ANNUAL REPORT 2018

Summary

Corporate bodies of Hyposwiss Private Bank Genève SA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Letter to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Activity Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Economic and Financial Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

– Consolidated balance sheet 38

– Consolidated income statement 39

– Cash flow statement 41

– Statement of changes in equity 42

– Notes to the 2018 Consolidated Financial Statements 43

Report of the Statutory Auditor on the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Disclosure requirements as prescribed in the FINMA circular 2016/1 for the group . . . . . . . . . . . . . . . . . . . . . .68

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

– Statutory balance sheet 73

– Income statement 74

– Appropriation of profit 76

– Statement of changes in equity 76

– Notes to the 2018 Financial Statements 77

Report of the Statutory Auditor on the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90

Disclosure requirements as prescribed in the FINMA circular 2016/1 for Hyposwiss Private Bank Geneva SA . . 92

Resume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

– Members of the Board of Directors 97

– Members of the Executive Board 99

Group companies' addresses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102

44

Corporate

BODIES OF HYPOSWISS PRIVATE BANK GENÈVE SA

55

MANAGEMENT COMMITTEE

Niels Bom OlesenChief Executive Officer

Albert LawiDeputy Chief Executive OfficerPrivate Banking responsable

Robert Dwek Chief Investment Officer - CIO

Sébastien Joliat Chief Financial Officer - CFO

Roni Hougui Chief Operations Officer - COO

INTERNAL AUDITORS

BDO SA, Geneva

STATUTORY AUDITORS

PricewaterhouseCoopers SA, Geneva

BOARD OF DIRECTORS

Solly S. LawiChairman

Alain Bruno Lévy* Vice-Chairman of the Board

Michel Broch*Member, Secretary

Boaz Barack *Member

Eric Bernheim *Member

Philippe Perles *Member

Nabil Jean SabMember

* Independent according to Circ . FINMA 2017/1

66

Letter

TO SHAREHOLDERS

77

Dear Shareholders,

As we head into 2019, the geopolitical, economic and financial risks we are facing are numerous and unprecedented . We remain optimistic about what the future holds, yet that optimism is tinged with a realistic outlook and cautious stance . Our solid organic growth and the synergies from our various acquisitions – particularly as we integrate client assets and staff – have made us stronger, more profitable and more competitive in the Swiss financial sector . Backed by growth in our assets under management as well as our sound capital base, we are well-positioned to adapt to the rapidly changing global financial system – and to seize the new opportunities offered by the exponential rhythm of the digital transformation .

In reviewing Hyposwiss' achievements, we will first retrace some key elements of the evolution of the international economy that are essential factors shaping our investment advisory and asset management policies .

Group Structure

HYPOSWISS PRIVATE BANK GENEVE SASWITZERLAND

FIMANOR FINANCIALMANAGEMENT AG

ZURICH

HYPOSWISSADVISORS SA

GENEVA

MONACO ASSET MANAGEMENT SAM

MONACO

STAVANGER ASSET MANAGEMENT LTD

NORWAY

100 %100 % 22.3 % 35 %

88

I - GLOBAL ECONOMY OVERVIEW

Global recovery loses steam against rising headwinds The global economy started 2018 on a solid footing but stumbled as the year went on, casting a shadow over the outlook for 2019–2020.

▪ Global economic growth entered 2018 on an upbeat note, bolstered by vibrant international trade and expanding output in 2017 . The synchronized global recovery gathered pace in the first half of 2018 with GDP growth reaching 3 .9% on an annualized basis – its highest reading in six years . But the tide turned faster than expected in the second half of the year, and analysts now expect the global economy to expand by 3 .5% in 2019 and 3 .6% in 2020 .

▪ The marked slowdown in the second half of 2018 reflects the consequences of the burgeoning trade war: tariffs imposed by heavyweights such as the US and retaliatory measures taken by their trading partners, above all China . Mounting protectionism across the globe has generated a great deal of uncertainty about the future of trade policies, which in turn is weighing on investment decisions and stock markets . Other headwinds include rising political risk in Europe (relating to Italy and to Brexit, for example) and in the Middle East (in countries such as Turkey, Saudi Arabia and Iran), tumbling oil prices and moves by central banks – starting with the US Federal Reserve (Fed) – to normalize interest rates .

Major risks stemming from monetary-policy divergence As central banks started unwinding their non-conventional monetary policies in 2018, what we saw was a marked divergence between the pace of interest rate hikes and the pace of liquidity withdrawals from the system . This mismatch buffeted financial markets throughout the fourth quarter. The US Federal Reserve’s (Fed) decision to lift its benchmark rate while the global economy was losing steam sparked fears that monetary policy would be tightened too quickly – especially since the Fed had already taken measures to shrink its balance sheet .

▪ Meanwhile, the European Central Bank (ECB) announced the end of its asset purchase program, although it will have to be flexible on the timing of any rate hikes . The Swiss National Bank (SNB) – whose main worry is the strength of the Swiss franc – will have to wait until the ECB moves first before lifting its policy rate out of the uncomfortable negative territory where it now sits . And the Bank of Japan (BoJ) has its hands tied by that country’s slowing GDP growth and zero inflation .

Record levels of public- and private-sector debt Financial conditions started tightening in the fall of 2018 after a decade of easy money . That could lead to a further deterioration in risk assessments and consequently weigh on economic growth, especially given the vast amounts of debt amassed by both governments and the private sector.

I - Global economy overviewII - Investment Policy

III - Swiss Financial Sector IV - Hyposwiss Financial Results

9

▪ If we take governments, businesses and households together, their combined debt worldwide (including China) totals $250 trillion, or over 320% of global GDP . This figure is up 40% from 2007 and marks a record in absolute terms . And it poses a huge threat if and when interest rates go up . With such a large stockpile of debt, any rise in borrowing costs could trigger a liquidity crunch and even push some borrowers into bankruptcy .

▪ In addition to these monetary and macroeconomic perils, other risks include climate change (which is a threat for low-income countries in particular), escalating geopolitical tensions, a rise in protectionist policies and the growing popularity of nationalist movements in the main industrialized countries . All these factors could have major social, economic, political and environmental ramifications .

