What moved us. Interim Report as of 30 June 2008. Vorarlberger ...

What moved us.
Interim Report as of 30 June 2008.
Vorarlberger Landes- und
Hypothekenbank Aktiengesellschaft
Vorarlberg | Kleinwalsertal | Vienna | Graz | Wels | Bolzano | St. Gallen | Vaduz
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Key figures of Vorarlberger Landes- und Hypothekenbank Aktiengesellschaft –
IFRS consolidated figures:
in ’000 EUR 30.06.2008 31.12.2007 Change
in ’000 EUR in %
Total assets 12,408,694 11,979,622 429,072 3.6
Loans and advances to customers 6,395,861 5,904,795 491,066 8.3
Amounts owed to customers 3,528,480 3,281,968 246,512 7.5
Liabilities evidenced by certificates 1,956,003 1,921,866 34,137 1.8
Capital resources pursuant to the Austrian Banking Act 795,656 786,522 9,134 1.2
thereof core capital Tier 1 502,839 506,767 - 3,928 - 0.8
in ’000 EUR 1.1. -
1.1. -
Change
30.06.2008 30.06.2007 in ’000 EUR in %
Net interest income after loan loss provisions 46,215 38,816 7,399 19.1
Net fee and commission income 21,128 21,731 - 603 - 2.8
Net trading result - 3,815 4,685 - 8,500 > - 100.0
Administrative expenses - 42,700 - 38,806 - 3,894 10.0
Profit from ordinary activities 25,772 29,677 - 3,905 - 13.2
Key figures 30.06.2008 31.12.2007 Change
absolute in %
Cost-Income-Ratio (CIR) 54.88 % 46.70 % 8.18 % 17.5
Solvency ratio (Total capital) pursuant to the Austrian Banking Act 11.58 % 12.37 % - 0.79 % - 6.4
Return on Equity (ROE) 11.50 % 14.06 % - 2.56 % - 18.2
Staff 30.06.2008 31.12.2007 Change
absolute in %
Staffing level 713 683 30 4.4
The shareholders of Vorarlberger Landes- und Hypothekenbank Aktiengesellschaft (Hypo Landesbank Vorarlberg)
as at 30 june 2008:
Owners Shareholders
total
Voting rights
Vorarlberger Landesbank-Holding 71.1715 % 74.9997 %
Austria Beteiligungsgesellschaft mbH 23.7242 % 25.0003 %
Landesbank Baden-Württemberg 15.8161 % -
Landeskreditbank Baden-Württemberg Förderbank 7.9081 % -
Widely held (participation capital) 5.1043 % 0.0000 %
Subscribed capital 100.0000 % 100.0000 %
Rating/Moody’s
Long-term: for liabilities with deficiency guarantee Aaa
for liabilities without deficiency guarantee (as of 2 April 2007) Aa1
Short-term P-1

Banking business environment in the second
quarter of 2008
The first half of 2008 was marked by repercussions
from the financial crisis. After five positive years,
the stock market has experienced a reversal leading
to a global correction of the most important stock
indices and major volatility in the markets. The
emerging markets did not meet expectations and
suffered disproportionate losses. In view of this, the
IMF (International Monetary Fund) is adhering to the
revised prognosis of 3.70% for global economic
growth.
Bond markets did not deliver a performance worth
mentioning either. May and June were especially
weak months for the bond market. Starting in the
middle of March, the yields on 10 year Euro-Benchmark-Bonds
climbed steadily and the corresponding
bond prices fell sharply.
Worldwide, central banks are confronted with major
challenges. The weakening economy in many regions,
coupled with accelerating inflation – helped by
rapidly increasing commodity prices – have put the
central banks in a waiting position. Growth risk was
clearly in the foreground in the USA and the Federal
Reserve Bank decided against further cuts in the
lending rate. Adhering to its main goal of maintaining
price stability, the European Central Bank raised
the benchmark interest rate to 4.25% in the second
quarter.
As a result of the real estate and financial crisis, the
USA is no longer the flagship of the world economy.
Growing worry about recession has made the
international markets unsure. The lack of autonomy
of many economic regions from the developments in
US economy led the mood indicators to new lows.
Unlike the traditional asset groups, raw materials
profited in the first six months. Crude oil set one
record price after another and was quoted at almost
USD 145.00 at the end of June. Gold reached an
all-time high in the first quarter, fluctuated strongly,
then began to climb again at the end of the second
quarter. The international real estate markets showed
no further positive stimulus.
The rise of the euro against the US dollar has continued
in the current year and reached an all time high
in April of 1.60 EUR/USD.
Consolidated management report for second
quarter of 2008
The Vorarlberger Landes- und Hypothekenbank
Aktiengesellschaft (Hypo Landesbank Vorarlberg
reported ordinary business results of
EUR 25.8 million for the first six months of 2008.
Due to the uncertain market environment this result
was 13.2% below the same period last year. Hypo
Landesbank Vorarlberg expects to achieve corporate
profits in 2008 in the magnitude of the positive
year 2006, assuming there are no drastic changes
in the economic and financial markets.
The international rating agency Moody’s has again
confirmed our very good Aa1 rating, and our rating
remains excellent even without the deficiency
guarantee. The increase in refinancing costs will be
limited.
The “Financial Times” newspaper annually compiles
and publishes in its trade magazine “The Banker” a
list of the global and national rankings of the 1,000
largest banks (based on assets and earnings). For
the first time, Hypo Landesbank Vorarlberg was
ranked tenth among the largest Austrian banks and
improved from rank 583 to 554 in the global listing.
Notes to the income statement
Net interest income was EUR 57.1 million as of
30 June 2008, 5.0% over last year, in spite of
continuing strong competition and pressure on
margins in credit business due to volume growth
in loans and advances to customers. Net interest
income after loan loss provisions, which signifies the
net performance of the interest business, increased
to EUR 46.2 million (+19.1%) due to lower loan loss
provisions.
In the course of the weakening stock markets, net
fee and commission income was EUR 21.1 million,
2.8% lower than last year.
Net trading results fell by EUR 8.5 million to
EUR - 3.8 million. This was mainly due to the valuation
of assets held for trading and assets designated
at fair value through profit or loss, caused by fluc-
tuations in value due to the crisis in the financial
markets.
