Information checkedInformation unaudited Information geprüft Information ungeprüft Accounting principles

1.1 Basis for financial accounting

This interim financial reporting was prepared in accordance with the international accounting standard for interim financial reporting" (IAS 34 “Interim Financial Reporting”). The accounting and valuation principles employed in the unaudited consolidated interim financial report correspond to those used in the 2021 annual report, which was prepared in accordance with international financial reporting standards (IFRS) and the requirements stipulated in Article 17a of the Person and Company Law Ordinance of the Principality of Liechtenstein. In addition, the regulations valid since 1 January 2022 have been applied.

The unaudited interim financial reporting does not encompass all the data contained in the audited 2021 consolidated financial statement and should, therefore, be read together with the audited consolidated financial statement as at 31 December 2021.

1.2 Material events and business transactions since 31 December 2021

With the introduction of ACT-26, the new corporate strategy for the business years 2022 to 2026, on 1 January 2022, an adjustment of the segments was made. The new segment structure encompasses the “Retail and Corporate Banking“ segment, the „International Wealth Management“ segment and the „Corporate Center”segment. For further information, please refer to the Letter to shareholders and the individual segment reports in the 2022 interim financial reporting. In this interim financial statement, financial reporting is made for the first time according to the new segment structure. The comparison periods have been adapted in line with the new segment structure.

On 18 May 2022, LLB made its public offer to the shareholders of Bank Linth for the purchase of their Bank Linth shares. Practically all the outstanding registered shares of the bank were acquired; LLB’s current equity stake in Bank Linth amounts to 99.9 per cent (31.12.2021: 74.9 %). The purchase price for the shares totalled CHF 114.0 million. The resulting positive effect on equity amounted to CHF 18.8 million. Accordingly, on account of the transaction, the Principality of Liechtenstein’s equity stake in LLB was reduced from 57.5 to 56.3 per cent; the free float increased to 37.3 per cent.

1.3 Use of estimates in the preparation of financial statements

Areas having large scope for estimate judgements, which could be of great significance for the financial statement, include estimates for expected credit losses, goodwill, provisions, fair value measurement, and liabilities for pension plans. Explanations regarding this point are shown under notes 12 and 13 in the 2022 consolidated interim financial statement and under notes 13, 17, 25 and 33, as well as in the chapter „Pension plans and other long-term benefits” in the 2021 consolidated financial statement.

The LLB Group updates the actuarial assumptions and parameters used for the calculation of pension obligations on every reporting date. In the first half of 2022 the increase in the discount interest rate from 0.3 to 2.1 per cent had a material impact. The impact from actuarial gains from pension plans on other comprehensive income amounted to CHF 30.8 million in the first half of 2022.

1.4 New IFRS, amendments and interpretations

New IFRS, as well as revisions and interpretations of existing IFRS, which are to be applied for financial years beginning on 1 January 2022 or later, were published, or came into effect. Should the LLB Group decide to adopt the standards and interpretations, which are to be applied for the first time from 1 January 2023 or later, at an earlier date, explicit reference will be made to this.

1.4.1 Changes to accounting policies effective from 1 January 2022

The following new or amended IFRS or interpretations are relevant to the LLB Group and will be applied for the first time from 1 January 2022:

• IAS 37 „Provisions, Contingent Liabilities and Contingent Assets“ – Clarification of the definition of the costs of fulfilling contracts
• Annual adjustments within the scope of the Annual Improvements to the IFRS 2018 – 2020 Cycle

The new or amended IFRS have no material influence on the financial statement of the LLB Group.

1.4.2 Applicable for financial years beginning on 1 January 2023

The following new or amended IFRS or interpretations are relevant for the LLB Group from 1 January 2023 or later:

• Amendments to IAS 1 „Material Accounting Policies“ – Clarification that in future entities disclose their material accounting policy information and not their significant accounting policies
• IAS 8 „Accounting Policies, Changes in Accounting Estimates and Errors“ – Clarification of the definition of accounting estimates to distinguish changes in accounting estimates from changes in accounting policies
• IAS 12 „Income Taxes“ – Clarification that deferred taxes are to be allocated for single transactions on initial recognition if equal amounts of deductable and taxable temporary differences arise from single transactions

Ongoing analyses have shown that the effects of these clarifications will have no material influence of the financial statement of the LLB Group.

In the first half of 2022, the subsidiary „LLB Berufliche Vorsorge AG in Liquidation“ was withdrawn from the scope of consolidation. The deconsolidation had no material impact.

Within the scope of its operative activity, the LLB Group is exposed to financial risks such as market, credit, liquidity and refinancing risks, as well as operational risks. The current situation has not changed substantially in comparison with the situation as at 31 December 2021. Therefore the 2022 consolidated interim financial reporting contains only qualitative disclosures regarding credit risks. For more detailed information, we refer to the risk management information in the 2021 annual report.

In terms of the value of its absolute loans, the credit portfolio of the LLB Group has not changed materially during the first half of 2022. In the case of stage 1 and stage 2 loans, there were no net changes in the expected credit losses (30.06.2021: CHF 0.0 million net change), for stage 3 positions a net allocation of CHF 3.4 million was made (30.06.2021: CHF 0.9 million net release). Across all stages the expected credit losses led to a total expense of CHF 3.4 million (30.06.2021: CHF 0.9 million gain). This is reported in the consolidated income statement.

No material events occurred after the balance sheet date which would have a significant influence on the asset, financial and earnings position of the LLB Group.