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LLB Annual Report 2021 de

Notes to the consolidated balance sheet

Information checkedInformation unaudited Information geprüft Information ungeprüft Notes to the consolidated balance sheet

11Cash and balances with central banks

11 Cash and balances with central banks

 

31.12.2021

31.12.2020

+ / – %

Cash

54'289

61'959

– 12.4

Demand deposits with central banks

7'158'871

6'653'651

7.6

Total cash and balances with central banks

7'213'159

6'715'610

7.4

12Due from banks

12 Due from banks

in CHF thousands

31.12.2021

31.12.2020

+ / – %

On demand

393'524

410'261

– 4.1

At maturity or callable

496'219

280'751

76.7

Total due from banks

889'744

691'011

28.8

13Loans

13 Loans

in CHF thousands

31.12.2021

31.12.2020

+ / – %

Mortgage loans

12'240'442

11'733'792

4.3

Public institutions

72'253

78'343

– 7.8

Fixed advances and loans

1'052'776

960'669

9.6

Other loans and advances

517'658

536'573

– 3.5

Expected credit losses

– 77'941

– 79'446

– 1.9

Total loans

13'805'188

13'229'931

4.3

Further information, especially regarding the expected credit loss, is provided in Risk management in chapter 3 “Credit risk”.

14Derivative financial instruments

14 Derivative financial instruments

Interest rate swaps are concluded to hedge against interest rate fluctuation risks. In addition, derivative financial instruments are employed primarily within the scope of client business. In this case, both standardised and OTC derivatives are traded. International banks having a high creditworthiness serve as counterparties. LLB does not assume a market-maker role on the interbank market. The tables in this note contain information about the nominal value (contract volume), about the replacement values and about the hedge accounting positions.

 

 

 

 

 

 

 

 

Total

 

 

in CHF thousands

Positive replacement values

Negative replacement values

Total contract volume

 

31.12.2021

31.12.2020

31.12.2021

31.12.2020

31.12.2021

31.12.2020

Derivative financial instruments in the trading portfolio

 

 

 

 

 

 

Interest rate contracts

 

 

 

 

 

 

Interest rate swaps

3'118

0

11'633

20'299

2'285'000

565'000

Forward contracts

194

263

504

255

96'719

108'162

 

 

 

 

 

 

 

Foreign exchange contracts

 

 

 

 

 

 

Forward contracts

198'660

188'688

226'465

199'761

23'562'245

20'209'099

Options (OTC)

2'377

5'975

2'377

5'975

74'362

617'520

 

 

 

 

 

 

 

Precious metals contracts

 

 

 

 

 

 

Options (OTC)

131

46

131

46

5'534

2'704

 

 

 

 

 

 

 

Equity / index contracts

 

 

 

 

 

 

Options (OTC)

2'312

469

2'312

469

255'345

25'287

 

 

 

 

 

 

 

Total derivative financial instruments in the trading portfolio

206'792

195'441

243'421

226'805

26'279'204

21'527'771

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments for hedging purposes

 

 

 

 

 

 

Interest rate contracts

 

 

 

 

 

 

Interest rate swaps (fair value hedge)

12'912

4'193

12'777

22'371

1'410'331

1'481'604

 

 

 

 

 

 

 

Total derivative financial instruments for hedging purposes

12'912

4'193

12'777

22'371

1'410'331

1'481'604

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total derivative financial instruments

219'704

199'634

256'198

249'176

27'689'535

23'009'375

Within the scope of fair value hedge accounting, the LLB Group employs interest rate swaps for interest rate risks on fixed-rate instruments. Ineffectiveness in highly effective hedge accounting positions occurs as a result of small mismatches in the risk profile, for example, differing payment dates or divergences in the term of the instruments amounting to a few days. Furthermore, different sensitivities in the underlying transactions and hedging instruments play a role, for example, major changes in the value of the front leg of the swap, for which there is no corresponding sensitivity in the underlying transaction. There are basic risks, which could have an influence on the effectiveness, such as different benchmark curves for the underlying and hedging transactions. In general, the LLB Group uses identical benchmark curves, however special situations such as the IBOR changeover could mean that a different approach is taken. Since the LLB Group utilises a macro hedge accounting concept, mortgage loans and medium-term notes represent the whole population of possible hedge accounting transactions. The population corresponds to the carrying amounts of the balance sheet items of the hedged items. Of these, only a portion is designated in the hedge accounting relationship.The designation between underlying transaction and hedging instrument is carried out with the aid of an optimisation algorithm, which determines the interest risk profile of the sub-portfolios in order to attain an optimal hedge allocation.

 

 

 

 

 

 

 

 

Carrying value of hedging instrument

 

 

in CHF thousands

Nominal value of hedging instrument

Assets

Liabilities

Balance sheet position of hedging instrument

Fair value change to measurement of ineffective hedge

31.12.2020

 

 

 

 

 

Fair value hedge

 

 

 

 

 

Interest rate swaps

705'802

4'193

 

Derivative financial instruments

159

Interest rate swaps

775'802

 

– 22'371

Derivative financial instruments

– 6'029

 

 

 

 

 

 

 

 

Carrying value of hedging instrument

 

 

in CHF thousands

Nominal value of hedging instrument

Assets

Liabilities

Balance sheet position of hedging instrument

Fair value change to measurement of ineffective hedge

31.12.2021

 

 

 

 

 

Fair value hedge

 

 

 

 

 

Interest rate swaps

625'000

12'912

 

Derivative financial instruments

9'330

Interest rate swaps

785'331

 

– 12'777

Derivative financial instruments

9'643

 

 

 

 

 

 

 

 

Carrying value of underlying transaction

Cumulative total from fair value adjustments of the underlying transaction

Balance sheet position of underlying transaction

Fair value change to measurement of ineffective hedge

in CHF thousands

Assets

Liabilities

Assets

Liabilities

 

 

31.12.2020

 

 

 

