Annual Report 2013. LGT Bank Ltd., Vaduz

Annual Report 2013 LGT Bank Ltd., Vaduz

Contents Organizational structure 4 The business year in comparison 5 Annual report 6 Balance sheet 7 Off-balance sheet transactions 8 Profit and loss account 9 Appropriation of net profit 10 Flow of funds statement 11 Appendix 12 Remuneration report 17 Notes on the balance sheet 21 Notes on off-balance sheet transactions 35 Notes to the profit and loss account 37 Additional information 39 Report of the statutory auditor 43 International presence and imprint 44

Organizational structure as of April 2014 Board of Directors Thomas Piske, Chairman H.S.H. Prince Max von und zu Liechtenstein Olivier de Perregaux Jacques Engeli Internal Audit Daniel Hauser Executive Management Board Norbert Biedermann, Chairman Ivo Klein Roland Schubert Markus Werner Statutory Auditor PricewaterhouseCoopers AG, Zürich 4 Organizational structure as of April 2014

The business year in comparison Balance sheet 2013 2012 Change absolute % Balance sheet total CHF m 25 130.8 23 947.2 1 183.7 4.9 Shareholders funds (after profit distribution) CHF m 2 124.1 1 916.9 207.2 10.8 Client deposit CHF m 14 809.7 13 639.4 1 170.3 8.6 Due from clients CHF m 10 018.1 10 089.5-71.4-0.7 Profit and loss account Net interest income CHF m 113.2 150.6-37.4-24.9 Net commission and fee income CHF m 218.2 175.7 42.5 24.2 Income from financial transactions CHF m 62.0 131.3-69.2-52.8 Gross operating income CHF m 423.4 485.0-61.7-12.7 Personnel expenses CHF m 172.2 170.7 1.6 0.9 Operating expenses CHF m 146.1 145.4 0.7 0.5 Result on ordinary business activity CHF m 92.9 154.8-61.9-40.0 Taxes CHF m 6.0 9.8-3.8-38.7 Profit for the year CHF m 301.9 144.9 156.9 108.3 Client assets under administration Client assets under administration CHF m 55 816.8 50 272.4 5 544.4 11.0 Personnel (full-time equivalents) Staff at year-end 713 665 48 7.2 The business year in comparison 5

Annual report Despite low interest rates around the world and the increasingly complex regulatory environment, LGT Bank Ltd. achieved a good result in the 2013 reporting year, contributing significantly to the Group result. The bank s stable and focused strategic approach proved to be a key advantage in a challenging environment. Commission income up, interest earned down As interest rates remained low, income from the interest business fell by almost 25 percent to CHF 113.2 million, as compared with the previous year. In contrast, income from the commission and services business improved by 24.2 percent to CHF 218.2 million, due to higher custody account volumes and an increase in client transactions. High quality bonds, which are held for liquidity management reasons, generated significantly lower valuation gains in the reporting year than in the exceptionally strong previous year, leading to a 52.8 percent drop in income from financial services, to CHF 62.0 million. On the expenditure side, thanks to good control over costs, we were able to maintain business and office expenses at CHF 146.1 million, which is virtually unchanged from the previous year. Personnel expenses increased by 0.9 percent to CHF 172.2 million, reflecting the higher headcount. Profit for the year rose by 108.3 percent to CHF 301.9 million; this includes exceptional income from the release of provisions for general banking risks of CHF 215 million. LGT Bank Ltd. is very well capitalized at the end of 2013. At 23.3 percent, the legally-required equity ratio of 8 percent of risk-weighted exposure was exceeded by 191 percent at the end of 2013. Client assets under administration rose by 11 percent to CHF 55.8 billion. This increase is attributable to performance-related increases in value and asset inflows. Organizational changes Roland Schubert took over the management of the Direct Clients business area at LGT Bank Ltd. during the year under review. Prior to this, from December 2011 to the end of 2012, he was a member of the Managing Board of Bethmann Bank in Germany. From 2003 until the end of 2011, he managed LGT Bank (Germany). Florian Dürselen, former head of the Direct Clients business, was appointed as a member of the Executive Board of LGT Bank (Switzerland) Ltd., where he is responsible for cross-border European business. Ownership structure at LGT Bank Ltd. The shares of LGT Bank Ltd. are wholly owned by the LGT Group Foundation. No own shares were acquired or taken as pledge, either directly or indirectly. LGT Bank Ltd. is part of the LGT Group, a globally active Private Banking & Asset Management group which takes an integrated approach to the management and development of the individual group companies. The LGT Group Annual Report provides more detailed information about the Group s financial capacity, expertise and development. Outstanding quality of advice and services We continually invest in the quality of our advice and services, which are regularly reviewed by internal and external bodies. In 2013, independent review bodies once again confirmed LGT as one of the world s best private banking providers: The Handelsblatt Elite Report, for instance, awarded us the top score for the eleventh time in succession, and the German market research company Fuchsbriefe also rates LGT as one of Europe s best portfolio managers. Optimistic outlook Thanks to our international presence, our superior investment expertise and our parent company s strong capital base, we are strategically very well-placed. As part of the LGT Group, LGT Bank Ltd. is assured of a simple and stable ownership structure, enabling us to adopt a long-term business strategy while at the same time making decisions independently and fast. We are on the right track, as demonstrated by the encouraging growth in new clients and our strong appeal to relationship managers with an entrepreneurial mindset. We would like to thank our employees for their great dedication and our clients for the trust they have placed in us. Thomas Piske, Chairman of the Board of Directors 6 Annual report

Balance sheet Assets (TCHF) Appendix 31.12.2013 31.12.2012 Change absolute % Cash and cash equivalents 7 335 362 5 579 617 1 755 745 31.5 Debt instruments of public authorities and bills which are eligible for refinancing at central banks 3, 22 22 931 23 603-672 -2.8 Due from banks 16 3 958 869 4 824 349-865 480-17.9 Due from clients 1, 16 10 018 096 10 089 453-71 357-0.7 of which mortgage loans 1, 16 2 587 115 2 387 441 199 674 8.4 Bonds and other fixed-interest bearing securities 2, 3, 4, 23, 38 2 283 836 1 986 212 297 624 15.0 Equities and other non-fixedinterest securities 2, 3, 4, 38 3 180 1 255 1 925 153.4 Participations 5, 7, 8, 38 166 166 0 0.0 Shares in affiliated companies 5, 6, 8, 21, 38 68 214 58 248 9 966 17.1 Intangible assets 9 50 30 20 66.7 Tangible assets 8 88 394 93 067-4 673-5.0 Other assets 40 1 311 925 1 257 119 54 806 4.4 Accrued income and prepaid expenses 39 824 34 050 5 774 17.0 Total assets 25 130 847 23 947 169 1 183 678 4.9 Liabilities (TCHF) Due to banks 16 6 745 506 6 633 555 111 951 1.7 Due to clients 16, 24 13 564 448 12 669 031 895 417 7.1 Securitized liabilities 12, 25 1 244 745 969 404 275 341 28.4 Other liabilities 41 775 584 900 920-125 336-13.9 Accrued expenses and deferred income 70 248 63 408 6 840 10.8 Provisions 13, 26, 36 81 602 84 496-2 894-3.4 Subordinated liabilities 39 470 920-450 -48.9 Provisions for general banking risks 13 429 500 644 500-215 000-33.4 Share capital 14 291 201 291 201 0 0.0 Revenue reserves 15 1 624 500 1 544 500 80 000 5.2 Profit carried forward 1 169 298 871 292.3 Profit for the year 301 874 144 936 156 938 108.3 Total liabilities 25 130 847 23 947 169 1 183 678 4.9 Important This document is a non-binding English translation of the authoritative German annual report. Balance sheet 7

Off-balance sheet transactions Off-balance sheet (TCHF) Appendix 31.12.2013 31.12.2012 Change absolute % Contingent liabilities 1, 27 3 771 924 4 077 147-305 223-7.5 of which liabilities from guarantees and indemnity agreements as well as from the furnishing of collateral 1, 27 3 771 924 4 077 147-305 223-7.5 Credit risks 82 974 52 076 30 898 59.3 of which irrevocable commitments 1 69 877 47 164 22 713 48.2 of which commitments to subscribe additional contributions for shares or other equity securities 1 13 097 4 912 8 185 166.6 Derivative financial instruments Positive replacement values 30, 40 779 378 765 328 14 050 1.8 Negative replacement values 30, 41 703 373 842 970-139 597-16.6 Contract volume 30 86 497 170 83 261 944 3 235 226 3.9 Fiduciary transactions 29 305 239 320 806-15 567-4.9 Important This document is a non-binding English translation of the authoritative German annual report. 8 Off-balance sheet transactions

