Financial Statements - Raiffeisenlandesbank Oberösterreich

geschaeftsbericht2007.rlbooe.at

Financial Statements - Raiffeisenlandesbank Oberösterreich

Tower 2000 and Bagration Bridge to Moscow City, Russia


Raiffeisenlandesbank Oberösterreich

Aktiengesellschaft

efficient

effective

experienced

Raiffeisenlandesbank

Oberösterreich

Sustainability and responsibility are of the highest priority for the Raiff -

eisenlandesbank Oberösterreich Aktiengesellschaft. It only operates

within business fields in which it possesses the necessary expertise to

assess and evaluate all risks. This high awareness of its responsibility

ensures the long-term success of the company – and thereby the success

of its customers as well.

Annual Report 07

947


Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Management Report 2007

TOTAL ASSETS DEVELOPMENT (IN EUR BN)

2007

20.4

2006

17.3

2005

15.7

2004

14.2

2003

12.8

0 5 10 15 20 25

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft has

adopted a special customer orientation. The goal is to do

everything possible to assist the customers. For this reason,

the leading institution of the Raiffeisen Banking Group Upper

Austria supports its customers with new, well-targeted financ -

ing instruments, improves its own risk-bearing capacity through

consistent reduction of the cost/income ratio, con tinuously

expands its worldwide service and support network and engages

in forward-thinking training and education measures

for its employees to establish a firm foundation for the success

of its customers.

Raiffeisenlandesbank Oberösterreich plans, develops, maintains

and expands relationships with its customers, with institutions,

with the competent authorities in the various regions of activity,

with neighbours outside of Upper Austria and with strong partners

around the world. The company relies heavily on sustain -

ability and value added. The strategies are clearly discernible

and comprehensible. Raiffeisenlandesbank Oberösterreich has

always considered it very important to avoid overregulation and

excess bureaucracy, keeping instead a sense of proportion with

regard to financing, carefully calculating risks and maintaining a

high risk-bearing capacity.

High risk-bearing capacity thanks to a low cost/income ratio

A bank that dynamically assists companies, finances exports and

supports companies with banking services in all parts of the world

must be capable of bearing risks. The lower the cost/income ratio,

the greater the bank’s ability to positively arrange its operations.

With its high risk-bearing capacity, Raiffeisenlandesbank Ober -

österreich is capable of financing the diverse opportunities that

arise for companies and their employees.

BUSINESS DEVELOPMENT

The sustained positive development and stability of Raiff -

eisenlandesbank Oberösterreich are also demonstrated in the

balance sheet totals, which grew by EUR 3,002 million, or

17.3%, compared with the end of the previous year’s balance

sheet date to reach EUR 20,350 million.

SOURCE OF FUNDS/CAPITAL STRUCTURE

The increase on the liabilities side of the balance sheet was

derived in particular from a sharp increase in savings and giro

deposits as well as a rise in the liabilities to banks.

The liabilities to banks increased over the last year by EUR

1,463 million, or 18.1%, to EUR 9,527 million.

Of this year-end amount, EUR 2,847 million are payable on

demand. Included in this are deposits held by the Upper

Austrian Raiffeisen banks in the amount of EUR 1,764 million,

which reflect the strong primary funds available at the primary

level.

48 Annual Report 07


The liabilities with fixed term or withdrawal date amounted to

EUR 6,680 million as at 31 December 2007, which provides

the Upper Austrian Raiffeisen banks with EUR 1,549 million in

long-term refinancing funds.

Also included are long-term refinancing funds totalling EUR

5,131 million from subsidy providers (such as the Oesterreichische

Kontrollbank), revenue transfers from issues by

subsidiaries, loans against borrower’s notes and funds

borrowed from banks. These funds represent an important

long-term basis for refinancing.

The organisational preparations for the submission of cus -

tomer loans to the European Central Bank tender process

were completed at Raiffeisenlandesbank Oberösterreich

during 2007.

The Oesterreichische Nationalbank certified the process submitted

by Raiffeisenlandesbank Oberösterreich. Effective

immediately, customer loans can now also be used for shortterm

refinancing.

The volume of issues, which consisted of securitised loans of

EUR 3,587 million, subordinated liabilities of EUR 93 million

and the supplementary capital of EUR 1,105 million, totalled

EUR 4,785 million as at 31 December 2007. This represents an

increase of 10.6% over the previous year.

Liabilities to customers reported on the 2007 balance sheet

date exhibited an attractive increase of 25.4% over the preceding

year to reach EUR 4,473 million. This figure related to

savings of EUR 803 million and payables on demand and

fixed-term deposits of EUR 3,670 million.

31 Dec 2007 331 Dec 2006 Change

in EUR mill. in % in EUR mill. in % in EUR mill. in %

Liabilities to banks 9,527 46.8 8,064 46.5 + 1,463 + 18.1

Own issues 4,785 23.5 4,328 24.9 + 457 + 10.6

Savings and giro deposits 4,473 22.0 3,566 20.6 + 907 + 25.4

Equity 1,316 6.5 1,076 6.2 + 240 + 22.3

Other liabilities 249 1.2 314 1.8 - 65 - 20.7

Raiffeisenlandesbank

Oberösterreich

Total assets 20,350 100.0 17,348 100.0 +3,002 + 17.3

CAPITAL RESOURCES

As at 31 December 2007, reported equity included the follow -

ing items:

Mio. EUR

Subscribed capital 254.0

Capital reserves 547.8

Retained earnings 219.3

Statutory reserves 262.4

Untaxed reserves 10.2

Net income for the year 22.1

Equity 1,315.8

The level of equity at Raiffeisenlandesbank Oberösterreich

rose in absolute terms by EUR 239.7 million to EUR 1,315.8

million. This growth was the result of a capital increase and

the strong power of the bank to finance itself, due to the

excellent income situation. A dividend distribution of EUR

21.2 million is planned.

The total amount of own funds to be taken into account at

Raiffeisenlandesbank Oberösterreich pursuant to the Austrian

Banking Code amounted to EUR 2,241 million at the end of

2007. The statutory capital requirement was EUR 1,283 million.

Despite the high level of growth in 2007, there was an

equity surplus of EUR 958 million on the balance sheet date.

With a core capital ratio of 8.10% and an equity ratio in the

banking book of 13.99%, the figures are noticeably above the

minimums.

Raiffeisenlandesbank Oberösterreich is in a very pleasing equity

situation for financing its further growth over the coming years.

Annual Report 07

49 9


APPLICATION OF FUNDS/ASSETS STRUCTURE

31 Dec 2007 31 Dec 2006 Change

in EUR mill. in % in EUR mill. in % in EUR mill. in %

Loans and advances to customers 11,358 55.8 8,918 51.4 + 2,440 + 27.4

Loans and advances to banks 4,462 21.9 4,063 23.4 + 399 + 9.8

Securities 3,470 17.1 3,391 19.6 + 79 + 2.3

Holdings and investments

in associated companies 853 4.2 784 4.5 + 69 + 8.8

Other assets 207 1.0 192 1.1 + 15 + 7.8

Total assets 20,350 100.0 17,348 100.0 + 3,002 + 17.3

On the asset side, above all, more loans and advances to

customers contributed to the increase in the total assets.

Holdings and shares in associated companies were expanded

compared to the previous year by EUR 69 million.

As at the 2007 balance sheet date there was a volume of EUR

11,358 million in loans and advances to customers. Com pared

to the year before, this amounts to an increase of EUR 2,440

million or 27.4%. As in past years, the focus was on qualitative

growth. In supporting and accompanying our customers,

we not only want to provide them with financing, we also hope

to help them take advantage of good chances with modern

financing models and a diverse range of subsidy opportunities.

The far-sighted, dynamic risk provision policy applied

when assessing credit exposure was continued.

Loans and advances to banks rose during the course of 2007

by EUR 399 million to EUR 4,462 million. Of the loans and

advances at the end of the year, EUR 1,039 million were re -

financed to Raiffeisen banks in Upper Austria.

Securities held by the bank increased in the year 2007 by 2.3%

to EUR 3,470 million. As at the end of the year, these con -

sisted of EUR 436 million in public sector debt issues and

similar securities, EUR 1,744 million in bonds and other fixed

interest securities and EUR 1,290 million in shares and other

non-fixed interest securities (e.g. pension funds).

Raiffeisenlandesbank Oberösterreich did not have any US

subprime securities in its portfolio on 31 December 2007.

As in previous years, all securities, including those held as

fixed assets, were valued according to the strict lower of cost

or market principle. The exception to this is a small volume of

trading securities that are assessed “mark to market”.

INCOME SITUATION

In 2007, Raiffeisenlandesbank Oberösterreich again succeeded

in maintaining its pleasing profit trend.

The net interest income reported for 2007 was EUR 91.2 million,

or 14.6%, higher than the comparable value for the preceding

year, mainly due to the flattening off of the interest-rate

curve. In 2007, the Raiffeisenlandesbank Oberösterreich

interest margin amounted to 0.48%.

The increase in operating income by 9.3% was due to the rise

in income from securities and investments (31.7%) and other

operating income (11.5%). The income balance from commission

business in 2007 was 15.5% up on that for the preceding

year, and amounted to EUR 62.9 million.

General administration costs in 2007 comprised EUR 72.7 million

in personnel expenses and EUR 58.7 million in operating

expenses.

While total assets increased by 17.3%, total operating expenditure

was only 6.1% higher than in the previous year.

The cost/income ratio was also further improved in 2007

by 1.4% points. In a banking comparison, the cost/income

ratio of 47.1% in 2007 was extremely favourable. In 2007,

for every euro earned, only 47.1 cents were consumed by

costs.

50

Annual Report 07


2007 2006 Change

in EUR mill. in % in EUR mill. in % in %

Ø TA

Ø TA

Net interest income 91.2 0.48 106.8 0.65 - 14.6

Income from securities and investments 137.5 0.73 104.4 0.63 + 31.7

Other income 101.9 0.54 91.4 0.55 +11.5

Operating income 330.6 1.75 302.6 1.83 +9.3

Personnel expenses -72.7 -0.38 - 67.8 -0.41 +7.2

Operating expenses -58.7 -0.31 - 55.3 -0.34 +6.1

Other expenses -24.3 -0.13 - 23.6 -0.14 +3.0

Total operating expenditure -155.7 -0.82 - 146.7 -0.89 +6.1

Operating profit 174.9 0.93 155.9 0.94 +12.2

Cost/income ratio 47.1% 48.5%

ø Balance sheet total 18,849 16,516

DEVELOPMENT OF THE COST/INCOME RATIO (IN %)

60

56

54

53.4

51.9

52

49.5

50

48.5

48

47.1

46

44

42

valuation of securities according to a strict lower of cost or

market principle, the EUR 100 million mark was crossed for the

first time.

Profit for the year was up by EUR 102.5 million and is thus

also over EUR 100 million for the first time.

Following the deduction of the movements in the reserves,

which resulted in expenditure of EUR 80.3 million, the net profit

reported for 2007 amounted to EUR 22,122,854.50.

RATING UPGRADE

OF RAIFFEISENLANDESBANK OBERÖSTERREICH

Raiffeisenlandesbank

Oberösterreich

40

2003 2004 2005 2006 2007

Moody’s rating agency raised the long-term rating on 20 April

2007 from A1 to Aa3, thereby confirming the successful course

of Raiffeisenlandesbank Oberösterreich.

The operating profit posted by Raiffeisenlandesbank Ober -

österreich for the 2007 financial year hit a record level once

again with EUR 174.9 million. Compared to the previous year,

this was an increase of EUR 19 million, or 12.2%.

The profit on ordinary activities rose by 6.9% to EUR 105.5 million.

Despite an extremely prudent risk provision policy and the

BANK BRANCHES

On 31 December 2007 Raiffeisenlandesbank Oberösterreich

had 20 bank branches in the greater Linz and Traun urban

area. Our customers have modern and friendly business facilities

at their disposal, which have been equipped in line with

Annual Report 07 951


the very latest banking operation know-how and are set up

for confidential consulting meetings. The self-service com -

ponents and, in particular, our electronic banking system

(ELBA) offer customers the most amount of flexibility possible

with which they can do their banking.

Apart from the acquisition of new clients, the assistance and

support of existing customers was the main priority. The success

of customer relations is measured with the so-called

cross-selling ratio. On average, the customers in the retail area

have 4.37 products. During the reporting year, it was possible

to increase the number of retail customers supported to almost

69,000. Compared to the previous year, this represents

a 2.8% rise.

Raiffeisenlandesbank Oberösterreich also successfully applies

this customer-orientated approach on the Internet. 44% of

private customers with an account at Raiffeisen already take

advantage of Internet Banking.

For this, Raiffeisen customers with “mein.raifeisen.at mit ELBA-

Internet” have the following Internet services at their fingertips:

the areas of special financing for companies, real estate project

financing as well as in the superior private banking sector.

MODERN VIDEO CONFERENCING SYSTEMS FOR

EFFICIENT COMMUNICATION THROUGHOUT THE

UPPER AUSTRIAN RAIFFEISEN NETWORK

The continuously growing volume of business at the locations

in Vienna, Germany and the Czech Republic requires fast and

above all efficient information and communications exchange.

Raiffeisenlandesbank Oberösterreich is planning to use an

integrated video conferencing solution for this.

At the moment, the relevant video conferencing systems are

being designed and set up. The plan is to furnish selected

work places and conference rooms with modern video technology

that will enable our employees in future to communicate

quickly and efficiently between the various locations in

Austria, Germany and the Czech Republic. With this, we hope

to improve communication and at the same time reduce travel

time and expenses.

■ Payment transactions

■ Account information

■ Securities transactions (“boerse-live.at”)

■ Online savings

■ as well as a secure communication line with a

personal mailbox

Raiffeisen customers that do not have “mein.raiffeisen.at mit

ELBA-Internet” and non-customers can access the following

Internet services around the clock:

■ Application for products and product information: Giro

account, Maestro Raiffeisen card, credit card, custody account,

online savings, savings with a building society, financing,

provisions and retaining value.

The branch in Southern Germany has a total of seven loca tions:

During the 2007 reporting year, the number of cus tomers

serviced and the business volume was again noticeably increased.

For 2008, the opening of another bank branch in Heilbronn

is planned. The core competencies of Raiffeisen lan desbank

Oberösterreich in this market segment are above all in

Once it is implemented, this efficient communications solution

will naturally be available to all Upper Austrian Raiffeisen

banks, which will further improve the cooperation and communication

in the Upper Austrian Raiffeisen network.

HUMAN RESOURCES MANAGEMENT

As at 31 December 2007, Raiffeisenlandesbank Ober österreich

had a banking staff of 891 and thus offered a large number

of top quality full and part-time jobs (part-time quota: 11%).

With a tailor-made overall design, Raiffeisenlandesbank

Oberösterreich added new momentum to the training and

development of apprentices. This paves the way to college

for our next generation bankers.

At the Raiffeisenlandesbank Academy which was founded

to build up future managers and specialists, high-potential

employees with individual training programmes are pro -

moted and prepared for deployment in strategically im -

portant positions.

52

Annual Report 07


QUALIFIED AND COMMITTED EMPLOYEES ARE

AN ESSENTIAL POTENTIAL FOR THE FUTURE AT

RAIFFEISENLANDESBANK OBERÖSTERREICH

Only employees that have been excellently trained can

guarantee the success of customers for the future.

E-learning has a very high status in the Raiffeisen Banking

Group Upper Austria. The learning platform, raiffeisen@

learning, combines all the modern instruments of communication

to guarantee an efficient training and development programme

with blended-learning concepts and is being con -

tinuously developed further and adjusted to meet the current

requirements.

The online certification of consultants was developed in cooperation

with the Johannes Kepler University in Linz and the

LIMAK Johannes Kepler University Business School and has

been recognised with the European E-Learning Award.

Market risks

Market risks are defined as changes in interest rates, currency

and exchange rates relating to securities, interest-rate and

foreign exchange items. These risks are measured in terms of

the value-at-risk parameter. This measures a possible loss,

which with 99% probability will not be exceeded in the case

of a certain holding period.

The value-at-risk is established daily for the trading books

using the Bloomberg trading system, while the KVAR+ risk

management program is employed for the bank books.

Apart from this parameter, stop-loss, present value of a basis

point and volume limits are also applied as additional risk

limitations.

These risk management methods are also employed for hedge

positions.

In 2008, this innovative training instrument will be expanded

to include multimedia e-learning. In the future it will be pos -

sible to transmit instruction units live through the raiffeisen@

learning platform directly to the workspaces of the various

employees.

Participants in this multimedia training program, which is

produced in its own e-learning multimedia studio, work

through the contents of the programme on their computer at

their own desk.

RISK MANAGEMENT

The long-term success of Raiffeisenlandesbank Oberösterreich

is largely dependent upon active risk management. In order to

achieve this target, risk management was implemented with

structures that facilitate the identification and measurement of

all risks (market, credit, liquidity and operational risks) and their

active managerial counteraction.

The Managing Board’s overall risk strategy ensures that risks

remain synchronised and in line with the strategic orientation

of the company. The Managing Board and the Supervisory

Board are regularly informed.

The total limit for these risks is decided on by the Managing

Board after taking the risk-bearing capabilities of the bank into

consideration. Controlling continuously checks that these

limits are complied with.

Shifts in the interest, currency and share price landscape can

bring a major influence to bear on results and the risk situation.

Therefore, possible shifts in risk parameters are simulated and

the consequences reported to the Managing Board.

Credit risk

The principles for the credit ratings of the customers are in -

corporated in the “Credit Risk Management” manual. This set of

regulations is a compact representation of the standards valid for

Raiffeisenlandesbank Oberösterreich. These are oriented on international

standards (Basel II) and on supervisory recommendations.

The organisational separation between the market and

market consequences was already implemented some years ago.

Moreover, in order to measure the credit risk, following an internal

bank rating, financing is divided into creditworthi ness and

risk classes. The risk class of a borrower therefore assumes two

dimensions, comprising the determination and assess ment of

the economic situation and the taking of collateral.

Raiffeisenlandesbank

Oberösterreich

Annual Report 07 953


Both hard and soft facts are employed as creditworthiness

criteria. In corporate customer business, soft facts are de fined

systematically during discussions with the company and then

assessed.

Since 2005, a scoring system has been employed for the auto -

matic classification of small volume business with employed

retail customers.

This credit rating system is also utilised by subsidiaries in this

customer segment.

Liquidity risk

Liquidity risk means not being able to fulfil one’s payment

obligations by the due date or, in the case of a liquidity short -

age, of not being able to acquire enough liquidity at the terms

expected.

Maturity-matching refinancing has a high priority in Raiffeisenlandesbank

Oberösterreich. This is reflected in the liquidity

gap analysis.

This is used for the calculation of monthly scenarios, which

define the closure expenditure required for open liquidity items.

The sufficient supply of short- and medium-term liquidity

in possible bottleneck situations is shown in the liquidity

hedging plan.

Operational risks

Raiffeisenlandesbank Oberösterreich defines operational risk

as being the risk of losses derived from the inadequacies or

failure of internal procedures, people and systems, or external

events.

Raiffeisenlandesbank Oberösterreich uses both organisa tional

and computer technology methods in order to best limit this

type of risk. A high degree of security is attained by means of

limit systems, competence regulations, a risk-adequate in -

ternal control system, a comprehensive security manual as

a behaviour code and directive, as well as scheduled and

unscheduled audits by Internal Auditing.

The operative management of this type of risk involves risk

discussions and analyses with managers (early warning system)

and the systematic registration of errors in a database for analysis

(ex-post analysis).

Risk-bearing capacity analysis

The risk bearing capacity analysis compares the Group risk

with the available risk coverage (operating result, hidden reserves,

provisions and equity), in order to furnish the certainty

that even in the very unlikely case of an extreme situation,

sufficient capital for risk coverage would be available.

The comparison of the Group risk with the available coverage

provides the risk-bearing capacity.

OeNB Audit 2007

The extensive audit carried out during the 2007 financial year

by OeNB of the business operations of Raiffeisenlandesbank

Oberösterreich, confirmed that the risk management already

complied with the requirements of Basel II, even before

Basel II came into effect.

OUTLOOK

Raiffeisenlandesbank Oberösterreich is in the process of

further expanding its risk-bearing ability and competitiveness.

The cost/income ratio is being reduced further by exercising

tight cost and income management, which also increases the

bank’s positive creative power.

State-of-the-art financial services for our customers

In the past, Raiffeisenlandesbank Oberösterreich has built up

many innovative business fields. With inventive and modern

financial services, we focus on sustainability and value-added,

as well as a continuous and lasting upward trend. Due to the

large capital resources available and the positive results, we

are in a position of systematically being able to expand our

special customer orientation. Our predominant marketing principle

is to assist the retention and enlargement of the financial

leeway of our customers.

54 Annual Report 07


Ongoing further development

In the 2008 financial year, Austria’s strongest regional bank

will remain on its successful course. The available figures point

toward the continuation of this unique path to success.

In the current year, we will push forward with the expansion of

the correspondent and cooperation bank network, focus on

Romania and Southern Russia, strengthen export financing,

accompany more and more companies to China and India,

broaden our leasing offers in the direction of Eastern Europe

and, above all, help to optimally shape the financing of the

generation change in companies.

Raiffeisenlandesbank Oberösterreich intends that expecta -

tions should not only be fulfilled but surpassed, and cus-

tomers should not only receive support, but also inspiration.

A unique level of customer orientation, with competence,

charm, understanding and yet assertireness, leadership with

regard to the development of new, targeted products and

modern sales instruments are fundamental building blocks

that distinguish us. We want to create trust, guarantee security

and ensure a solid base for a successful and sustainable

partnership.

There were no events of particular significance after the close

of the 2007 business year.

There are no results of research and development to comment

on, as these are not relevant in this industry.