 

 

 

Fair value hedge

 

 

 

 

 

 

Mortgage loans

11'733'792

 

14'685

 

Loans

3'751

Medium-term notes

 

1'392'978

 

– 350

Debt issued

– 87

 

 

 

 

 

 

 

 

Carrying value of underlying transaction

Cumulative total from fair value adjustments of the underlying transaction

Balance sheet position of underlying transaction

Fair value change to measurement of ineffective hedge

in CHF thousands

Assets

Liabilities

Assets

Liabilities

 

 

31.12.2021

 

 

 

 

 

 

Fair value hedge

 

 

 

 

 

 

Mortgage loans

12'240'442

 

– 3'610

 

Loans

– 18'295

Medium-term notes

 

1'548'220

 

497

Debt issued

847

in CHF thousands

Ineffectiveness recognised in the income statement

Income statement position

31.12.2020

 

 

Fair value hedge

 

 

Interest rate risk

– 2'206

Interest expenses

 

 

 

31.12.2021

 

 

Fair value hedge

 

 

Interest rate risk

1'524

Interest income

15Financial investments

15 Financial investments

in CHF thousands

31.12.2021

31.12.2020

+ / – %

Financial investments at fair value through profit and loss

 

 

 

Debt instruments

 

 

 

listed

146'032

263'285

– 44.5

unlisted

44'985

29'602

52.0

Total debt instruments

191'017

292'887

– 34.8

 

 

 

 

Equity instruments

 

 

 

listed

2

57

– 96.4

unlisted

2'315

2'245

3.1

Total equity instruments

2'317

2'302

0.7

 

 

 

 

Total financial investments at fair value through profit and loss

193'334

295'189

– 34.5

 

 

 

 

Financial investments, recognised at fair value through other comprehensive income

 

 

 

Debt instruments

 

 

 

listed

1'986'598

1'809'930

9.8

Total debt instruments

1'986'598

1'809'930

9.8

 

 

 

 

Equity instruments

 

 

 

listed

229'300

57'041

302.0

unlisted

30'952

30'152

2.7

Total equity instruments

260'251

87'193

198.5

 

 

 

 

Total financial investments, recognised at fair value through other comprehensive income

2'246'849

1'897'123

18.4

 

 

 

 

Total financial investments

2'440'183

2'192'312

11.3

The equity instruments recognised at fair value through other comprehensive income consist of strategic investments of an infrastructure nature, which are not exchange-listed (see note 33), as well as various equities of the Swiss Market Index (SMI). Short-term profit-taking is not the focus with equity instruments recognised at fair value through other comprehensive income, rather they represent a long-term position which pursues the collection of dividends and a long-term appreciation in value.

During the reporting period, additional investments were made in securities that track the SMI. In addition, due to the departure of the Swatch Group from the SMI, there was a sale of these equity securities. The sale resulted in a loss of CHF thousands 80 (previous year: minus CHF thousands 215). The fair value of the transactions amounts to CHF thousands 752 (previous year: CHF thousands 6'645). The loss was recognised directly in retained earnings.

16Property and other equipment

16 Property and other equipment

in CHF thousands

Property

Right of use assets 1

Other equipment

Total

Year ended December 2020

 

 

 

 

Cost as at 1 January

203'138

44'159

98'475

345'772

Additions

1'305

2'398

8'702

12'405

Disposals

– 2'240

– 1'901

– 3'304

– 7'444

Currency effects

0

– 95

– 31

– 126

Cost as at 31 December

202'203

44'561

103'842

350'606

 

 

 

 

 

Accumulated depreciation / impairments as at 1 January

– 117'424

– 4'667

– 64'757

– 186'848

Depreciation

– 4'753

– 4'866

– 9'655

– 19'274

Disposals / (Additions) from accumulated depreciation

955

383

3'071

4'409

Currency effects

0

– 9

11

2

Accumulated depreciation / revaluation as at 31 December

– 121'222

– 9'160

– 71'329

– 201'712

 

 

 

 

 

Net book amount as at 31 December 2020

80'981

35'401

32'513

148'895

 

 

 

 

 

 

 

 

 

 

Year ended December 2021

 

 

 

 

Cost as at 1 January

202'203

44'561

103'842

350'606

Additions

2'027

5'650

7'136

14'813

Disposals

– 5'365

– 68

– 11'894

– 17'328

Currency effects

0

– 840

– 273

– 1'113

Cost as at 31 December

198'865

49'303

98'811

346'979

 

 

 

 

 

Accumulated depreciation / impairments as at 1 January

– 121'222

– 9'160

– 71'329

– 201'712

Depreciation

– 4'428

– 5'307

– 9'766

– 19'501

Impairments

0

– 662

– 861

– 1'523

Disposals / (Additions) from accumulated depreciation

5'365

174

11'861

17'401

Currency effects

0

223

208

432

Accumulated depreciation / impairments as at 31 December

– 120'285

– 14'731

– 69'887

– 204'903

 

 

 

 

 

Net book amount as at 31 December 2021

78'579

34'571

28'925

142'076

1 The rights of use relate mainly to real estate. An immaterial proportion relates to the use of vehicles.

Impairments in the 2021 financial year are related to rental properties that are no longer used and whose leases cannot be terminated. Accordingly, the right of use is reduced, but the liability remains. The infrastructure associated with these properties, such as leasehold improvements, consequently lost their value and was also written down.

The LLB Group as lessee

Further details regarding leases, besides this note, are provided for the repayment of leasing liabilities (see Statement of cash flows and note 23) as well as their amounts (note 26), maturities (see Risk management, chapter 2) and interest expenses (see note 1).

Leasing relationships not recognised in the balance sheet

in CHF thousands

2021

2020

+ / – %

Short-term lease expenses

379

505

– 25.0

Low-value lease expenses

3

3

0.0

Total expenses for unrecognised lease obligations

382

508

– 24.8

Expenses from unrecognised leases are included in general and administrative expenses.

