:€747thousand)wereincludedaswellasthesettlementofGroupcharges(includingcapitalyieldstaxchargedtotheGroup)intheamountof€556thousand(31/12/2018:liabilityfromGroupchargescomingto€938thousand).

in€thousand Name Shareholdingin% Equity Annualresults2018 Domicile 31/12/2018

1CentrotradeHoldingGmbH,Vienna 100 1,143 (12)

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

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VII.Deferredtaxassets“Deferredtaxassets”amountedto€219thousand(31/12/2018:€167thousand)asat31/12/2019.

31/12/2019 Deferredtaxassets Deferredtaxliabilities in€thousand

Loansandadvancestocreditinstitutions 8 0


Sharesandothervariable-yieldsecurities 0 (267)

Prepaymentsandotherdeferrals 14 0

Provisionsforseverancepayments 1,926 0

Otherprovisions 50 0

Total 2,023 (267)

Balance 1,756 0

Deferredtaxassetsasat31/12/2019(12.5%) 219 0

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

VIII.Liabilities

VIII.1.Classificationofliabilitiesaccordingtotheirremainingterm


Liabilitiestocreditinstitutions 45,978 5,370 0 0 630 51,978

Liabilitiestocustomers 210,861 4,129 6,631 244,867 0 466,489

Securitizedliabilities 0 129,343 417,125 1,984,660 963,427 3,494,556

Otherliabilities 106,756 39,651 33,552 105,790 2,006 287,755

363,595 178,493 457,309 2,335,318 966,063 4,300,778


Liabilitiestocreditinstitutions 3,181 11,070 0 0 101 14,353

Liabilitiestocustomers 134,486 575 11,557 218,357 0 364,975

Securitizedliabilities 0 75,383 411,014 1,604,430 658,448 2,749,275

Otherliabilities 132,557 8,130 89,830 226,074 10,946 467,538

270,225 95,158 512,401 2,048,861 669,496 3,596,140

31/12/2018 Deferredtaxassets Deferredtaxliabilities in€thousand

Sharesandothervariable-yieldsecurities 0 (95)

Sharesinaffiliatedcompanies 3 0

Prepaymentsandotherdeferrals 14 0

Provisionsforseverancepayments 1,390 0

Otherprovisions 25 0

Total 1,432 (95)

Balance 1,337 0

Deferredtaxassetsasat31/12/2018(12.5%) 167 0

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VIII.2.Liabilitiestoaffiliatedcompaniesandequityparticipations

31/12/2019 Liabilitiestoaffiliated Liabilitiestoequity in€thousand companies(direct/indirect>50%) participationsinwhich RaiffeisenCentrobankAGhasa directshareholding(<50%)

Liabilitiestocreditinstitutions 4,931 0

Liabilitiestocustomers 1,131 0

Otherliabilities 2,976 2

9,038 2

31/12/2018 Liabilitiestoaffiliated Liabilitiestoequity in€thousand companies(direct/indirect>50%) participationsinwhich RaiffeisenCentrobankAGhasa directshareholding(<50%)

Liabilitiestocreditinstitutions 10,291 0

Liabilitiestocustomers 1,139 0

Otherliabilities 7,164 2

18,594 2

VIII.3.SecuritizedliabilitiesThebalancesheetitemP3“Securitizedliabilities”includedissuedandothersecuritizedliabilitiestotaling€3,494,556thousand(31/12/2018:€2,749,275thousand),heldfortradingandallocatedtothefollowingproductcategories:

in€thousand 31/12/2019 31/12/2018

Negativefairvaluesofderivativefinancialinstruments 185,626 368,257

fromOTCoptionsandforwardexchangetransactions 168,459 332,173

fromtradinginEUREXoptionsandfutures 5,364 3,792

fromtradinginotheroptionsandfutures 11,803 32,291

Short-sellingoftradingassets 74,453 89,376

260,079 457,633

“Securitizedliabilities”intheamountof€546,468thousand(31/12/2018:€486,397thousand)willfalldueinthenextyear.

VIII.4.OtherliabilitiesThebalancesheetitemP4“Otherliabilities“amountingto€287,755thousand(31/12/2018:€467,538thousand)referredprimarilytoliabilitiesreportedatfairvalueaswellaspremiumsreceivedfromtradinginsecuritiesandderivativefinancialinstruments.

“Otherliabilities“asat31/12/2019includedinparticularshort-termchargesderivedfromsecuritytradesnotyetsettledat31/12/2019comingto€13,437thousand(31/12/2018:€5,003thousand)andaliabilityrelatingtoanequitycapitalmarkettransactiontotaling€11,512thousand(31/12/2018:€1,461thousand).Inaddition,theitemincludedvariousliabilitiesinrelationtocostschargedcomingto€529thousand(31/12/2018:€447thousand),groupchargesintheamountof€44thousand(31/12/2018:€938thousand),liabilitiestodomestictaxauthoritiesaddingupto€787thousand(31/12/2018:€996thousand)andliabilitiesrelatedtopayrollaccountingintheamountof€610thousand(31/12/2018:€573thousand).