Linz, 04 February 2008

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Europaplatz 1a, 4020 Linz

THE MANAGING BOARD

Raiffeisenlandesbank

Oberösterreich

Ludwig Scharinger

Chief Executive

Hans Schilcher

Deputy Chief Executive

Helmut Schützeneder

Member of the Managing Board

Georg Starzer

Member of the Managing Board

Markus Vockenhuber

Member of the Managing Board

Michaela Keplinger-Mitterlehner

Member of the Managing Board

Annual Report 07 955


FINANCIAL STATEMENTS 2007

RAIFFEISENLANDESBANK OBERÖSTERREICH

AKTIENGESELLSCHAFT, 4020 LINZ, EUROPAPLATZ 1A

BALANCE SHEET AS AT 31 DECEMBER 2007

INCOME STATEMENT 2007

NOTES TO THE FINANCIAL STATEMENTS 2007

(SECTION SUBJECT TO STATUTORY DISCLOSURE)

AUDIT CERTIFICATES

2007

56

Annual Report 07


Balance Sheet as at 31 December 2007

ASSETS

31 Dec. 2007 31 Dec. 2006

in EUR in EUR in EUR ‘000 in EUR ‘000

1. Cash in hand and balances

at central banks 35,544,006.14 19,308

2. Public sector debt issues and

bills of exchange eligible for refinancing

at the Austrian Central Bank

a) Public sector debt issues

and similar securities 436,212,606.65 502,292

b) Bills of exchange eligible

for refinancing at central banks 0.00 436,212,606.65 0 502,292

3. Loans and advances to banks:

a) Payable on demand 1,159,712,435.02 519,771

b) Other loans and advances 3,302,114,702.20 4,461,827,137.22 3,542,791 4,062,562

4. Loans and advances to customers 11,357,637,755.85 8,918,370

5. Debt securities and other

fixed-income securities:

a) From public sector issuers 254,767.62 6,501

b) From other issuers 1,744,110,847.85 1,744,365,615.47 1,798,051 1,804,552

including:

own bonds (60,718,420.95) (43,398)

6. Shares and other variable

yield securities 1,290,128,229.79 1,083,924

7. Investments 106,976,761.89 82,981

including:

banks (6,353,570.51) (6,257)

8. Investments in associates 746,497,803.02 701,389

including:

banks (32,824,255.26) (25,824)

9. Intangible fixed assets 0.00 0

10. Property, plant and equipment 22,006,185.34 24,134

including:

land and buildings used by the bank

in the course of its operations (17,498,574.44) (19,426)

11. Own shares or interests and shares

in companies with a controlling or

majority holding 0.00 0

including:

nominal values (0.00) (0)

12. Other assets 126,746,889.59 121,770

13. Subscribed capital (payment has been

demanded but not yet paid) 0.00 0

14. Deferred income from tax assets 22,138,518.86 26,967

Raiffeisenlandesbank

Oberösterreich

Total assets 20,350,081,509.82 17,348,249

1. Foreign assets 6,220,305,729.64 4,506,127

Annual Report 07 957


Balance Sheet as at 31 December 2007

LIABILITIES

31 Dec. 2007 31 Dec. 2006

in EUR in EUR in EUR ‘000 in EUR ‘000

1. Liabilities to banks:

a) Payable on demand 2,846,748,009.36 2,725,331

b) With fixed term or withdrawal date 6,680,088,006.43 9,526,836,015.79 5,338,256 8,063,587

2. Liabilities to customers:

a) Savings deposits 803,279,199.05 746,233

including:

aa) payable on demand (45,973,350.91) (45,012)

ab) with fixed term or termination date (757,305,848.14) (701,221)

b) Other liabilities 3,669,738,499.02 4,473,017,698.07 2,820,211 3,566,444

including:

ba) payable on demand (1,890,875,149.84) (1,639,450)

bb) with fixed term or termination date (1,778,863,349.18) (1,180,761)

3. Debt securities in issue:

a) Bonds issued 1,326,584,033.37 1,120,454

b) Other liabilities evidenced by certificates 2,260,603,839.08 3,587,187,872.45 2,065,003 3,185,457

4. Other liabilities 138,388,243.20 188,962

5. Deferred income from tax liabilities 30,768,981.37 37,121

6. Provisions:

a) Provisions for severance payments 16,353,595.00 14,838

b) Provisions for pension obligations 17,565,881.92 17,479

c) Provisions for taxes 12,234,582.90 10,321

d) Other provisions 33,913,354.92 80,067,414.74 45,515 88,153

6.A Fund for general bank risks 0.00 0

7. Subordinated liabilities 92,700,721.44 94,201

8. Supplementary capital 1,105,283,809.76 1,048,224

9. Subscribed capital 254,031,954.25 241,032

10. Capital reserves:

a) Committed 547,845,996.45 410,859

b) Uncommitted 0.00 547,845,996.45 0 410,859

11. Retained earnings

a) Statutory reserves 0.00 0

b) Reserves in accordance with

the articles of association 0.00 0

c) Other reserves 219,328,790.46 219,328,790.46 164,499 164,499

including:

reserves pursuant to § 225 (5)

of the Austrian Business Code (0.00) (0)

12. Liability reserve pursuant to § 23 (6)

of the Austrian Banking Act 262,359,531.48 229,940

13. Net income for the year 22,122,854.50 19,056

58

Annual Report 07


LIABILITIES

31 Dec. 2007 31 Dec. 2006

in EUR in EUR in EUR ‘000 in EUR ‘000

14. Untaxed reserves:

a) Valuation reserve due to

special depreciation 10,141,625.86 10,714

b) Other untaxed reserves 0.00 10,141,625.86 0 10,714

including:

ba) investment allowance pursuant

to § 10 of the 1988 Austrian

Income Tax Act (0.00) (0)

bb) carry-over reserves pursuant

to § 12 of the 1988 Austrian

Income Tax Act (0.00) (0)

Total liabilities 20,350,081,509.82 17,348,249

1. Contingent liabilities 2,073,425,058.85 1,710,949

including:

a) acceptances and endorsed bills sold (0.00) (0)

b) liabilities from indemnity

agreements and guarantees (2,073,345,747.23) (1,710,870)

2. Credit risks 7,911,056,429.98 7,027,493

including:

liabilities from

repurchase transactions (31,847,192.70) (54,960)

3. Liabilities from

trust fund transactions 12,196,298.19 10,334

4. Equity eligible for inclusion pursuant

to § 23 (14) of the Austrian Banking Act 2,241,482,297.14 1,965,596

including:

equity pursuant to § 23 (14)

subpara. 7 of the Austrian Banking Act (0.00) (0)

5. Mandatory equity pursuant to

§ 22 (1) of the Austrian Banking Act 1,283,547,846.98 1,023,749

including:

mandatory equity pursuant to § 22 (1)

(1 and 4) of the Austrian Banking Act (1,279,368,846.98) (1,018,956)

6. Foreign liabilities 3,940,648,433.21 3,524,094

7. Hybrid capital pursuant to § 23 (2)

(5 and 6) of the Austrian Banking Act 0.00 0

8. Under-accrual in provisions

for pension obligations 273,637.47 354

Raiffeisenlandesbank

Oberösterreich

Annual Report 07 959


Income Statement 2007

2007 2006

in EUR in EUR in EUR ‘000 in EUR ‘000

1. Interest and interest-related income 781,859,363.79 558,723

including:

from fixed interest securities (100,102,206.16) (76,781)

2. Interest and interest-related expenses - 690,713,806.63 - 451,968

I. NET INTEREST INCOME 91,145,557.16 106,755

3. Income from securities and investments:

a) Income from shares, other equity interest

and non-fixed interest securities 75,980,894.02 54,275

b) Income from investments 5,029,733.58 3,714

c) Income from shares in associates 56,501,196.36 137,511,823.96 46,448 104,437

4. Commission income 95,748,540.04 86,924

5. Commission expenses - 32,853,251.31 - 32,452

6. Income from/expenses

in financial operations 13,044,110.76 11,442

7. Other operating income 25,977,309.48 25,504

II. OPERATING INCOME 330,574,090.09 302,610

8. General administrative expenses:

a) Personnel expenses - 72,719,194.27 - 67,808

including:

aa) wages and salaries (- 52,701,886.46) (- 46,529)

ab) expenses for statutory social security

contributions, payroll taxes

and mandatory contributions (- 13,149,481.11) (- 13,849)

ac) other social expenses (- 947,970.32) (- 970)

ad) expenses for pension schemes

and support payments (- 3,990,978.61) (- 3,806)

ae) allocations to the provisions

for pensions (- 86,654.58) (- 74)

af) expenses for severance payments

and employee pension funds (- 1,842,223.19) (- 2,579)

b) other administrative expenses

(operating expenses) - 58,679,474.06 - 131,398,668.33 - 55,262 - 123,070

9. Value adjustments for property items

in asset Items 9 and 10 - 2,823,970.57 - 3,085

10. Other operating expenses - 21,464,157.43 - 20,566

III. OPERATING EXPENSES - 155,686,796.33 - 146,721

IV. OPERATING RESULT 174,887,293.76 155,889

60

Annual Report 07


2007 2006

in EUR in EUR in EUR ‘000 in EUR ‘000

IV. OPERATING RESULT

(carry-over) 174,887,293.76 155,889

11./12. Balance from reversals/

additions, or value adjustments

to loans and certain securities

and provisions for contingent

liabilities and loan risks - 57,092,877.37 - 55,275

13./14. Balance from reversals/

additions, or value adjustment

to securities valued as financial

assets as well as investments and

shares in associates - 12,282,434.31 - 1,920

V. RESULTS FROM ORDINARY

BUSINESS ACTIVITIES 105,511,982.08 98,694

15. Extraordinary income 0.00 0

including:

withdrawals from the fund

for general bank risks (0.00) (0)

16. Extraordinary

expenses 0.00 0

including:

allocations to the fund

for general bank risks (0.00) (0)

17. Extraordinary result 0.00 0

(subtotal of items 15 and 16)

18. Taxes on income

and earnings - 1,084,400.60 - 3,495

19. Other taxes, unless reported

under Item 8 - 1,958,160.94 - 329

Raiffeisenlandesbank

Oberösterreich

VI. PROFIT FOR THE YEAR 102,469,420.54 94,870

20. Movements in reserves - 80,346,566.04 - 75,814

including:

allocation to the statutory reserve (- 32,419,309.87) (- 20,982)

reversal from the statutory reserve (0.00) (0)

VII. NET PROFIT 22,122,854.50 19,056

21. Profit/loss carry-over 0.00 0

VIII. NET INCOME FOR THE YEAR 22,122,854.50 19,056

Annual Report 07 961


Notes to the Financial Statements 2007

1. INFORMATION CONCERNING THE REPORTING AND VALUATION METHODS USED IN THE BALANCE SHEET

AND THE INCOME STATEMENT

The 2007 Financial Statements were prepared in accordance

with the provisions of the Austrian Banking Act (BWG) and the

Austrian Business Code (UGB).

The annual financial statements were drawn up in line with the

principles of orderly accounting, as well as the generally

accepted standard practice providing a true and fair view of

the assets, financial position and profitability of the company.

The principle of completeness was observed in preparing the

annual financial statements.

The principle of individual valuation was observed during the

valuation of the various assets and liabilities and the con tinued

operation of the company was assumed.

The principle of prudence was observed, as only those profits

realised on the balance sheet date were reported. All recog -

nisable risks and impending losses were taken into account.

1.1 Foreign currency translation

Sums in foreign currency were converted using the European

Central Bank’s foreign currency mean exchange rate pursuant

to § 58 (1) of the Austrian Banking Act.

1.2 Securities

Both securities held as fixed and current assets were valued

in accordance with the strict lower of cost or market method.

In accordance with § 56 (2) of the Austrian Banking Act, bonds

purchased above par and other fixed-interest securities held

as fixed assets, were written down pro rata temporis to the

amount repayable.

There were no pro rata write-ups in the case of securities

purchased below par.

Securities used as cover funds for trust funds were regarded

as fixed assets and valued according to the strict lower of cost

or market method pursuant to § 2 (3) of the Austrian Trustees

Securities Directive.

Low-volume trading stock securities admissible to the stock

markets were valued on a mark to market basis.

1.3 Risk provisions

Itemised value adjustments and provisions were made for

recog nisable risks as they relate to borrowers. As in previous

years, a dynamic, forward-looking approach was adopted for

the valuation of loan business. For some loans, standardised,

defined value adjustments were employed, or provisions were

formed in the shape of dynamic risk provisions, on the basis

of risk groups in accordance with the "risk management"

rating model.

An appropriate provision was formed for possible loan

defaults relating to financing in risk countries, on the basis of

international, estimated values.

On the whole, this is a continuation of the cautious valuation

policy.

1.4 Special valuation pursuant to § 57 (1) and (2)

of the Austrian Banking Act

The scope for valuation as per § 57 (1) and (2) of the Austrian

Banking Act was not employed.

1.5 Investments

Investments and shares in associated companies were valued

at historical cost. Extraordinary depreciation was made in the

case of value impairments which were likely to be of a permanent

nature, due to sustained losses, a reduction in equity

and/or a reduced earnings capacity level.

1.6 Property, plant and equipment

Pursuant to § 55 (1) of the Austrian Banking Act in combination

with § 204 of the Austrian Business Code, the valuation of

tangible assets took place at the historical price or the cost of

production less scheduled depreciation.

Low-value items were written-off completely in the year of

purchase.

The useful economic life employed as a basis for scheduled depreciation

amounted to 20-50 years for immovable fixed assets

and 3- 20 years for movables.

62

Annual Report 07


Extraordinary depreciation was applied in cases of assumed

lasting value impairment.

1.7 Provisions for pension obligations

Pension commitments were calculated according to the partial

value method for future retirement benefit entitlements, using

the AVÖ 1999 R Pagler & Pagler mortality tables and an

interest rate of 3.5%.

The transitional provisions pursuant to Article X of the Austrian

Business Code have been applied since 1992 and extend over

a period of 20 years.

1.11 Derivative financial instruments

The fair value to be provided is the amount at which an asset

was exchanged or a debt was paid between competent, contractually

willing and mutually independent business partners.

Where stock exchange prices were available, these were

employed for evaluation. Internal evaluation models with current

market parameters and in particular the cash value method

and option price models were used for financial instruments

lacking a stock exchange price.

1.8 Provisions for severance payments

and similar pensions

The provisions for severance payments on the balance sheet

date were calculated according to actuarial mathematical principles

using an interest rate of 3.5% and subject to the assumption

that an average employment term can be expected.

The provisions for long-service bonuses were calculated according

to actuarial mathematical principles using an interest

rate of 3.5% and subject to the assumption that an average

employment term can be expected. A deduction for fluc tuations

was taken.

Raiffeisenlandesbank

Oberösterreich

The transitional provisions of Article X of the Austrian Business

Code were not implemented.

1.9 Other provisions

In line with the prudence principle, other provisions include all

risks recognisable at the time the balance sheet was prepared,

as well as those liabilities which were basically certain, but

where uncertainty existed as to their amount have been considered.

1.10 Own issues

Accruals and deferrals relating to issue costs, additional

cash payment commission, premiums and discounts were

reversed over the term of debt in proportion to the capital

guaranteed.

Annual Report 07 963


2. NOTES TO THE BALANCE SHEET

2.1 Periods to maturity

Loans and advances and other liabilities to banks and non-banks that are not payable on demand have the following periods to

maturity:

Loans and advances

Loans and advances

Remaining period to banks to non-banks

to maturity 31 Dec 2007 31 Dec 2006 31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Committed for up to 3 months 1,761,173 2,054,173 1,945,081 1,238,233

Committed for

3 to 12 months 888,785 1,155,603 1,673,203 1,319,846

Committed for

1 to 5 years 268,770 657,053 2,642,751 2,194,210

Committed for

more than 5 years 383,386 354,390 3,427,671 2,774,295

Total 3,302,114 4,221,219 9,688,706 7,526,584

Liabilities to banks

Liabilities to non-banks

Remaining period

to maturity 31 Dec 2007 31 Dec 2006 31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Committed for up to 3 months 2,358,872 1,218,572 1,184,130 630,628

Committed for

3 to 12 months 1,060,971 1,381,803 806,567 612,158

Committed for

1 to 5 years 1,227,800 1,289,169 1,916,314 1,733,501

Committed for

more than 5 years 2,032,445 1,523,564 2,117,373 2,020,507

Total 6,680,088 5,413,108 6,024,384 4,996,794

In 2008, bonds and other fixed-interest securities held by Raiffeisenlandesbank Oberösterreich in the amount of EUR 170,454k

(2007: 316,078k) will mature, along with bond issues in the amount of EUR 8,721k (2007: EUR 63,619k),

64

Annual Report 07


2.2 Securities

The securities admitted to trading shown in asset Items 5 and 6

consist of listed bonds and other fixed interest securities amounting

to EUR 1,722,824k (previous year: EUR 1,782,409k) and

listed shares and other non-fixed interest securities totalling

EUR 77,634k (previous year: EUR 30,108k).

There are no non-listed bonds and other fixed interest securi -

ties, non-listed shares and other non-fixed interest securities,

or investments and shares in associated companies admitted

to trading.

The shares and other non-fixed interest securities recognised

as fixed assets amounted to EUR 72,643k (previous year: EUR

21,976k) and those recognised as current assets to EUR

4,992k (previous year: EUR 8,132k).

Asset items are allocated to the fixed assets because the

securities listed above serve the long-term investment of liquid

funds, in order to obtain higher returns.

Securities held as current assets were acquired for the purpose

of securities trading, in order to attain price gains and for the

retention of a cash reserve.

The securities admitted to trading shown in asset Items 5 and 6

are divided into bonds and other fixed interest securities recognised

as fixed assets totalling EUR 1,573,431k (previous year:

EUR 1,617,307k) and bonds and other fixed interest securities

recognised as current assets of EUR 149,393k (previous year:

EUR 165,102k).

Raiffeisenlandesbank Oberösterreich maintains a securities

trading account book, in accordance with § 2 subpara. 35 of

the Austrian Banking Act. The volume of the listed securities

amounted to EUR 144,423k (previous year: EUR 175,858k)

and that of the other financial instruments to EUR 123,497k

(previous year: 116,852k).

Raiffeisenlandesbank

Oberösterreich

Annual Report 07 965


2.3 Fixed assets

Raiffeisenlandesbank Oberösterreich‘s fixed and financial assets developed as follows:

Acquisition cost/ Depre- Book Depre-

Balance sheet item Cost of production ciation values ciation

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

As at: Additions Disposals As at: As at:

01 Jan of in the in the 31 Dec of 31 Dec of in the

the financial financial financial the financial the pre- financial

year year year Total year vious year year

Public sector debt issues

and similar securities 454,532 77,977 139,798 8,319 384,392 448,332 2,320

Other loans to banks 74,749 63,769 128,467 2 10,049 74,586 0

Loans and advances

to customers 431,954 37,835 25,427 8,747 435,615 426,020 2,979

Debt securities and other

public interest fixed-interest

securities 2,435 13,042 15,477 0 0 2,435 0

Debt securities and other

fixed-interest securities from

other issuers 1,626,033 415,959 438,606 29,955 1,573,431 1,614,872 22,920

Shares and other

variable interest securities 1,032,990 971,808 731,219 29,526 1,244,053 1,018,750 20,576

Investments 83,071 34,204 10,208 90 106,977 82,981 0

including:

banks (6,257) (97) (0) (0) (6,354) (6,257) (0)

Shares in associates 703,553 58,617 13,508 2,164 1) 746,498 701,389 0

including:

banks (25,824) (7,000) (0) (0) (32,824) (25,824) (0)

Property, plant and equipment 72,947 724 1,294 50,371 22,006 24,134 2,824

including:

Land and buildings used

by the bank in the course

of its operations (55,764) (129) (67) (38,327) (17,499) (19,426) (2,040)

Total 4,482,264 1,673,935 1,504,004 129,174 4,523,021 4,393,499 51,619

1)

Loss allocation of atypical silent partners for start-up losses of EUR 2,163,900 relating to depreciation for wear and tear.

66

Annual Report 07


2.4 Equity and equity-related liabilities

In the case of subordinated liabilities, the subordination is

always agreed separately in writing pursuant to § 51 (9) of the

Austrian Banking Act. The term and repayment are established

in a manner that permits allocation to equity in accordance

with § 23 (8) subpara. 1 of the Austrian Banking Act. The subordinated

liabilities contain an issue of EUR 124,172k and an

interest rate of 5.161% as well as an emission with a nominal

value of EUR 117,305k and an interest rate of 5.0%, which

will be paid off in 2020.

In accordance with its articles, Raiffeisenlandesbank Ober österreich’s

share capital as at 31 December 2007 was EUR 253,000k

(previous year: 240,000k). It consists of 714,578 (previous year:

714,578) ordinary shares and 749,294 (previous year: 674,075)

preferred shares.

The increase in share capital by a nominal amount of 13,000k

was raised in accordance with the decision of the extraordinary

general meeting on 07 December 2007 and with the approval

of the Supervisory Board by issuing 75,219 individual shares

– non-par, registered and voting preferred shares – at an issue

amount of EUR 1,994 each.

Participation capital amounting to EUR 1,032k (previous year:

EUR 1,032k) has been issued.

2.5 Provisions and other liabilities

Due to the use of the transitional provision contained in Article

X (3) of the Austrian Accounting Act, on 31 December 2007

there was an under-accrual in the provisions for pension

obligations of EUR 274k (previous year: EUR 354k).

2.6 Supplementary information

The balance sheet contains foreign currency items recog -

nised as assets amounting to EUR 2,287,011k (previous year:

EUR 2,019,767k) and EUR 1,821,958k (previous year: EUR

1,656,999k) recognised as liabilities.

Raiffeisenlandesbank

Oberösterreich

Annual Report 07 967


The following derivative financial instruments existed on the balance sheet date:

Term to maturity

Nominal amount

Market value

up to from 1 year over

1 year to 5 years 5 years Total Positive Negative

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Interest rate derivatives

OTC products

Forward rate agreements 1,500,000 2,265,350 0 3,765,350 7,158 6,748

Interest-rate swaps 4,927,304 7,716,157 11,080,274 23,723,735 265,341 373,317

Interest-rate options – purchases 4,000 609,197 408,912 1,022,109 8,414 41

Interest rate options – sales 95,539 1,708,854 1,487,991 3,292,384 1,305 25,504

Products traded on the stock exchange

Interest rate futures 298 34,226 69,887 104,411 0 0

Interest rate options – purchases 5,178 0 0 5,178 0 0

Interest rate options – sales 9,135 0 0 9,135 0 0

Total 6,541,454 12,333,784 13,047,064 31,922,302 282,218 405,610

Foreign-currency derivatives

OTC products

Spot exchange and

forward transactions 1,013,215 4,488 0 1,017,703 6,121 7,296

Currency and interest-rate swaps

with several currencies 2,324,670 118,448 30,990 2,474,108 34,814 21,756

Currency options – purchases 262,225 165,363 0 427,588 12,725 0

Currency options – sales 270,494 164,858 0 435,352 0 12,364

Total 3,870,604 453,157 30,990 4,354,751 53,660 41,416

Other futures

OTC products

Structured shares/index products 205 0 0 205 0 204

Shares options – purchases 31,134 128,716 75,211 235,061 27,649 6,132

Shares options – sales 32,829 124,861 75,210 232,900 5,508 27,147

Commodity options – purchases 0 15,000 5,000 20,000 1,152 298

Commodity options – sales 0 15,000 5,000 20,000 318 1,378

Total 64,168 283,577 160,421 508,166 34,627 35,159

Total OTC products 10,461,615 13,036,292 13,168,588 36,666,495 370,505 482,185

Total products traded

on the stock exchange 14,611 34,226 69,887 118,724 0 0

Total 10,476,226 13,070,518 13,238,475 36,785,219 370,505 482,185

68

Annual Report 07


Market values from derivatives are not booked, due to the fact that valuation units are formed.

Prepay- Accruals

ments and and

2007 Bank Bank Other Other accrued deferred

loans liabilities assets liabilities income income

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Book values of

trading book derivatives

a) Interest-rate related agreements 104 290 0 140 0 0

Book values of

banking book derivatives

a) Interest-rate related agreements 244,254 204,860 387 -37,674 13,056 26,973

b) Exchange-rate related agreements 0 0 8,421 0 0 0

c) Securities-related transactions 0 0 6 180 0 0

Market values from derivatives are not booked, due to the fact

that valuation units are formed.

As at 31 December 2007, securities to the amount of EUR 2,798k

(previous year: EUR 2,873k) were held as cover for trust fund

deposits of EUR 5,753k (previous year EUR 3,392k).

Securities amounting to a book value of EUR 24,044k (previous

year: EUR 35,940k) were pledged as collateral for certain

issues of securities, in addition securities with a book value of

EUR 993,702k (previous year: EUR 1,023,872k) were deposited

as collateral at banks and stock exchanges. EUR 89,374k (previous

year EUR 35,722k) were deposited at banks for reasons

of collateral arrangements and EUR 15,000k are pledged.

Money claims to the amount of EUR 631,266k (previous year:

EUR 534,667k) were assigned to the Oesterreichische Kontrollbank.

