Profit or losses of companies valued at equity are netted and recognized in “current income from associates”. The rules applicable to companies valued according to the equity method are the same as those for fully consolidated companies (offsetting acquisition costs against proportional fair net asset value). As a rule, the IFRS financial statements of associated companies are used. Changes in the equity of companies valued at equity are included in other comprehensive income in the consolidated financial statements.
Goodwill is measured as the excess of the aggregate of the value of the consideration transferred, the amount of any noncontrolling interest and the acquisition-date fair value of the acquirer’s previously-held equity interest in the acquiree (if any), and the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. In case that the difference is negative after further review, the resulting gain is recognized immediately in income statement.
Non-controlling interests currently procuring ownership rights and granting the right to the owner in case of liquidation to receive a proportionate share of net assets of the entity, are measured either at fair value or at the non-controlling interest’s proportionate share of net assets of the acquiree at acquisition date. This accounting policy choice can be newly opted for every business combination. Other components of non-controlling interests are measured at fair value or with measurement values derived from other standards.
Separately acquired intangible fixed assets, i.e. those with a definite useful life not acquired in a business combination, are capitalized at acquisition cost less accumulated amortization and impairment. Amortization is accrued in a straight line over the expected useful and reported as an expense in the income statement. The expected useful life and the depreciation method are reviewed at each reporting date and any possible changes in measurement taken into account prospectively. Separately acquired intangible fixed assets with an indefinite useful life are capitalized at acquisition cost less accumulated impairment. The normal useful life of software is between four and six years. The normal useful life for large software projects may extend over a longer period.
 The availability of adequate technical, financial and other resources in order to complete development and to use or sell the intangible fixed asset is assured.
Group companies use brands to differentiate their services from the competition. According to IFRS 3, brands of acquired companies are recognized separately under the item "intangible fixed assets." Brands have an indeterminable useful life and are therefore not subject to scheduled amortization. Brands have to be tested annually for impairment and additionally whenever indications of impairment arise. Details on impairment testing can be found in the notes under (22) Intangible fixed assets
The land and buildings as well as office furniture and equipment reported under tangible fixed assets are measured at cost of acquisition or conversion less depreciation. Depreciation is recorded under item "General administrative expenses". The straightline method is used for depreciation and is based on the following useful life figures: Useful life Years
Expected useful lives, residual values and depreciation methods are reviewed annually. Any necessary future change of estimates is taken into account. Any anticipated permanent depreciation is reported in the income statement and shown under item "General administrative expenses". In the event that the reason for the write-down no longer applies, a write-up will take place up to a maximum of the amount of the amortized cost of the asset.
Non-current assets and discontinued operations are classified as held for sale when the related carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is only considered met if the sale is highly probable and the asset (or discontinued operation) is immediately available for sale and furthermore that the management has committed itself to a sale. Moreover, the sale transaction must be due to be completed within 12 months.
Non-current assets and discontinued operations classified as held for sale are valued at the lower amount of their original carrying value or fair value less costs to sell and are reported under other assets. Income from non-current assets held for sale and discontinued operations are reported under other net operating income.
In the Group variable compensation is based on bonus pools on the bank or profit center level. Every variable pay system has fixed minimum and maximum levels and thus defines maximum payout values.
As of the fiscal year 2011, the general and specific principles for the allocation, the claim and the payment of variable remuneration (including the payment of the deferred portion of the bonus) for board members of RBI AG and certain Group units and identified staff ("risk personnel") are applied:  60 per cent and for especially high amounts 40 per cent of the annual bonus respectively will be paid out on a proportional basis as 50 per cent cash immediately (up-front), and 50 per cent through a phantom share plan (see details below), which will pay out after a holding period (retention period) of one year. An exception to this are the Group units in Bulgaria, with 40 percent up-front portion and a retention period of two years, and in the Czech Republic with a holding period of 1.5 years.
All expenses related to the share incentive program are recognized in staff expenses in accordance with IFRS 2 (share-based payment) and charged to equity. They are described in greater detail in the notes under (34) Equity.