At EUR 42.7 million, administrative expenses
were 10% higher than the first six months of 2007
although they remain within budget. There are
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70
60
several reasons for the higher costs, among them
an increase of 30 employees as well as the continuing
investment in modernisation of the headquarters
in Bregenz, the Hypo Office Dornbirn and several
branches.
Loan loss provisions remain at a historical low at
EUR 10.8 million.
The lower contribution by net trading results
amounted to operating results of EUR 24.3 million, a
reduction of EUR 6.2 million compared to the same
period last year. After balancing the results from
investments and the results from equity consolidation,
earnings before taxes (ordinary business results)
was EUR 25.8 million as of 30 June 2008, 13.2%
under the results of the first six months of 2007.
The price of the Hypo Landesbank Vorarlberg
participation certificate was quoted at EUR 98.00
(EUR 83.90 in 2007) as of 30 June 2008. At the
annual meeting of shareholders on 18 June 2008,
the Managing Board proposed distributing, based on
the share capital of EUR 22 million, to the shareholders,
to Vorarlberger Landesbank-Holding and to
Austria Beteiligungsgesellschaft mbH (Landesbank
Baden-Württemberg und Landeskreditbank Baden-
Württemberg Förderbank) a total amount of
EUR 8.79 million and a total of EUR 540,000 to
holders of participation certificates. This equals a
dividend increase of 20% compared to last year.
Balance sheet
Total assets of the group increased 3.6% to
EUR 12,408.7 million as of 30 June 2008. Loans
and advances to customers increased by
EUR 491.1 million to EUR 6,395.9 million, taking into
account that the application of the IFRS 7 standard
10,047.4
11,979.6
EUR 98,00
as of 30 June 2008
Development of the Hypo Landesbank Vorarlberg participation certificate
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Development of total assets (in million EUR):
12,408.7
31.12.06 31.12.07 30.06.08
is obligatory as of 1 January 2007. This standard
requires that financial instruments be recognized
separately by valuation category pursuant to IAS 39.
For this reason, the Group reclassified loans and
advances to banks and customers designated at fair
value through profit or loss in the amount of
EUR 603.3 million (2007: EUR 622.9 million) in
“Financial assets/at fair value” for the fiscal year
2008 and for reference years. This item qualifies
as and must be added to loans and advances to
customers.
On the liabilities side, in the first six months of 2008
amounts owed to customers recorded the largest
increase compared to end 2007 (EUR 246.5 million
or 7.5%) and amounted to EUR 3,528.5 million as of
30 June 2008.

Business segments in the second quarter of
2008
Corporate Customers/Public Sector
Hypo Landesbank Vorarlberg offers its customers
both traditional banking products and other bankrelated
services such as leasing, real estate
services, and insurance through its subsidiaries. The
range of financing portfolio products includes equity
financing, as well as competent consulting and
support in connection with financial aid programmes
and institutions.
In order to professionally support our corporate
customers in their international activities, we have
expanded our services abroad and have installed
an International Services team. In future Credit
Management-Corporate Customers will take care of
financial engineering and the structuring of complex
transactions as well as the syndication/consortium
business. In response to high demand, we have set
up precious metal accounts for our customers, to
facilitate the buying and selling of precious metals.
In the Corporate Services segment, ordinary
business results (earnings before taxes) was
EUR 14.8 million. As of 30 June 2008, net interest
income was EUR 23.3 million (+10.1%). Net fee and
commission income increased by 9.6% to
EUR 5.6 million. Contribution of the Public Segment
was EUR 2.1 million in first six months of 2008.
Private Customers
As a universal bank, Hypo Landesbank Vorarlberg
offers private customers a complete range of
products – with focus on investment advice and
residential real estate financing. A priority for our
investment consulting is financial security for the
future. Rising interest rates have led to increased
enquiries concerning savings accounts. To raise the
awareness of the importance of a monthly savings
programme, of accruing investments and of pension
provisions, Hypo Landesbank Vorarlberg offers
customers new portfolio-funds from our in-house,
highly-rated investment management. For the Hypo-
Portfolio fund, the minimum investment is EUR 50
per month. It usually requires a minimum investment
of EUR 50,000 to enjoy the benefits of investment
management.
In autumn the newly launched Hypo-Klima-Kredit
was made available for private as well as corporate
customers. The goal is to promote energy saving
measures in cooperation with the Energy Institute
Vorarlberg by offering attractive conditions. In addition
to the introduction of the Hypo-Lebenswert-Kredit
last year for the financial needs of older customers,
Hypo Landesbank Vorarlberg launched the Komfort-
Programm 60Plus in early summer 2007, thus
providing a complete product package for seniors.
At the same time a full range of products for younger
customers was developed.
In the Private Customer sector, ordinary business
results (earnings before taxes) was EUR 6.1 million
as of 30 June 2008. Net interest income increased
by 5.9% to EUR 9.1 million. Net fee and commission
income fell 8.3% to EUR 8.5 million due to the
situation in the financial markets.
Private Banking and Asset Management
We operate separate Private Banking Centres in
all large branch offices in Vorarlberg as well as in
Lech, Vienna, Graz and Wels. As a particular quality
feature of these centres, only qualified investment
managers provide services there. In addition, at
the beginning of 2007 the Team Private Banking
Plus for top private and institutional customers was
established.
The superior quality of our investment consulting
and asset management services has been confirmed
through external recognition by the “Fuchsbriefe
Report” and the “Elite Report”. In addition, in the
“Private Banking Survey 2008” conducted by the
business magazine “Euromoney”, Hypo Landesbank
Vorarlberg was ranked among the top 10 private
banks in Austria.
Hypo Landesbank Vorarlberg expanded its already
innovative and attractive range of products in June
2008 with the new asset management strategy
Hypo Weltdepot Anleihen, with active duration
controls. An in-house developed computer model
can track and recognise the correct point in time –
and with that the basis for the decision to extend or
reset the term of the bond – to optimise yields.
Hypo Landesbank Vorarlberg “Hypo-Weltportfolio
Aktien” fund of funds in first place three
years in a row.
In November 2007, the annual “geld” magazine
award for the best Austrian fund of funds went to the
Hypo-Weltportfolio equity fund of funds for the third
year in a row. The award included best 3-year and
best 5-year performance as well as second place in
1-year performance.