Outstanding debts of EUR 53,423k (previous year:

49,833k) were assigned to the European Investment Bank.

In addition, as at 31 December 2007, fixed-interest securities

with a nominal value of EUR 40,000k (previous year EUR 13,000k)

were held in a blocked account at the Landeszentralbank in

the Free State of Bavaria as a security deposit for advances

on securities.

Raiffeisenlandesbank

Oberösterreich

Annual Report 07 969


3. NOTES TO THE INCOME STATEMENT

3.1 Other operating income

To a large extent, the other operating income shown in Item 7 of

the income statement amounting to EUR 18,587k (previous year:

EUR 18,066k) relates to non-bank subsidiary offsetting.

3.2 Other operating expenses

To a large extent, the other operating expenses shown in Item 10

of the income statement amounting to EUR 18,363k (previous

year: EUR 17,690k) relates to non-bank subsidiary offsetting.

3.3 Expenses for

subordinated liabilities

Expenses for subordinated liabilities in the 2007 financial year

totalled EUR 54,796k (previous year: EUR 47,458k).

3.4 Tax savings

As a result of the change in the untaxed reserves, a reduction

in taxes on income and earnings of EUR 0k was calculated

for 2007 (previous year: EUR 0k).

4. OTHER NOTES

4.1 Workforce information

An average of 831 employees worked in banking operations

during the 2007 financial year (previous year: 800).

4.2 Advances and loans to members of the Managing

Board and the Supervisory Board

Advances and loans to members of the Raiffeisenlandesbank

Oberösterreich Aktiengesellschaft Managing Board and the

Supervisory Board consisted of EUR 306k (previous year:

EUR 287k) to members of the Managing Board and EUR 963k

(previous year: EUR 385k) to members of the Supervisory

Board.

Loans to members of the Managing Board and the Super -

visory Board were granted at standard bank conditions. Repayments

are made as agreed.

4.3 Expenses for severance payments pension obligations

The personnel expenses contain expenses for severance payments

amounting to EUR 1,703k (previous year: EUR 2,475k)

and contributions to employee pension funds of EUR 139k

(previous year: EUR 104k).

Expenses for severance payments (including provisions) and

pension obligations (including provisions) in 2007 amounted

to EUR 243k (previous year: EUR 313k) for members of the

Managing Board and to EUR 3,057k for other employees (previous

year: EUR 3,244k).

Further expenditure of EUR 1,039k (previous year: EUR 997k)

was used for Managing Board pensions and EUR 1,580k (previous

year: EUR 1,350k) for other employees.

4.4 Expenses for remunerations and reimbursements

to the members of the Managing Board and the

Supervisory Board

In 2007, the remunerations and reimbursements paid to members

of the Managing Board (including payments in kind and

expenses in connection with pensions) totalled EUR 2,724k

(previous year: EUR 2,555k).

As far as the expenses for former executive managers (severance

and pension payments) are concerned, § 241 (4) of the

Austrian Business Code is called upon.

In 2007, reimbursements of EUR 402k (previous year: EUR 385k)

were paid to members of the Supervisory Board.

4.5. The Members of the Board of Raiffeisenlandesbank

Oberösterreich Aktiengesellschaft

The names of the members of the Raiffeisenlandesbank Ober -

österreich Aktiengesellschaft Managing Board and Super -

visory Board can be found on pages 4 to 7.

70

Annual Report 07


Linz, 4 February 2008

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Europaplatz 1a, 4020 Linz

THE MANAGING BOARD

Ludwig Scharinger

Chief Executive and Chairman of the Managing Board

Hans Schilcher

Deputy Chairman of the Managing Board

Helmut Schützeneder

Member of the Managing Board

Georg Starzer

Member of the Managing Board

Markus Vockenhuber

Member of the Managing Board

Michaela Keplinger-Mitterlehner

Member of the Managing Board

Raiffeisenlandesbank

Oberösterreich

Annual Report 07 971


Unqualified Audit Certificate

We examined the annual financial statements of

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft,

Europaplatz 1a, 4020 Linz

for the financial year from January 1 to December 31, 2007,

taking into consideration the accounting. In compliance with

Austrian commercial law and the supplementary stipulations

contained in the company articles, the accounting, presentation

and content of these financial statements, as well as the

management report, are the responsibility of the legal rep -

resentatives of the company. Our responsibility is to express

an opinion on these financial statements based on our audit

and a statement concerning the correspondence of the

management report with the financial statements.

Our audit was conducted in accordance with the applicable

Austrian legal regulations and professional standards. These

standards require that the audit be planned and performed in

such a manner that reasonable assurance can be obtained as

to whether the financial statements are free of material mis -

statement and whether an opinion can be expressed concerning

the correspondence of the management report with the

financial statements. During the audit, knowledge concerning

the business activities and economic and legal background

of the company, as well as the expectations concerning possible

errors, were taken into account.

The audit includes an examination, largely on a test basis, of

evidence supporting the amounts and disclosures in the

financial statements. The audit also includes the assessment

of the accounting principles used and significant estimates

made by the legal representatives of the company, as well as

the eval u ation of the overall financial statement presentation.

We believe that our audit provides a reasonable basis for our

opinion.

The results of our audit gave no reason for objection. On the

basis of the knowledge gained during the audit, in our judgement

the financial statements comply with the legal regula -

tions in Austria, as well as the supplementary stipulations

in the company articles and present a true and fair view of

the assets, financial position and earnings of the company in

accordance with Austrian accounting regulations. The management

report corresponds with the financial statements.

Linz, 07 March 2008

KPMG Austria GmbH

Wirtschaftsprüfungs- und Steuerberatungsgesellschaft

Martha Kloibmüller

Auditor

Ernst Pichler

Auditor

72

Annual Report 07


Unqualified Audit Certificate

I examined the annual financial statements of

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft,

Europaplatz 1a, 4020 Linz

for the financial year from 1 January 2007 to 31 December

2007, taking into consideration the accounting. In compliance

with Austrian commercial law and the supplementary stipulations

contained in the company articles, the accounting, presentation

and content of these financial statements and of the

management report are the responsibility of the legal representatives

of the company. My responsibility is to express an

opinion on these financial statements based on my audit and

make a statement concerning whether the management

report corresponds with the financial statements.

My audit was conducted in accordance with the applicable

Austrian legal regulations and professional standards. These

standards require that the audit be planned and performed in

such a manner that reasonable assurance can be obtained as

to whether the financial statements are free of material misstatement

and whether an opinion can be expressed concern -

ing the correspondence of the management report with the

financial statements. During the audit, knowledge concerning

the business activities and economic and legal background

of the company as well as the expectations concerning possible

errors were taken into account. The audit includes an

examination, largely on a test basis, of evidence supporting the

amounts and disclosures in the financial statements. The audit

also includes the assessment of the accounting principles

used and significant estimates made by the legal representatives

of the company, as well as the evaluation of the overall

financial statement presentation. I believe that my audit provides

a reasonable basis for my opinion.

The results of my audit gave no reason for objection. On the

basis of the knowledge gained during the audit, in my judgement

the financial statements comply with the legal regula -

tions in Austria, as well as the supplementary stipulations in

the company articles and present a true and fair view of the

company’s assets and financial position as at 31 December

2007 and the company’s earnings in the financial year from

1 January 2007 until 31 December 2007, in accordance with

Austrian accounting regulations. The management report corresponds

with the financial statements.

Raiffeisenlandesbank

Oberösterreich

Linz, 04 February 2008

Auditing association: Österreichischer Raiffeisenverband

Auditor:

Ursula Palle-Futschik

Association Auditor

Annual Report 07 973


Group Management Report 2007

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

GROUP STRUCTURE

As a superordinated banking institute, starting with the 2007

financial year Raiffeisenlandesbank Oberösterreich Aktien -

gesellschaft is obliged to prepare and publish consolidated

financial statements in accordance with the IAS Regulation (EC)

1606/2002, abiding by the regulations of the International

Financial Reporting Standards (IFRS). In addition, notes and

explanations are required in accordance with the regulations

of the Austrian Banking Act and the Austrian Business Code.

Apart from the parent company, the consolidated balance sheet

of the Raiffeisenlandesbank Oberösterreich Group as on

31 December 2007 included 25 fully consolidated Group companies

and 7 Group companies consolidated according to the

equity method. During 2007, bankidirekt.at AG was fully consolidated

for the first time and included in the consolidated

financial statements of Raiffeisenlandesbank Oberösterreich.

The shares in three subsidiaries, “LDZ” Landesdienstleis -

tungszentrum Vermietungs GmbH, Passage Linz GmbH and

Passage Linz GmbH & Co KG, were sold in December 2007

and the companies removed from the scope of consolidation.

BUSINESS TRENDS

The results of the 2007 financial year proved to be a continuation

of the upward trend seen over the past few years. The main

reason for this development was the excellent growth and

earnings situation of Raiffeisenlandesbank Oberösterreich, which

dominates the Group.

INCOME STATEMENT

The income situation of the Raiffeisenlandesbank Oberösterreich

Group is characterised by a clear upward trend.

Net interest income before risk provisions sank compared to

the previous year by EUR 4.6 million or 1.8% to EUR 248.5

million. This mainly reflects interest income from loans and

advances to customers and banks as well as fixed-income

securities. It also includes income from shares and variable yield

securities as well as from holdings. Interest expenses arise in

conjunction with amounts owed to customers and banks, with

securitised liabilities and with subordinated capital.

2007 2006 Change

in EUR mill. in EUR mill. in EUR mill. in %

Net interest income 248.5 253.1 - 4.6 - 1.8

Risk provisions - 81.5 - 77.9 3.6 4.6

Net interest income after risk provisions 167.0 175.2 - 8.2 - 4.7

Net commission income 92.7 79.0 13.7 17.3

Trading income 17.0 8.5 8.5 100.0

Results of the valuation of designated financial instruments 12.4 12.6 - 0.2 - 1.6

Net investment income 36.0 38.1 - 2.1 - 5.5

Result of companies that are accounted for at equity 109.4 80.7 28.7 35.6

Administrative Expenses - 250.7 - 242.4 8.3 3.4

Other operating result 71.2 67.1 4.1 6.1

Pre-tax profit for the year 255.0 218.8 36.2 16.5

Operating profit 288.1 246.0 42.1 17.1

Cost/income ratio 46.5% 49.6%

74

Annual Report 07


The result of fee and commission income and expenses was

increased by 17.3% to EUR 92.7 million.

The result of the evaluation of designated financial instruments

sank by a slight 1.6% to EUR 12.4 million. Net investment income

reached a value of EUR 36.0 million, including the result

of the final consolidation of the three subsidiaries, “LDZ”

Landesdienstleistungszentrum Vermietungs GmbH, Passage

Linz GmbH and Passage Linz GmbH & Co KG.

The result of companies accounted for at equity rose com -

pared to the previous year by EUR 28.7 million or 35.6% to

EUR 109.4 million. This was mainly due to the positive de -

velopment of Oberösterreichische Landesbank Aktiengesellschaft

and Raiffeisenlandesbank Oberösterreich Invest GmbH,

which holds shares in the voestalpine AG group.

The administrative expenses rose by 3.4% to EUR 250.7 million

and contain personnel expenses, other administrative

expenses and depreciation.

Other operating income, which mainly consists of income and

expenses of non-bank group companies, rose by EUR 4.1 million

or 6.1% to EUR 71.2 million.

The pre-tax profit posted for 2007 rose by EUR 36.2 million or

16.5% to a record EUR 255.0 million.

Corporates & Retail

In this segment all of Raiffeisenlandesbank Oberösterreich’s

business relations are bundled that are exposed to a counterparty

risk. Thus, the Corporates & Retail segment includes the

business areas corporate customers and groups, major institutional

customers, SME support, retail business, cash man -

agement, correspondent banking and international finance.

In total, this segment added the amount of EUR 28.7 million

to the operating income.

Financial Markets

The Financial Markets segment includes the results of the

trad ing areas (money, foreign exchange, stocks and bonds), the

treasury results from interest-rate management and hedging

with customers and from the management of the banking book,

as well as the income from services arising from the area of

securities sales. In the trading areas, customer business takes

priority over in-house trading and this is reflected in the high

portion of income from services.

All in all, the Financial Markets sector contributed a total of

EUR 45.3 million to the group’s consolidated result in 2007.

Invest Banking

Compared to the previous year, the operating profit, at EUR

288.1 million, was up by EUR 42.1 million, a pleasing 17.1%.

In detail, the 2007 financial year saw the following business

developments at the most important Group companies:

The cost/income ratio developed very positively in the

2007 financial year. With an excellent 46.5% risk-bearing

capacity, customers of the affiliated group can be provided

with even more dynamic assistance in the realisation of their

opportunities.

Fully consolidated banks:

■ Hypo Holding GmbH

■ SALZBURGER LANDES-HYPOTHEKENBANK AKTIEN-

GESELLSCHAFT

The Group

SEGMENTS

The Group’s pre-tax profit for the year is composed of the results

of the following segments:

The shares in HYPO Salzburg are mainly held indirectly through

Hypo Holding GmbH. As on 31 December 2007 HYPO Salzburg

was operating 24 branches in the province of Salzburg.

Of these, 13 locations are in the central Salzburg area and

eleven spread out in the province of Salzburg.

Annual Report 07

75


Corporate customer business grew, taking the conservative

risk assessment into consideration. In the public sector, classic

financing models are being increasingly supplemented by

alternative models. In both areas, synergies with Raiffeisen -

landesbank Oberösterreich Aktiengesellschaft are to be used

to the advantage of the customers.

In the private loan business, the focus of HYPO Salzburg is

on financing building and residential projects. This area makes

up three fourths of the bank’s total private financing.

In the securities business, the customer account volume was

increased despite the high level of volatility on the stock markets

and the sinking prices on the European bond markets.

■ PRIVAT BANK AG der Raiffeisenlandesbank Oberösterreich

PRIVATBANK AG of Raiffeisenlandesbank Oberösterreich was

able to increase its business volume during 2007 in the group

picture including bankdirekt.at AG by 19.3% to about EUR 3.5

billion. Once again – as in the years before – this was clearly

above market growth in Austria.

■ bankdirekt.at AG

bankdirekt.at AG stands for first-class products for private

money investment and online securities trading without classic

investment consultants.

Effective as at 26 November 2007, bankdirekt.at AG took over

the direktbank.at division of PRIVAT BANK AG der Raiffeisen -

landesbank Oberösterreich. Business development was characterised

by the extreme fluctuations on the stock exchanges

that brought good sales particularly in the months of October and

November. All told, the company was able to reach its targets.

■ KEPLER-FONDS Kapitalanlagegesellschaft m.b.H.

KEPLER-FONDS KAG was able to stand its ground nicely in the

difficult markets and continued to increase fund volume through -

out the year 2007. At the end of 2007 a volume of EUR 7.9 billion

was managed, which is equivalent to a growth rate of 2.3%. This

fund volume put KEPLER in fifth place among the 24 Austrian

capital investment companies.

Fully consolidated financial institutions:

■ Raiffeisen-IMPULS-Leasing Gesellschaft m.b.H.

■ Raiffeisen-IMPULS-Mobilienleasing GmbH

■ Raiffeisen-IMPULS-Immobilien GmbH

■ Raiffeisen-IMPULS-Realitätenleasing GmbH

■ Raiffeisen-IMPULS-Leasing GmbH & Co KG Passau

With a market share of over 20%, Raiffeisen-IMPULS-Leasing

was able to further expand its positions as Upper Austria’s leader

in the leasing market in 2007. A volume of new acquisitions that

exceeded EUR 700 million for the first time meant a 16%

increase compared to 2006. At the end of 2007, Raiffeisen-

IMPULS-Leasing had an inventory of almost 39,000 leasing

agreements with a purchasing value of over EUR 2.9 billion.

Other fully consolidated companies:

The other fully consolidated companies, which also include

major holding companies (e.g. REAL-TREUHAND Management

GmbH), companies that play a supportive role in the

group (e.g. GRZ IT Center Linz GmbH) and institutions that are

close to the bank (e.g. activ factoring AG), likewise con tribute

to the positive development of the group.

■ REAL-TREUHAND Management GmbH

From the revitalisation of town centres to urban planning, from

terraced houses to multifunctional office towers, REAL-TREUHAND

develops and realises real estate projects in accordance with individual

requirements. Choosing the right location, cost-efficient

realisation, top construction quality and optimal maintenance

costs are the first priorities and ensure secure and profitable investments.

■ GRZ IT Center Linz GmbH

With a total of 580 employees, GRZ IT Group is one of the

largest and most successful IT service providers in Austria. The

product and service spectrum of the GRZ IT Group goes far

beyond the area of finance. It covers everything from oper at ing

mainframes, servers and networks of any kind to application

service provisions, all the way to developing total tailor-made

IT solutions.

■ activ factoring AG

activ factoring AG is not only successful in its traditional markets

Austria, Southern Germany and the Czech Republic, it actually

purchases receivables around the world. The combination of prefinancing,

taking on the complete risk of bad debs and active

debtor management provides companies with a flexible financ -

ing and services instrument.

Companies consolidated at equity:

Among the most important companies accounted for at equity

are Oberösterreichische Landesbank Aktiengesellschaft, which

is held by the fully consolidated Hypo Holding GmbH, and

Raiffeisenlandesbank Oberösterreich Invest GmbH & Co OG,

76 Annual Report 07


which holds shares in the voestalpine AG group. All seven

companies that are accounted for at equity achieved a highly

satisfactory business and earnings development during the

2007 financial year, contributing positively to the overall operative

success of the Group.

The Invest Banking segment made the largest contribution to

the Group’s overall result in 2007, in the amount of EUR 178.0

million.

Corporate Center

The Corporate Center segment shows income and expenses

where the content does not fit into any other segment. Onetime

special effects that would distort the various segment

results are also recorded here when applicable.

In addition, cooperative Group services provided to the Raiff -

eisen Banking Group Upper Austria by Raiffeisenlandesbank

Oberösterreich are listed under the Corporate Center.

In total, the Corporate Center segment contributed EUR 3.0

million to the total result in 2007.

THE BALANCE SHEET DEVELOPMENT

The total assets of Raiffeisenlandesbank Oberösterreich

Aktiengesellschaft as at 31 December 2007 amounted to EUR

25,267 million. Compared to the same balance sheet date in

the preceding year, this represented an increase of EUR 3,116

million or 14.1%.

ASSETS 31 Dec 2007 31 Dec 2006 Change

in EUR mill. in % in EUR mill. in % in EUR mill. in %

Loans and advances to banks 4,633 18.3 4,432 20.0 + 201 + 4.5

Loans and advances to customers 13,744 54,4 11,009 49.7 + 2,735 + 24.8

Trading assets 537 2.1 511 2.3 + 26 + 5.1

Financial investments 5,294 21.0 5,058 22.8 + 236 + 4.7

Companies accounted for at equity 625 2.5 514 2.4 + 111 + 21.6

Other assets 434 1.7 627 2.8 - 193 - 30.8

Total 25,267 100.0 22,151 100.0 + 3,116 + 14.1

On the 2007 balance sheet date there was a volume of EUR

13,744 million loans and advances to customers. Compared

to the prior year, this amounts to a strong increase of EUR

2,735 million or 24.8%. The dynamic risk provision policy

applied when assessing credit exposure was continued.

Financial investments rose compared to the previous year by

4.7% to a value of EUR 5,294 million.

Loans and advances to banks as at the last balance sheet

date were EUR 4,633 million, which was EUR 201 million

higher than 31 December 2006.

The Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Group did not have any US subprime securities in its port folio

on 31 December 2007.

The Group

LIABILITIES 31 Dec 2007 31 Dec 2006 Change

in EUR mill. in % in EUR mill. in % in EUR mill. in %

Liabilities to banks 8,704 34.5 7,577 34.2 + 1,127 + 14.9

Liabilities to customers 6,691 26.5 5,532 25.0 + 1,159 + 21.0

Debt securities in issue 5,922 23.4 5,574 25.2 + 348 + 6.2

Other liabilities 956 3.8 853 3.8 + 103 + 12.1

Subordinated capital 1,295 5.1 1,207 5.4 + 88 + 7.3

Equity 1,699 6.7 1,408 6.4 + 291 + 20.7

Total 25,267 100.0 22,151 100.0 + 3,116 + 14.1

Annual Report 07

77


The increase on the liabilities side of the balance sheet is

mainly derived from a sharp expansion of savings and giro

deposits among the liabilities to customers as well as more

liabilities to banks.

The amounts owed to customers reached a record high of EUR

6,691 million, showing a rise of 21.0% compared to the previous

year. Amounts owed to banks rose by 14.9%. Compared

to the previous year, this represents an increase of EUR 1,127

million to EUR 8,704 million.

As at 31 December 2007, reported equity included the fol -

lowing items:

in EUR mill.

Subscribed capital 254.0

Capital reserves 547.9

Cumulative results 859.2

AfS reserves - 41.1

Minority interests 79.4

Total 1,699.4

The equity of the Raiffeisenlandesbank Oberösterreich Group

rose in absolute numbers by EUR 291.7 million. This growth was

the result of an increase in the share capital of Raiffeisen -

landesbank Oberösterreich Aktiengesellschaft as well as the

ex cellent income situation and the strong power of the Group

companies to finance themselves.

All in all, the Raiffeisenlandesbank Oberösterreich Group has a

very pleas ing equity capital situation which will also provide

for further growth in the years to come.

BANK BRANCH MANAGEMENT

During the reporting year it was possible to increase the number

of supported retail customers to almost 115,000. Compared

to the previous year this represents a 2.8% increase.

Aside from modern self-service components and the inno -

vative electronic banking system (ELBA), customers have

access above all to modern and customer-friendly business

facilities that have been equipped in line with the very latest

banking operation know-how.

HUMAN RESOURCES MANAGEMENT

During the 2007 financial year, on average, the fully consolidated

companies employed a workforce of 1,752 staff.

Every success depends on people. For this reason, ongoing

training and development of employees receives special focus.

OUTLOOK

The Raiffeisenlandesbank Oberösterreich Group is in the process

of further expanding its risk-bearing ability and competi -

tiveness. The cost/income ratio is being reduced further by

exercising tight cost and income management, which also increases

the positive creative power of the Group.

Other important cornerstones of Raiffeisenlandesbank Oberösterreich

Group’s strategic orientation are sustainable growth

and the generation of additional value-added. In the past, the

con tin uous upwards trend and good results have enabled the

formation of a well-founded capital base. For this reason Raiff -

eisenlandesbank Oberösterreich Group is in a position to offer

special services as an expression of a pronounced customer

focus. For example, it has become more and more important

to strengthen the competitive ability of companies by using

special financing models. For years we have also been pro -

viding venture and partner capital.

Ongoing further development

This successful course will be continued during the 2008

financial year. The available budget figures point toward the

continuation of this unique path to success.

78

Annual Report 07


During the current year the Raiffeisenlandesbank Oberösterreich

Group will expand its activities, actively build up its networks

of correspondent banks and partner banks, focus on

Romania and Southern Russia, strengthen export finance and

increasingly support companies especially in penetrating the

countries that are currently carrying the world economy:

China, India and Russia.

The Raiffeisenlandesbank Oberösterreich Group intends not

only to fulfil expectations, but to surpass them. It not only wants

to support customers, it hopes to inspire them. A unique level of

customer orientation, leadership with regard to the devel op -

ment of new, targeted products and modern sales instruments

are fundamental building blocks that distinguish the Group.

