INNOVATION AWARD WINNING OUTSTANDING ......The Company Key Data of Raiffeisen Centrobank AG in €...

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


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


TES HIGH LEVEL INNOVATION AWARD WINNING OUTSTANTE

2016Annual F inancial Report

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

10–18 ManagementReport 10 EconomicEnvironment 11 DevelopmentofBusinessandEarnings 11 SegmentReporting 13 PerformanceIndicators 14 RiskManagement 14 InternalControlSystem 17 HumanResources 17 Outlook2017 18 ResearchandDevelopment 18

18 StatementofLegalRepresentatives 18

19–43 FinancialStatements 19 BalanceSheet 20 IncomeStatement 22 DevelopmentofFixedAssets 23 Notes 25 Auditor'sReport 41

44 Publisher'sDetails 44

ThisisatranslationfromGerman.IncaseofanydiscrepanciesbetweentheEnglishandGerman version,theGermantextshallprevailandbebinding.

AnnualFinancialReport2016:AnOverview

TheCompany

KeyDataofRaiffeisenCentrobankAG

in € thousand / in per cent 2016 2015 Change

Key ratios

Operatingincome 45,704 49,028 (6.8%)

Operatingexpenses (37,146) (35,992) 3.2%

Resultonordinaryactivities 9,632 12,284 (21.6%)

Netprofitfortheyear 3,178 6,911 (54.0%)

Balancesheettotal 2,728,234 2,524,919 8.1%

Return-on-equitybeforetax 9.0% 11.8% -

Return-on-equityaftertax 3.0% 6.6% -

Cost/incomeratio 81.3% 73.4% -

Bank-specific information

Corecapital 105,334 101,729 3.5%

Totalrisk-weightedassets 437,035 532,665 (18.0%)

Surplusofownfunds 70,371 59,116 19.0%

Corecapitalratio 24.1% 19.1% -

Corecapitalratio/creditrisk 60.7% 59.6% -

Ownfundsratio 24.1% 19.1% -

Liquiditycoverageratio(LCR) 149.8% 192.7% -

Non-financial performance indicators

Employeesatyear-end 175 177 (1.1%)

Averagenumberofemployees 175 202 (13.4%)

Stockexchangememberships 12 12 0.0%

Numberofnewlyissuedwarrantsandcertificates 3,811 2,817 35.3%

4

LadiesandGentlemen,

Duringthe2016financialyear,themembersoftheSupervisoryBoardanditsCommitteeswereinformedinatimelyandcomprehensivemannerbytheManagementBoardaboutthedifferentbusinessareas,riskdevelopmentsandrelevantbusinessdevelopmentsinRaiffeisenCentrobankAG.InformationwasprovidedverballyaswellasinwrittenformandenabledtheSupervisoryBoardtofulfillitsdutytosuperviseandadvisetheManagementBoard.

InthepastyearRaiffeisenCentrobankAGfo-cusedontheraisingofitsprofileasacompe-tencecenterforequitiesandcertificates.Thiswas,amongotherthings,achievedbyitssuc-cessfulparticipationintheannuallyorganizedspecialisttenderoftheViennaStockExchangeinApril2016.RaiffeisenCentrobankAGsuc-cessfullygained34of39specialistmandatesontheprimemarket.Morethanthat,duringthesecondhalfoftheyearRaiffeisenCentrobankAGbecamemarketmakerof30AustriantitlesonXETRAFrankfurt.Furthermore,theintenseplanningofabranchofficeinSlovakiathatwillsupportsalesandsalestradingofcertificates,hastobementioned.

Intermsoflastyear’sbusinessdevelopment,thepictureforRaiffeisenCentrobankAGisratherambivalentduetothedifficultmarketenviron-ment:whileGlobalEquitySaleswasconfrontedwithdecliningbusiness,Treasury&Tradingcanreportstableresults.ThemultiplyawardedteamStructuredProductscoulddrawaverysuccess-fulbalance:theopeninterest2016reachedarecordlevelwith€3.4billion.Overall,Raiffei-senCentrobankAGachievedtoreacharesultwithinbudget.However,thedecisiontopaytheAustrianbanklevyatoncestronglyweighsontheresultsof2016whicharethereforeclearlylowerthanthoseoftheyearbefore.

Withregardstopersonnel,thenominationofValerieBrunnerasMemberoftheManage-mentBoardasper1January2016hastobehighlighted.AsaBoardMembersheconducts,togetherwithWilhelmCeleda,thebusinessesofRaiffeisenCentrobankAGandholdsthepositionsofChiefRiskOfficerandChiefFinancialOfficer.

OnbehalfoftheSupervisoryBoardIwouldliketoexpressmysinceregratitudetotheBoardMembersandtoRaiffeisenCentrobankAG’sstafffortheirgreateffortandgoodworkinthepastyear.

PrefacebytheChairmanoftheSupervisoryBoard

KlemensBreuerChairmanoftheSupervisoryBoard

5

LadiesandGentlemen,dearReader,

In2016,volatilemarkets,exceptionalpoliticaleventsand–onceagain–theimplementationofregulatorychallengesontoplevelstoodinthefocusforRaiffeisenCentrobankAG.Againstthisbackdrop,ourmottowastotakeadvantageofnewopportunitiestothebenefitofourcusto-mersandtoimproveperformancebolsteredbyourprofessionalapproachandexemplarycom-mitment.Iwouldliketoexpressmysinceregratitudetoallouremployeesfortheirgreateffortandachievements.NumerousnationalandinternationalawardsconfirmedRaiffeisenCentrobankAG’scuttingedgeperformance.WewontheStructuredProductsEuropeAwardasbestcertificatesissuerinCEE,wewereamongthetopthreebrokersforAustrianandCEEsharesintherenownedExtelRanking,wecameoffasoverallwinnerandbestAustrianissuerofcertificatesintheZFAAwardsforthetenthconsecutiveyearandwonthetrophyforthefirstsuccessfullyremittedFinRepSoloRe-portingtotheAustrianNationalBank.AnotherhighlightwastheelectionofHeikeArbteras“BestBankeroftheYear2016inAustria“.

Oursuccessisreflectedinourbusinessresults:WemaintainedourleadingpositionasmajordomesticmarketparticipantonthespotmarketandtopmarketmakerintermsofsalesontheViennaStockExchange.Inthecustomerbusi-nesssegment,weassertedourtop3position.Inthe2016financialyear,high-endroadshowandmarketmakingactivitieswerefurtherexpan-ded.Inadditionto94roadshowswithAustrianandEasternEuropeancompanies,theflagshipconferenceinZürsandmultiplespecialconfe-rencesinseveralEuropeancitieswereorga-nized.Moreover,weunderpinnedourleader-shipamongAustriancertificatesissuersandachievedanewrecordlevelofopeninterest.

Eventhoughthe2016resultwasburdenedbytheone-offsettlementoftheAustrianbanklevyanddidnotfullyliveuptoourexpectations,weareconfidentthatdespitethechallengingregu-latoryenvironmentandfosteredbynumerousbusinessinitiativesthatwerelaunchedin2016thefinancialresultwillbeinlinewithourtoplevelperformance.

Iwishyouaninterestingreviewofthefinancialyear2016whichhasbeenoutlinedinthepre-sentannualreportofRaiffeisenCentrobankAG.

Kindregards,

CEOEditorial

WilhelmCeledaCEOofRaiffeisenCentrobankAG

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8 June – Premiere at Bucharest Stock Exchange (BVB)RCBbroadensitsstructuredproductsrangeatBVB:30newRCBproducts–allofthemwarrants–arelistedinjointcooperationwithRaiffeisenBankRomania.ThisguaranteescompletelynewinvestmentopportunitiestoRomanianinvestorsforupsideaswellasdownsidemarkets.

13 June – Extel rankings AccordingtotheExtelRanking,RCBranksamongthetop-threebrokersforAustrianandCentralandEasternEuropeanequities.Inthecategories"BrokerageHousesinEMEA-CEE"aswellas"BrokerageHousesinAustria"RCBisawardedthethirdplaceandisthereforeleadingAustrianbroker.

12 September – Turkish small and midcap conferenceRCBandGarantiSecuritiesholdaTurkishSmallandMidcapConferenceinWarsaw,thusbringingrenownedinvestorsandnichecompaniesinalmost70one-on-onemeetingsandgrouppresentationstogether.

26 September – press talkHighrankingrepresentativesofAustrianfinancialpapersfollowRCB’sinvitationtoatalkfocusingontheEUanditscurrentplansregardinginvestorprotection.GuestspeakerThomasWulf,SecretaryGeneralEUSIPA,givesaninterestingoverviewonEurope’sfinancialsector.

27 September – employee event / kick-off cooperation Haus Arjan Duringtheemployeeevent“Let’smoveit”,organizedonaregularbasis,RCBpresentsitsnewcooperationwiththeCaritasHouseArjaninMistelbach.Varioussponsoringactivitiesfollow.

11 October – Number 1 in Securities Trading & Sales TherenownedLondonbasedWealth&FinanceInternationalMagazineelectsRCBnumberoneinSecuritiesTrading&SalesinAustriainthisyear’sFinanceAwards.

20 – 21 October – GEWINN-fairAtthesummitoftheAustrianfinancialsectorfocusingonthetopic“investingwithfu-ture”RCBpresentsitscertificatesandinformsaboutcurrentinvestmentopportunities.

29 November – Structured Products Europe Awards Forthesixthtimeandthethirdconsecutiveyear,RCBisawardedbytheleadingEuropeanspecialistmagazineStructuredProductsMagazineandwinsthehonorablecategory"BestinCEE".

1 JanuaryValerieBrunnerbecomesboardmemberaswellasCFOandCROofRaiffei-senCentrobankAG.

12 February – RCB press_talkRepresentativesofthefinancialpressinViennafollowtheinvitationtoatalkbyguestspeakerMichaelVölter,chairmanoftheExecutiveBoardatVereinigungBaden-WürttembergischeWerpapierbörsee.V.,aboutnewtrendsandrecentdevelopmentsonthecertificatemarket.

15 March – Number 1 on the Vienna Stock ExchangeRCBistheclearwinneratthecallforspecialistsoftheViennaStockExchange.SinceApril12016thecompetencecenterforequitiesandcertificateshasworkedastheleadingAustrianspecialistfor34outof39ofATXPrimeMarketlistedcompanies.

15 – 16 April – Invest StuttgartTheteamStructuredProductsrepresentsRCBatthelargestfinancialfairinGerman-speakingcountriesandshowswhichinvestmentsinthecurrentmarketenvironmentgenerateanattractivereturn.

19 April – Investor conference ZürsMorethan120investorsandhighrankingrepresentativesofalmost70compa-niesvisittheinvestorconference,organizedbyRCBalreadyforthe15thtime.22 April – overall winner Certificates Award Austria 2016Forthe10thtimeinarowRCBisawardedbestnationalissuerofcertificates.TheteamStructuredProductsistheoverallwinnerwitheightawardsintotal.

12 May – EUSIPA: Heike Arbter new presidentHeikeArbter,ManagingDirectoratRCB,isunanimouslyappointedPresidentoftheEuropeanStructuredInvestmentProductsAssociation(EUSIPA).

24 May – Turkey Day in WarsawRCBispleasedtoannounceitsTurkeyDayinWarsaw,offeringauniqueop-portunityforinvestorstomeetthemanagementandIRmanagersofanumberofTurkey’slistedcompaniesinaninformativemeetingwithinasingleday.

31 May – Börsentag Wien RCBisrepresentedattheBörsentagWien,Austria’snewfinancialfairespe-ciallyforprivateinvestorsandtraders.

7

CorporateBodiesManagement Board WilhelmCeleda ChiefExecutiveOfficer ValerieBrunner MemberoftheManagementBoard Supervisory Board KlemensBreuer Chairman MemberoftheManagementBoard, RaiffeisenBankInternationalAG,Vienna Asof18March2017DeputyChairmanoftheManagementBoard, RaiffeisenBankInternationalAG,Vienna MichaelHöllerer 1stDeputyChairman MemberoftheManagementBoard, RaiffeisenZentralbankÖsterreichAG,Vienna Asof18March2017Plenipotentiary, RaiffeisenBankInternationalAG,Vienna HannesMösenbacher Member DivisionHead RaiffeisenBankInternationalAG,Vienna Asof18March2017MemberoftheManagementBoard, RaiffeisenBankInternationalAG,Vienna

WernerKaltenbrunner Member DivisionHead, RaiffeisenBankInternationalAG,Vienna Asof18March2017HeadofInternationalEquityInvestments RaiffeisenBankInternationalAG,Vienna

State Commissioners AlfredHacker Karl-HeinzTscheppe

Vienna,5April2017TheManagementBoard

WilhelmCeledaChiefExecutiveOfficer

ValerieBrunnerMemberoftheManagementBoard

8

SupervisoryBoard

TheSupervisoryBoardmonitorsandassiststheManagementBoardinthemanagementofRaiffeisenCentrobankAG,inparticularwithregardstodecisionsoffundamentalimportance.

TherulesofprocedurefortheSupervisoryBoardanditscommitteesformu-lateinconcretetermsalistofbusinesstransactionsthataresubjecttotheapprovaloftheSupervisoryBoardoritscommittees.TheSupervisoryBoardhassetupanominationcommittee,riskcommittee,remunerationcommitteeandanauditcommittee.

CollaborationbetweentheSupervisoryBoardandManagementBoard

Akeyprincipleofgoodcorporategovernanceisopendiscussionbet-weentheManagementBoardandSupervisoryBoardoritscommitteesandwithinthesegoverningbodies.

TheManagementBoardsubmitsregular,timelyandcomprehensivereportstotheSupervisoryBoardaboutallrelevantissuesoftheBank’sbusinessdevelopment,includingtherisksituationandriskmanagementmeasuresattheBankandallmaterialGroupcompanies.TheChiefExecu-tiveOfficerimmediatelyreportsallimportanteventstothechairmanoftheSupervisoryBoardandalsoreportsimmediatelyonallcircumstancesthatareofmaterialrelevancetotheprofitabilityorliquidityoftheCompany.

TheManagementBoardcoordinatesthestrategicorientationoftheCom-panywiththeSupervisoryBoardanddiscussesthestatusoftheimplemen-tationofthestrategyatregularintervalswiththisBoard.

TheSupervisoryBoardmeetsatleastfourtimesperfinancialyear.

TransparentInformationPolicy

RaiffeisenCentrobankAGattachesconsiderableimportancetoopenandtransparentcommunicationwithitsshareholdersandotherstakeholders.

•Pressreleases,keydata•Shareholderstructure•DownloadableannualreportsinPDFformat•DownloadablesecuritiesprospectusesinPDFformat

CriteriafortheIndependenceoftheSupervisoryBoardMembersforthePurposesoftheAustrianCodeofCorporateGovernance

ASupervisoryBoardmemberisconsideredtobeindependentwhenheorsheisnotinanybusinessorpersonalrelationshipwiththeCompanyoritsManagementBoardthatcouldcauseamaterialconflictofinterestsandthatcouldthereforeinfluencethebehavioroftheBoardmember.

All members of the Supervisory Board of Raiffeisen Centrobank AG are independent according to the defined criteria for independence.

CorporateGovernanceThesharesofRaiffeisenCentrobankAGarenotlistedonastockexchange.AsleadingAustrianissuerofstructuredproductsandasoneofthemostimportantsecuritiesbrokersinViennaandotherfinancialcenters,RaiffeisenCentrobankAGorientsitselftowardstherulesandprinciplesofgoodandresponsiblecorporategovernanceassetforthintheAustrianCodeofCorporateGovernancetotheextentthattheserulesandprinciplesareapplicableforRaiffeisenCentrobankAG.RaiffeisenCentrobankAGhasnot(yet)formallyundertakentocomplywiththeAustrianCodeofCorporateGovernance.

EfficientcollaborationbetweenthevariousbodiesoftheCompanyonastrongfoundationoftrust,protectionofitsshareholder’sinterestsandopenandtransparentcommunicationarekeyelementsofRaiffeisenCentrobankAG’sapproachtogoodcorporategovernance.ThefollowingcommentsillustratesomeaspectsofRaiffeisenCentrobankAG’scompliancewiththeCodeinthereportingperiod(1Januaryto31December2016).

ManagementBoard

TheManagementBoardismadeupoftwopersonsandhassolerespon-sibilitytomanagetheCompanybasedonconcretegoals,conceptsandguidelines.TheManagementBoardpursuesafuture-orientedapproachtakingintoaccountstandardsofgoodcorporatemanagementandtheinterestsofthepublicgood.

TherulesofprocedurefortheManagementBoardasadoptedbytheSupervisoryBoardstipulatethatmeetingsoftheManagementBoardshallbeheldatregularintervals.ThechairmanoftheManagementBoardshallconveneandchairthemeeting.ThemeetingsoftheManagementBoardfocusonamutualexchangeofinformationanddecision-makinginallmat-terssubjecttoapprovalbytheManagementBoard.TheManagementBoardconductsthebusinessoftheCompanyinaccordancewiththelaw,thebylawsoftheCompanyandtherulesofprocedure.Therulesofproce-durefortheManagementcontainstipulationsregardingthedisclosureandreportingobligationsoftheManagementBoardandformulateinconcretetermsalistofbusinesstransactionsthataresubjecttoapprovaloftheSupervisoryBoard.

RulesforProprietaryTrading

TheManagementBoardmakesitsdecisionsonthebasisofthemembers’professionalexpertiseandirrespectiveofanypersonalinterests.MembersoftheManagementBoarddiscloseallmaterialpersonalinterestsintran-sactionsofRaiffeisenCentrobankAGtotheSupervisoryBoard.ConflictsofinterestshavetobereportedtoCompliance;incaseoftransactionswithrelatedparties(=conflictofinterest)theSupervisoryBoardistobenotifiedofsuchtransactionswithrelatedpartiespursuanttoorganisationalinstruc-tions07/2004intheirprevailingversion.AlltransactionsbetweenRaiffei-senCentrobankAGandthemembersoftheManagementBoardorpartiesrelatedtothemareconductedinaccordancewithgenerallyacceptedin-dustrystandardsandareapprovedbytheSupervisoryBoardinadvance.