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3.500
3.000
2.500
2.000
1.500
1.000
500
0
11
1989
1990
1991
1992
Financial Markets/Treasury
Due to foresighted refinancing policies the bank is in
an excellent liquidity situation. While the narrowing
credit spread in issues made refinancing favourable
for the bank, the severely flattening interest curves
in the first half of the year allowed no earnings
growth from term transformation. The bank was
comparatively only moderately exposed.
The sub-prime crisis in the US created great market
volatility in the second half of 2007 and led to a
strong increase in the credit spread which has lasted
through the first half of 2008. Although the Bank has
no direct US sub-prime risk, it is indirectly affected
through developments in the money and capital
markets. As with almost all other banks, Hypo
Landesbank Vorarlberg could not evade the turbulence
on the money and capital markets or the falling
bond prices and was therefore indirectly affected by
the financial market crisis. Earnings before taxes of
the Financial Markets division was EUR -4.5 million
in the first half of 2008. In comparison to a great
many other institutions, the financial impact on the
bank has been very limited. At the present time we
can assume there will be no value fluctuations or
permanent losses.
Leasing and Real Estate
Development of asset management mandates
1993
1994
1995
1996
1997
Ordinary business results (earnings before taxes) of
the division Leasing and Real Estate was
EUR 2.8 million in the first half of 2008.
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
3,449
2008
Hypo Vorarlberg Leasing AG in Bolzano, Italy, had an
80% increase in new business volume compared to
the same period last year. Priorities, in addition to
the long term focus on real estate leasing, are the
areas of alternative energy (especially photovoltaic)
and municipal leasing. The first transactions with
Northern Italian municipalities have been concluded.
Hypo Vorarlberg Leasing AG in Bolzano moved to
new rental offices in the Via Galileo Galilei at the end
of May 2008. The new offices are better located
and provide more office space. By early 2009, two
new branches in Treviso and Modena (Italy) will be
opened to complement and enlarge the trading area.
Hypo Südleasing GmbH new business volume
amounted to EUR 108.3 million in the first half of
2008, and special attention was given to large
projects in real estate and vendor leasing. In June,
Hypo Südleasing GmbH celebrated its fifth anniversary.
This year, strengthening operations in Germanspeaking
Switzerland will be a priority.
Hypo Immobilien GmbH, based in Dornbirn, is the
competence centre for real estate in the Hypo
Vorarlberg group and manages the entire real estate
portfolio of Hypo Landesbank Vorarlberg, consisting
of buildings used for its own purposes and of properties
destined for utilisation. The company is divided
into the business areas of real-estate brokering,
facility management, building management, construction
management and real estate assessment.

Three large construction projects will be completed
this year: the renovation and enlargement of the
headquarters in Bregenz, the construction of the
Hypo Office for subsidiaries in Dornbirn, and the
erection of a new bank building for our subsidiary in
Bendern, Liechtenstein.
Corporate Centre contributions amounted to
EUR 4.5 million.
Outlook
Rising commodity prices, crisis in the USA, eurodollar
parity, poor general conditions, increasing
transportation costs as well as the surfacing economic
problems in Germany are negatively affecting
the current mood of Vorarlberg industrialists. 54
companies with 22,947 employees took part in the
latest economic survey (second quarter 2008) by
the Industriellenvereinigung Vorarlberg (an industrial
association) and the Vorarlberg Chamber of Commerce
and revealed a very cloudy outlook. It also
exposed the negative development of the business
climate index, which has declined for four months
in a row. The business climate index, which shows
business conditions currently and in six months, has
fallen more than 20 points compared to last year.
Demand for credit remains stabile in Vorarlberg, and
employment remains high.
WIFO, the Austrian Institute for Economic Development,
is also predicting an economic downturn for
Austria. The continuing stagnation in the USA, consequences
from the high valuation of the Euro and
the unfavourable credit conditions were amplified in
the last months by high crude oil prices. This pushed
inflation higher (2008 +3.5%) and reduced the real
disposable income and consumer demand of private
households. In 2009, the domestic economy will
grow by only 1.4%. The weakening of economic
growth will also cause a reverse in the employment
market. Although the employment rate is currently
growing strongly, higher unemployment is expected
in 2009.
Hypo Landesbank Vorarlberg is pursuing a sustainable
growth strategy taking full consideration of the
risks and costs involved. The outlook for the fiscal
year 2008, especially for the first half, for the loan
and investment business is cloudy. Capital markets,
stock exchanges and investors are unsettled, as are
consumers by the relatively high inflation accompanied
by real wage loss and reduction in buying power.
In our home market Vorarlberg, we again anticipate
massive margin pressure and fierce competition.
Because of these difficult conditions and the loss
of one-off special factors, at this time we expect to
achieve corporate profit in 2008 in the magnitude of
the positive year 2006.
This year the issuance of participation certificates
in the amount of EUR 50 million is planned. The goal
is to interest as many customers as possible in a
(non-voting) stake in Hypo Landesbank Vorarlberg.
The current participation certificates will be called
in, and, following the wishes of the customer, either
compensated for in cash or traded for new participation
certificates. On 18 June 2008, shareholders
approved both the recall as well as the issue of
participation certificates.
The tax affair between Germany and Liechtenstein
escalated in the first quarter 2008. We expect
somewhat reduced growth in our subsidiary Hypo
Investment Bank (Liechtenstein) AG in the next
years and anticipate regulatory adjustments in the
Principality of Liechtenstein.
A priority for 2008 is “energy efficiency and energy
optimising”. In addition to the assistance provided
by Hypo-Klima-Kredit for energy saving investments,
Hypo Landesbank Vorarlberg supports the Vorarlberg
Klimaschutzpreis (climate protection prize) as
well as the passive-house campaign of the Province
of Vorarlberg.
Our leasing subsidiary Hypo Vorarlberg Leasing AG
will open two new locations in Modena and Treviso
(Italy) in 2008 or by early 2009 and further establish
its position as the largest leasing business in
Südtirol (Trentino-Alto Adige).
The Bregenz-based centralized Portfolio and Asset Management of Vorarlberger
Landes und Hypothekenbank Aktiengesellschaft is considered a company
within the meaning of the Global Investment Performance Standards (GIPS®).