This further increases trust, guarantees security and ensures

a solid base for a successful and sustainable partnership.

There were no events of particular importance after the close

of the 2007 business year.

There are no results of research and development to comment

on as these are not relevant in this industry.

Linz, 07 April 2008

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Europaplatz 1a, 4020 Linz

THE MANAGING BOARD

Ludwig Scharinger

Chief Executive and Chairman of the Managing Board

Hans Schilcher

Deputy Chairman of the Managing Board

Helmut Schützeneder

Member of the Managing Board

Georg Starzer

Member of the Managing Board

The Group

Markus Vockenhuber

Member of the Managing Board

Michaela Keplinger-Mitterlehner

Member of the Managing Board

Annual Report 07

79


IFRS CONSOLIDATED

FINANCIAL STATEMENTS 2007

RAIFFEISENLANDESBANK OBERÖSTERREICH

Aktiengesellschaft, 4020 Linz, Europaplatz 1a

INCOME STATEMENT

BALANCE SHEET

STATEMENT OF CHANGES IN EQUITY

CASH FLOW STATEMENT

NOTES

The company

The basics of the consolidated accounts according to IFRS

Accounting policies

Segment reporting

Notes to the income statement

Notes to the balance sheet

Risk report

Other information

Information based on Austrian accounting practices

Events after the balance sheet date

The Members of the Board of Raiffeisenlandesbank Oberösterreich

AUDIT CERTIFICATES

STATEMENT OF THE MANAGING BOARD

REPORT OF THE SUPERVISORY BOARD

2007

80

Annual Report 07


Income Statement

Note No. 2007 2006

in EUR ‘000 in EUR ‘000

Interest and interest-related income 1,066,134 822,741

Interest and interest-related expenses - 817,558 - 569,594

Net interest income (1) 248,576 253,147

Risk provisions (2) - 81,537 - 77,931

Net interest income after risk provisions 167,039 175,216

Fee and commission income 141,908 124,733

Fee and commission expenses - 49,214 - 45,749

Net fee and commission income (3) 92,694 78,984

Trading income (4) 16,978 8,456

Income from designated financial instruments (5) 12,396 12,625

Net investment income (6) 35,982 38,064

Income from companies accounted for at equity 109,426 80,765

Administrative expenses (7) - 250,663 - 242,355

Other operating results (8) 71,220 67,068

Pre-tax profit for the year 255,072 218,823

Taxes on income and earnings (9) - 29,333 - 11,130

Profit for the year 225,739 207,693

Minority interests - 7,880 - 10,128

Net profit 217,859 197,565

The Group

Annual Report 07

81


Balance Sheet

ASSETS Note No. 31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Cash and cash equivalents (10), (11) 116,012 103,239

Loans and advances to banks (10), (12), (14) 4,633,396 4,431,704

Loans and advances to customers (10), (13), (14) 13,744,557 11,009,014

Trading assets (10), (15) 536,872 511,285

Financial assets (10), (16) 5,293,991 5,057,778

Companies accounted for at equity (17) 625,406 514,447

Intangible assets (18), (21) 1,719 3,126

Property, plant and equipment (19), (21) 79,532 103,291

Financial real estate (19), (21) 8,731 175,890

Current tax assets (9) 28,295 17,071

Deferred tax assets (9) 15,981 18,869

Other assets (20) 182,597 205,785

Total 25,267,089 22,151,499

LIABILITIES Note No. 31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Liabilities to banks (10), (22) 8.703.699 7.576.904

Liabilities to customers (10), (23) 6.690.824 5.531.842

Debt securities in issue (10), (24) 5.921.938 5.573.969

Provisions (14), (25) 121.633 123.481

Current tax liabilities (9) 12.909 10.459

Deferred tax liabilities (9) 34.655 27.162

Trading liabilities (10), (26) 531.795 413.221

Other liabilities (27) 255.261 279.439

Subordinated capital (10), (28) 1.294.971 1.207.349

Equity (29) 1.699.404 1.407.673

of which minority interests 79.420 76.697

of which shareholder of the parent company 1.619.984 1.330.976

Total 25.267.089 22.151.499

82

Annual Report 07


Statement of Changes in Equity

Sub-

Cumuscribed

Capital lative AfS Sub- Minority

capital reserve results reserves total interests Total

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Equity 01 January 2007 241,032 410,859 671,207 7,878 1,330,976 76,697 1,407,673

With no effect on the Income Statement

in accordance with IAS 39 0 0 0 - 67,689 - 67,689 0 - 67,689

Changes in equity in companies

accounted for at equity 0 0 - 17,079 0 - 17,079 - 3,517 - 20,596

Other changes 0 0 - 78 0 - 78 0 - 78

Taxes recognised with no effect

on the Income Statement 0 0 0 18,734 18,734 0 18,734

Total of results recorded

directly under equity 0 0 - 17,157 - 48,955 - 66,112 - 3,517 - 69,629

Profit for the year 0 0 217,859 0 217,859 7,880 225,739

Total results for the year 0 0 200,702 - 48,955 151,747 4,363 156,110

Dividends 0 0 - 12,726 0 - 12,726 - 1,640 - 14,366

Capital increase/reduction 13,000 136,987 0 0 149,987 0 149,987

Equity 31 Dec 2007 254,032 547,846 859,183 - 41,077 1,619,984 79,420 1,699,404

Sub-

Cumuscribed

Capital lative AfS Sub- Minority

capital reserve results reserves total interests Total

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Equity 01 January 2006 241,032 410,859 487,605 39,176 1,178,672 65,667 1,244,339

With no effect on the Income Statement

in accordance with IAS 39 0 0 0 - 39,763 - 39,763 0 - 39,763

Changes in equity in companies

accounted for at equity 0 0 - 3,845 0 - 3,845 2,600 - 1,245

Other changes 0 0 0 0 0 0 0

Taxes recognised with no effect

on the Income Statement 0 0 0 8,465 8,465 0 8,465

Total of results recorded

directly under equity 0 0 - 3,845 - 31,298 - 35,143 2,600 - 32,543

Profit for the year 0 0 197,565 0 197,565 10,128 207,693

Total results for the year 0 0 193,720 - 31,298 162,422 12,728 175,150

Dividends 0 0 - 10,118 0 - 10,118 - 1,698 - 11,816

Capital increase/reduction 0 0 0 0 0 0 0

The Group

Equity 31 Dec 2006 241,032 410,859 671,207 7,878 1,330,976 76,697 1,407,673

The item “changes in equity in companies accounted for at equity” includes all of the valuation results that are proportionately attrib uted

to Raiffeisenlandesbank Oberösterreich Aktiengesellschaft and recorded under equity without affecting the balance sheet. They come for

the most part from financial instruments in the category of “financial assets available for sale” (Afs) in companies accounted for at equity.

Annual Report 07

83


Cash Flow Statement

2007 2006

in EUR ‘000 in EUR ‘000

Profit for the year 225,739 207,693

Non-cash items contained in the profit for the year and transferral

to the cash flow from operating activities:

Write-offs/write-ups of property, equipment and financial assets,

trading securities, intangible assets and financial real estate 58,964 75,055

Reversal/allocation of reserves and risk provisions 86,069 67,670

Profit/loss from sale of property, equipment and financial assets,

trading securities, intangible assets and financial real estate - 2,368 - 14,262

Other adjustments due to non-cash items - 415,764 -345,891

Subtotal - 47,360 - 9,735

Changes in operating assets and liabilities after correcting

for non-cash components:

Loans and advances to banks and customers - 2,751,535 - 1,240,096

Trading assets 589 55,356

Other assets 33,587 - 114,149

Liabilities to banks and customers 2,250,383 1,316,367

Trading liabilities 17,494 4,159

Debt securities in issue 363,516 595,501

Other liabilities - 21,392 49,230

Interest and dividends received 1,094,854 685,808

Interest paid - 774,280 - 425,597

Cash flow from operating activities 165,856 916,844

Cash proceeds from the sale of:

Financial assets and shares in companies 1,634,817 699,853

Property and equipment, financial real estate and intangible assets 549 1,819

Payments to acquire:

Financial assets and shares in companies - 2,009,977 - 1,514,815

Property and equipment, financial real estate and intangible assets - 10,231 - 12,282

Cash flow from investing activities - 384,842 - 825,425

Capital increase 149,987 0

Income and payments from subordinated capital 96,138 - 16,209

Dividends - 14,366 - 11,816

Cash flow from financing activities 231,759 - 28,025

Cash and cash equivalents at the end of the previous period 103,239 39,845

Cash flow from operating activities 165,856 916,844

Cash flow from investing activities - 384,842 - 825,425

Cash flow from financing activities 231,759 - 28,025

Cash and cash equivalents at the end of the period 116,012 103,239

Cash includes the balance sheet item “cash reserves” which consists of the cash in hand and balances payable on demand at

central banks,

84

Annual Report 07


Notes

THE COMPANY

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft acts

as a regional central institution of the Raiffeisen Banking

Group Upper Austria and is registered in the Commercial

Register at the District Court in Linz under the number

247579m. The headquarters are in Austria, at Europaplatz

1a, 4020 Linz.

Shareholders of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

are the “RLB Holding registrierte Genossenschaft

m.b.H. OÖ” with a portion of the share capital amounting to

48.81% (ordinary shares) and the registered cooperative asso -

ciation “Raiffeisenbankengruppe OÖ Verbund” with 51.19%

(preferred shares). The latter cooperative is the uppermost

parent company of the Group.

The Upper Austrian Raiffeisenbanks make up the most important

owner groups of the two cooperatives. These two are supported

by Raiffeisenlandesbank Oberösterreich Aktien gesellschaft

(referred to below as Raiffeisenlandesbank Oberösterreich) in its

func tion as Upper Austrian headquarters in all banking matters.

As a superordinated banking institute, starting with the 2007

finan cial year, Raiffeisenlandesbank Oberösterreich is obliged

to prepare consolidated financial statements in accordance with

the IAS Regulation (EC) 1606/2002, abiding by the regulations

of the International Financial Reporting Standards (IFRS). In addition,

notes and explanations are required in accordance with

the national regulations of the Austrian Banking Act and the Austrian

Business Code.

THE BASICS OF THE CONSOLIDATED ACCOUNTS ACCORDING TO IFRS

Principles

These consolidated financial statements for the 2007 financial

year as well as the comparative figures from 2006 were

prepared in compliance with the applicable International Financial

Reporting Standards (IFRS) as published by the Inter -

national Accounting Standards Board (IASB) and international

accounting and financial reporting standards based on the IAS

Regulation (EC) 1606/2002 as adopted by the EU.

The figures in these financial statements are quoted in EUR

thousands.

Not yet mandatory application of IFRS

The following new or modified standards and interpretations

were already published as at the balance sheet date, however,

they have not yet come into effect and were not applied in

these consolidated financial statements:

Standard/Interpretation Mandatory for Already adopted

financial year beginning by the EU

IFRS 8 (“Business Segments”) 01 Jan 2009 yes

Modification of IAS 23 (“Borrowing Costs”) 01 Jan 2009 no

Modification of IAS 1 (“Presentation of the Financial Statements”) 01 Jan 2009 no

IFRIC 14 (“IAS 19 - The Limit on a Defined Benefit Asset,

Minimum Funding Requirements and their Interaction”) 01 Jan 2008 no

IFRIC 13 (“Customer Loyalty Programmes”) 01 July 2008 no

IFRIC 12 (“Service Concession Arrangements”) 01 Jan 2008 no

IFRIC 11 (“IFRS 2 – Dealing with own shares and shares

of Group companies”) 01 March 2007 yes

The Group

No material effects are expected on future consolidated financial statements as a result of the application of the standards and

interpretations listed.

Annual Report 07

85


First-time adoption of IFRS

Raiffeisenlandesbank Oberösterreich is publishing consoli -

dated financial statements for the 2007 financial year that have

been prepared in accordance with the International Financial

Reporting Stand ards for the first time and is therefore a firsttime

adopter in the sense of IFRS 1. The transition time for

the first-time adoption is 01 January 2006 so the information

from the previous year that is quoted in the financial statements

was gathered as required in accordance with IFRS.

When preparing the IFRS opening balance, all IFRS that were

valid on the balance sheet date are to be applied retrospectively.

Adjustments that thus result from the application of previous

accounting policies are to be charged directly to the reserves

for accumulated results.

Differences that were already charged to equity at the time of

the first- time adoption of the IFRS were not recorded.

The group of fully consolidated companies according to IFRS

is, in accordance with the terms of IAS 27, much broader than

the previous scope of consolidation according to the Austrian

Business Code and the Austrian Banking Act. In accordance

with § 59 in conjunction with § 30 of the Austrian Banking Act,

the consolidation includes banks, financial institutions, securities

companies and companies providing bank-related support

services, while IAS 27 on the other hand does not exclude a

subsidiary from full consolidation due to the fact that it exercises

a different business than that of the group.

As stipulated by the guidelines in IFRS 1, transition calculations

show the equity and the result of the 2006 financial year abid -

ing by the previously applied accounting practices (Austrian

Business Code/Austrian Banking Act) in transition to the equity

and the IFRS result in the same financial year, whereby important

adjustments are to be explained separately.

Additional explanations in this context concern important

adjustments to the cash flow statement and information on

the classification of financial instruments that were applied

earlier.

Reconciliation of equity to IFRS

When determining the equity the following differences result between the application of the previous accounting principles

(Austrian Business Code/Austrian Banking Act) and IFRS:

01 Jan 2006 31 Dec 2006

in EUR ‘000 in EUR ‘000

Subscribed capital 241,032 241,032

Capital reserves 391,778 391,778

Retained earnings (incl, net income for the year) 134,952 243,002

Liabilities pursuant to § 23 (6) of the Austrian Banking Act 219,201 242,896

Minority interests 35,143 36,026

Untaxed reserves 11,283 10,714

Fund for general banks risks 1,453 1,453

Equity according to the Austrian Business Code/Austrian Banking Act (total) 1,034,842 1,166,901

Adjustment due to change in the scope of consolidation 162,463 187,802

Adjustment of the evaluation of financial instruments with effect on the Income Statement 980 17,624

Available for sale reserves 39,176 7,878

Provisions for personnel expenses - 23,195 - 22,097

Other adjustments - 451 8,894

Adjustments of minority interests 30,524 40,671

IFRS equity (total) 1,244,339 1,407,673

86

Annual Report 07


Reconciliation of the results to IFRS

When determining the result the following differences emerge between the application of the previous accounting principles

(Austrian Business Code/Austrian Banking Act) and IFRS:

2006

in EUR ‘000

Austrian Business Code/Austrian Banking Act net profit after tax 141,295

Adjustment due to change in the scope of consolidation 29,184

Adjustment of the evaluation of financial instruments with effect on the Income Statement 16,643

Provisions for personal expenses 1,098

Other adjustments 9,345

IFRS profit for the year 197,565

Notes on material adjustments to the cash flow statement

The cash flow statement in the consolidated financial statements according to the accounting principles of the Austrian Business

Code and the Austrian Banking Act was already very similar to the terms of IAS 7 (“Cash flow statements”). However, differences

did result because the scope of consolidation was different in the two kinds of financial statements – national compared to

international accounting principles.

Classification of previously determined financial instruments

The following financial assets were assigned to the category of “designated financial instruments” at the time of the transition to

IFRS (1 January 2006):

Carrying amount Carrying amount

ABC/ABA

IFRS

in EUR ‘000 in EUR ‘000

The Group

Loans and advances to banks 334,875 334,957

Loans and advances to customers 343,279 355,554

Financial assets 962,346 1,037,429

Total 1,640,500 1,727,940

Annual Report 07

87


The following financial liabilities were assigned to the category of “designated financial instruments” at the time of the transition to

IFRS (1 January 2006):

Carrying amount Carrying amount

ABC/ABA

IFRS

in EUR ‘000 in EUR ‘000

Liabilities to banks 1,846,249 1,871,505

Liabilities to customers 1,009,965 1,069,444

Debt securities in issue 3,752,411 3,789,668

Subordinated capital 510,921 542,436

Total 7,119,546 7,273,053

The following financial assets were assigned to the category of “financial assets available for sale” (AfS) at the time of the transition

to IFRS (1 January 2006):

Carrying amount Carrying amount

ABC/ABA

IFRS

in EUR ‘000 in EUR ‘000

Financial assets 2,953,941 3,046,129

Total 2,953,941 3,046,129

The IFRS carrying amounts of AfS financial assets contain equity instruments held on 1 January 2006 in the amount of EUR 667,141k

that are valued at historical cost because their fair value cannot be reliably determined.

88

Annual Report 07


Consolidation methods

The starting point for preparing the consolidated balance

sheet and the group income statement is the sum of the

separate financial statements of the subsidiaries included in

the consolidated financial statements. Subsidiaries are companies

on which Raiffeisenlandesbank Oberösterreich exercises

a controlling influence on their business and financial policies.

The separate financial statements of the fully consolidated

subsidiaries are prepared in accordance with IFRS and are

based on uniform accounting principles applied throughout

the group. The balance sheet date of the fully consoli dated

companies is 31 December with the exception of a few leasing

companies and RB Prag Beteiligungs GmbH that are included

as of 30 September. The selection of a date for these companies

that differs from that of the parent company guarantees

that the financial statements can be prepared and audited without

delay. Two subsidiaries prepare their financial statements

as at 28 February and 30 June and report as at 31 December

with an IFRS interim report.

In the course of the capital consolidation the carrying amounts

of the shares in each subsidiary belonging to the parent company

are calculated based on the trial balance with the proportionate

equity of each subsidiary. When a subsidiary is acquired

it is included as of the date of acquisition. The assets and liabilities

acquired are recorded applying the revaluation method in

accordance with IFRS 3 at their fair value. If there is a positive

difference between the purchase price and the proportionate

net assets in the acquired company it is to be reported as goodwill.

Goodwill is not subject to scheduled depreciation but rather

is subject to an annual impairment test according to IAS 36.

Associates are companies where the group exercises a sig -

nificant influence on business and financial policy. There is

usually a significant influence when the holdings amount to

between 20% and 50%. Material investments in associates

are accounted for at equity and recorded in a separate balance

sheet item. The proportionate profits and losses from com -

panies accounted for at equity are also shown separately in

the income statement. When applying the equity method the

same basic approach is used in accounting for acquisitions

as is used for a fully consolidated company.

In the course of the debt consolidation, loans and advances

within the group are set off against internal liabilities. Expenses

and income resulting from transactions between companies in

the full scope of consolidation are eliminated in the course of

the expense and income consolidation.

Consolidated companies

The scope of consolidation was determined according to the

terms of IAS 27, taking the principle of materiality into con -

sideration. Materiality in this sense is determined according

to criteria applied uniformly throughout the group, focussing on

the effect of the inclusion or non-inclusion of a subsidiary on

the representation of the group’s assets, financial position and

profitability. Because of their minor significance for assets,

financial position and profitability, 143 subsidiaries were not

included and 62 associates were not accounted for at equity.

For the IFRS financial statements as at 31 December 2007, the

scope of consolidation of Raiffeisenlandesbank Oberösterreich

includes 25 fully consolidated companies (incl. Raiffeisen -

landesbank Oberösterreich). Seven additional companies were

accounted for at equity. Of the 32 companies, 27 are based in

Austria and 5 abroad. Of the fully consolidated companies, 5

are banks, 6 are financial institutions and 14 other companies.

The following list shows the material subsidiaries and as so -

ciates. An overview of all holdings of the Raiffeisenlandesbank

Oberösterreich Group (information according to § 265 (2)

of the Austrian Business Code) has been prepared separately.

This list is available at the headquarters of the parent company.

Raiffeisenlandesbank Oberösterreich has, because of

both a direct and an indirect holding, a clear majority vote in

Salzburger Landes-Hypothekenbank AG.

The Group

Annual Report 07

89


Name Share in % Balace sheet date

Fully consolidated subsidiaries

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft Group parent 31 Dec

Raiffeisen-IMPULS-Leasing GmbH 100.00% 30 Sept

Raiffeisen-IMPULS-Mobilienleasing GmbH 100.00% 30 Sept

Raiffeisen-IMPULS-Immobilien GmbH 100.00% 30 Sept.

Raiffeisen-IMPULS-Realitätenleasing GmbH 100.00% 30 Sept

Raiffeisen-IMPULS-Leasing GmbH & Co KG, Passau 100.00% 31 Dec

PRIVAT BANK AG der Raiffeisenlandesbank Oberösterreich 100.00% 31 Dec

SALZBURGER LANDES-HYPOTHEKENBANK AKTIENGESELLSCHAFT 49.98% 31 Dec

Hypo Holding GmbH 70.00% 30 June

RB Prag Beteiligungs GmbH 100.00% 30 Sept

KEPLER-FONDS Kapitalanlagegesellschaft m.b.H. 64.00% 31 Dec

Kapsch Financial Services GmbH 74.00% 30 Sept

activ factoring AG, München 94.00% 31 Dec

RVD Raiffeisen-Versicherungsdienst GmbH 75.00% 31 Dec

GRZ IT Center Linz GmbH 96.19% 31 Dec

LOGIS IT Service GmbH 73.10% 31 Dec

RLB OÖ Sektorbeteiligungs GmbH 100.00% 31 Dec

BHG Beteiligungsmanagement und Holding GmbH 100.00% 28 Feb

INCOM Private Equity GmbH, Passau 100.00% 31 Dec

Invest Holding GmbH 100.00% 31 Dec

Invest Holding GmbH & Co KG 100.00% 31 Dec

REAL-TREUHAND Management GmbH 100.00% 31 Dec

RealRendite Immobilien GmbH 100.00% 31 Dec

IB-RT Immobilien Beteiligungs Real-Treuhand

Portfoliomanagement GmbH & Co KEG 100.00% 31 Dec

bankdirekt.at AG 100.00% 31 Dec

Companies consolidated at equity

Oberösterreichische Landesbank Aktiengesellschaft 34.01% 31 Dec

Raiffeisenbank a.s., Prag 25.00% 31 Dec

eBanka a.s., Prag 25.00% 31 Dec

ZRB Beteiligungs GmbH 20.00% 31 Dec

Österreichische Salinen Aktiengesellschaft 41.25% 30 June

Beteiligungs- und Wohnungsanlagen GmbH & Co OEG 46.00% 31 Dec

Raiffeisenlandesbank Oberösterreich Invest GmbH & Co OG 49.00% 30 Sept

Changes in the scope of consolidation and their effects

The number of fully consolidated companies accounted for at equity developed during the financial year as follows:

Number of units Fully consolidated Equity method

2007 2006 2007 2006

As at 01 January 27 27 6 6

Included for the first time during the reporting year 1 — 1 —

De-consolidated during the reporting year 3 — — —

As at 31 December 25 27 7 6

90

Annual Report 07


ankdirekt.at AG was newly founded and included in the scope of consolidation of Raiffeisenlandesbank Oberösterreich for the

first time in 2007. The shares in three subsidiaries, “LDZ” Landesdienstleistungszentrum Vermietungs GmbH, Passage Linz GmbH

and Passage Linz GmbH & Co KG, were sold in December 2007 and the companies removed from the scope of consolidation.

The number of companies accounted for at equity increased with the acquisition of a 25% share in eBanka a.s. in August 2007.