in€thousand 31/12/2019 31/12/2018

Issuedsecuritizedliabilities 1,826,606 1,460,556

GuaranteeCertificates 1,541,5721,094,088

ReverseConvertibleBonds 285,034 366,467

Othersecuritizedliabilities 1,667,950 1,288,719

Certificateswithoptioncharacter 1,654,733 1,280,236

Warrants 13,217 8,483

3,494,556 2,749,275

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in€thousand 31/12/2019 31/12/2018

Provisionsforseverancepayments 4,763 4,436

Provisionsfortaxes 119 190

Otherprovisions 6,302 7,527

Provisionsforbonuspayments 2,449 3,016

Provisionsforoverduevacation 1,293 1,308

Provisionsforlegal,auditingandconsultingexpenses 212 347

Provisionsforlitigationrisks 233 0

Provisionsforoutstandinginvoicesinthesecuritiessegment 247 310

ProvisionsforoutstandinginvoicesintheInvestmentServicessegment 43 326

Provisionsforoutstandinginvoices(others) 173 450

Provisionsforsecuritiessupervision 0 350

Provisionsformarketingcosts 209 290

ProvisionsforchargedManagementBoardexpenses 983 1,043

Provisionsformarketdatarisks 365 0

Sundry 95 87

11,183 12,153

XI.ObligationsarisingfromtheuseoftangiblefixedassetsnotrecognizedinthebalancesheetTherentalandleasingexpensesduringtheperiodunderreviewamountedto€431thousand(2018:€451thousand),thereof€60thousand(2018:€123thousand)toaffiliatedcompanies.Forthe2020financialyear,rentalandleasingexpensesareexpectedtototal€394thousandand€1,773thousandforthe2020-2024financialyears,ofwhichtherentalandleasingexpensesforaffiliatedcompanieswilltotal€36thousandand€186thousand,respectively.

IX.Provisions“Provisions”wereasfollows:

Asofthemergercontractdated27/05/2019,LexxusServicesHoldingGmbH,Vienna,astransferredcompanywasmergedwithRaiffeisenInternationalInvestHoldingGmbH,Viennaastransferringcompany.

Capitalreservesamountedto€20,651thousandasat31/12/2019,remainedunchangedtothepreviousyear(31/12/2018:€20,651thousand)andcontaincommittedanduncommittedcapitalreservesaddingupto€6,651thousandand€14,000thousand,respectively.

Retainedearningsincludedlegalreservesintheamountof€1,031thousand(31/12/2018:€1,031thousand)andotherreservestotaling€33,654thousand(31/12/2018:€31,129thousand).Theincreaseofotherreservesamountingto€2,524thousandisattributabletotheallocationoftheundistributedbalancesheetprofitfor2018tootherreserves.

LiabilityreservepursuanttoArticle57section5AustrianBankingActremainedunchangedtothepreviousyear,totaling€13,539thousand.

X.SharecapitalandreservesThesharecapitalremainedunchangedandiscomprisedof655,000no-par-valueshares.

ThesharesinRaiffeisenCentrobankAGareownedbythefollowingcompanies:

% Shares

RBIIBBeteiligungsGmbH,Vienna 100.00 654,999

RaiffeisenInternationalInvestHoldingGmbH,Vienna(previouslyLexxusServicesHoldingGmbH,Vienna) 0.00 1

100.00 655,000

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TradingbookAtradingbookismaintained.Atthebalancesheetdate,thetradingvolumeatfairvalues(positiveandnegativefairvaluesoffset)estimatedpursuanttointernalriskcalculationamountedto:

in€thousand 31/12/2019 31/12/2018

Shares/mutualfunds 266,706 41,151

Listedoptions 11,508 7,445

Futures 10,667 286

Warrants/certificates (1,575,382) (1,287,876)

OTCoptions (2,622) (249,464)

Purchasedbonds/tradablemoneymarketdeposits 3,260,011 2,583,238

Issuedguaranteebondsandreverseconvertiblebonds (1,759,507) (1,461,113)

DataontransactionswithderivativefinancialinstrumentsandunsettledforwardtransactionsRaiffeisenCentrobankAG’stradinginderivativefinancialinstrumentsfocusesonoptionsandforwardtransactions(mainlyfutures).

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

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

VolumeofthesecuritiestradingbookAsatthebalancesheetdatethesecuritiestradingbook(notionalamount)wasmadeupasfollows:

in€thousand 31/12/2019 31/12/2018

Securities 3,757,989 3,554,790

Otherfinancialinstruments 8,711,147 6,909,103

12,469,136 10,463,893

XII.Supplementarydata

AssetsandliabilitiesinforeigncurrenciesThefollowingamountswerecontainedinthebalancesheettotalinforeigncurrencies:

in€thousand 31/12/2019 31/12/2018

Assets 1,415,100 1,179,190

Liabilities 1,217,538 1,127,785

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Thevolumesofderivativefinancialinstrumentsandunsettledforwardtransactionsasat31/12/2019wereasfollows:

in€thousandNotionalamount thereofFairvalue 31/12/2019 Purchase Sale TradingBook Positive Negative

1.Foreignexchangecontracts 71,982 117,361 73,008 5,018 (156)

1.1.OTCproducts 44,658 117,361 45,684 4,272 (156)

Forwardforeignexchangecontracts 0 116,335 0 0 (156)