Profit and loss account Profit and loss account (TCHF) Appendix 2013 2012 Change absolute % Interest earned 32, 33 182 303 260 908-78 605-30.1 Interest paid -69 152-110 331 41 179-37.3 Net interest income 113 151 150 577-37 426-24.9 Equities and other non-fixed-interest securities 0 0 0 0.0 Participations 3 568 755 2 813 372.6 Shares in affiliated companies 29 29 0 0.0 Current income from securities 3 597 784 2 813 358.8 Commission income from lending business 6 123 6 416-293 -4.6 Commission income from securities and investment business 264 652 212 304 52 348 24.7 Commission from other services 16 651 15 375 1 276 8.3 Income from commission business and services 287 426 234 095 53 331 22.8 Commission paid -69 224-58 441-10 783 18.5 Net commission and fee income 218 202 175 654 42 548 24.2 Income from financial transactions 62 018 131 267-69 249-52.8 of which from trading 33 53 904 61 175-7 271-11.9 Other ordinary income 42 26 405 26 766-361 -1.3 Gross operating income 423 373 485 048-61 675-12.7 Personnel expenses 34-172 244-170 655-1 589 0.9 Operating expenses 35-146 056-145 353-703 0.5 Business expenses -318 300-316 008-2 292 0.7 Gross profit 105 073 169 040-63 967-37.8 Amortization of intangible assets and depreciation of tangible assets -8 347-7 752-595 7.7 Other ordinary expenses 36, 43-3 347-6 159 2 812-45.7 Value adjustments on receivables and funds allocated to provisions for contingent liabilities and credit risks -864-1 027 163-15.9 Income from the release of value adjustments on receivables and from provisions for credit risks 385 671-286 -42.6 Amortization of participations, shares in affiliated companies and securities held as non-current assets 0 0 0 0.0 Result on ordinary business activity 92 900 154 773-61 873-40.0 Income tax -6 026-9 837 3 811-38.7 Other taxes 0 0 0 0.0 Income from the release of provisions for general banking risks 215 000 0 215 000 0 Profit for the year 301 874 144 936 156 938 108.3 Important This document is a non-binding English translation of the authoritative German annual report. Profit and loss account 9

Appropriation of net profit Appropriation of net profit proposal of the Board of Directors 2013 2012 to the general meeting of shareholders (CHF) Profit for the year 301 873 658.13 144 935 835.66 Profit carried forward 1 169 306.08 297 646.42 Accumulated profit for the year 303 042 964.21 145 233 482.08 Profit distribution Allocation to legal reserves 0.00 0.00 Allocation to statutory reserves 0.00 0.00 Allocation to other reserves 0.00 80 000 000.00 Dividend on company capital 94 640 260.00 64 064 176.00 Other profit distribution 0.00 0.00 Profit carried forward 208 402 704.21 1 169 306.08 Important This document is a non-binding English translation of the authoritative German annual report. 10 Appropriation of net profit

Flow of funds statement Flow of funds statement (TCHF) 2013 2012 Source Application Source Application of funds of funds of funds of funds Flow of funds from operating result (internal financing) Profit for the year 301 874 144 936 Depreciation of non-current assets 8 347 7 752 Value adjustments and provisions 217 894 1 764 Accrued income and prepaid expenses 5 774 7 735 Accrued expenses and deferred income 6 840 19 084 Other items 0 0 Previous-year dividend 64 064 48 048 Balance 29 329 129 695 Flow of funds from changes to non-current assets Participations 0 0 54 0 Shares in affiliated companies 9 966 32 433 0 Securities and precious metals as non-current assets 162 0 0 13 Intangible assets 0 40 0 30 Properties 41 2 720 1 034 9 220 Other tangible assets 0 975 0 876 Balance -13 498 23 382 Flow of funds from banking operations Medium and long-term business (> 1 year) Due to banks 8 752 28 Due to clients 2 924 700 Bonds 15 708 236 381 Medium-term notes 15 861 5 476 Other liabilities 10 105 12 205 Due from banks 97 953 75 255 Due from clients (excl. mortgage loans) 43 411 90 211 Mortgage loans 14 906 6 794 Other receivables 9 281 14 377 Short-term business ( 1 year) Due to banks 103 199 156 661 Due to clients 892 493 1 048 912 Other liabilities 128 090 785 489 Due from banks 963 433 2 608 035 Due from clients 42 852 1 726 999 Trading positions in securities and precious metals 71 866 161 896 Securities and precious metals held as current assets (excl. trading positions) 291 682 1 197 827 Other receivables 422 660 053 Liquid funds Cash and cash equivalents -1 755 745-3 233 092 Balance -15 831-153 077 Total 0 0 0 0 Important This document is a non-binding English translation of the authoritative German annual report. Flow of funds statement 11

Appendix to the financial statement Notes on business activity General points LGT Bank Ltd. with its registered office in Vaduz operates as a universal bank and securities trader. The company has branch offices in Hong Kong and Vienna. The bank maintains representative offices in Bahrain, Chur, Davos, Geneva, Lugano, Zurich and Montevideo. At 31 December 2013, LGT Bank Ltd. employed 713 persons on a full-time equivalent basis (665 in the previous year). In 2013, the average headcount amounted to 691 persons (606). As a universal bank, LGT Bank is active in the fields of wealth management (commission business and services) and trading, as well as in money market and lending business. Wealth management LGT Bank Ltd. is one of the leading international names in traditional private banking. The bank offers a broad spectrum of products and services that enable clients to choose the best solution to suit their needs. Most earnings from commission business and services stem, among other things, from wealth management. The commission business and services also represents the bank s main source of revenue. Money market business Within the scope of money market business, money in the form of call money, time deposits and fiduciary investments is deposited with the bank. Insofar as these funds are not required for lending business, they are placed with first-class banks, predominantly in Western Europe. These investments are being made in the form of easily convertible money market paper (certificates of deposit, Euro commercial papers). Despite its focus on private banking, interest margin business represents an important earnings stream for the bank. Trading business LGT Bank Ltd. operates trading transactions for clients and for its own account in securities, foreign exchange and precious metals. The bank trades for its own account in accordance with conservative principles. Derivative instruments are used mostly for hedging purposes. Lending business Most lending takes the form of Lombard loans and mortgages on residential property. Mortgages are granted primarily for financing properties in Liechtenstein and in Switzerland. Property financing in selected other countries is offered as part of integrated wealth management. Statement regarding the correctness of the financial statements and the annual report We confirm that the financial statements have been prepared in conformance with the prevailing accounting policies and standards, and that to our knowledge they present a true and fair picture of the assets and liabilities, as well as the financial, earnings and profitability position of the bank. The annual report contains all the required information about the course of business, the results of operations and the position of the bank. It provides an accurate picture of the actual situation, and outlines the most important risks and uncertainties. Thomas Piske Chairman of the Board of Directors Olivier de Perregaux Member of the Board of Directors 12 Appendix to the financial statement