The company includes all asset management mandates of private and institutional
customers as well as those publicly offered funds that are managed
as part of the Bank’s centralized investment process. They do not include
decentralized organization units and other Group units with their own market
presence. The company is in compliance with GIPS®. A list of all composites
and their detailed description can be requested from Vorarlberger Landesund
Hypothekenbank Aktiengesellschaft by telephone at +43 (0)5574/414-
1521 or via e-mail at gips@hypovbg.at
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Interim Report
International Financial Reporting Standards (IFRS) as of 30 June 2008
I. Income statement
in ’000 EUR (Notes) 1.1. -
1.1. -
Change
30.06.2008 30.06.2007 in ’000 EUR in %
Interest and similar income 275,691 226,886 48,805 21.5
Interest and similar expenses - 218,632 - 172,562 - 46,070 26.7
Net interest income (1) 57,059 54,324 2,735 5.0
Loan loss provisions - 10,844 - 15,508 4,664 - 30.1
Interest income after loan loss provisions 46,215 38,816 7,399 19.1
Fee and commission income 23,693 24,409 - 716 - 2.9
Fee and commission expenses - 2,565 - 2,678 113 - 4.2
Net fee and commission income 21,128 21,731 - 603 - 2.8
Net trading result - 3,815 4,685 - 8,500 > - 100.0
Administrative expenses (2) - 42,700 - 38,806 - 3,894 10.0
Other operating income and expenses 3,440 4,053 - 613 - 15.1
Operating profit 24,268 30,479 - 6,211 - 20.4
Net results from investments 4,321 - 1,148 5,469 > - 100.0
Results from equity consolidation - 2,817 346 - 3,163 > - 100.0
Profit from ordinary activities 25,772 29,677 - 3,905 - 13.2
Taxes on income - 6,360 - 7,880 1,520 - 19.3
Consolidated net income after taxes 19,412 21,797 - 2,385 - 10.9
Minority interests in consolidated net income - 238 - 233 - 5 2.1
Consolidated net income 19,174 21,564 - 2,390 - 11.1
II. Balance
Assets
in ’000 EUR (Notes) 30.06.2008 31.12.2007 Change
in ’000 EUR in %
Cash and balances with central banks 40,034 131,171 - 91,137 - 69.5
Loans and advances to, and placements with banks 2,007,601 1,965,971 41,630 2.1
Loans and advances to customers 6,395,861 5,904,795 491,066 8.3
Loan loss provisions - 130,016 - 123,473 - 6,543 5.3
Trading assets and derivatives (3) 243,343 245,464 - 2,121 - 0.9
Financial assets - at fair value (4) 1,157,267 1,113,666 43,601 3.9
Financial assets - available for sale (5) 1,190,602 1,364,738 - 174,136 - 12.8
Financial assets - held to maturity (6) 1,157,043 1,066,490 90,553 8.5
Shares in companies valued at equity 20,271 24,332 - 4,061 - 16.7
Investment property 23,993 23,399 594 2.5
Intangible assets (7) 1,335 1,331 4 0.3
Property, plant and equipment (8) 76,824 68,365 8,459 12.4
Current tax assets 2,996 21,212 - 18,216 - 85.9
Deferred tax assets 122,313 99,092 23,221 23.4
Available-for-sale assets 50,503 51,093 - 590 - 1.2
Other assets 48,724 21,976 26,748 > 100.0
Total assets 12,408,694 11,979,622 429,072 3.6

Liabilities
in ’000 EUR (Notes) 30.06.2008 31.12.2007 Change
in ’000 EUR in %
Amounts owed to banks 300,592 89,361 211,231 > 100.0
Amounts owed to customers 3,528,480 3,281,968 246,512 7.5
Liabilities evidenced by certificates (9) 1,659,003 1,921,866 34,137 1.8
Trading liabilities and derivatives (3) 469,484 383,175 86,309 22.5
Financial liabilities - at fair value (10) 5,178,620 5,417,849 - 239,229 - 4.4
Provisions 8,746 12,036 - 3,290 - 27.3
Social capital 14,703 14,645 58 0.4
Current tax liabilities 4,577 36,049 - 31,472 - 87.3
Deferred tax liabilities 120,837 96,788 24,049 24.8
Other liabilities 122,365 41,964 80,401 > 100.0
Subordinated and supplementary capital 242,394 226,362 16,032 7.1
Shareholders’ equity 461,893 457,559 4,334 0.9
thereof minority interests 1,318 1,454 - 136 - 9.4
Total liabilities 12,408,694 11,979,622 429,072 3.6
III. Statement of changes in shareholders’ equity
in ’000 EUR Subscri- Capital Retained Available- Reserves Effects Consoli- Minority Total
bed reserves earnings for-Sale from from dated net interests share-
capital
reserves currency first-time profit
holders’
IFRS
translation adoption
equity
As at 1 st January 2007 24,180 100,342 298,372 - 316 - 570 3,615 7,775 1,299 434,697
Consolildated net income 0 0 - 48 0 0 0 21,612 233 21,797
Currency translation 0 0 0 6 - 410 0 - 283 0 - 687
Changes in valuation 0 0 742 0 0 - 3 0 10 749
Valuation of available-for-Sale
portfolio
0 0 0 - 150 0 0 0 0 - 150
Total income second quarter 0 0 694 - 144 - 410 - 3 21,329 243 21,709
Dividends 0 0 0 0 0 0 - 7,775 0 - 7,775
As at 30 th June 2007 24,180 100,342 299,066 - 460 - 980 3,612 21,329 1,542 448,631
As at 1 st January 2008 24,180 100,342 327,331 - 7,746 - 947 3,615 9,330 1,454 457,559
Consolidated net income 0 0 - 10 0 0 0 19,184 238 19,412
Currency translation 0 0 107 - 6 779 0 220 40 1,140
Changes in valuation 0 0 612 0 0 0 0 0 612
Valuation of available-for-Sale
portfolio
0 0 0 - 7,086 0 0 0 - 23 - 7,109
Total income second quarter 0 0 709 - 7,092 779 0 19,404 255 14,055
Dividends 0 0 0 0 0 0 - 9,330 - 391 - 9,721
As at 30 th June 2008 24,180 100,342 328,040 - 14,838 - 168 3,615 19,404 1,318 461,893
IV. Cash flow statement
in ’000 EUR 1.1. -
1.1. -
30.06.2008 30.06.2007
Cash and balances with central banks at end of previous period 131,171 61,406
Cashflows from operating activities - 128,403 509,019
