Bank für Tirol und Vorarlberg : 1st quarter (690 KB)

BANK FÜR TIROL UND VORARLBERG AKTIENGESELLSCHAFT

SHAREHOLDERS' REPORT: INTERIM REPORT

AS AT 31/03/2021

Interi Report

Contents

1. Important dates for BTV shareholders in 2021
2. BTV Group at a glance
   Management report and notes on BTV Group business trends
3. Economic environment
4. BTV shares
5. Balance sheet and profit trend

Abridged consolidated financial statements

1. Balance sheet
2. Comprehensive income statement
3. Statement of changes in equity
4. Cash flow statement

Important dates for BTV shareholders

Annual General Meeting

Ex-dividend date

Payment of dividend

Interim Report as at 31/03/2021 Half-Year Financial Report as at 30/06/2021 Interim Report as at 30/09/2021

1. BTV group: notes to the accounts 2021

1. Accounting and valuation principles

1. Significant events during or after the reporting period
2. Notes on the balance sheet - Assets

1. Notes on the balance sheet - Liabilities

1. Notes on the statement of comprehensive income

1. Other and supplementary notes on the balance sheet

1. Segment report

1. Statements by the statutory representatives
2. Imprint

07/05/2021, 11.00 am, Stadtforum 1, Innsbruck (held virtually)

The dividend will be published on the BTV homepage and in the gazette of the Wiener Zeitung the day after the Annual General Meeting.

14/05/2021

18/05/2021

Published on 28/05/2021 (www.btv.at)

Published on 27/08/2021 (www.btv.at)

Published on 26/11/2021 (www.btv.at)

2    BTV Interim Report as at 31/03/2021

BTV Group at a glance

Profit and loss in EUR million	31/03/2021	31/03/2020	Change in %
Net interest income	38.0	36.4	+4.3%
Loan loss provisions in the credit business	-2.7	-7.9	-65.7%
Net commission income	13.8	15.8	-12.5%
Revenue from companies valued at equity	15.8	1.5	>+100%
Operating expenses	-43.4	-50.8	-14.6%
Other operating income	1.2	40.8	-97.1%
Annual net income before tax	23.4	31.8	-26.4%
Group net profit for the period	21.2	24.5	-13.5%

Balance sheet figures in EUR million	31/03/2021	31/12/2020	Change in %
Balance sheet total	13,933	13,969	-0.3%
Loans to clients after risk provisions	7,991	8,026	-0.4%
Primary funds	9,518	9,649	-1.4%
of which savings deposits	1,512	1,531	-1.2%
of which own issues	1,341	1,390	-3.5%
Equity	1,806	1,787	+1.1%
Managed deposits	16,610	16,438	+1.0%

Regulatory capital (CRR) in EUR million	31/03/2021	31/12/2020	Change in %
Total risk amount	7,754	7,866	-1.4%
Capital	1,298	1,317	-1.5%
of which common equity (CET1)	1,069	1,086	-1.5%
of which total core capital (CET1 and AT1)	1,069	1,086	-1.5%
Common equity Tier 1 ratio	13.8%	13.8%	-0.0 pp
Core capital ratio	13.8%	13.8%	-0.0 pp
Equity ratio	16.7%	16.7%	-0.0 pp

			Change in
Key indicators in percentage points	31/03/2021	31/03/2020	percentage points
Return on equity before tax (RoE)	5.3%	7.3%	-2.0 pp
Return on equity after tax	4.8%	5.6%	-0.8 pp
Cost/income ratio	63.0%	55.6%	+7.4 pp
Risk/earnings ratio	7.1%	21.7%	-14.6 pp

Number of resources	31/03/2021	31/03/2020	Change figure
Weighted average number of employees	1,244	1,510	-267
Number of branches	35	36	-1
Key indicators for BTV shares	31/03/2021	31/03/2020
Number of ordinary no par value shares	31,531,250	31,531,250
Number of preference shares	2,500,000	2,500,000
Highest price of ordinary/preference share in EUR	31.00/27.80	30.00/27.80
Lowest price of ordinary/preference share in EUR	29.60/27.00	26.80/24.80
Closing price of ordinary/preference share in EUR	30.80/27.80	27.40/25.40
Market capitalisation in EUR million	1,041	927
IFRS earnings per share in EUR	2.25	2.19
P/E ratio, ordinary share	13.7	12.5
P/E ratio, preference share	12.3	11.6

BTV Interim Report as at 31/03/20213

Management report and notes on BTV Group business trends in 2021

Economic environment

The global vaccination campaign launched at the end of 2020 was very heterogeneous in the first quarter of 2021. While Israel, the United Kingdom and the USA took the lead, and by the end of the first quarter between 30% and 50% of the population in those countries had already received their first dose, the pace of vaccination in continental Europe proved to be rather slow. This, and the prevalence of the Alpha (UK) variant in particular, led to an extension of lockdown measures in many EU Member States over the entire first quarter. In particular the service sector suffered again, while the manufacturing industry continued to recover thanks to the ongoing recovery in global demand and in the eurozone reached pre-COVID levels at the beginning of the year. Packages of measures on the part of central banks and governments continued to provide support, with the USA in particular offering packages on a historic scale. The Senate election at the beginning of January resulted in a majority Democratic Congress, giving US President Joe Biden more capacity to act. As a result, the COVID-19 aid package worth billions and an additional infrastructure programme were passed. US consumers significantly increased their savings rate as a result of high grant payments and unemployment benefits; as a result, a noticeable increase in consumption is only expected in the second quarter.