The following table shows the assets and liabilities of the three companies that were de-consolidated at the time of their final

consolidation:

Disposals

in EUR ‘000

Cash and cash equivalents - 53

Loans and advances to customers 180,322

Trading assets 12,769

Financial assets 13,443

Intangible assets - 939

Financial real estate - 179,859

Tax assets - 52

Other assets - 5,921

Assets, total 19,710

Liabilities to customers 2,969

Provisions - 1

Tax liabilities - 33

Trading liabilities 745

Other liabilities - 16,872

Nets assets 32,902

Minority interests 28

Net assets including minority interests 32,930

Sale price (in cash) 73

Result from final consolidation 33,003

Foreign currency translation

The Group

Financial statements prepared in a foreign currency in foreign business operations must be converted to euros in accordance with

the regulations of IAS 21. This applies to the two banks accounted for at equity that are headquartered in Prague, Raiffeisenbank

a.s. and eBanka a.s., who use Czech korunas (CZK) as their currency.

Annual Report 07

91


ACCOUNTING POLICIES

FINANCIAL INSTRUMENTS

A financial instrument is a contract that is a financial asset for

the first company and, at the same time, results in a financial

liability or an equity instrument in the other company. In accordance

with IAS 39, all financial assets and liabilities includ -

ing all derivative financial instruments must be included in the

balance sheet. A difference is made between the following

categories:

Financial assets or liabilities that are assessed at fair value

with an effect on income; and this category is subdivided

into:

Financial instruments held for trading

❑ Designated financial instruments

Financial assets available for sale

Financial investments held to maturity

■ Loans and receivables

Financial liabilities that are assessed to continued acqui -

sition costs

The purchase and sale of financial instruments is always balanced

on the day of trading.

The stock exchange prices are used to determine the fair

value of financial instruments listed on the stock exchange

(with the exception of bonds). Bonds and other financial

instruments are valued based on market-maker prices. If these

prices are not available, for originative financial instruments

and forward transactions internal prices are determined based

on cash value calculations assuming own spread of creditworthiness

and liquidity and for options using applicable options

price models.

Financial instruments held for trading

The category “financial instruments held for trading” includes

dealing securities and derivative financial instruments. They

are assessed at fair value. The financial instruments in this

category are used to take advantage of short-term price fluctuations

on the market or are purchased for the purpose of

economic security.

If there are positive market values including deferred interest

(“dirty price”), the financial instruments are included in the

trading assets.

If there are negative market values then they are recorded

under the balance sheet item of “trading liabilities”. There is no

settlement of positive and negative market values. Interest and

dividend income, refinancing costs, commisions and changes

in value of dealing securities are recorded as part of the trad -

ing result with effect on the Income Statement Changes in the

value of derivatives effect the income statement and are shown

in the results of designated financial instruments. Interest payments

connected with such financial instruments are included

in the interest income or interest expenses from designated

financial instruments in the net interest income.

Designated financial instruments

Designated financial instruments refer to those financial assets

and liabilities that, at the point in time that they are first stated in

the balance sheet, are categorised or designated as a fair value

assessment with effect on the balance sheet (the so-called

fair value option). Such a categorisation can only be made if:

■ The categorisation eliminates or considerably decreases

incongruencies in the assessment or the approach,

■ The management and the performance measurement of a

portfolio of financial assets and /or financial liabilities are

done on a fair value basis according to a documented risk

management or investment strategy,

■ A contract contains an embedded derivative that must be

separated.

The following balance sheet items contain designated financial

instruments:

■ Loans and advances to banks

■ Loans and advances to customers

Financial assets

■ Liabilities to banks

■ Liabilities to customers

■ Liabilities evidenced by certificates

■ Subordinated capital

These financial instruments are evaluated at fair value, unreal

ised and realised profits and losses are recorded with

effect on the income statement as income from designated

financial instruments. Interest Income or expenses from

designated financial instruments are recorded under the net

interest income.

92

Annual Report 07


Financial assets available for sale (AfS)

Loans and receivables

These include bonds and other fixed-income securities, shares

and other variable-interest securities as well as shares in companies.

Financial asset in this category are evaluated in accordance

with IAS 30 at fair value. The balance sheet value is recorded

under the balance sheet item “financial assets,” changes in

the fair value are shown without effect on the income statement.

Changes in value that are recognised directly in the

equity are transferred to the income statement if the financial

asset in questions is derecognised. The same applies in the

case of impairment; the difference between the fair value and

the cost of purchase (less any repayments and amortisation)

is to be recorded with effect on the income. If the reasons for

impairment no longer apply a reversal of the impairment loss

is to be carried out with effect on the income statement if it

is a debt capital instrument. However, any increases in fair

value that go beyond the amount of the reversal of the

impairment loss are recorded with no effect on the income

statement. If an equity instrument is held, the impairment is

not retracted with effect on the income statement. Increases

in value in later periods are therefore accounted for with no

effect on the income statement. If the fair value of an equity

instrument held cannot be reliably determined at the cost of

purchase is used.

Financial investments held to maturity (HtM)

Financial assets in the category “loans and receivables” are

evaluated as carry forward acquisition costs as long as they are

not placed in the category of “designated financial instruments”.

They are mainly recorded under the balance sheet items “loans

and advances to banks” and “loans and advances to customers”.

Risk provisions:

Risk provisions have been made for recognisable risks among

borrowers. A dynamic approach was used to evaluate the loan

transactions. For some loans, standardised, defined risk provisions

were formed in the shape of dynamic risk provisions,

on the basis of risk groups in accordance with the "risk

management" rating model. The amount of the credit risk provision

that applies to the financial loans including the value

adjustments and the portfolio-based revaluations is subtracted

from the applicable loans. The risk provision for commitments

similar to loans is booked as provisions.

Financial liabilities that are evaluated with the carried

forward acquisition costs

If financial instruments on the liabilities side are neither "finan -

cial instruments held for trading" nor from the category of

"designated financial instruments" they are evaluated as carry

forward acquisition costs. They are mainly recorded under the

balance sheet items “amounts owed to banks”, “amounts owed to

customers”, “debt securities in issue” or “subordinated capital”.

This category contains non-derivative financial assets with

fixed or determinable payments and a fixed term, that are

quoted on an active market and held to maturity, with the exception

of those financial assets that are evaluated and desig -

nated at the initial recognition with effect on the income

statement and those that are determined as being available

for sale. Financial assets in this category are evaluated with

the carried forward acquisition costs. Impairment in the sense

of IAS 39 is recorded with effect on the income statement.

Financial investments that are included in this category are

listed under the balance sheet item “financial assets”.

Repurchase transactions

In the course of real repurchase transactions (repo) the group

sells assets to a contract party, at the same time agreeing to

buy them back on a certain date at a certain price. These assets

remain on the group’s balance sheet and are evaluated

according to the rules of the various balance sheet items.

At the same time, an obligation in the amount of the payment

received is shown on the liabilities side.

The Group

Annual Report 07

93


In a reverse repo transaction assets are purchased together

with the obligation to sell in future for a certain price. The cash

outflow from the purchase is recorded under the balance

sheet items loans and advances to banks or loans and advances

to customers. Interest expenses from repo transactions

and interest income from reverse repo transactions are

accrued by the straight-line method throughout the term and

recorded under net interest income.

For non-real repurchase transactions the debtor bank has the

obligation to take the assets back but it does not have the right

to demand them back. The creditor bank makes the decision

alone as to whether it wants a retrocession.

Leasing transactions

The group differentiates between finance leases and operat -

ing leases. According to IFRS, a finance lease is essentially

when the risks associated with the property and the opportuni -

ties of an asset are transferred to the lessee. An operating

lease is a lease that is not a financing lease. For the evaluation,

substance over form is decisive.

In accordance with IAS 17, when financing leases the lessor

records the future leasing payments and any remaining amounts

as loans and advances to lessees. The lessee at the

same time records the assets under the respective item of

property, plant and equipment balanced by a corresponding

leasing liability.

With operating leases, the leasing contracts are recognised

with an effect on income by both the lessee and the lessor.

The lessor capitalised the asset being leased less the amount

of depreciation.

Intangible assets

The paid acquisition of intangible assets is accounted for at

the historical cost less depreciation and impairment. All

intangible assets (except goodwill) exhibit a limited useful life

and are subject to linear depreciation over this period. The

usual useful life ranges from 2 to 20 years. There were no selfproduced

intangible assets to be recorded upon the balance

sheet date.

Property, plant and equipment and financial real estate

The assessment of property, plant and equipment occurs

at their historical or production costs less depreciation. The

following terms of useful life are usually taken as the basis for

straight-line depreciation:

Useful life expectancy

Years

Movable assets 3 – 20

Immovable assets 20 – 67

In the event of impairment, the greater of the two comparable

values (fair value less the cost of disposal and value in use) are

amortised pursuant to IAS 36. If the reasons for impairment

cease, then appreciation up to the historical cost carried

forward shall occur. The real estate objects held as financial

investments (financial real estate) are also assessed according

to the respective electoral law in IAS 40 in accordance with

the historical or production costs carried forward.

Provisions

All social provisions (provisions for pension obligations, sever -

ance obligations and bonuses) are determined pursuant to

IAS 19 – Employee Benefits – following the ‘projected unit

credit method’.

A valuation interest rate of 5.0% p.a. (previous year: 4.5%)

as well as an effective pensionable salary increase of 4.0% p.a.

(previous year: 3.5%) shall form the basis of the actuarial

calcu lation of pension obligations for the entitlement phase.

The parameters for the working periods are calculated at an

interest rate of 4.75% p.a. (previous year: 4.0% p.a.) and an un -

changed anticipated pension increase of 3.5% p.a. The calcu -

lations are based on a calculative pensionable age of 60 for

women and 65 for men with adherence to the legal transitional

regulations as well as individual contractual particularities.

The actuarial calculation of severance obligations and bonuses

shall occur using a valuation interest rate of 5.0% p.a. (previous

year: 4.5% p.a.) and an average salary increase of

4.0% p.a. (previous year: 3.5% p.a.). A fluctuation deduction

of 5.0% p.a. is accounted for.

94 Annual Report 07


The actuarial profits and losses in the case of social pro visions

are immediately recognised with effect on the income and

shown under personnel expenses.

Further provisions are made for contingent liabilities towards

third parties at the amount of anticipated utilisation. If interest

rates play a significant role, then the rates of such provisions

shall be reduced and assessed at their cash value.

Defined contribution plans

Pursuant to IAS19, the defined contribution plans are to be

distinguished from the performance-oriented plans – for which

provisions for pensions and severance payments must be

made. In the context of such plans, specified payments are

made to an independent institution (pension fund, employee

provision fund). Within this scheme, the company only guarantees

the contributions, not the amount of the later benefits.

These payments are effectively recognised as personnel expenses.

Taxes on income

Taxes on income are accounted for in accordance with IAS 12.

Deferred taxes based on the country-specific tax rates are calcu

lated for temporary differences that result from the settlement

of consolidated book value and tax values, which balance out

in the following period. Tax losses carried forward are re -

corded as deferred taxes under assets if it seems probable

that there will be taxable profits in the future in a similar amount

in the same company. Deferred tax assets are set off against

deferred tax liabilities for each subsidiary separately.

Raiffeisenlandesbank Oberösterreich, as head of the group, has

formed a corporate group with diverse financially affiliated companies

in the sense of § 9 of the Corporation Tax Act since 2005.

Trust fund transactions

Business operations based on the administration or placement

of assets for third party accounts are not shown on the

balance sheet. Commission payments from these operations

are shown under net commission income.

Net interest income

Interest and interest-related income includes, on the one hand,

interest income from loans and advances to customers and

banks as well as fixed-interest securities. On the other hand,

it includes current earnings from shares and variable interest

securities as well as from holdings and non-consolidated

companies, for example in the form of dividend payments.

Interest expenses mostly arise in connection with amounts

owed to customers, banks, debt securities in issue and sub -

ordinated capital.

Interest income and expenses are subject to accrual accounting,

dividends are recognised as soon as legal entitlement

arises.

Proportional profit or loss from companies balanced at equity,

and regular income and expenses in connection with trading

assets and liabilities which were not acquired for the purpose

of economic security, are not shown under net interest income,

but rather under individual profit and loss positions.

Risk provisions

In the context of this item on the income statement, the building

and the release of risk positions (revaluations and reserves for

the lending business) are shown. Direct write-offs and retro -

active payments to loans that have already been written off are

also included in this item.

The Group

Annual Report 07

95


Net fee and commission income

Net fee and commission income is the result of the expenses

and income accrued approbiate to the period in connection

with the services business. This mainly includes payment trans -

actions, foreign exchange, currency and precious metal transactions,

the securities business, and loan processing and the

financial guarantee business.

Net income from investments

Net income from investments shows the profits and losses

recorded with an effect on the income statement, both unrealised

(the result of the valuation) and realised (from the disposal),

from securities that are listed under financial assets in

the category of “financial investments held to maturity” and

“financial assets available for sale” (AfS). Profits and losses

from the available-for-sale assets that are recorded directly

under equity or that were transferred from equity to the income

statement can be found under their own heading in the Notes.

In addition, net income from investments also includes the net

income from the valuation and disposal of assets of affiliated

companies and other holdings that are neither fully consolidated

nor accounted for at equity. These are, due to a lack of

reliable information on their fair value, assessed at historical

cost less any impairment, so that no changes in the valuation

(without effect on the income statement) are recorded.

Income from designated financial instruments

Unrealised and realised profits and losses in conjunction with

designated financial instruments that are recorded on the balance

sheet under financial assets are not shown as net income from

investment but rather in a separate item on the income statement

called “income from designated financial instruments”.

The latter item also includes the net income from valuation

and sale of all other designated financial instruments and de -

rivatives.

Administrative Expenses

The general administrative expenses include personnel and

operating expenses as well as depreciation and impairment

of property, plant and equipment, financial real estate and

intangible assets.

Exercising judgement and making estimates

For the consolidated financial statements, a certain amount of

judgement must be used when applying the accounting policies

and, to a certain extent, estimations and assumptions must be

made that influence the accounts of the assets and liabilities,

the declaration of contingent liabilities on the balance sheet date

and the report on expenses and income during the reporting period.

When applying the accounting policies the management exercises

judgement, keeping in mind the goal of the financial state -

ments to provide meaningful information about the company’s

assets, financial position and profitability as well as about any

changes in the assets, financial position or profitability of the

company.

The main areas effected by assumptions and estimates are the

determination of the fair value of some financial instruments,

balancing risk positions for future bad debt or a drop in interest

rates, building provisions for obligations, severance payments

and long-term service bonuses, other provisions and determin -

ing the useful life of long-term assets. The amounts that actually

turn up may be different from the estimates.

96 Annual Report 07


SEGMENT REPORTING

The segment reporting is based on the internal market segment

calculation, in accordance with IAS 14. This is a gradu ated

breakeven analysis that illustrates customer respon si bility

within the Raiffeisenlandesbank Oberösterreich Group. When

dividing up the segments, care was taken to combine in one

segment activities that show for the most part a homogenous

structure of opportunities and risks.

Income and expenses are always assigned to the segment

that caused them. Net interest income is calculated using the

market interest rate method. The interest benefit from the

equity is assigned to the segments based on the regulatory

capital requirements. The general administrative expenses

include direct and indirect costs. The direct costs (personnel

and material costs) are the responsibility of the market segments,

the indirect costs are assigned based on certain keys.

The results per segment also include results from transactions

with other segments. The assessment of services exchanged

between the segments is always done at market price, the

segments are positioned to each other like external suppliers.

The segment reporting is divided into the following four segments:

Corporates and Retail

Here all of Raiffeisenlandesbank Oberösterreich’s business

relations are bundled together that are exposed to a counterparty

risk. Thus, this segment includes the business areas corporate

customers, groups, SME support, major institutional

customers, international finance and correspondent banking

as well as the retail business in Raiffeisenlandesbank Ober -

österreich’s branches in Linz and Traun.

Financial Markets

The Financial Markets segment includes the results of the

trading areas (money, foreign exchange, stocks and bonds),

the treasury results from interest-rate management and hedg -

ing with customers and from the management of the banking

book, as well as the income from services arising from the

area of securities sales. In the trading areas, customer business

takes priority over in-house trading and this is reflected in the

high portion of income from services.

Invest Banking

The invest banking segment includes in particular Raiffeisen

landesbank Oberösterreich’s bank and financial insti -

tution oriented holding portfolio. In addition, aside from the

most import ant fully consolidated subsidiaries, this segment

also includes subsidiaries and other holdings from other

business branches that are accounted for at equity or at

historical cost.

Corporate Center

This includes revenue and yields where the content does not

fit into any other segment. One-time special effects that would

distort the various segment results are also recorded here

when applicable.

A segmentation according to geographic criteria was not made

because the companies of the Raiffeisenlandes bank Oberösterreich

Group do business for the most part in a single

homogenous economic region.

The Group

Annual Report 07

97


Segment reporting 2007

Corporates Financial Invest Corporate

& Retail Markets Banking Center Total

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Net interest income 134,365 4,156 93,697 16,358 248,576

Risk provisions - 51,729 0 - 29,808 0 - 81,537

Net interest income after risk provisions 82,636 4,156 63,889 16,358 167,039

Net fee and commission income 32,131 28,176 32,158 229 92,694

Trading income 684 13,357 2,937 0 16,978

Income from designated financial instruments 0 7,762 4,634 0 12,396

Net investments income 0 11,499 24,483 0 35,982

Income from companies accounted for at equity 0 0 109,426 0 109,426

Administrative expenses - 87,085 - 20,114 - 128,283 - 15,181 - 250,663

Other operating results 323 447 68,823 1,627 71,220

Profit before tax 28,689 45,283 178,067 3,033 255,072

Segment reporting 2006

Corporates Financial Invest Corporate

& Retail Markets Banking Center Total

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Net interest income 114,293 33,467 88,949 16,438 253,147

Risk provisions - 41,790 0 - 36,141 0 -77,931

Net interest income after risk provisions 72,503 33,467 52,808 16,438 175,216

Net fee and commission income 28,502 24,449 25,810 223 78,984

Trading income 679 11,217 - 3,440 0 8,456

Income from designated financial instruments 0 273 12,352 0 12,625

Net investments income 0 6,719 31,345 0 38,064

Income from companies accounted for at equity 0 0 80,765 0 80,765

Administrative expenses - 82,039 - 19,665 - 122,390 - 18,261 - 242,355

Other operating results 1,633 - 2,611 64,871 3,175 67,068

Profit before tax 21,278 53,849 142,121 1,575 218,823

98

Annual Report 07


NOTES TO THE INCOME STATEMENT

1. Net interest income

2007 2006

in EUR ‘000 in EUR ‘000

Interest income

from financial instruments in the category

“loans and receivables” 716,604 436,870

from financial instruments in the category

“available for sale” 104,024 71,077

from financial instruments in the category

“held to maturity” 4,297 6,901

Subtotal 824,925 514,848

from designated financial instruments 112,438 180,431

from lease financing 25,426 18,097

Total interest income 962,789 713,376

Regular income

from shares and other variable-yield securities 42,952 40,779

from investments in affiliated companies 9,079 23,771

from other investments 46,888 40,988

Regular income 98,919 105,538

Other interest-related income 4,426 3,827

Interest and interest-related income 1,066,134 822,741

Interest expenses

financial liabilities that are evaluated with the

carried forward acquisition costs - 549,456 - 469,954

for designated financial instruments - 265,901 - 89,799

Total interest expenses - 815,357 - 559,753

The Group

Other interest-related expenses - 2,201 - 9,841

Interest and interest-related expenses - 817,558 - 569,594

Net interest income 248,576 253,147

Annual Report 07

99


2. Risk provisions

2007 2006

in EUR ‘000 in EUR ‘000

Allocation to risk provisions for loans and advances - 173,949 - 147,383

Release of risk provisions 91,413 59,661

Direct write-offs - 1,069 -1,339

Amounts received against loans and advances written off 2,068 11,130

Total - 81,537 - 77,931

3. Net fee and commission income

2007 2006

in EUR ‘000 in EUR ‘000

from payment transactions 17,528 15,651

from financing transactions 11,422 9,573

from securities business 53,592 44,421

from foreign exchange, currency and precious metals transactions 5,907 5,298

from other service business 4,245 4,041

Total 92,694 78,984

100

Annual Report 07


4. Trading income

2007 2006

in EUR ‘000 in EUR ‘000

Interest-rate related business 6,262 6,191

Currency related business 8,302 1,103

Stock and index related business 3,737 3,168

Other business - 1,323 - 2,006

Total 16,978 8,456

5. Income from designated financial instruments

2007 2006

in EUR ‘000 in EUR ‘000

Net profit/loss from designated financial instruments

and derivatives 12,396 12,625

6. Net investment income

2007 2006

in EUR ‘000 in EUR ‘000

Securities in the category “held to maturity”

Net result from valuation - 261 - 155

Net result from disposal 26 1

Securities in the category “available for sale”

Net result from the valuation 0 0

Net result from disposal 7,037 25,067

Shares in companies in the category “available for sale”

Net result from valuation - 3,927 12,738

Net result from disposal 104 413

Result from final consolidation 33,003 0

The Group

Total 35,982 38,064

Annual Report 07

101


7. Administrative Expenses

2007 2006

in EUR ‘000 in EUR ‘000

Personnel expenses

Wages and salaries - 101,457 - 94,249

Compulsory social security contributions - 25,033 - 25,324

Voluntary social security contributions - 2,258 - 2,255

Expenses on severance payments and pensions - 4,533 - 10,111

Operating expenses

Rent and leasing expenses - 9,888 - 9,850

Room expenses (operation, maintenance, administration) - 26,529 - 23,661

IT and communications - 12,795 - 12,598

Legal and consulting expenses - 7,321 - 6,629

Advertising and representation expenses - 15,144 - 14,182

Other material expenses - 24,894 - 21,255

Depreciation of property, plant and equipment, financial real estate

and intangible assets

Property, plant and equipment - 14,500 - 15,877

Financial real estate - 5,518 - 5,648

Other intangible assets - 793 - 716

Total - 250,663 - 242,355

Breakdown of expenses for defined contribution plans for severance and pension payments:

2007 2006

in EUR ‘000 in EUR ‘000

Pension fund - 1,364 - 2,347

Employee pension fund - 154 - 104

Expenses for defined contribution plans - 1,518 - 2,451

102

Annual Report 07


8. Other operating results

2007 2006

in EUR ‘000 in EUR ‘000

Other operating income

Income from non-bank activities 136,048 131,000

Remaining operating income 34,100 26,898

Other operating expenses

Expenses from non-bank activities - 24,511 - 24,070

Other taxes and fees - 2,289 - 1,091

Remaining operating expenses - 72,128 - 65,669

Total of other operating result 71,220 67,068

9. Taxes on income and earnings

2007 2006

in EUR ‘000 in EUR ‘000

Current taxes on income and earnings - 3,280 - 6,218

of which domestic - 3,288 - 6,207

of which foreign 8 - 11

Deferred taxes - 26,053 - 4,912

Total - 29,333 - 11,130

The following calculation of translation reserves shows the relationship between the profit for the year and the actual tax burden:

2007 2006

in EUR ‘000 in EUR ‘000

The Group

Pre-tax profit for the year 255,072 218,823

Income tax expense expected for the financial year

at the statutory tax rate (25%) 63,768 54,706

Tax reductions due to tax-exempt earnings of investments - 17,693 - 22,493

Tax reductions due to at-equity profit - 20,584 - 17,103

Tax reductions due to tax-exempt other earnings - 1,631 -1,892

Tax increase due to non-deductable expenses 2,971 2,708

Tax credit/burden from previous years 4,147 962

Effect of deviating foreign tax rates - 471 - 2,820

Change in the usability of losses carried forward 0 0

Other - 1,174 - 2,938

Actual tax burden 29,333 11,130

Annual Report 07

103


Tax assets

2007 2006

in EUR ‘000 in EUR ‘000

Current tax assets 28,295 17,071

Deferred tax assets 15,981 18,869

of which deferred tax assets from tax losses carried forward

that have not yet been utilised 6,910 6,675

Total 44,276 35,940

Development of tax liabilities

Current taxes

Deferred taxes

2007 2006 2007 2006

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

As at 01 January 10,459 4,131 27,162 21,027

Allocations 2,601 6,329 8,815 6,953

Reversals - 151 0 - 1,322 - 818

Utilised 0 - 1 0 0

As at 31 December 12,909 10,459 34,655 27,162

104

Annual Report 07


Temporary differences between the valuation rates in the IFRS consolidated financial statements and the tax valuation rates have

the following effect on the deferred taxes recorded on the balance sheet:

Deferred Deferred With effect

tax tax on the income

assets liabilities statement in

2007 2007 2007

in EUR ‘000 in EUR ‘000 in EUR ‘000

Financial assets of the category “available for sale” 2,940 10,616 - 7,533

Designated financial instruments and derivatives - 1,577 1,883 - 10,816

Shares in companies 2,217 - 11,876 3,893

Leasing transactions 79 25,775 - 4,946

Social capital provisions - 287 6,536 - 1,950

Risk provisions 3,897 - 4,212 - 1,281

Other provisions 1,640 -23 1,045

Tax losses carried forward, not yet utilised 6,910 2,211 -391

Other temporary differences 162 3,745 - 4,074

Total 15,981 34,655 - 26,053

Deferred Deferred With effect

tax tax on the income

assets liabilities statement in

2006 2006 2006

in EUR ‘000 in EUR ‘000 in EUR ‘000

Financial assets of the category “available for sale” - 3,551 11,005 - 11,481

Designated financial instruments and derivatives 5,485 2,513 6,731

Shares in companies 1,266 - 8,935 1,078

Leasing transactions 647 21,397 - 4,278

Social capital provisions - 115 5,260 -739

Risk provisions 4,642 - 4,750 607

Other provisions 591 -824 - 4,097

Tax losses carried forward, not yet utilised 6,675 533 6,013

Other temporary differences 3,229 963 1,254

The Group

Total 18,869 27,162 - 4,912

Annual Report 07

105


NOTES TO THE BALANCE SHEET

10. Financial instruments disclosures

Categories of financial assets and financial liabilities as at 31 December 2007

ASSETS

Financial

Designated

instruments

financial

held for trading instruments

in EUR ‘000 in EUR ‘000

Cash and cash equivalents 0 0

Loans and advances to banks 0 606,922

Loans and advances to customers 0 583,040

Trading assets 536,872 0

Financial assets 0 1,315,185

Carrying amount total as at 31 Dec 2007 536,872 2,505,147

The fair value carrying amounts in the category “Assets available for sale (Afs)” contain equity instruments in the amount of

EUR 813,092k that are valued at the cost of purchase because their fair value cannot be reliably determined.