MembersoftheManagementBoardarenotpermittedtooperatebusines-sesorbeofficersinotherbusinessentitieswithouttheapprovaloftheSu-pervisoryBoardunlesstheseentitiesareinagrouprelationshipwithRaiff-eisenCentrobankAGorunlessRaiffeisenCentrobankAGholdsaninte-restintheseentities.MembersoftheManagementBoardarealsonotper-mittedtoconductbusinesstransactionsfortheirownaccountortheaccountofanotherpartyortoholdashareinanothercompanyasaper-sonallyliablepartnerintheareasinwhichRaiffeisenCentrobankAGisactivewithouttheapprovaloftheSupervisoryBoard.

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ByimplementingMADII/MAR(MarketAbuseDirectiveII/MarketAbuseRegulation)theEuropeanmarketabuseregulationswasfullyamendedon3July2016.Duediligenceobligationsofissuersandotheroperatorshaveincreasedandthreatsofsanctionswereintensified.

Inthecourseofimplementingthe4thAnti-MoneyLaunderingDirectivepro-visionsrelatingtoanti-moneylaunderingandterroristfinancinghavebeenamendedintheircontentsandtightenedup(e.g.definitionofbeneficialowner,includingdomesticPEPs(PoliticallyExposedPersons)etc.Theim-plementationofthesedirectivesisprimarilyduetotheFinancial-Market-Anti-Laundering-Legislation,whichwillenterintoforceon1January2017.

ThefederallawontheimplementationoftheCommonReportingStandardforautomaticexchangeoffinancialaccountinformation(CommonRe-portingStandard,CRS)hastransposedtheOECDstandardforautomaticexchangeoffinancialaccountinformation,includingtheCommonRe-portingStandard(CRS)andtheCommonAuthorityAgreement(CAA)mo-delintonationallaw.Since1October2016banksaresubjecttotheobli-gationtoidentifytheresidenceofitsclients.Thefirstreportingofaccountsanddepositswilltakeplaceuntil30June2017.

Compliance

Tostrengthenthe2ndLineofDefense,Legal,ComplianceandTaxwereseparatedasof1October2015,andCompliance,OperationalRiskandICS(InternalControlSystem)werebundledinoneorganizationalunit.Thisdepartmentassumesresponsibilityforallcompliance-relatedtaskswithinRaiffeisenCentrobankAGandissubordinatetotheCRO,butdirectlyre-portstotheentireManagementBoardandtheSupervisoryBoard.Mo-reover,acontinuousexchangeofinformationwithRZBGroupCompliancetakesplace.Thesecomprehensivemeasuresprovideforaneffectiveimple-mentationofthehighstandardsofstatutoryandregulatorydemands.

RaiffeisenCentrobankAGfullyappliestheStandardComplianceCodethatwasdevelopedbytheAustrianbankingindustryasthebasisforitsbusinessactivities,inadditiontorelevantlegalandregulatoryprovisions.AsasubsidiaryofRaiffeisenBankInternationalAGtheprovisionscontai-nedintheCodeofConductofRZBGroup(CoC)arebindingforandshallbeobservedbyallemployeesofRaiffeisenCentrobankAG.TheCoCformsanintegralpartoftheRZBGroupComplianceManualwhichoutlinestheprinciplescontainedintheCoC.Theprovisionshavebeenim-plementedwithinRaiffeisenCentrobankAGinabindingsetofrulesincludinge.g.theComplianceandAnti-MoneyLaunderingManualororganizationalinstructions.

Corecompliance-relatedissuesinRaiffeisenCentrobankAGincludepro-ceduresandmeasurestopreventmoneylaunderingandterroristfinancing,conflictsofinterest,adherenceto(financial)sanctions,implementationandmonitoringofregulationsforemployeetransactionsandacceptanceofgiftsaswellastrainingsforemployees.Moreover,majortasksincludeperi-odicreviewsoftheadherencetotheExecutionPolicywhenexecutingcus-tomerordersandmeasurestopreventinsiderdealingandmarketmanipu-lation.

In2016,theComplianceOfficeofRaiffeisenCentrobankAGfocusedonanalyzingimplicationsofregulatoryissueslistedbelowandwillconcentra-teonimplementingtheseregulations:

MiFIDII/MiFIR(MarketsinFinancialInstrumentsDirectiveII/MarketsinFinancialInstrumentsRegulation)basedonMiFIDIaredesignedtoamendandtightenupstandardsforequitytradingandinvestmentadvisoryservi-ces(e.g.stricterrulesforOTCtransactions,comprehensivecustomerinfor-mationrequirementsetc.).ThedateofimplementationofMiFIDII/MiFIRhasbeenpostponedto3January2018.

PRIIPregulations(PackagedRetailandInsurance-basedInvestmentPro-ducts/KeyInformationDocument)extendcustomerinformationobligationsforPRIIPissuers(bymeansofstandardizedKIDs–KeyInformationDocu-ments).TheimplementationofPRIIPregulationshasbeenpostponedforayearto1January2018.

10

ManagementReportofRaiffeisenCentrobankAGforthe2016FinancialYear

Theadditionofroundednumbersusingautomatedsystems,aswasdoneforthisreport,mayresultinminordifferencesinamounts.Thechangesindicatedinpercentrefertotheactualamountsandnottheroundedamountsshowninthisreport.

Alldesignationsthatareusedtorefertopersonsinthisreportapplyequallytobothgendersunlessreferenceisbeingmadetoaspecificindividual.

11

EconomicEnvironmentThepastyearwasdominatedbyfundamentalpoliticalchanges,theim-pactofwhichwillbefeltwellbeyondthe2016financialyear:theBrexitvoteinGreatBritain,thesurprisingelectionvictoryofDonaldTrumpintheUSandthefailureofthereferendumonthesenatereforminItaly.

Thereisaprominentphenomenonthathasbecomeperceptibleacrossallcountries:thesurgeofpopulistpartieslocatedleftorrightof“traditional”parties(whohadgovernmentalresponsibilityinrecentyearsanddeca-des),andconcomitantlyestablishedpartiestakingatleastinpartpopulistparties’stanceoneconomicpolicyissues.InsouthernEurozonecountries,thefocushasshiftedtodemandsideconsiderationsinpoliticstocombatthehighunemploymentrates.ThiscanbeobservedinPortugalorItalywhereeconomicperformancesarebelowEurozoneaverageaswellasinSpainwitha2016GDPgrowthratesettlingabove3percentanditsan-nouncementtoimplementnewinvestmentprograms.ThesamecountsforthedemandforamoreexpansivefiscalpolicythroughouttheentireEuro-zone.Despitepersistentpoliticalimponderables,theeconomicupturnintheEurozonecontinuedthroughout2016.Growthdynamicsweremodera-tebutlikewisestoodupagainstthebackdropofnumerousdownwardrisks.SentimentindicatorspostedanincreaseinthepastmonthssignalingaGDPgrowthrateofroughly0.4percentinthefourthquarter2016,whichequalstheaverageupswingsince2013.

InRaiffeisenCentrobankAG’scoremarketsinCentralandEasternEurope,Russiadisplayedaparticularlypositiveeconomicperformance.Fosteredbytherisingoilprice,Russia’srecessionwasflatteningout.AsintheCzechRepublicandinSlovakiagovernmentspendingisstronglydepen-dentoninflowsofEUfunds,growthratesexperiencedamarginalslow-downcomparedtothepreviousyearperiod.ThisdevelopmentcanbeclearlyattributedtotheexpirationofEU-programs.Hungarydisplayedasimilargrowthperformance.Nevertheless,allthreecountriesrecordedGDPgrowthratesmarkedlyabovethe1.7percentEU-average(CzechRepublic:2.3percent;Slovakia:3.3percent;Hungary:2percent).WithaGDPgrowthrateof2.8percent,Polandpostedtheweakestgrowthinovertwoyears.Themainsourceoftheweaknessislowerinvestmentap-petiteandloweroutlaysonthepartoflocalgovernmentsandprivatein-vestors.InTurkey,theJuly’scoupattemptandtheinvestmentbreakdowntookaheavytollontheeconomywhichfacedanegativeGDPgrowthrateinthethirdquarter.Withmerely2percentincrease,theriseturnedoutonlyhalfthe2015result.

FinancialMarkets

In2016,thefinancialmarketsweredominatedbytheBrexitvoteandDo-naldTrump’selectionvictoryintheUSaswellasbyuncertaintiesprece-dingthesedecisiveevents.TheECB’sdecisiontoextenditsbondpurchasingprogramtoDecember2017proppedupthemarkets;theelec-tionofDonaldTrumpfinallyprovidedanadditionalboosttothemarketsatlarge.ThemarketsintheCEEregionbenefittedfromtheoptimisticsenti-mentontheestablishedmarkets,whereastheemergingmarketsreactedwithlosses.

Inannualcomparison,theUSexchangesdeliveredparticularlystrongin-creases:theDowJonesIndustrial(DJIA)Indexgathered13.4percent;theNasdaqCompositerecordedariseof7.5percentandtheStandard&Poor’s500roseby9.5percent.Inaddition,theFTSEandtheDAXalsoshowedsubstantialgainswith+14.4percent.TheJapaneseNikkei225andtheChineseHongSengCEbothroseby0.4percent.Withanups-wingofroughly11percentincludingdividends,theAustrianleadingindexATXdevelopedmorefavorablythanitsEuropeancounterpartsattheendofthe2016financialyear.TheEuroSTOXX50,theEuropeanstockbench-mark,postedariseof0.7percent.

DevelopmentofBusinessandEarnings2016DevelopmentofEarnings

Withanoperatingincomeof€45,704thousandandoperatingexpensesof€37,146thousand,anoperatingresultof€8,558thousandwasgene-ratedinthe2016financialyear.Underconsiderationofvalueadjustmentsandnetproceedsintheamountof€1,074thousand,theresultonordina-ryactivitiescameto€9,632thousand.Thepreviousyearresultonordina-ryactivitiesintheamountof€12,284thousandwasundercutby€2,652thousandor21.6percent.

Theoperatingincomewasdownonthepreviousyearresultandfellby€€ 3,324thousandto€45,704thousand,mainlyduetothehighernegati-venetinterestresultintheamountof€ minus18,584thousand.Incontrast,thenetprofitonfinancialtradingactivitiespostedanincreaseby€3,877

in€thousand 2016 2015 Change

Netinterestresult (18,584) (12,555) 48,0%

Incomefromsecuritiesandfinancialinvestments 9,224 8,489 8.7%

Feeandcommissionresult (2,506) (2,723) (8.0%)

Netprofitonfinancialtradingactivities 55,616 51,739 7.5%

Otheroperatingincome 1,954 4,078 (52.1%)

Operating income 45,704 49,028 (6.8%)

Staffexpenses (20,762) (20,103) 3.3%

Otheradministrativeexpenses (14,576) (13,828) 5.4%

Depreciation (1,353) (1,557) (13.1%)

Otheroperatingexpenses (455) (504) (9.6%)

Operating expenses (37,146) (35,992) 3.2%

Operating result 8,558 13,036 (34.4%)

Valueadjustments,netproceeds 1,074 (0,753) >100%

Result on ordinary activities 9,632 12,284 (21.6%)

Taxes (6,454) (5,373) 20.1%

Net income for the year 3,178 6,911 (54.0%)

12

valuationsandnetproceedsinsecuritiesheldasothercurrentassets.Theresultonordinaryactivitiescameto€9,632thousandcomparedto€12,284thousandinthepreviousyearperiod.

Inthe2016financialyear,incometaxesamountedto€290thousand(2015:€minus1,340thousand).Thechangeisprimarilyattributabletoanegativetaxresultwhichtranslatedintoataxcreditofthegroupparentintheamountof€809thousand(2015:€minus110thousand).Further-more,theitemincludesanamountof€170thousandfromtherecognitionofdeferredtaxassetspursuanttoRÄG2014(AustrianActonChangesinAccountingPractices).Incontrast,expensesfromforeignwithholdingtaxsumupto€minus743thousand(2015:€minus1,117thousand).

Thechangeinothertaxesby€2,711thousandto€6,744thousand(2015:€4,033thousand)isduetoexpensesrelatedtotheone-offcontributiontotheAustrianbanklevyintheamountof€4,651thousandinDecember2016.Non-deductibleinputtaxhasnolongerbeenincludedinothertaxesfollowingachangeininputtaxreportingasfrom2016.In2015,non-deductibleinputtaxcameto€1,918thousand.

Thenetincomefortheyearamountedto€3,178thousand(2015:€6,911thousand).

BalanceSheetDevelopment

ComparedtoDecember2015,thebalancesheettotalgained8.1percentandrosefrom€2,524,919thousandto€2,728,234thousand.

Ontheassetside,“Cashinhandanddepositswithcentralbanks“(6.5percentofthebalancesheettotalon31December2016and0.1percenton31December2015)postedanincreaseby€175,005thousandto€176,436thousandresultingfromhigherdepositsatOesterreicheNa-tionalbankforreasonsofliquiditymanagement.

“Loansandadvancestocreditinstitutions“(79.6percentofthebalancesheettotalon31December2016and76.9percenton31December2015)steppedupby€229,840thousandto€2,172,722thousand.Theriseismainlyduetoanincreaseintradablemoneymarketdepositsby€268,796thousandto€1,721,259thousand.Moreover,theiteminclu-desinterbankdeposits(€245,222thousand),unlistedbonds(€95,893thousand)andcollateralforthesecuritiesbusinessandsecuritieslendings(€110,298thousand).Inannualcomparison,interbankdepositsandunlis-tedbondsroseby€41,357thousandand€16,194thousand,respec-tively,whereascollateralforthesecuritiesandoptionbusinessdeclinedby€56,543thousand.

“Bonds,notesandotherfixed-interestsecurities”(0.7percentofthebalan-cesheettotalon31December2016and3.0percenton31December2015)droppedby€56,301thousandto€18,575thousand.Thedecreaseisprimarilyattributabletoadeclineinlistedbondsthatwerereplacedbytradablemoneymarketdeposits.

“Sharesandothervariable-yieldsecurities“(6.4percentofthebalancesheettotalon31December2016and9.6percenton31December2015)fellby€69,257thousandto€173,544thousand,mainlyfollowingthedeclineinforeignsharesby€48,392thousandandtheredemptionofvariable-yielddomesticsecuritiesintheamountof€40,952thousand.Contrary,fundssteppedupby€18,083thousand.SharesandfundsheldbyRaiffeisenCentrobankAGintandemwithpurchasedoptions(“Otherassets”),tradablemoneymarketdeposits(“Loansandadvancestocreditinstitutions”)andzerobonds(“Loansandadvancestocreditinsti-tutions”and”Bonds,notesandotherfixed-interestsecurities”)serveashedgesforissuedcertificatesandwarrantsorarepartoftheBank’smarketmakeractivities.

thousandto€55,616thousandcomparedtothepreviousyearperiod.Lowerinterestincomeismainlyresponsibleforthehighernegativenetinterestresult.Thedeclineininterestincomeisattributabletolowerincomefromfixed-interestsecuritiesintheamountof€1,168thousandfurthertotheirsaleorredemption.Moreover,interestandsimilarincomefromstructuredproductsrecordedavolume-relateddeclinefrom€5,152thousandto€1,668thousand.

Interestexpensesrosemildlyby€564thousandto€23,899thousandandincludeprimarilycouponpaymentsforstructuredissues.Thisiscontrastedwithapositivevaluationresultfromtradablemoneymarketdepositsandderivativefinancialinstrumentsinthetradingprofit.

Thenetprofitonfinancialtradingactivitiesaccountsforthemainpartoftheoperatingincomeandwentupfrom€51,739thousandin2015to€55,616thousandin2016.Thisfavorabledevelopmentresultsfromthevaluationanddisposalofderivativesandmoneymarketdepositssummingupto€88,708thousand(2015:€67,429thousand)aswellasfromthevaluationofspotandfuturespositionsintheamountof€5,603thousand(2015:€2,840thousand).Thisiscontrastedwithanegativeresultfromthevaluationanddisposalofcertificatesandsharesintheamountof€minus38,695thousand(2015:€minus18,529thousand).

Otheroperatingincomepostedadeclineby52.1percentor€2,124thousandto€1,954thousand,whereasinthe2015financialyeartheitemhadincludedprofitgeneratedfromthedisposalofbusinesspremisessummingupto€1,624thousand.

Operatingexpensescameto€37,146thousandandwereby3.2percentor€1,154thousandabovethepreviousyearamountof€35,992thousand.

Staffexpensescameto€20,762thousandandremainedatthepreviousyearlevelasthe2015financialyearwaspositivelyinfluencedbythere-leaseofarestructuringprovisionintheamountof€360thousand.Wagesandsalariesfellfrom€16,097thousandto€15,418thousand,whereasexpensesforseverancepaymentsandcontributionstoseverancefundsroseto€878thousand(2015:incomesummingupto€607thousand).

Followingachangeininputtaxreporting,otheradministrativeexpensesincreasedfrom€13,828thousandto€14,576thousandinthe2016financialyear.Theitemincludesprimarilyexpensesforinformationservicessummingupto€3,631thousand(2015:€2,863thousand),ITcostsintheamountof€2,336thousand(2015:€1,989thousand)andsundrycomingupto€1,835thousand(2015:€2,256thousand).SundryincluderemunerationsfortheManagementBoardaswellasexpensesforseverancepaymentsandretirementbenefitspaidbyRaiffeisenBankInternationalAGandchargedtoRaiffeisenCentrobankAG.Inaddition,otheradministrativeexpensesincludetheannualcontributiontotheresolutionfundintheamountof€687thousand(2015:€896thousand).