Accounting policies Basic principles The annual accounts are prepared in accordance with the act and ordinance on banks and investment firms (Banking Act, Bank Ordinance) and applicable provisions of the Law on Persons and Companies (PGR). Consolidation LGT Bank Ltd. does not prepare consolidated accounts because the parent company, the LGT Group Foundation, is itself subject to the Banking Act and prepares annual accounts at Group level. The consolidated accounts are available for inspection at LGT Marketing & Communications at the offices of LGT Bank Ltd., Herrengasse 12, FL-9490 Vaduz, and can be accessed on the internet under www.lgt.com. Recording and reporting of transactions All business transactions are recorded in the company s accounts on the date of the transaction, and are valued from this date for the calculation of earnings. Foreign currency conversions Assets and liabilities denominated in foreign currencies are converted at the rates applicable on the balance sheet date. For income and expenditure, the rates applicable at the time of the transaction are used. Futures contracts are valued at residual maturity rates. The balance sheet and income statement positions of foreign operations are converted at the rates prevailing on the balance sheet date. Cash and cash equivalents, debt instruments of public authorities and bills which are eligible for refinancing at central banks, and claims on banks Cash and cash equivalents and claims on banks are reported in the balance sheet at par value. Registered money market claims, rescriptions and treasury certificates are reported inclusive of amortized discounts. Due from clients Non-impaired claims against clients are reported in the balance sheet at nominal value. Impaired claims, i.e. claims where it appears unlikely that the debtor will be able to meet his future obligations, are valued on an individual basis and the decrease in value is covered by specific value adjustments. Loans are rated as impaired at the latest if the contractual payments for capital and/or interest have been outstanding for more than 90 days. Interest which has been outstan ding for more than 90 days is regarded as overdue. Overdue interest and interest which is in danger of not being received, is no longer recovered but is instead allocated to value adjustments. The decrease in value is measured according to the difference between the book value of the claim and the probable recoverable amount, taking account of the estimated net present value on the balance sheet date. The net present value calculation is based on the current interest rate of the claim and the expected dates of the future incoming payments. Specific value adjustments are deducted directly from the corresponding claims. Conversion rates 31.12.2013 31.12.2012 1 EUR 1.2252 1.2068 1 USD 0.8891 0.9148 1 GBP 1.4724 1.4863 1 SGD 0.7042 0.7488 1 HKD 0.1147 0.1180 100 JPY 0.8459 1.0570 In addition to the specific value adjustments, the bank makes portfolio value adjustments to cover any latent default risks present on the balance sheet date. In this connection, equivalent claims not entitled to specific value adjustments are grouped together (portfolios). A calculation model is then applied to each portfolio to determine the necessary portfolio value adjustments as soon as a latent credit risk is signaled by predetermined indicators. Portfolio value adjustments are offset against the corresponding claims. Changes to the portfolio value adjustments are entered in the profit and loss account. Impaired claims are reclassified as performing if the outstanding capital amounts and interest are again paid within the specified period under contractual agreements. Appendix to the financial statement 13

Trading positions comprising securities and precious metals Trading positions are valued at the market value on the balance sheet date. For positions which are not traded on a recognized exchange or for which there is no representative market, valuation is carried out at the lower of cost or market. Securities and precious metals held as current and non-current assets Current assets are valued at the lower of cost or market. Money market papers are measured at amortized cost. Fixed-interest bearing securities assigned to non-current assets are reported in the balance sheet at the repayment amount. Premiums and discounts which have not yet been amortized are reported as accrued items. Only those debt instruments which are kept until maturity are recorded as non-current assets. Precious metals held as current assets are valued at the market value on the balance sheet date. Precious metals held as non-current assets are reported at cost minus necessary value adjustments. Shares in affiliated companies and participations Shares in affiliated companies and participations are valued at cost, taking into account necessary value adjustments. Shares in infrastructure companies are also reported in the balance sheet under participations. These items are insignificant in capital and voting shares. Subordinated loans to affiliated companies are reported at the nominal value. Tangible assets Properties for the bank s own use are valued at cost, including any appreciating investments, less depreciation over a fixed useful life (generally 50 years). Any building work carried out in rented properties is depreciated over the term of the rental agreement. Other tangible assets such as machinery, furniture and vehicles are depreciated over their useful life (normally 3 5 years). Derivatives The positive and negative replacement values of all derivative financial instruments are reported under the positions other assets or other liabilities. The positive and negative replacement values are reported in the balance sheet as gross figures and valued at fair value. If interest rate business positions are hedged with derivatives, the difference between the fair value valuation and the accrual method is reported in the compensation account. Repurchase and reverse repurchase transactions (Repo transactions) Repo transactions are used to refinance and fund money market transactions. They are entered in the balance sheet as advances against collateral and cash contributions or with pledging of securities held on own account. Securities provided to serve as cover thus continue to be posted in the corresponding balance sheet positions securities received to serve as collateral are not reported in the balance sheet. Interest resulting from the transactions is posted as net interest income. Securities lending and borrowing transactions Securities lending is recorded at the value of cash deposits which have been received or made, including interest accrued. Securities which have been borrowed or accepted as collateral are only recorded in the balance sheet if the bank gains control of the contractual rights contained in these securities. Securities lent or provided as collateral are only taken off the balance sheet if the bank loses the contractual rights associated with these securities. The market values of the securities which have been either borrowed or lent are monitored daily so that additional collateral can be provided or requested where necessary. Fees arising from securities lending and repurchase transactions, which have been received or paid, are entered as interest earned and interest paid. 14 Appendix to the financial statement

Amounts due to banks and clients Amounts due to banks and clients are reported in the balance sheet at nominal values. Securitized liabilities Securitized liabilities in the form of certificates and medium-term notes are reported in the balance sheet at repayment amount. Bonds are reported at amortized cost using the effective interest method. Other liabilities Derivatives are reported at their fair value. The other items (settlement accounts, coupons etc.) are reported at their nominal value or the value of the repayment amount. Risk management The risk policy complies with internal requirements and guidelines, Liechtenstein Banking Law, FMA communiqué no. 10/2009 Risk-compatible capital adequacy requirements, risk management and control, the risk management guidelines of the Swiss Bankers Association and the principles of the Basel Committee on Banking Supervision. The Board of Directors has overall responsibility for implementing risk policy. Whereas the functions of risk management are allocated to operational units, the Executive Board is responsible for overall risk control. The independent Risk Controlling Department monitors compliance with the issued provisions. Subordinated debt Securitized subordinated debt is entered in the balance sheet at the value of the repayment amount. Non-securitized subordinated debt is reported at the nominal value. Value adjustments and provisions In accordance with prudent accounting practice, specific value adjustments and provisions are made for all identifiable risks. To cover latent default risks, which, as experience has shown, exist in a loan portfolio, portfolio value provisions are also made based on a systematic approach. Value adjustments are offset directly against the corresponding asset position. Provisions are formed for uncertain liabilities and for threatened losses which are likely or certain on the balance sheet reporting date, but whose level or date of occurrence is uncertain. Provisions are reported under the same name in the balance sheet. Taxes Taxes accruing to the result for the period under review are recorded as expenses in the accounting period in which the corresponding profit has occurred. For value adjustments and provisions recognized and entered against tax only, a provision for deferred taxes is made against the profit and loss account. Market risks The bank s business activities mean that it is mainly exposed to risks associated with interest rate changes and share price and foreign currency fluctuations. Whereas the Trading Committee is responsible for controlling risks resulting from trading activities, the Asset and Liability Committee is responsible for controlling the risks associated with changes in interest rates. These bodies restrict the risk positions by means of volume and sensitivity guideline limits. An analysis of the aggregate risks and the simulation of worst-case scenarios are carried out on a regular basis. Credit risks Lending activities are primarily carried out in the interbank market or in secured form in private client business. The bank pursues a conservative lending policy where the same guidelines are applied for both monetary loans and guarantee credits. By strict limitation of the default risks, the formation of cluster and country risks is also countered. An internal rating procedure is applied as an instrument for efficient risk management and risk-adjusted calculation of conditions. Detailed reporting ensures that the Executive Board is constantly informed about developing risks. Provisions for general banking risks Provisions for general banking risks are formed to hedge against latent risks in the bank s operating activities. Appendix to the financial statement 15

Operational risks The operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. LGT Group has established a Group-wide Operational Risk Committee which provides the Executive Board with support in the early identification of these risks and in implementing appropriate measures. These tasks are based on the principles stipulated in the Sound Practices for the Management and Supervision of Operational Risk issued by the Basel Committee on Banking Supervision. The set guidelines ensure that risk management takes suitable care of all risk categories. Derivative financial instruments Interest rate and currency swaps, forward rate agreements, futures and share options are regularly used to manage the bank s own risk positions. Within the framework of client business, foreign currency and precious metals options are used in addition to the aforesaid instruments. 16 Appendix to the financial statement