Further information

Within the scope of its strategy, the LLB Group evaluates which business locations are relevant in its target markets, and whether properties should be purchased or rented at these locations. If the LLB Group decides against the purchase of properties, leasing contracts are concluded. These frequently contain termination and extension options. The assessment of these options is considered at the time of initial recognition. They are reassessed only if a significant event occurs.

The recognised liabilities from leasing contracts and the corresponding rights of use contain extension options. These reflect the current assumptions relating to durations. The off-balance sheet leasing contracts encompass office premises with short contract periods, as well as parking places, which contain reciprocal short-term termination options. These are basically classified as short-term leases provided there is substitutability for them.

The LLB Group as lessor

Future claims from operating leases

in CHF thousands

31.12.2021

31.12.2020

+ / – %

Due within one year

1'364

1'628

– 16.2

Residual period to maturity between 1 and 2 years

1'258

1'314

– 4.2

Residual period to maturity between 2 and 3 years

1'166

1'253

– 6.9

Residual period to maturity between 3 and 4 years

1'114

1'161

– 4.1

Residual period to maturity between 4 and 5 years

1'114

1'109

0.4

Due in more than five years

2'364

3'473

– 31.9

Total future net receivables from operating leases

8'380

9'939

– 15.7

Income from operating leases is a part of other income and amounted to CHF thousands 1'687 (2020: CHF thousands 1'799). Properties are only leased.

17Goodwill and other intangible assets

17 Goodwill and other intangible assets

in CHF thousands

Goodwill

Client rela- tionships

Software

Other intangible assets

Total

Year ended December 2020

 

 

 

 

 

Cost as at 1 January

163'767

135'832

116'873

1'152

417'625

Additions

0

0

11'968

0

11'968

Disposals

0

0

– 87

0

– 87

Currency effects

– 462

– 314

– 18

0

– 794

Cost as at 31 December

163'306

135'518

128'736

1'152

428'712

 

 

 

 

 

 

Accumulated depreciation / impairments as at 1 January

0

– 57'320

– 69'859

– 344

– 127'523

Depreciation

0

– 8'889

– 13'872

– 215

– 22'977

Disposals / (Additions) from accumulated amortisation

0

0

87

0

87

Currency effects

0

– 26

16

– 1

– 11

Accumulated depreciation / impairments as at 31 December

0

– 66'235

– 83'628

– 560

– 150'423

 

 

 

 

 

 

Net book amount as at 31 December 2020

163'306

69'283

45'108

592

278'289

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 2021

 

 

 

 

 

Cost as at 1 January

163'306

135'518

128'736

1'152

428'712

Additions 1

0

17'200

12'759

0

29'959

Disposals

0

0

– 1'401

0

– 1'401

Currency effects

– 4'181

– 2'125

– 870

– 12

– 7'189

Cost as at 31 December

159'124

150'593

139'224

1'140

450'081

 

 

 

 

 

 

Accumulated depreciation / impairments as at 1 January

0

– 66'235

– 83'628

– 560

– 150'423

Depreciation

0

– 9'211

– 9'106

– 213

– 18'531

Disposals / (Additions) from accumulated amortisation

0

0

1'401

0

1'401

Currency effects

0

247

600

0

847

Accumulated depreciation / impairments as at 31 December

0

– 75'198

– 90'733

– 774

– 166'705

 

 

 

 

 

 

Net book amount as at 31 December 2021

159'124

75'395

48'491

366

283'376

1 Includes client relationships from the referral agreement of LLB Österreich with Credit Suisse. Payment will take place for the most part in the 2022 business year.

Goodwill

The LLB Group carried goodwill for the following cash generating units:

in CHF thousands

31.12.2021

31.12.2020

Bank Linth LLB AG

55'620

55'620

Liechtensteinische Landesbank AG 1

58'720

61'229

Liechtensteinische Landesbank (Österreich) AG 1

36'892

38'564

LLB Swiss Investment AG

7'892

7'892

Total

159'124

163'306

1 Fluctuations in goodwill are attributable to conversion of the functional currency into the reporting currency.

Goodwill impairment testing

Goodwill is tested for impairment annually in the third quarter as a basis for the annual financial reporting at 31 December, and also as required. In order to determine a possible impairment, the recoverable amount of each cash generating unit which carries goodwill is compared with its balance sheet value. According to the calculations made, the recoverable amount of a cash generating unit always corresponds to the value in use. The balance sheet value or carrying value comprises equity before goodwill and intangible assets, as well as goodwill and intangible assets from the underlying purchase price allocation of this cash generating unit.

On the basis of the impairment testing carried out, management reached the conclusion that for the year ended on 31 December 2021, the total goodwill of CHF 159.1 million allocated to the cash generating units remains recoverable. No impairment of goodwill has to be recognised because the recoverable amount exceeds the carrying value.

Recoverable amount

For determining the value in use, which corresponds to the recoverable amount of the respective cash generating units, the LLB Group employs a discounted cash flow (DCF) valuation model. It takes into consideration the special characteristics of the banking business and the financial services sector, as well as the regulatory environment. With the aid of the model, and on the basis of the financial planning approved by management, the cash value of estimated free cash flow is calculated. If regulatory capital requirements exist for the cash generating unit, these capital requirements are deducted from the estimated free cash flows for the respective period. This amount, adjusted for regulatory capital requirements, then corresponds to the theoretical sum that could be paid out to the shareholders. For the assessment of the forecasted earnings, management employs approved financial plans covering a period of five years. The results for all periods after the fifth year are extrapolated from the forecasted result and the free cash flows of the fifth year with a long-term growth rate, which corresponds to the long-term inflation rate of the functional currency of the tested cash generating unit. These are the inflation rates of Switzerland, Liechtenstein and Austria. Under certain circumstances, the growth rates may vary for the individual cash generating units because the probable developments and conditions in the respective markets are taken into account.