Financial

Designated

LIABILITIES instruments financial

held for trading instruments

in EUR ‘000 in EUR ‘000

Liabilities to banks 0 1,742,916

Liabilities to customers 0 975,420

Debt securities in issue 0 3,656,504

Trading liabilities 531,795 0

Subordinated capital 0 506,011

Carrying amount total as at 31 Dec 2007 531,795 6,880,851

Because there was no significant change to the rating at Raiffeisenlandesbank Oberösterreich, fair value changes of designated

financial liabilities were due to changes in market circumstances. The credit exposure for these designated liabilities as at 31 December

2007 was EUR 6,880,851k.

106

Annual Report 07


Financial assets Financial assets Loans Carrying amount Fair Value

available held to and total total

for sale maturity receivables as at 31 Dec 2007 as at 31 Dec 2007

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

0 0 116,012 116,012 116,012

0 0 4,026,474 4,633,396 4,617,780

0 0 13,161,517 13,744,557 13,766,879

0 0 0 536,872 536,872

3,891,020 87,786 0 5,293,991 5,294,977

3,891,020 87,786 17,304,003 24,324,828 24,332,520

The amount of the change in fair value of designated loans and receivables that was due to changes in ratings in 2007 was

EUR - 265k (aggregate EUR 1,884k). This figure was obtained by applying the credit spread changes based on rating changes.

The credit exposure for these designated loans and receivables as at 31 December 2007 was EUR 1,189,962k.

Financial liabilities Total Total

valued at carrying amount fair Value

carried forward as at as at

acquisition cost 31 Dec 2007 31 Dec 2007

in EUR ‘000 in EUR ‘000 in EUR ‘000

6,960,783 8,703,699 8,661,667

5,715,404 6,690,824 6,662,209

2,265,434 5,921,938 5,916,523

0 531,795 531,795

788,960 1,294,971 1,286,741

The Group

15,730,581 23,143,227 23,058,935

The carrying amount of designated financial liabilities as at 31 December 2007 was EUR 178,594k less than the repayment sum

contractually agreed on.

Annual Report 07

107


Categories of financial assets and financial liabilities as at 31 December 2006

ASSETS

Financial

Designated

instruments

financial

held for trading instruments

in EUR ‘000 in EUR ‘000

Cash and cash equivalents 0 0

Loans and advances to banks 0 480,587

Loans and advances to customers 0 442,576

Trading assets 511,285 0

Financial assets 0 1,166,718

Carrying amount total as at 31 Dec 2006 511,285 2,089,881

The fair value carrying amounts in the category “Assets available for sale (Afs)” contain equity instruments in the amount of

EUR 758,430k that are valued at the cost of purchase because their fair value cannot be reliably determined.

Financial

Designated

LIABILITIES instruments financial

held for trading instruments

in EUR ‘000 in EUR ‘000

Liabilities to banks 0 1,623,514

Liabilities to customers 0 966,299

Debt securities in issue 0 3,823,574

Trading liabilities 413,221 0

Subordinated capital 0 588,997

Carrying amount total as at 31 Dec 2006 413,221 7,002,384

Because there was no significant change to the rating at Raiffeisenlandesbank Oberösterreich, fair value changes of designated

financial liabilities were due to changes in market circumstances. The credit exposure for these designated liabilities as at 31 December

2006 was EUR 7,002,384k.

108

Annual Report 07


Financial assets Financial assets Loans Carrying amount Fair Value

available held to and total total

for sale maturity receivables as at 31 Dec 2006 as at 31 Dec 2006

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

0 0 103,239 103,239 103,239

0 0 3,951,117 4,431,704 4,423,100

0 0 10,566,438 11,009,014 11,066,149

0 0 0 511,285 511,285

3,789,753 101,307 0 5,057,778 5,059,896

3,789,753 101,307 14,620,794 21,113,020 21,163,669

The amount of the change in fair value of designated loans and receivables that was due to changes in ratings in 2006 was

EUR 2,670k. This figure was obtained by applying the changes in credit spread due to rating changes. The credit exposure for

these designated loans and receivables as at 31 Dec 2006 was EUR 923,163k.

Financial liabilities Total Total

valued at carrying amount fair Value

carried forward as at as at

acquisition cost 31 Dec 2006 31 Dec 2006

in EUR ‘000 in EUR ‘000 in EUR ‘000

5,953,390 7,576,904 7,566,952

4,565,543 5,531,842 5,512,163

1,750,395 5,573,969 5,576,556

0 413,221 413,221

618,352 1,207,349 1,202,599

The Group

12,887,680 20,303,285 20,271,491

The carrying amount of designated financial liabilities as at 31 December 2006 was EUR 54,559k less than the repayment sum

contractually agreed on.

Annual Report 07

109


The following derivative financial instruments existed on the 2007 balance sheet date:

Term to maturity

Nominal amount

Market value

up to from 1 year over

1 year to 5 years 5 years Total Positive Negative

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Interest rate derivatives

OTC products

Forward rate agreements 1,500,000 2,265,350 0 3,765,350 7,158 6,748

Interest rate swaps 5,188,524 8,670,894 13,948,613 27,808,031 295,578 424,602

Interest rate options – purchases 4,000 609,497 410,227 1,023,724 8,400 41

Interest rate options – sales 95,539 1,709,154 1,499,272 3,303,965 1,305 25,505

Products traded on the stock exchange

Interest rate futures 298 34,226 69,887 104,411 0 0

Interest rate options – purchases 5,178 0 0 5,178 0 0

Interest rate options – sales 9,135 0 0 9,135 0 0

Total 6,802,674 13,289,121 15,927,999 36,019,794 312,441 456,896

Foreign-currency derivatives

OTC products

Spot exchange and

forward transactions 1,169,508 4,488 0 1,173,996 5,537 6,685

Currency and interest-rate swaps

with several currencies 2,671,226 140,119 108,816 2,920,161 32,028 20,072

Currency options – purchases 271,615 393,335 0 664,950 13,057 0

Currency options – sales 279,185 311,748 0 590,933 0 14,659

Total 4,391,534 849,690 108,816 5,350,040 50,622 41,416

Other futures

OTC products

Structured shares/index products 205 0 0 205 0 204

Shares options – purchases 68,756 128,716 75,211 272,683 27,676 6,132

Shares options – sales 77,249 124,861 75,210 277,320 5,508 25,471

Commodity options – purchases 0 15,000 5,000 20,000 1,152 298

Commodity options – sales 0 15,000 5,000 20,000 318 1,378

Total 146,210 283,577 160,421 590,208 34,654 33,483

Total OTC products 11,325,807 14,388,162 16,127,349 41,841,318 397,717 531,795

Total products traded

on the stock exchange 14,611 34,226 69,887 118,724 0 0

Total 11,340,418 14,422,388 16,197,236 41,960,042 397,717 531,795

110

Annual Report 07


The following derivative financial instruments existed on the 2006 balance sheet date:

Term to maturity

Nominal amount

Market value

up to from 1 year over

1 year to 5 years 5 years Total Positive Negative

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Interest related derivatives

OTC products

Forward rate agreements 20,440 568,862 20,440 609,742 5,362 163

Interest rate swaps 3,805,986 6,036,232 8,043,306 17,885,524 267,111 334,249

Interest rate options – purchases 14,860 480,422 1,186,589 1,681,871 5,409 1,698

Interest rate options – sales 53,127 892,167 1,478,848 2,424,142 2,567 14,402

Products traded on the stock exchange

Interest rate futures 0 21,830 81,069 102,899 0 0

Interest rate options – purchases 0 0 10,635 10,635 0 0

Interest rate options – sales 2,913 0 0 2,913 0 0

Total 3,897,326 7,999,513 10,820,887 22,717,726 280,449 350,512

Foreign-currency derivatives

OTC products

Spot exchange

and forward transactions 407,711 1,972 0 409,683 2,662 2,648

Currency and interest-rate swaps

with several currencies 1,497,688 63,842 61,204 1,622,734 21,191 15,446

Currency options – purchases 510,975 81,322 0 592,297 11,536 189

Currency options – sales 509,665 83,061 0 592,726 189 11,454

Total 2,926,039 230,197 61,204 3,217,440 35,578 29,737

Other futures

OTC products

Structured shares/index products 166 0 0 166 0 166

Shares options – purchases 34,686 138,716 95,210 268,612 23,599 5,171

Shares options – sales 34,478 134,646 95,148 264,272 5,171 23,729

Commodity options – purchases 0 15,000 5,000 20,000 3,560 346

Commodity options – sales 0 15,000 5,000 20,000 346 3,560

Total 69,330 303,362 200,358 573,050 32,676 32,972

Total OTC products 6,889,782 8,511,242 10,990,745 26,391,769 348,703 413,221

Total products traded

on the stock exchange 2,913 21,830 91,704 116,447 0 0

The Group

Total 6,892,695 8,533,072 11,082,449 26,508,216 348,703 413,221

Annual Report 07

111


11. Cash and cash equivalents

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Cash in hand 34,727 33,576

Balances at central banks 81,285 69,663

Total 116,012 103,239

12. Loans and advances to banks

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Loans and advances payable on demand 1,406,973 813,824

Money market transactions 1,875,874 2,347,002

Loans to banks 1,328,463 1,263,706

Purchased loans and advances 22,086 7,172

Total 4,633,396 4,431,704

In Austria 3,329,668 3,549,256

Abroad 1,303,728 882,448

Total 4,633,396 4,431,704

13. Loans and advances to customers

31 Dec 2007 31.12.2006

in EUR ‘000 in EUR ‘000

Money market transactions 1,712,510 1,098,539

Loan transactions 10,771,967 8,617,536

Mortgage 478,002 519,980

Covering loans 229,696 241,343

Purchased loans and advances 175,999 187,991

Lease financing 372,517 343,625

Other 3,866 0

Total 13,744,557 11,009,014

In Austria 9,270,546 7,829,678

Abroad 4,474,011 3,179,336

Total 13,744,557 11,009,014

112

Annual Report 07


14. Risk provisions 2007

As at Alloca- As at

01 Jan 2007 tions Reversals Utilised 31 Dec 2007

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Loans and advances to banks 5,583 0 948 1,116 3,519

of which domestic 2,249 0 22 1,116 1,111

of which foreign 3,334 0 926 0 2,408

Loans and advances to customers 388,225 148,142 82,005 34,618 419,744

of which domestic 290,358 123,687 66,063 22,280 325,702

of which foreign 97,867 24,455 15,942 12,338 94,042

Revaluations in the portfolio 40,801 15,571 0 0 56,372

Subtotal 434,609 163,713 82,953 35,734 479,635

Risks for commitments similar to loans 17,599 10,236 8,460 240 19,135

Total 452,208 173,949 91,413 35,974 498,770

Risk provisions 2006

As at Alloca- As at

01 Jan 2006 tions Reversals Utilised 31 Dec 2006

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Loans and advances to banks 5,356 638 411 0 5,583

of which domestic 1,611 638 0 0 2,249

of which foreign 3,745 0 411 0 3,334

Loans and advances to customers 329,135 133,796 40,583 34,123 388,225

of which domestic 259,091 77,933 29,081 17,585 290,358

of which foreign 70,044 55,863 11,502 16,538 97,867

Revaluations in the portfolio 36,588 4,263 50 0 40,801

Subtotal 371,079 138,697 41,044 34,123 434,609

Risks for commitments similar to loans 27,694 8,686 18,617 164 17,599

The Group

Total 398,773 147,383 59,661 34,287 452,208

The interest income from impaired financial assets that were made interest-free amounted to EUR 2,845k (previous year: EUR 2,553k) in 2007.

Annual Report 07

113


15. Trading assets

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Debt securities and other fixed-interest securities

Public sector debt issues eligible for refinancing 38,732 39,652

Other public sector debt issues 255 4,043

Bonds and debt securities from other issuers 95,017 113,494

Shares and other variable-yield securities

Shares 169 0

Other variable yield securities 4,982 5,392

Positive market value from derivative transactions

Interest rate transactions 312,441 280,450

Currency exchange transactions 50,622 35,578

Stock and index related business 33,157 28,770

Other business 1,497 3,906

Total 536,872 511,285

16. Financial assets

Designated financial assets

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Debt securities and other fixed-interest securities

Public sector debt issues eligible for refinancing 274,482 339,265

Bonds and debt securities from other issuers 702,314 719,875

Shares and other variable-yield securities

Shares 11,375 12,139

Shares in investment funds 265,853 87,496

Other variable yield securities 61,161 7,943

Total 1,315,185 1,166,718

114

Annual Report 07


Financial assets in the category “available for sale” (AfS)

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Debt securities

and other fixed-interest securities

Public sector debt issues eligible for refinancing 124,692 115,549

Other public sector debt issues 2,004 4,526

Bonds and debt securities from other issuers 1,984,415 1,945,288

Shares

and other variable-yield securities

Shares 2,843 11,092

Shares in investment funds 959,613 952,506

Other variable yield securities 192,112 188,019

Shares in companies

Investments in associated companies 150,436 155,928

Other holdings 474,905 416,845

Total 3,891,020 3,789,753

Financial instruments in the category “held to maturity” (HtM)

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Debt securities and other fixed-interest securities

Public sector debt issues eligible for refinancing 54,178 59,352

Bonds and debt securities from other issuers 33,608 41,955

Total 87,786 101,307

The Group

Annual Report 07

115


17. Companies accounted for at equity

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Banks 238,516 186,477

Non-banks 386,890 327,970

Total 625,406 514,447

Among the banks that are accounted for at equity is the 34% share in the group Oberösterreichische Landesbank AG (HYPO

Oberösterreich) which is held by the fully consolidated Hypo Holding GmbH. Raiffeisenlandesbank Oberösterreich sees itself as a

long-term strategic partner to the regional bank that is headquartered in Linz and in which the province of Upper Austria has a majority

holding.

As regards non-bank holdings, the participation in Raiffeisenlandesbank Oberösterreich Invest GmbH &Co OG is worth

particular mention. This company also owns 14.12% of the shares in the voestalpine AG group and have, as the largest

individual share holder, the opportunity to exercise a considerable influence on the financial and business policies of the

most important steel company in Austria. In his function as deputy chairman of the Supervisory Board, the CEO of

Raiffeisenlandesbank Oberösterreich – Ludwig Scharinger – is an active participant in the strategic decisions made at voest -

alpine AG.

A list of the companies that are accounted for at equity can be found under the heading “Scope of consolidation”. The following

table is a summary of the financial data on the companies mentioned in this list. The figures are a sum of the information contained

in the various financial statements.

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Assets 14,713,658 11,364,393

Liabilities 13,363,243 10,125,441

Earnings 631,533 557,496

Result 192,240 146,206

Two of the companies have a balance sheet date that is different from that of Raiffeisenlandesbank Oberösterreich. Both in the

application of the equity method and for the list above, Raiffeisenlandesbank Oberösterreich Invest GmbH & Co OG was taken

into con sideration with values in accordance with its reporting date of 30 September. The data for Österreichische Salinen Aktiengesellschaft

(reporting date 30 June) is based on an interim report as at 31 December.

116

Annual Report 07


18. Intangible assets

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Other intangible assets 1,719 3,126

Total 1,719 3,126

19. Property, plant and equipment and financial real estate

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Land and buildings used for bank operations 31,275 41,802

Other property, plant and equipment 15,584 27,693

Leasing property and equipment rented out 32,673 33,796

Financial real estate 8,731 175,890

Total 88,263 279,181

The fair value of financial real estate amount to EUR 10,428k (previous year: EUR 205,259k).

20. Other assets

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Receivables from non-bank activities 9,742 8,882

Prepayments and accrued income 8,302 6,276

Other assets 164,553 190,627

Total 182,597 205,785

The Group

Annual Report 07

117


21. Schedule of fixed asset transactions 2007

Historical/production costs

As at Change in the scope

01 Jan 2007 of consolidation Additions

in EUR ‘000 in EUR ‘000 in EUR ‘000

Intangible assets 10,854 - 1,264 482

Other intangible assets 10,854 - 1,264 482

Property, plant and equipment 258,924 - 15,782 9,729

Land and buildings used for operations 86,945 0 1,203

of which basic value of developed land 40,393 0 0

Other property, plant and equipment 135,722 - 15,782 7,716

Leasing property and equipment rented out 36,257 0 810

Financial real estate 215,886 - 203,383 21

Total 485,664 - 220,429 10,232

Schedule of fixed asset transactions 2006

Historical/production costs

As at Change in the scope

01 Jan 2005 of consolidation Additions

in EUR ‘000 in EUR ‘000 in EUR ‘000

Intangible assets 10,516 0 620

Other intangible assets 10,516 0 620

Property, plant and equipment 266,036 0 11,586

Land and buildings used for operations 86,326 0 647

of which basic value of developed land 40,393 0 0

Other property, plant and equipment 144,498 0 9,067

Leasing property and equipment rented out 35,212 0 1,872

Financial real estate 216,056 0 77

Total 492,608 0 12,283

118

Annual Report 07


Appreciation and depreciation Carrying amount

Reclassifi- As at Accumulated As at

Disposals cations 31 Dec 2007 depreciation Depreciation 31 Dec 2007

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

295 0 9,777 8,058 793 1,719

295 0 9,777 8,058 793 1,719

18,400 - 1,179 233,292 153,760 14,500 79,532

183 0 87,965 56,690 3,212 31,275

67 0 40,326 0 0 40,326

18,160 0 109,496 93,912 10,175 15,584

57 - 1,179 35,831 3,158 1,113 32,673

0 166 12,690 3,959 5,518 8,731

18,695 - 1,013 255,759 165,777 20,811 89,982

Appreciation and depreciation Carrying amount

Reclassifi- As at Accumulated As at

Disposals cations 31 Dec 2006 depreciation Depreciation 31 Dec 2006

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

282 0 10,854 7,728 716 3,126

282 0 10,854 7,728 716 3,126

18,698 0 258,924 155,633 15,877 103,291

28 0 86,945 45,143 2,886 41,802

0 0 40,393 0 0 40,393

17,843 0 135,722 108,029 11,874 27,693

827 0 36,257 2,461 1,117 33,796

247 0 215,886 39,996 5,648 175,890

19,227 0 485,664 203,357 22,241 282,307

The Group

Annual Report 07

119


22. Liabilities to banks

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Liabilities payable on demand 2,628,283 2,603,066

Money market transactions 4,058,640 3,408,861

Long-term financing 2,016,776 1,564,977

Total 8,703,699 7,576,904

In Austria 6,555,057 5,442,734

Abroad 2,148,642 2,134,170

Total 8,703,699 7,576,904

23. Liabilities to customers

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Demand deposits 2,561,996 2,240,713

Term deposits 2,490,379 1,719,183

Savings deposits 1,604,164 1,532,649

Other 34,285 39,297

Total 6,690,824 5,531,842

In Austria 4,793,590 3,830,456

Abroad 1,897,234 1,701,386

Total 6,690,824 5,531,842

120

Annual Report 07


24. Debt Sescurities in issue

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Bonds issued 2,363,165 2,288,358

Pfandbriefe/ municipal bonds 396,257 411,070

Other debt securities in issue 3,162,516 2,874,541

Total 5,921,938 5,573,969

25. Provisions

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Severance provisions 33,838 31,015

Pension obligation provisions 56,718 62,694

Long-term service bonus fund provisions 5,379 5,253

Other provisions 25,698 24,519

Total 121,633 123,481

Development of severance provisions

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Present value (DBO) 01 January 31,015 27,905

Service cost 1,919 1,950

Interest cost 1,460 1,343

Payments -782 -1,426

Actuarial profit/loss 226 1,243

The Group

Present value (DBO) 31 December (= provisions) 33,838 31,015

Annual Report 07

121


Development of pension obligation provisions

2007 2006

in EUR ‘000 in EUR ‘000

Present value (DBO) 01 January 62,694 63,994

Change in scope of consolidation 0 0

Service cost 483 519

Interest cost 2,575 2,570

Payments - 3,378 - 3,311

Actuarial profit/loss - 5,656 - 1,078

Present value (DBO) 31 December (= provisions) 56,718 62,694

Development of long-term service bonus fund provisions

2007 2006

in EUR ‘000 in EUR ‘000

Present value (DBO) 01 January 5,253 4,863

Change in scope of consolidation 0 0

Service cost 357 354

Interest cost 245 232

Payments - 395 - 275

Actuarial profit/loss - 81 79

Present value (DBO) 31 December (= provisions) 5,379 5,253

Development of other provisions

Risk provisions

Other provisions

2007 2006 2007 2006

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

As at 01 January 17,599 27,694 6,920 18,152

Allocations 10,236 8,686 37 3,897

Reversals - 8,460 - 18,617 - 394 - 13,950

Utilised - 240 - 164 0 - 1,179

As at 31 December 19,135 17,599 6,563 6,920

122

Annual Report 07


26. Trading liabilities

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Interest rate transactions 456,896 350,512

Currency exchange transactions 41,416 29,737

Stock and index related business 33,483 29,066

Other transactions 0 3,906

Total 531,795 413,221

27. Other liabilities

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Liabilities from non-bank activities 28,075 32,356

Accruals and deferred income 7,459 23,223

Other liabilities 219,727 223,860

Total 255,261 279,439

28. Subordinated capital

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Subordinated liabilities 134,395 127,838

Supplementary capital 1,160,576 1,079,511

Total 1,294,971 1,207,349

The Group

Annual Report 07

123


29. Equity

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Subscribed capital 254,032 241,032

Capital reserves 547,846 410,859

Accumulated results 859,183 671,207

Afs reserves - 41,077 7,878

Minority interests 79,420 76,697

Total 1,699,404 1,407,673

In accordance with its articles, Raiffeisenlandesbank Oberösterreich’s share capital as at 31 December 2007 was EUR 253,000k

(previous year: 240,000k). It consists of 714,578 (previous year: 714,578) ordinary shares and 749,294 (previous year: 674,075) preferred

shares.