Otheroperatingexpensesanddepreciationspostedamilddeclineby€49thousandand€204thousand,respectively.

Thecost/incomeratiowhichhadcometo73.4percentin2015,increa-sedto81.3percentowingtoloweroperatingincomeandhigheroperatingexpenses.

Theriseinvalueadjustmentsandnetproceedsisinparticularduetoaliquidationprofitintheamountof€1,842thousand,resultingfromtheclosingdownofCentrotradeChemicalsAGinthe2016financialyear.The2015financialyearwaspositivelyimpactedbyincomefromthewrite-upofCentrotradeHoldingGmbHsummingupto€490thousand.Contrary,the2015and2016financialyearsrecordedexpensesfromnet

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“Otherassets“(3.7percentofthebalancesheettotalon31December2016and2.9percenton31December2015)increasedby€28,991thousandinannualcomparison,mainlyinfuturesandunlistedoptionscontractsandcameupto€102,175thousand.

“Loansandadvancestocustomers“(2.1percentofthebalancesheettotalon31December2016and2.3percenton31December2015)mildlyfellby€1,161thousandto€58,014thousand.

Asgovernmentbondsincludedin“Bondsandnotesissuedbypublicbodies“andamounting€103,177thousandasat31December2015arenolongerrequiredforreasonsofliquiditymanagement,theitemwasreducedtozero.

Ontheequityandliabilitiesside“Otherliabilities“(17.1percentofthebalancesheettotalon31December2016and22.0percenton31De-cember2015)wentdownby€90,781thousandto€465,858thousand,followingadeclineinshortsellingsoftradingassetsby€ 38,433thousandandunlistedoptionsby€57,100thousand,respectively.Short-sellingsareeffectedinconnectionwiththemarketmakingactivitiesoftheBankinrelationtopensionplansandrepresentoffsettingitemstoequityandindexfuturesaswellastocashpositionsontheassetsideoftheba-lancesheet.

“Securitizedliabilities”(72.0percentofthebalancesheettotalon31December2016and64,4percenton31December2015)recordedanincreaseinannualcomparisonby€337,486thousandto€1,964,063thousand.Duetoachangeinreportingeffectiveasfrom31December2016,theitemincludescertificateswithoptioncharacterandwarrantsthathadformerlybeenrecordedunder“Otherliabilities”.

Zerobonds,structurednotesandtradablemoneymarketdepositspurchasedfromRaiffeisenBankInternationalAGinrelationtotheissuingactivitiesinthecertificatesbusinesswereincludedin"Loansandadvancestocreditinstitutions","Sharesandothervariable-yieldsecurities”and“Bonds,notesandotherfixed-interestsecurities”andcameuptoatotalof€1,790,440thousand(2015:€1,583,384thousand).Inaddition,“Otherassets”includeOTCoptionspurchasedfromRaiffeisenBankInter-nationalAGintheamountof€193thousand(31December2015:€609thousand).

“Liabilitiestocreditinstitutions“(0.5percentofthebalancesheettotalon31December2016and0.6percenton31December2015)postedamilddeclineby€922thousandto€14,167thousand.

Thedecreasein“Liabilitiestocustomers“(5.9percentofthebalancesheettotalon31December2016and8.0percenton31December2015)by€40,555thousandto€161,158thousandisprimarilyattributa-bletoadeclineinsightdepositsofforeigncustomers.

“Provisions“(0.5percentofthebalancesheettotalon31December2016and0.5percenton31December2015)marginallyfellfrom€13,548thousandon31December2015to€12,929on31December2016.

“Retainedearnings“(0.9percentofthebalancesheettotalon31Decem-ber2016and0.9percenton31December2015)steppedupfrom€22,463thousandon31December2015to€24,852thousandon31December2016.Thechangerelatestootherreservesandisattributabletoanallocationfromthe2015netprofitintheamountof€2,389thousand.

FinancialInstruments

Pleaserefertothenotes.

SegmentReportingSecurities Trading & Sales and TreasuryRaiffeisenCentrobankAGisoneofthelargestplayersinequitiesandstructuredproductsontheViennaStockExchangeandholdsakeypositi-oninthemarketsinCentralandEasternEurope.

Treasury&TradingThesalesvolumeontheViennaStockExchangewasdownonthe2015fullyearresultbyamodest4percent,whereasleadinginternationalex-changessuchasXETRAFrankfurtandNYSEEuronextrecordedadeclineof16and15percent,respectively.In2016,thesalesvolumeontheBu-dapestStockExchangegatheredroughly6percentandthestockex-changeinPraguepostedamildincreasebyroughly1percent.Incont-rast,theWarsawStockExchangesufferedadeclineinsalesvolumeofroughly11percent.

Withamarketshareof6.35percentonthespotmarket,RaiffeisenCent-robankAGisthesixthlargestmarketparticipantontheViennaStockEx-change.Inmarketmaking,thesalesvolumeof€1.4billionwasmildlydownonthepreviousyearresult,themarketshareof9.43percent,howe-ver,wasnearlyonparwiththepreviousyearlevel.RaiffeisenCentrobankAGwasagaintopdomesticmarketmakerintermsofsales.

Inthe2016financialyear,operatingincomeexcludingotheroperatingincomeandincludingnetvaluationsandnetproceedsinsecuritiesheldasothercurrentassetsfortheTreasury&Tradingbusinesscameto€14.5millionandundercutthepreviousyearresulttotaling€15.6millionby7percent.

InthespecialisttenderontheViennaStockExchangeinApril2016,Raiff-eisenCentrobankAGreceived34outof39specialistmandatesintheprimemarketandholdsatotalof38marketmakermandatesintheprimemarketandonemandateintheStandardMarketContinuous.OntheGer-manstockexchangeXETRAFrankfurtRaiffeisenCentrobankAGactsasmarketmakerfor30AustrianequitiesandontheEUREXRaiffeisenCentro-bankAGprovidesquotesfor23AustrianandEasternEuropeanunderly-ings.

OntheWarsawStockExchangeRaiffeisenCentrobankAGactsasmar-ketmakerfor24Polishequitiesandprovidesquotesinsinglestockfuturesfor16selectedequitiesandWIG20derivatives.ThenumberofequitymarketmakingmandatesinPragueandBucharestremainedstableatatotalof11.Inmarketmakingforwarrantsandcertificatesquotesforover4,800productsonroughly250Austrianandinternationalunderlyingswereprovided.

GlobalEquitySalesInthe2016financialyear,costumersalesvolumeontheViennaStockEx-changewasdownonthepreviousyearresultby19.4percent.RaiffeisenCentrobankAGdefendeditstop3positionincustomerstradingwithatotalvolumeof€1.89billionandamildriseinmarketshareof10.6percent(2015:10.3percent).TheGlobalEquitySalesteamfurtherintensi-fieditsroadshowandmarketingactivitiesinthe2016financialyear.Inad-ditionto94roadshowswithAustrianandEasternEuropeancompanies,theflagshipconferenceinZürsandfivespecialistconferencesinLondon,ParisandWarsawwereorganized.

Operatingincomeexcludingotheroperatingincomeamountedto€4.4millioninthe2016financialyearandwasalmostequaltothepreviousyearresultof€4.5million.

InExecution&ElectronicTrading,aspecialtoolforETFexecutionwasdevelopedandsuccessfullyimplemented.Moreover,smartorderrouting

14

FinancialandNon-FinancialPerformanceIndicatorsFinancialPerformanceIndicators

Comparedtothepreviousyear,equityincreasedwhereastheresultonordinaryactivitiesdeclined.Consequently,theRoEbeforetaxfellfrom11.8percentto9.0percentandcorrespondingly,theRoEaftertaxdeclinedin2016comparedtothepreviousyearfrom6.6percentto3.0percent.

Thecost/incomeratioof73.4percentin2015roseto81.3percent,mainlyduetothedeclineinoperatingincomeandtheriseinoperatingexpenses.

Non-FinancialPerformanceIndicators

AspertheendofDecember,thenumberofemployeesatRaiffeisenCent-robankAGamountedto175,which,comparedto31December2015,representsadecreaseof2employees.Inannualcomparison,thestaffde-clinedonaverageby7employeesto175employees.

Stockexchangemembershipscameto12andremainedunchangedtothe2015financialyear.Thenumberofissuedwarrantsandcertificatesroseto3,811and,comparedtothepreviousyear,steppedupbyroughly35percent.

RiskManagementPrinciples

BusinessopportunitiesandearningspotentialarerealizedinRaiffeisenCentrobankAGbasedonactiveriskmanagementbytakingriskinatargetedandcontrolledmanner.TheBankhasasystemofriskinstrumentsinplaceformeasuringandmonitoringrisks.Inallrelevantareasofriskefficientmonitoringandcontrollinginstrumentsareavailableenablingthecompetentbodiestoreacttomarketopportunitiesandspecificbankingbusinessrisks.Activeriskmanagementresultedinastableandlessvolatiletradingresult,inparticularagainstthebackdropofayearthatsawseveralmarketturmoilssuchasthecrisisinChinaatthestartoftheyear,theBrexitvoteinJune,theUSpresidentialelectionsinNovemberandthereferen-duminItalyinDecember.

whichisofparticularimportanceforMiFIDIIwasimprovedanddevelo-pedfurther.Moreover,theproductrangeinalgoexecutionwassubstanti-allyexpanded.Thesemeasuresalongwithintensivecustomeracquisitionactivitiestranslatedintoastableincomedespiteadeclineinstockex-changeturnover.

StructuredProductsBoththedemandforcertificatesandRaiffeisenCentrobankAG’sissuanceactivityremainedhigh.RaiffeisenCentrobankAGoffered7,832publicproductsandissuedatotalof3,811newcertificatesinthe2016financialyear.RaiffeisenCentrobankAGdefendeditsmarketleadershipontheAustriancertificatesmarket.Asperyear-end2016,openinterestreachedarecordlevelof€3.4billionandrosebyroughly8percentcomparedto31December2015.Salesvolumeremainedhighandcontributedtoafurtherincreaseinthedepartment’sprofitforthe2016financialyear.

Operatingincomeexcludingotheroperatingincomecameto€20.6milli-onandsurpassedthepreviousyearresultof€19.3millionby7percent.

IntheRaiffeisennetworkbanksinCentralandEasternEurope,42productswereplacedintheprivatebankingand20productsinthepremiumban-kingsegmentontheprimarymarket,whichunderpinsthestrongdemandforinvestmentcertificatesintheretailbusinessinEasternEurope.Compa-redtothepreviousyearperiod,salesvolumesremainedstable.

AttheCertificatesAwardsAustria2016,RaiffeisenCentrobankAGwaselectedbestcertificatesissuerinAustriabyanindependentjuryforthetenthconsecutiveyearandstoodoutagainstnumerousnationalandinter-nationalcompetitors.InNovember2016,RaiffeisenCentrobankAGwontheaward“BestIssuerinCentralandEasternEurope“ontheoccasionofthe“StructuredProductsEuropeAwards”.

Investment ServicesThedepartmentservicescustomersofRaiffeisennetworkbanksinCentralandEasternEurope.ThemajorshareofitsbusinessactivitiesiscarriedoutincooperationwithAORaiffeisenbankinRussia.Risingdemandforinvest-mentsbyRussianprivateinvestorstranslatedintoapositiveresultinthesecondhalfyear.There-alignmentofthebusinesssegmentthathadbeeninitiatedin2014andthetransferoftheprivatebankingbusinessintoKathreinPrivatbankAGweresuccessfullyfinalized.Inthe2016financialyear,thetotalvolumeofassetsundermanagementroseby3percentto€507million.

Operatingincomeexcludingotheroperatingincomeamountedto€1.8millionandundercutthepreviousyearfigureof€2.0millionby10percent.

Company ResearchUnchangedtothepreviousyearandincooperationwithanalystsfromthelocalnetworkbanksoftheoftheRaiffeisenBankInternationalAGGroup,theCompanyResearchteamcoveredroughly130Austrian,Cen-tralandEasternEuropeanaswellasRussiancompanies.RaiffeisenCentro-bankAGstilloffersthelargestcoverageuniverseinAustria.Toexpandtheregionalapproach,aresearchcooperationwiththeTurkishbrokerGlobalSecuritieswasestablishedatthebeginningoftheyear,providinginstitutio-nalclientsofRaiffeisenCentrobankAGwithequityresearchoftheTurkishpartner.Intheyearunderreview,thedepartmentpublishedandmarketedmorethan350CompanyUpdatesandover1,000researchpublicationsincludingFirstImpressions,CompanyNews,EquityDaily,EquityWeekly,CEEEquityNavigator,BrexitSpecialetc.RegularanalystroadshowsandinvestormeetingswereheldinLondon,Paris,Zurich,Frankfurt,Dublin,Stockholm,Copenhagen,Helsinki,Prague,Tallinn,Warsaw,BudapestandVienna.

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in per cent 2016 2015

Return-on-equitybeforetax 9.0 11.8

Return-on-equityaftertax 3.0 6.6

Cost/incomeratio 81.3 73.4

Ownfundsratio 24.1 19.1

Corecapitalratio 24.1 19.1

Liquiditycoverageratio 149.8 192.7

2016 2015

Employeesatyear-end 175 177

Averagenumberofemployees 175 202

Stockexchangememberships 12 12

Numberofnewlyissuedwarrantsandcertificates 3,811 2,817

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AsasubsidiaryofRaiffeisenBankInternationalAG(RBI),RaiffeisenCent-robankAGisintegratedintotheriskmanagementprocessoftheRaiffeisenZentralbankÖsterreichAGAktiengesellschaft/RaiffeisenBankInternatio-nalAGCreditInstitutionGroup,safeguardingthatallmajorrisksareidenti-fied,measuredandcontrolledonGroup-levelandensuringthattransac-tionsareconcludedexclusivelyifparticularrisk/rewardrelationsarecom-pliedwith.

RiskGovernance

TheManagementBoardofRaiffeisenCentrobankAGisresponsibleforallrisksoftheBankaswellasforimplementinganddevelopingariskstrat-egy.TheManagementBoardissupportedinimplementingthesetasksbyanindependentriskmanagementunit,whichisclearlyseparatedfromthefrontoffices.OperationalRisk,InternalControlSystemandCompliancearebundledinonedepartment(Compliance,OperationalRisk&ICS).

Unchangedtothepreviousyear,riskmanagementatRaiffeisenCentro-bankAGissplitinto2departmentsasat31December2016:•RiskManagement(market,credit,liquidationrisks,overallbankriskma-nagement)•OperationalRisk&ICS(operationalrisksandInternalControlSystem)

ThecentralriskmanagementunitsaretheRiskManagementCommittee(RMK),theInternalLimitCommittee(ILC),theOperationalRiskManage-mentCommittee(ORMK)andtheAssetandLiabilityCommittee(ALCO).

TheRMK,whichmeetsweekly,addressesallissuesandregulationsintheareaofriskmanagementoftheBankanditssubsidiariesfocusinginparti-cularoncreditrisk,marketriskandoperationalrisk.Overdrafts,overdueloansandadvancesandnecessaryvalueadjustmentsarereportedinduecourseandrecommendationsfortheManagementBoardaredeveloped.Since21December2016,theRMKhasbeenadecision-takingbody,au-thorizedtoapproverisk-relatedprinciples,procedures,measures,proces-sesandparameters.

TheILC,whichmeetseverysecondweek,decideswithinitscompetency(dependingontypeandamountofthelimit)oncounterparty,countryandmarketrisklimits.LargeexposuresrequiretheapprovaloftheSupervisoryBoard.Onceayear,theaggregateoflargeexposuresisreportedtotheSupervisoryBoard.

TheORMK,whichmeetsonceaquarter,establishesanappropriateframeworkforoperationalriskmanagementanddefinesandapprovesanadequateriskstrategy.Moreover,riskassessments,scenarioanalysesandriskindicatorsarediscussedandapprovedandmaterialeventsofdefaultandresultingmeasurestobetakenareanalyzed.

TheALCO,whichmeetsonceamonth,continuouslyevaluatesthemacro-economicenvironmentandcontrolsandassessesinterestraterisk,liquidityriskandbalancesheetstructuralrisk.

RiskManagementSystematRaiffeisenCentrobankAG

RaiffeisenCentrobankAGemploysacomprehensiveriskmanagementsys-temtakingintoaccountalllegal,businessandregulatoryrequirements.Theappliedprocessesandmodelsaresubjecttoongoingreviewandfurtherdevelopment.ThekeycomponentsoftheriskmanagementsystemsarecompliantwithregulatorycapitalrequirementspursuanttoBaselIII,limitingspecificbankingrisksandprovidingadequateriskcoveragesumsaswellaspermanentsupervisionandcontroloflitigationriskswithinacomprehensiveInternalControlSystem.

1. Capital requirements to limit market risk, credit risk and operational risk Tosecurecapitaladequacyforcreditrisk,marketriskandoperationalriskpursuanttoBaselIII,RaiffeisenCentrobankAGappliesthestandardap-proach.Tocalculateoption-relatednon-linearrisksthescenariomatrixme-thodisemployed.

Forregulatorycapitalrequirementspleaserefertothenotes(page38)

2. Identification and limiting specific banking business risks (ICAAP) AsasubordinatecompanyofRZB/RBI,RaiffeisenCentrobankAGisinteg-ratedintotheICAAPofRZB/RBIonaconsolidatedbasis.Therisk-bearingcapacityanalysisispreparedbyRZB/RBIonamonthlybasisforboththegoingconcernscenario(VaRwithaconfidencelevelof95percent)andthetargetratingperspective(VaRwithaconfidencelevelof99.92percent)isprovidedtoRaiffeisenCentrobankAGandsupportstheManage-mentBoardinmanagingtheoverallbankrisk.

3. Internal Control SystemRaiffeisenCentrobankAGhasimplementedacompany-widemodernInter-nalControlSystemthatmeetstherequirementsofRZB/RBIgroupstan-dards.Allbankingprocessesandimmanentrisksaredocumentedandres-pectivecontrolsaresetupandreviewed.Processdescriptions,risksandmonitoringarereviewedsemi-annuallyandarecontinuouslyoptimized.