Assumptions

As far as possible, and when available, the parameters on which the valuation model is based are coordinated with external market information. In this context, the value in use of a cash generating unit reacts in the most sensitive manner to changes in the forecasted earnings, changes to the discount rate and changes in the long-term growth rate. The forecasted earnings are based on an economic scenario, whose input factors are the projected interest rate, currency and stock market developments, as well as the sales planning of the individual market divisions. The discount rate is determined on the basis of the capital asset pricing model (CAPM), which contains a risk-free interest rate, a market risk premium, a small cap premium, as well as factor for the systematic market risk, i.e. the beta factor.

The long-term growth rate outside the five-year planning period (terminal value), on which the impairment tests for the annual report as at 31 December 2021 were based and which were used for extrapolation purposes, as well as the discount rate for the cash generating units are shown in the table below.

 

 

 

 

 

 

Growth rate

Discount rate

 

 

 

 

 

in per cent

2021

2020

2021

2020

Bank Linth LLB AG

1.0

1.0

5.5

5.8

Liechtensteinische Landesbank AG

1.0

1.0

6.0

6.5

Liechtensteinische Landesbank (Österreich) AG

2.0

2.0

8.0

8.5

LLB Swiss Investment AG

1.0

1.0

8.5

8.5

Sensitivities

All the parameters and assumptions, on which the testing of the individual cash generating units are based, are reviewed and, if necessary, adjusted during the periodic preparation and conducting of impairment tests. In order to check the effects of parameter adjustments on the value in use of the individual cash generating units, the parameters and assumptions used with the valuation model are subjected to an individual sensitivity analysis. For this purpose, the forecasted free cash flow attributable to shareholders is changed by 10 per cent, the discount rate by 10 per cent and the long-term growth rates also by 10 per cent. According to the results of the impairment tests performed, and based on the assumptions described, an amount of between CHF 16 million and CHF 160 million in excess of the balance sheet value is obtained for all cash generating units. A reduction of the free cash flow by 10 per cent, or an increase in the discount rate of 10 per cent, or a reduction in the long-term growth rate of 10 per cent would not result in any impairment of the goodwill.

Over the last five years, the parameters have remained very constant. In the 2021 business year, adjustments were made to the discount rate; LLB Swiss Investment AG was not affected by this. In essence, these adjustments were based on a reduced small cap premium. Since a constant development of the parameters is also expected in the future, the sensitivities of 10 per cent for each of the three parameters are regarded as reasonable.

In view of the challenging situation in the financial industry, which is expected to persist in the future, an impairment of goodwill in the coming financial years can not be ruled out. However, thanks to measures to increase earnings, improve efficiency and cut costs as well as the further planned growth, a positive development is expected over the medium to long term.

If the estimated earnings and other assumptions in future financial years deviate from the current outlook due to political or global risks in the banking industry (for example, due to uncertainty in connection with the implementation of regulatory provisions and the introduction of certain legislation, or a decline in general economic performance) this could result in an impairment of goodwill in the future. This would lead to a reduction in the income statement of the LLB Group and a decrease in the equity attributable to shareholders and net profit. Such an impairment would not, however, have an impact on cash flows or on the tier 1 ratio because, in accordance with the Liechtenstein Capital Adequacy Ordinance, goodwill must be deducted from capital.

Client relationships

Client relationships are assets, which are acquired and capitalised within the scope of an acquisition. These are amortised over a period of 15 years on a straight-line basis. Estimated aggregated amortisation amounts to:

in CHF thousands

 

2022

7'016

2023

6'403

2024

6'403

2025

6'403

2026

6'403

2027 and thereafter

42'768

Total

75'395

18Other assets

18 Other assets

in CHF thousands

31.12.2021

31.12.2020

+ / – %

Precious metals holdings

13'978

15'035

– 7.0

Settlement accounts

14'755

6'825

116.2

VAT and other tax receivables

2'135

2'227

– 4.1

Investment property

19'732

15'000

31.5

Non-current assets held for sale

1'750

6'813

– 74.3

Investment in associates and joint venture

33

30

9.2

Total other assets

52'383

45'931

14.0

19Assets pledged

19 Assets pledged

 

 

 

 

 

 

31.12.2021

31.12.2020

in CHF thousands

Carrying value

Actual liability

Carrying value

Actual liability

Due from banks

82'219

76'014

58'225

51'059

Mortgage loans

1'720'980

1'396'400

1'501'113

1'204'700

Financial investments

1'085'150

886'655

756'102

544'010

Loans

45'248

36'870

52'351

49'000

Total pledged / assigned assets

2'933'597

2'395'939

2'367'791

1'848'769

The mortgage loans are pledged as collateral for shares in bond issues of the Swiss Regional or Cantonal Banks’ Central Bond Institutions.

The financial assets are pledged for Repurchase agreements, Stock exchange deposits, Lombard limits at national and central banks and to secure other business activities.

The bridging loans granted in the course of the corona pandemic and guaranteed by the Swiss Confederation were pledged to the Swiss National Bank as loans and advances to customers for refinancing purposes.