Stock markets Record high in Q1 2018 — Crash in Q4 2018 — Rebound in Q1 2019The low-interest-rate policies and massive liquidity injections introduced in the wake of the 2008 financial crisis pushed up the prices of real assets like stocks, real estate and other assets – which reached record highs in early 2018 . Some asset classes chalked up gains of around 300% from their March 2009 lows .

▪ As a result, investors in search of attractive yields amid low interest rates and elevated asset prices started turning to alternatives like real estate, art and private equity . These investments are generally less liquid than conventional banking products .

▪ With the business cycle at a mature stage and central banks set to reverse their accommodative monetary policies, volatility picked up and the slide in stock prices from their record highs accelerated . This trend became most obvious in the fourth quarter of 2018 . US and European equity indices plunged 15% on average over the last three months of the year . Just about every asset class ended 2018 in the red.

▪ However, we believe the global economy is merely pausing for breath, and we don’t see a recession coming anytime soon . Both stock and bond markets staged a remarkable comeback in the first quarter of 2019, recovering two-thirds of stock market losses at the end of the year.

Interest-rate normalization on hold Central banks return to a dovish stance The stock-market rebound in early 2019 was driven by an about-face on the part of central bankers, particularly in the US, as they took measure of the slowdown in global growth, stubbornly weak inflation, financial-market gyrations and the underlying geopolitical uncertainty – especially the question marks surrounding US-China trade talks, Brexit and Europe’s political future in general .

▪ Central banks therefore shelved their plans for monetary-policy normalization – and some have even started considering more dovish policies to boost economic output . The Fed indicated it would delay or maybe even cancel any further rate hikes and might stop shrinking the size of its balance sheet . The ECB has pushed back the timing of its first rate hike; the BoJ has said it would loosen monetary policy if needed; and the Bank of England will now wait for greater clarity on the terms of Brexit before making any move .

The general trend in monetary policy in the developed world is no longer one of normalization, but rather of a neutral or even accommodative policy stance.

1010

Outlook: 2019 in two stages. We expect the global economy to decelerate slightly in H1 2019 in the wake of reduced international trade, anemic manufacturing output and lower capital spending by companies worldwide . However, the economy should regain momentum in H2, supported by more accommodative monetary and fiscal policies .

Measures to be implemented to maintain the growth cycle - Multilateral responsibilitiesOur optimistic outlook is based on trends we have seen in the past, which show that although trade wars can weigh on global growth, those effects are muted in a digital age where advanced technology like digitized processes, automated factories, artificial intelligence and biotech-based systems keeps the economy humming . Policymakers therefore need to think beyond the merely financial aspects of multilateral cooperation and encourage more efficient mechanisms for the movement of human and social capital .

▪ In 2008, the share of global economic output from the developing world crossed the 50% mark for the first time . Labor and commodities markets around the world were transformed, as countries like China, India and Russia opened up their economies . Emerging markets were no longer simply major new players on the international stage – they also prompted structural shifts in trading patterns across the globe .

Shifting wealth distribution The economies of China and India have been growing considerably faster than the OECD average since the 1990s . That – coupled with their expanding populations – has reshaped the global economic landscape . Today the countries with the most economic weight are not necessarily those with the highest per capita GDP; China now boasts the world’s biggest economy when measured at purchasing-power parity . And its leaders have major ambitions, as reflected in their Belt and Road Initiative and massive investments across the globe, including in Europe .

▪ A staggering six billion people – or 85% of the global population (which measured 7 .7 billion in 2018) – live in the developing world . And over the next five years those countries will account for some two-thirds of global GDP . The BRICS – Brazil, Russia, India, China and South Africa – alone are home to three billion people, or 42% of the global population, and represent over 20% of global GDP .

Rising wealth levels in these countries have redrawn the map in terms of international trade, capital flows and migration . They have also boosted global economic output, lifted millions of people out of poverty and given developing countries a seat at the table when it comes to global governance .

▪ The consequences of the latest global financial crisis and current refugee crises have engendered social tensions in a number of countries, potentially undermining the main economic-growth drivers as well as support for globalization and multilateral trade . Indeed, slowing international commerce and mounting protectionism are changing the very nature of globalization as it stands today .

▪ The solution to all this, particularly if policymakers want to rebalance the global economic order, is not to throw up fresh obstacles to free trade by slapping aggressive tariffs on imported goods . But it’s worth pointing out that free trade is still advancing (in regions such as Asia, Europe and Africa), even as its existence is under threat . And to help make sure this progress continues, the G20 is recommending significant reforms to international organizations like the World Trade Organization .

11

▪ Strategies for accelerating growth include a number of other reforms – on both a macroeconomic and structural level – to spur capital spending, increase employment and workforce participation levels, step up international trade and make companies more competitive . These essential reforms would lift countries’ GDP growth potential .

▪ Such strategies should also factor in the pace of technological change, which is faster than ever before . This is having unprecedented consequences on the global economy and consumers’ lifestyles . As technologies converge and big data gets even bigger, developers are coming up with even more powerful algorithms to crunch through and interpret these vast amounts of data – giving policymakers better information with which to address today’s challenges .

II - INVESTMENT POLICY

The cautious optimism of our Research & Investment “R&I” team is rooted in the international system’s ability to absorb the natural, geopolitical and financial shocks felt around the world . The repeated crises have toughened up international companies and boosted their productivity . Diversified listed companies were able to react vigorously to the many changes thrown at them since the 2008 financial crisis . It is through equity and bond holdings in these companies that we are able to tap into a wide range of opportunities for our clients’ managed portfolios at a time when the buoyant global economy has fueled aspirations for greater prosperity .

▪ As we mentioned earlier, asset prices have been climbing steadily, especially in Asia and the US . The number of millionaires worldwide has more than doubled since 2010 and reached 36 million in 2018 . Investing the assets of this growing clientele requires a combination of judicious investment choices and professional advice, as well as processes that enhance the security and stability of their portfolios, in order to protect their wealth .

▪ Our R&I team analyzes various investment options and selects the most promising ones using a process that combines state-of-the-art software with shrewd stock picking . We identify the best companies – small-, mid- and large-cap – in both cyclical and defensive industries . This is based on our conviction that attractive investment opportunities are to be found in any industry, regardless of the economic climate.