Remuneration report Remuneration principles LGT Group (LGT) is a family-run company built on the values of long-term commitment, stability and independence. LGT relies on the achievements, ideas and dedication of its employees to meet the needs of its clients and implement its business strategy. An appropriate, sustainable and market-based remuneration model forms a central part of the attractive and inspirational working environment that LGT offers. The remuneration model of LGT and LGT Bank Ltd. (the bank) is based on the following principles: n The compensation model supports the implementation of LGT s corporate values and objectives and takes the risk elements into consideration. n Excellent performance, outstanding dedication and successes achieved with integrity will be rewarded. n The compensation model is focused on long-term business success. n Success is evaluated on a long-term basis. Failure on the part of employees in key positions can also result in salary deductions. The total amount of remuneration paid by the bank is approved by the HRCC on the basis of a recommendation from the Board of Directors of the bank/ccb. The remuneration of the Executive Board is decided in accordance with the following process: Beneficiary Recommended Approved by by CEO of the bank Board of Directors HRCC Norbert Biedermann of the bank/ccb Members of the CEO of the bank Board of Directors Executive Board of the bank/ccb Roland Schubert Ivo Klein Markus Werner LGT s fundamental salary policy guidelines are developed and monitored by the Human Resources Compensation Committee (HRCC) 1 of the Board of Trustees. At bank level, the implementation of the guidelines is guaranteed by the Compensation Committee of the Bank (CCB) 2. The CCB evaluates the implementation of the guidelines and the growth, suitability and composition of the overall compensation. It also determines whether the remuneration is based on the remuneration principles. In addition, it ensures that the current national regulatory requirements are met. It reports annually to the HRCC and submits changes to the HRCC for approval. 1 Dr. Rodolfo Bogni, Dr. Dominik Koechlin, Dr. Phillip Colebatch 2 H.S.H. Prince Max von und zu Liechtenstein, Thomas Piske Remuneration report 17

Components of the remuneration The compensation model for all employees of the bank consists of a fixed basic salary, a variable remuneration component and benefits. The following table gives a summary of the individual components of the remuneration. Characteristics Element Plan participants Brief description Purpose Fixed Cash Basic salary Employees of the bank Monthly market-based remuneration paid in 13 installments in accordance with the position and the contract of employment Reflects abilities, skills and responsibility Variable Cash incentive Bonus Employees of the bank Granted and paid annually. Amount of bonus depends on business success and individual performance in the business year in question Rewarding excellent performance, outstanding dedication and successes achieved with integrity Options Deferred incentive LTIS 1 Senior Management and employees in key positions Options on LGT dividend right certificates granted annually. Three-year blocked period, followed by exercise of the options within four years Reinforcing the long-term links between the interests of the employees, owners and clients. Possibility for plan participants to share in the value created by the company Benefits Benefits/ Fringe benefits Employees of the bank Pension, insurance, discounts on bank products, right to a sabbatical Providing competitive benefits 1 Long Term Incentive Scheme Basic salary The fixed monthly basic salary is paid in cash in 13 installments to compensate employees for performing the tasks relating to their position, for their personal abilities and skills and for any management responsibility that they have taken on. LGT regularly checks the basic salaries against market benchmarking studies to ensure that they are compatible with the market and makes any necessary changes. LGT does not grant any automatic salary increases. Variable remuneration As a basic principle, the total variable remuneration is based on the business success of LGT and the bank and reflects the bank s risk profile. In order to take account of exceptional developments, the final decision about the total amount is made during the approval process at the discretion of the HRCC. The variable remuneration can be paid directly as an annual cash bonus or can take the form of options as part of the Long Term Incentive Scheme (LTIS). The relationship between the direct and the deferred remuneration (LTIS and cash incentive) is determined on the basis of the employee s risk profile. In the case of members of the Executive Board and risk takers, the proportion of deferred remuneration is in line with the regulatory requirements. 18 Remuneration report

Parts of the variable remuneration can be subject to a forfeiture clause. Where appropriate, claims to variable remuneration (the cash bonus) may be forfeited, for example, in the case of extraordinary dismissal, serious breaches of the law and significant financial losses made by the Group. Cash incentive (bonus) All bank employees can benefit from the cash incentive. The individual bonus amount is linked to performance based on quantitative and qualitative criteria. The quantitative criteria relate to performance at Group, bank, business sector and individual level, which is measured against predefined target values. The qualitative criteria include risk behavior, compliance with the code of conduct, specialist expertise, social skills, personality and management ability. These are assessed on the basis of the skills in the employee qualification system (BSC). This approach allows the bank to reward excellent performance, outstanding dedication and successes achieved with integrity. Deferred incentive (LTIS Long Term Incentive Scheme) In order to enable employees who have specifically promoted the growth of the company by means of their position, their knowledge or their abilities to participate in the company s long-term success, LGT has set up an internal Long Term Incentive Scheme (LTIS) based on options. This reinforces the links between the interests of the employees and those of the owners, which is an important aspect of LGT s philosophy. The long-term structure of the LTIS rewards loyalty to the company and, at the same time, encourages a conscious and cautious approach to opportunities and risks for the benefit of the entire company and the cohesion of the Group. The LTIS allows plan participants to take part in the development of the economic value added, which is measured using a predefined formula. The calculation is based on the operating profit, the performance of the Princely Portfolio and the Group s capital costs. The LTIS options are granted annually and can be exercised after a three-year blocked period up to and including the seventh year (see chart). Benefits/Fringe benefits Benefits are another component of the LGT compensation model. These can take the form, for example, of a pension, insurance, discounts on bank products and the right to a sabbatical. LGT works with different pension companies that make payments into insurance products or funds under trusteeship. Overview of the LGT remuneration structure LTIS Blocked period Exercise period Cash incentive Basic salary Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Time Remuneration report 19

Remuneration of the Executive Board The remuneration paid to the Executive Board is checked regularly by the CCB to ensure that it is appropriate. In order to reinforce the links between the interests of the management and the owners and to ensure that the management focuses on long-term added value, the members of the Executive Board receive variable remuneration, which is made up of the cash incentive and the LTIS. The conditions governing the cash incentive and the LTIS apply, while the bonus amount can be adjusted on a discretionary basis. Regulatory requirements The HRCC makes every effort to ensure that the remuneration policy of LGT and the bank and its practical application meet national and international requirements. For this purpose, the committee monitors developments and changes in the legal regulations that are relevant to LGT and the bank. The bank s remuneration system is subjected to an independent internal investigation by the CCB regularly, i.e. annually or as events dictate, to ensure that it fulfills all the regulations. Remuneration of the Executive Board Remuneration of the Executive Board 2013 (TCHF) Direct Deferred Cash payment Shares/sharelinked instruments Basic salary Bonus LTIS Entire EB 1 988 1 365 123 1 In 2013 there were four members of the Executive Board. 20 Remuneration report

Notes on the balance sheet 1 Overview of collateral (TCHF) Mortgage- Other Without Total backed collateral collateral Advances Due from clients (excl. mortgage loans) 4 262 6 584 238 842 480 7 430 980 Mortgage loans Residential properties 2 158 047 0 0 2 158 047 Office and business premises 223 626 0 0 223 626 Commercial and industrial premises 124 881 0 0 124 881 Other 80 561 0 0 80 561 Total 31.12.2013 2 591 377 6 584 238 842 480 10 018 095 31.12.2012 2 393 789 6 659 346 1 036 318 10 089 453 Off-balance sheet transactions Contingent liabilities 322 127 263 3 644 339 3 771 924 Irrevocable commitments 69 877 0 0 69 877 Commitments to subscribe additional contributions for shares or other equity securities 0 0 13 097 13 097 Total 31.12.2013 70 199 127 263 3 657 436 3 854 898 31.12.2012 43 032 143 083 3 943 108 4 129 223 Impaired due amounts (TCHF) Gross amount Estimated realization Net amount Specific value due value of collateral due adjustments 31.12.2013 11 356 3 804 7 552 7 552 31.12.2012 11 040 3 691 7 349 7 349 2 Trading positions (TCHF) Book value Cost Market value 31.12.2013 31.12.2012 31.12.2013 31.12.2012 31.12.2013 31.12.2012 Trading positions comprising securities and precious metals Debt instruments 68 748 63 479 69 299 63 251 68 748 63 479 listed (traded on a recognized exchange) 68 748 63 479 69 299 63 251 68 748 63 479 unlisted 0 0 0 0 0 0 of which own bonds and medium-term notes 25 207 5 285 25 542 5 283 25 207 5 285 Equity paper 3 180 1 255 3 318 1 200 3 180 1 255 of which own equity paper 0 0 0 0 0 0 Precious metals 507 818 443 147 507 818 443 147 507 818 443 147 Total 579 746 507 881 580 435 507 598 579 746 507 881 of which eligible as security for central bank borrowings 0 0 0 0 0 0 Notes on the balance sheet 21