20Due to banks

20 Due to banks

in CHF thousands

31.12.2021

31.12.2020

+ / – %

On demand

387'362

252'062

53.7

At maturity or callable

1'935'556

1'074'108

80.2

Total due to banks

2'322'918

1'326'170

75.2

21Due to customers

21 Due to customers

in CHF thousands

31.12.2021

31.12.2020

+ / – %

On demand

13'682'220

13'299'777

2.9

At maturity or callable

902'673

1'120'724

– 19.5

Savings accounts

3'475'307

3'331'698

4.3

Total due to customers

18'060'199

17'752'199

1.7

22Debt issued

22 Debt issued

in CHF thousands

31.12.2021

31.12.2020

+ / – %

Medium-term notes 1

150'298

186'472

– 19.4

Shares in bond issues of the Swiss Regional or Cantonal Banks' Central Bond Institutions 2

1'397'921

1'206'506

15.9

Bonds

401'198

401'339

– 0.0

Total debt issued

1'949'418

1'794'317

8.6

1 The average interest rate was 0.3 per cent as at 31 December 2021 and 0.4 per cent as at 31 December 2020.

2 The average interest rate was 0.4 per cent as at 31 December 2021 and 0.5 per cent as at 31 December 2020.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

in CHF thousands

Year issued

Name

ISIN

Currency

Maturity

Effective annual interest rate in %

Nominal interest rate in %

Nominal value

31.12.2021

31.12.2020

2019

Liechtensteinische Landesbank AG 0.125 % Senior Preferred Anleihe 2019 – 2026

CH0419041204

CHF

28.05.2026

0.106 %

0.125 %

150'000

150'235

150'263

2019

Liechtensteinische Landesbank AG 0.000 % Senior Preferred Anleihe 2019 – 2029

CH0419041527

CHF

27.09.2029

– 0.133 %

0.000 %

100'000

101'039

101'173

2020

Liechtensteinische Landesbank AG 0.300 % Senior Preferred Anleihe 2020 – 2030

CH0536893255

CHF

24.09.2030

0.315 %

0.300 %

150'000

149'924

149'902

23Changes to liabilities from financing activities

23 Changes to liabilities from financing activities

 

 

 

 

 

 

 

 

 

 

 

Non-cash changes

 

in CHF thousands

01.01.2020

Cash changes

Changes in scope of con- solidation

Changes in ex- change rates

Changes in fair value

Other

31.12.2020

Medium-term notes 1

219'473

– 32'925

0

0

0

– 77

186'472

Shares in bond issues of the Swiss Regional or Cantonal Banks' Central Bond Institutions 1

1'111'918

95'000

0

0

0

– 412

1'206'506

Bonds 1

251'600

150'000

0

0

0

– 262

401'339

Lease liabilities

39'677

– 5'106

0

0

0

1'158

35'729

Total liabilities from financing activities

1'622'669

206'969

0

0

0

407

1'830'045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash changes

 

in CHF thousands

01.01.2021

Cash changes

Changes in scope of con- solidation

Changes in ex- change rates

Changes in fair value

Other

31.12.2021

Medium-term notes 1

186'472

– 35'168

0

0

– 847

– 159

150'298

Shares in bond issues of the Swiss Regional or Cantonal Banks' Central Bond Institutions 1

1'206'506

191'700

0

0

0

– 284

1'397'921

Bonds 1

401'339

0

0

0

0

– 141

401'198

Lease liabilities

35'729

– 5'175

0

0

0

5'160

35'714

Total liabilities from financing activities

1'830'045

151'357

0

0

– 847

4'576

1'985'131

1 Part of the balance sheet position "Debt issued"

24Deferred taxes

24 Deferred taxes

in CHF thousands

As at 1 January

Amount recognised in the income statement

Amount recognised in other comprehensive income

Currency effects

From other effects (reclassifications)

As at 31 December

Deferred tax assets

 

 

 

 

 

 

2020

 

 

 

 

 

 

Recognised rights of use from leases

36

25

0

 

 

61

Property and equipment

4'334

– 254

0

 

 

4'080

Liability for pension plans

13'675

– 337

– 869

 

 

12'469

Intangible assets

13

– 13

0

 

 

– 0

Derivative financial instruments

2'685

– 1'169

0

 

 

1'516

Expected credit losses

1'258

– 557

4

 

 

705

Total deferred tax assets

21'999

– 2'305

– 865

 

 

18'830

Offsetting

 

 

 

 

 

– 7'346

Total after offsetting

 

 

 

 

 

11'483

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

Recognised rights of use from leases

61

21

0

0

0

82

Property and equipment

4'080

– 82

0

0

– 530

3'468

Specific allowance

0

0

0

– 11

530

519

Liability for pension plans

12'469

148

– 6'243

2

0

6'375

Intangible assets

– 0

0

0

0

0

– 0

Derivative financial instruments

1'516

– 969

0

0

297

844

Expected credit losses

705

– 86

0

0

0

619

Total deferred tax assets

18'830

– 968

– 6'243

– 9

297

11'906

Offsetting

 

 

 

 

 

– 4'081

Total after offsetting

 

 

 

 

 

7'825

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities

 

 

 

 

 

 

2020

 

 

 

 

 

 

Intangible assets

18'576

– 1'952

– 130

 

 

16'494

Financial investments

7'626

– 608

1'850

 

 

8'869

Property and equipment

229

– 229

0

 

 

0

Provisions

10'977

0

0

 

 

10'977

Total deferred tax liabilities

37'407

– 2'789

1'720

 

 

36'338

Offsetting

 

 

 

 

 

– 7'346

Total after offsetting

 

 

 

 

 

28'992

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

Intangible assets

16'494

– 1'974

0

– 456

0

14'063

Financial investments

8'869

– 143

– 2'700

– 67

0

5'959

Property and equipment

0

248

0

– 36

515

727

Provisions

10'977

768

0

0

297

12'042

Total deferred tax liabilities

36'338

– 1'101

– 2'700

– 559

812

32'789

Offsetting

 

 

 

 

 

– 4'081

Total after offsetting

 

 

 

 

 

28'708

As per 31 December 2021, there were no temporary differences which were not reported as deferred taxes and which in future could be offset with potential tax allowances (previous year: CHF thousands 0).

25Provisions

25 Provisions

in CHF thousands

Provisions for legal and litigation risks

Provisions for other business risks and restructuring

Total 2021

Total 2020

As at 1 January

2'757

8'441

11'199

14'907

Provisions applied

– 34

– 3'877

– 3'911

– 4'158

Increase in provisions recognised in the income statement

952

4'473

5'425

4'654

Decrease in provisions recognised in the income statement

0

– 467

– 467

– 4'145

Changes due to foreign exchange differences

– 17

– 12

– 29

– 59

As at 31 December

3'658

8'558

12'217

11'199

in CHF thousands

31.12.2021

31.12.2020

+ / – %

Short-term provisions

751

1'736

– 56.8

Long-term provisions

11'466

9'462

21.2

Total

12'217

11'199

9.1

Estimates and assumptions are made to assess the amount of provisions required. However, such estimates and assumptions can mean that substantial uncertainties could exist in relation to the occurrence of the events for which provisions were allocated.