▪ After revamping its asset-management approach, our R&I team adopted a new Risk Metric procedure in 2018: a metric-based risk-assessment model that works by calculating risk ratings for each various asset . The same ratings scale is used for stocks, bonds, precious metals, structured products and investment funds .

▪ We use the risk ratings to construct our portfolios in accordance with a risk-based asset allocation approach, which differs from the conventional approach based on asset classes . Once the asset allocation is determined, we then draw on correlation tables to pick investments that move independently from each other, so as to provide the best possible expected return for a given level of risk . This method allows us to more effectively measure, and then reduce, the risk in our portfolios under both regular and stressed market conditions ; as experienced during the last quarter of 2018.

The growth and productivity potential of both industrialized and developing countries - vigorously driven by technological advances - are the positive foundations of our asset allocation strategy and high-added-value investment .

1212

New and existing funds Thanks to our active investment approach, the size of the following in-house funds grew considerably in 2018: Protea Orchard Europe Equity, Protea Fixed Income Key Solution, Protea Crawford Lake US Equity, Leo First European Growth and Montlake Avenir US Equity.

▪ Client assets brought in by our Asset Management Department and managed by our Research & Investment Department (i .e ., centralized discretionary mandates and third-party investment fund mandates) grew to over CHF 530 million in 2018 . Our Bank’s profitability increased in 2018 thanks to a combination of new assets under management, a shift in client funds from cash to investments, an increase in centralized asset management mandates, and an expansion in the size of our in-house and third-party funds .

▪ We expanded our “global custody services” for independent asset managers in 2018, leveraging our Geneva base – ideal for serving a large number of independent wealth managers and financial advisors . Through our global custody services, we provide those advisors with efficient support for their operations as well as personalized expertise and high added-value solutions .

▪ During the sharp market rebound in Q1 2019, we were able to recover the losses from the stock-market tumble in Q4 2018 . By end-March 2019, thanks to swift responses by central banks, nearly all the losses incurred by our domestic and international investors were recuperated and we returned to positive territory last seen in 2017 . Our diversified EUR and USD portfolios managed under centralized discretionary mandates also benefitted from the market rebound, through increases in equity exposure at just the right time .

III - SWISS FINANCIAL SECTOR

Switzerland’s financial sector once again adapted to new international standards and regulations in 2018, underscoring its strength in asset management . These changes aimed in particular to improve investor protection, investment transparency and the way the market operates .

▪ The SNB maintained its accommodative monetary policy throughout 2018, keeping inflation stable and supporting the country’s economy . The central bank held the interest rate it charges on sight deposits at -0 .75% and kept its target range for the 3-month Libor at -1 .25% to -0 .25% . These negative interest rates, along with the SNB’s readiness to intervene in the currency markets, are still necessary and have proven effective in making CHF-denominated investments less attractive thus reducing the upward pressure on the Swiss franc .

▪ We believe a variety of factors will keep interest rates extremely low in Switzerland, and in Europe in general, for some time to come . The SNB does not have much scope to conduct monetary policy independent from the decisions of the ECB .

▪ Swiss GDP is expected to expand by around 1 .5% in 2019 . Although this is slower than the 2 .5% figure recorded in 2018, the outlook for the country’s economy is rosy and capacity utilization should stay robust . The job market has improved further with employment rates up and unemployment all the way down to 2 .4% – a level last seen before the 2008 financial crisis . However, the Swiss economy could still be dragged down by an unexpected slump in the global economy (resulting from Brexit or the ongoing structural problems in the Eurozone, for example) .

13

Banking industry The banking industry is currently undergoing rapid change, both in Switzerland and internationally . Banks must grapple with a host of challenges – some of which could fundamentally disrupt their business models .

▪ At end-2017, Swiss banks together had some CHF 7 .3 trillion in assets under management – up 51% since 2000 . Half of those assets come from international clients . Switzerland has a 27 .5% share of the global market for cross-border private-banking assets, making it the world leader . That means that for the country’s banks to remain competitive, they must be able to keep serving international and especially other European markets .

▪ The Swiss parliament passed a new financial services law (LSFin) in the summer of 2018 . This law – designed to mirror equivalent EU regulations – sets new requirements for companies that provide financial services and sell financial instruments, in order to enhance investor protection . This regulatory equivalence is a sine qua non in order for Swiss banks to be able to develop their activities in EU markets .

Digital platformDigital technology is becoming more important with each passing year, throwing up new challenges for banks and forcing them to restructure many of their business processes . At Hyposwiss, we are continually improving our capacity to innovate and adapt to the digital age, in order to effectively leverage our advanced skills in asset management.

▪ To that end, we set up a Blockchain Committee in 2018 to explore this new technology for storing and transmitting data in a transparent, secure manner, without the involvement of a central governing body . This Committee is tasked with examining the benefits and opportunities that distributed ledges technology could bring to banking services – and to identify ways to manage the inherent risks . We believe that fintech and wealthtech will play an increasingly pivotal role in the Swiss financial sector .

▪ We entered the fintech market in 2017 by acquiring a stake in Numbrs Personal Finance AG, a company founded in Zurich in 2015 . Numbrs has developed a banking app that today has 458,000 users . Our investment in this young firm reflects our strategy of using digital channels to make our financial products and services available to a broader client base, through an approach combining technological cooperation and regulatory development .

▪ In 2018, we purchased a stake in “WeCanGroup SA” . This Swiss fintech develops blockchain technology, which is growing in importance in the field of financial services . With this stake, we aim to adapt to a blockchain world while adhering to new Swiss regulations . This investment also illustrates our commitment to keeping pace with Switzerland’s digital sector .

▪ In terms of our own processes, we invested further in our IT systems in 2018 in order to remain at the forefront of modern technology . We set up a new mobile banking platform with an array of convenient, easy-to-use features for our clients and the asset managers we work with . At the seventh annual WealthBriefing Swiss Awards in February 2019, Hyposwiss won the “Customer Facing Digital Capabilities” award in recognition of the advanced digital banking services we offer to our private-banking customers on tablets or smartphones .

1414

IV - HYPOSWISS FINANCIAL RESULTS

In line with our business development strategy, we boosted our assets under management by bringing in CHF 438 .4 million (+9%) in net new money in 2018 (before adjusting for market and currency effects) .