3 Securities and precious metals Book value Cost Market value held as current assets 31.12.2013 31.12.2012 31.12.2013 31.12.2012 31.12.2013 31.12.2012 (excl. trading positions) (TCHF) Debt instruments 2 238 019 1 946 336 2 325 101 1 969 450 2 243 271 1 959 896 of which own bonds and medium-term notes 0 0 0 0 0 0 Equity paper 0 0 0 0 0 0 of which qualified participations (at least 10% of capital or votes) 0 0 0 0 0 0 Precious metals 0 0 0 0 0 0 Total 2 238 019 1 946 336 2 325 101 1 969 450 2 243 271 1 959 896 of which eligible as security for central bank borrowings 1 072 367 1 098 541 1 080 812 1 103 934 1 075 527 1 102 859 4 Securities and precious metals Book value Cost Market value held as non-current assets 31.12.2013 31.12.2012 31.12.2013 31.12.2012 31.12.2013 31.12.2012 (TCHF) Debt instruments 0 0 0 0 0 0 of which own bonds and medium-term notes 0 0 0 0 0 0 of which valued according to the accrual method 0 0 0 0 0 0 of which valued at the lower of cost or market 0 0 0 0 0 0 Equity paper 0 0 0 0 0 0 of which qualified participations (at least 10% of capital or votes) 0 0 0 0 0 0 Precious metals 792 954 1 791 1 791 792 954 Total 792 954 1 791 1 791 792 954 of which eligible as security for central bank borrowings 0 0 0 0 0 0 22 Notes on the balance sheet

5 Participations and shares in affiliated companies (TCHF) 31.12.2013 31.12.2012 Participations with market value 0 0 without market value 166 166 Total 166 166 Shares in affiliated companies with market value 0 0 without market value 17 067 17 067 Subordinated claims against affiliated companies 51 147 41 181 Total 68 214 58 248 6 Affiliated companies Business Share % share % share Business activity capital of votes of capital result TCHF Banks and investment firms LGT Bank (Cayman) Ltd., Grand Cayman bank USD 600 000 100 83 10 940 LGT Bank (Ireland) Ltd., Dublin bank USD 50 000 000 75 25 4 761 The capital of LGT Bank (Cayman) Ltd. is divided into 500 000 ordinary shares and 100 000 participating shares. Both categories of share have a par value of USD 1 per share. The participation comprises 100% of the ordinary shares, which have a preferential dividend. At 31 December 2013, the shares in banks and investment firms shown under the shares in affiliated companies item amounted to TCHF 57 068 (57 068 in the previous year). 7 Participations The companies listed under participations serve only as infrastructure and are insignificant in terms of the share of capital and votes. There are no shares in banks and investment firms under participations. Notes on the balance sheet 23

8 Statement of changes in non-current assets (TCHF) Cost Accumulated Book value depreciation/ 31.12.2012 write-ups Total participations (minority holdings) 166 0 166 Total shares in affiliated companies 58 248 0 58 248 Total securities and precious metals held as non-current assets 1 791-837 954 Total intangible assets 30 0 30 Properties Bank premises 194 538-105 712 88 826 Other properties 9 616-6 862 2 754 Other tangible assets 2 231-743 1 488 Total tangible assets 206 385-113 317 93 068 Fire insurance value of properties 200 066 Fire insurance value of other tangible assets 2 344 9 Intangible assets At 31 December 2013, this item included capitalized software licenses amounting to TCHF 50 and at 31 December 2012 amounting to TCHF 30. 10 Pledged or assigned assets and assets subject to reservation of ownership (TCHF) 31.12.2013 31.12.2012 Pledged or assigned assets and assets subject to reservation of ownership, without securities lending or repurchase transactions Book value of pledged or assigned (assigned as collateral) assets 364 435 360 518 Actual liabilities 52 975 43 584 There are no assets subject to reservation of ownership. Securities lending and repurchase transactions 1 Receivables from cash deposits in connection with securities borrowing and reverse repurchase transactions 444 979 1 135 885 Liabilities from cash deposits in connection with securities lending and repurchase transactions 88 910 0 Own securities lent or provided as collateral within the scope of securities lending, borrowing transactions and transferred from repurchase transactions 26 649 0 of which capable of being resold or pledged without restrictions 26 649 0 Securities borrowed or accepted as collateral within the scope of securities lending, borrowing transactions and reverse repurchase agreements which are capable of being resold or further pledged without restrictions 1 888 878 1 527 957 of which resold or further pledged securities 786 920 280 301 24 Notes on the balance sheet

Investments Disinvestments Reclassifications Write-ups Depreciation Book value 31.12.2013 0 0 0 0 0 166 9 966 0 0 0 0 68 214 0 0 0 0-162 792 40 0 0 0-20 50 2 719-41 0 0-5 878 85 626 0 0 0 0-1 574 1 180 975 0 0 0-875 1 588 3 694-41 0 0-8 327 88 394 202 299 2 534 11 Liabilities in respect of own pension funds (TCHF) 31.12.2013 31.12.2012 Total liabilities 31 396 16 121 12 Outstanding bonds Interest Year of issue Earliest Currency Par value at 31.12.2013 rate % redemption date TCHF LGT GIM Index Certificates 0.0 up to 2004 28.2.2017 EUR 63 052 LGT GIM Index Certificates II 0.0 up to 2006 30.6.2014 EUR 155 162 LGT GIM Index Certificates II/2 0.0 2006 31.3.2016 EUR 38 591 LGT GIM Index Certificates III 0.0 up to 2008 31.7.2016 EUR 90 564 Crown Absolute Return Index Certificates 0.0 ongoing 30.11.2018 EUR 6 446 Crown Absolute Return Index Certificates II 0.0 ongoing 31.7.2014 EUR 1 023 Crown Alternative SV Index Certificates 0.0 ongoing 30.6.2017 EUR 64 016 LGT GATS Index Certificates 0.0 ongoing 30.9.2014 EUR 49 145 LGT M-Smart Allocator Index Certificates 0.0 ongoing 31.8.2017 EUR 59 568 LGT EX EQ EM IU Leaders Certificates 0.0 ongoing 31.12.2027 USD 854 LGT EX FI EM IU Index Certificates 0.0 ongoing 31.12.2027 USD 7 758 LGT EX HF GIM IU Index Certificates 0.0 ongoing 31.12.2027 USD 6 724 LGT EX HF GATS IU Index Certificates 0.0 ongoing 31.12.2027 USD 2 643 2% bond LGT Bank Ltd. 2012 2.7.2019 2.0 2012 02.07.2019 CHF 249 265 1.875% bond LGT Bank Ltd. 2013 8.2.2023 1.875 2013 08.02.2023 CHF 298 375 For product explanations see appendix 45 on page 41 Notes on the balance sheet 25

13 Value adjustments and provisions/ Status Application provisions for general banking risks (TCHF) 31.12.2012 Value adjustments for default risks Specific value adjustments 7 349-243 Flat-rate specific value adjustments (incl. such adjustments for country risks) 0 0 Portfolio value adjustments 7 056 0 Provisions for contingent liabilities and credit risks 362 0 Provisions for other business risks 2 613-223 Provisions for taxes and deferred taxes 80 114-8 419 Other provisions 1 407-48 Total value adjustments and provisions 98 901-8 933 less: Value adjustments -14 405 Total provisions as per the balance sheet 84 496 Provisions for general banking risks 644 500 See also Point 36 14 Share capital 31.12.2013 31.12.2012 (TCHF) Total Number Capital Total Number Capital nominal of shares entitled to nominal of shares entitled to value a dividend value a dividend Share capital 291 201 2 912 008 291 201 291 201 2 912 008 291 201 Total 291 201 2 912 008 291 201 291 201 2 912 008 291 201 No authorized capital or contingent capital exists. Major shareholders and groups of 31.12.2013 31.12.2012 shareholders linked by voting rights Nominal % Nominal % with voting right LGT Group Foundation 291 201 100.0 291 201 100.0 The economic beneficiary of LGT Group Foundation is the Prince of Liechtenstein Foundation in Vaduz. The main economic beneficiary of the Prince of Liechtenstein Foundation is the reigning prince of Liechtenstein, H.S.H. Prince Hans-Adam II von und zu Liechtenstein. 26 Notes on the balance sheet