Interest and interest-like income mainly includes interest income on loans and advances to banks and customers and from fixedinterest securities. In addition, current income from shares and other variable-yield securities (especially dividends), income from equity participations and from investments accounted for at equity, and interest-like income are also reported under net interest income. Dividend income is recognized if the entitlement of the owner for payment exists. Interest expenses and interest-like expenses mainly include interest paid on deposits from banks and customers and on debt securities issued and subordinated capital. Interest income and interest expenses are accrued in the reporting period.
Other comprehensive income comprises all income and expenses directly recognized in equity according to IFRS standards. Income and expenses recognized directly in equity that are reclassified in the income statement are reported separately from income and expenses recognized directly in equity that are not reclassified in the income statement. This applies to currency differences resulting from the translation of equity held in foreign currency, changes resulting from the hedging of net investments in a foreign entity (capital hedge), the effective part of a cash flow hedge, changes resulting from valuation of available-for-sale financial assets as well as deferred taxes on the mentioned items. Revaluations of defined benefit plans are reported in other comprehensive income and are not reclassified to the income statement.
According to IAS 39, a financial guarantee is a contract under which the guarantor is obliged to make certain payments. These payments compensate the party to whom the guarantee is issued to for a loss arising in the event that a particular debtor does not fulfill payment obligations on time as stipulated in the original terms of the debt instrument. At the date of recognition of a financial guarantee, the initial fair value corresponds under market conditions to the premium at the date of signature of the contract. For subsequent measurement the credit commitment has to be presented as provision according to IAS 37.
Notes on segment reporting are to be found in chapter segment reporting.
Information on capital management, regulatory own funds and risk-weighted assets are disclosed in the notes under (50) Capital management and regulatory own funds according to the Austrian Banking Act.
The amendments of IAS 32 clarify existing application issues relating to the offsetting of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of “currently has a legally enforceable right to set off” and “simultaneous realization and settlement”. The application of the revised version of IAS 32 has no material impact on the consolidated financial statements of RBI.
The revised IAS 27 will only be relevant for separate financial statements. The application of the revised version of IAS 27 has no impact on the consolidated financial statements of RBI.
Joint ventures are added to the scope of the revised IAS 28, since, under IFRS 11, joint ventures may only be included in the consolidated financial statements according to the equity method. The application of the revised version of IAS 28 has no impact on the consolidated financial statements of RBI.
IFRS 10 replaces the parts of IAS 27 (Consolidated and Separate Financial Statements) that deal with consolidated financial statements. SIC-12 (Consolidation – Special Purpose Entities) is replaced by IFRS 10. In IFRS 10, there is only one basis for consolidation, namely control. Under IFRS 10, control exists if an investor has all three of the following elements: (a) controlling influence over an investee, (b) exposure, or rights, to variable returns from its involvement with the investee, and (c) the ability to use its power over the investee to affect the amount of the investor's return. Extensive guidance has been added in the standard to deal with complex scenarios.
IFRS 12 is a disclosure standard regarding statements in the notes and is applicable to entities that have interests in subsidiaries, joint arrangements (joint ventures or joint operations), associates and/or unconsolidated structured entities. In general, the disclosure requirements in IFRS 12 are far more extensive than those in the current standards. This additional disclosure is shown in the Notes under (56) Group composition.
Amendments to IFRS 10, IFRS 11 and IFRS 12 (Transition guidance; entry into force on January 1, 2014)
As a result of these amendments, the transition guidance in IFRS 10, IFRS 11 and IFRS 12 is clarified and additional relief provided in all three standards. Adjusted comparative information is only required for the preceding comparative period. In addition, in connection with the disclosures in the notes on non-consolidated structured entities there is no obligation to provide comparative information for periods that precede the first-time application of IFRS 12.