Assets under management – including discretionary mandates and investment and advisory services – totaled CHF 4 .75 billion at end-2018 (against CHF 4.6 billion at end-2017) . This increase includes the effects of the high stock-market and currency market volatility seen in Q4 2018, which impacted considerably our portfolios’ performance .

Our balance sheet totaled CHF 708 million at end-2018, down from CHF 721 million one year earlier . We have a conservative capital structure with sufficient equity along with external funding that comes essentially from client deposits . The loans granted to clients take the form of Lombard loans and are funded entirely by client deposits . We expect to once again generate a profit in 2019, consistent with our budgetary forecasts .

Consolidated shareholders’ equity was CHF 50 .1 million at end-2018, against CHF 47 .2 million one year earlier . Our capital adequacy ratio was 376% and our solvency ratio was 30 .1% – comfortably above the regulatory minimum of 10 .5% . Our operating profit rose 24% in 2018 to CHF 5 .9 million, from CHF 4 .8 million in 2017, thanks to growth in our core business . As a result of firm cost control, our gross profit increased from CHF 7 .6 million in 2017 to CHF 10 million in 2018, improving our cost-to-income ratio from 81% to 78% .

Our net profit rose to CHF 4 .3 million in 2018, including income from all group companies as at December 31, 2018 . This increase reflects higher net interest income on loans and sustained activity in our brokerage business . Our investments in wealth management companies also helped boost our bottom line . These stakes included Monaco Asset Management SAM (AuM of CHF 2 .7 billion), Hyposwiss Advisors SA (AuM of CHF 260 million), Stavanger Asset Management Ltd (AuM of CHF 56 million), and Fimanor Financial Management AG (AuM of CHF 33 million) .

We opened a new Hyposwiss Advisors branch in Zurich in September 2018, with three portfolio managers who serve a US and Canadian client base . This helped to increase our assets under management .

Key figures, consolidated group (CHF)

Net profit Operating revenueBalance sheet Assets EquityAssets under Management

2018

4.3 mio45.5 mio708 mio50.1 mio4.8 billion

2017

3.7 mio39.9 mio721 mio47.2 mio4.6 billion

15

CONCLUSION

▪ Hyposwiss Private Bank Genève SA stands for the fundamental values of stability, reliability, growth and a long-term view, based on a history of solid banking experience that dates back over a century . Hyposwiss focuses exclusively on providing customized wealth management services backed by a team of professional, loyal and multicultural experts . The synergies we have been able to generate from the client assets and human resources obtained through our acquisitions have made us a competitive financial institution . In today’s fast-changing market environment, we intend to continue developing our business by capturing the vast potential offered by digitized processes and services .

▪ Hyposwiss Directors, General Management and all teams are supported by active Partners that adhere to strict standards for managing risk in a controlled, yet dynamic and innovative, way . We aim to preserve and grow the wealth of our international clients by taking measured risks and using a variety of financial instruments – both conventional and alternative .

▪ Between now and 2021, we will continue implementing our organic and acquisition-driven growth strategy . Despite the turbulence of the financial markets crossed at the end of 2018 and following the strong rebound of the markets during the first quarter of 2019, we expect to remain profitable over the coming years, in line with our forecasts and intend to maintain our dividend payouts to shareholders .

▪ We would like to thank our partners and employees for their commitment and hard work . Their complementary skills and solid teamwork are essential to our success . By continuing to take a professional approach to everything we do, we will maintain our standing as an asset management firm that delivers consistent performance, led by a management team passionate about what they do .

▪ We would also like to thank our clients for their ongoing loyalty and trust . We will continue to provide them with the high-quality, personalized service they have come to expect from Hyposwiss .

Niels BOM OLESENChief Executive Officer

Solly S. LAWIChairmain ofthe Board of Directors

Activity

REPORT

17

HYPOSWISS ACTIVITY REPORT

GROWTH OF ASSETS UNDER MANAGEMENT

CONSOLIDATED KEY RESULTS IN 2018

Assets under management: CHF 4.8 billion Shareholders equity: CHF 50.1 million Net profit: CHF 4.3

In billion CHF

Hyposwiss GroupMonaco Asset Management SAM

2013

1 .4

2 .2

2014

3 .4

2 .5

2015

3 .2

2 .0

2016

4 .0

2 .5

2017

4 .6

2 .6

2018

4 .8

2 .7

Hyposwiss GroupIn million CHF

2013 2014 2015 2016 2017 2018

5'000

4’500

4’000

3’500

3’000

2’500

2’000

1’500

1’000

500

0

3’000

2’500

2’000

1’500

1’000

500

02013 2014 2015 2016 2017 2018

Monaco Asset Management SAMIn million CHF

1818

HYPOSWISS GROUP

TOTAL CONSOLIDATED CLIENTS' ASSETS AT 31 DECEMBER 2018: CHF 4.8 BILLION

Asset allocation as at 31.12.2018

Others

CHF

GBP

EUR

CAD

USD

Currency allocation as at 31.12.2018

53 .1%

2 .3%

1 .8%

19 .6%

10 .2%

12 .9%

Cash

Bonds and Bonds Funds

Other Funds and Structured products

Alternative Investments

Equities and Equity Funds

Metals and Commodities

Others

26%

1% 1%

27%

4%

33%

8%

19

2020

Economic

AND FINANCIAL OUTLOOK

21

DEVELOPED AND EMERGING COUNTRIES GROWTH FORECASTS

Global growth started to slow in 2018 due to tensions between China and the US

▪ After peaking in Q4 2017, at 4 .2%, GDP growth in volume started to slow . In 2018, it should average 3 .7% over the year (down from 3 .9% in 2017) and continue to slow in 2019 .

▪ In 2018, the diffusion effect of growth was weaker as the US adopted a protectionist policy . This led, inter alia, to a trade war with China . The three-month truce signed in December will end shortly and uncertainty regarding a global, sustainable agreement remains high . Additionally, other political risks (Brexit, European elections, situation in Italy, replacement of Mario Draghi at the head of the ECB, VAT hike in Japan, etc), coupled with the slowdown cycle in industry and trade are clipping investment and hence growth .

