Other investment vehicles 55,575 26,957 1 Previous-year figures adjusted; reclassification from fiduciary funds
Finance income from finance lease net investment was € 127,682 thousand in the reporting period. Income from operating leases was € 60,494 thousand.
There was no income relating to variable lease payments not included in the measurement of the net investment in the lease. Profit due to sale of leased assets as part of a finance lease was € 635 thousand.
The following table shows the maturity analysis of lease liabilities, showing the undiscounted lease payments to be paid after the reporting date: Up to 1 year 86,946
Variable lease payments not included in the measurement of lease liabilities 29
Loan commitments, financial guarantees and other commitments given 166,922 44,712 468,650 107,970
In the previous year, shares were allocated for the last time as part of share-based payment (IFRS 2). There are currently no sharebased payment programs.
Short-term employee benefits shown in the above table contain salaries and benefits in kind and other benefits, remuneration for membership of boards in affiliated companies and those parts of the bonuses which become due in the short term.
An amount of € 1,137 thousand (2018: € 1,142 thousand) was paid in pension benefits to former members of the Management Board and to their surviving dependants. In addition to these amounts, short-term benefits and deferred bonus components totaling € 1,346 thousand (2018: € 3,258 thousand) were paid to former members of the Management Board.
Andrii Stepanenko 1 March 2018 28 February 2021 1 Effective as of 10 October 2010 2 The number of members of RBI AG’s Management Board will be reduced from seven to six when Martin Grüll’s Management Board mandate expires at the end of
The Supervisory Board as at 31 December 2019 was as follows: Members of the Supervisory Board First assignment End of period
 Alfred Lejsek, State Commissioner (since 1 January 2011) Anton Matzinger, Deputy State Commissioner (since 1 April 2011)
RB International Finance (Hong Kong) Ltd., Hong Kong (HK) 100.0% 1/4 End of operations
RL Hotel Palace Wien Besitz GmbH, Vienna (AT) 99.0% 1/11 Materiality
Of the 209 entities in the Group, 115 are domiciled in Austria (2018: 120) and 94 abroad (2018: 106). They comprise 20 banks, 134 financial institutions, 11 companies rendering bank-related ancillary services, 9 financial holding companies and 35 other companies.
In the period under review, four real estate companies were consolidated for the first time while twelve companies, primarily from the leasing and real estate sector, were removed from the consolidated group due to their minor significance. One leasing company and three real estate companies were sold, and one financial institution was shut down. In the period under review, two investment holdings, a financial institution and one company categorized as other were merged.
Abakus Immobilienleasing GmbH & Co Projekt Leese KG, Eschborn (DE) 6.0% 1/9 Materiality
Park City real estate Holding d.o.o., Novi Sad (RS) 100.0% 1/1 Materiality
Adamas Immobilienleasing GmbH & Co. Projekt Pflegeheim Werdau KG, Eschborn (DE) 5,000 EUR 100.0% FI
Abura Immobilienleasing GmbH & Co. Projekt Seniorenhaus Boppard KG, Eschborn (DE) 5,000 EUR 6.0% FI
Achat Immobilien GmbH & Co. Projekt Hochtaunus-Stift KG, Eschborn (DE) 10,000 EUR 1.0% FI
Aedificium Banca pentru Locuinte S.A., Bucharest (RO) 131,074,560 RON 99.9% BA
Anton Proksch Institut Kalksburg RBI Immobilien Leasing GmbH, Vienna (AT) 35,000 EUR 75.0% OT
Health Resort RBI Immobilien-Leasing GmbH, Vienna (AT) 35,000 EUR 75.0% FI 1 Less own shares 2 Company type: BA Bank, BR Company rendering banking-related ancillary services, FH Financial holding, FI Financial institution, OT Other companies, VV Insurance, SC
RZB Finance (Jersey) III Ltd, St. Helier (JE) 1,000 EUR 100.0% FI
ZHS Office- & Facilitymanagement GmbH, Vienna (AT) 36,336 EUR 98.6% BR 1 Less own shares 2 Company type: BA Bank, BR Company rendering banking-related ancillary services, FH Financial holding, FI Financial institution, OT Other companies, VV Insurance, SC
The maximum exposure to loss is determined by considering the nature of the interest in the non-consolidated structured entity. The maximum exposure for loans and trading instruments is reflected by their carrying amounts in the consolidated statement of financial position. The maximum exposure for derivatives and instruments off the statement of financial position such as guarantees, liquidity facilities and loan commitments under IFRS 12, as interpreted by the Group, is reflected by the respective notional amount. Such amounts do not reflect the economic risks faced by the Group because they do not take into account the effects of collateral or hedges or the probability of such losses being incurred. As at 31 December 2019, the notional values of derivatives and instruments off the statement of financial position amounted to € 17,672 thousand (2018: € 23,218 thousand) and € 18,884 thousand (2018: € 49,023 thousand) respectively. The reduction in instruments off the statement of financial position was primarily caused by Raiffeisen Leasing s.r.o., Prague, and is connected with a change in the refinancing structure of the companies involved.