Recoveries, overdue interest, New allocations out of Releases to Status currency differences P/L account P/L account 31.12.2013 274 557-385 7 552 0 0 0 0-379 307 0 6 984 6 0 0 368-51 0-285 2 054-2 29 714-23 688 77 719 1 101 0 1 461-151 30 679-24 358 96 138-14 536 81 602 0-215 000 429 500 15 Equity statement (TCHF) Equity capital at the start of the business year Total equity capital at the end of the Share capital paid in 291 201 business year (prior to profit distribution) 2 648 244 Capital reserves 0 of which Legal reserves 218 500 Share capital paid in 291 201 Reserves for own shares 0 Capital reserves 0 Statutory reserves 0 Legal reserves 218 500 Other reserves 1 326 000 Reserves for own shares 0 Provisions for general banking risks 644 500 Statutory reserves 0 Accumulated profit for the year 145 234 Other reserves 1 406 000 Total equity capital at the start of the Provisions for general banking risks 429 500 business year (prior to profit distribution) 2 625 435 Accumulated profit for the year 303 043 +/- capital increase/capital reduction 0 + premium 0 - Release of provisions for general banking risks -215 000 - dividend from the previous year s profit -64 064 + annual profit for the business year 301 874 Total equity capital at the end of the business year (prior to profit distribution) 2 648 244 Notes on the balance sheet 27

16 Maturity structure of assets, liabilities and provisions On demand Redeemable (TCHF) Assets Cash and cash equivalents 7 335 362 Debt instruments of public authorities and bills which are eligible for refinancing at central banks 0 0 Due from banks 843 167 0 Due from clients 6 739 977 553 of which mortgage loans 3 163 116 451 Trading positions comprising securities and precious metals 579 746 Securities and precious metals held as current assets (excl. trading positions) 2 215 088 Securities and precious metals held as non-current assets 792 0 Other assets 75 097 8 480 Total assets 31.12.2013 11 055 991 986 033 31.12.2012 9 361 975 1 183 475 Liabilities and provisions Due to banks 4 820 236 0 Due to clients 7 588 750 5 018 834 Savings accounts 0 764 067 Other liabilities to clients 7 588 750 4 254 767 Securitized liabilities 0 0 Issued bonds 0 0 of which medium-term notes Other securitized liabilities 0 0 Provisions (excl. provisions for general banking risks) 81 602 0 Subordinated liabilities 0 0 Other liabilities 121 263 16 342 Total liabilities and provisions 31.12.2013 12 611 851 5 035 176 31.12.2012 11 174 905 5 610 167 Of the securities reported in the balance sheet under bonds and other fixed-interest bearing securities, instruments amounting to TCHF 957 189 (698 089 in the previous year) will become due in 2014. Issued bonds due in 2014 amount to TCHF 280 117 (36 345 in the previous year). 28 Notes on the balance sheet

Due within Due between Due between Due after immobilized Total 3 months 3 to 12 months 12 months to 5 years 5 years 7 335 362 22 931 0 0 0 22 931 1 538 462 970 251 462 821 144 168 3 958 869 6 957 449 613 689 1 169 569 293 097 10 018 096 1 189 627 235 077 760 687 282 110 2 587 115 579 746 2 215 088 0 0 0 0 792 581 113 190 870 35 691 21 905 86 807 999 963 9 099 955 1 774 810 1 668 081 459 170 86 807 25 130 847 9 423 751 1 819 424 1 708 227 358 256 92 061 23 947 169 1 671 111 241 225 12 934 0 6 745 506 769 644 181 088 6 132 0 13 564 448 0 0 0 0 764 067 769 644 181 088 6 132 0 12 800 381 10 124 269 993 351 953 612 675 1 244 745 10 124 269 993 351 953 612 675 1 244 745 10 124 26 071 68 308 47 056 151 559 0 0 0 0 0 0 0 0 0 81 602 30 220 220 0 470 505 086 159 790 38 212 5 139 845 832 2 955 995 852 316 409 451 617 814 0 22 482 603 2 733 473 809 065 668 518 325 606 0 21 321 734 Notes on the balance sheet 29

17.1 Claims on affiliated companies (TCHF) 31.12.2013 31.12.2012 Due from banks 1 168 068 994 378 Due from clients 5 044 401 5 076 577 of which due from qualified participants (LGT Group Foundation) 540 500 451 333 Bonds and other fixed-interest bearing securities 67 038 52 074 Total 6 279 507 6 123 029 17.2 Liabilities to affiliated companies (TCHF) 31.12.2013 31.12.2012 Due to banks 5 811 182 5 475 295 Due to clients 469 353 446 037 of which due to qualified participants (LGT Group Foundation) 1 459 776 Securitized liabilities 0 0 Subordinated liabilities 0 0 Total 6 280 535 5 921 332 17.3 Loans to governing bodies (TCHF) 31.12.2013 31.12.2012 Members of the Board of Directors 7 059 5 301 Members of the Executive Board 4 577 4 591 Total 11 636 9 892 17.4 Transactions with closely associated persons Transactions with closely associated persons such as securities transactions, payment transactions, lending facilities and interest on deposits were made under the same terms and conditions as applicable to third parties. 30 Notes on the balance sheet

18 Breakdown of balance sheet according to domicile (TCHF) 31.12.2013 31.12.2012 Domestic Abroad Domestic Abroad Assets Cash and cash equivalents 7 325 423 9 939 5 572 007 7 610 Debt instruments of public authorities and bills which are eligible for refinancing at central banks 0 22 931 0 23 603 Due from banks 1 460 769 2 498 100 1 841 275 2 983 074 Due from clients (excl. mortgage loans) 1 035 604 6 395 377 1 086 135 6 615 877 Mortgage loans 2 361 905 225 210 2 229 659 157 782 Bonds and other fixed-interest bearing securities 25 207 2 258 629 5 400 1 980 812 Equities and other non-fixed-interest securities 3 180 0 1 255 0 Participations 66 100 66 100 Shares in affiliated companies 50 000 18 214 40 000 18 248 Intangible assets 0 50 0 30 Tangible assets 82 019 6 375 86 308 6 759 Other assets 770 287 541 638 671 263 585 856 Accrued income and prepaid expenses 12 632 27 192 12 077 21 973 Total assets 13 127 092 12 003 755 11 545 445 12 401 724 Liabilities Due to banks 4 815 758 1 929 748 4 368 232 2 265 323 Due to clients (excl. savings accounts) 5 630 701 7 169 680 5 664 248 6 238 760 Savings accounts 643 765 120 302 644 308 121 715 Securitized liabilities 1 244 745 0 969 404 0 Other liabilities 296 995 478 589 426 115 474 805 Accrued expenses and deferred income 41 825 28 423 39 106 24 302 Provisions 81 304 298 84 229 267 Subordinated liabilities 470 0 920 0 Provisions for general banking risks 429 500 0 644 500 0 Share capital 291 201 0 291 201 0 Legal reserves 218 500 0 218 500 0 Other reserves 1 406 000 0 1 326 000 0 Profit carried forward 1 169 0 298 0 Profit for the year 301 874 0 144 936 0 Total liabilities 15 403 807 9 727 040 14 821 997 9 125 172 Balance sheet items are broken down based on the client s domicile, mortgage loans by the location of the property. Notes on the balance sheet 31

19 Breakdown of assets according to 31.12.2013 country/country group TCHF % Country Liechtenstein 2 530 209 10.1 Switzerland 10 596 883 42.2 Europe excl. FL/CH 3 905 581 15.5 North America 476 631 1.9 Caribbean 5 408 720 21.5 Latin America 133 747 0.5 Africa 26 333 0.1 Asia 1 629 257 6.5 Oceania 423 486 1.7 Total assets 25 130 847 100.0 Breakdown of assets according to 31.12.2012 country/country group TCHF % Country Liechtenstein 2 876 871 12.0 Switzerland 8 668 574 36.2 Europe excl. FL/CH 4 900 047 20.5 North America 315 700 1.3 Caribbean 5 704 945 23.8 Latin America 114 255 0.5 Africa 27 074 0.1 Asia 950 365 4.0 Oceania 389 338 1.6 Total assets 23 947 169 100.0 20 Breakdown of balance sheet according to currencies (TCHF) Assets Cash and cash equivalents Debt instruments of public authorities and bills which are eligible for refinancing at central banks Due from banks Due from clients (excl. mortgage loans) Mortgage loans Bonds and other fixed-interest bearing securities Equities and other non-fixed-interest securities Participations Shares in affiliated companies Intangible assets Tangible assets Other assets Accrued income and prepaid expenses Total assets Delivery claims from forex spot, forex futures and forex options transactions Total assets Liabilities Due to banks Due to clients (excl. savings accounts) Savings accounts Securitized liabilities Other liabilities Accrued expenses and deferred income Provisions Subordinated liabilities Provisions for general banking risks Share capital Legal reserves Other reserves Profit carried forward Profit for the year Total liabilities Delivery liabilities from forex spot, forex futures and forex options transactions Total liabilities Net position per currency 32 Notes on the balance sheet