▪ In the wake of these risks, global growth should however benefit from (i) easing global financial conditions, resulting from a more accommodative monetary policy in the US, (ii) a more relaxed fiscal policy in many countries (China, Germany, France, etc .) and (iii) stabilisation of EM economic momentum . All in all, global growth should continue to slow to close to 3 .2% in 2019 .

ECONOMIC AND FINANCIAL OUTLOOK

Annual GDP growth(EM vs developed, %)

Growth gap (EM vs developed, %)

10

8

6

4

2

0

-2

-4

5

0

EM

Developed

World

1980

1980

1990

1990

2000

2000

2010

2010

2020

2020

% a/aIMF forecasts

22

DEVELOPED AND EMERGING COUNTRIES GROWTH FORECASTS

Advanced economies

US

Japan

UK

Eurozone

Germany

France

Italy

Spain

Switzerland

2 .2

1 .9

1 .8

2 .4

2 .2

2 .2

1 .6

3 .0

1 .6

2 .9

0 .7

1 .4

1 .8

1 .4

1 .5

0 .8

2 .5

2 .5

2 .3

0 .8

1 .4

1 .3

1 .3

1 .5

0 .2

1 .9

1 .5

2 .6

0 .3

3 .1

1 .3

1 .9

1 .0

0 .2

1 .4

2 .4

1 .6

0 .6

1 .8

2 .0

2 .2

1 .1

1 .1

3 .2

1 .6

2 .9

1 .4

2 .3

2 .1

1 .5

1 .0

0 .9

3 .4

1 .2

201920182017201620152014Real GDP growth in %

Long-term potentialgrowth rate

Global business cycle overview

Stronger growth dynamics

Weaker growth dynamics

UK

Business cycle

Japon

Italy

China

Australia

Canada

SwitzerlandFrance

South Korea

Eurozone

Germany

USA

EM Asia

World

China

India

Brazil

Mexico

Russia

Turkey

Indonesia

South Africa

6 .8

8 .2

1 .1

2 .0

1 .6

7 .4

5 .1

1 .2

6 .6

7 .2

1 .5

2 .0

2 .3

3 .0

5 .2

0 .7

6 .0

7 .0

2 .5

1 .9

1 .6

0 .2

5 .1

1 .6

7 .3

6 .9

0 .5

2 .8

1 .1

5 .2

5 .0

1 .5

6 .7

8 .0

-3 .3

2 .3

0 .3

3 .2

5 .0

0 .6

6 .9

7 .5

-3 .5

3 .3

-2 .7

6 .1

4 .9

1 .2

Emerging economies

20192018201720162015Real GDP growth in % 2014

23

USA

In 2018, the US boasted robust GDP growth, which has started to normalise however

▪ US economy should grow by about 2 .9% in 2018, the strongest performance among developed countries . This primarily reflects the strength of domestic demand, underpinned by high job creation (220k monthly average), unemployment rate at a 50-year’s low and wage growth in excess of 3% . Meanwhile, business investment benefited from D . Trump’s fiscal stimulus package (corporate tax rate cut) and the rise in corporate earnings . Such growth significantly exceeds its potential (2%), leading to an upturn in inflationary pressures (core inflation at 2 .2%) and justified a normalisation of monetary policy .

▪ However the tightening of financial conditions weighed down on growth towards the end of the year . In 2019, growth should ease back to around 2 .3% on average, penalised, among others, by slowing business investment . As productivity growth is putting a lid on modest inflationary pressure, the Fed has understandably already started scaling back its rate hike projections for 2019 . And, in the light of its latest statements, the Fed is very likely to leave rates unchanged until at least the end of H1 .

Job creation, 3m avg (L) Unemployment rate (R)

US unemployment rate and private sector job creation(in thousands)

201020082006 2012 2014 2016 2018 2020

%

10

9

8

7

6

5

4

400

200

0

-200

-400

-600

-800

-1'000

US unemployment rate and private sector job creation

2424

EUROZONE

Eurozone economic growth disappointed in 2018

▪ Unlike 2017, Eurozone GDP growth surprised on the upside . Eventually, economy will grow by only around 1 .8% (vs . 2 .4% forecast in February 2018) . The slowdown reflects (i) external factors (net exports have made a negative contribution since the end of 2017, whereas the contribution from the components of domestic demand remained stable overall); (ii) and domestic shocks (crisis in Italy, German automotive sector decline, Yellow Vests, etc .) . With growth remaining above potential, headline inflation increased slightly, although this is primarily due to energy prices, as illustrated by the decline since December .

▪ The eurozone’s catch-up potential remains significant, real GDP is quite close to the level at the end of 2007 . Nevertheless, on an annual basis (Q418 vs Q417) the slower trend is noticeable, with persistently negative momentum in industry (PMI manufacturing at the lowest point since 2014) . Therefore, with a weak growth carryover, GDP growth is unlikely to exceed 1 .5% over 2019 . Growth momentum stay uneven, as the beginning of 2019 was sluggish (potential US sanctions over the automotive sector, European and Spanish elections), before picking up subsequently .

– First, growth diffusion remains positive, demonstrating that the slowdown is limited only to some sectors . – Later, it will benefit from major fiscal stimulus in excess of 0 .4pp of GDP (of which about 0 .7-0 .8pt from German GDP) as well as from the impact of lower oil prices .

– Lastly, financial conditions will remain accommodative: inflation should ease back below 1 .3%, and while the ECB discontinued asset purchases in December as expected, it simultaneously lowered its GDP growth and inflation forecasts and started downplaying rhetoric . The ECB is expected to lose its stance further at the next meeting, which will contribute to containing the euro’s potential of an appreciation against the USD .

GDP growth (base 100 Q1-2008)

110

105

100

95

90

110

105

100

95

9020092008 2010 2011 2012 2013 20152014 2016 2017 2018

Germany

Spain

Italy

Portugal

France

Netherlands

Austria

Eurozone

107 .2

25

EMERGING COUNTRIES

China (40% of EM GDP) remains the main risk for emerging countries .

▪ lobal environment remained challenging in 2018 with a relatively pronounced slowdown in industrial momentum, which weighs down on global trade . In addition, emerging countries were plagued by the dollar appreciation, the US monetary policy tightening, the fall in commodity prices and the global upturn in risk aversion (trade war) . All this led to major capital outflows and the fall of EM currencies . Aimed at alleviating risks, most central banks in the region had to tighten monetary policy, thus contributing further to the deterioration of financial conditions .