MajorRisks

Market riskMarketriskisdefinedastheriskoflossesinonandoff-balancesheetposi-tionsarisingfromchangesinmarketprices(equityandcommodityprices,changesininterestratesandexchangerates).

AsthemainfocusofthebusinessactivitiesofRaiffeisenCentrobankAGisonsecuritiestradingandtheissueofequity-indexbasedderivativesandstructuredproducts,thetoppriorityofRaiffeisenCentrobankAGistocoun-teractmarketrisk.RaiffeisenCentrobankAGmeasures,monitorsandma-nagesallmarketrisksbysettingavarietyoflimitsthatarereviewedonanannualbasisandaresubmittedtotheRaiffeisenCentrobankAGILC,Raiff-eisenBankInternationalAGMACO(MarketRiskCommittee)andtheSu-pervisoryBoardofRaiffeisenCentrobankAGforapproval.Allmarketriskpositionsarecomparedwiththerespectivelimitsinamostlyautomatedprocess.Limitoverdraftsarehandledinanescalationprocess.Currently,over15,000limitsinroughly25categoriesaremonitored,themajorityaccountsforlimitsforsingleshares.

Inmarketriskmanagement,theValue-at-Risk(VaR)isemployed,whichfur-nishesforecastsonpotentiallossesinadversescenariosundernormalmar-ketconditionsandcontraststhemwithaparticularlimit.Onthebasisofthevariance-covariancemodel,theVaRforequityandproduct-specificposi-tionsiscalculateddailywithaconfidenceintervalof99percentandaretentionperiodofoneday.On31December2016theVaRamountedto€843thousand(31December2015:€620thousand):

VaR 1 Day, 99% P&L hypothetical

Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec-2,0 -1,5 -1,0

-0,5 0,0

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Moreover,regularliquiditystresstestsarecarriedoutandthetime-to-wallinthestressscenarioismonitoredindifferentcurrencies.Inflowsneedtosurpassoutflowsforaperiodofatleast30daysinacrisisscenario(marketcrisis,namecrisisandscenarioofboth).Theliquiditycoverageratio(LCR)servestomeasuretheBank’sliquiditysupplyinadefinedstressscenario(combinationofmarketandnamecrisis).Asof31December2016,theLCRcameto149.8percent(31December2015:192.7percent).SinceJanuary2016,aminimumrateof70percentonsingle-institutionlevelhasbeenmandatory.

AllkeyperformanceindicatorsconfirmedtheadequateliquiditysupplyofRaiffeisenCentrobankAGinthe2016financialyear.

RiskSituation

Asasubordinatecompany,RaiffeisenCentrobankAGisintegratedintotheICAAPofRZB/RBIonaconsolidatedbasis.RaiffeisenCentrobankAGisprovidedwithmonthlyICAAPreportsincludingagoingconcernper-spectivewithaconfidenceintervalof95percentandatargetratingperspectivewithaconfidenceintervalof99.92percent.

ThefollowingtablesdepicttheVaRperriskcategoryasof31December2016and31December2015,respectively:

Thekeydatainbothscenarioswerestableonoverallbanklevel.

Followingasubstantialreductionin2015(roughlyminus40percent),thecreditriskfurtherdeclinedmainlyduetotheimplementationofcontractualnettinginrelationtotheOTCbusinessintheICAAPandafurtherdecreaseintheloanportfolio.

Comparedtotheyear-end2015,marketriskincreasedbyroughly40percentfollowingariseintheequityVaRbyroughly40percent.Inabsolutefigures,theincreaseiscomparativelymoderateandstillatalowlevel.

TheabovechartdepictstheperformanceofVaRandhypotheticalP&L(profitandlossthatwouldhaveoccurredinaconstantportfolioandactu-allyrecordedmarketmovements)inthe2016financialyear.Intheperiodunderreview,backtestingrevealednoVaRexceedancewhichunderlinestheconservativeparametrizationoftheVaR.

InadditiontoVaR,RaiffeisenCentrobankAGusesregulatoryandma-nagement-definedstressteststoevaluatemarketrisk.Stresstestssimulatetheperformanceoftheportfoliounderabnormalmarketsituationsandaty-picalpricemovements.

Credit riskCreditriskrepresentsthedefaultriskthatarisesfromtheinabilityofacusto-mertofulfilcontractuallyagreedfinancialobligations,whenserviceshavebeenrendered(e.g.liquidity,securities,advisoryservices)orwhenunrea-lizedprofitsfrompendingbusinesstransactionscannolongerbereco-vered(counterpartydefaultrisk).

ThemajorcreditrisksofRaiffeisenCentrobankAGresultfrompositionsofpurchaseddebtinstruments,tradablemoneymarketdepositsandOTCoptionsservingprimarilytohedgeissuedcertificatesandstructuredpro-ductsaswellasfrommarginpositionsrelatingtoOTCandstockexchangetransactions.ThisaffectsprimarilymembersoftheRZB/RBICreditInstituti-onGroupandtoalimitedextentotherfinancialinstitutions.Thetraditionalcreditandloanbusiness(lombardloans,otherloanstoprivateandcorpo-ratecustomers)isofimmaterialsignificanceforRaiffeisenCentrobankAGduetothelimitedbusinessvolumeandthecompany’sstrategicorientation.

Creditriskmanagementisbasedoncounterparty-relatednominallimitswhicharecomprehensivelymonitoredbytheInternalControlSystemforcreditrisks.Thelimitsareapproved-dependingontypeandsize-bytherespectivehierarchicalcompetenceauthorityscheme.Creditdecisionsaretakendependingontheassessmentofthecounterpartyrisktakingintoaccounttheratingandapplicablecreditriskmitigatingmeasureslikefinan-cialcollaterals(e.g.cashorsecuritiescollateral).IntheGroup-widedefaultandratingdatabasecustomersareregisteredandevaluatedandeventsofdefaultaredocumented.ThewholelendingdecisioncorrespondstoregulatoryrequirementsandRZB/RBIGroupDirectives.

Operational riskOperationalriskisdefinedastheriskofunexpectedlossesresultingfrominadequateorfailedinternalprocesses,peopleandsystemsorfromexter-nalevents.Thisdefinitionincludeslegalriskbutexcludesstrategicandreputationalrisk.ThisriskcategoryismanagedonthebasisoftheresultsofregularBank-wideself-assessments,standardizedkeyriskindicators,scenarioanalysesandGroup-internalhistoricaldata.

EventsofdefaultinoperationalriskareregisteredintheGroup-widedatabasisORCA(OperationalRiskControllingApplication)andarerecog-nizedseparatelybybusinesssegmentandtypeofevent.Measurestakenarealsodocumentedandlinkedwiththeeventofdefault.

Liquidity riskLiquidityriskiscalculatedbasedonaliquiditymodeldevelopedincoopera-tionwithRaiffeisenBankInternationalAG.DailybalancesheetitemsofRaiff-eisenCentrobankAGareseparatedbymaturitybandsandcurrencies,theirinflowsandoutflowsaremodeledbasedonpre-definedfactors.Theliquidi-tyrequirementindifferentmaturitybandsislimitedbymeansofregulatorylimitsaswellasbylimitsdeterminedbyRBI.

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Going concern perspective (VaR in € million) 31/12/2016 31/12/2015 Change

Creditrisknon-retail 2.9 3.4 (3.6%)

Marketrisk 2.4 1.7 39.1%

Operationalrisk 1.3 1.3 1.5%

Equityparticipationrisk 1.1 0.9 25.7%

CVArisk 0.5 0.6 (10.7%)

Total 8.3 7.8 6.3%

Target rating perspective (VaR in € million) 31/12/2016 31/12/2015 Change

Creditrisknon-retail 6.8 7.8 (12.5%)

Marketrisk 9.6 6.9 39.5%

Operationalrisk 8.8 8.7 1.5%

Otherrisks 8.1 8.0 0.9%

Total 33.3 31.4 6.2%

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AratingdowngradeofCentrotradeChemicalsAGfollowingthedisconti-nuationoftheoperativebusinesstranslatedintoanegativeeffectontheequityparticipationrisk.Inthe2016financialyear,CentrotradeChemicalsAGwasinliquidationandwascloseddowninFebruary2017.

OperationalriskiscalculatedbyRZB/RBIonaconsolidatedbasisbymeansoftheAdvancedMeasurementApproach(AMA)anddistributedtoasignificantpartoftheGroup.

InternalControlSystemasRelevantfortheAccountingSystemRaiffeisenCentrobankAGanditsgoverningbodiesarecommittedtoensu-ringbalancedandcompletefinancialreporting.Afundamentalrequire-mentinthisiscompliancewithallrelevantlegalregulations.Inconnectionwiththeaccountingprocess,theManagementBoardisresponsiblefordesigningandinstallinganinternalcontrolandriskmanagementsystemthatmeetstherequirementsoftheCompany.Theobjectofthisinternalcontrolsystemistosupportthemanagementbymakingcertainthateffecti-veinternalcontrolsareappliedtotheaccountingprocessandthatthesecontrolsareenhancedwheneverappropriate.Thecontrolsystemisdesig-nedtoassurecompliancewithguidelinesandregulations,aswellastocreateoptimalconditionsforspecificcontrolmeasures.AninternalcontrolsystemhasalreadyexistedatRaiffeisenCentrobankAGforyearsintheformofdirectivesandinstructionsforstrategicallyimportantsubjectareas.ThefinancialstatementsarepreparedonthebasisofthepertinentAustrianlaws,abovealltheAustrianBankingAct(BWG)inconnectionwithEURegulationNr.575/2013(CapitalRequirementsRegulation“CRR”)andtheAustrianCommercialCode(UGB)asamendedbytheRÄG2014.Thedepartment“Finance”isresponsiblefortheBank’saccountingsystemandisdirectlysubordinatedtotheManagementBoard.Thedepartmentisresponsiblefordealingwithallaccountingissuesandhastheauthoritytoprovideforsafeguardingtheapplicationofuniformstandards.Organizati-onalinstructionsandguidelines,whicharecomprisedinamanual,havebeensetupforsupport.

AccountingaccordingtotheAustrianBankingActandAustrianCommer-cialCodeiseffectedviaacentralITsystemapplyingthePAGORO/400system,whichisprotectedbytherestrictedassignmentofaccessauthori-zations.ThetableofaccountsistailoredtotheBank’sindividualrequire-ments.Transactionsareregisteredbothautomaticallyandmanually.Ac-countingvouchersarethenfiledsystematicallyandchronologically.MonthlybalancesheetsarecreatedandpassedontotheManagementBoardandtheseniormanagementbymeansofastandardizedfinancialreportingsystem.AtleastonceperquartertheSupervisoryBoardisinformedinthecourseoftheSupervisoryBoardmeetingsofthecurrentcourseofbusinessincludingtheBank’soperativeplanningandmedium-termstrategy.TheManagementBoardevaluatesandmonitorsmaterialrisksinconnec-tionwiththeaccountingprocess.Inthis,thefocusisplacedontherisksthataretypicallyfoundtobematerial.Theannualevaluationoftheinter-nalcontrolmeasuresappliedbyeachoftheresponsibleunitsisbasedonarisk-orientedapproach.Theriskoffaultyfinancialreportingisassessedonthebasisofanumberofdifferentcriteria.Forexample,complexaccountingprinciplescanincreasetheriskoferrors.Differentprinciplesforthemeasurementofassetsandcomplexorchangingbusinesscondi-tionscanalsocausesubstantialerrorsinthefinancialreporting.

Estimatesmustregularlybemadeduringthepreparationofthefinancialstatements.Inallofthesecases,thereisaninherentriskthattheactualde-

velopmentsmaydeviatefromtheseestimates.Thisespeciallyappliestotheparametersinvaluationmodelsthatareusedtodeterminethefairvaluesoffinancialinstrumentsforwhichthereisnocurrentpricequotationaswellastosocialcapital,theoutcomeoflegaldisputes,thecollectabilityoflo-ansandadvances,andtheimpairmentofequityparticipationsandinven-tories.Insomecases,externalexpertsareinvolvedorpubliclyavailableinformationsourcesareusedtominimizetheriskofincorrectestimates.InadditiontotheManagementBoard,thegeneralcontrolframeworkalsoincludesseniormanagement(thedepartmentheads).Allcontrolmeasuresareappliedtothedailybusinessprocessestoensurethatpotentialerrorsordeviationsinthefinancialreportingarepreventedordiscoveredandcorrected.Thecontrolmeasuresthatareappliedatregularintervalsrangefromthereviewoftheperiodicresultsbythemanagementtothespecificreconciliationandcoordinationofaccountsandtheanalysisandfurtheroptimizationofaccountingprocesses.TheInternalAuditdepartmentisalsoinvolvedinthemonitoringprocess.ItsactivitiesarebasedontheAustrianFinancialMarketAuthority’sminimumstandardsforinternalauditingandinternationalbestpractices.TheInternalAuditdepartmentreportsdirectlytotheManagementBoard.

“Controlling”(partofthe“Finance”department)isresponsibleforprepa-ringthenotestotheannualfinancialstatementssetupaccordingtotheAustrianBankingActandtheAustrianCommercialCode.Inaddition,amanagementreportisdrawnupwhichexplainstheresultsinlinewithstatutoryrequirements.Theannualfinancialstatementsandthemanage-mentreportareforwardedtoandreviewedbytheAuditCommitteeoftheSupervisoryBoardandarethenpresentedtotheSupervisoryBoardforitsapproval.TheannualfinancialstatementsarepublishedontheCompany’swebsite,theOfficialGazettetotheWienerZeitung,andarealsofiledwiththeAustrianCompanyRegister.KeyemployeesandtheManagementBoardreviewtheannualfinancialstatementspriortotheirdistributiontotheSupervisoryBoard.Moreover,analysesoftheannualfinancialstatementsarepreparedespeciallyfortheseniormanagement.

HumanResourcesAsoftheendofDecember2016,RaiffeisenCentrobankAGhad175em-ployees,whichcomparedto31December2015representsadecreaseby2employees.Inthe2016financialyear,RaiffeisenCentrobankAGem-ployedanaverageof175employees.€Fluctuation–relatedvacancieswerefilledprimarilyinkeyfunctions.Inthereportingperiod,thefluctuationrateamountedto9.6percent.

Remuneration managementRegulatoryprovisionsonremunerationmanagementwerecompliedwithandappliedsubjecttoRaiffeisenCentrobankAG’sremunerationpolicy.Inaddition,theimplementationoftheEBAguidelinesonsoundremunerationpracticesenteringintoforceon1January2017wasprepared.

Employee surveyInOctober2016,thefirstRaiffeisenCentrobankAGemployeesurveywascarriedout.Theoverallresponseratewas82percent.Theresultsareaddressedbyinterdisciplinarygroupworkshopsasabasistodevelopfurtherimprovementmeasures.

DiversityRecently,theinitiative“Diversity2020”waslaunched.Thediversityinitiati-vefocusesontheempowermentofwomen.Inparticular,itaimstoincrea-sethenumberofwomenintopmanagementpositionsinRZBandRBIto35percentuntil2024.AninternalRZB/RBIdiversitycommitteehasbeenformedtoaddressandthedealwiththemultitudeofperspectivesofthis

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issue.ValerieBrunner,MemberoftheManagementBoardofRaiffeisenCentrobankAG,hasbeenappointedtotheCommittee.TheCommitteemembersactasDiversityAmbassadorswhopromotethetopicwithintheirprofessionalenvironmentandparticipateindevelopingfurtherimprove-mentmeasures.

Asof31December2016,RaiffeisenCentrobankAGonceagainachie-vedthetargetrateof35percentfortheunder-representedgenderinSu-pervisoryBoard,ManagementBoardandseniormanagementfunctions(B-1andB-2).

Outlookfor2017Withagrowthrateof2.4percent,theUSeconomyisexpectedtoclearlyacceleratein2017.Atthereport’screationdate,nostatementcanyetbemadeaboutthedirecteconomicimpactoftheTrumpadministration’spro-jectedlegislation,however,positiveeffectsshouldcomeforward.ThetrendintheUSAtowardsanextremelyexpansionaryfiscalpolicyandsur-gingbudgetdeficitsprovidesaboostforthemarkets.Inflationrateswillmoveupwardsonthebackofsignificantlygrowingcommodityandener-gyprices.IntheUSA,interestrateswillrise,butataslowerpacethaninthepast.Themorerapidlyinterestratesareadjusted,themoreslowlyyieldswillriseoverthelongrun.Thiswillalsoimpactlong-endEuropeanbonds.

Atthecreationdateofthisreport,therelevantleadingindicatorssuchasthepurchasingmanagers‘index(PMI)pointtowardsasoundrecoveryoftheEurozoneandtheCEEregion.ThefavorableoutlookisshoredupbytheassumptionofabarelynoticeabledisruptiveeffectoftheBrexitontheEurozone,whichisprojectedtopostariseinrealGDPof1.9percent.CentralEuropeshouldseeariseof3.1percent,SouthEasternEurope3.7percentandEasternEurope1.0percent,respectively.Albaniastandsoutwithariseof4.0percent,Romaniawith4.2percentandSlovakiawith3.3percent.Russiawillreturntomodestgrowthwith1.0percent.Drivenbydomesticdemand,theeconomyinAustriaisanticipatedtocontinueitsmoderateupwardtrendwithaGDPgrowthrateof1.7percentin2017and,againstthebackdropofrisingforeigntrade,1.5percentin2018.Thisisonlyashortbreather,however,becausethegrowthinthenumberofjobsisnotexpectedtobesufficienttoabsorbtheincreaseinthepotentialworkforceforanumberofdifferentreasons(migrationfromEUmemberstates,labormarketaccessforasylumseekers,ahigherparticipationrateamongwomenandelderlypersons).