Provisions for other risks and restructuring measures

In the 2021 business year, the LLB Group allocated provisions for restructuring measures totalling net CHF 3.0 million, and CHF 1.8 million were utilised for this purpose. At 31.12.2021, the total amount of these provisions stood at CHF 4.5 million.

The provisions for a service agreement for the use of Tambas banking software, which is no longer used, were utilised fully for this purpose in the 2021 business year (effect in 2021: CHF 1.9 million).

There were no contingent liabilities in connection with legal and litigation risks.

26Other liabilities

26 Other liabilities

in CHF thousands

31.12.2021

31.12.2020

+ / – %

Lease liabilities

35'714

35'729

– 0.0

Charge accounts

12'081

10'040

20.3

Accounts payable

19'420

17'730

9.5

Settlement accounts

34'835

23'619

47.5

Pension plans

51'642

101'140

– 48.9

Outstanding holidays / flexi-time

4'122

3'551

16.1

Other long-term benefits

4'199

4'358

– 3.6

Non-current liabilities held for sale

0

2'250

– 100.0

Total other liabilities

162'014

198'417

– 18.3

27Share capital

27 Share capital

 

31.12.2021

31.12.2020

+ / – %

Number of registered shares (fully paid up)

30'800'000

30'800'000

0.0

Nominal value per registered share (in CHF)

5

5

0.0

Total nominal value (in CHF thousands)

154'000

154'000

0.0

28Share premium

28 Share premium

in CHF thousands

2021

2020

+ / – %

As at 1 January

– 13'177

– 22'432

– 41.3

Net movements in treasury shares 1

– 775

9'255

 

As at 31 December

– 13'952

– 13'177

5.9

1 Contains a change to reserves for security entitlements and realised price gains on treasury shares.

Share entitlements at the LLB

Risk takers whose decisions have a significant impact on the bank’s risk profile and other employees in selected salary models receive part of their variable salary component paid out in share entitlements. The variable component of compensation depends on individual target achievement and the relative equity performance of the LLB. The share component of the variable compensation of risk takers is at least 50 per cent, of the other employees at least 40 per cent.

In 2021, share entitlements of CHF 2.4 million (44'810 shares at an average price of CHF 52.47) were earned and recognised in personnel expenses. In the previous year, it was CHF 2.0 million (37'270 shares at an average price of CHF 53.80).

29Treasury shares

29 Treasury shares

 

Quantity

in CHF thousands

As at 1 January 2020

364'295

23'574

Purchases

0

0

Disposals

– 75'885

– 4'911

As at 31 December 2020

288'410

18'663

Purchases

0

0

Disposals

– 55'475

– 3'590

As at 31 December 2021

232'935

15'073

The disposals were in connection with the transfer of share entitlements to the entitled employees of the LLB Group following a blocked period of three years. Only earned shares were transferred, no cash funds were paid out. The average price per share amounted to CHF 64.71 (previous year: CHF 64.71). The proportion of share capital represented by the transferred shares was 0.2 per cent (previous year: 0.2 %).

30Retained earnings

30 Retained earnings

in CHF thousands

2021

2020

+ / – %

As at 1 January

1'902'316

1'866'121

1.9

Net profit attributable to the shareholders of LLB

129'907

103'523

25.5

Dividends paid

– 67'237

– 67'124

0.2

Increase / (Reduction) in non-controlling interests

0

0

 

Reclassification not affecting the income statement

– 5'469

– 204

 

As at 31 December

1'959'517

1'902'316

3.0

31Other reserves

31 Other reserves

in CHF thousands

2021

2020

+ / – %

As at 1 January

– 20'911

– 44'803

– 53.3

Foreign currency translation

– 14'372

– 1'258

 

Actuarial gains / (losses) of pension plans

46'707

9'000

419.0

Value changes from financial investments measured at fair value through other comprehensive income

– 3'962

15'946

 

Reclassification not affecting the income statement

5'469

204

 

As at 31 December

12'932

– 20'911

 

32Non-controlling interests

32 Non-controlling interests

in CHF thousands

2021

2020

+ / – %

As at 1 January

134'029

130'785

2.5

Foreign currency translation

– 61

– 7

 

Non-controlling interests in net profit

7'956

6'299

26.3

(Dividends paid) / Reduction of nominal value in non-controlling interests

– 2'345

– 2'357

– 0.5

Increase / (Reduction) in non-controlling interests

36

0

 

Actuarial gains / (losses) of pension plans

3'211

– 641

 

Value changes from financial investments measured at fair value through other comprehensive income

– 120

– 51

134.5

As at 31 December

142'704

134'029

6.5

From the Group’s perspective, the minorities are considered immaterial, so that no further disclosures are made in the annual report. From an individual company perspective, the minority interests of Bank Linth are of a certain relevance. For further information, see the annual report of Bank Linth.

33Fair value measurement

33 Fair value measurement

Measurement guidelines and classification in the fair value hierarchy

The fair value represents a market-based measurement and not an entity-specific valuation. It is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date on the principal market or the most advantageous market.

Various techniques and models are employed to determine the fair value. As far as possible, the LLB Group uses observable input factors from active markets accessible to the company on the measurement date. The fewer the number of observable input factors that can be employed, the more assumptions and estimates have to be utilised to enable an exit price on the measurement date to be determined from the perspective of the market participant. Such assumptions and estimates contain uncertainties, which at a later date can lead to substantial changes in the fair value of financial and non-financial assets and liabilities.