As a sponsor, the Group is often involved in the legal set up and marketing of the entity and supports the entity in different ways such as providing operational support to ensure the entity’s continued operation. The Group is also deemed a sponsor for a structured entity if market participants would reasonably associate the entity with the Group. Additionally, the use of the Raiffeisen name for the structured entity often indicates that the Group has acted as a sponsor. The gross proceeds from sponsored entities for the year ending 31 December 2019 amounted to € 216,505 thousand (2018: € 193,995 thousand). No assets were transferred to sponsored non-consolidated structured entities in 2019 or 2018.
As in 2018, the Group has not provided financial support during the financial year to non-consolidated structured entities.
Faru Handels- und Beteiligungs GmbH in Liqu., Vienna (AT) 80,000 EUR 100.0% OT
ICS Raiffeisen Leasing s.r.l, Chisinau (MD) 8,307,535 MDL 100.0% FI 1 Company type: BA Bank, BR Company rendering banking-related ancillary services, FH Financial holding, FI Financial institution, OT Other companies, VV Insurance,
ICTALURUS Handels- und Beteiligungs GmbH in Liqu., Vienna (AT) 36,336 EUR 100.0% OT
Késmárk utca 11-13. Szolgáltató Korlátolt Felelősségű Társaság, Budapest (HU) 10,000 EUR 100.0% OT
NAURU Handels- und Beteiligungs GmbH in Liqu., Vienna (AT) 35,000 EUR 100.0% OT
Niobe Property, s.r.o., Prague (CZ) 50,000 CZK 100.0% OT 1 Company type: BA Bank, BR Company rendering banking-related ancillary services, FH Financial holding, FI Financial institution, OT Other companies, VV Insurance,
PARO Raiffeisen Immobilien Leasing Gesellschaft m.b.H., Vienna (AT) 36,400 EUR 100.0% FI
Raiffeisen Future AD Beograd drustvo za upravljanje dobrovoljnim penzijskim fondom, Belgrade (RS) 143,200,000 RSD 100.0% FI 1 Company type: BA Bank, BR Company rendering banking-related ancillary services, FH Financial holding, FI Financial institution, OT Other companies, VV Insurance,
ZUNO GmbH, Vienna (AT) 35,000 EUR 100.0% OT 1 Company type: BA Bank, BR Company rendering banking-related ancillary services, FH Financial holding, FI Financial institution, OT Other companies, VV Insurance,
A-Trust Gesellschaft für Sicherheitssysteme im elektronischen Datenverkehr GmbH, Vienna AT) 5,290,013 EUR 12.1% OT
Public Joint Stock Company National Depositary of Ukraine, Kiev (UA) 103,200,000 UAH 0.1% FI
Societatea de Transfer de Fonduri si Decontari-TRANSFOND S.A, Bucharest (RO) 6,720,000 RON 3.4% FI
Society for Worldwide Interbank Financial Telekommunication scrl, La Hulpe (BE) 13,713,125 EUR 0.4% FI
Stemcor Global Holdings Limited, St. Helier (JE) 349,138 USD 0.9% OT
Ziloti Holding S.A., Luxembourg (LU) 48,963 EUR 0.9% OT 1 Company type: BA Bank, BR Company rendering banking-related ancillary services, FH Financial holding, FI Financial institution, OT Other companies, VV Insurance,
Establishment of a countercyclical buffer is the responsibility of the national supervisors. The buffer established for RBI resulted in a weighted average at the level of RBI in order to curb excessive lending growth. The buffer was set at 0 per cent for the present time due to restrained lending growth and the stable macroeconomic environment in Austria. The buffer rates defined in other member states apply at the level of RBI (based on a weighted calculation of averages).
Regulatory information (71) Capital management and total capital according to CRR/CRD IV and Austrian Banking Act (BWG)
The so-called Pillar 2 requirement is calculated based on the business model, risk management, or the capital situation, for example. The most recent official notification from the ECB specifies that the Pillar 2 requirement must be adhered to at the level of RBI (consolidated) and the level of RBI AG (unconsolidated). In addition, RBI is subject to the minimum requirements of the CRR and the combined buffer requirement. The combined buffer requirement for RBI currently contains a capital conservation buffer, a systemic risk buffer, and a countercyclical buffer. As at 31 December 2019, the CET1 ratio requirement (including the combined buffer requirement) was 9.3 per cent for the RBI Group. A breach of the combined buffer requirement would induce constraints, for example in relation to dividend distributions and coupon payments on certain capital instruments. The capital requirements applicable during the year were complied with, including an adequate buffer, on both a consolidated and individual basis.