The increase in share capital by a nominal amount of EUR 13,000k was raised in accordance with the decision of the extraordinary

general meeting on 07 December 2007 and with the approval of the Supervisory Board by issuing 75,219 individual shares – non-par,

registered and voting preferred shares – at an issue amount of EUR 1,994 each.

Participation capital amounting to EUR 1,032k (previous year: EUR 1,032k) has been issued.

Capital reserves amounting to EUR 410,859k were set aside in conjunction with bringing bank business from the former Raiffeisenlandesbank

Oberösterreich reg. Gen.m.b.H. into Raiffeisenlandesbank Oberösterreich Aktiengesellschaft in the 2004 financial year.

With the capital increase and the premiums on newly issued preferred shares the capital reserves grew in 2007 by EUR 136,987k.

In the 2007 financial year dividends of EUR 12,726k were paid on the preferred shares and the participation capital, in accordance

with the decision made at the annual general meeting concerning the use of the profit of 2006. The dividend per preferred share

was EUR 17.56. The recommendation of the Managing Board as to the use of the profit from 2007 will be to pay a dividend of

EUR 21,238k on the preferred shares and participation capital. This means that the planned dividend for each preferred share

(before new shares are issued) will be EUR 30.19.

The provisions for aggregate results contain the reinvested profits of the group as well as the group profit for the current year.

Development of the Afs provisions

2007 2006

in EUR ‘000 in EUR ‘000

As at 01 January 7,878 39,176

Changes in the fair value of Afs assets with no effect on the income statement - 54,115 -20,866

Amounts transferred to the income statement after disposal of Afs assets - 13,574 -18,897

Taxes recognised with no effect on the income statement 18,734 8,465

As at 31 December - 41,077 7,878

The Afs provisions reflect changes in valuation recorded under equity with no effect on the income statement of financial instruments

in the category "financial assets available for sale" (Afs) in accordance with IAS 39.

124

Annual Report 07


RISK REPORT

Summary

The long-term success of Raiffeisenlandesbank Ober österreich

Aktiengesellschaft is largely dependent upon active

risk management. In order to achieve this objective, as the

dominating Group company, Raiffeisenlandesbank Oberösterreich

has implemented a risk management system which

allows the identification and measurement of all risks within

the Group (market, credit, liquidity and operational risks) and

their active managerial control.

The risk policy sanctioned by the Raiffeisenlandesbank Ober -

österreich Managing Board represents the guidelines for the

other Group companies.

Risk Controlling analyses all risks and examines adherence

to the defined risk limits by means of ongoing projection and

actual comparisons. Internal/Group Auditing assesses the

effectiveness of working procedures, processes and internal

controls.

RISK MANAGEMENT ORGANISATION

The Managing Board of Raiffeisenlandesbank Oberösterreich

bears responsibility for all risk management activities.

It approves the risk policy in accordance with the business

strategies, the risk principles, procedures and methods of risk

measurement and the risk limits.

The Managing Board and all employees act in accordance

with the risk policy principles and make decisions on the basis

of these guidelines. Risk management is organised in such a

way that conflicts of interest both on a personal level and at

the organisation units level are avoided.

For the main types of risks, Raiffeisenlandesbank Oberösterreich

strives to operate a risk management system on a

level which at least corresponds to that of institutions of a

similar structure and size (best practice principle) and is primarily

aimed at the continuation of the company as a going

concern.

Raiffeisenlandesbank Oberösterreich in general only aims its

work at areas of the business in which it has the requisite expertise

in the assessment of the specific risks. Before it moves

into new areas of business or products, the group always

carries out an adequate analysis of the risks posed by that

specific business.

The Managing Board and the Supervisory Board of Raiff -

eisenlandesbank Oberösterreich are informed promptly of the

bank’s risk situation by means of comprehensive, objective

reports. All the quantifiable risks (in particular credit, market,

liquidity and operational risks) to which Raiffeisenlandesbank

Oberösterreich is exposed are monitored and coordi nated

with the Group’s overall strategy.

All the quantifiable risks are monitored on the basis of the

Group-wide risk-bearing capacity. The aim of the early risk

identification and risk monitoring systems is to ensure the

qualified and timely identification of all major risks.

The Controlling organisation unit is responsible for the identification

and measurement of risks in cooperation with the

organisation units charged with them. Controlling is also responsible

for the development and provision of risk measurement

methods and IT systems and provides the result and risk

information required for active risk management.

Market risks

Market risks take the form of changes in interest rates, currency

and exchange rates relating to securities, interest rate and

foreign exchange items

The basis for all business is a balanced risk/reward ratio.

The Raiffeisenlandesbank Oberösterreich Group also uses the

principle of diversification on the basis of business partners,

products, regions and sales channels to reduce its risks. In

addition, derivative transactions are conducted almost exclusively

with banks with which security agreements are in place.

The strict division of labour between front, middle and back

office and risk controlling ensures that risks can be described

comprehensively, transparently and objectively to the Manag -

ing Board and supervisory authorities.

New products and markets are evaluated in an approval process

and then approved by the Managing Board. The primary

objective of trading activities in the Finance Trade Center is

customer transactions. The trades and the market price risk

are limited by an extensive limit system.

The Group

Annual Report 07

125


All trading positions are valued every day at market prices.

The strategic alignment and positioning in the bank book are

presented to the Managing Board on a weekly basis and

continued procedure is then agreed. No open liquidity po -

sitions are entered into for deadline transformation purposes.

Foreign currency risks are only entered into on a very limited

basis by Raiffeisenlandesbank Oberösterreich. All market

price risks from customer transactions are recorded and valued

in the bank book.

The excess risk from all customer transactions is insured.

The market risks are measured every day with the value-at-risk

index for the trading and bank books. This indicates a possible

loss, which with 99% probability will not be exceeded

in the case of a certain holding period. The assumed holding

period is one day for the trading book and one month for the

bank book. The calculations are made using the variancecovariance

method in the trading book and a historic simulation

in the bank book.

The market risks are managed using a limit system based on

the value at risk. All market risk activities are assigned a risk

limit which is included in full in the risk capacity analysis.

In addition to the value-at-risk index, the following limits are

used for risks: Stop loss, scenario analyses and volume limits.

The value-at-risk figures for Raiffeisenlandesbank Oberösterreich

Aktiengesellschaft and Salzburger Landes-Hypothekenbank

AG are calculated on a daily basis. Reports to the full

Managing Board are made every day for the trading book and

on a monthly basis for the bank book. The Board member responsible

for the treasury is also informed of the bank book every

day. The other fully consolidated Group companies minimise

their market risks through punctual re-financing via Raiffeisen -

landesbank Oberösterreich.

Shifts in the interest, currency and share price landscape can

bring a major influence to bear on results and the risk situation.

Therefore, in Raiffeisenlandesbank Oberösterreich possible

changes in risk parameters are simulated and the con -

sequences reported to the Managing Board.

The following table shows the value-at-risk values for the

Raiff eisenlandesbank Oberösterreich Group (confidence level

99%, holding period 1 month). The value-at-risk of the trading

book with a holding period of one day was rescaled to a

holding period of one month due to its insignificance and has

not been shown separately.

Raiffeisenlandesbank 31 Dec 2007 31 Dec 2006

Oberösterreich Group in EUR ‘000 in EUR ‘000

Total 31,946 50,072

Interest 32,976 52,148

Currency 424 645

Shares 5,161 12,729

Volatility 3,017 1,440

The total value-at-risk on 31 December 2007 fell in comparison

with 31 December 2006 by EUR 18.1 million to EUR 31.9 million.

In view of the high volatility of the financial markets, the

Treasury continuously reduces the interest and shares risk

over the course of the year.

The Raiffeisenlandesbank Oberösterreich Group did not invest

in US sub-prime finance instruments neither in 2007 nor in pre -

vious years.

To check the forecast quality of the value-at-risk figures, backtesting

is carried out on a daily basis. This means that the

actual results are compared to the values forecast by the

value-at-risk model. This back-testing confirms the validity

of the statistical methods used.

126 Annual Report 07


In addition, stress tests are conducted to take account of

risks in the event of extreme market movements. The crisis

scenarios include the simulation of large fluctuations in the

risk factors and are designed to highlight potential losses

which are not covered by the value-at-risk model. The stress

scenarios comprise both the extreme market fluctuations

which have actually occurred in the past and also a series of

standardised shock scenarios involving interest rates, share

prices, currency exchange rates and volatility. On the basis of

the value losses simulated by these stress tests, we analyse

whether the market risks we review are reasonable in relation

to our equity capital on a quarterly basis.

within Raiffeisenlandesbank Oberösterreich, which in turn are

based on the regulations of the international “Basel II” standards.

The organisational separation between the market and market

consequences was already implemented some years ago.

Moreover, in order to measure the credit risk, following an

inter national bank rating, financing is divided into creditworthi -

ness and risk classes. The risk situation of a borrower therefore

comprises two dimensions – the recording and the

assess ment of their financial situation and the provision of

securities.

Credit risk

The credit risk constitutes the risk of the bank that a loss will

occur as a result of the non-fulfilment of the contract duties of

customers or contract partners.

Credit risk is mainly generated by the loans to customers and

banks and from securities from the bank book. The Group

takes into account and consolidates all elements of credit risk

claims, such as the risk of insolvency of individual debtors,

national and sector risks for the purpose of producing a risk

report.

The credit risk of the securities from the trading book is treated

separately for the purposes of risk management. Reports are

made as part of the market risk.

The principles for the credit ratings of the customers are incor -

porated in the ”Credit Risk Management” manual. This manual

contains a complete description of the standards that apply

Both hard and soft facts are employed as creditworthiness

criteria. In corporate customer business, soft facts are also

defined systematically during discussions with the company

and then adjudged.

The rating systems are distinguished on the basis of the claim

classes of corporates, retail customers, banks and securities

issuers and states.

Since 2005, a scoring system has been employed for the automatic

classification of small volume business with employed

retail customers.

The credit rating systems are validated on an on-going basis

and undergo further development if necessary.

The following rating classes, which were supplemented in

2000 with half-classes as a result of Basel II, are used for

rating purposes in the Raiffeisenlandesbank Oberösterreich

Group. The following table demonstrates the rating struc tures

described below.

The Group

Annual Report 07

127


Text 10 point scale Subclasses S&P Moodys

Risk-free 0,5 0,5 AAA Aaa

AA+

Aa1

outstanding creditworthiness 1 1

AA Aa2

AA-

Aa3

A+ A1

excellent creditworthiness 1.5 1.5

A A2

A- A3

good creditworthiness (+) 2 + BBB+ Baa1

2

good creditworthiness 2 BBB Baa2

good to average creditworthiness 2 - BBB- Baa3

2.5

average creditworthiness 2.5 BB+ Ba1

satisfactory creditworthiness (+) 3 + BB Ba2

satisfactory creditworthiness 3 3 BB- Ba3

mediocre creditworthiness (-) 3 - B+ B1 .

3.5

poor creditworthiness 3.5 B B2

very poor creditworthiness (+) 4 + B- B3

4

very poor creditworthiness 4 CCC Caa

in danger of default 4.5 4.5 CC

default criteria C Ca

5 5

reached

D

Individual rating classes are defined and delineated by means

of calculations which assess mathematical default probabilities,

the written specification is only for elucidatory purposes,

the above transition to external ratings corresponds to the

bank’s experience to date.

Addendums showing +/- do not represent main rating classes,

they simply aim to enhance pricing accuracy. Moreover,

default probabilities are the basis for transitions to external

rating classes.

128

Annual Report 07


Overall financial structure pursuant to balance sheet items

Maximum credit risk exposure pursuant to IFRS 7.36 a

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Cash reserves (credit balance at central banks) 81,285 69,663

Loans and advances to banks 4,633,396 4,431,704

Loans and advances to customers 13,744,557 11,009,014

Trading assets 536,703 511,285

Financial assets 4,580,961 4,393,601

Tax assets 44,276 35,940

Other assets 182,597 205,784

Total 23,803,775 20,656,991

Contingent liabilities 2,188,951 1,819,967

Credit risks 8,504,940 7,543,522

Total 10,693,891 9,363,489

Total maximum credit exposure 34,497,666 30,020,480

Security values for overall financial structure

The stated security values correspond to the values determined within internal risk management; they communicate the conservative

income expectations in the event of settlement of existing credit commitments.

Security values pursuant to IFRS 7.36 b

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Loans and advances to banks 5,391 1,933

Loans and advances to customers 5,053,011 4,467,734

Total 5,058,402 4,469,667

The Group

Contingent liabilities 574,478 449,833

Credit risks 1,133,276 845,580

Total 1,707,754 1,295,413

Total security values 6,766,156 5,765,080

Annual Report 07

129


Rating structure for credit risk exposure which is neither overdue nor impaired

The quality of the financial assets which are neither overdue nor impaired are depicted as follows on the basis of the internal rating

classification:

Very low risk: Rating classes 0.5 to 1.5

Normal risk: Rating classes +2 to 3+

Increased risk:

Rating classes 3 and poorer

Customers Banks Others

2007 2006 2007 2006 2007 2006

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Very low to low risk 12,452,788 10,947,146 5,561,761 5,436,339 125,561 105,603

Normal risk 11,522,497 9,406,455 463,813 409,229 215,873 242,213

Increased risk 1,393,058 1,012,547 5,046 289 0 0

Total 25,368,343 21,366,148 6,030,620 5,845,857 341,434 347,816

Structure of overdue or impaired credit risk exposure

Book values of overdue or impaired financial assets.

Classification of maximum credit risk exposure in accordance to IFRS 7.36 d (overdue or impaired)

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Loans and advances to banks 92,344 111,724

Loans and advances to customers 1,915,660 1,738,533

Trading assets 689 750

Financial assets 137,285 80,711

Total 2,145,978 1,931,718

Contingent liabilities 173,999 214,550

Credit risks 437,292 314,391

Total 611,291 528,941

Total 2,757,269 2,460,659

130

Annual Report 07


Sector structure/Correlation risk

Maximum credit risk exposure pursuant to sector groups

Sector

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Banks 8,553,811 8,140,681

Real estate projects, property management and residential building management 5,137,732 4,295,683

Public households and non-profit organisations 2,596,691 2,904,754

Finance leasing institutions 2,317,106 1,396,759

Retail (natural persons) 1,204,055 1,120,381

Construction 1,053,480 951,340

Finance holdings 1,018,521 627,417

Supplementary construction trade 985,786 806,783

Engine and plant construction 919,792 776,811

Foodstuffs 802,194 797,358

Metal production and processing 767,129 521,764

Consumer goods 713,659 581,760

Financial services 696,977 506,652

Energy and other utilities 673,867 609,456

Automotive 599,837 558,661

Transport (goods, people, on land, on water) 546,763 559,535

Subtotal 28,587,400 25,155,795

Other 5,910,266 4,864,685

Total 34,497,666 30,020,480

The Credit Institution Group of Raiffeisenlandesbank Oberösterreich procured 15 large-volume assessments exhibiting credit exposure

amounting to EUR 8,190 million at the end of 2007. Eight of these large-volume assessment come from the commercial

sector, 3 come from the public sector and 4 from the banking sector. Thirteen commitments exhibited very low and low risk

ratings; two were classified as exhibiting normal risk.

The Group

Age structure of overdue credit risk exposure

The financial assets which were overdue but not impaired upon balance sheet date exhibit the following age structure:

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

up to 30 days 615,204 561,232

31 to 60 days 145,328 184,194

61 to 90 days 13,017 17,371

over 90 days 36,875 33,547

Total 810,424 796,344

Annual Report 07

131


Risk provisions for impaired credit exposure

The financial assets which were individually determined to be impaired upon balance sheet date, exhibit the following structure: *)

Customers Banks Others

2007 2006 2007 2006 2007 2006

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Gross value 2,872,518 2,557,877 113,437 153,457 137,974 81,461

Risk provisions (incl. general provisions) - 375,788 - 341,593 - 3,519 - 5,583 0 0

Book value 2,496,730 2,216,284 109,918 147,874 137,974 81,461

*)

Contributions without portfolio value adjustment

In the rating class w 5.0, the proportion of the due credit risk exposure not covered by the securities calculated through bankinternal

measures are usually determined as risk provisions. In rating classes w 3.0 to w 4.5, proportional value adjustments are

made for the blank portion of the due credit exposure.

Standardised (pursuant to risk classes) risk provisions are applied in the retail sector.

Collateral relating to overdue or impaired credit risk exposure

The following value-based collateral applies to the overdue or impaired financial assets:

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Loans and advances to banks 431 431

Loans and advances to customers 826,047 853,721

Contingent liabilities 63,045 89,618

Credit risks 136,710 87,694

Total security values 1,026,233 1,031,464

The securities valuations of impaired credit risk exposure are assessed without delay – and correspond to the conservative,

prospective long-term earnings through realisation,

132

Annual Report 07


Credit-Value-at-Risk

Credit-Value-at-Risk for all assets exhibiting address default

risk is assessed monthly. Risk may arise due to credit default

or worsening of creditworthiness – and it is communicated

through the key figures credit-value-at-risk, expected loss and

unexpected loss.

The expected loss represents the most probable value de -

crease of a given portfolio. This specified decrease in value

should be expected each year. This loss is covered by the

calculated risk costs. The unexpected loss represents a portfolio’s

possible loss beyond the expected loss, and thus communicates

possible negative deviation from the expected loss.

The unexpected loss is covered by the equity capital.

The aggregate of expected loss and unexpected loss results

in the credit-value-at-risk. The credit-value-at-risk is the

maximum loss that can possibly arise within a single year,

and which – with a certain amount of probability – will

not be exceeded. Raiffeisenlandesbank Oberösterreich

calculates unexpected loss at probabilities of 95%, 99%

and 99.9%.

The calculation is carried out by RiskMetrics’ credit manager

program. Credit-value-at-risk is assessed with adherence to

diversification effects within the portfolio. The asset value

model is applied to this end.

Liquidity risk

The liquidity risk encompasses the risk of not being able to

fulfil one’s payment obligations by the due date or, in the case

of a liquidity shortage, of not being able to acquire enough

liquidity at the terms expected (structural liquidity risk).

The bank’s liquidity must be secured at all times. This is why

no open liquidity risks are taken for term transformation purposes.

Furthermore, securities suitable for ECB tenders shall

only be used for securitisation for clearing houses and se curity

agreements in exceptional cases in order to ensure that sufficient

coverage is always available and can be refinanced in

the event of a liquidity crisis.

In 2007 the organisational preparations were completed at

Raiffeisenlandesbank Oberösterreich for submitting customer

loans to the ECB tender process.

The Österreichische Nationalbank certified the procedures submitted

by Raiffeisenlandesbank Oberösterreich. Thus, with imme

diate effect, customer credits may be utilised for short-term

re financing.

The structural liquidity risk is monitored and managed with

continuous reports showing capital commitment (pertaining

to both assets and liabilities) at all the different time frames

until maturity.

The short-term liquidity reserves that are available to be capitalised

are depicted in the liquidity protection plan (emergency plan).

On the basis of the liquidity maturity balance, monthly scenarios

are calculated for Raiffeisenlandesbank Oberösterreich

Aktiengesellschaft and Salzburger Landes-Hypothekenbank AG,

which determine the closure expense for the open liquidity

items. The sufficient supply of short- and medium-term liquid -

ity for the event of bottleneck situations is presented in the

liquidity protection plan.

To measure the structural liquidity risk, a simulated worsening

of Raiffeisenlandesbank Oberösterreich’s rating class on the

basis of Moody’s transition probability is assessed. The risk

capital requirements result from the difference in present-value

expenditure between refinancing at the present conditions

and refinancing at the simulated altered rating class.

The other fully consolidated group companies are also re -

financed on a punctual basis.

The following table summarises the maturities of the nondiscounted

liabilities including the respective interest payments

and depicts the earliest possible utilisation of guarantees and

credit commitments:

The Group

Annual Report 07

133


Payable on de- Up to 3 months 1 year to Over

31 Dec 2007 mand/no term 3 months to 1 year 5 years 5 years Total

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Liabilities to banks 2,465,162 2,151,578 1,133,546 1,369,573 1,912,021 9,031,880

Liabilities to customers 2,547,430 1,503,548 801,387 728,008 1,530,245 7,110,618

Debt securities in issue 4,157 312,658 689,664 3,211,804 3,500,347 7,718,630

Trading liabilities 0 243,622 627,966 2,376,940 6,044,509 9,293,037

Subordinated capital 0 13,645 49,381 403,909 1,224,417 1,691,352

Contingent liabilities 2,188,951 0 0 0 0 2,188,951

Credit risks 8,504,940 0 0 0 0 8,504,940

Payable on de- Up to 3 months 1 year to Over

31 Dec 2006 mand/no term 3 months to 1 year 5 years 5 years Total

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Liabilities to banks 2,419,781 1,163,367 1,373,469 1,319,962 1,268,927 7,545,506

Liabilities to customers 2,274,287 827,654 559,906 664,876 1,580,287 5,907,010

Debt securities in issue 60,241 360,549 502,259 2,903,500 3,230,926 7,057,475

Trading liabilities 0 182,579 499,620 1,673,355 1,808,814 4,164,368

Subordinated capital 0 6,707 120,497 297,070 1,138,693 1,562,967

Contingent liabilities 1,819,967 0 0 0 0 1,819,967

Credit risks 7,543,522 0 0 0 0 7,543,522

From the gap analysis below it can be seen that there is no liquidity risk in the individual maturity periods.

GAP in EUR mill.

1,500

31 Dec 2007 31 Dec 2006

1,000

500

Active

surplus

0

- 500

Passive

surplus

- 1,000

up to 1 year 1 to 3 years 3 to 5 years 5 to 7 years 7 to 10 years over 10 years

134

Annual Report 07


Operational risks

The Group defines operational risk as being the risk of losses

derived from the inadequacies or failure of internal procedures,

people and systems, or external events.

The Group has used organisational and technical computing

measures in order to restrict this type of risk. Limit systems,

com petence regulations, a risk-adequate internal control

system, as well as scheduled and unscheduled audits by

Internal / Group Auditing in the individual group companies

guarantees a high degree of security.