Cashflows from investing activities 36,313 - 487,349
Cashflows from financing activities 978 - 12,920
Effects of changes in exchange rate, valuation, consolidation - 25 - 4
Cash and balances with central banks at end of period 40,034 70,152
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V. Notes
Notes to the income statement
(1) Net interest income
in ’000 EUR 1.1. -
1.1. -
Change
30.06.2008 30.06.2007 in ’000 EUR in %
Interest and similar income 275,691 226,886 48,805 21.5
Interes income from cash and balances with central banks 1,092 1,853 - 761 - 41.1
Interest income from loans and advances to banks 33,935 28,086 5,849 20.8
Interest income from loans and advances to customers 150,998 115,507 35,491 30.7
Interest income from bonds - held for trading 11 0 11 100.0
Interest income from bonds - at fair value 8,754 8,288 466 5.6
Interest income from bonds - available for sale 30,847 26,095 4,752 18.2
Interest income from bonds - held to maturity 21,169 19,407 1,762 9.1
Interest income from leasing 24,738 19,882 4,856 24.4
Interest income from shares 2,956 7,471 - 4,515 - 60.4
Investment income from affiliated companies 73 138 - 65 - 47.1
Investment income from associated companies 1,118 159 959 > 100.0
Interest and similar expenses - 218,632 - 172,562 - 46,070 26.7
Interest expenses for amounts owed to bank - 7,223 - 6,472 - 751 11.6
Interest expenses for amounts owed to customers - 67,559 - 48,813 - 18,746 38.4
Interest expenses for liabilities evidenced by certificates - 39,427 - 43,638 4,211 - 9.6
Interest expenses for liabilities - at fair value - 96,537 - 67,314 - 29,223 43.4
Interest income for subordinated and supplementary capital - 7,710 - 6,299 - 1,411 22.4
Other leasing expenses - 176 - 26 - 150 > 100.0
Net interest income 57,059 54,324 2,735 5.0
(2) Administrative expenses
in ’000 EUR 1.1. -
1.1. -
Change
30.06.2008 30.06.2007 in ’000 EUR in %
Staff costs - 24,589 - 22,580 - 2,009 8.9
Material expenses - 15,408 - 13,541 - 1,867 13.9
Amortisation of property, plant and equipment and intangible asstes - 2,703 - 2,685 - 18 0.7
Administrative expenses - 42,700 - 38,806 - 3,894 10.0
Thereof staff costs
in ’000 EUR 1.1. -
1.1. -
Change
30.06.2008 30.06.2007 in ’000 EUR in %
Wages and salaries - 18,426 - 17,418 - 1,008 5.8
Statutory social security contributions - 4,696 - 4,240 - 456 10.8
Voluntary social benefits - 782 - 392 - 390 99.5
Expenses for retirement benefits and other benefits - 567 - 478 - 89 18.6
Social capital - 118 - 52 - 66 > 100.0
Staff costs - 24,589 - 22,580 - 2,009 8.9

Notes to the balance sheet
(3) Trading assets and derivatives
Trading assets and derivatives – breakdown by product
in ’000 EUR 30.06.2008 31.12.2007 Change
in ’000 EUR in %
Debt securities of public issuers 1,208 1,723 - 515 - 29.9
Investment certificates 9,048 783 8,265 > 100.0
Other equity interests 481 2,254 - 1,773 - 78.7
Positive market values of derivative financial instruments 122,057 134,649 - 12,592 - 9.4
Deferred interest 110,549 106,055 4,494 4.2
Trading assets and derivatives 243,343 245,464 - 2,121 - 0.9
Derivatives
in ’000 EUR Nominal Value Positive market values Negative market values
30.06.2008 31.12.2007 30.06.2008 31.12.2007 30.06.2008 31.12.2007
Interest rate derivatives 8,229,392 8,514,618 113,063 125,032 383,183 305,068
Interest rate swaps 6,377,136 6,669,944 89,219 95,352 295,934 214,981
Cross currency swaps 994,942 1,029,952 19,412 27,151 82,889 87,945
Interest rate options 699,394 690,378 4,400 2,380 3,533 1,298
Others derivatives 157,920 124,344 32 149 827 844
Currency derivatives 898,122 785,400 8,994 9,617 11,485 10,801
FX forward transactions 524,804 494,836 6,926 8,367 6,735 8,076
FX swaps 194,374 189,720 330 366 3,012 1,841
FX options 178,944 100,844 1,738 884 1,738 884
Derivatives 9,127,514 9,300,018 122,057 134,649 394,668 315,869
(4) Financial assets – designated at fair value
in ’000 EUR 30.06.2008 31.12.2007 Change
in ’000 EUR in %
Debt securities of public issuers 50,275 48,741 1,534 3.1
Debt securities of other issuers 453,174 407,255 45,919 11.3
Equities 12,686 10,471 2,215 21.2
Investment certificates 19,164 6,871 12,293 > 100.0
Loans and advances to, and placements with, banks 34,497 35,029 - 532 - 1.5
Loans and advances to customers 568,805 587,835 - 19,030 - 3.2
Deferred interest 18,666 17,464 1,202 6.9
Financial assets - at fair value 1,157,267 1,113,666 43,601 3.9
(5) Financial asstes - available for sale
in ’000 EUR 30.06.2008 31.12.2007 Change
in ’000 EUR in %
Debt securities of public issuers 10,122 10,275 - 153 - 1.5
Debt securities of other issuers 1,129,979 1,298,930 - 168,951 - 13.0
Equities 1,189 1,182 7 0.6
Investment certificates 19,483 22,637 - 3,154 - 13.9
Other equity rights 10,373 10,373 0 0.0
Deferred interest 5,254 7,342 - 2,088 - 28.4
Investments 10,041 9,912 129 1.3
Shares in affiliated companies 4,161 4,087 74 1.8
Investments - available for sale 1,190,602 1,364,738 - 174,136 - 12.8
11

12
(6) Financial assets - held to maturity
in ’000 EUR 30.06.2008 31.12.2007 Change
in ’000 EUR in %
Debt securities of public issuers 360,007 355,197 4,810 1.4
Debt securities of other issuers 777,491 688,754 88,737 12.9
Deferred interest 19,545 22,539 - 2,994 - 13.3
Financial assets - held to maturity 1,157,043 1,066,490 90,553 8.5
(7) Intangible assets