Currencyoptions/goldcontracts 44,658 1,026 45,684 4,272 0

1.2.Productstradedonstockexchange 27,324 0 27,324 747 0

Futureforeignexchangecontracts 27,324 0 27,324 747 0

2.Equitycontracts 2,954,755 2,442,255 5,397,010 179,865 (185,401)

2.1.OTCproducts 2,029,634 1,817,926 3,847,559 154,968 (168,303)

Equity/index-basedoptions 2,029,634 1,817,926 3,847,559 154,968 (168,303)

2.2.Productstradedonstockexchange 925,121 624,330 1,549,451 24,897 (17,098)

Sharesandotherequity/index-basedoptionsandfuturecontracts 189,056 76,879 265,935 9,321 (2,258)

Equity/index-basedoptions 736,065 547,451 1,283,516 15,576 (14,840)

3.Commodities/preciousmetals 98,744 6,000 104,744 5,142 (69)

3.1.OTCproducts 30,507 6,000 36,507 2,244 0

Commodityandpreciousmetaloptions 30,507 6,000 36,507 2,244 0

3.2.Productstradedonstockexchange 68,237 0 68,237 2,898 (69)

Othercommodityandpreciousmetalfuturecontracts 68,237 0 68,237 2,898 (69)

4.Othertransactions 41,450 0 41,450 1,167 0

4.1.OTCproducts 41,450 0 41,450 1,167 0

Otheroptions 41,450 0 41,450 1,167 0

TotalOTCproducts 2,146,249 1,941,287 3,971,201 162,650 (168,459)

Totalstockexchangetradedproducts 1,020,682 624,330 1,645,012 28,542 (17,167)

3,166,931 2,565,617 5,616,213 191,193 (185,627)

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Thevolumesofderivativefinancialinstrumentsandunsettledforwardtransactionsasat31/12/2018wereasfollows:

1Adjustmentofpreviousyear’sdataduetotheimplementationofthecategory“Othertransactions”.

in€thousandNotionalamount thereofFairvalue 31/12/2018 Purchase Sale TradingBook Positive Negative

1.Foreignexchangecontracts 160,366 875 71,020 2,987 0

1.1.OTCproducts 136,059 875 46,713 1,844 0

Forwardforeignexchangecontracts 90,221 0 0 293 0

Currencyoptions/goldcontracts 45,839 875 46,713 1,551 0

1.2.Productstradedonstockexchange 24,307 0 24,307 1,143 0

Futureforeignexchangecontracts 24,307 0 24,307 1,143 0

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

2.1.OTCproducts 1,640,188 1,883,938 3,524,126 80,408 (331,712)

Equity/index-basedoptions1 1,640,188 1,883,938 3,524,126 80,408 (331,712)

2.2.Productstradedonstockexchange 460,288 281,444 741,732 40,750 (33,990)

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

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

3.Commodities/preciousmetals 94,511 4,444 98,955 2,949 (2,555)

3.1.OTCproducts 43,163 4,444 47,607 1,382 (462)

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

3.2.Productstradedonstockexchange 51,348 0 51,348 1,568 (2,093)

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

4.Othertransactions 41,450 0 41,450 1,925 0

4.1.OTCproducts 41,450 0 41,450 1,925 0

Otheroptions1 41,450 0 41,450 1,925 0

TotalOTCproducts 1,819,410 1,889,256 3,618,446 83,633 (332,173)

Totalstockexchangetradedproducts 535,943 281,444 817,386 43,460 (36,083)

2,355,353 2,170,700 4,435,833 127,094 (368,257)

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C.NotestotheIncomeStatement

I.Interestandsimilarincome

“Netinterestresult”intheamountof€39,652thousandwasnegativebothin2019and2018(€19,398thousand).

Therisein“netinterestresult”from€minus39,652thousand(2018:€19,398thousand)wasduetohighercouponpaymentsforsecuritizedliabilities(structuredproducts).

Dependingonthehedge,theseexpenseswerecontrastedwithinterestincomeand–asdescribedbelowinnetprofitonfinancialtradingactivities–withapositivevaluationresultfromtradablemoneymarketdepositsinthenetprofitonfinancialtradingactivities(tradingprofit).In2019,couponexpensescontainedinthenetinterestresultpostedastrongrisecomparedtothepreviousyear’sresult,whereascouponincomeroseonlyslightly.In2019,netvaluationsincludedinthenetprofitonfinancialtradingactivitiesincreasedaccordingly.

Comparedtothepreviousyear,interestexpenseswentupby€22,699thousandto€71,307thousand.Inadditiontothestrongriseofcouponpay-mentsforsecuritizedliabilities,interestexpensesforliabilitiestocreditinstitutionspostedavolume-relatedincrease.

Duetohigherinterestincomefromloansandadvancestocreditinstitutions,interestincomeroseby€2,445thousandto€31,656thousand.

Theliquidityderivedfromissuesisprimarilyinvestedintotradablemoneymarketdepositswithoutcurrentcouponswhichareincludedinthetradingbook.Theresultfromtradablemoneymarketdepositsincludedinthetradingbookisshownin“Netprofitonfinancialtradingactivities”.

Furthertothelowinterestrateenvironmentin2019item“Netinterestresult”includedexpensesresultingfromnegativeinterestforloansandadvancesintheamountof€1,291thousand(2018:€1,169thousand).Incontrast,theitemincludedincomederivedfromnegativeinterestforliabilitiesintheamountof€238thousand(2018:€172thousand).