▪ The trend is gradually reversing, as illustrated for instance by the PMI divergence between developed and emerging countries . Also US policy mix will play a smaller role in 2019, as the Fed will raise its key rates once at most and stay cautious going forward . In addition, with still muted inflation, EM do enjoy today greater leeway with respect to monetary policy .

▪ All in all, GDP growth in emerging countries is expected to slow somewhat in 2019 (below 4 .5% . vs about 4 .6% in 2018), although most of this results from the Chinese slowdown . If anything, growth should bounce back in Latin America, with an acceleration in Brazil and Argentina which is emerging from recession . We will be monitoring private debt momentum, especially in China .

56

54

52

50

48

46

44

42

40

Russia

China

India

Brazil

2016 2017 2018 2019

BRIC: manufacturing PMI

PMI index

2626

SWITZERLAND

Momentum is weakening and potential for acceleration in 2019 is limited .

▪ After five quarters of strong growth, Swiss economy slowed significantly in Q3 2018 (-0 .2% year over year), gripped by (i) a smaller contribution from foreign trade due to the slump in international trade and the appreciation of the Swiss franc . Indeed, the currency, which is highly correlated to risk aversion, appreciated by 4% in real terms during the year; (ii) investment downturn and (iii) tepid private consumption grappled by a slight upturn in inflation . Although a rebound is likely in Q4, it will remain contained (momentum is sluggish and the composite PMI plunged in January) . The Swiss economy is expected to grow by almost 2 .5% in 2018 (vs 1 .6% in 2017) .

▪ In 2019, momentum should settle down further as both the global and Eurozone economy will edge down while the Swiss franc remains overvalued . Although we cannot rule out an external shock that would buoy the Swiss franc, the currency should eventually depreciate (PPP gap, behavioural equilibrium model) . Domestically, consumer spending will benefit from the upturn in wages, underpinned by a strained labour market (unemployment rate lower than the Non-Accelerating Inflation Rate of Unemployment) and a downturn in inflation resulting from the fall in oil prices . All in all, the Swiss economy is unlikely to grow beyond potential, i .e . 1 .6% .

▪ Risks are on the downside and are essentially made of external factors (US slowdown, Brexit, relations between Switzerland and the EU as part of the framework agreement negotiations) .On the domestic front, it worth mentioning the following risks: the Federal election to be held in late October and the property market which appears at risk to the SNB .

%

30

20

10

0

-10

-20

-301975 1980 1985 1990 1995 2000 2005 2010 2015

Swiss franc real effective exchange rate (in %)

Mean deviation since 1972

Mean deviation over 5 years

Trend deviation

27

COMMODITIES

Performance should be range-bound and volatility lower .

▪ Following an overall positive 2017, 2018 turned out much more volatile . Indeed, excepting stable agriculture goods in the absence of major natural catastrophes, other commodities including base metals were hard hit as the second round of the economic slowdown sparked notably by Chinese slowdown as well as trade concerns took a heavy toll . If anything, the downturn in risk appetite and the fall in real interest rates by the end of the year made it possible for precious metals to recover since October . Finally, the group finished the year close to breakeven .

▪ Interesting enough, most of the commodities that were severely down in late 2018 had bounced back sharply early this year: the simultaneous rebound of oil and industrial metals resulted from a growing appetite for risk since year start . Going forward, industrial metals will rely much on Chinese growth which is expected to rise on the second half of 2019 onwards . Whereas agricultural commodities are more correlated to weather conditions since no structural unbalance in terms of fundamental, i .e . supply versus demand, is today visible . Finally, further dollar appreciation seems difficult to hold .

Energy

Precious metals

Industrial metals

Agricultural commodities

130

120

110

100

90

80

70

J F M A A S O N D J F MM J J

2018 2019

Commodity prices (S&P GSCI spotindex in USD — Normalized since April 01,2018 at base 100)

2828

OIL

More balanced market, however upside potential appears limited at least for now .

▪ 2018 was a bumpy year . After rising more than 25% in October, in the wake of shrinking global inventories and particularly of the large reduction in net speculative positions, oil prices ended the year down 20% at USD53 per barrel (Brent), after recording eight consecutive weeks of decline . The fall went far beyond the deterioration in economic fundamentals, the reason being a swing in sentiment going from fears of supply constraints (related to Iran sanctions) to fears of oversupply (higher output from Saudi Arabia, Russia and the US) at a time when global demand was slowing .

▪ In 2019, trend is slightly more positive . Oil producing countries have agreed to reduce output by 1 .2mbbl/d, and may cut it further . Meanwhile, on the demand front, the IEA forecasts a rise, i .e ., +1 .4mbbl/d after +1 .3mbbl in 2018, boosted by the decline in average price . Further down the road, markets are likely to stay more balanced . Inventories replenishing will moderate and oil should benefit from tighter supply as an outcome of recent fall in investments . Furthermore OPEC’s surplus has reached a low level . A price range of USD 60 to 70 per barrel in the next 12 months looks plausible . Hence, the main risk remains geopolitical .

Trend of energy prices

Oil prices Brent/WTI

S&P GSCI Energy index

25

35

55

16045

120

65200

30

40

100

60

180

50

140

70

75

80

85

220

240

260

Brent (R) WTI (R)

S&P GSCI Energy (L)

2017 2018 2019

29

GOLD

Positive outlook, although not exceptional .

▪ Gold has been on an uptrend since 2016, driven by the reacceleration of net purchases by central banks (currently 571 tonnes, a new record) . That said, the yellow metal had a turbulent year in 2018 . After gaining 10% in the first three months of the year due to geopolitical uncertainty, it went to free fall when both real interest rates and the dollar rose, before climbing again, propped up by mounting trade tensions, and declining real rates together with risk appetite as financial turmoil was growing at year end . Ultimately, the price of bullion closed the year down by a slight 1 .4% at USD1, 282 .00 / oz .

▪ Gold price continued to surge early 2019 despite the rebound in risk appetence . Upside potential appears however more balanced in the short run: real rates have already declined significantly, downside risk on the dollar is more limited and risk of a straight trade war is ebbing . Further out, gold will continue to play a key role in terms of diversification and hedging .