in ’000 EUR 30.06.2008 31.12.2007 Change
in ’000 EUR in %
Software acquired 1,104 1,101 3 0.3
Other intangible assets 231 230 1 0.4
Intangible assets 1,335 1,331 4 0.3
(8) Property, plant and equipment
in ’000 EUR 30.06.2008 31.12.2007 Change
in ’000 EUR in %
Land without buildings 963 963 0 0.0
Land with buildings 8,015 8,030 - 15 - 0.2
Buildings 41,965 37,248 4,717 12.7
Furniture and fixtures 5,020 4,588 432 9.4
Leased movables 190 199 - 9 - 4.5
Construction in progress 20,671 17,337 3,334 19.2
Property, plant and equipment 76,824 68,365 8,459 12.4
(9) Liabilities evidenced by certificates (LAC)
in ’000 EUR 30.06.2008 31.12.2007 Change
in ’000 EUR in %
Mortgage bonds 24,678 31,481 - 6,803 - 21.6
Municipal bonds 19,239 40,157 - 20,918 - 52.1
Medium-term fixed-rate notes 1,082 7,973 - 6,891 - 86.4
Bonds 1,085,707 1,055,110 30,597 2.9
Housing construction bonds 254,260 212,375 41,885 19.7
Bonds issued by Pfandbriefstelle 560,000 560,000 0 0.0
Other liabilities evidenced by certificates 545 545 0 0.0
Interest accrued 10,492 14,225 - 3,733 - 26.2
Liabilities evidenced by certificates 1,956,003 1,921,866 34,137 1.8
(10) Financial liabilities - designated at fair value
in ’000 EUR 30.06.2008 31.12.2007 Change
in ’000 EUR in %
Amounts owed to banks - at fair value 141,543 143,367 - 1,824 - 1.3
Amounts owed to customers - at fair value 377,805 387,201 - 9,396 - 2.4
Mortgage bonds - at fair value 17,550 32,807 - 15,257 - 46.5
Municipal bonds - at fair value 27,858 28,631 - 773 - 2.7
Medium-term fixed-rate notes - at fair value 69,410 66,962 2,448 3.7
Bonds - at fair value 3,220,566 3,424,295 - 203,729 - 5.9
Housing construction bonds - at fair value 112,993 96,033 16,960 17.7
Bonds issued by Pfandbriefstelle - at fair value 990,118 991,291 - 1,173 - 0.1
Subordinated capital - at fair value 94,471 96,545 - 2,074 - 2.1
Supplementary capital - at fair value 63,926 64,104 - 178 - 0.3
Interest accrued - at fair value 62,380 86,613 - 24,233 - 28.0
Financial liabilities - at fair value 5,178,620 5,417,849 - 239,229 - 4.4

Additional IFRS disclosures
(11) Segment reporting
Breakdown by segment
in ’000 EUR Public Corporate Private Leasing Financial Corporate Total
Customers Customers and Real
Estate
Markets Center
Net interest income 2nd Q 2008 2,146 23,300 18,637 5,714 4,348 2,914 57,059
2nd Q 2007 2,411 21,166 17,602 5,454 5,821 1,870 54,324
Loan loss provisions 2nd Q 2008 - 2 - 4,559 - 1,675 - 2,013 - 1,499 - 1,096 - 10,844
2nd Q 2007 0 - 9,772 - 2,031 - 2,002 - 5 - 1,698 - 15,508
Net fee and commission income 2nd Q 2008 190 5,554 8,515 - 69 1,900 5,038 21,128
2nd Q 2007 183 5,068 9,285 21 2,133 5,041 21,731
Net trading result 2nd Q 2008 6 1,278 973 110 - 7,781 1,599 - 3,815
2nd Q 2007 1 930 899 88 1,474 1,293 4,685
Administrative expenses 2nd Q 2008 - 260 - 10,789 - 20,508 - 3,412 - 2,757 - 4,974 - 42,700
2nd Q 2007 - 226 - 10,284 - 18,925 - 2,365 - 2,627 - 4,379 - 38,806
Other operating income and 2
expenses
nd Q 2008 1 63 159 2,428 46 743 3,440
2nd Q 2007 1 67 138 1,623 21 2,203 4,053
Net results from financial 2
investments
nd Q 2008 0 0 0 0 1,262 3,059 4,321
2nd Q 2007 0 0 0 0 - 862 - 286 - 1,148
Result from equity consolidation 2nd Q 2008 0 0 0 0 0 - 2,817 - 2,817
2nd Q 2007 0 0 0 0 0 346 346
Operating profit 2nd Q 2008 2,081 14,847 6,101 2,758 - 4,481 4,466 25,772
2nd Q 2007 2,370 7,175 6,968 2,819 5,955 4,390 29,677
Total assets 2nd Q 2008 652,975 3,233,017 1,459,462 1,472,271 5,251,364 339,605 12,408,694
2nd Q 2007 810,288 2,734,089 1,227,194 1,273,186 5,388,286 379,845 11,812,888
Total liabilities 2nd Q 2008 137,612 964,646 2,440,624 367,880 7,351,335 1,146,597 12,408,694
2nd Q 2007 129,796 756,058 2,129,046 267,617 8,202,910 327,461 11,812,888
(12) Staff
30.06.2008 31.12.2007 Change
absolute in %
Full-time salaried staff 650 621 29 4.7
Part-time salaried staff 47 47 0 0.0
Apprentices 12 11 1 9.1
Full-time blue-collar workers 4 4 0 0.0
Average number of staff in a year 713 683 30 4.4
13

14
(13) Overview quarterly results
in ’000 EUR 1 st Quarter 2 nd Quarter 3 rd Quarter 4 th Quarter 1 st Quarter 2 nd Quarter
Minority interests in consolidated net income - 76 - 157 - 121 - 135 - 77 - 161
Consolidated net income (10) Overall risk management 10,716 10,848 9,044 8,108 9,308 9,866
(14) Overall risk management
2007 2007 2007 2007 2008 2008
Net interest income 26,995 27,329 27,090 29,008 27,883 29,176
Loan loss provisions - 8,213 - 7,295 - 5,217 - 7,343 - 3,057 - 7,787
Net fee and commission income 10,867 10,864 12,313 12,680 10,357 10,771
Net trading result 1,698 2,750 189 - 4,008 - 1,939 - 1,876
Administrative expenses - 19,646 - 19,060 - 19,828 - 19,555 - 21,475 - 21,225
Other operating income and expenses 1,708 2,245 3,182 2,311 1,173 2,267
Net results from financial instruments 233 - 1,144 - 535 37 1,440 2,881
Result from equity consolidation 600 - 254 - 764 809 - 1,843 - 974
Profit from ordinary activities 14,242 15,435 16,430 13,939 12,539 13,233
Taxes on income - 3,450 - 4,430 - 7,265 - 5,696 - 3,154 - 3,206
Consolidated net income after income taxes 10,792 11,005 9,165 8,243 9,385 10,027
The Bank’s operations involve the following risks:
Credit risk: This includes the counterparty
default risk, as well as the risk of deteriorating
credit standing. Risks can also result from the
use of credit risk minimization methods.