III.IncomefromsecuritiesandfinancialinvestmentsInthe2019financialyear,“Incomefromsecuritiesandfinancialinvestments”comingto€13,305thousand(2018:€11,427thousand)includedprimari-lyincomefromdomesticandforeignsecurities.

in€thousand 2019 2018

fromloansandadvancestocreditinstitutions 12,228 10,351

fromloansandadvancestocustomers 386 549

fromfixed-interestsecurities 267 99

fromstructuredproducts 18,774 18,211

31,656 29,211

II.Interestandsimilarexpenses


forliabilitiestocreditinstitutions (6,474) (4,668)

forliabilitiestocustomers (6,193) (6,163)

forsecuritizedliabilities (58,640) (37,778)

(71,307) (48,609)

IV.Feeandcommissionincome


fromsecuritiesbusiness 8,280 9,782

fromECMtransactions 2,172 1,706

frompaymenttransactions 1,686 1,340

12,138 12,828

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VI.Netprofitonfinancialtradingactivities”Netprofitonfinancialtradingactivities”accountedforthemajorpartoftheoperatingincomeandwentupfrom€67,521thousandin2018to€86,471thousandin2019.Thisdevelopmentresultedfrompositivenetvaluationsandnetproceedsofderivativesheldforhedgingpurposesandmoneymarketdepositsaddingupto€133,788thousand.Incontrast,therewasanegativeresultfromthevaluationanddisposalofcertificatesandsharesintheamountof€minus50,590thousand.Thevaluationofspotandfuturespositionscameto€plus3,273thousand.

Inthecomparativeperiod,“Netprofitonfinancialtradingactivities”wascomprisedofpositivenetvaluationsandnetproceedsofcertificatesandsharesintheamountof€154,362thousandandnegativenetvaluationsandnetproceedsofderivativesheldforhedgingpurposesandmoneymarketdepositsaddingupto€minus92,238thousand.Thevaluationofspotandfuturespositionscameto€plus5,398thousand.

VII.OtheroperatingincomeTheitemincludedmainlyincomefromthereleaseofprovisionsintheamountof€466thousand(2018:€658thousand).Inaddition,theitemincludedincomefromchargespassedontothirdpartiesintheamountof€254thousand(2018:€315thousand)aswellasotherincomeintheamountof€161thousand(2018:€171thousand).Thedecreasewasmainlyattributabletolowerincomeformthereleaseofprovisionsandlowertochargespassedontothirdparties.

VIII.Otheradministrativeexpenses


Officespaceexpenses(maintenance,operation,administration,insurance) (1,175) (1,003)

Officesupplies,printedmatter,literature (332) (322)

ITcosts (3,595) (3,472)

Communicationcosts (1,061) (1,063)

Informationservices (4,670) (3,298)

Carexpensesandtravellingexpenses (640) (652)

Advertisingandpromotionalexpenses (1,721) (1,491)

Legal,advisoryandconsultancyservices (1,972) (1,379)

Contributionstoassociations (1,287) (1,502)

Resolutionfund (973) (723)

Sundry (1,956) (2,179)

(19,383) (17,084)

Therisein“Otheradministrativeexpenses”wasmainlyduetohigherexpensesformarketingandinformationservicesaswellasforadvisoryandconsul-tancyservices.“Sundry”intheamountof€1,956thousand(2018:€2,179thousand)mainlyincludedexpenseschargedfortheManagementBoard.

IX.Otheroperatingexpenses“Otheroperatingexpenses“intheamountof€341thousand(2018:€332thousand)primarilyrelatedtoexpenseschargedintheamountof€248thousand(2018:€311thousand).

X.NetvaluationsandnetproceedsInthe2019financialyear,“Netvaluationsandnetproceeds”amountedto€152thousand(2018:€minus1,665thousand).TheitemcontainedmainlythecurrentadjustmentofgeneralimpairmentallowancescalculatedpursuanttothemethodologylaiddowninIFRS9.Inthepreviousyear,theitemincludedmainlyadditionalexpensesnotcoveredbyprovisionsrelatingtoaliabilityforasubsidiaryamountingto€1,442thousand.

V.Feeandcommissionexpenses

“Netfeeandcommissionresult”intheamountof€minus1,731thousand(2018:€plus935thousand)wascomprisedoffeeandcommissionincometotaling€12,138thousand(2018:€12,828thousand)andfeeandcommissionexpensesintheamountof€13,869thousand(2018:€13,763thousand).In2019,thedecreaseinnetfeeandcommissionresultwasmainlyduetohigherexpensesforsalesfeesandlowerfeeincomefromtheIn-vestmentServicesbusinesswhichwereonlypartlyoffsetbyhigherincomederivedfromequitycapitalmarkettransactions.


fromsecuritiesbusiness (12,141) (12,365)

frompaymenttransactions (1,728) (1,398)

(13,869) (13,763)

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D.OtherDisclosuresContingentliabilitiesInaccordancewithArticle93oftheAustrianBankingAct,theBankislegallyobligedtoprovideforproportionatedepositinsuranceaspartofitsmem-bershipinaprofessionalassociation.RaiffeisenCentrobankAGisamemberofEinlagensicherungAUSTRIAGesmbH.Thecontingentliabilitiesderivedfromtheoreticalclaimswerereportedatamarketvalueof€0.07.