Profitexpectationsfortheequitymarketsareambitious.Thepersistentlyhighliquiditysupplyfromcentralbanksaswellthesolideconomicdeve-lopmentprovideasupportiveenvironmentfortheequitymarkets.Equaltotheestablishedmarkets,CEEmarketsshouldseeafriendlyfirsthalfyear2017.Growthprojectionsandprofitsalongwithcontinuedsupportfromexpansivemonetarypolicyshoulddrivestockpricesupward.In2017,theATXisexpectedtocarryoveritsstrongperformancefrom2016,whereasthefirsthalfyearshouldseeamorefavorabledevelopmenttrailingoffoverthecourseoftheyear.AfurtherpickupoftheEuropeaneconomy,thesoundeconomicoutlookfortheCEEregion,andpositiveramificationsofastrongUSdollaronAustrianexportingcompaniesbackRaiffeisenCentrobank‘sestimateofapriceupswinginthefirsthalfyear2017.

Againstthebackdropofrobustgrowthestimatesfortheglobalequitymar-ketsaswellasforitscoremarketsinAustriaandtheCEEregion,RaiffeisenCentrobankAGexpectsitsbusinesssegmentsTreasury&Trading,Structu-redProducts,InvestmentServices,GlobalEquitySalesandCompanyRe-searchtodeliverasoundperformance.Fromanoperatingperspective,themainprioritywillbeonsustaineddevelopmentofbothexistingandnew

businessactivitiesintandemwithstrictcostdisciplineandfurtherefficiencyenhancement.Forthesecondquarter2017,theEquityCapitalMarketsbusinessofRaiffeisenBankInternationalAGandRaiffeisenCentrobankAGistobeconsolidatedwithinRaiffeisenCentrobankAGwiththepurpo-seoffocusingincreasinglyonacquiringandexecutingequitycapitalmar-kettransactionsandfurtherexpandingtheGlobalEquitySalesbusiness.In2017,severaladditionalinitiativesareplannedintheStructuredProductsbusinessincludingthedevelopmentofdigitaldistributionchannelsintheretailsegmentforawiderinvestoraudienceandtheestablishmentofabranchinSlovakiainthesecondquartertostimulatethesaleandboostthepopularityofstructuredproductsinoneoftheBank’scoremarkets.TaxesnotbasedonincomeincludingtheAustrianbanklevy,supervisoryfeesandthecontributiontotheEUresolutionfundinconjunctionwiththeimplementationofregulatoryrequirementswillconstituteaforeseeablebur-denforRaiffeisenCentrobankAG.Asthecompetencecenterforequitiesandcertificates,RaiffeisenCentrobankAGisreadytofacetheopportuni-tiesunfoldinginthecourseofthe2017financialyearandexpectsariseinthenetprofitcomparedtothe2016result.

ResearchandDevelopmentRaiffeisenCentrobankAGwithitscoreareaofbusinessfocusingonequi-tiesandstructuredproductsdoesnotengageinresearchanddevelop-ment.


StatementofLegalRepresentativespursuantto§82StockExchangeActWeconfirmtothebestofourknowledgethattheannualfinancialstate-mentsgiveatrueandfairviewoftheassets,liabilities,financialposition,andprofitorlossofRaiffeisenCentrobankAGasrequiredbytheappli-cableaccountingstandardsandthatthemanagementreportgivesatrueandfairviewofthedevelopmentandperformanceofthebusinessandthepositionoftheCompany,togetherwithadescriptionoftheprincipalrisksanduncertaintiestheCompanyfaces.


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FinancialStatementsofRaiffeisenCentrobankAGasat31December2016accordingtotheAustrianBankingAct

Theadditionofroundednumbersusingautomatedsystems,aswasdoneforthisreport,mayresultinminordifferencesinamounts.

Thechangesindicatedinpercentrefertotheactualamountsandnottheroundedamountsshowninthisreport.

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BalanceSheetasatDecember31,2016 Assets 31/12/2016 31/12/2016 31/12/2015 31/12/2015 in € in € in € thousand in € thousand

1. Cashinhandanddepositswithcentralbanks 176,435,817.22 1,430

2. Bondsandnotesissuedbypublicbodieseligibleforrefinancingwithcentralbanks bondsandnotesissuedbypublicbodiesandsimilarsecurities 0.00 103,177

3. Loansandadvancestocreditinstitutions

a)repayableondemand 125,618,422.53 219,642

b)otherloansandadvances 2,047,103,440.76 2,172,721,863.29 1,723,240 1,942,882

4. Loansandadvancestocustomers 58,013,564.84 59,174

5. Bonds,notesandotherfixed-interestsecurities

a)issuedbypublicbodies 9,829,244.12 9,788

b)issuedbyotherborrowers 8,745,624.30 18,574,868.42 65,088 74,876

6. Sharesandothervariable-yieldsecurities 173,544,496.93 242,802

7. Equityparticipations 5,138,499.88 5,137

8. Sharesinaffiliatedcompanies 8,474,754.91 8,475

9. Intangiblefixedassets 125,464.01 134

10.Tangiblefixedassets 11,522,399.95 12,535

thereoflandandbuildingsusedbythecreditinstitution forownpurposes:€9,779,295.92 previousyear:€10,031thousand

11.Otherassets 102,175,371.72 73,184

12.Prepaymentsandotherdeferrals 1,336,770.73 1,113

13.Deferredtaxassets 170,490.83 0

Total assets 2,728,234,362.73 2,524,919

Off-balance sheet items

1. Foreignassets 301,300,265.82 540,019

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Equity and liabilities 31/12/2016 31/12/2016 31/12/2015 31/12/2015

in € in € in € thousand in € thousand

1. Liabilitiestocreditinstitutions


b)withagreedmaturitydatesorperiodsofnotice 6,725,023.71 14,166,432.89 1,876 15,089

2. Liabilitiestocustomers


b)withagreedmaturitydatesorperiodsofnotice 40,608,680.90 161,158,483.36 21,778 201,714

3. Securitisedliabilities

a)issuedsecuritisedliabilities 905,292,188.10 791,233

b)othersecuritisedliabilities 1,058,771,231.93 1,964,063,420.03 835,3441 1,626,5771

4. Otherliabilities 465,857,529.15 556,6391

5. Accrualsanddeferreditems 240,526.87 126

6. Provisions

a)forseverancepayments 4,037,124.00 3,884

b)otherprovisions 8,891,868.91 12,928,992.91 9,664 13,548

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 23,820,697.77 24,851,634.60 21,432 22,463

10.LiabilityreservepursuanttoArticle57para5AustrianBankingAct1 13,538,860.00 13,539

11.Netprofitfortheyear 3,177,901.21 6,974

Total equity and liabilities 2,728,234,362.73 2,524,919

Off-balance sheet items

1. Contingentliabilities 0.07 0

2. Commitmentsarisingfromfiduciarybusinesstransactions 7,091,121.47 7,091

3. EligibleownfundspursuanttoPart2ofRegulation(EU)No575/2013 105,333,909.92 101,730

4. CapitalrequirementspursuanttoArticle92ofRegulation(EU) 437,034,817.82 532,664 No575/2013(Totalrisk-weightedassets) hereof:capitalrequirementspursuanttoArticle92para1lit(a)to(c) ofRegulation(EU)No575/2013 hereof:capitalrequirementspursuanttoArticle92para1lit(a) 24.10% 19.10% hereof:capitalrequirementspursuanttoArticle92para1lit(b) 24.10% 19.10% hereof:capitalrequirementspursuanttoArticle92para1lit(c) 24.10% 19.10%

5. Foreignequityandliabilities 344,875,146.71 445,2151Adjustmentofpreviousyeardatasubjecttoachangeinreporting

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IncomeStatementforthe2016FinancialYear

2016 2016 2015 2015 in € in € in € thousand in € thousand

1. Interestandinterest-likeincome 5,314,893.08 10,779

thereoffixed-interestsecurities 1,167,688.93 2,305

2. Interestandinterest-likeexpenses (23,898,746.21) (23,334)

I. Net interest result (18,583,853.13) (12,555)

3. Incomefromsecuritiesandfinancialinvestments

a)Incomefromshares,sharerightsandother variable-yieldsecurities 7,343,715.13 7,469

b)Incomefromsharesinaffiliatedcompanies 1,880,000.00 9,223,715.13 1,020 8,489

4. Feeandcommissionincome 9,664,232.75 10,516

5. Feeandcommissionexpenses (12,170,130.60) (13,239)

6. Netprofitonfinancialtradingactivities 55,616,028.75 51,739

7. Otheroperatingincome 1,954,108.48 4,078

II. Operating income 45,704,101.38 49,028

8. Generaladministrativeexpenses (35,338,114.50) (33,931)

a)staffexpenses

aa)wagesandsalaries (15,417,534.73) (16,097)

bb)expensesforstatutorysocialcontributionsandcompulsorycontributionsrelated towagesandsalaries (3,570.607.00) (3,686)

cc) othersocialexpenses (362,607.48) (370)

dd)expensesforpensionsandassistance (366,465.15) (390)1

ee)provisionsforseverancepaymentsandcontributionstoseverancefunds (1,045.160.89) (440)1

(20,762,375.25) (20,103)

b)otheradministrativeexpenses (14,575,739.25) (13,828)

9. Valueadjustments onassetitems9and10 (1,352,764.95) (1,557)

10.Otheroperatingexpenses (455,381.36) (504)

III. Operating expenses (37,146,260.81) (35,992)

IV. Operating result 8,557,840,57 13,036

11.Loanlossprovisionsandexpendituresarisingfromthevaluation ofloansandadvancesanddisposalofsecuritiesheldasother currentassets (692,061.50) (1,252)

12.Incomearisingfromthevaluationanddisposalofloans andadvancesandofsecuritiesheld asothercurrentassets 107,963.93 88

13.Expendituresarisingfromthevaluationofequityparticipationsheld asfinancialinvestments (183,962.33) (81)

14.Incomearisingfromthevaluationanddisposal ofsharesinaffiliatedcompaniesandequityparticipationsheld asfinancialinvestments 1,841,987.06 493

V. Result on ordinary activities 9,631,767.73 12,284

15.Incometaxes 290,295.08 (1,340) thereoftaxcredit(+)orpassedon(-)fromparentcompany €809,010.63(previousyear:€(110)thousand)

16.Othertaxesunlessincludedinitem15 (6,744,161.60) (4,033)

VI. Net income for the year 3,177,901.21 6,911

17.Changesinnetassetsthroughtransfer 0.00 (5,068)

18.Changesinreserves 0.00 5,068

VII. Profit for the year 3,177,901.21 6,911

19.Profitcarriedforward 0.00 63

VIII.Net profit for the year 3,177,901.21 6,974

1Adjustmentofpreviousyeardatasubjecttoachangeinreporting

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DevelopmentofFixedAssetsinthe2016FinancialYear Amounts in € Cost of acquisition Cost of acquisition Cost of acquisition Cost of acquisition Accumulated depr. Accumulated depr. Accumulated depr. Accumulated depr. Accumulated depr. Carrying amount Carrying amount Balance as at 1/1/2016 Additions Disposals Balance as at 31/12/2016 Balance as at 1/1/2016 Additions / Depreciation Write-up Disposals 31/12/2016 31/12/2016 31/12/2015

I. Intangible fixed assets

Softwarelicenses 1,886,695.35 81,902.12 0.00 1,968,597.47 1,752,375.35 90,758.12 0.00 0.00 1,843,133.47 125,464.00 134,320.00

II. Tangible fixed assets

1.Landandbuildingsusedbythecreditinstitution forownpurposes thereofvalueofproperty:€ 2,637,765.92; previousyear:€ 2,638thousand 12,694,367.11 0.00 0.00 12,694,367.11 2,663,655.19 251,416.00 0.00 0.00 2,915,071.19 9,779,295.92 10,030,711.92

2.Officefurnitureandequipment 13,011,026.55 249,002.15 26,122.80 13,233,905.90 10,506,333.83 1,010,590.83 0.00 26,122.80 11,490,801.86 1,743,104.04 2,504,692.72

25,705,393.66 249,002.15 26,122.80 25,928,273.01 13,169,989.02 1,262,006.83 0.00 26,122.80 14,405,873.05 11,522,399.96 12,535,404.64

III. Financial investments

1.Sharesinaffiliatedcompanies thereofincreditinstitutions:€0.00 8,474,754.91 0.00 0.00 8,474,754.91 0.00 0.00 0.00 0.00 0.00 8,474,754.91 8,474,754.91

2.Equityparticipations thereofcreditinstitutions:€0.00 5,156,700.61 1,129.21 0.00 5,157,829.82 19,329.94 0.00 0.00 0.00 19,329.94 5,138,499.88 5,137,370.67

13,631,455.52 1,129.21 0.00 13,632,584.73 19,329.94 0.00 0.00 0.00 19,329.94 13,613,254.79 13,612,125.58

Total 41,223,544.53 332,033.48 26,122.80 41,529,455.21 14,941,694.31 1,352,764.95 0.00 26,122.80 16,268,336.46 25,261,118.75 26,281,850.22

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DevelopmentofFixedAssetsinthe2016FinancialYear Amounts in € Cost of acquisition Cost of acquisition Cost of acquisition Cost of acquisition Accumulated depr. Accumulated depr. Accumulated depr. Accumulated depr. Accumulated depr. Carrying amount Carrying amount Balance as at 1/1/2016 Additions Disposals Balance as at 31/12/2016 Balance as at 1/1/2016 Additions / Depreciation Write-up Disposals 31/12/2016 31/12/2016 31/12/2015

I. Intangible fixed assets

Softwarelicenses 1,886,695.35 81,902.12 0.00 1,968,597.47 1,752,375.35 90,758.12 0.00 0.00 1,843,133.47 125,464.00 134,320.00

II. Tangible fixed assets

1.Landandbuildingsusedbythecreditinstitution forownpurposes thereofvalueofproperty:€ 2,637,765.92; previousyear:€ 2,638thousand 12,694,367.11 0.00 0.00 12,694,367.11 2,663,655.19 251,416.00 0.00 0.00 2,915,071.19 9,779,295.92 10,030,711.92

2.Officefurnitureandequipment 13,011,026.55 249,002.15 26,122.80 13,233,905.90 10,506,333.83 1,010,590.83 0.00 26,122.80 11,490,801.86 1,743,104.04 2,504,692.72

25,705,393.66 249,002.15 26,122.80 25,928,273.01 13,169,989.02 1,262,006.83 0.00 26,122.80 14,405,873.05 11,522,399.96 12,535,404.64

III. Financial investments

1.Sharesinaffiliatedcompanies thereofincreditinstitutions:€0.00 8,474,754.91 0.00 0.00 8,474,754.91 0.00 0.00 0.00 0.00 0.00 8,474,754.91 8,474,754.91

2.Equityparticipations thereofcreditinstitutions:€0.00 5,156,700.61 1,129.21 0.00 5,157,829.82 19,329.94 0.00 0.00 0.00 19,329.94 5,138,499.88 5,137,370.67

13,631,455.52 1,129.21 0.00 13,632,584.73 19,329.94 0.00 0.00 0.00 19,329.94 13,613,254.79 13,612,125.58

Total 41,223,544.53 332,033.48 26,122.80 41,529,455.21 14,941,694.31 1,352,764.95 0.00 26,122.80 16,268,336.46 25,261,118.75 26,281,850.22

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A.AccountingPolicies

General principlesThefinancialstatementsofRaiffeisenCentrobankAGforthe2016financi-alyearhavebeenpreparedinaccordancewiththegeneralaccountingprinciplesstipulatedintheAustrianCommercialCodeasamendedintheAustrianActonChangesinAccountingPractices(RÄG2014)andthespecificsectoralregulationsasspecifiedbytheAustrianBankingAct.Inaccordancewiththeprinciplesofproperaccounting,andtakingintoac-countstandardpracticeasdescribedinSection222(2)oftheAustrianCommercialCode,theannualfinancialstatementsgiveatrueandfairviewofthecompany’snetassets,financialpositionandearnings.

Thevaluationofassetsandequityandliabilitiesisbasedontheprincipleofindividualvaluationassumingagoingconcernperspective.Theprincip-leofprudenceisapplied,takingaccountofthespecificcharacteristicsofthebankingbusiness.

Thebalancesheetandtheincomestatementhavebeenstructuredaccor-dingtoAppendix2oftheformscontainedinArticle43AustrianBankingAct.SpecialregulationsasstipulatedbytheRÄGhavebeentakenintoaccount.

FurthertotheapplicationoftheRÄG,deferredtaxassetswerereportedforthefirsttime.DeferredtaxassetsarecalculatedpursuanttoArticle198para9and10oftheAustrianCommercialCodefollowingabalancesheetorientedapproachwithoutdiscounting.Existinglong-termprovisionswerediscountedatmarketinterestrates.FurthertotheapplicationoftheRÄG,balancesheetandincomestatementitemsarecomparableonlytoalimitedextentwithpreviousyearfigures.

Nochangesintheaccountingandvaluationmethodshavebeenmadecomparedtothe2015financialstatements(seethewebsiteofRaiffeisenCentrobankAGhttps://www.rcb.at/en/news-info/annual-reports),ex-ceptfortheabovechangesrelatingtotheapplicationoftheRÄGandac-countingpolicieshavebeenconsistentlyapplied.

Foreign currency translationAssetsandliabilitiesdenominatedinforeigncurrenciesarereportedatthemiddleratesofexchangesfixedbytheEuropeanCentralBankontheba-lancesheetdate.AmountsdenominatedincurrenciesforwhichtheEuro-peanCentralBankpublishednoratesareconvertedatthemiddleratesofexchangepublishedbyRaiffeisenBankInternationalAGonthebalancesheetdate.

Forwardforeignexchangecontractsarecapitalizedattheforwardex-changerates.Anydifferencesinratesresultingfromcurrencyconversionarereportedasaprofitorlossintheincomestatement.