Market risks: The common characteristic of
these risks is that they result from price
changes in money and capital markets. Market
price risks are divided into interest rate risks,
stock price risks, foreign currency risks, and
commodity risks.
Liquidity risk: Liquidity risks can be
distinguished in maturity and retrieval risks,
structural liquidity risk (roll-over financing risk),
and market liquidity risk. The maturity risk
describes an unplanned extension of the capital
commitment period in the lending business. The
retrieval risk is the risk that credit commitments
are unexpectedly utilized or deposits are with
drawn. As a result, a bank can no longer fully
meet its payment obligations. The structural
liquidity risk results from the fact that required
roll-over financing can only be carried out at
less favourable conditions or not at all. A market
liquidity risk arises when items can only be sold
immediately, having to accept a loss.
Operational risk: This includes the risk of
direct or indirect losses caused by human error,
process deficits, technological failure, or
external influence. Operational risks also include
the legal risk.
Other risks: These include above all those
types of risks for which only rudimentary or no
quantification methods exist. In particular, other
risks encompass strategic risks, reputation,
equity, as well as performance or business
risks.
The Bank controls these risks as part of its control
and limitation of the central banking risk. The
Managing Board is responsible for the overall risk
management of Hypo Landesbank Vorarlberg. In this
capacity, it approves the principles of risk control
and the risk measurement procedures. Moreover,
it establishes the Bank‘s willingness to take risks
and defines the limits for all relevant types of risk,
depending on the bank‘s risk-absorbing capacity.
The overall risk management of Hypo Landesbank
Vorarlberg is based on a strict separation between
Front Office and Back Office. The risk management
functions of Hypo Landesbank Vorarlberg are concentrated
in the Member of the Board responsible
for risk management. The risk controlling of Hypo
Landesbank Vorarlberg is developed and implemented
by the Central Risk Controlling Department. The
group measures credit risks, market risks, liquidity
risks and operational risks on an overall bank level.
Moreover, this group is also responsible for the
implementation of the Basel II requirements. The
independent assessment and approval of credit
applications is carried out by the Credit Management
departments for corporate and private customers.
The Bank‘s market and liquidity risks, as well as
the Capital Adequacy Process are discussed in the
Asset Liability Management Committee (ALM). In
this committee, the Managing Board decides on
procedures for market risk measurement, on the
definition of interfaces between Sales and Treasury
with regard to the market interest rate method, and
on the level of market risk or liquidity limits. The
Central Risk Controlling, Controlling, and Treasury

departments are also represented in the meetings of
the committee.
The strategies, procedures, and approaches for the
management of risks are documented in writing.
The Bank keeps a risk management handbook and
a credit handbook that is available to all employees.
These handbooks are updated at regular intervals.
Frameworks are provided for all other types of risk.
The risk strategy of the Bank sets the guidelines for
the single risk frameworks adopted by the Managing
Board. Moreover, the Bank has laid down all relevant
work processes in written instructions that are also
available to all employees.
The Bank has set out the following risk policy
principles:
Risk control
The entire Managing Board is responsible for
the Bank‘s risk management.
The Bank distributes its risk capital among the
organisational units by defining suitable limits.
The Bank only assumes risks that are in proportion
to the envisaged results.
The Bank only assumes measurable risks.
The Bank only assumes auditable risks, i.e. the
guidelines for the assumption of risks are laid
down in writing to allow for examination by the
internal audit department.
Risk measurement
The Bank identifies all major types of risk and
quantifies these using acknowledged methods.
During the first six months of the year. the market risk developed as follows:
In case quantification is not possible or useful,
provisions are made for risk buffers.
The Bank performs stress tests to identify
severe risks.
Organisation
For each risk, the Bank defines who is responsible
for a risk and who monitors the risk.
Risk management is organised in a way so as
to avoid conflicts of interest on a personal level
and on the level of organisational units.
The Bank defines structured emergency plans
allowing it to remain operational in a crisis
situation.
New products and areas of business
New products or areas of business are only
introduced after a structured analysis of opportunities
and risks.
New products must be represented in the
internal risk measurement.
Limits regime
The Bank formulates as many limits as necessary
and as few as possible.
The Bank does not take any risks without a limit.
Illiquid risks are limited where they emerge: in
the market sector.
Concentration risks are curbed using structure
limits or volume limits that depend on credit
standing.
The Bank monitors both compliance with and
utilization of the risk capital provided.