OthercontractualbankguaranteeobligationsThefollowingassetswerepledgedassecurityforobligationsasat31/12/2019:

ItemA2Loansandadvancestocreditinstitutions

€ 425,516 thousand (31/12/2018:€397,971thousand) Collateraldepositedwithbanksforthesecuritiesandoptionsbusinessandsecuritieslending

ItemA3Loansandadvancestocustomers

€ 3,451thousand (31/12/2018:€98,432thousand) Collateraldepositedwithstockexchangesandotherfinancialinstitutionsforthesecuritiesandoptionbusiness

ItemA4Fixed-interestsecurities€3,078thousand (31/12/2018:€4,223thousand) Collateraldepositedwithbanksforthesecuritiesandoptionsbusiness

LettersofcomfortAsatthebalancesheetdateRaiffeisenCentrobankAGhadnotissuedanylettersofcomfort.

CommitmentsarisingfromfiduciarybusinessCommitmentsarisingfromfiduciarybusinesstransactionsnotincludedinthebalancesheetreferredtooneequityparticipationheldintrustintheamountof€7,091thousandon31/12/2019and31/12/2018.

XII.DeferredtaxesIn2019,incomefromdeferredtaxassetscameto€52thousand(2018:€4thousand)

XIII.Expensesforauditingthefinancialstatements“Expensesforauditingthefinancialstatements”werecontainedinlegal,advisoryandconsultancyservices.Thereof€183thousandwereattributabletotheauditor(2018:€110thousand)andalsoincludetheauditoftheclosingbalanceasat30/06/2019inrelationtothedemergeroftheInvestmentServicessegmentofRaiffeisenCentrobankAG.€68thousandwereattributabletootherconsultancyservices(2018:€23thousand).

XI.IncometaxesandothertaxesIncometaxeswereasfollows:


Grouptaxation (859) (1,046)

Corporateincometax/Slovakbranch (6) (77)

Taxesforformerperiods(settlementofGroupcharge) (49) (216)

Notrecognizedasforeignwithholdingtax (1,182) (1,059)

Currentincometaxes (2,095) (2,397)

Deferredincometaxes 52 4

(2,043) (2,393)

“Taxesforformerperiods”comingto€49thousand(2018:€216thousand)wereattributabletothesettlementoftheGroupchargefrompreviousye-arsatRBI.Duetoariseinforeigndividendincome,higherforeignwithholdingtaxexpensesaddingupto€1,182thousand(2018:€1,059thousand)wereduein2019.

Inthe2019financialyear,“Othertaxes”cameto€930thousand(2018:€331thousand).Theriseoftaxexpenseswasattributabletonon-periodicVATtaxincomeinthepreviousyearfollowingataxauditintheamountof€348thousand.Inaddition,theitemcontainedariseinexpensesforthebanklevyofRaiffeisenCentrobankAGandtheSlovakbranchintheamountof€753thousandand€166thousand(2018:€607thousandand€82thousand).

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OwnfundsTheownfundspursuanttopart2CRRwereasfollows:

in€thousand 31/12/2019 31/12/2018

Risk-weightedassetsaccordingtostandardapproach 99,577 105,450

Governmentsandcentralbanks 16 0

Institutions 50,978 53,106

Corporates 28,864 32,898

Equityparticipations 6,240 6,240

Otherpositions 13,479 13,206

CVArisk 48,241 42,349

147,818 147,799

in€thousand 31/12/2019 31/12/2018

Capitalpaid-in 47,599 47,599

Earnedcapital 68,875 66,351

Corecapital(tier1capital)beforedeductions 116,474 113,950

Intangiblefixedassets (137) (105)

Prudentvaluation (1.252) (917)

Holdingsinnon-significantinvestmentsinfinancialsectorentities (6.992) (585)

Corecapital(tier1capital)afterdeductions 108,094 112,343

Supplementaryownfunds 0 0

Corecapital 108,094 112,343

Supplementarycapital 0 0

Supplementaryownfunds(afterdeductions) 0 0

Totalownfunds 108,094 112,343

Totalrisk-weightedassets 520,337 475,262

Corecapitalratio,creditrisk 73.1% 76.0%

Corecapitalratio,total 20.8% 23.6%

Ownfundsratio 20.8% 23.6%

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

Risk-weightedassetsforthecreditriskaccordingtoassetclasseswereasfollows:

in€thousand 31/12/2019 31/12/2018

Risk-weightedassets(creditrisk) 147,818 147,799

Standardapproach 99,577 105,450

CVA(creditvalueadjustment)risk 48,241 42,349

Risk-weightedassets(positionriskinbonds,equities,commoditiesandforeigncurrencies) 240,312 204,926

Risk-weightedassets(settlementanddeliveryrisks) 16 696

Risk-weightedassets(operationalrisk) 132,191 121,842

Totalrisk-weightedassets 520,337 475,262

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Numberofstaff

31/12/2019 Annual 31/12/2018 Annual average average

Salariedemployees 195 195 191 186

thereofpart-time 40 41 40 41

AdvancesandloanstomembersoftheManagementBoardandSupervisoryBoardAtthebalancesheetdatenoadvancesandloanshadbeengrantedtomembersoftheManagementBoard.Noadvances,loansorguaranteeshadbeengrantedtomembersoftheSupervisoryBoard.