National supervisors may in principle determine systemic risk buffers (up to 5 per cent) as well as additional capital add-ons for systemic banks (up to 3.5 per cent). In the event both systemic risk buffers and add-ons for systemic banks are determined for an institution, only the higher of the two values is applicable. In September 2015, the Financial Market Stability Board (FMSB) responsible for this in Austria recommended to the Austrian financial supervisor – the FMA – that it required certain banks, including RBI, to adhere to a systemic risk buffer (SRB). The FMA consequently introduced a systematic risk buffer at the beginning of 2016 via the Capital Buffer Regulation (including subsequent amendments). The SRB for RBI was set at 0.25 per cent in 2016, was raised to 0.50 per cent as of 1 January 2017, and has increased progressively to 2 per cent in 2019.
The following consolidated figures have been calculated in accordance with the provisions of the Capital Requirements Regulation (CRR) and other statutory provisions such as the Implementing Technical Standards (ITS) issued by the European Banking Authority (EBA).
The fully loaded ratios are for informational purposes only and are calculated assuming full implementation without taking the transitional provisions into account.
In accordance with IFRS 9, embedded derivatives are not separated from the host contract of a financial asset. Instead, financial assets are classified in accordance with the business model and their contractual characteristics as explained in the chapter business model assessment and in the chapter analysis of contractual cash flow characteristics.
 How managers of the business are compensated – e.g. whether the compensation is based on the fair value of the assets managed or the contractual cash flows collected
They are measured at amortized cost. If there is a difference between the amount paid and face value – and this has an interest character – the effective interest method is used, and the amount is stated under net interest income. Interest income is calculated on the basis of the gross carrying amount provided the financial asset is not impaired. As soon as the financial asset is impaired, interest income is calculated based on the net carrying amount. The amortized cost is also adjusted by the expected loss recognized, using the expected loss approach in accordance with IFRS 9, as outlined in the chapter impairment general (IFRS 9).
Securities for the purpose of liquidity management are in particular assigned to this category.
Financial assets and liabilities – held for trading are acquired or incurred principally for the purpose of generating profit from short-term fluctuations in market prices. Securities and derivative financial instruments held for trading are recognized at fair value. If securities are listed, the fair value is based on stock exchange prices. Where such prices are not available, internal prices based on present value calculations for originated financial instruments and futures or option pricing models for options are applied. Present value calculations are based on an interest rate curve which consists of money market rates, future rates and swap rates. Option price formulas Black-Scholes 1972, Black 1976 or Garman-Kohlhagen are applied depending on the kind of option. The measurement for complex options is based on a binominal tree model and Monte Carlo simulations.
Capital-guaranteed products (guarantee funds and pension plans) are shown as sold put options on the respective funds to be guaranteed, in accordance with statutory requirements. The valuation is based on a Monte Carlo simulation. The Group has provided capital guarantee obligations as part of the government-funded state-sponsored pension plans according to Section 108h (1) item 3 EStG (Austrian Income Tax Act). The bank guarantees that the retirement annuity, available for the payment amount is not less than the sum of the amounts paid by the taxpayer plus credits for such taxable premiums within the meaning of Section108g EStG.
This category comprises mainly all those financial assets that are irrevocably designated as financial instruments at fair value (socalled fair value option) upon initial recognition in the statement of financial position. An entity may use this designation only when doing so eliminates or significantly reduces incongruities in measurement or recognition. These arise if the measurement of financial assets or liabilities or the recognition of resulting gains or losses has a different basis.
In 2019, as in 2018, observable market prices were used for the valuation of liabilities of subordinated issues measured at fair value. The financial liabilities are mostly structured bonds. The fair value of these financial liabilities is calculated by discounting the contractual cash flows with a credit-risk-adjusted yield curve, which reflects the level at which the Group could issue similar financial instruments at the reporting date. The market risk parameters are determined based on similar financial instruments. Valuation results for liabilities that are designated as a financial instrument at fair value are recognized in net trading income and fair value result.
Assets/liabilities Fair value Amortized cost Category according to IFRS 9 Asset classes
Cash, cash balances at central banks and other demand deposits X AC
The effective interest rate method is a method of calculating the amortized cost of a financial instrument and allocating interest expenses and interest income to the relevant periods. The effective interest rate is the interest rate applied to discount the forecast future cash inflows and outflows (including all fees which form part of the effective interest rate, transaction costs and other premiums and discounts) over the expected term of the financial instrument or a shorter period, where applicable, to arrive at the net carrying amount from initial recognition.
The fair value is the price that would be received for the sale of an asset or paid for the transfer of a liability, in an orderly business transaction between market participants on the measurement reference date. This applies irrespective of whether the price is directly observable or has been estimated using a valuation method.
