The Group fulfills the obligation arising from Clause 11 of the Annex to Section 39b of the Austrian Banking Act (BWG) which stipulates that at least 50 per cent of the variable remuneration of risk personnel must be paid out in the form of shares or similar non-cash instruments by means of a phantom share plan as follows: 50 per cent of the "up front" and 50 per cent of the "deferred " portion of the bonus are divided by the average closing price of the RBI share on trading days of the Vienna Stock Exchange in the payment year serving as the basis for calculating the bonus. Thereby, a certain amount of phantom shares will be determined. This amount will be fixed for the entire duration of the deferral period. After the expiration of the respective retention period, the amount of specified phantom shares will be multiplied by RBI's share price for the previous fiscal year. The resulting cash amount will be paid when the next available monthly salary is paid.
Except for 2010 the Management Board, with approval by the Supervisory Board, of RBI AG has approved the existence of a share incentive program (SIP) for the years 2011, 2012 and 2013 which offers performance based allotments of shares to eligible employees at home and abroad for a given period. Eligible employees are current board members and selected executives of RBI AG, as well as executives of its affiliated bank subsidiaries and other affiliated companies. In 2014, it was decided not to continue the program due to complexity of the regulatory rules regarding variable compensation.
RBI AG and eight of its consolidated domestic subsidiaries are members of a tax group for which Raiffeisen Zentralbank Österreich Aktiengesellschaft acts as group parent. Current taxes are calculated on the basis of taxable income for the current year taking into account the tax group (in terms of a tax group allocation). The taxable income deviates from the profit of the statement of comprehensive income due to expenses and income which are taxable or tax-deductible in the following years or which are never taxable or tax-deductible. The liability of the Group for current taxes is recognized on the basis of the actual tax rate or the future tax rate which is enacted by the end of the reporting period.
Deferred taxes are calculated and recognized in accordance with IAS 12 applying the liability method. Deferred taxes are based on all temporary differences that result from comparing the carrying amounts of assets and liabilities in the IFRS accounts with the tax bases of assets and liabilities, and which will reverse in the future. Deferred taxes are calculated by using tax rates applicable in the countries concerned. A deferred tax asset should also be recognized on tax loss carry-forwards if it is probable that sufficient taxable profit will be achieved against which the tax loss carry-forwards can be utilized within the same entity. On each reporting date, the carrying amount of the deferred tax assets is reviewed and impaired if it is no longer probable that sufficient taxable income is available in order to partly or fully realize the tax assets. Deferred tax assets and deferred tax liabilities within the same entity are netted. Income tax credits and income tax obligations are recorded separately under the item "other assets" and "tax provisions" respectively.
Current taxes and movements of deferred taxes are recognized in the income statement. In case that they are linked to items which are recognized in other comprehensive income, current and deferred taxes are also directly recognized in other comprehensive income.
IAS 32 (Offsetting financial assets and liabilities; entry into force on January 1, 2014)
IAS 27 (Separate financial statements; entry into force on January 1, 2014)
IFRS 10 (Consolidated financial statements; entry into force on January 1, 2014)
IFRS 11 replaces IAS 31 (Interests in Joint Ventures) and SIC-13 (Jointly Controlled Entities – Non-Monetary Contributions by Ventures). IFRS 11 deals with how a joint arrangement should be classified. Joint arrangements are classified as a contractual agreement in which two or more parties practice joint management. Joint management can extend to a joint venture or a joint operation. In contrast to IAS 31, accounting for jointly controlled assets is no longer addressed separately in IFRS 11; the rules for joint ventures are applied. The classification of a joint arrangement as joint operation or joint venture depends on the rights and obligations of the parties to the agreement. In addition, joint ventures under IFRS 11 must be accounted for using the equity method, whereas jointly controlled entities under IAS 31 can be accounted for using proportionate consolidation or the equity method. The application of IFRS 11 has no impact on the consolidated financial statements of RBI.