Trading portfolio – valuation of securities, futures and options Adailymarketpricesystemisappliedforthevaluationofsecuritiesheldfortradingpurposesorasothercurrentassets.Intermsofsecuritiesheldfortradingpurposesorasothercurrentassets,

thecompany’sportfolioofsharesinpubliclylistedcompaniesaswellasfixed-interestsecuritiesisreportedatthesharepriceprevailingontheba-lancesheetdate.Ifnoquotesorsharepricesareavailablethevalueisdeterminedbymeansofvaluationmodels.

Bondsheldbythecompanyfortradingpurposesarevaluedatquotesprovidedbyothercreditinstitutions,brokersoratReutersquotes,incasestockexchangequotesarenotavailableorarenotconclusive.Ifsuchquotesarenotavailable,pricesarecalculatedinternallyonthebasisofthenetpresentvaluemethod.Thismethodisbasedonaninterestratecur-vecomprisedofmoneymarket,futuresandswapratesaswellasspreads.

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

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

Forplainvanillaoptions(AmericanandEuropeanstyle),theBlack-ScholesmodelandthebinomialpricingmodelaccordingtoCox-Ross-Rubinsteinareapplied.TheCurranapproximationisappliedtoAsianoptions,where-asbarrieroptionsuseHeynen-KatandspreadoptionsrelyontheKirkmo-del.

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

OTCoptionsareprimarilyvaluedattradablepricesquotedbythecoun-terparty.Optionsforwhichnotradablepricesareavailablearevaluedbyadequatemodels.Forplainvanillaoptions(AmericanandEuropeansty-le),theBlack-ScholesmodelandthebinomialpricingmodelaccordingtoCox-Ross-Rubinsteinareapplied.TheCurranapproximationisappliedtoAsianoptions,whereasbarrieroptionsusetheHeynen-Katmodel.

Banking book — valuation of derivativesThederivativesvolumeinthebankingbookrelatesontheonehandtoanOTCproducttohedgeinterestraterisksandontheotherhandtoFXfor-wardstohedgeforeigncurrencyrisks.Theyarevaluedatfairvaluerelyingonobservablemarketparameters.

Loans and advances to credit institutions and customersLoansandadvancestocreditinstitutionsandcustomersareshownattheirnominalvalue.Individualloanlossprovisionsaremadeinthecaseofanidentifiablerecognizableriskofdefaultonthepartofborrowers.

Equity participations and shares in affiliated companiesEquityparticipationsandsharesinaffiliatedcompaniesarevaluedatcostunlesspermanentlossesordecreasedequityrequireanon-scheduledde-preciationofthefairvalue(subjectiveorobjectifiedcompanyvalue).Incase,reasonsforimpairmentarenolongerapplicable,awrite-uptothecostofacquisitioniscarriedout.

FinancialStatementsasat31December2016

Notes

26

Intangible and tangible fixed assetsThevaluationofintangibleandtangiblefixedassets(i.e.landandbuil-dings,officefurnitureandequipmentaswellasothertangiblefixedassets)iscarriedoutatthecostofacquisitionlesstheirscheduled,lineardepre-ciation.

Depreciationratesappliedare33.3percentand14.3percentp.a.forintangiblefixedassets,2.5percentand10.0percentp.a.forimmovablefixedassets,and10percent–33percentformovablefixedassets.Afullyear’sdepreciationistakeninthecaseofadditionsmadeduringthefirsthalfofthefinancialyear,whereashalf-yeardepreciationappliestoaddi-tionsinthesecondhalfofthefinancialyear.Lowvalueassets(costofac-quisitionperitemlessthan€0.4thousand)arefullydepreciatedintheyearofacquisition.

Liabilities to credit institutions and customersLiabilitiestocreditinstitutionsandcustomersarereportedattheamountofrepayment,takingintoconsiderationtheprincipleoffinancialprudence.

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

Provisions for severance paymentsTheprovisionsforseverancepaymentsaredesignedtofulfilllegalde-mands,aswellasthosearisingfromindividualorcollectivecontractualag-reements.Provisionsarecalculatedinaccordancewiththeguidelinesspe-cifiedbyIAS19,applyingtheProjectedUnitCreditMethodandassumingacalculatoryinterestrateof1.60percent(31/12/2015:2.00percent),aswellasanunchangedannualsalaryincreaseamountingto2.7percent(31/12/2015:3.00percent).TheAVÖ(Austrianactuaries’association)2008-P-basisforcalculatingretirementpensioninsurances–Pagler&Pag-lerforsalariedemployeeswastakenasbiometricbasisforcalculation.

Theunderlyingpresumptionisadecreasingfluctuationrateinconnectionwiththeearliestpossibleretirementdate,attheageof60forwomenand65formen,takingintoaccountthechangestoAustria’sGeneralSocialSecurityLawinaccordancetotheBudgetaryAmendment2003.Thepre-miumreserveamountsto78.3percent(31/12/2015:75.7percent)ofthestatisticalterminationbenefitobligationsonthebalancesheetdate.

Other provisionsOtherprovisionshavebeenmadeaccordingtoexpecteddemands.Theycompriseidentifiablerisksandliabilities,theextentofwhichhasnotyetbeendetermined.SubjecttotheprovisionsoftheRÄG,long-termprovisionswerediscountedasfromthefinancialyear2016.Theinterestrateamountsto1.6percent.

B.NotestoBalanceSheetItems

I. Cash in hand and deposits with central banksThebalancesheetitemA1,whichencompassescashinhandanddepo-sitswiththeAustrianNationalBank,isreportedat€176,436thousand(31/12/2015:€1,430thousand).Prevailingregulationspertainingtoli-quidityandminimumreserveswereobserved.

II.1. Classification of loans and advances and securities positions according to their term to maturity

II. Loans and advances

31/12/2016 repayable 0-3 3-12 1-5 >5 Total in€thousand on demand months months years years

Bondsandnotesissuedbypublicbodies 0 0 0 0 0 0

Loansandadvancestocreditinstitutions 125,618 204,058 343,690 1,299,924 199,431 2,172,722

Loansandadvancestocustomers 35,209 565 8,812 6,467 6,960 58,014

Bonds,notesandotherfixed-interestsecurities 0 7,580 2,250 8,363 382 18,575

Sharesandothervariable-yieldsecurities 151,083 21,461 1,001 0 0 173,544

Otherassets 41,200 418 2,273 53,420 4,865 102,175

353,110 234,082 358,026 1,368,174 211,638 2,525,030

Comparative figures as at 31/12/2015

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Bondsandnotesissuedbypublicbodies 0 0 377 102,800 0 103,177

Loansandadvancestocreditinstitutions 219,642 241,476 233,283 1,041,595 206,886 1,942,882

Loansandadvancestocustomers 33,562 2,010 0 16,046 7,556 59,174

Bonds,notesandotherfixed-interestsecurities 73 7,327 59,406 8,070 0 74,876

Sharesandothervariable-yieldsecurities 179,388 31,314 9,743 22,357 0 242,802

Otherassets 31,386 948 2,422 34,888 3,539 73,184

464,050 283,075 305,231 1,225,756 217,980 2,496,0941Adjustmentofpreviousyeardataaccordingtothetableasat31/12/2016

27

II.2. Loans and advances to affiliated companies and equity participations

31/12/2016 Loans and advances to Loans and advances to equity in€thousand affiliated companies participations in which Raiffeisen (direct/indirect >50%) Centrobank has a direct shareholding (<50%)

Loansandadvancestocreditinstitutions 1,878,452 0

Loansandadvancestocustomers 4,652 514

Bonds,notesandotherfixed-interestsecurities 8,363 0

Sharesandothervariable-yieldsecurities 22,506 0

Otherassets 1,926 8

1,915,899 522


31/12/2015 Loans and advances to Loans and advances to equity in€thousand affiliated companies participations in which Raiffeisen (direct/indirect >50 %) Centrobank has a direct shareholding (<50%)

Loansandadvancestocreditinstitutions 1,679,793 0

Loansandadvancestocustomers 4,525 514

Bonds,notesandotherfixed-interestsecurities 54,600 0

Sharesandothervariable-yieldsecurities 48,449 0

Otherassets 914 8

1,788,281 522

III. Securities

Figures supplied pursuant to Article 64 para 1 no 10 and 11 Austrian Banking Act

31/12/2016 Unlisted Listed Total Valued at in€thousand market price

Bondsandnotesissuedbypublicbodies,A2 0 0 0 0

Bonds,notesandotherfixed-interestsecurities,A5 0 18,575 18,575 18,575

Sharesandothervariable-yieldsecurities,A6 48,215 125,330 173,544 173,544

Equityparticipations,A7 5,139 0 5,139 x

Sharesinaffiliatedcompanies,A8 8,475 0 8,475 x


31/12/2015 Unlisted Listed Total Valued at in€thousand market price

Bondsandnotesissuedbypublicbodies,A2 0 103,177 103,177 103,177

Bonds,notesandotherfixed-interestsecurities,A5 0 74,876 74,876 74,876

Sharesandothervariable-yieldsecurities,A6 61,524 181,278 242,802 242,802

Equityparticipations,A7 5,137 0 5,137 x

Sharesinaffiliatedcompanies,A8 8,475 0 8,475 x

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Asat31/12/2016balancesheetitemA5includesfixed-interestsecuritiesamountingto€18,575thousand(31/12/2015balancesheetitemA2andA5:€178,052thousand)ofwhich€9,829thousand(31/12/2015:€67,110thousand)willfalldueintheforthcomingyear.

Asat31/12/2016balancesheetitemA5includessecuritiesclassifiedascurrentassetsamountingto€9,829thousand(31/12/2015balancesheetitemsA2andA5:€52,558thousand)andsecuritiesofthetradingbookintheamountof€8,746thousand(31/12/2015balancesheetitemsA2andA5:€125,495thousand).

Thefairvalueofsecuritiesofthetradingbookandsecuritiesheldasothercurrentassets(excludinghedgepositions)exceededtheacquisitioncostsby€141thousandasat31/12/2016(31/12/2015:€78thousand).

IV. Equity participations and shares in affiliated companiesThefollowinglistcontainsinformationoncompaniesinwhichtheBankdirectlyheldaminimumof20percentshareholdingonthebalancesheetdate:

Figures as at 31/12/2016

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in€thousand Name Shareholding in % Equity Annual results 2016 Domicile

1CentrotradeHoldingGmbH, 100 3,968 (21)1

Vienna

2CentrotradeChemicalsAG, 100 4,5752 (83)3 Zug–inliquidation

3SyrenaImmobilienHoldingAG, 21 29,046 (270) Spittal/Drau1unauditedfigures2liquidationbalancesheetasat30September20163lossfortheperioduntilpreparationoftheliquidationbalancesheet(30September2016)


V. Fixed assetsThecompositionanddevelopmentoffixedassetsiscontainedinthetableoutliningthedevelopmentoffixedassets.

CentrotradeChemicalsAGhasbeeninliquidationsinceNovember2015asthesalesprocesswasnotsuccessful.InFebruary2017,thecompanywascloseddown.

Sincethesaleofthecommoditytradingsubsidiaries,CentrotradeHoldingGmbHhasnotperformedanyoperationalactivities.

in€thousand Name Shareholding in % Equity Annual results 2015 Domicile

1CentrotradeHoldingGmbH, 100 5,869 2,147 Vienna

2CentrotradeChemicalsAG, 100 6,693 (1,478) Zug–inliquidation

3SyrenaImmobilienHoldingAG, 21 29,315 (298) Spittal/Drau

VI. Other assetsBalancesheetitemA11“Otherassets“amountingto€102,175thousand(31/12/2015:€73,184thousand)primarilyreferstopurchasecontractsfromtradinginderivativefinancialinstrumentsreportedatfairvalueasat31/12/2016:

31/12/2016 in€thousand Unlisted Listed Total

Positive fair values from derivative transactions

Foreigncurrencytransaction 554 0 554

Equity/index-basedtransaction 58,643 36,365 95,009

Commodity/preciousmetaltransactions 1,651 1,467 3,118

60,849 37,832 98,681

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31/12/20151

in€thousand Unlisted Listed Total

Positive fair values from derivative transactions

Foreigncurrencytransaction 106 0 106

Equity/index--basedtransaction 41,092 29,098 70,190

Commodity/preciousmetaltransactions 182 260 442

41,379 29,358 70,737


1Adjustmentofpreviousyeardataaccordingtothetableasat31/12/2016

Inaddition,loansandadvancestoforeigntaxauthoritiesintheamountof€1,067thousand(31/12/2015:€1,585thousand),andsettlementofGroupchargesintheamountof€1,730thousand(31/12/2015:€305thousand)areincluded.

VII. Deferred tax assetsPursuanttotheapplicationoftheRÄG,deferredtaxassetasat31/12/2016amountedto€170thousand.

Balance sheet items Deferred tax assets Deferred tax liabilities

Shareandothervariable-yieldsecurities 0 (141)

Sharesinaffiliatedcompanies 8

Prepaymentsandotherdeferrals 14

Provisionsforseverancepayments 1,422

Otherprovisions 61

Total 1,505 (141)

Balance 1,364

Deferredtaxassetsasat31/12/2016(12.5%) 170

Deferredtaxassetsarerecognizedatataxrateof12.5percentas,basedontheprevailinggroupassessmentagreement,thispercentagewillprovideforataxreliefinthefuture.AnytaxreliefbeyondthisratecannotbeassessedbytheGroupmemberasnoinfluencecanbeexertedontheamountofuntaxableportionofthetaxableprofitonGrouplevel.

VIII. Liabilities

VIII.1. Classification of liabilities according to their term to maturity


1Adjustmentofpreviousyeardatasubjecttoachangeinreporting(fordetailsseepage30)


Liabilitiestocreditinstitutions 7,442 6,725 0 0 0 14,167

Liabilitiestocustomers 120,550 0 22,955 17,653 0 161,158

Securitizedliabilities 0 78,341 211,957 1,307,803 365,962 1,964,063

Otherliabilities 281,751 53,570 19,084 78,706 32,764 465,858

409,743 138,637 253,997 1,404,162 398,709 2,605,246


Liabilitiestocreditinstitutions 13,213 1,875 0 0 0 15,089

Liabilitiestocustomers 179,935 0 21,778 0 0 201,714

Securitizedliabilities1 0 65,173 231,112 1,009,929 320,377 1,626,577

Otherliabilities1 320,192 57,009 32,283 113,793 33,363 556,639

513,340 124,057 285,172 1,123,708 353,740 2,400,019

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VIII.2. Liabilities to affiliated companies and equity participations

31/12/2016 Liabilities to affiliated Liabilities to equity in€thousand companies (direct/indirect >50 %) participations in which Raiffeisen Centrobank has a direct shareholding (<50%)

Liabilitiestocreditinstitutions 4,122 0

Liabilitiestocustomers 8,524 0

Otherliabilities 17,792 0

30,438 0


31/12/2015 Liabilities to affiliated Liabilities to equity in€thousand companies (direct/indirect >50 %) participations in which Raiffeisen Centrobank has a direct shareholding (< 50%)

Liabilitiestocreditinstitutions 1,489 0

Liabilitiestocustomers 7,482 500

Otherliabilities 18,278 0

27,248 500

VIII.3. Securitized liabilitiesThebalancesheetitemP3“Securitizedliabilities”includesissuedcertificatesandwarrants(mainlyownissues)totaling€1,964,063thousand(31/12/2015:€1,626,577thousand),heldfortradingandofwhich€290,299thousand(31/12/2015:€296,285thousand)willfalldueinthecourseof2016.Followingachangeinreportingasat31/12/2016,theitemincludescapitalguaranteedcertificatesintheamountof€727,889thousand(31/12/2015:€694,859thousand),reverseconvertiblebondstotaling€177,403thousand(31/12/2015:€96,374thousand)andcertifi-cateswithoptioncharactersummingupto€1,053,009thousand(31/12/2015:€832,130thousand)aswellaswarrantscomingupto€5,762thousand(31/12/2015:€3,214thousand).

VIII.4. Other liabilitiesThebalancesheetitemP4“Otherliabilities“amountingto€465,858thousand(31/12/2015:€556,639thousand)primarilyreferstoliabilitiesrepor-tedatfairvalueaswellaspremiumsreceivedfromtradinginsecuritiesandderivativefinancialinstruments.


“Otherliabilities“asat31/12/2016includealiabilityrelatingtoaone-offcontributiontotheAustrianbanklevyintheamountof€4,651thousandaswellasliabilitiesrelatingtopayrollaccountingsummingupto€560thousand(31/12/2015:€574thousand).

in€thousand 31/12/2016 31/12/2015

Negative fair values of derivative financial instruments 178,379 234,5571

fromOTCoptions 137,783 194,883

fromtradinginEUREXoptions 35,256 25,323

fromtradinginotheroptions 5,340 14,352

Short-selling of trading assets 281,737 320,171

460,116 554,728

IX. Share capital and reservesTheshare capitalremainedunchangedandiscomprisedof655,000no-par-valueshares.

ThesharesinRaiffeisenCentrobankAGareownedbythefollowingcompanies:

% Shares

RBIIBBeteiligungsGmbH,Wien 100.00 654,999

LexxusServicesHoldingGmbH,Wien 0.00 1

100.00 655,000

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Volume of the securities trading book Asatthebalancesheetdatethesecuritiestradingbookwasmadeupasfollows:

in€thousand 31/12/2016 31/12/2015

Securities 2,636,145 3,055,796

Otherfinancialinstruments 5,568,351 4,227,249

Total 8,204,497 7,283,045

in€thousand 31/12/2016 31/12/2015

Provisionsforseverancepayments 4,037 3,884

Otherprovisions 8,892 9,664

Provisionsforbonuspayments 1,275 1,697

Provisionsforlitigationriskss 4,078 4,213

Provisionsforoverduevacation 1,093 1,111

Legal,auditingandconsultingexpenses 351 420

ProvisionsfortheSecuritiesTrading&SalesDepartment 357 404

Provisionsforoutstandinginvoices 888 478

ProvisionsforchargedManagementBoardexpenses 771 1,213

Provisionsformanagementfees 2 45

Sundry 76 83

Total 12,929 13,548

XII. Supplementary data

Assets and liabilities in foreign currenciesThefollowingamountsarecontainedinthebalancesheetinforeigncurrencies:

in€thousand 31/12/2016 31/12/2015

Assets 844,619 753,647

Liabilities 748,559 638,425

XI. Obligations arising from the use of tangible fixed assets not recognized in the balance sheetTherentalandleasingexpensesduringtheperiodunderreviewamountedto€422thousand(2015:€516thousand),thereof€133thousand(2015:€185thousand)toaffiliatedcompanies.Forthe2017financialyear,rentalandleasingexpensesareexpectedtototal€412thousandand€1,900thousandforthe2017-2021financialyears,ofwhichtherentalandleasingexpensestoaffiliatedcompanieswilltotal€100thousandand€284thousand,respectively.