Change VaR in ’000 EUR
Mean value of Mean value of Maen value of Mean value of
VaR Total VaR Interest VaR FX VaR Equities
2007 Jan 9,226,501 8,753,217 1,320,380 580,425
Feb 8,894,292 8,417,387 1,429,414 609,519
Mar 8,453,666 8,055,484 1,528,203 921,274
Apr 8,220,504 7,757,913 1,494,328 765,350
May 8,610,471 7,989,793 1,432,231 667,383
Jun 8,882,120 8,336,497 1,375,282 732,753
2008 Jan 9,436,093 8,429,780 2,070,334 687,030
Feb 9,480,521 8,218,230 2,496,121 932,646
Mar 9,847,104 8,377,370 2,846,687 980,590
Apr 10,636,602 9,116,958 2,842,295 778,399
May 11,685,230 10,356,228 3,039,721 1,410,349
Jun 7,440,529 7,780,681 264,269 1,596,758
15

16
Declaration of the statutory representatives with respect to the interim report
The undersigned members of the Managing Board, as statutory representatives, confirm that this interim
report has been prepared within their responsibility to the best of their knowledge in accordance with
International Financial Reporting Standards (IFRS) as applicable within the EU, including but not limited to
IAS 34 („Interim Reports“) and presents a true and fair view of the Company‘s assets and liabilites, financial
condition, and results of operation.
This interim report was not subjected to an audit or review by an auditor.
Jodok Simma
CEO, Chairman Managing Board
Bregenz, 13 August 2008
Johannes Hefel
Member Managing Board
Michael Grahammer
Member Managing Board

Branch offices/Subsidiaries
Vorarlberg: Vorarlberger Landes- und Hypothekenbank Aktiengesellschaft
International dialing code for Austria: +43
Zentrale: 6900 Bregenz, Hypo-Passage 1, T (05574) 414-0, F 414-10 50
6900 Bregenz „GWL”, Römerstraße 2, T (05574) 414-17 00, F 414-17 50
6900 Bregenz Vorkloster, Heldendankstraße 33, T (05574) 414-18 00, F 414-18 50
6700 Bludenz Am Postplatz 2, T (05552) 633 47-0, F 633 47-30 50
6850 Dornbirn Rathausplatz 6, T (05572) 246 53-0, F 246 53-40 50
6850 Dornbirn „Messepark”, Messestraße 2, T (05572) 295 80-0, F 295 80-42 50
6863 Egg „Wälderpark”, HNr. 940, T (05512) 21 44-46 00, F 21 44-46 50
6800 Feldkirch Neustadt 23, T (05522) 736 01-20 00, F 736 01-20 50
6800 Feldkirch „LKH Feldkirch“, Carinagasse 47-49, T (05522) 787 72-0, F 787 72-24 50
6793 Gaschurn Schulstraße 6b, T (05558) 87 22-34 00, F 87 22-34 50
6840 Götzis Hauptstraße 4, T (05523) 624 51-0, F 624 51-60 50
6971 Hard Landstraße 9, T (05574) 414-16 00, F 414-16 50
6973 Höchst Hauptstraße 25, T (05578) 722 72-0, F 722 72-52 50
6845 Hohenems Bahnhofstraße 19, T (05576) 737 81-0, F 737 81-62 50
6923 Lauterach „Achpark”, Dammstraße 2, T (05574) 414-64 00, F 414-64 50
6764 Lech HNr. 138, T (05583) 25 78-0, F 25 78-38 50
6890 Lustenau Kaiser-Franz-Josef-Straße 4a, T (05577) 836 11-0, F 836 11-50 50
6993 Mittelberg Walserstraße 62, T (05517) 55 91-0, F 55 91-84 50
6830 Rankweil Ringstraße 11, T (05522) 453 30-0, F 453 30-22 50
6830 Rankweil „LKH Rankweil“, Valdunastraße 16, T (05522) 787 72-26 11, F 787 72-26 50
6991 Riezlern Walserstraße 31, T (05517) 50 01-0, F 50 01-80 50
6780 Schruns Jakob-Stemer-Weg 2, T (05556) 739 76-0, F 739 76-32 50
Kleinwalsertal: Vorarlberger Landes- und Hypothekenbank Aktiengesellschaft
87569 Mittelberg, Walserstraße 62, T (05517) 55 91-0, F 55 91-84 50
87567 Riezlern, Walserstraße 31, T (05517) 50 01-0, F 50 01-80 50
Vienna: Vorarlberger Landes- und Hypothekenbank Aktiengesellschaft
1010 Vienna, Singerstraße 12, T (01) 513 89 29-0, F 513 89 29-74 50
Vorarlberger Landes- und Hypothekenbank Aktiengesellschaft, Mobiler Vertrieb
1040 Vienna, Wiedner Hauptstraße 76, T (01) 587 02 70-0, F 587 02 70-77 50
Styria: Vorarlberger Landes- und Hypothekenbank Aktiengesellschaft
8010 Graz, Joanneumring 7, T (0316) 81 64 70-68 00, F 81 64 70-68 50
Upper Austria: Vorarlberger Landes- und Hypothekenbank Aktiengesellschaft
4600 Wels, Kaiser-Josef-Platz 49, T (0)50 414-68 00, F -68 50
Switzerland: Vorarlberger Landes- und Hypothekenbank Aktiengesellschaft
eine Niederlassung der Vorarlberger Landes- und Hypothekenbank Aktiengesellschaft
9004 St. Gallen, Bankgasse 1, T +41/(0)71/228 85-00, F 228 85-19
Principality of Hypo Investment Bank (Liechtenstein) Aktiengesellschaft
Liechtenstein: 9490 Vaduz, Austrasse 59, Postfach 231, T +423/265 56-56, F 265 56-699
Italy: Hypo Vorarlberg GmbH
39100 Bolzano, Galileo-Galilei-Straße 10/B, T +39/0471/06 05 00-0, F 06 05 50
Hypo Vorarlberg Leasing AG
39100 Bolzano, Galileo-Galilei-Straße 10/B, T +39/0471/06 05 00-0, F 06 05 00-50
Hypo Vorarlberg Leasing AG
24100 Bergamo, Via Vittorio Emanuele II, T +39/035/21 07 51-0, F 21 06 09
Hypo Vorarlberg Leasing AG
22100 Como, Via Fratelli Rosselli 14, T +39/031/57 45 17-0, F 57 44 76
17

Vorarlberger Landes- und Hypothekenbank Aktiengesellschaft
Hypo-Passage 1, 6900 Bregenz, Austria
T +43/(0)5574/414-0, F +43/(0)5574/414-1050
info@hypovbg.at, www.hypovbg.at
BLZ 58000, BIC/SWIFT HYPVAT2B, DVR 0018775, UID ATU 36738508, FN 145586y