Interest rates

In the first quarter, global central banks also stuck to their chosen path of expansionary monetary policy. Nevertheless, the improved economic outlook and the resulting rise in inflation expectations worldwide led to a steepening of interest rate curves. In the eurozone and Japan, the increase in long-term interest rates was relatively low, which is why 10-year German and Japanese government bonds also had negative returns at the end of the first quarter. In the USA, on the other hand, the steepening of the interest curve was much more pronounced, with the yield on 10-year government bonds rising by 83 basis points in the first quarter,

to 1.74%.

This movement caused increased concern, particularly in the USA, which could lead to tendencies to overheat and a rapid rise in inflation. This would slow down economic development at an early stage and would presumably cause central banks to adopt more restrictive monetary policies. US Federal Reserve Chair Jerome Powell provided reassurance with his statement that the Fed would tolerate an increase in inflation to over 2% for some time.

Even after the recently observed interest rate rises, yields on comparatively safe government bonds remained at low levels in a historical comparison, which is unlikely to change in the near future due to the expansionary monetary policies of the major central banks. In addition, it should be noted that the central banks' scope for interest rate hikes is limited by the increased global public debt as a result of COVID-19

aid packages.

Yields on European and US corporate bonds with good credit ratings (investment grade) also rose in the first quarter. How- ever, this segment suffered from the higher interest rates, which falling risk premiums failed to offset. On the other hand, European and US high-yield bonds were able to perform more positively. Risk premiums on these bonds fell sharply due to expansionary measures taken by the central banks and the improved economic outlook.

The long-term euro interest rates increased slightly in the first quarter. The 10-year euro swap rose by 33 basis points to 0.07%. With a yield of -0.54%, there was hardly any change in money market interest rates (3-month Euribor; -0.55% as at 31 December 2020).

Currency markets

After the upward trend in the fourth quarter of 2020, the euro's strength against the US dollar eased in the first quarter. This was mainly due to the expectation of a comparatively stronger economic recovery in the USA after a fiscal package of USD 1.9 trillion was passed in Congress at the beginning of the year. The resulting higher inflation expectations led to a noticeable rise in long-term US interest rates in particular, which boosted the US dollar and led to a widening of the EUR/USD interest rate differential. However, the global economic recovery as a result of the first vaccination successes and the associated "risk-on" mood were able to limit the depreciation of the euro. The agreement on a European recovery fund in December of the previous year also continued to have a positive effect on the stability of the euro. As a result, investors expected a less volatile and more crisis-proof currency. Nevertheless, the euro depreciated against the US dollar by -4.0% in the first quarter, resulting in a EUR/USD exchange rate of 1.17 on 31 March 2021.

Against the Swiss franc, the euro continued to assert its strength in the first quarter and even extended it significantly. Above all, the improved global economic outlook and the

4    BTV Interim Report as at 31/03/2021

Performance of BTV shares in EUR

32.00
30.00
							BTV ordinary share
28.00							BTV preference share
26.00
24.00
22.00
20.00
18.00
16.00
31/03/2016	31/03/2017	31/03/2018	31/03/2019	31/03/2020	31/03/2021

resulting "risk-on" mood recently strengthened the euro, even though the Swiss franc was in constant demand as a traditional "safe haven." In addition, the agreement on a European recovery fund continued to provide support, since it strengthened the perception of the euro as the currency of a stable economic area. In the first quarter, the euro appreciated against the Swiss franc by just under +2.4%. The EUR/CHF exchange rate was 1.107 at the end of the quarter. In the first quarter, the euro rose by +2.9% against the Japanese yen. At the end of March, the EUR/JPY exchange rate was 130.24. In addition to lower demand than "safe havens," the yen also came under pressure from comparatively weaker Japanese economic data.

Currency rates as at 31 March 2021:

EUR/USD: 1.1725

EUR/CHF: 1.1070

EUR/JPY: 129.91

Equity markets

Following the successful fourth quarter, in which some global equity indices even managed to close the year with price gains after a turbulent 2020, the asset class continued its upward trend in the first quarter of 2021. The main driver of this rally was the improved economic outlook as a result of the vaccination campaigns launched around the world. There was a catch-up effect at the sector level, particularly in value stocks that were punished during the crisis and in cyclical sectors,

while growth stocks were less sought after. In the USA, the IT-heavy NASDAQ Composite, with a performance of +2.8% in the first quarter, lagged behind the US leading index the S&P 500 with its performance of +5.8%. Nevertheless, both indices managed to surpass their pre-COVID-19 highs. In addition to the positive economic outlook, the US stock market was also supported by the recently agreed billion-dollarCOVID-19 aid package and an additional infrastructure programme. The broad European stock market (STOXX 600) showed strong performance at +7.7%, proving somewhat indifferent to rising case numbers and extended lockdowns in many EU member states. This was mainly due to a catch-up movement after European equity markets significantly underperformed US exchanges last year. The German DAX was particularly strong among the European indices in the first quarter, with a gain of +9.4%. The Japanese Nikkei 225 was in the global midfield with a gain this quarter of +6.3%. Among the emerging market exchanges, the Asia region (MSCI Asia ex Japan) stood out slightly with an increase of +2.7%, while Latin America had to relinquish performance, particularly in Brazil (MSCI Latin America at -5.3%) in light of the sharp rise in COVID-19 cases.

BTV shares

BTV ordinary shares rose in the first quarter of 2021 by +2.0% to EUR 30.80. Preference shares stood at EUR 27.80 (+2.2%) at the end of the quarter.

BTV Interim Report as at 31/03/20215