In RBI, a financial asset is derecognized on account of a modification if the underlying contract is modified substantially. Terms are substantially different if the discounted present value of the cash flows under the new terms using the original effective interest rate differs by at least 10 per cent from the discounted present value of the remaining cash flows of the original financial asset (present value test). In addition to the present value test further quantitative and qualitative criteria are considered in order to assess whether a substantial modification applies. These criteria consider the extension of the average remaining term, whereby in the
case of Stage 3 loans which are restructured, this is often done to match the maximum expected payments. If this is the case, then additional judgement is required to determine whether the extension is a new instrument in economic terms. RBI has defined qualitative criteria for a significant change in the terms of the contract as a change in the underlying currency and also the introduction of clauses that would normally cause the contractual cash flow criteria according to IFRS 9 to fail, or a change in the type of instrument (e.g. a bond is converted to a loan).
Credit derivatives, the value of which is dependent on future specified credit (non-)events are shown at fair value under the item financial assets – held for trading or financial liabilities – held for trading. Changes in valuation are recognized under net trading income and fair value result.
Raiffeisen Bank International | Annual Report 2019 case of Stage 3 loans which are restructured, this is often done to match the maximum expected payments. If this is the case, then additional judgement is required to determine whether the extension is a new instrument in economic terms. RBI has defined qualitative criteria for a significant change in the terms of the contract as a change in the underlying currency and also the introduction of clauses that would normally cause the contractual cash flow criteria according to IFRS 9 to fail, or a change in the type of instrument (e.g. a bond is converted to a loan).
IFRS 9 grants accounting options for hedge accounting. In 2019, RBI continues to apply the provisions on hedge accounting pursuant to IAS 39 while, however, taking into account the changes in the disclosures in the notes pursuant to IFRS 7. The respective disclosures are shown in the notes under (47) Hedge accounting - additional information.
In the Group, foreign exchange hedges of investments in economically independent sub-units are executed in order to reduce differences arising from the foreign currency translation of equity components. Currency swaps are mainly used as hedging instruments. Where the hedge is effective the resulting gains or losses from foreign currency translation are recognized in other comprehensive income and shown separately in the statement of comprehensive income. Any ineffective part of the hedge is recognized in net trading income. The related interest components are shown in net interest income.
This item mainly includes contingent liabilities from guarantees, credit guarantees, letters of credit and loan commitments recognized at face value. Guarantees are used in situations in which the Group guarantees payment to the creditor of a third party to fulfill the obligation of the third party. Irrevocable credit lines must be reported when a credit risk may occur. These include commitments to provide loans, to purchase securities or to provide guarantees and acceptances. Loan loss provisions for contingent liabilities and irrevocable loan commitments are reported under provisions for liabilities and charges. Often, loan commitments are only partially drawn and thus comprise a drawn and an undrawn commitment. If it is not possible to separately identify the expected credit losses applicable to a drawn commitment and those to an undrawn commitment, these are shown together with the impairments of the financial asset, in accordance with IFRS 7. The total expected credit losses are shown as a provision if they exceed the gross carrying amount of the financial asset.
RBI has introduced recognition and measurement methods in order to be able to assess at the end of every reporting period whether or not the credit risk for a financial instrument has significantly increased since initial recognition. Based on the method outlined above, RBI classifies its financial instruments into Stage 1, Stage 2, Stage 3 and POCI as follows:  Stage1 essentially includes all financial instruments whose credit default risk has not significantly increased since their initial recognition. Stage 1 also includes all transactions which show a low credit risk on the reporting date and where RBI has utilized the option available under IFRS 9 to waive the assessment of a significant increase in credit risk. A low credit risk exists for all debt securities whose internal credit rating on the reporting date is within the investment grade range (at least corresponds to Standard & Poor's BBB-, Moody's Baa3 or Fitch BBB-). RBI did not make use of the exemption for low credit risks in the lending business. On initial recognition of loans, the bank records an impairment in the amount of the expected twelvemonth loss. Stage 1 also includes loans where the credit risk has improved and which have thus been reclassified from Stage 2.
RBI calculates the expected credit loss as the probability-weighted, expected value of all payment defaults taking into account various scenarios over the expected lifetime of a financial instrument discounted with the effective interest rate that was originally determined. A payment default is the difference between the contractually agreed and actually expected payment flows.
 Loss given default (LGD): The loss given default represents RBI’s expectation of the extent of loss on a defaulted exposure.
All risk parameters used from the bank’s internal models are adjusted to meet the specific requirements of IFRS 9, and the forecast horizon has been extended accordingly to cover the entire term of the financial instruments. For example, the forecast for the development of the exposure over the entire term of the financial instrument therefore also includes, in particular, contractual and statutory termination rights.
As a rule, the risk parameters specific to IFRS 9 are estimated not only on historical default information but also, in particular, on the current economic environment (point-in-time perspective) and forward-looking information. This assessment primarily involves regularly reviewing the effects which the bank’s macroeconomic forecasts will have regarding the amount of the ECL and including these effects in the determination of the ECL. A baseline scenario is used for this purpose which relies on the respective applicable consensus (forecasts of Raiffeisen Research on significant macroeconomic factors, such as real GDP, unemployment rate, reference interest rates and information about the currently assumed state of the credit cycle). This baseline scenario is then supplemented with additional macroeconomic parameters that are relevant for the model. Other risks which cannot be depicted in the standard model and the related expected losses are also taken into account.