All financial and non-financial assets and liabilities, which possess a fair value, are assigned to one of the following three levels of fair value hierarchy. It is possible that the input factors, which are used to measure the fair value of individual financial and non-financial assets and liabilities, fall into different levels of the fair value hierarchy. The classification of the financial or non-financial asset or liability in the fair value hierarchy is made to the lowest level, to which one of the significant input factors is assigned.

Level 1

Financial and non-financial assets and liabilities, whose prices are quoted for identical assets and liabilities on active markets and which were not calculated on the basis of valuation techniques or models for the determination of fair value.

Level 2

If no market price quotes are available, or if they cannot be extrapolated from active markets, the fair value is determined by means of valuation methods or models which are based on assumptions made on the basis of observable market prices and other market quotes.

Level 3

Input factors are considered in the valuation methods and models to determine the fair value, which are not observable because they are not based on market prices.

Valuation methods

Valuation methods and models are employed to determine the fair value of financial and non-financial assets and liabilities if no market prices quoted on an active market are available. The LLB Group employs standardised and generally recognised valuation methods and models.

The LLB Group employs the market-based approach to determine the fair value of investment funds and shares, which are not traded on an active market or which are not listed.

The income-based approach is used if payment streams or expenses and revenues with financial assets and liabilities form the basis for the fair value measurement. The present or cash value method is used to determine the fair value by discounting the payment streams to the present value on the reporting date. Interest rate curves appropriate for the term and / or foreign currency curves, as well as spot prices form the main basis for this purpose. Forward pricing models are used in the case of futures contracts.

To determine the fair value of financial and non-financial assets and liabilities, which are classified as Level 3 positions, the LLB Group takes over the fair value determined by third parties (estimates made by experts).

The following table shows the most important valuation methods and models together with the key input factors:

 

Valuation technique / model

Inputs

Significant, non-observable inputs

Level 2

 

 

 

Derivative financial instruments (interest rate swaps)

Income approach, present value calculation

Market price of congruent SARON interest rates, spot rates

 

Derivative financial instruments (forward contracts)

Income approach, present value calculation

Market price of congruent SARON interest rates, spot rates

 

Investment funds

Market approach

Market prices of underlying assets

 

Equities

Market approach

Market prices of underlying assets

 

Due from banks

Income approach, present value calculation

Market price of congruent SARON interest rates

 

Due to banks

Income approach, present value calculation

Market price of congruent SARON interest rates

 

Loans

Income approach, present value calculation

Market price of congruent SARON interest rates

 

Due to customers

Income approach, present value calculation

Market price of congruent SARON interest rates

 

Medium-term notes and shares in bond issues of the Swiss Regional or Cantonal Banks' Central Bond Institutions

Income approach, present value calculation

Market price of congruent SARON interest rates

 

 

 

 

 

Level 3

 

 

 

Infrastructure title

Market approach

Audited financial statements

Illiquidity, special micro- economic conditions

Investment property

External expert opinions, present value calculation

Prices of comparable properties

Assessment of special property factors, expected expenses and earnings for the property

Measurement of assets and liabilities, classified as Level 3

The measurement process to determine the fair value of recurring and non-recurring Level 3 assets and liabilities, especially the non-observable input factors, as shown in the previous table, are explained in the following. No explanation of the interrelationships between observable and non-observable inputs is provided because these have no material influence on the measurement of the fair value.

Financial investments measured at fair value through other comprehensive income

These financial investments largely relate to non-listed shares in companies having an infrastructure nature, which offer the services necessary or advantageous for the operation of a bank. The largest proportion of the portfolio consists of shares in the SIX Swiss Exchange and in the Pfandbriefbank Schweizerischer Hypothekarinstitute (Swiss Mortgage Institutes). The financial investments are periodically revalued on the basis of current company data, or with the aid of external valuation models.

Investment property

These properties are periodically valued by external experts. The assessments take into consideration such circumstances as the location and condition of the property, as well as the costs and revenues expected in connection with it.

Measurement of fair values through active markets or valuation techniques

The following table shows the classification of financial and non-financial assets and liabilities of the LLB Group within the fair value hierarchy and their fair value.

Positions measured at fair value are recognised on a recurring basis in the balance sheet at fair value. As at 31 December 2021, the LLB Group had no assets or liabilities which were measured at fair value on a non-recurring basis in the balance sheet. In the 2021 financial year, there were no significant transfers between Level 1, Level 2 and Level 3 financial instruments.

in CHF thousands

31.12.2021

31.12.2020

+/– %

Assets

 

 

 

 

 

 

 

Level 1

 

 

 

Financial investments at fair value through profit and loss

146'034

263'342

– 44.5

Financial investments, recognised at fair value through other comprehensive income

2'215'897

1'866'971

18.7

Precious metal receivables

134'236

112'081

19.8

Total financial instruments at fair value

2'496'167

2'242'393

11.3

 

 

 

 

Precious metals

13'978

15'035

– 7.0

Total other assets at fair value

13'978

15'035

– 7.0

 

 

 

 

Cash and balances with central banks

7'213'159

6'715'610

7.4

Total financial instruments not at fair value

7'213'159

6'715'610

7.4

 

 

 

 

Total Level 1

9'723'305

8'973'039

8.4

 

 

 

 

Level 2

 

 

 

Derivative financial instruments

219'704

199'634

10.1

of which for hedging purpose

12'912

4'193

208.0

Financial investments at fair value through profit and loss 1

47'300

31'847

48.5

Total financial instruments at fair value

267'003

231'481

15.3

 

 

 

 

Due from banks

755'584

691'156

9.3

Loans

14'265'921

13'806'289

3.3

Total financial instruments not at fair value

15'021'505

14'497'445

3.6

 

 

 

 

Total Level 2

15'288'509

14'728'926

3.8

 

 

 

 

Level 3

 

 

 

Financial investments, recognised at fair value through other comprehensive income 2