The changes represent a correction of the disclosure rules that were changed more extensively than intended in connection with IFRS 13. These relate to impaired assets for which the recoverable amount is equivalent to fair value less costs of disposal. At present, the recoverable amount must be disclosed regardless of impairment. The correction now restricts the disclosure to actual impairments, but extends the disclosures to be made in such cases.
Amendments to IAS 39 (Novation of OTC derivatives and continuation of hedging relationship; entry into force January 1, 2014)
The amendments will clarify the provisions that relate to the allocation of employee or third-party contributions linked to service to periods of service. In addition, a solution that simplifies accounting practice is permitted if the amount of the contributions is independent on the number of years of service performed. These amendments have no material impact on the consolidated financial statements of RBI.
Annual Improvements to IFRS – 2010–2012 cycle (entry into force July 1, 2014)
Standards and interpretations not yet applicable (not yet endorsed by the EU)
IFRS 9 (financial instruments), issued in November 2009, introduced new requirements for the classification and measurement of financial assets. IFRS 9 was amended in October 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition. Key requirements of IFRS 9 are: According to IFRS 9, all recognized financial assets must be subsequently measured at amortized cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are measured at amortized cost at the end of subsequent accounting periods. All other instruments must be measured at fair value.
IFRS 15 (Revenue from contracts with customers; entry into force January 1, 2017)
Just entities firstly applying IFRS and who recognize regulatory deferrals according to the previous accounting standards are allowed to continue with regulatory deferrals after transition into IFRS. The standard is intended to be a short-term interim solution till the IASB concludes the long-term fundamental project to price-regulated business transactions.
The amendments to IFRS 11 (Recognition of acquired shares of a joint arrangement) modifies IFRS 11, so that the acquirer of shares of a joint arrangement representing a business operation as defined in IFRS 3, has to apply all principles regarding the recognition of business combinations according to IFRS 3 and other IFRS, as far as they do not contradict other rules of IFRS 11.
Amendments to IAS 16/IAS 38 (Clarification of acceptable methods of depreciation; entry into force January 1, 2016)
Amendments to IAS 27 (Equity-method in separate financial statements; entry into force January 1, 2016)
These amendments allow investors in separate financial statements to use the option of recognizing shares in subsidiaries, joint ventures or associated entities at equity.
Amendments to IFRS 10/IAS 28 (Disposal or contribution of financial assets between an investor and an associated entity or joint venture; entry into force January 1, 2016)
Annual Improvements to IFRS – 2012–2014 cycle (entry into force January 1, 2016)
Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Raiffeisen Bank International AG, Vienna, for the year from 1 January 2014 to 31 December 2014. These consolidated financial statements comprise the consolidated statement of financial position as of 31 December 2014, the consolidated statement of comprehensive income, the consolidated cash flow statement and the consolidated statement of changes in equity for the year ended 31 December 2014 and a summary of significant accounting policies and other explanatory notes.
Management's Responsibility for the Consolidated Financial Statements and for the Accounting System
The Company’s management is responsible for the Group accounting system and for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and the additional requirements pursuant to §§ 245a UGB (Austrian Commercial Code) and 59a BWG (Austrian Banking Act). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Operations, Procurement & Cost Management, Project Portfolio & Security and Small Business & Premium Banking
Glossary Back testing – Backward comparison of VaR figures with actual results to test the quality of a model.
Basel II – The body of capital adequacy regulations proposed by the “Basel Committee,” an international forum dedicated to improving bank supervision. As in the case of the Basel I Accord, the goal is to ensure that banks have adequate capital resources and that uniform competitive conditions are created for both lending and credit trading. The main objective of the changes made by Basel II compared to Basel I is to orient capital adequacy requirements prescribed by regulators more effectively to actual risk and hence approximate the capital requirements internally ascertained by banks.
Common equity tier 1 ratio (transitional) – Common equity tier 1 as a percentage of risk-weighted assets (total RWA) according to CRR/CRD IV Regulation.
Credit spread – Difference in yield between top-rated bonds (usually government bonds) and bonds with the same residual maturity but lower issuer quality.