Amendments to IFRS 10, IFRS 11 and IAS 27 (Investment entities; entry into force on January 1, 2014)
These amendments provide an exception to the consolidation requirements of subsidiaries in IFRS 10 (Consolidated Financial Statements). This applies if the parent company meets the definition of an “investment company“(for example, certain mutual funds). These entities measure their investments in particular subsidiaries at fair value through profit or loss in accordance with IFRS 9 (Financial Instruments) or IAS 39 (Financial Instruments: Recognition and Measurement). These amendments have no impact on the consolidated financial statements of RBI.
Amendments to IAS 36 (Recoverable amount disclosures for non-financial assets; entry into force January 1, 2014)
As a result of the amendments, derivatives remain designated as hedging instruments in existing hedging relationships despite novation. Novation refers to cases in which the original parties to a derivatives contract agree that a central counterparty shall replace their original counterparty to become the counterparty to each of the original parties. The fundamental requirement is that the use of a central counterparty is required by law or regulation. Moreover, changes to contractual arrangements must be limited to those that are necessary for novation. The objective of the amendments is to avoid any impact on hedge accounting as a consequence of the write-off of the derivative on the conversion of the contract to a central counterparty. These changes have no material impact on the consolidated financial statements of RBI.
IFRIC 21 contains guidance as to when a liability is to be recognized for a levy imposed by a government (e.g. bank levies). The obligating event for the recognition of a liability is identified as the activity that triggers payment according to the relevant legislation. Levies do not have to be recognized until the obligating event has occurred. The obligating event may also occur gradually over a period of time and the liability is therefore recognized progressively.
The Annual Improvements to IFRS – 2010–2012 cycle include numerous amendments to various IFRS. The amendments are effective for annual periods beginning on or after January 1, 2014. These amendments have no material impact on the consolidated financial statements of RBI.
Annual Improvements to IFRS – 2011 – 2013 cycle (entry into force July 1, 2014)
The Annual Improvements to IFRS 2011–2013 cycle include numerous amendments to various IFRS. The amendments are effective for annual periods beginning on or after January 1, 2014. These amendments have no material impact on the consolidated financial statements of RBI.
IFRS 9 also includes an irrevocable option to recognize subsequent changes in the fair value of an equity instrument (not held for trading purposes) in other comprehensive income and to recognize only dividend income in the profit and loss statement. With regard to the measurement of financial liabilities (designated as measured at fair value through profit or loss), IFRS 9 requires that changes in fair value arising out of changes in the default risk of the reporting entity are to be recognized in other comprehensive income. However, this does not apply if recognition of such changes in other comprehensive income was to create or increase an accounting inconsistency in or compared to the profit and loss statement. Changes in fair value attributable to a reporting entity’s own credit risk may not be subsequently reclassified to profit or loss. RBI anticipates that the application of IFRS 9 in the future may have a significant impact on amounts reported in respect of the Group's financial assets and financial liabilities. However, it is not practicable to provide a reasonable estimate of the impact of IFRS 9 until a detailed review has been completed.
The standard regulates the determination when to recognize revenue and how much revenue to recognize. IFRS 15 replaces IAS 18 'Revenue', IAS 11 'Construction contracts' and a series of revenue-related interpretations. The application of IFRS 15 is obligatory for all IFRS users and is valid for almost all contracts with customers – the material exemptions are leasing contracts, financial instruments and insurance contracts.
Amendments to IFRS 11 (Joint arrangements; entry into force January 1, 2016)
Amendments to IAS 16/IAS 41 (Agriculture, biological assets; entry into force January 1, 2016)
The amendments clarify that revenue recognition of transactions with an associated entity or joint venture is dependent on the fact that the disposed or contributed financial assets represent a business operation.