30'952

30'152

2.7

Total financial instruments at fair value

30'952

30'152

2.7

 

 

 

 

Investment property

19'732

15'000

31.5

Total other assets at fair value

19'732

15'000

31.5

 

 

 

 

Total Level 3

50'683

45'152

12.2

 

 

 

 

Total assets

25'062'498

23'747'117

5.5

1 Investment funds and equities

2 Infrastructure title

in CHF thousands

31.12.2021

31.12.2020

+/– %

Liabilities

 

 

 

 

 

 

 

Level 1

 

 

 

Precious metal liabilities

147'908

126'807

16.6

Total financial instruments at fair value

147'908

126'807

16.6

 

 

 

 

Bonds

397'980

402'655

 

Total financial instruments not at fair value

397'980

402'655

 

 

 

 

 

Total Level 1

545'888

529'462

3.1

 

 

 

 

Level 2

 

 

 

Derivative financial instruments

256'198

249'176

2.8

of which for hedging purpose

12'777

22'371

– 42.9

Total financial instruments at fair value

256'198

249'176

2.8

 

 

 

 

Due to banks

2'323'976

1'329'815

74.8

Due to customers

17'980'507

17'861'027

0.7

Medium-term notes and shares in bond issues of the Swiss Regional or Cantonal Banks' Central Bond Institutions

1'583'750

1'452'239

9.1

Total financial instruments not at fair value

21'888'233

20'643'081

6.0

 

 

 

 

Total Level 2

22'144'431

20'892'257

6.0

 

 

 

 

Level 3

 

 

 

Total Level 3

0

0

 

 

 

 

 

Total liabilities

22'690'319

21'421'718

5.9

Reconciliation of assets and liabilities classified as Level 3

All Level 3 positions are measured by third parties and, due to their amount, are not material. The reconciliation is not therefore shown in tabular form.

The financial investments measured at fair value through other comprehensive income rose by CHF 0.8 million in the 2021 business year (previous year: CHF 2.0 million). The increase was attributable solely to a change in the fair value due to higher market prices.

The change in investment property was due to the acquisition of a property, which is now classified as investment property.

Financial investments not measured at fair value

The fair value hierarchy also includes details of financial assets and liabilities which are not measured on a fair value basis, but for which a fair value does exist. In addition to their inclusion in the fair value hierarchy, basically a comparison between the fair value and the carrying value of the individual categories of financial assets and liabilities is to be presented.

The following table shows this comparison only for positions which were not measured at fair value, since for positions measured at fair value the carrying value corresponds to the fair value. On account of the maturity being more than one year, for specific positions a present value was calculated taking as a basis SARON interest rates appropriate for the duration of the term. In the case of all other positions, the carrying value represents a reasonable approximation of the fair value.

 

 

 

 

 

 

31.12.2021

31.12.2020

in CHF thousands

Book amount

Fair value

Book amount

Fair value

Assets

 

 

 

 

Cash and balances with central banks

7'213'159

7'213'159

6'715'610

6'715'610

Due from banks 1

755'508

755'584

578'930

579'075

Loans

13'805'188

14'265'921

13'229'931

13'806'289

 

 

 

 

 

Liabilities

 

 

 

 

Due to banks

2'322'918

2'323'976

1'326'170

1'329'815

Due to customers 1

17'912'291

17'980'507

17'625'392

17'734'220

Medium-term notes and shares in bond issues of the Swiss Regional or Cantonal Banks' Central Bond Institutions

1'548'220

1'583'750

1'392'978

1'452'239

Bonds

401'198

397'980

401'339

402'655

1 Adjusted to consider the claims or liabilities from precious metals accounts due to the separate disclosure in the fair value hierarchy.

34Netting of financial assets and financial liabilities

34 Netting of financial assets and financial liabilities

The LLB Group has concluded agreements with various counterparties which permit netting. These are mainly agreements in connection with securities lending and borrowing transactions, reverse-repurchase deals and over-the-counter transactions. The following table provides an overview of the financial assets and financial liabilities which are subject to an enforceable netting agreement or similar agreements. The LLB Group does not conduct balance sheet netting with the financial assets and financial liabilities of balance sheet transactions because the legal requirements for netting are not satisfied. Accordingly, the table shows unnetted amounts on the balance sheet and therefore risks, which the bank has accepted with the individual executed transactions, and which existed on the balance sheet date. The information provided in the table does not represent the current credit risk in connection with the transactions conducted by the LLB Group.

 

 

 

 

 

 

 

Potential netting amounts

 

in CHF thousands

On the balance sheet recognised amounts

Financial instruments

Financial collaterals

Amounts after potential netting

31.12.2020

 

 

 

 

Financial assets subject to off-setting, enforceable netting agreements or similar arrangements

 

 

 

 

Positive replacement values

199'634

54'577

96'375

48'682

Total assets

199'634

54'577

96'375

48'682

 

 

 

 

 

Financial liabilities subject to off-setting, enforceable netting agreements or similar arrangements

 

 

 

 

Repurchase agreements

490'000

490'000

0

0

Negative replacement values

249'176

54'577

58'225

136'374

Total liabilities

739'176

544'577

58'225

136'374

 

 

 

 

 

 

 

Potential netting amounts

 

in CHF thousands

On the balance sheet recognised amounts

Financial instruments

Financial collaterals

Amounts after potential netting

31.12.2021

 

 

 

 

Financial assets subject to off-setting, enforceable netting agreements or similar arrangements

 

 

 

 

Positive replacement values

219'704

79'294

34'444

105'965

Total assets

219'704

79'294

34'444

105'965

 

 

 

 

 

Financial liabilities subject to off-setting, enforceable netting agreements or similar arrangements

 

 

 

 

Repurchase agreements

835'000

835'000

0

0

Negative replacement values

256'198

79'294

82'219

94'685

Total liabilities

1'091'198

914'294

82'219

94'685