Default risk – Risk that counterparties in a financial transaction will not be able to fulfill an obligation, causing the other party a financial loss.
EPS – Earnings per share. Adjusted consolidated profit (after deduction of dividend for participation capital) divided by the average number of ordinary shares outstanding for the reporting period.
Funding – All means used by banks for the purpose of refinancing.
General administrative expenses – Comprises staff expenses, other administrative expenses, and depreciation/amortization on intangible and tangible fixed assets.
Interest-bearing assets – Total assets less trading assets, derivatives, intangible fixed assets, tangible fixed assets, and other assets.
Liquidity risk – Risk that a bank could be unable to meet its current and future financial obligations in full or in time. This arises from the danger that, e.g. refinancing can only be obtained at very disadvantageous terms or is entirely impossible.
Loan/deposit ratio (net) – Loans and advances to customers excluding impairment losses in relation to deposits from customers, less claims and obligations from (reverse) repurchase agreements and securities lending.
Market capitalization – The number of issued shares multiplied by the share price on a particular date.
Net interest margin (average interest-bearing assets) – Net interest income in relation to average interest-bearing assets.
Other results – Consist of net income from derivatives and liabilities, net income from financial investments, expenses for bank levies, impairment of goodwill, net income from disposal of Group assets and any one-off effects from sundry operating expenses.
Premium banking – Support for wealthy customers that includes additional and above all more individually tailored products in comparison to the customary support for private customers.
Quarter-on-quarter – Compared to the quarter which precedes the quarter under consideration; for example, the fourth quarter of 2014 in comparison to the third quarter of 2014.
RBI – Raiffeisen Bank International. RBI Group in contrast to RBI AG.
Risk-weighted assets (RWA credit risk) – The sum of the weighted accounts receivable including receivables in the form of asset items, items off the statement of financial position and CVA risk.
Tier 1 ratio – Tier 1 capital to risk-weighted assets (total RWA).
Tier 1 ratio, credit risk (Basel II) – Core capital to risk-weighted assets (RWA credit risk).
Tier 1 ratio, total (Basel II) – Core capital to risk-weighted assets (total RWA).
Trading book – Bank regulators’ term for assets held by a bank for short-term resale to exploit fluctuations in prices and interest rates.
Bosnia and Herzegovina Raiffeisen Leasing d.o.o. Sarajevo Danijela Ozme 3 71000 Sarajevo www.rlbh.ba
Bulgaria Raiffeisen Leasing Bulgaria OOD 32A Cherni Vrah Blvd. Fl. 6 1407 Sofia www.rlbg.bg
Croatia Raiffeisen Leasing d.o.o. Radnicka cesta 43 10000 Zagreb Phone: +385-1-65 9-5000 Fax: +385-1-65 9-5050 www.rl-hr.hr
Romania Raiffeisen Leasing IFN S.A. 246 D Calea Floreasca 014476 Bucharest www.raiffeisen-leasing.ro
RBI Representative Office Harbin Room 1104, Pufa Piaza No. 209 Chang Jiang Street Nang Gang District 150090 Harbin
India RBI Representative Office Mumbai 803, Peninsula Heights C.D. Barfiwala Road, Andheri (W)
Malaysia RBI Labuan Branch Licensed Labuan Bank No. 110108C Level 6 (1E), Main Office Tower Financial Park Labuan Phone: +607-29 1-3800 Fax: +607-29 1-3801
Republic of Korea RBI Representative Office Korea # 1809 Le Meilleur Jongno Town 24 Jongno 1-ga Seoul 110-888 Phone: +82-2-72 5-7951 Fax: +82-2-72 5-7988
USA RB International Finance (USA) LLC 1133 Avenue of the Americas, 16th Floor 10036 New York
RZB Austria Representative Office New York 1133 Avenue of the Americas, 16th Floor 10036 New York
Kathrein Privatbank Aktiengesellschaft Wipplingerstraße 25 1010 Vienna Phone: +43-1-53 451-300 Fax: +43-1-53 451-8000 www.kathrein.at