Auditor's Responsibility and Description of Type and Scope of the Statutory Audit
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with laws and regulations applicable in Austria and in accordance with International Standards on Auditing (ISA), issued by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC). Those standards require that we comply with professional guidelines and that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
Our audit did not give rise to any objections. In our opinion, which is based on the results of our audit, the consolidated financial statements comply with legal requirements and give a true and fair view of the financial position of the Group as of 31 December 2014 and of its financial performance and its cash flows for the year from 1 January 2014 to 31 December 2014 in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU.
Chief Executive Officer responsible for Compliance, Group Communications, Group Strategy, Human Resources, Internal Audit, International Banking Units, Legal Services, Management Secretariat, Marketing & Event Management and Participations
Member of the Management Board responsible for Consumer Banking, Group & Austrian IT, Lean,
Member of the Management Board responsible for Business Management & Development, Group Capital
Member of the Management Board responsible for Corporate Customers, Corporate Finance, Corporate Sales
Management & Development, International Business Support and Trade Finance & Transaction Banking
Basel III – Basel-II regulations, broadened with the experiences and insights of the financial and economic crisis to harmonize incurred risks and the bank’s risktaking capacity (derived from the equity’s amount and quality).
CEE Other – For RBI the segment CEE Other encompasses Belarus, Kazakhstan and Ukraine.
Common equity tier 1 ratio (fully loaded) – Common equity tier 1 as a percentage of risk-weighted assets (total RWA) according to CRR/CRD IV without applying the transitional provisions set out in Part Ten of CRR and CRR accessory regulation of FMA respectively (425th regulation issued on 11 December 2013).
Consolidated ROE – Consolidated Return on Equity is consolidated profit less dividend on participation capital in relation to average consolidated equity less participation capital, i.e. the equity attributable to the shareholders of RBI. Average equity is based on month-end figures excluding non-controlling interest and does not include current year profit.
Cost/income ratio – General administrative expenses in relation to operating income (less bank levies, impairments of goodwill and any one-off effects from sundry operating expenses).
Country risk – Comprises transfer and convertibility risk as well as political risk.
EBRD – European Bank for Reconstruction and Development. An institution that promotes the transition to an open market economy and to private and entrepreneurial action in the countries of Central and Eastern Europe. Through its investments, it supports activity of the private sector and strengthens financial institutions, legal systems, and development of infrastructure needed by the private sector.
Excess cover ratio (own funds) – Relation of excess total capital to total capital requirement.
IAS – International Accounting Standards. Reporting standards published by the IASB (International Accounting Standards Board) with the goal of achieving transparent and comparable accounting on an international basis.
IFRS – International Financial Reporting Standards. Reporting standards published by the IASB (International Accounting Standards Board) with the goal of achieving transparent and comparable accounting on an international basis.
IRB – Internal Ratings-Based. Approach to measure the own funds requirement for credit risks in accordance with Basel III. By applying the IRB approach, the total capital requirement is determined according to internal credit ratings. In the process, features specific to the borrower and the loan are taken into account. The ratings must be made by an independent source.
Monte Carlo simulation – Numerical method to aggregate risks to evaluate specific risks concerning their influence on corresponding income statement items.
NPL – Non-performing loans. Defined as the event where a specific debtor is unlikely to pay its credit obligations to the bank in full, or the debtor is overdue more than 90 days on any material credit obligation (RBI has defined 12 default indicators).
Operating income – Comprises of net interest income, net fee and commission income, net trading income and other net operating income (less bank levies, impairments of goodwill and any one-off effects from sundry operating expenses).
ROE – Return on equity. Return on the total equity including non-controlling interests, i.e. profit before tax respectively after tax in relation to average equity on the statement of financial position. Average equity is calculated on month-end figures including non-controlling interest and does not include current year profit.
ROTE – Return on tangible equity is consolidated profit less depreciation on intangible assets and less impairment of goodwill in relation to average consolidated equity less participation capital and less intangible assets. Average equity is calculated using month-end figures for the period.
RZB – Raiffeisen Zentralbank Österreich. RZB Group in contrast to RZB AG.