Gold price and MSCI World

Gold (L)

MSCI World, USD (R)

(USD)

2000

1500

1000

500

0

600

500

400

300

200

100

2002 2004 2006 2008 2010 2012 2014 2016 2018

MSCI index

USD

CHF

GBP

EUR

Gold performance in different currencies (USD, GBP, EUR, CHF) Base 100 01 .01 .2008

240

220

200

180

160

140

120

100

80

2008 2010 2012 2014 2016 20172009 2011 2013 2015 2018

30

EXCHANGE RATES

The euro is fairly valued, while the dollar remains expensive .

▪ On the back of global slowdown and receding risk appetite, some safe-haven currencies such as the dollar (+5%), the yen (+7%) and the Swiss franc (+4%) have appreciated significantly to the detriment of the euro (+0 .5%) and sterling (-1 .5%) . The euro ended the year virtually stable in effective terms . On one hand it rose relative to emerging currencies (+33% vs . the Turkish lira for instance) on the other hand it lost close to 5% against the dollar . Overall, it was grappled by the economic slowdown in the region and the resurgence of political risk, particularly in Italy .

▪ While the dollar-bull positioning stays on track, the single currency did gain ground at the end of the period with further stabilisation in macroeconomic momentum as well as real rates in relative terms . Globally, the euro valuation appears fair unlike the dollar which is relatively expensive based on various metrics (mean deviation, behavioural exchange rate) and may appreciate slightly in 2019 . Whereas the Swiss Franc real effective exchange rate veered away from the long-term average in 2018, it remains however lower than levels in 2015/2017 and its overvaluation has shrunk based on the behavioural equilibrium model .

Real effective exchange rate(base 100 as at 01/01/2000)

160

140

120

100

80

60

40

20022000 2004 2006 2008 2010 2012 2014 2016 2018

Euro

Swiss franc

Yen

SterlingDollar

Yuan

31

CENTRAL BANKS

Interest rates will normalise but only gradually

▪ In 2017, global growth accelerated, coupled with a reduction in surplus manufacturing capacity, which led central banks, especially the Fed, followed by EM central banks, to safeguard their currencies and normalise monetary policy in 2018 . But the tightening of financial conditions and the materialisation of the US and European slowdown at the end of the year prompted them to ease their stance significantly .

– FED: Faced with a gradual acceleration in inflation, it raised the key rate by 100 basis points at 2 .50% . With inflation edging down at the end of the year, in December 2018 the Fed scaled back its rate hike projections for 2019 (from 3 to 2) before confirming a more accommodative bias (adjusting down the balance sheet if necessary), suggesting that it would leave rates unchanged at least until the end of the first half of 2019 . A further rate hike cannot be ruled out at a later stage . The markets currently price in a 10bp cut in 2020, which looks today optimistic .

– BCE: As the Eurozone is less in advance in the cycle, with core inflation stable at 1%, the ECB did not start normalising monetary policy until the second half of this year, with asset purchases slowing down gradually till the end of the program expected to hold in December . Initially, the end of the asset purchases were expected to take place before rate hikes, sometime after the summer of 2019 . Since then, the ECB has lowered its inflation forecasts to 1 .6% in 2020 . At the last meeting, the ECB did anchor expectations and maintain financial conditions consistent with the economic slowdown in the eurozone .

– BoJ: in Japan, inflation, just like economic growth, moderated at the end of 2018 . The absence of specific shocks (typhoons, earthquakes, etc) augurs for growth to bounce back in the short run, albeit at a slower pace (the PMI Manufacturing is at a 32-month low) . In the meantime, core inflation was at a mere 0 .4% over one year in January 2019 ahead of the VAT hike (from 8 to 10%) next October . All in all, the BoJ governor has warned that if the strength of the yen were to jeopardise inflation target, the BoJ may decide to step up its support .

– PBoC: in order to boost activity, the central bank was very pro-active in 2018 . It cut the banks’ reserve requirement ratio four times (from 15% in April 2018 to 11 .50% at end-February 2019, the lowest level since 2007) . The PBoC also proved innovative: (i) medium term credit facilities for private companies; (ii) bank perpetual bond swap in exchange for state assets in order to help banks recapitalise . Thanks to the Fed’s unchanged policy, inflation below target and the appreciation of the renminbi, the PBoC still has leeway in 2019 .

Size of central banks' balance sheets in relation to GDP

Bank of Japan

Bank of China

SNB

FED ECB

120

100

80

60

40

20

% of GDP

20162015201420132012 2018 20192017

3232

BOND MARKET

Sharp downturn at year end

▪ In the US, 10-year Treasury yields were spurred until November driven by above-potential growth and the normalisation of monetary policy (at 3 .25%, +80bp over 2018) . They then declined steadily as investors repriced rate hike expectations in 2019 . Ultimately, the annual increase is just +30bp and the 2-10-year slope ended the year at about 13bp, the lowest level since 2007 . With this regard, an inversion of the yield curve and not a flattening is believed as an indicator of recession .

▪ In Europe, the momentum was less pronounced, but the downtrend was rather clear-cut, as economic activity did start slowing, already in Q1 and inflation remained moderate (1% ex food and energy) since then . Altogether, the Bund declined 17bp, at 0 .25%, and the US-Europe spread stood at 250bp, the widest since 1989 . In France, the decline was less severe, with the OAT declining 8bp, at 0 .71%, and the spread vs the Bund widening by 20bp, reflecting the impact of social unrest and the ensuing fiscal response . Italy lowered its deficit target for 2019 under pressure from financial markets, leading to significant yield reduction . That said, the spread was still 140bp wider than the pre-crisis level, stirred up by persistently high uncertainties .