IX. ProvisionsProvisionsbreakdownasfollows:

Capital reservesamountedto€20,651thousandasat31/12/2016andremainedunchangedtothepreviousyear(31/12/2015:€20,651thousand).

Retained earningsincludelegalreserveintheamountof€1,031thousand(31/12/2015:€1,031thousand)andotherreservessummingupto€23,821thousand(31/12/2015:€21,432thousand).

Liability reservepursuantto§57para5AustrianBankingActremainedunchangedtothepreviousyear,totaling€13,539thousand.

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Data on transactions with derivative financial instrumentsStockmarkettradinginderivativefinancialinstrumentsfocusesonequitiesandequity/index-basedfuturesandoptions.ThefinancialinstrumentsissuedbyRaiffeisenCentrobankAGcanbeclassifiedaswarrants,certificatesmainlyonequitiesandequityindices(turbo,discount,bonusandopen-endcertifica-tes),andguaranteebondswithapaymentstructurerelatedtoequityorequityindices.

EquitiesheldbyRaiffeisenCentrobankAGrepresent,togetherwithpurchasedoptions,tradablemoneymarketdepositsandzerobondsdepictedinotherbalancesheetitems,thehedgepositionstoissuedcertificatesandwarrantsandarepartoftheBank’smarketmakeractivities.

Unsettled forward and option contractsAtthebalancesheetdate,thefollowingforwardandoptionstransactions(bankingandtradingbook)hadnotyetbeensettled:

in€thousand 31/12/2016 31/12/2015

Purchase contracts (notional amount)

Optionsoninterest-rateinstruments 200 200

Forwardexchangecontracts/goldcontracts 62,476 63,749

Futuresinassetvalues 1,305 1,990

Indexfuturecontracts 384,703 407,119

Optionsonassetvaluesandequity/index-basedoptions 869,045 817,047

Preciousmetalsandcommodityfuturecontracts 87,833 55,524

Preciousmetalsandcommodityoptions 33,063 26,492

Otherforwardtransactions,futurecontracts,optionsandsimilartransactions 0 19,000

in€thousand 31/12/2016 31/12/20151

Sales contracts (notional amount)

Interestratefutures 0 59,100

Forwardexchangecontracts/goldcontracts 22,757 46,133

Futuresinassetvalues 394 573

Indexfuturecontracts 25,173 26,679

Optionsonassetvaluesandequity/index-basedoptions 1,805,414 1,638,778

Preciousmetalsandcommodityoptions 23,476 82,411

Securities trading bookAsecuritiestradingbookismaintained.Onthebalancesheetdatethetradingvolumeatfairvalues(positiveandnegativefairvaluesoffset)estimatedpursuanttointernalriskcalculationamountsto:

in€thousand 31/12/2016 31/12/2015

Shares/mutualfunds (130,429) (143,442)

Listedoptions (1,828) 10,172

Futures 472,288 366,154

Warrants/certificates (1,061,052) (821,096)

OTCoptions (77,389) (161,775)

Purchasedbonds 1,900,806 1,742,125

Issuedguaranteebonds (913,514) (793,597)

Total 188,883 198,541


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Volumesofderivativefinancialtransactionsfor2016areasfollows:

in€thousandNotional amount Positive fair value Negative fair value 31/12/2016 Banking book Trading book Banking book Trading book Banking book Trading book

1. Interest rate contracts 200 0 0 0 0 0

1.1.OTC products 200 0 0 0 0 0

Optionsoninterest-rateinstruments 200 0 0 0 0 0

1.2. Products traded on stock exchange 0 0 0 0 0 0

Interestratefutures 0 0 0 0 0 0

2. Foreign exchange contracts 44,099 41,134 3 551 90 1,247

2.1. OTC products 44,099 20,044 3 551 90 0

Forwardforeignexchangecontracts 44,099 0 3 0 90 0

Currencyoptions 0 94 0 59 0 0

Goldcontracts 0 19,950 0 492 0 0

2.2. Products traded on stock exchange 0 21,090 0 0 0 1,247

Forwardforeignexchangecontracts 0 21,090 0 0 0 1,247

Currencyfutures/goldcontracts 0 0 0 0 0 0

3. Equity contracts 0 3,086,034 0 95,008 0 169,009

3.1. OTC products 0 2,375,889 0 58,643 0 131,085

Equity/index-basedoptions—purchased 0 768,524 0 49,701 0 0

Equity/index-basedoptions—sold 0 1,607,365 0 8,942 0 131,085

Otherequity-basedcontracts 0 0 0 0 0 0

3.2. Products traded on stock exchange 0 710,145 0 36,365 0 37,925

Shareandotherequity/index-basedoptionsandfuturecontracts 0 710,145 0 36,365 0 37,925

4. Commodities/precious metals 0 144,372 0 3,119 0 8,032

4.1. OTC products 0 53,855 0 1,651 0 6,608

Commodityandpreciousmetaloptions 0 53,855 0 1,651 0 6,608


Othercommodityandpreciousmetalfuturecontracts 0 90,516 1,467 0 1,424

Total OTC products 44,299 2,449,788 3 60,846 90 137,693

Total stock exchange traded products 0 821,752 0 37,832 0 40,596

Total 44,299 3,271,540 3 98,678 90 178,289

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Volumesofderivativefinancialtransactionsfor2015areasfollows:

in€thousandNotional amount Positive fair value Negative fair value 31/12/20151 Banking book Trading book Banking book Trading book Banking book Trading book

1. Interest rate contracts 200 59,100 0 0 0 57

1.1.OTC products 200 0 0 0 0 0

Optionsoninterest-rateinstruments 200 0 0 0 0 0

1.2. Products traded on stock exchange 0 59,100 0 0 0 57

Interestratefutures 0 59,100 0 0 0 57

2. Foreign exchange contracts 92,237 17,645 0 106 30 146

2.1. OTC products 92,237 3,107 0 106 30 0

Forwardforeignexchangecontracts 92,237 0 0 0 30 0

Currencyoptions 0 123 0 59 0 0

Goldcontracts 0 2,984 0 47 0 0

2.2. Products traded on stock exchange 0 14,539 0 0 0 146

Forwardforeignexchangecontracts 0 14,485 0 0 0 146

Currencyfutures/goldcontracts 0 54 0 0 0 0

3. Equity contracts 0 2,911,186 0 70,190 0 195,592

3.1. OTC products 0 2,084,858 0 41,092 0 160,380

Equity/index-basedoptions—purchased 0 708,076 0 41,019 0 0

Equity/index-basedoptions—sold 0 1,357,782 0 0 0 160,380

Otherequity-basedcontracts 0 19,000 0 73 0 0


Shareandotherequity/index-basedoptionsandfuturecontracts 0 826,328 0 29,098 0 35,212

4. Commodities/precious metals 0 164,427 0 442 0 38,732

4.1. OTC products 0 108,901 0 182 0 34,473

Commodityandpreciousmetaloptions 0 108,901 0 182 0 34,473

4.2. Products traded on stock exchange 0 55,525 0 260 0 4,259

Othercommodityandpreciousmetalfuturecontracts 0 55,525 260 0 4,259

Total OTC products 92,437 2,196,866 0 41,379 30 194,853

Total stock exchange traded products 0 955,492 0 29,358 0 39,674

Total 92,437 3,152,358 0 70,737 30 234,5271Adjustmentofpreviousyeardatasubjecttoachangeinreporting

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C.NotestotheIncomeStatement

I. Interest and similar income

Netinterestresultintheamountof€18,584thousandwasnegativebothin2016and2015(€12,556thousand)andiscomprisedofinterestincomesummingupto€5,315thousand(2015:€10,779thousand)andinterestexpensestotaling€23,899thousand(2015:€23,335thousand).

Comparedtothepreviousyear,interestincomepostedadeclinefollowinglowerincomefromfixed-interestsecuritiesintheamountof€1,168thousandfurthertotheirsaleorredemption.Interestandsimilarincomefromstructuredproductsrecordedavolume-relateddecreasefrom€5,152thousandto€1,668thousand.

Interestexpensesrosemildlyby€564thousandto€23,899thousandandincludemainlycouponpaymentsforstructuredproducts.Thisiscontrastedwithapositivevaluationresultfromtradablemoneymarketdepositsandderivativefinancialinstrumentsinthetradingprofit.Theliquidityderivedfromissu-esisprimarilyinvestedintotradablemoneymarketdepositswithoutcurrentcouponswhichareincludedinthetradingbook.Theresultfromtradablemo-neymarketdepositsincludedinthetradingbookisshownin“Netprofitonfinancialtradingactivities”.

Duetothepersistentlylowinterestrateenvironment,item“Netinterestresult”includedexpensesresultingfromnegativeinterestforloansandadvancesintheamountof€750thousand(2015:€104thousand).Contrary,theitemincludesincomeintheamountof€78thousand(2015:€16thousand)stemmingfromnegativeinterestforliabilities.

in€thousand 2016 2015

fromliabilitiestocreditinstitutions 1,471 1,347

fromliabilitiestocustomers 1,008 1,975

fromfixed-interestsecurities 1,168 2,305

fromstructuredproducts 1,668 5,152

5,315 10,779

II. Interest and similar expenses


forliabilitiestocreditinstitutions (2,141) (1,683)

forliabilitiestocustomers (228) (158)

forsecuritizedliabilities (21,530) (21,494)

(23,899) (23,335)

III. Fee and commission income


fromsecuritiesbusiness 9,281 10,358

fromECMtransactions 150 0

fromcreditbusiness 0 57

frompaymenttransactions 233 101

fromotherbankingservices 1 0

9,664 10,516

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V. Net profit on financial trading activitiesThenetprofitonfinancialtradingactivitiesaccountsforthemajorshareoftheoperatingincomeandwentupfrom€51,739thousandin2015to€ 55,616thousandin2016.Thisfavorabledevelopmentresultsfromthevaluationanddisposalofderivativesandmoneymarketdepositsheldforhedgingpurposessummingupto€88,708thousand(2015:€67,429thousand)aswellasfromthevaluationofspotandfuturespositionsintheamountof€5,603thousand(2015:€2,840thousand).Thisiscontrastedwithanegativeresultfromthevaluationanddisposalofcertificatesandsha-resintheamountof€minus38,695thousand(2015:€minus18,529thousand).

VI. Other operating incomeTheitemincludesmainlyincomefromthereleaseofprovisionsintheamountof€657thousand(2015:€794thousand)andcomprises€319thousandrelatedtothediscountoflong-termprovisionssubjecttotheRÄG.Inaddition,theitemincludesincomefromthechargeofinternalexpensestoRaiffeisenBankInternationalAGsummingupto€833thousandinthe2016financialyear(2015:€730thousand).Inthe2015financialyear,theitemincludedincomederivedfromthesaleofbusinesspremisescomingupto€1,624thousand.

VII. Other administrative expenses


Officespaceexpenses(maintenance,operation,administration,insurance) (1,202) (1,095)

Officesupplies,printedmatter,literature (252) (262)

ITcosts (2,336) (1,989)

Communicationcosts (928) (960)

Informationservices (3,631) (2,863)

Carexpensesandtravellingexpenses (586) (587)

Advertisingandpromotionalexpenses (1,003) (816)

Legal,advisoryandconsultancyservices (1,345) (1,216)

Contributionstoassociations (771) (889)

Resolutionfund (687) (896)

Sundry (1,835) (2,256)

(14,576) (13,828)

VIII. Other operating expenses“Otheroperatingexpenses“intheamountof€455thousand(2015:€504thousand)primarilyrelatestoexpenseschargedintheamountof€437thousand(2015:€467thousand).

IX. Net valuations and net proceeds Inthe2016financialyear,netvaluationsandnetproceedsamountedto€1,074thousand(2015:€minus753thousand).ThisprimarilycomprisestheprofitfromtheliquidationofCentrotradeChemicalsAGtotaling€1,842thousand(2015:incomederivedfromtheappreciationofCentrotradeHoldingGmbHby€490).Contrary,expensesfromnetvaluationsanddisposalofsecuritiesheldasothercurrentassetsin2016and2015areincluded.

IV. Fee and commission expenses


fromsecuritiesbusiness (11,854) (13,028)

fromECMtransactions (27) 0

frompaymenttransactions (287) (192)

fromotherbankingservices (2) (19)

(12,170) (13,239)

Thenegativefeeandcommissionresultsummingupto€2,506thousand(2015:€2,723thousand)iscomprisedoffeeandcommissionincometotaling€9,664thousand(2015:€10,516thousand)andfeeandcommissionexpensesintheamountof€12,170thousand(2015:€13,239thousand).

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D.OtherDisclosuresContingent liabilitiesInaccordancewithArticle93AustrianBankingAct,theBankislegallyobligedtoprovideforproportionatedepositinsuranceaspartofitsmembershipinaprofessionalassociation.RaiffeisenCentrobankAGisamemberoftheFachverbandderRaiffeisenbanken(professionalassociationoftheRaiffeisenBankingGroup).ThisalsoentailsanaffiliationwithÖsterreichischeRaiffeisenEinlagensicherungreg,GenmbH.,Vienna(thedepositinsurancearmoftheRaiffeisenBankingGroup,registeredasalimitedliabilitycompany).Inthefinancialyearthetheoreticalclaimonthisinsuranceislimitedtoarateof1.5percentoftheassessmentbasisinaccordancewithArticle22para2AustrianBankingActatthebalancesheetdate,plustheweighteditemsofthese-curitiestradingbook,alsoinaccordancewithpart3CRR.Thesecontingentliabilitiesarereportedatamarketvalueof€0.07.

Other contractual bank guarantee obligationsThefollowingassetswerepledgedassecurityforobligationsasat31/12/2016:

ItemA3Loansandadvancestocreditinstitutions

€ 462,533thousand (31/12/2015:€171,037thousand) Collateraldepositedwithbanksforthesecuritiesandoptionsbusinessandsecuritieslendings

ItemA4Loansandadvancestocustomers

€ 8,309thousand (31/12/2015:€40,763thousand) Collateraldepositedwithstockexchangesandotherfinancialinstitutionsforthesecuritiesandoptionbusiness

ItemA5Bonds,notesandotherfixed-interestsecurities

€ 9,829thousand (31/12/2016:€62,101thousand) Collateraldepositedwithbanksforthesecuritiesandoptionsbusiness

Letters of comfortAsatthebalancesheetdateRaiffeisenCentrobankAGdidnotissueanylettersofcomfort.

Commitments arising from fiduciary businessCommitmentsarisingfromfiduciarybusinesstransactionsnotincludedinthebalancesheetrefertooneequityparticipationheldintrustintheamountof€7,091thousandinbothyears2016and2015.

XI. Deferred taxesAsat31/12/2016deferredtaxassetscameto€170thousandpursuanttotheapplicationoftheRÄG.Inthe2015financialyear,thebankdidnotexer-ciseitsrighttocapitalizedeferredtaxessummingupto€395thousand.

XII. Expenses for auditing the financial statementsExpensesforauditingthefinancialstatementsarecontainedinlegal,advisoryandconsultancyservices.Thereof€110thousandareattributabletotheauditor(2015:€180thousand)and€20thousandtootherconsultancyservices(2015:€20thousand).

X. Income taxes and other taxesIncometaxesareasfollows:


Taxcredit/Grouptaxation 809 (110)

Taxesforformerperiods(settlementofGroupcharge) 54 (113)

Notrecognizedasforeignwithholdingtax (743) (1,117)

Current income taxes 120 (1,340)

Deferredincometaxes 170 0

290 (1,340)

Thechangein“Incometaxes”isinparticularattributabletoanegativetaxresulttranslatingintoataxcreditformthegroupparentsummingupto€809thousand(2015:€minus110thousand).Inaddition,theitemincludesincomeintheamountof€170derivedfromcapitalizationofdeferredtaxespursu-anttotheRÄG.Incontrast,theitemincludesexpensesrelatingtoforeignwithholdingtaxtotaling€minus743thousand(2015:€minus1,117thousand).

Asat31/12/2016,“Othertaxes”amountedto€6,744thousand(2015:€4,033thousand).Theitemincludesinparticulartheone-offcontributiontotheAustrianbanklevycomingupto€4,651thousandthatwaseffectedinDecember2016.Moreover,theitemreflectsachangeinthereportingofnon-deductibleinputtaxthathadbeenincludedinthe2015financialyear.