For contracts before 1 January 2019, RBI determined whether the arrangement was or contained a lease based on the assessment of whether
 fulfilment of the arrangement was dependent upon a specific asset; and  the arrangement had conveyed the right to control the use of the underlying asset. This was the case if any of the following conditions was met: - The purchaser in the arrangement had the ability or right to operate the asset or direct others to operate the asset. - The purchaser had the ability or right to control physical access to the asset. - There was only a remote possibility that parties other than the purchaser took more than an insignificant amount of the output of the asset and the price that the purchaser would pay was neither fixed per unit of output nor equal to the current market price at the time of delivery.
This policy is applied to contracts entered into, or changed, on or after 1 January 2019.
When RBI acts as lessor, it determines at lease inception whether the lease is accounted for as finance or operating lease. In RBI a lease is classified as a finance lease if substantially all the risks and rewards incidental to ownership are transferred. Typical factors that, individually or in combination, would normally lead to a lease being classified as a finance lease:  Transfer of ownership of the asset by the end of the lease term;  Option to purchase the asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain at the inception date that the option will be exercised;  The lease term is for the major part of the economic life of the asset (even if the title is not transferred);  At the inception date, the present value of the lease payments equals at least substantially the fair value of the asset;  The asset is of such a specialized nature that only the lessee can use it without major modifications.
The accounting policies applied in 2018 as a lessor in the comparative period were not different from IFRS 16.
Similar to subsidiaries, consolidation of structured entities is necessary, if the Group has control over the entity. In the Group, the need to consolidate structured entities is reviewed as part of the securitization transaction process, where the structured entity is either formed by the Group with or without participation of third parties, or, in which the Group with or without participation of third parties enters into contractual relationships with already existing structured entities. Whether an entity should be consolidated or not is reviewed at least quarterly or if an event occurs. All fully consolidated structured entities and investments in non-consolidated structured entities are to be found in the notes under (69) Group composition.
If voting rights are relevant, the Group has control over an entity in which it directly or indirectly holds more than 50 per cent of the voting rights; except when there are indicators that another investee has the ability to determine unilaterally the relevant activities of the entity. One or more of the following points may be such an indicator:  Another investor has control over more than half of the voting rights due to an agreement with the Group,  Another investor has the ability to control financial policy and operational activities of the equity participation due to legal provisions or an agreement,  Another investor has control over the equity participation due to its possibility to appoint and withdraw the majority of members of the Board or members of an equivalent governing body,  Another investor has control over the entity due to its possibility to possess the majority of the delivered voting rights in a meeting of members of the Board or of members an equivalent governing body.
The acquisition cost of these investments including goodwill is determined at the time of their initial consolidation, applying by analogy the same rules as for subsidiaries (offsetting acquisition costs against proportional fair net asset value). If associated companies are material, appropriate adjustments are made to the equity carrying amount, in accordance with developments in the company’s equity. Profit or losses of companies valued at equity are netted and recognized in the item current income from investments in associates. Losses attributable to companies accounted for using the equity method are only recognized up to the level of the equity carrying amount. Losses in excess of this amount are not recognized, since there is no obligation to offset excess losses. Furthermore, any amounts recognized by the associate through other comprehensive income will be recognized in the other comprehensive income statement of RBI. This is especially relevant for valuation effects seen from financial assets at fair value through other comprehensive income (FVOCI). At each reporting date, the Group reviews to what extent there is objective evidence for impairment of an equity participation in an associated company. If there is objective evidence of impairment, an impairment test is carried out, in which the recoverable value of the participation – this is higher of the usable value and the fair value less selling costs – is compared to the carrying amount. An impairment made in previous periods is reversed only if the assumptions underlying the determination of the recoverable value have been changed since recognition of the last impairment. In this case the carrying amount is written up to the higher recoverable value.
Raiffeisen Bank International | Annual Report 2019 of the acquisition-date amounts of the fair values of identifiable assets acquired and the liabilities assumed. In the event that the difference is negative after further review, the resulting gain is recognized immediately in the income statement.
This item on the statement of financial position includes cash in hand, balances at central banks that are due on call, and demand deposits at banks that are due on call.
recognized under tangible fixed assets. Depreciation is recorded under the item general administrative expenses. Impairments that are expected to be permanent are recognized in profit or loss and shown in the item impairment on non-financial assets. If the reasons for the impairment cease to exist, a write-up is made up to the amortized acquisition costs.
 The legally required CET 1 ratio of RBI is achieved, the capital and buffer requirements of the CRR and CRD IV for RBI are complied with in full and additionally neither the allocation, payment nor transfer of the variable remuneration is detrimental to the maintenance of a sound capital base for RBI.