RZB Credit Institution Group – Pursuant to Section 30 of the Austrian Banking Act (BWG), the RZB Credit Institution Group is made up of all banks, financial institutions, securities companies and companies rendering banking related services in which RZB holds direct or indirect interests or has control as a superordinate institution.
SEE – Southeastern Europe. For RBI this segment comprises Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo, Romania (incl. Moldova), and Serbia.
Stress test – Stress tests endeavor to simulate extreme fluctuations in market parameters. They are used because such fluctuations are usually inadequately captured by VaR models (VaR forecasts maximum losses under normal market conditions).
VaR – Value at risk. Expresses the potential loss that will, with a 99 per cent probability, not be exceeded within the period for which an asset is held in the portfolio in question.
Year-on-year – Compared to the point in time, or the time period, which occurs one year before the point in time, or the time period, under consideration; for example, the first half year of 2014 in comparison to the first half year of 2013, or 30 June 2014 in comparison to 30 June 2013.
Belarus Priorbank JSC V. Khoruzhey Str. 31-A 220002 Minsk Phone: +375-17-28 9-9090 Fax: +375-17-28 9-9191 SWIFT/BIC: PJCBBY2X www.priorbank.by
Bosnia and Herzegovina Raiffeisen Bank d.d. Bosna i Hercegovina Zmaja od Bosne bb 71000 Sarajevo Phone: +387-33-287 101 Fax: +387-33-21 385 1 SWIFT/BIC: RZBABA2S www.raiffeisenbank.ba
Bulgaria Raiffeisenbank (Bulgaria) EAD Ulica N. Gogol 18/20 1504 Sofia Phone: +359-2-91 985 101 Fax: +359-2-94 345 28 SWIFT/BIC: RZBBBGSF www.rbb.bg
Russia AO Raiffeisenbank Smolenskaya-Sennaya Sq. 28 119002 Moscow Phone: +7-495-72 1-9900 Fax: +7-495-72 1-9901 SWIFT/BIC: RZBMRUMM www.raiffeisen.ru
Albania Raiffeisen Leasing Sh.a. “European Trade Center” Bulevardi “Bajram Curri” Tirana www.raiffeisen-leasing.al
Hungary Raiffeisen Lízing Zrt. Kèsmark Utca 11-13 1158 Budapest Telefon: +36-1-298 8000 Fax: +36-1-298 8010 www.raiffeisenlizing.hu
Slovakia Tatra-Leasing s.r.o. Černyševského 50 85101 Bratislava Phone: +421-2-59 19-3168 Fax: +421-2-59 19-3048 www.tatraleasing.sk
Slovenia Raiffeisen Leasing d.o.o. Letališka cesta 29a SI-1000 Ljubljana Phone: +386 1 241-6250 www.rl-sl.si
Ukraine LLC Raiffeisen Leasing Aval 9, Moskovskyi Av. Build. 5 Office 101 www.rla.com.ua
France RBI Representative Office Paris 9-11 Avenue Franklin D. Roosevelt 75008 Paris
RBI Representative Office Zhuhai Room 2404, Yue Cai Building No. 188, Jingshan Road, Jida, Zhuhai, Guangdong Province 519015, P.R. China Phone: +86-756-32 3-3500 Fax: +86-756-32 3-3321
Raiffeisen Centrobank AG Tegetthoffstraße 1 1015 Vienna Phone: +43-1-51 520-0 Fax: +43-1-51 343-96 www.rcb.at
Publication details Media owner, publisher Raiffeisen Bank International AG Am Stadtpark 9 1030 Vienna Austria Phone: +43-1-71 707-0 Fax: +43-1-71 707-1715 Internet: www.rbinternational.com
The forecasts, plans and forward-looking statements contained in this Annual Report are based on the state of knowledge and assessments of Raiffeisen Bank International AG at the time of its preparation. Like all statements about the future, they are subject to known and unknown risks, as well as uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. No guarantee can be provided for the accuracy of forecasts, target values or forwardlooking statements.