CHF EUR USD Other Total 7 316 617 17 468 613 664 7 335 362 0 0 0 22 931 22 931 1 165 248 381 319 1 366 054 1 046 248 3 958 869 4 227 687 1 574 111 873 699 755 484 7 430 981 2 365 033 44 572 17 646 159 864 2 587 115 815 710 139 857 266 969 1 061 300 2 283 836 971 545 1 664 0 3 180 166 0 0 0 166 67 068 0 0 1 146 68 214 0 50 0 0 50 82 019 4 664 0 1 711 88 394 776 050 7 175 8 597 520 103 1 311 925 15 986 4 056 4 364 15 418 39 824 16 832 555 2 173 817 2 539 606 3 584 869 25 130 847 15 295 014 20 226 416 34 154 618 10 523 590 80 199 638 32 127 569 22 400 233 36 694 224 14 108 459 105 330 485 1 332 374 1 351 691 3 173 131 888 310 6 745 506 3 475 827 3 623 957 4 019 749 1 680 848 12 800 381 729 284 29 210 5 573 0 764 067 679 447 547 318 17 980 0 1 244 745 757 155 8 039 1 037 9 353 775 584 54 170 4 804 1 585 9 689 70 248 79 158 572 1 778 94 81 602 470 0 0 0 470 429 500 0 0 0 429 500 291 201 0 0 0 291 201 218 500 0 0 0 218 500 1 406 000 0 0 0 1 406 000 1 169 0 0 0 1 169 301 874 0 0 0 301 874 9 756 129 5 565 591 7 220 833 2 588 294 25 130 847 22 260 871 16 849 278 29 454 592 11 541 479 80 106 220 32 017 000 22 414 869 36 675 425 14 129 773 105 237 067 110 569-14 636 18 799-21 314 93 418 Notes on the balance sheet 33

21 Subordinated assets (TCHF) 31.12.2013 31.12.2012 Balance sheet items Bonds and other fixed-interest bearing securities 5 902 5 709 Shares in affiliated companies 51 147 41 180 Total 57 049 46 889 22 Debt instruments of public authorities and bills which are eligible 31.12.2013 31.12.2012 for refinancing at central banks (TCHF) Debt instruments of public authorities 22 931 23 603 Bills 0 0 Total 22 931 23 603 23 Bonds and other fixed-interest bearing securities (TCHF) 31.12.2013 31.12.2012 Money market paper 291 588 129 719 of which from public sector issuers 0 0 of which from other issuers 291 588 129 719 Bonds 1 992 248 1 856 493 of which from public sector issuers 152 031 88 486 of which from other issuers 1 840 217 1 768 007 of which own bonds 25 207 5 285 Total 2 283 836 1 986 212 24 Due to clients (TCHF) 31.12.2013 31.12.2012 Savings accounts 764 067 766 023 Other liabilities 12 800 381 11 903 008 Total 13 564 448 12 669 031 25 Securitized liabilities (TCHF) 31.12.2013 31.12.2012 Issued bonds 1 244 745 969 404 of which medium-term notes 151 559 130 220 Other securitized liabilities 0 0 Total 1 244 745 969 404 26 Provisions (TCHF) 31.12.2013 31.12.2012 Provisions for pensions and similar liabilities 0 0 Tax provisions 77 719 80 114 Other provisions 3 883 4 382 Total 81 602 84 496 34 Notes on the balance sheet

Notes on off-balance sheet transactions 27 Contingent liabilities (TCHF) 31.12.2013 31.12.2012 Credit guarantees and similar instruments 454 252 646 529 of which for affiliated companies 361 135 539 298 Performance guarantees and similar instruments 3 312 096 3 430 092 of which for affiliated companies 3 261 549 3 381 862 Irrevocable commitments and other contingent liabilities 5 576 526 of which for affiliated companies 0 0 Total 3 771 924 4 077 147 28 Commitment credits Liabilities from deferred payments are reported in the balance sheet. There were no acceptance liabilities or other commitment credits at 31 December 2013 and 31 December 2012. 29 Fiduciary transactions (TCHF) 31.12.2013 31.12.2012 Fiduciary investments at third-party banks 305 239 320 806 Fiduciary investments at affiliated banks and investment firms 0 0 Fiduciary loans and other financial transactions in a fiduciary capacity 0 0 of which with affiliated companies 0 0 Total 305 239 320 806 Notes on off-balance sheet transactions 35

30 Open derivative Trading instruments Hedging instruments financial instruments positive negative Contract positive negative Contract (TCHF) replacement replacement volume replacement replacement volume values values values values Interest rate instruments Forward contracts incl. FRAs 0 0 0 0 0 0 Swaps 64 15 165 791 13 175 30 724 1 945 628 Futures 0 0 0 0 0 0 Options (OTC) 0 0 0 0 0 0 Options (exchange-traded) 0 0 0 0 0 0 Forex/precious metals Forward contracts 514 313 481 174 63 190 607 185 979 125 631 15 425 160 Swaps 0 0 0 0 0 0 Futures 0 0 0 0 0 0 Options (OTC) 61 846 61 828 5 282 413 0 0 0 Options (exchange-traded) 0 0 0 0 0 0 Equity securities/indices Forward contracts 0 0 0 0 0 0 Futures 0 0 0 0 0 0 Options (OTC) 878 878 18 939 0 0 0 Options (exchange-traded) 0 0 0 0 0 0 Credit derivatives Credit default swaps 1 522 1 522 72 515 0 0 0 Total return swaps 0 0 0 0 0 0 First to default swaps 0 0 0 0 0 0 Other credit derivatives 0 0 0 0 0 0 Other Forward contracts 0 0 0 0 0 0 Swaps 1 601 1 601 396 117 0 0 0 Futures 0 0 0 0 0 0 Options (OTC) 0 0 0 0 0 0 Options (exchange-traded) 0 0 0 0 0 0 Total before consideration of the netting contracts 31.12.2013 580 224 547 018 69 126 382 199 154 156 355 17 370 788 31.12.2012 658 308 691 126 70 678 682 107 020 151 844 12 583 262 Total after consideration of the netting contracts positive negative replacement values replacement values 31.12.2013 430 682 354 677 36 Notes on off-balance sheet transactions

Notes to the profit and loss account 31 Offsetting of refinancing expenses with income from trading The refinancing expenses arising from trading positions are not offset against income from trading activities because this business activity does not have a significant influence on the bank s business result. 32 Interest income from fixed-interest securities (TCHF) 2013 2012 Interest income from bonds 39 109 43 071 Interest income from money market paper 2 457 5 810 Total 41 566 48 881 33 Income from trading transactions (TCHF) Reported in the P&L under 2013 2012 Interest income from fixed-interest securities Interest income 1 154 1 697 Interest income from credit derivatives Interest income 33 108 Trading in foreign exchange and precious metals Income from financial transactions 52 642 58 940 Securities trading Income from financial transactions -211 2 235 Structured products and other income Income from financial transactions 1 473 0 Total 55 091 62 980 34 Personnel expenses (TCHF) 2013 2012 Wages and salaries 130 900 118 806 Social security contributions, pensions and social assistance 18 613 17 610 of which for pensions 9 786 9 404 Other personnel expenses 7 537 7 922 Subtotal 157 050 144 338 Adjustment of liability for Long Term Incentive Scheme 15 194 26 317 Total 172 244 170 655 Emoluments to members of the Executive Board 2 476 1 824 35 Operating expenses (TCHF) 2013 2012 Occupancy expense 15 593 15 988 Expenses for IT, machinery, furniture, vehicles and other equipment 53 483 49 521 Other business expenses 76 980 79 844 Total 146 056 145 353 Notes to the profit and loss account 37

36 Losses, extraordinary items, provisions The losses reported under the item other ordinary expenses were incurred mainly in connection with lending business and settlements (see also Point 43). No extraordinary items were recorded in the years 2013 and 2012. The item provisions contains mainly tax provisions, provisions for projects, as well as provisions for other business risks (see also Points 13 and 26). 37 Income and expenses broken down 2013 2012 according to office or branch (TCHF) FL Abroad FL Abroad Interest earned 178 742 3 561 259 190 1 718 Interest paid -66 998-2 154-108 451-1 880 Current income from securities 3 597 0 784 0 Income from commission business and services 232 765 54 661 203 495 30 600 Commission paid -61 641-7 583-56 233-2 208 Income from financial transactions 58 404 3 614 129 998 1 269 Other ordinary income 17 232 9 173 23 191 3 575 Operating expenses -223 924-94 376-246 752-69 256 Other ordinary expenses -2 948-399 -6 513-109 The break down is based on the domicile of the booking branch. 38 Notes to the profit and loss account