The goal of the self assessments done in the group is to make

an appraisal of the operational risks and to increase the awareness

of operational risks (early warning system).

Risk-bearing capacity analysis

In the analysis of risk-bearing capacity the aggregate banking

risk of the entire Group is divided into credit risk, market risk,

refinancing risk, operational risk and other risks (= strategic risk,

reputational risk, equity risk and earnings risk) and compared

with the risk coverage (= operating result, hidden reserves,

provisions and equity).

This comparison of the Group risk with the available coverage

shows the risk-bearing capacity.

With this comparison, the Raiffeisenlandesbank Oberösterreich

Group is able to guarantee that it can cover extremely

unexpected losses from its own funds without difficult negative

effects. Economic capital is the measurement of risk used

to calculate extremely unexpected losses. It is defined as the

minimum amount of capital necessary to cover unexpected

losses with a probability of 99.9% within one year.

The Group

Annual Report 07

135


OTHER NOTES

Breakdown of remaining maturities

Breakdown of remaining maturities as at 31 December 2007

Payable on de- Up to 3 months 1 year to Over

mand/no term 3 months to 1 year 5 years 5 years Total

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Cash and cash equivalents 116,012 0 0 0 0

Loans and advances to banks 1,406,826 1,634,591 918,628 464,132 209,219

Loans and advances to customers 1,994,954 2,234,292 2,049,005 3,302,245 4,164,061

Trading assets 94,231 32,491 36,602 185,680 187,868

Financial assets 2,206,355 103,019 103,028 1,685,273 1,196,316

Companies accounted for at equity 625,406 0 0 0 0

Liabilities to banks 2,986,129 2,015,754 1,024,655 1,086,163 1,590,998

Liabilities to customers 2,565,465 1,518,443 787,763 553,989 1,265,164

Debt securities in issue 139,045 245,697 580,834 2,404,887 2,551,475

Trading liabilities 4,908 16,294 54,147 146,433 310,013

Subordinated capital 28,528 0 21,199 257,469 987,775

Breakdown of remaining maturities as at 31 December 2006

Payable on de- Up to 3 months 1 year to Over

mand/no term 3 months to 1 year 5 years 5 years Total

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Cash and cash equivalents 103,239 0 0 0 0

Loans and advances to banks 822,176 1,475,083 1,223,493 643,302 267,650

Loans and advances to customers 1,530,163 1,625,055 1,603,189 2,828,555 3,422,052

Trading assets 115,972 125,235 58,531 113,815 97,732

Financial assets 1,955,516 81,625 264,479 1,463,499 1,292,659

Companies accounted for at equity 514,447 0 0 0 0

Liabilities to banks 2,947,311 1,108,343 1,276,479 1,142,372 1,102,399

Liabilities to customers 2,243,986 857,704 542,821 515,507 1,371,824

Debt securities in issue 161,202 294,309 357,799 2,263,616 2,497,043

Trading liabilities 17,449 248,601 42,974 46,650 57,547

Subordinated capital 30,867 0 41,678 142,516 992,288

136

Annual Report 07


Loans and advances and other liabilities to related companies

Loans and advances and other liabilities to related companies as at 31 December 2007

Loans and advances and other liabilities of Raiffeisenlandesbank Oberösterreich to parent companies and companies in which

Raiffeisen landesbank Oberösterreich holds shares are as follows:

Companies accounted Shares in

for at equity companies

in EUR ‘000 in EUR ‘000

Loans and advances to banks 804,724 1,075,288

Loans and advances to customers 384,666 1,411,034

Trading assets 58,792 15,509

Financial assets 62,121 527,486

Other assets 179 19,369

Liabilities to banks 808,800 456,306

Liabilities to customers 9,090 151,354

Other liabilities 2,439 18,711

Contingent liabilities 0 0

Loans and advances and other liabilities to related companies as at 31 December 2006

Companies accounted Shares in

for at equity companies

in EUR ‘000 in EUR ‘000

Loans and advances to banks 516,353 1,845,640

Loans and advances to customers 311,754 1,211,163

Trading assets 20,350 27,198

Financial assets 170,331 635,067

Other assets 131 41,766

Liabilities to banks 867,289 602,692

Liabilities to customers 35,648 74,075

Other liabilities 21 17,218

The Group

Contingent liabilities 0 35

As of 31 December 2007 EUR 15,000k are pledged to companies accounted for at equity. Valuation allowances in the amount of

EUR 8,000k were reserved for related companies in the 2007 financial year.

The parent company is a cooperative registered as “Raiffeisenbankengruppe OÖ Verbund eingetragene Genossenschaft” which is not,

aside from its function as a holding, operationally active. Information about the companies accounted for at equity is recorded separately

from other shares in companies. The latter are holdings in companies that are neither fully consolidated nor accounted for at equity.

As of the balance sheet date there were no material loans and advances or other liabilities to the parent company.

In the course of ordinary business activities, transactions with related companies and persons are concluded under standard market

conditions.

Annual Report 07

137


Remuneration of the Managing Board and the Supervisory Board

Expenses for the remuneration of members of the Managing Board of Raiffeisenlandesbank Oberösterreich are spread out during

the financial year as follows:

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Ongoing payments 1,684 1,558

Post-employment benefits 1,192 1,096

Other long-term benefits due 9 12

Total 2,885 2,666

During the 2007 financial year EUR 402k (previous year: EUR 385k) were paid to members of the Supervisory Board,

Advances and loans to membersof the Managing Board and the Supervisory Board

Advances and loans to members of the Raiffeisenlandesbank Oberösterreich Managing Board and the Supervisory Board consisted of

EUR 306k (previous year: EUR 287k) to members of the Managing Board, and EUR 963k (previous year: EUR 385k) to members of the

Supervisory Board.

Loans to members of the Managing Board and the Supervisory Board are granted at standard bank conditions. Repayments are made

as agreed.

138

Annual Report 07


Contingent liabilities and credit risks

As at the balance sheet date the following off-balance-sheet obligations existed:

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Contingent liabilities 2,188,951 1,819,967

of which other indemnity agreements 2,188,872 1,819,888

of which other contingent liabilities 79 79

Credit risks 8,504,940 7,543,522

of which revocable loan commitments/stand-by facilities 8,452,794 7,488,562

up to 1 year 5,233,036 4,948,961

over 1 year 3,219,758 2,539,601

of which pseudo repo transactions 31,847 54,960

of which other credit risks 20,299 0

Assets pledged as collateral

As at 31 December 2007, securities to the amount of EUR

9,429k (previous year: EUR 6,441k) were held as reserve for

trust fund deposits of EUR 5,991k (previous year EUR 5,190k).

Actuarial reserve funds of EUR 721,665k (previous year: EUR

863,839k) have been earmarked for Pfandbriefe, municipal

bonds and covered bonds. In addition, securities are held in

the substitute reserve depot in accordance with § 2 para 3 of

the “Austrian Pfandbrief Act” in the amount of EUR 0 (previous

year: EUR 2,921k).

Securities with a carrying amount of EUR 1,013,926k (previous

year: EUR 1,074,918k) have been deposited as collateral at

banks and stock exchanges. EUR 89,374k (previous year EUR

35,722k) were deposited at banks for collateral arrangements

and EUR 15,000k (previous year: EUR 0 k) are pledged.

Money claims to the amount of EUR 631,266k (previous year:

EUR 534,667k) were ceded to the Oesterreichische Kontrollbank.

Outstanding debts of EUR 53,565k (previous year: EUR

50,420k) were ceded to the European Investment Bank.

In addition, as at 31 December 2007, fixed-interest securities

with a carrying amount of EUR 39,970k (previous year EUR

13,149k) were held in a blocked account at the Landeszentral -

bank in the Free State of Bavaria as a security deposit for

advances on securities.

As per 31 December 2007 securities with a carrying amount of

EUR 135,646k (previous year: EUR 201,377k) were put in pensions.

The Group

Annual Report 07

139


Finance lease (Lessor)

Claims from leasing transactions (Finance Lease) are as follows:

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Investment (gross) 468,646 364,509

Minimum lease payments 432,596 330,579

up to 3 months 40,994 32,975

from 3 months to 1 year 72,215 51,976

from 1 to 5 years 215,938 159,476

over 5 years 103,449 86,152

Non-guaranteed residual values 36,050 33,930

Unrealised financial earnings 95,830 70,656

up to 3 months 4,883 2,936

from 3 months to 1 year 12,387 8,341

from 1 to 5 years 39,281 29,208

over 5 years 39,279 30,171

Investment (net) 372,816 293,853

Value adjustments for irrecoverable outstanding minimum lease payments amount to EUR 299k.

The leased property holdings are structured as follows:

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Vehicle leasing 131,433 82,634

Real estate leasing 121,508 113,342

Lease of movables 119,875 97,877

Total 372,816 293,853

140

Annual Report 07


Finance lease (Lessee)

The assets and future minimum lease payments below refer to finance lease agreements in which Raiffeisenlandesbank Ober -

österreich is the lessee:

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Net carrying amount 1,919 2,776

Minimum lease payments 1,113 2,301

of which up to one year 713 1,417

of which from 1-5 years 400 884

of which for more than 5 years 0 0

The contingent lease payments recognised as expenses amounted to EUR 1,517k in the financial year 2007 (EUR 1,655k in the previous year).

Operating Leasing (Lessor)

The depicted future minimum lease payments below refer to irredeemable operating lease business operations in which Raiff -

eisenlandesbank Oberösterreich is the lessor:

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

up to 1 year 3,136 2,300

from 1 to 5 years 9,571 8,312

over 5 years 18,284 18,543

Total 30,991 29,155

The minimum lease payments refer solely to real estate leasing.

The Group

The further operative earnings from Operating Leasing amount to EUR 2,355k for the financial year 2007 (previous year: EUR 1,813k).

Annual Report 07

141


INFORMATION BASED ON AUSTRIAN ACCOUNTING STANDARDS

Foreign currency trading volumes

The assets and liabilities below are recognised in foreign currencies in the consolidated financial statements:

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Assets 3,245,339 2,905,240

Liabilities 2,496,413 2,309,961

Listed securities pursuant to § 64 of the Austrian Banking Act

listed

non-listed

31 Dec 2007 31 Dec 2006 31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000 in EUR ‘000 in EUR ‘000

Bonds and other

fixed-interest securities 2,216,444 2,162,489 0 0

Shares and other

fixed-interest securities 77,734 34,991 0 0

Of the listed bonds and other fixed-interest securities, EUR 1,779,306k (previous year: EUR 1,545,688k) can be allocated to the

fixed assets.

Volume of securities book in accordance with § 22 of the Austrian Banking Act

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Securities 144,423 175,858

Other financial instruments 123,497 116,852

Total 267,920 292,710

142

Annual Report 07


Regulatory equity requirements

Equity of the Credit Institution Group of Raiffeisenlandesbank Oberösterreich in accordance with the Austrian Banking Act is divided as follows:

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Tier 1 - capital (core capital) 1,459,848 1,218,265

Tier 2 capital (supplementary capital) 1,242,888 1,150,198

Less holdings in banks/financial institutions - 192,330 - 142,780

Equity eligible for inclusion 2,510,406 2,225,683

Tier 3 capital (short-term subordinated capital) 0 0

Total equity 2,510,406 2,225,683

The total equity requirement is divided up as follows:

31 Dec 2007 31 Dec 2006

in EUR ‘000 in EUR ‘000

Risk-weighted assessment bases

in accordance with § 22 of the Austrian Banking Act 19,302,709 16,001,356

of which 8% minimum equity requirement 1,544,217 1,280,108

Equity requirement for the securities trading book

in accordance with § 22b para 1 of the Austrian Banking Act 4,179 4,793

Equity requirements for the open foreign exchange positions

in accordance with § 26 of the Austrian Banking Act 0 0

Total equity requirement 1,548,396 1,284,901

Requisite equity bank book 1,544,217 1,280,108

Requisite equity trading book 4,179 4,793

Equity surplus 962,010 940,782

Coverage ratio in% 5,0 5,9

Tier 1 ratio in% 7,56 7,61

Equity ratio in% 12,98 13,88

The Group

The Tier 1 ratio refers to the risk-weighted basis pursuant to § 22 of the Austrian Banking Act.

Within the framework of equity management, the main focus lies on securing adequate financial resources for the group and

maintaining regulatory equity requirements for the Credit Institute Group of Raiffeisenlandesbank Oberösterreich.

Annual Report 07

143


Average number of employees pursuant to § 266 of the Austrian Business Code

31 Dec 2007 31 Dec 2006

Employees 1,736 1,732

Labourers 16 16

Total 1,752 1,748

Additional information on terms according to § 64 of the Austrian Banking Act

In 2008, bonds and other fixed-interest securities held by Raiffeisenlandesbank Oberösterreich to the amount of EUR 190,898k

(2007: 343,290k) will mature, along with bond issues of EUR 225,552k (2007: EUR 178,192k).

Subordinated liabilities

In the case of subordinated liabilities, the subordination is always agreed separately in writing pursuant to § 51 para 9 of the

Austrian Banking Act. The term and repayment are established in a manner that permits allocation to equity in accordance with

§ 23 para 8 subpara 1 of the Austrian Banking Act. The subordinated liabilities include an emission with the nominal value of

EUR 124,172k and an interest rate of 5.161% as well as an emission with the nominal value of EUR 117,305k and an interest rate

of 5.0% which will be repaid in 2020.

Expenses for subordinated liabilities

Expenses for subordinated liabilities in the 2007 financial year totalled EUR 60,141k (previous year: EUR 52,951k).

EVENTS AFTER THE BALANCE SHEET DATE

There were no events of particular importance after the close of the 2007 business year.

THE MEMBERS OF THE BOARD OF RAIFFEISENLANDESBANK OBERÖSTERREICH AKTIENGESELLSCHAFT

Information on the members of the Raiffeisenlandesbank Oberösterreich Aktiengesellschaft Managing Board and Supervisory

Board can be found on pages 4 to 7.

144

Annual Report 07


Linz, 07 April 2008

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Europaplatz 1a, 4020 Linz

THE MANAGING BOARD

Ludwig Scharinger

Chief Executive

Hans Schilcher

Deputy Chief Executive

Helmut Schützeneder

Member of the Managing Board

Georg Starzer

Member of the Managing Board

Markus Vockenhuber

Member of the Managing Board

Michaela Keplinger-Mitterlehner

Member of the Managing Board

The Group

Annual Report 07

145


Unqualified Audit Certificate

REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

We have audited the accompanying consolidated financial statements of

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft,

domiciled in 4020 Linz, Europaplatz 1a,

for the financial year from 1 January 2007 to 31 December

2007. Those financial statements comprise the balance sheet

as at 31 December 2007, and the income statement, statement

of changes in equity and cash flow statement for the

year then ended, and a summary of significant accounting

policies and other explanatory notes. Our liability as auditors

is guided under § 275 UGB.

Management’s Responsibility

for the Financial Statements

Management is responsible for the preparation and fair presentation

of these consolidated financial statements in

accordance with International Financial Reporting Standards

(IFRSs) as adopted by the EU. This responsibility includes:

designing, implementing and maintaining internal control

relevant to the preparation and fair presentation of financial

statements that are free from material misstatement, whether

due to fraud or error; selecting and applying appropriate

accounting policies; and making accounting estimates that

are reasonable in the circumstances.

Auditor's Responsibility

Our responsibility is to express an opinion on these consolidated

financial statements based on our audit. We con ducted

our audit in accordance with laws and regulations applicable

in Austria and Austrian Standards on Auditing and Inter -

national Standards on Auditing, issued by the International

Auditing and Assurance Standards Board (IAASB) of the

International Federation of Accountants (IFAC). Those stand -

ards require that we comply with ethical requirements and

plan and perform the audit to obtain reasonable assurance

whether the consolidated financial statements are free from

material misstatement.

An audit involves performing procedures to obtain audit

evidence about the amounts and disclosures in the con soli -

dated financial statements. The procedures selected depend

on the auditor’s judgement, including the assessment of the

risks of material misstatement of the consolidated financial

statements, whether due to fraud or error. In making those risk

assessments, the auditor considers internal control relevant

146

Annual Report 07


to the entity’s preparation and fair presentation of the con -

solidated financial statements in order to design audit pro -

cedures that are appropriate in the circumstances, but not for

the purpose of expressing an opinion on the effectiveness of

the entity’s internal control. An audit also includes evaluation

of the appropriateness of accounting policies used and the

reasonableness of accounting estimates made by management,

as well as evaluating the overall presentation of the

financial statements.

We believe that the audit evidence we have obtained is sufficient

and appropriate to provide a basis for our audit opinion.

Opinion

Our audit did not give rise to any objections. Based on the

results of our audit in our opinion the consolidated financial

statements present fairly, in all material respects, the financial

position of the group as of 31. December 2007 and of its finan -

cial performance and its cash flows for the year then ended in

accordance with International Financial Reporting Standards

(IFRSs) as adopted by the EU.

REPORT ON OTHER LEGAL REQUIREMENTS

Law and regulation applicable in Austria require us to perform

audit procedures whether the group management report is

consistent with the consolidated financial statements and

whether the other disclosures made in the group management

report do not give rise to misconception of the position of the

group.

In our opinion, the Group Management Report is consistent

with the consolidated financial statements.

Linz, 07 April 2008

KPMG Austria GmbH

Wirtschaftsprüfungs- und Steuerberatungsgesellschaft

The Group

Martha Kloibmüller

Ernst Pichler

Chartered accountants and tax consultants

This report is a translation of the original report in German, which is solely valid.

Annual Report 07

147


Unqualified Audit Certificate

REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

I have audited the consolidated financial statements of

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft,

domiciled in 4020 Linz, Europaplatz 1a,

for the financial year from 1 January 2007 to 31 December

2007. These consolidated financial statements include the consolidated

balance sheet as of 31.12.07, the group income statement,

the group cash flow statement and the group statement

of changes in equity for the financial year ending 31.12.07 and

a summary of material accounting policies and other data in the

appendices.

The legal representatives of the company are responsible for

compiling the consolidated financial statements presenting a

true and fair view of the assets, financial position and earnings

of the company in accordance with the International Financial

Reporting Standards (IFRS), as they are applied in the EU. This

responsibility includes: The design, implementation and maintaining

of an internal control system, insofar as this is important

for the compiling of consolidated financial statements and presenting

a true and fair view of the assets, financial position and

earnings of the company so that these consolidated financial

statements are free of material misstatements, whether due to

intended or unintended errors; the selection and application of

suitable accounting policies; the submission of estimates which,

taking into account the given framework conditions, appear appropriate.

My responsibility consists of issuing an auditing opinion about

these consolidated financial statements based on my audit. My

audit was conducted in accordance with the applicable Austrian

legal regulations. These standards require that I plan and perform

the audit in such a manner that I can form a reasonable opinion

as to whether the financial statements are free of material

misstatement.

An audit includes the implementation of auditing actions to obtain

auditing evidence in respect of the amounts and other details

given in the consolidated financial statements. The choice

of auditing actions is left to the obligatory discretion of the auditor,

taking into account his assessment of the risk of material

misstatements occurring, whether due to intended or unintended

errors. In assessing this risk, the auditor takes into account

the internal control system, insofar as it is important for compiling

the consolidated financial statements and presenting a true

and fair view of the assets, financial position and earnings of

the company, in order to determine suitable auditing actions taking

account of the framework conditions, not however to submit

an auditing opinion about the effectiveness of the company’s

internal control system. Furthermore, the audit also includes the

assessment of the appropriateness of the accounting principles

used and material estimates made by the legal representatives

of the company, as well as the evaluation of the overall financial

statement presentation.

I believe that I have obtained sufficient and suitable auditing

proof, so that my audit provides a reasonable basis for my opinion.

The results of my audit gave no reason for objection. On the

basis of the knowledge gained during the audit, in my judgement

the consolidated financial statements comply with the legal

regulations and present a true and fair view of the company’s

148

Annual Report 07


assets and financial position as at 31.12.07 and the company’s

earnings and cash flow in the financial year from 1 January 2007 to

31 De cember 2007, in accordance with the International Financial

Reporting Standards (IFRS), as they are applied in the EU.

The unqualified auditor’s certificate was issued for the un -

abridged, German-language version of the consolidated

financial statements.

As a result of Austrian legal regulations, the group management

report is to be audited as to whether it is consistent with

the consolidated financial statements and whether other details

given in the group management report give a misleading

impression of the group’s financial position.

In my opinion, the group management report is consistent with

the consolidated financial statements.

Linz, 07 April 2008

Auditing association: Österreichischer Raiffeisenverband

Auditor:

Ursula Palle-Futschik

Association Auditor

The Group

Annual Report 07

149


Statement of the Managing Board

The managing board of the Raiffeisenlandesbank Oberösterreich Aktiengesellschaft declares that the annual financial statements

as at 31 December 2007 compiled according to Austrian Business Code/Austrian Banking Act regulations and the consolidated

financial statements as at 31 December 2007 compiled according to the International Financial Reporting Standards (IFRS) present

a true and fair view of the assets, financial position and earnings of Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

and of the companies included in the consolidation, in their entirety.

Equally, the management report and the group management report for the financial year 2007 present a true and fair view of the

assets, financial position and earnings of the company and the group and give information about business performance and the

effects of existing and future risks to business activities.

Linz, 07 April 2008

Raiffeisenlandesbank Oberösterreich Aktiengesellschaft

Europaplatz 1a, 4020 Linz

THE MANAGING BOARD

Ludwig Scharinger

Chief Executive and Chairman of the Managing Board

Hans Schilcher

Deputy Chairman of the Managing Board

Helmut Schützeneder

Member of the Managing Board

Georg Starzer

Member of the Managing Board

Markus Vockenhuber

Member of the Managing Board

Michaela Keplinger-Mitterlehner

Member of the Managing Board

150

Annual Report 07


Report of the Supervisory Board

The Supervisory Board of Raiffeisenlandesbank Ober österreich

Aktiengesellschaft has fulfilled the tasks incumbent upon

them according to the law and the company articles for

the financial year 2007. The Managing Board has reported

regularly, promptly and comprehensively about important

business transactions and the situation and development of

the bank and the group.

Three committees (executive and personnel committee, auditing

committee and balance sheet committee) have effectively

supported the entire Supervisory Board in the completion of

its work.

The Österreichischer Raiffeisenverband and KPMG Austria

GmbH have audited the accounts, the annual financial statement

according to Austrian Business Code/Austrian Banking

Act regulations and the consolidated financial statements

according to the International Financial Reporting Standards

(IFRS) as at 31 December 2007 and the management report

and the group management report for the financial year 2007.

management report for the financial year 2007. It concurs

with the result of the financial statement auditor and the

Managing Board’s proposals as to how the profits should

be used and approves Raiffeisenlandesbank Oberösterreich

Aktiengesellschaft’s annual financial statement for 2007,

which thereby adheres to Section 125 (2) of the Stock Corporation

Act.

The Supervisory Board would like to thank the Managing

Board and all employees of Raiffeisenlandesbank Ober österreich

Aktiengesellschaft and the whole group for their per -

formance and notable success in financial year 2007.

Linz, 30 April 2008

The Supervisory Board

The audits did not give cause for any reservations and all legal

regulations were complied with in full. Consequently, the un -

qualified audit certificate was given. The Supervisory Board

noted with approval the results of the audit.

The Supervisory Board has also audited the annual financial

statements and the consolidated financial statements as at

31 December 2007, the management report and the group

Jakob Auer

Chairman of the Supervisory Board

The Group

Annual Report 07

151

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