Expensesforseverancepaymentsandretirementbenefits“Expensesforseverancepaymentsandretirementbenefits”(includingcontributionstopensionfundsandstaffretirementbenefitplans,aswellasprovisionsforseverancepayments)fortheManagementBoard(includedin“Otheradministrativeexpenses”)andthestaffamountedto€1,364thousand(2018:€1,477thousand).Paymentstoemployeepensionfundstotaled€225thousand(2018:€211thousand).

Nobreak-downpursuanttoArticle239section1no3accordingtoArticle242section4wasprovided.

RemunerationformembersoftheManagementBoardandSupervisoryBoardNobreak-downpursuanttoArticle239section1no4accordingtoArticle242section4wasprovided.

In2019,attendingfeesintheamountof€95thousandwerepaidtomembersoftheSupervisoryBoard(2018:€70thousand).

RemunerationsandexpensesonseverancepaymentsandretirementbenefitsformembersoftheManagementBoardwerebornebyRBI(anaffiliatedcom-pany)andwerechargedtoRaiffeisenCentrobankAG(includedin“Otheradministrativeexpenses”).

GrouprelationsThecompanyisanaffiliatedcompanyofRaiffeisenBankInternationalAG(ultimateholdingcompany),Vienna,andisintegratedinitsconsolidatedfinancialstatements.TheconsolidatedfinancialstatementsaredepositedwiththeCommercialCourtinViennaandareavailableattherespectiveparentcompany.

Since17December2008,thecompanyhasbeenamemberofthecorporategroupRaiffeisenZentralbankÖsterreichAktiengesellschaft(nowRaiffeisenBankInternationalAG)pursuanttoArticle9AustrianCorporationTaxAct.TheapplicationsubmittedbythecompanytobecomeagroupmemberofthecorporategroupRZBasofthebusinessyear2008pursuanttoArticle9AustrianCorporationTaxActwasnotifiedtothefinancialauthoritieson19Decem-ber2008andwasapprovedbynoticeon22April2009.

Thetaxableresultsofthemembersofthegroupareattributedtotheparentcompany.Anytaxadjustmentsbetweentheparentcompanyandtheindividualmembersofthecorporategroupareregulatedintheformofataxallocationagreement.

in€thousandorinpercent 31/12/2019 31/12/2018

Annualresultaftertax 11,573 13,004

Balancesheettotal 4,440,234 3,735,352

OverallReturn-on-Assets 0.3% 0.3%

OverallReturn-on-Assets

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MembersoftheManagementBoard,theSupervisoryBoardandStateCommissioners

ManagementBoard WilhelmCeleda ChiefExecutiveOfficeruntil30April2019 ValerieBrunner MemberoftheManagementBoarduntil30April2019 HaraldKröger ChiefExecutiveOfficerasfrom01May2019 HeikeArbter MemberoftheManagementBoardasfrom01May2019 SupervisoryBoard ŁukaszJanuszewski Chairman MemberoftheManagementBoard, RaiffeisenBankInternationalAG HannesMösenbacher DeputyChairman MemberoftheManagementBoard, RaiffeisenBankInternationalAG MichaelHöllerer Member ChiefFinancialOfficer, RaiffeisenBankInternationalAG

AndriiStepanenko Member MemberoftheManagementBoard, RaiffeisenBankInternationalAG,Vienna

ChristianMoucka Memberasfrom29April2019 GeneralManagement, RaiffeisenbankRegionBaden MatthiasZitzenbacher Memberasfrom29April2019 GeneralManagement, RaiffeisenbankLeoben-BruckeGen(mbH)

StateCommissioners AlfredHacker Karl-HeinzTscheppe

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DistributionoftheProfit2019

The2019financialyearclosedwithanetprofitof€11,573,183.40.

TheManagementBoardproposestotheSupervisoryBoardthatadividendintheamountor€17.00persharebedistributedfromthenetprofitasat31December2019.Thiscorrespondstoatotaldividendamountingto€11,135,000.00for655,000shares.TheManagementBoardfurtherproposestoallocateanamountof€438,183.40tobecarriedforward.




SignificantEventsaftertheBalanceSheetDate

On13January2020ademergerandabsorptionagreementwasconcludedinwhichRaiffeisenCentrobankAGasassigningcompanyintends,intheformofademergerbyabsorption,totransferitsInvestmentServicesdivisiontoKathreinPrivatbankAktiengesellschaftasacquiringcompanypursuantto§1para2Z2DemergerAct(Spaltungsgesetz)andArticleVIReorganizationTaxAct(Umgründungssteuergesetz)byuniversalsuccessionwiththeef-fectivedateasof30June2019(demergerdate)andonthebasisoftheauditedclosingbalancesheetofRaiffeisenCentrobankAGasat30June2019KathreinPrivatbankAktiengesellschaftshallnotissueanynewsharesinthecourseofthedemergerbyabsorption.IntheExtraordinaryGeneralAssemblyofRaiffeisenCentrobankAGheldon13January2020thedemergerbyabsorptionwasapproved.