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 is determined. This amount is fixed for the entire duration of the deferral period. After the expiration of the respective retention period, the amount of specified phantom shares is multiplied by RBI's share price for the previous financial year, calculated as described above. The resulting cash amount is paid on the next available monthly salary payment date.
The Management Board, with approval of the Supervisory Board, of RBI AG has approved a share incentive program (SIP) for the years 2011, 2012 and 2013 which provides performance-based allotments of shares to eligible employees domestically 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 already decided not to continue the program due to the complexity of the regulatory rules regarding variable compensation.
All expenses related to the share incentive program were recognized in staff expenses in accordance with IFRS 2 (share-based payment) and charged to equity. The final allocation under a SIP tranche was made in 2018.
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 generated 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 will become available in order to partly or fully realize the tax assets. Deferred tax assets are offset against deferred tax liabilities for each subsidiary to the extent that offsetting is permitted. Income tax credits and income tax obligations are recorded under the items current and deferred tax assets and current and deferred tax liabilities.
IFRIC 23 Uncertainty over Income Tax Treatments was issued in June 2017 and is applied byby RBI starting with the 2019 financial year. The interpretation is to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates when there is uncertainty over income tax treatments under IAS 12. RBI is required to use judgment to determine whether each tax treatment should be considered independently or whether some tax treatments should be considered together. If RBI concludes that it is not probable that a particular tax treatment is accepted, it has to use the most likely amount or the expected value of the tax treatment. Otherwise, it uses the tax treatment that is consistent with its income tax filings. An entity has to reassess its judgments and estimates if facts and circumstances change.
Revaluations of defined benefit plans, valuation changes of financial assets (equity instruments) of the category FVOCI, valuation changes on account of the change in the own default risk of financial liabilities at fair value, proportionate other comprehensive income from associates as well as deferred taxes on the mentioned items are reported in other comprehensive income and are not reclassified to the income statement.
The cash flow statement reports the change in the cash and cash equivalents of the Group through the net cash from operating activities, investing and financing activities. Cash flows for investing activities mainly include proceeds from the sale, or payments for the acquisition of, financial investments and tangible fixed assets. The net cash from financing activities shows all cash flows from equity capital and subordinated capital. All other cash flows are – according to international practices for financial institutions – assigned to operating activities.
The amendments affect in particular certain simplifications with regard to the hedge accounting regulations and are mandatory for all hedging relationships that are affected by the reform of the reference interest rate. In addition, further information is provided on the extent to which the hedging relationships of the companies are affected by the amendments. The amendments are to be applied for reporting periods from 1 January 2020. Early application of the amendments is permitted but not applied by RBI. Application of the standard is not expected to materially impact the consolidated financial statements of RBI.
Standards and interpretations not yet applicable (not yet endorsed by the EU) Amendments to IFRS 3 (Definition of a Business; effective date: 1 January 2020)
IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the standard. The objective of IFRS 17 is to ensure that entities provide relevant information that faithfully represents those contracts. This information gives a basis for users of financial statements to assess the effect of insurance contracts on an entity’s financial position, financial performance and cash flows. IFRS 17 was issued in May 2017 and applies to annual reporting periods beginning on or after 1 January 2021. Application of the standard is not expected to materially impact the consolidated financial statements of RBI.
Alternative Performance Measures (APM) The Group uses alternative performance measures in its financial reporting, not defined by IFRS or CRR regulations, to describe RBI Group's financial position and performance. These should not be viewed in isolation, but treated as supplementary information.
Cost/income ratio is an economic metric and shows the company’s costs in relation to its income. The ratio gives a clear view of operational efficiency. Banks use the cost/income ratio as an efficiency measure for steering the bank and for easily comparing its efficiency with other financial institutions. General administrative expenses in relation to operating income are calculated for the cost/income ratio. General administrative expenses comprise staff expenses, other administrative expenses and depreciation /amortization of intangible and tangible fixed assets. Operating income comprises net interest income, dividend income, current income from investments in associates, net fee and commission income, net trading income and fair value result, net gains/losses from hedge accounting and other net operating income.
Net interest margin is used for external comparison with other banks as well as an internal profitability measurement of products and segments. It is calculated with net interest income set in relation to average interest-bearing assets (total assets less investments in subsidiaries and associates, tangible fixed assets, intangible fixed assets, tax assets and other assets).
NPE ratio is an economic ratio to demonstrate the proportion of non-performing loans and debt securities in relation to the entire loan portfolio of customers and banks, and debt securities. The ratio reflects the quality of the loan portfolio of the bank and provides an indicator for the performance of the bank’s credit risk management.
NPL coverage ratio describes to which extent non-performing loans have been covered by impairments (Stage 3) thus expressing also the ability of a bank to absorb losses from its NPL. It is calculated with impairment losses on loans to customers and banks set in relation to non-performing loans to customers and banks.
Operating result is used to describe the operative performance of a bank for the reporting period. It consists of operating income less general administrative expenses.