Additional information 38 Securities negotiable on the stock exchange (TCHF) 31.12.2013 31.12.2012 Bonds and other fixed-interest bearing securities 2 283 836 1 986 212 of which listed securities 1 884 960 1 604 392 of which listed and treated as current assets 1 884 960 1 604 392 of which listed and treated as non-current assets 0 0 of which unlisted securities 398 876 381 820 Equities and non-fixed-interest securities 3 180 1 255 of which listed securities 3 180 1 255 of which listed and treated as current assets 3 180 1 255 of which listed and treated as non-current assets 0 0 of which unlisted securities 0 0 Participations 166 166 of which listed securities 0 0 of which unlisted securities 166 166 Shares in affiliated companies 17 067 17 067 of which listed securities 0 0 of which unlisted securities 17 067 17 067 39 Subordinated liabilities at 31.12.2013 Interest rate % Maturity Currency TCHF Medium-term note 2.0625 2015 CHF 60 Medium-term note 2.3750 2014 CHF 30 Medium-term note 2.3750 2016 CHF 40 Medium-term note 2.4375 2014 CHF 50 Medium-term note 2.5625 2014 CHF 120 Medium-term note 2.5625 2016 CHF 50 Medium-term note 2.7500 2014 CHF 30 Medium-term note 2.8125 2014 CHF 20 Medium-term note 2.9375 2016 CHF 50 Medium-term note 2.9375 2017 CHF 20 Total 470 Additional information 39

40 Other assets (TCHF) 31.12.2013 31.12.2012 Positive replacement values of derivatives 779 378 765 328 Compensation account 6 628 28 248 Physical holdings of precious metals 508 610 444 101 Other assets 17 309 19 442 Total 1 311 925 1 257 119 41 Other liabilities (TCHF) 31.12.2013 31.12.2012 Negative replacement values of derivatives 703 373 842 970 Coupons 105 105 LTIS liability 41 604 30 551 Clearing accounts 30 502 27 294 Total 775 584 900 920 42 Other ordinary income (TCHF) 2013 2012 Compensation from Group companies 18 774 19 962 Income from real estate 5 180 5 130 Income from the release of provisions 285 330 Remaining other income 2 166 1 344 Total 26 405 26 766 Compensation from the other Group companies forms the largest component of other ordinary income. This item comprises compensation for services, performed centrally by the bank on behalf of the Group companies. Income from real estate contains the net amounts (rent payments less maintenance costs) from the rental of bank-owned property to third parties and Group companies. 43 Other ordinary expenses (TCHF) 2013 2012 Losses from receivables and guarantees 670 4 334 Transaction losses 529 579 Remaining other expenses 2 148 1 246 Total 3 347 6 159 See also Point 36 44 Breakdown of client assets (TCHF) 31.12.2013 31.12.2012 Client assets Client assets in own-managed funds (investment undertakings) 15 362 485 14 386 810 Client assets under management 10 989 929 10 143 395 Other client assets under administration 29 464 337 25 742 147 Total client assets (including double counting) 55 816 751 50 272 352 of which double counting 9 490 098 7 612 413 40 Additional information

45 Outstanding bonds Product explanations for table 12 on page 25 The LGT GIM Index Certificates (EUR) are issued in the form of no-par-value promissory notes. These each relate to one of the LGT Premium Strategy GIM (EUR) indices compiled and administered by LGT Capital Management Ltd. These indices reflect the value development of a global, diversified portfolio that invests in various asset classes, where exchange rate fluctuations of the components included in the index are largely hedged against the Euro. Both traditional and alternative asset classes are included. Both tranches of the Crown Absolute Return (EUR) Index Certificates are no-par-value. These each relate to one of the Crown Absolute Return (EUR) indices calculated and administered by LGT Capital Partners Ltd. The two indices show the value development of a global, diversified portfolio that invests in alternative asset classes, where exchange rate fluctuations of the components included in the index are largely hedged against the Euro. The Crown Alternative SV (EUR) Index Certificates are no-par-value. They relate to the Crown Alternative SV (EUR) Index calculated and administered by LGT Capital Partners Ltd. This index shows the value development of a global, diversified portfolio that invests in various alternative asset classes, where exchange rate fluctuations of the components included in the index are largely hedged against the Euro. The LGT GATS Index Certificates are no-par-value and are made out to the bearer. They relate to the LGT Premium Strategy GATS (EUR) Index compiled and administered by LGT Capital Management Ltd. This index shows the value development of a global, diversified portfolio that invests in various asset classes, where exchange rate fluctuations of the components included in the index are largely hedged against the Euro. The LGT M-Smart Allocator (EUR) Index Certificates are no-par-value. They relate to the LGT M-Smart Allocator (EUR) Index calculated and administered by LGT Capital Partners Ltd. This index shows the value development of a global, diversified portfolio that invests in various asset classes, where exchange rate fluctuations of the components included in the index are largely hedged against the Euro. The LGT EX EQ EM IU Leaders (USD) Index Certificates are no-par-value. They relate to the LGT EX Equity Emerging Markets II (USD) Index calculated and administered by LGT Capital Management Ltd. This index shows the value development of a diversified portfolio that invests globally. The LGT EX FI EM IU (USD) Index Certificates are no-par-value. They relate to the LGT EX Fixed Income Emerging Markets II (USD) Index calculated and administered by LGT Capital Management Ltd. This index shows the value development of a diversified portfolio that invests globally. The LGT EX HF GIM IU (USD) Index Certificates are no-par-value. They relate to the LGT EX Hedge Funds GIM IU (USD) Index calculated and administered by LGT Capital Partners Ltd. This index shows the value development of a diversified portfolio that invests globally. The LGT EX HF GATS IU (USD) Index Certificates are no-par-value. They relate to the LGT EX Hedge Funds GATS IU (USD) Index calculated and administered by LGT Capital Partners Ltd. This index shows the value development of a diversified portfolio that invests globally. Additional information 41

Report of the statutory auditor Report of the statutory auditor 43

International presence of LGT Group and imprint Austria Bahrain China Germany Hong Kong Ireland Japan Liechtenstein Singapore Switzerland United Arab Emirates United Kingdom United States of America Uruguay Salzburg Vienna Manama Beijing Frankfurt am Main Hong Kong Dublin Tokyo Vaduz Singapore Basel Berne Chur Davos Geneva Lausanne Lugano Pfäffikon Zurich Dubai London New York Montevideo Media Relations Legal Services Dispatch Christof Buri Phone +423 235 23 03 christof.buri@lgt.com Jacques Engeli Dr. Urs Gähwiler Phone +423 235 28 72 jacques.engeli@lgt.com Jasmin Kozlica Phone +423 235 22 89 jasmin.kozlica@lgt.com 44 International presence and imprint

Lilium The period from 1740 to 1840 saw a burst of development that proved ground-breaking in the field of botanical illustrations. This period, which also saw botany itself become established as an independent branch of the natural sciences, is also regarded as the heyday of flower painting in Vienna. During his early career, Ferdinand Lukas Bauer (1760 1826) was active as a plant painter for the Princes of Liechtenstein. He accompanied several expeditions during which he made a pictorial record of foreign flora and fauna. His brother Franz Andreas Bauer (1758 1840) also worked as a flower painter for the Princely House of Liechtenstein as well as for the famous Viennese court botanist Nikolaus von Jacquin. Between 1776 and 1805, the so-called Codex Liechtenstein was created: a fourteen-volume illuminated compendium of manuscripts in which Ferdinand Lukas, Franz Andreas and their brother Joseph Anton Bauer (1756 1831) and several other plant illustrators were involved. This work, held today by the Princely Collections, is among the most beautiful plant books that were made at the time. In the Codex s more than 2 700 separate plant illustrations, the Bauer brothers created a synthesis of art and science: faithful in detail, yet obeying the high aesthetic requirements of art, they achieved the balancing act of uniting fidelity to nature on the one hand with their own art of interpretation on the other. LIECHTENSTEIN. The Princely Collections, Vaduz Vienna The illustrations in this report are details from Brothers Bauer, Hortus Botanicus Lilium, 1776/1804

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