TheEuropeanCentralBankapprovedthedemergerbyabsorptionoftheInvestmentServicesdivisionofRaiffeisenCentrobankAGtoKathreinPrivatbankAktiengesellschaftbydecisiondated27February2020.Uponentryintothecommercialregisteron01April2020thedemergerbyabsorptionbecamelegallyeffective.

Thepre-taxresultoftheInvestmentServicesdivisionfromJulytoDecember2019cameto€305,089.54andhasbeenincludedinthe2019annualfinancialreportofRaiffeisenCentrobankAG.Thisamountissubjecttoadistributionprohibition.

ThemeasurestakenbytheAustriangovernmenttocombattheCovid-19virushaveasubstantialimpactonthebusinessofRaiffeisenCentrobankAG.Thestockmarketssufferedasevereslumpagainstthebackdropoftheeconomicramificationsoftheepidemic,translatingintoanoticeableriseintradingac-tivitiesandvolatilityontheexchanges.Over90percentofRaiffeisenCentrobankAG’semployeesareworkingremotelyviateleworkingsolutions.CorestaffintheTrading&TreasuryandElectronicSalesTradingbusinessesareworkingontheBank’spremisesoratthebackupdatacenter.TheimpactonRaiffeisenCentrobankAG’sfrontofficeshingesonthedurationandintensityoftheeconomicslowdownandpotentialsecond-roundeffects,andcancurrentlynotbeassessed.




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Auditor’s Report ReportontheFinancialStatements

AuditOpinion

Wehaveauditedthefinancialstatementsof

RaiffeisenCentrobankAG,Vienna,Austria,

whichcomprisetheBalanceSheetasat31December2019,theIncomeStatementfortheyearthenended,andtheNotes.

Inouropinion,thefinancialstatementspresentfairly,inallmaterialre-spects,thefinancialpositionoftheCompanyasat31December2019,anditsfinancialperformancefortheyearthenendedinaccordancewithAustrianGenerallyAcceptedAccountingPrinciplesandotherlegalrequirements(AustrianBankingAct).

BasisforOurOpinion

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

KeyAuditMatters

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

Valuationofcertificates,warrantsandotherfinancialinstrumentsaswellasdynamichedging

Theissuanceofcertificatesandwarrantswithatotalvolumeofroughly3.5billionEUR,ieroughly78percentofthebalancesheettotal,aswellascontinualadjustmentsofhedgingpositions(dynamichedging)connectedtothisactivityrepresentthemajorbusinessactivitiesofRaiffeisenCentrobankAG.RaiffeisenCentrobankAGcalculatespricesforissuedcertificates,warrantsandstructuredproductsbasedoninternalvaluationmodels.Marketpricerisksandinterestraterisksresultingfromtheissueofcertificatesarehedgeddynamically.Structuredproductsissuedontheliabilitiessidearereplicatedbycounter-positionsontheas-setsside.Hedgingpositionsarecontinuallyadjustedtomarketconditions.Financialproductswithouttradablepricesarereportedinthebalancesheetatfairvaluewhichisdeterminedbyvaluationmodelsor,inindividualcases,byexternal(indicative)quotesofbrokersorothercreditinstitutions.

TheManagementBoarddescribestheprocessofvaluatingassets-relatedandliabilities-relatedproductsunder"AccountingPolicies"withinthenotes.

TheFinancialStatementRiskTherisktothefinancialstatementsresultsfromdiscretionaryassumptionsandparametersappliedintheinternalmodelsandthuspotentialmisjudg-mentforthevaluationoffinancialinstrumentsreportedatfairvaluewithouttradablepricesandobservablemarketdata.Thesameappliestothedeterminationofthefairvaluebasedonexternal(indicative)pricingmethodsandvalueadjustments.

OurResponseWehavetestedtheprocessesforvaluingthesefinancialproducts,in-cludingdepositoryreconciliation.Wetestedkeycontrolswithintheseprocessesfortheirdesign,implementationandoperationaleffectiveness.Furthermore,wesurveyedtheimplementationofriskmanagementinthetradingbook,inparticularforlimitmonitoring,marketconformitychecksandproductlaunches.Wehaveidentifiedandtestedthedesignandim-plementationoftherelatedkeycontrols.

Wehaveinvolvedourinternalvaluationspecialiststoassessthefairvalues.Further,wehavereviewedthevaluationmodelsusedandtheun-derlyingvaluationparameterstoensuretheirappropriateness.Inaddition,wecomparedtheparametersusedwithmarketdataonasamplebasisandexaminedwhethertheyaresuitableinputfactors.Wealsoassessedwhethertheexternal(indicative)pricequotationscanbeusedasfairvaluesbyquestioningtheresponsibleemployeesandinspectingthedocumentsprovidedbytheBank.Wetookrandomsamplestocheckwhethertheassumptionsmadeinthecalculationwereconclusiveandrecalculatedthefairvalues.

Finally,weassessedwhetherthedisclosuresinthenotesregardingthevaluationmethodswerecompliantwithlegalrequirements.

ResponsibilitiesofManagementandtheAuditCommitteefortheFinancialStatements

ManagementisresponsibleforthepreparationandfairpresentationofthefinancialstatementsinaccordancewithAustrianGenerallyAcceptedAccountingPrinciplesandotherlegalrequirements(AustrianBankingAct)andforsuchinternalcontrolsasmanagementdeterminesarenecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

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

TheauditcommitteeisresponsibleforoverseeingtheCompany´sfinancialreportingprocess.