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Own funds Theownfundspursuanttopart2CRRarecomprisedofthefollowing:


Risk-weighted assets according to standard approach 161,501 156,968

Centralgovernmentsandcentralbanks 453 495

Publicbodies 0 0

Institutions 81,458 68,391

Corporates 52,369 60,157

Equityparticipations 13,613 13,612

Positionswithparticularlyhighrisk 0 0

Otherpositions 13,608 14,312

CVA risk 11,913 13,766

Total 173,414 170,734


Capitalpaid-in 47,599 47,599

Earnedcapital 59,042 56,653

Core capital (tier 1 capital) before deductions 106,641 104,252

Intangiblefixedassets (126) (134)

Prudentvaluation (1,181) (2,388)

Core capital (tier 1 capital) after deductions 105,334 101,729

Supplementaryownfunds 0 0

Core capital 105,334 101,729

Supplementary capital 0 0

Supplementary own funds (after deductions) 0 0

Total own funds 105,334 101,729

Total risk-weighted assets 437,035 532,665

Corecapitalratio,creditrisk 60.7% 59.6%

Corecapitalratio,total 24.1% 19.1%

Ownfundsratio 24.1% 19.1%

Ownfundsrequirementspursuanttopara92Regulation(EU)No575/2013(totalrisk-weightedassets)breakdownasfollows:

Risk-weightedassetsforthecreditriskaccordingtoassetclassesbreakdownasfollows:


Risk-weightedassets(creditrisk) 173,414 170,734

Standardapproach 161,501 156,968

CVA(creditvalueadjustment)risk 11,913 13,766

Risk-weightedassets(positionriskinbonds,equities,commoditiesandforeigncurrencies) 149,035 230,247

Risk-weightedassets(operationalrisk) 1 0

Risk-weightedassets(settlementanddeliveryrisks) 114,585 131,683

Total risk-weighted assets 437,035 532,665

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Number of staff

31/12/2016 Annual 31/12/2015 Annual average average

Salariedemployees 175 175 177 202

thereofpart-time 32 28 25 26

Wageemployees 0 0 0 0

thereofpart-time 0 0 0 0

Total 175 175 177 202

Advances and loans to members of the Management Board and Supervisory BoardAtthebalancesheetdatenoadvancesandloanshadbeengrantedtomembersoftheManagementBoard.Noadvances,loansorguaranteeshadbeengrantedtomembersoftheSupervisoryBoard.

Expenses for severance payments and retirement benefitsExpensesforseverancepaymentsandretirementbenefits(includingcontributionstopensionfundsandstaffretirementbenefitplans,aswellasprovisionsforseverancepayments)fortheManagementBoard(includedin"Otheradministrativeexpenses")andthestaffamountedto€1,592thousand(2015:€30thousand).Paymentstoemployeepensionfundstotaled€168thousand(2015:€167thousand).

Nobreak-downpursuantto§239para1no3accordingto§242para4isprovided.

In2015,expensesforseverancepaymentssawapositiveeffectfromthereleaseofarestructuringprovisionintheamountof€360thousand.

Remuneration for members of the Management Board and Supervisory BoardNobreak-downpursuantto§239para1no4accordingto§242para4isprovided.

In2016,attendingfeesintheamountof€75thousandwerepaidtomembersoftheSupervisoryBoard(2015:€75thousand).

RemunerationsandexpensesonseverancepaymentsandretirementbenefitsformembersoftheManagementBoardwerebornebyRaiffeisenBankIn-ternationalAG(anaffiliatedcompany)andwerechargedtoRaiffeisenCentrobankAG(includedin“Otheradministrativeexpenses”).

Group relationsThecompanyisanaffiliatedcompanyofRaiffeisenZentralbankÖsterreichAktiengesellschaft,Vienna,andisintegratedinitsconsolidatedfinancialstate-ments,aswellasintheconsolidatedfinancialstatementsofRaiffeisenBankInternationalAG,Viennawhichprovidestheconsolidatedfinancialstatementsfortheleastnumberofcompaniesrequired.TheconsolidatedfinancialstatementsareavailableattheCommercialCourtinViennaandtherespectiveparentcompany.

RaiffeisenZentralbankÖsterreichAktiengesellschaft,Vienna,(transferringcompany)wasmergedwithRaiffeisenBankInternationalAG,Vienna,(acqui-ringcompany)on18March2017.AsaresultRaiffeisenBankInternationalAG,ViennaistheultimateholdingcompanyoftheGroup.

SinceDecember17,2008,thecompanyhasbeenamemberofthecorporategroupRaiffeisenZentralbankÖsterreichAktiengesellschaft(nowRaiffei-senBankInternationalAG)pursuanttoArticle9AustrianCorporationTaxAct.TheapplicationsubmittedbythecompanytobecomeagroupmemberofthecorporategroupRZBasofthebusinessyear2008pursuanttoArticle9AustrianCorporationTaxActwasnotifiedtothefinancialauthoritieson19December2008andwasapprovedbynoticeon22April2009.

Thetaxableresultsofthemembersofthegroupareattributedtotheparentcompany.Anytaxadjustmentsbetweentheparentcompanyandtheindividu-almembersofthecorporategroupareregulatedintheformofataxallocationagreement.

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Members of the Management Board, the Supervisory Board and State Commissioners

Management Board WilhelmCeleda ChiefExecutiveOfficer ValerieBrunner MemberoftheManagementBoard Supervisory Board KlemensBreuer Chairman MemberoftheManagementBoard, RaiffeisenBankInternationalAG,Vienna Asof18March2017DeputyChairmanoftheManagementBoard, RaiffeisenBankInternationalAG,Vienna MichaelHöllerer 1stDeputyChairman MemberoftheManagementBoard, RaiffeisenZentralbankÖsterreichAG,Vienna Asof18March2017Plenipotentiary, RaiffeisenBankInternationalAG,Vienna HannesMösenbacher Member DivisionHead RaiffeisenBankInternationalAG,Vienna Asof18March2017MemberoftheManagementBoard, RaiffeisenBankInternationalAG,Vienna

WernerKaltenbrunner Member DivisionHead, RaiffeisenBankInternationalAG,Vienna Asof18March2017HeadofInternationalEquityInvestments RaiffeisenBankInternationalAG,Vienna

State Commissioners AlfredHacker Karl-HeinzTscheppe




Distribution of the Profit 2016

TheManagementBoardofRaiffeisenCentrobankAGrecommendstotheSupervisoryBoardthatnodividendpershareshallbedistributedfromthenetprofitasat31December2016.TheManagementBoardfurtherrecommendstoallocatetheamountof€3,177,901.21tootherreserves.



ValerieBrunnerMemberoftheManagement

Significant Events after the Balance Sheet Date

Therewerenosignificanteventsafterthebalancesheetdate.

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Auditor’sReportReportontheFinancialStatementsAuditOpinion

Wehaveauditedthefinancialstatementsof

RaiffeisenCentrobankAG,Vienna,Austria,

thatcomprisethestatementoffinancialpositionasof31December2016,theincomestatementfortheyearthenended,andthenotes.

Inouropinion,thefinancialstatementspresentfairly,inallmaterialre-spects,thefinancialpositionoftheCompanyasof31December2016,anditsfinancialperformancefortheyearthenendedinaccordancewithAustrianGenerallyAcceptedAccountingPrinciples,andotherlegalrequi-rements(AustrianBankingAct).

BasisforOurOpinionWeconductedourauditinaccordancewithAustrianStandardsonAu-diting.ThesestandardsrequiretheaudittobeconductedinaccordancewithInternationalStandardsonAuditing(ISA).Ourresponsibilitiespursu-anttotheserulesandstandardsaredescribedinthe“Auditors’Responsi-bility”sectionofourreport.WeareindependentoftheCompanywithinthemeaningofAustriancommerciallawandprofessionalregulations,andhavefulfilledourotherresponsibilitiesunderthoserelevantethicalrequirements.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.

KeyAuditMattersKeyauditmattersarethosemattersthat,inourprofessionaljudgment,wereofmostsignificanceinourauditofthefinancialstatements.Keyauditmattersareselectedfromthematterscommunicatedwiththeauditcommit-tee,butarenotintendedtorepresentallmattersthatwerediscussedwiththem.Ourauditproceduresrelatingtothesemattersweredesignedinthecontextofourauditofthefinancialstatementsasawhole.Ouropiniononthefinancialstatementsisnotmodifiedwithrespecttoanyofthekeyauditmattersdescribedbelow,andwedonotexpressanopinionontheseindividualmatters.

Issuanceofcertificatesandwarrantsanddyna-michedging

The Financial Statement RiskTheissuanceofcertificatesandwarrantswithatotalvolumeofroughlyEUR2billion,i.e.roughly72percentofthebalancesheettotalaswellascontinualadjustmentsofhedgingpositions(dynamichedging)connectedtothisactivityrepresentthemajorbusinessactivitiesofRaiffeisenCentro-bankAG.

TheManagementBoarddescribestheprocessofvaluatingassets-relatedandequityandliabilities-relatedproductsunder“AccountingPolicies”withinthenotes.

RCBcalculatespricesforissuedcertificates,warrantsandstructuredpro-ductsbasedoninternalvaluationmodels.Marketpricerisksandinterestraterisksresultingfromtheissueofcertificatesarehedgeddynamically.Structuredproductsissuedontheequityandliabilitiessidearereplicatedbycounter-positionsontheassetsside.Hedingpositionsarecontinuallyadjustedtomarketconditions.Financialproductswithouttradablepricesarereportedinthebalancesheetatfairvaluewhichisdeterminedbyvaluationmodelsor,inindividualcases,byexternal(indicative)quotesofbrokersorothercreditinstitutions.Followingtheprincipleofprudentvalu-ation,valueadjustmentsaremadeinthedeterminationofthefairvalueofparticularfinancialproducts.

Therisktothefinancialstatementsresultsfromdiscretionaryassumptionsandparametersappliedintheinternalmodelsandthuspotentialmisjudgmentforthevaluationoffinancialinstrumentsreportedatfairvaluewithouttradablepricesandobservablemarketdata.Thesameappliestothedeterminationofthefairvaluebasedonexternal(indicative)pricingmethodsandvalueadjustments.

Our ResponseWetestedtheentireprocessesofevaluation(inparticularparameters,vo-latilityandbidprices),reconciliationofdespositoriesandadjustmentofge-neralledgerandsub-ledger.Inaddition,weassessedtheimplementationofriskmanagementinthetradingbook,inparticularlimitreviews,marketconformitycheckandproductintroduction.Wetestedsignificantkeycon-trolsinrespecttotheirdesign,implementationandoperatingeffectiveness.OurinternalvaluationspecialistsassessedtheappropriatenessofthefairvaluesasdeterminedbytheBankaswellasofthevaluationmodels,va-lueadjustmentsandtheunderlyingparametersapplied.Wecomparedtheparameterswithmarketdataonasamplebasisandverifiedwhethertheyrepresentedadequateinputfactors.Further,weanalysedtheresultsoftheBank’sbacktestingofvalueadjustmentassumptionsandcriticallyassessedifthevalueadjustmentswereappropriatetodeterminethefairvalue.Inaddition,weassessedwhetherexternal(indicative)quoteswereadequatetobeusedasfairvaluesbasedontheinquiriesoftheresponsibleemplo-yeesandtheinspectionofdocumentsprovidedtous.Basedonasample,wetestedwhethertheunderlyingassumptionsforthecalculationwereconclusiveandrecalculatedthefairvalue.

Further,weassessedwhetherthedisclosuresinthenotesregardingthevaluationmethodswereappropriateandcomplete.

Managemet'sResponsibilityandResponsibilityoftheAuditCommitteefortheFinancialStatementsTheCompany’smanagementisresponsibleforthepreparationandfairpresentationofthesefinancialstatementsinaccordancewithAustrianGe-nerallyAcceptedAccountingPrinciplesandotherlegalrequirements(Aus-trianBankingAct)andforsuchinternalcontrolasmanagementdeterminesisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

ManagementisalsoresponsibleforassessingtheCompany’sabilitytocontinueasagoingconcern,and,whereappropriate,todisclosemattersthatarerelevanttotheCompany’sabilitytocontinueasagoingconcernandtoapplythegoingconcernassumptioninitsfinancialreporting,exceptincircumstancesinwhichliquidationoftheCompanyorclosureofoperationsisplannedorcasesinwhichsuchmeasuresappearunavo-idable.

Theauditcommitteeisresponsiblefortheoversightofthefinancialrepor-tingprocessoftheCompany.

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Auditors’ResponsibilityOuraimistoobtainreasonableassuranceaboutwhetherthefinancialstatementstakenasawhole,arefreeofmaterial–intentionaloruninten-tional–misstatementsandtoissueanauditreportcontainingourauditopinion.Reasonableassurancerepresentsahighdegreeofassurance,butprovidesnoguaranteethatanauditconductedinaccordancewithAustrianStandardsonAuditing,whichrequiretheaudittobeperformedinaccordancewithISA,willdetectamaterialmisstatement,ifany.Mis-statementsmayresultfromfraudorerrorandareconsideredmaterialiftheycould,individuallyorasawhole,beexpectedtoinfluencetheeco-nomicdecisionsofusersbasedonthefinancialstatements.

AspartofanauditinaccordancewithAustrianStandardsonAuditing,whichrequiretheaudittobeperformedinaccordancewithISA,weex-erciseprofessionaljudgmentandretainprofessionalskepticismthroughouttheaudit.

Moreover:

— Weidentifyandassesstherisksofmaterialmisstatements– intentionalorunintentional–inthefinancialstatements,weplanand performprocedurestoaddresssuchrisksandobtainsufficientand appropriateauditevidencetoserveasabasisforourauditopinion. Theriskthatmaterialmisstatementsduetofraudremainundetected ishigherthanthatofmaterialmisstatementsduetoerror,sincefraud mayincludecollusion,forgery,intentionalomissions,misleading representationoroverrideofinternalcontrol.

— Weconsiderinternalcontrolrelevanttotheauditinordertodesign auditproceduresthatareappropriateinthecircumstances,butnot forthepurposeofexpressinganopinionontheeffectivenessofthe entity'sinternalcontrol.

— Weevaluatetheappropriatenessofaccountingpoliciesusedand thereasonablenessofaccountingestimatesaswellasrelated disclosuresmadebymanagement.

— Weconcludeontheappropriatenessofmanagement’suseofthe goingconcernassumptionand,basedontheauditevidence obtained,whetheramaterialuncertaintyexistsrelatedtoeventsor conditionsthatmaycastsignificantdoubtontheentity’sabilityto continueasagoingconcern.Incaseweconcludethatthereis amaterialuncertaintyabouttheentity’sabilitytocontinueasagoing concern,wearerequiredtodrawattentiontotherespectivenotein thefinancialstatementsinourauditreportor,incasesuchdisclosures arenotappropriate,tomodifyourauditopinion.Weconclude basedontheauditevidenceobtaineduntilthedateofouraudit report.Futureeventsorconditionshowevermayresultinthe Companydepartingfromthegoingconcernassumption.

— Weassesstheoverallpresentation,structureandcontentofthe financialstatementsincludingthenotesaswellaswhetherthe financialstatementsgiveatrueandfairviewoftheunderlying businesstransactionsandevents.

— Wecommunicatetotheauditcommitteethescopeandtiming ofourauditaswellassignificantfindingsincludingsignificant deficienciesininternalcontrolthatweidentifyinthecourseof ouraudit.

— Wereporttotheauditcommitteethatwehavecompliedwiththe relevantprofessionalrequirementsinrespectofourindependence andthatwewillreportanyrelationshipsandothereventsthatcould reasonablyaffectourindependenceand,whereappropriate,related measurestakentoensureourindependence.

— Fromthematterscommunicatedwiththeauditcommitteewe determinethosemattersthatrequiredsignificantauditorattention inperformingtheauditandwhicharethereforekeyauditmatters. Wedescribethesekeyauditmattersinourauditreportexceptinthe circumstanceswherelawsorotherlegalregulationsforbid publicationofsuchmatterorinveryrarecases,wedeterminethat amattershouldnotbeincludedinourauditreportbecausethe negativeeffectsofsuchcommunicationarereasonablyexpected tooutweighitsbenefitsforthepublicinterest.

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ReportonOtherLegalRequirements

Management ReportInaccordancewithAustrianGenerallyAcceptedAccountingPrinciplesthemanagementreportistobeauditedastowhetheritisconsistentwiththefinancialstatementsandastowhetherithasbeenpreparedinaccor-dancewithlegalrequirements.

ThelegalrepresentativesoftheCompanyareresponsiblefortheprepa-rationofthemanagementreportinaccordancewithAustrianGenerallyAcceptedAccountingPrinciplesandotherlegalrequirements(AustrianBankingAct).WehaveconductedourauditinaccordancewithgenerallyacceptedstandardsontheauditofmanagementreportsasappliedinAustria.

OpinionInouropinion,themanagementreporthasbeenpreparedinaccordancewithlegalrequirementsandisconsistentwiththefinancialstatements.ThedisclosurespursuanttoSection243aUGB(AustrianCommercialCode)areappropriate.

StatementBasedonourknowledgegainedinthecourseoftheauditofthefinancialstatementsandtheunderstandingoftheCompanyanditsenvironment,wedidnotnoteanymaterialmisstatementsinthemanagementreport.

KPMGAustriaGmbHWirtschaftsprüfungs-undSteuerberatungsgesellschaft

WilhelmKovscaAustrianCharteredAccountant

Other InformationThelegalrepresentativesoftheCompanyareresponsiblefortheotherinformation.Otherinformationcomprisesallinformationprovidedinthean-nualreport,withtheexceptionofthefinancialstatements,themanagmentreportandtheauditor’sreportthereon.

Ouropiniononthefinancialstatementsdoesnotcoverotherinformation,andwewillnotprovideanyassuranceonit.

Inconjunctionwithouraudit,itisourresponsibilitytoreadthisotherin-formationandtoassesswhetheritcontainsanymaterialinconsistencieswiththefinancialstatementsandourknowledgegainedduringouraudit,oranyapparentmaterialmisstatementoffact.Ifonthebasisofourworkperformed,weconcludethatthereisamaterialmisstatementoffactintheotherinformation,wemustreportthatfact.Wehavenothingtoreportwiththisregard.

Auditor in ChargeTheauditorinchargeisMr.WilhelmKovsca.

Vienna,5April2017

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OwnerandPublisherConcept,Layout,ProductionandEditorialRaiffeisenCentrobankAGCommunications&MarketingA-1015Vienna,Tegetthoffstrasse1Phone+43-1-51520-0Fax:+43-1-5134396

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