Provisioning ratio is an indicator for development of risk costs and provisioning policy of an enterprise. It is computed by dividing impairment or reversal of impairment on financial assets (customer loans) by average customer loans (categories: financial assets measured at amortized cost and financial assets at fair value through other comprehensive income).
Return on assets (ROA before/after tax) is a profitability ratio and measures how efficiently a company can manage its assets to produce profits during a period. It is computed by dividing profit before tax/after tax by average assets (based on total assets, average means the average of year-end figure and the relevant month´s figures).
Return on equity (ROE before/after tax) provides a profitability measure for both management and investors by expressing the profit for the period as presented in the income statement as a percentage of the respective underlying (either equity related or asset related). Return on equity demonstrates the profitability of the bank on the capital invested by its shareholders and thus the success of their investment. Return on equity is a useful measure to easily compare the profitability of a bank with other financial institutions. 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 interests and does not include current year profit.
Total capital specific key figures Common equity tier 1 ratio – Common equity tier 1 as a percentage of total risk-weighted assets (total RWA) according to CRR/CRD IV regulation.
Tier 1 ratio – Tier 1 capital to total risk-weighted assets (total RWA).
Events after the reporting date There were no significant events after the reporting date.
Chief Executive Officer responsible for Group Marketing, Group Regulatory Affairs & Data Governance, Group Sustainability Management, Legal
Services, Chairman’s Office, Group Communications, Group Compliance, Group Executive Office, Group Human Resources, Group Internal Audit,
Report on the Consolidated Financial Statements We have audited the consolidated financial statements of
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2019, and its consolidated financial performance and consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU, and the additional requirements pursuant to Sections 245a UGB (Austrian Commercial Code) and 59a BWG (Austrian Banking Act).
As at the reporting date, impairments of EUR 2.3 billion were recognized for the above loans. They comprised EUR 1.2 billion for non-financial corporates and EUR 1.1 billion for households.
In the following we present the key audit matters from our point of view: 1) Recoverability of loans and advances to non-financial corporations and households 2) Provision for legal risk regarding retail mortgages in the Warsaw branch of RBI AG 3) Valuation of financial liabilities at fair value through profit and loss 1) Recoverability of loans and advances to non-financial corporations and households
Loans and advances to non-financial corporations and households are reported under financial assets – amortized cost in the amount of EUR 79.9 billion in the statement of financial position. They comprise EUR 45.3 billion in loans and advances to nonfinancial corporations and EUR 34.6 billion in loans and advances to households.
The Management Board describes the processes of monitoring credit risk and the procedures for determining impairments in note 36 Expected credit losses and the Risk Report and Recognition and Measurement Principles chapters in the notes of the Financial Statements. As part of the credit risk monitoring process, the bank checks whether there is an indication of default and therefore whether an individual impairment (stage 3) is required. The calculation of impairments for defaulted, individually significant customers is based on an analysis of the expected scenario-weighted future cash flows. This analysis is influenced by the assessment of the respective customer’s economic situation and development, the estimate of collateral values and the estimated amount and timing of cash flows derived from the analysis. For defaulted, individually insignificant customers in the household segment, impairment is determined according to the so-called best estimate of expected loss model. This represents a best estimate of expected loss based on statistical evidence.
For the Financial Statements, this involves the risk that a transfer from one stage to the next and the determination of impairments are based to a significant extent on estimates and assumptions, which involves room for judgment and uncertainties regarding the amount of impairments, which may result in misstatements.
Finally we asssessed whether the disclosures in the notes to the Financial Statements regarding the calculation of impairments on loans and advances to customers were appropriate.
2) Provision for legal risk regarding retail mortgages in the Warsaw branch of RBI AG
On the reporting date, the Warsaw branch of RBI AG had consumer mortgage loans denominated in or indexed to foreign currencies with a book value of EUR 2.9 billion.
In connection to these loans, customers filed civil lawsuits to certain contractual stipulations. The bank recognized a provision of EUR 49.34 million in this regard.
The bank's estimate regarding the parameters used and the expected probability of occurrence of the respective decision scenarios have a significant impact on the determination of the provision and therefore, due to uncertainties regarding the actual loss rates as well as potential upcomming legal regulations, leads to a risk of misstatement in the financial statements.
We evalueted the general process of recording and measuring provisions for legal risks, analysed the internal controls and assessed the Bank’s accounting treatment of this provision.
Further, we assessed the appropriateness of the expected scenarios and loss rates used as well as the allocated weighted probabilities. These are based on the legal and economic expert opinions of RBI as well as on the opinion of a legal advisor who is involved in the lawsuit. We also verified the arithmetical accuracy of the provision calculation.
The determination of the credit spread curve is a significant input to the fair value calculation of financial liabilities and due to the partly indicative nature of the price quotations leads to a risk of misstatement in the Financial Statements.
The audit committee is responsible for overseeing the Group’s financial reporting process.