Auditors’Responsibilities

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

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AspartofanauditinaccordancewiththeAPRegulationandAustrianStandardsonAuditing,weexerciseprofessionaljudgmentandmaintainprofessionalskepticismthroughouttheaudit.

Moreover:

— Weidentifyandassesstherisksofmaterialmisstatementsinthe financialstatements,whetherduetofraudorerror,wedesignand performauditproceduresresponsivetothoserisksandobtain sufficientandappropriateauditevidencetoserveasabasisforour auditopinion.Theriskofnotdetectingmaterialmisstatementsresulting fromfraudishigherthanforoneresultingfromerror,asfraudmay involvecollusion,forgery,intentionalomissions,misrepresentationsor theoverrideofinternalcontrol.

— Weobtainanunderstandingofinternalcontrolrelevanttotheaudit inordertodesignauditproceduresthatareappropriateinthe circumstances,butnotforthepurposeofexpressinganopinionon theeffectivenessoftheentity'sinternalcontrol.

— Weevaluatetheappropriatenessofaccountingpoliciesusedand thereasonablenessofaccountingestimatesandrelateddisclosures madebymanagement.

— Weconcludeontheappropriatenessofmanagement’suseofthe goingconcernbasisofaccountingand,basedontheauditevidence obtained,whetheramaterialuncertaintyexistsrelatedtoeventsor conditionsthatmaycastsignificantdoubtontheCompany’sability tocontinueasagoingconcern.Ifweconcludethatamaterial uncertaintyexists,wearerequiredtodrawattentioninouraudit reporttotherespectivenoteinthefinancialstatements.Ifsuch disclosuresarenotappropriate,wewillmodifyourauditopinion.Our conclusionsarebasedontheauditevidenceobtaineduptothedate ofourauditor’sreport.However,futureeventsorconditionsmay causetheCompanytoceasetocontinueasagoingconcern.

— Weevaluatetheoverallpresentation,structureandcontentofthe financialstatements,includingthenotes,andwhetherthefinancial statementsrepresenttheunderlyingtransactionsandeventsina mannerthatachievesfairpresentation.

— Wecommunicatewiththeauditcommitteeregarding,amongstother matters,theplannedscopeandtimingofourauditaswellas significantfindings,includinganysignificantdeficienciesininternal controlthatweidentifyduringouraudit.

— Wecommunicatetotheauditcommitteethatwehavecomplied withtherelevantprofessionalrequirementsinrespectofour independence,thatwewillreportanyrelationshipsandotherevents thatcouldreasonablyaffectourindependenceand,where appropriate,therelatedsafeguards.

— Fromthematterscommunicatedwiththeauditcommittee,wedeter- minethosemattersthatwereofmostsignificanceintheauditi.e.key auditmatters.Wedescribethesekeyauditmattersinourauditor’s reportunlesslawsorotherlegalregulationsprecludepublic disclosureaboutthematterorwheninveryrarecases,wedetermine thatamattershouldnotbeincludedinourauditreportbecausethe negativeconsequencesofdoingsowouldreasonablybeexpected tooutweighthepublicbenefitsofsuchcommunication.

ReportonOtherLegalRequirements

ManagementReportInaccordancewithAustrianCompanylawthemanagementreportistobeauditedastowhetheritisconsistentwiththefinancialstatementsandpreparedinaccordancewithlegalrequirements.

KPMGAustriaGmbHWirtschaftsprüfungs-undSteuerberatungsgesellschaft

signedbyWilhelmKovscaWirtschaftsprüfer

(AustrianCharteredAccountant)

ManagementisresponsibleforthepreparationofthemanagementreportinaccordancewithAustriancompanylawandotherlegalrequirements(AustrianBankingAct).

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

StatementBasedonourknowledgegainedinthecourseoftheauditofthefinancialstatementsandourunderstandingoftheCompanyanditsenvironment,wedidnotnoteanymaterialmisstatementsinthemanagementreport.

OtherInformationManagementisresponsibleforotherinformation.Otherinformationisallinformationprovidedintheannualreport,otherthanthefinancialstate-ments,themanagementreportandtheauditor’sreport.

Ouropiniononthefinancialstatementsdoesnotcoverotherinformationandwedonotprovideanykindofassurancethereon.

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

AdditionalinformationinaccordancewithArticle10EURegulationAttheAnnualGeneralMeetingdated25April2018,wewereelectedasauditors.Wewereappointedbythesupervisoryboardon30May2018.WehavebeentheCompany’sauditorsformorethan20yearswithoutinterruption.

Wedeclarethatouropinionexpressedinthe"ReportontheFinancialStatements"sectionofourreportisconsistentwithouradditionalreporttotheauditcommittee,inaccordancewithArticle11APRegulation.

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

EngagementPartnerTheengagementpartnerisMrWilhelmKovsca.

Vienna,3April2020

ThisreportisatranslationoftheoriginalreportinGerman,whichissolelyvalid.Thefinancialstatements,togetherwithourauditor'sopinion,mayonlybepublishedifthefinancialstatementsandthemanagementre-portareidenticalwiththeauditedversionattachedtothisreport.Section281Paragraph2UGB(AustrianCommercialCode)applies.

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