 We evaluate the overall presentation, structure and content of the consolidated financial statements, including the notes, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
At the Annual General Meeting dated 21 June 2018, we were elected as group auditors for the consolidated financial statements of the fiscal year ending 31 December 2019. We were appointed by the Supervisory Board on 26 June 2018.
At 13 June 2019, we were elected as group auditor for the consolidated financial statements of the fiscal year ending 31 December 2020 and were appointed by the Supervisory Board on 11 July 2019.
Belarus Priorbank JSC V. Khoruzhey St. 31-A 220002 Minsk Tel: +375-17-28 9-9090 SWIFT/BIC: PJCBBY2X www.priorbank.by
Bosnia and Herzegovina Raiffeisen Bank d.d. Bosna i Hercegovina Zmaja od Bosne bb 71000 Sarajevo Tel: +387-33-75 50 10 SWIFT/BIC: RZBABA2S www.raiffeisenbank.ba
Bulgaria Raiffeisenbank (Bulgaria) EAD 55 Nikola I. Vaptzarov Blvd. Business Center EXPO 2000 PHAZE III 1407 Sofia Tel: +359-2-91 985 101 SWIFT/BIC: RZBBBGSF www.rbb.bg
Russia AO Raiffeisenbank St. Troitskaya 17/1 129090 Moscow Tel: +7-495-777 17 17 SWIFT/BIC: RZBMRUMM www.raiffeisen.ru
Slovakia Tatra banka, a.s. Hodžovo námestie 3 81106 Bratislava 1 Tel: +421-2-59 19-1000 SWIFT/BIC: TATRSKBX www.tatrabanka.sk
Ukraine Raiffeisen Bank Aval JSC Vul Leskova 9 01011 Kiev Tel: +38-044-490 8888 SWIFT/BIC: AVALUAUK www.aval.ua
Moldova I.C.S. Raiffeisen Leasing S.R.L. Alexandru cel Bun 51 2012 Chişinău Tel: +373-22-27 931 3 www.raiffeisen-leasing.md
Ukraine LLC Raiffeisen Leasing Aval Stepan Bandera Av. 9 Build. 6 Office 6-201 04073 Kiev Tel: +38-044-590 24 90 www.rla.com.ua
Czech Republic Raiffeisenbank a.s. Hvězdova 1716/2b 14078 Prague 4 Tel: + 420-412 446 400 SWIFT/BIC: RZBCCZPP www.rb.cz
Bosnia and Herzegovina Raiffeisen Leasing d.o.o. Sarajevo Zmaja od Bosne bb. 71000 Sarajevo Tel: +387-33-254 340 www.rlbh.ba
Croatia Raiffeisen Leasing d.o.o. Radnicka cesta 43 10000 Zagreb Tel: +385-1-65 9-5000 www.raiffeisen-leasing.hr
Kosovo Raiffeisen Leasing Kosovo LLC Rr. UCK p.n. 222 10000 Pristina Tel: +383-38-222 222-340 www.raiffeisenleasing-kosovo.com
Serbia Raiffeisen Leasing d.o.o. Djordja Stanojevica 16 11070 Novi Beograd Tel: +381-11-220 7400 www.raiffeisen-leasing.rs
France RBI Representative Office Paris 9-11 Avenue Franklin D. Roosevelt 75008 Paris Tel: +33-1-45 612 700
Poland RBI Poland Branch Ul. Grzybowska 78 00-844 Warsaw Tel: +48-22-578 56 00 SWIFT/BIC: RCBWPLPW www.raiffeisen.pl
UK RBI London Branch Tower 42, Leaf C, 9th Floor 25 Old Broad Street London EC2N 1HQ Tel: +44-20-79 33-8000
Korea RBI Representative Office Korea #1809 Le Meilleur Jongno Town 24 Jongno 1ga Seoul 110-888 Tel: +82-2-72 5-7951
Singapore RBI Singapore Branch 50 Raffles Place #31-03 Singapore Land Tower Singapore 048623 Tel: +65-63 05-6000
Vietnam RBI Representative Office Ho-Chi-Minh-City 35 Nguyen Hue Str., Harbour View Tower Room 601A, 6th Floor, Dist 1 Ho-Chi-Minh-City Tel: +84-8-38 214 718, +84-8-38 214 719
Raiffeisen Bausparkasse Gesellschaft m.b.H. Mooslackengasse 12 1190 Vienna Tel: +43-1-54 646-0 www.bausparen.at
Raiffeisen Factor Bank AG Mooslackengasse 12 1190 Vienna Tel: +43-1-21 974-57 www.raiffeisen-factorbank.at
Raiffeisen Kapitalanlage- Gesellschaft m.b.H. Mooslackengasse 12 1190 Vienna Tel: +43-1-71 170-0 www.rcm.at
Czech Republic Raiffeisen stavební spořitelna a.s. Koněvova 2747/99 13045 Prague 3 Tel: +420-800 112 211 www.rsts.cz
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