Sovereign bond yields (%) %

16

14

12

10

8

6

4

2

0

-2

20001995 2005 2010 2015 2019

Switzerland

Italy

US

Germany

UK

33

Corporate bond yields (%)

20022001 2004 2006 2008 2010 2012 2014 2016 2018

%

30

25

20

15

10

5

0

HY USIG US

IG Z€

HY Z€

▪ In the near term, the persistent gap between bond yields and global economic activity suggests that some downward pressure still remains, but overall, with the repricing at an advanced stage (short-term rate forecasts have returned to the early-2018 level and the term premium to that of mid-2016), the rates outlook appears more balanced in the short term and skewed to the upside in the medium term . More specifically in the eurozone, (i) there is no risk of a sudden surge in European bond yields even when the ECB discontinues asset purchases; (ii) the change in the distribution of the ECB’s equity will favour Portugal in relative terms; (iii) the replacement of Mario Draghi at the head of the ECB in October is a risk, even though most contenders’ recent statements were relatively supportive .

▪ The credit market had a disappointing performance in 2018 for both HY segment (-1% in the US and -4% in the Eurozone), and IG group (-1% and -2%) . This depicts concerns over the economic cycle, but also the deterioration in the ratio of net rating revisions (-2% in Q4 2018 in Europe and -9% in the US, the lowest level since Q2 2016) .

▪ All in all, the market swung much more than suggested by the deterioration in fundamentals . Hence, despite the first signs of normalisation by year end, the credit market, especially Investment grade bonds, remains compelling, as the default rate is expected to remain low (moderate risk of recession in the US in the next 12 months) .

3434

EQUITY MARKETS

Bull market not over yet, but lower expected returns

▪ While the equity markets worldwide demonstrated some resilience until last November, the combination of early-mentioned risks sparked a reversal point in risk appetite and propelled a number of them into a bear market (i .e ., fall over 20% since the peak) between November and December (MSCI World, MSCI EM, Eurostoxx, Nikkei) . The S&P 500 finished quite close (-19 .8%) .

▪ Over the whole year, performances (in local currency) range from -6% for the S&P 500, to -18% for the TOPIX, with -13% for the Eurostoxx despite the euro depreciation -4 .5% relative to the dollar . Interestingly enough, these disappointing performances occurred (i) at a time of sudden surge in volatility; and (ii) in a context of strong EPS momentum, fostered by a sharp increase in US EPS (+24%), following the president Trump’s tax reform .

▪ As a result, valuations contracted significantly . The 12-month forward P/E thus returned to 4% below the long-term average in the US and 16% in Europe . The risk premium also bounced back sharply, at 8% in Europe (the highest level since 2012) .

▪ A pricing of a global recession, 40% of probability, seems today excessive and valuations worldwide are now back to the range of neutral to compelling (the US markets alone have shot up above their long-term average) . Nevertheless, we remain cautious in 2019: so far this year equity markets have bounced back with great scope (MSCI World up 11% in USD), while global GDP will grow moderately and EPS forecasts for 2019 are subject to downward revisions particularly in Europe . All in all, the bull market is not over yet and emerging markets would emerge as outperformers . That said, risk-adjusted returns are expected to be modest, which is consistent with the current advanced-stage cycle and thus warrants a more conservative stance for the next 12 months . Finally, the recent outperformance of EM markets has almost offset last year’s decline, narrowing the discount gap to global stocks .

120

100

80

60

40

20

300

250

200

150

100

50

S&P500, Eurostoxx, MSCI World and EM in USD except for Eurostoxx (EUR)

2002 2004 2006 2008 2010 2012 2014 2016 2018

MSCI Em, (R)

MSCI World

S&P 500Eurostoxx

35

STOCK MARKET INDICES

North / Latin America

Dow Jones Industrial AVG - USD

Standard and Poor's 500 - USD

S&P/TSX COMPOSITE - CAD

Mexican Stock Exchange - MPS

Brasil Ibovespa Sao Paulo - BRL

Europe / Africa / Middle East

EURO STOXX 50 - EUR

FTSE 100 - GBP

CAC 40 - EUR

DAX - EUR

IBEX 35 - EUR

FTSE/MIB - EUR

AEX Amsterdam Index - EUR

OMX Stockhol 30 - SEK

Swiss Market - CHF

Asia / Pacific

Nikkei 225 - JPY

Hong Kong Hang Seng - HKD

Standard and Poor's/Austr - AUD

12 .4%

14 .0%

13 .2%

4 .4%

8 .6%

12 .2%

8 .1%

14 .4%

9 .2%

8 .8%

16 .2%

13 .4%

10 .3%

12 .4%

5 .95%

13 .9%

9 .3%

Perf. YtD (in local currency)

2018 Q1-2019

-6 .7%

-7 .0%

-12 .3%

-16 .0%

15 .0%

-14 .7%

-12 .4%

-11 .9%

-18 .3%

-15 .4%

-16 .1%

-11 .1%

-10 .7%

-10 .1%

-12 .1%

-14 .8%

-6 .8%

Sources: (1) World Bank, G20, Swiss National Bank (SNB), International Monetary Fund (IMF), Ernst & Young SA, Deloitte SA, OCDE . (2) Economic and Financial Outlook, in cooperation with Les Cahiers Verts de l'Economie/SOCOFI

Consolidated

ACCOUNTS

37

CONSOLIDATED ACCOUNTS

1 Includes: net result from interest operations, result from commission business and services, result from trading activities and the fair value option and other result from ordinary activities .

(CHF 1'000)Net profit

Operating result

Total operating income1

Total operating expenses

Total balance sheet

Total assets under management

Shareholders' equity

Number of employees (full-time equivalents)

Operating expenses / income ratio

Ratio Tier 1

20184'331

5'917

45'497

35'487

707'701

4'754'026

50'118

103

78%

30 .1%

20173'667

4'787

39'905

32'353

721'125

4'618'299

47'196

95

81%

23 .8%

3838

CONSOLIDATED BALANCE SHEET

ASSETS

Liquid assets

Amounts due from banks

Amounts due from customers

Mortgage loans

Trading portfolio assets

Positive replacement values of derivative financial instruments

Financial investments

Accrued income and prepaid expenses

Non-consolidated participations

Tangible fixed assets

Intangible assets

Other assets

Total assetsTotal subordinated claims

- of which subject to mandatory conversion and / or debt waiver

LIABILITIES

Amounts due to banks

Amounts due in respect of customer deposits

Negative replacement values of derivative financial instruments

Accrued expenses and deferred income

Other liabilities

Provisions

Reserves for general banking risks

Share capital

Capital reserve

Retained earnings reserve

Currency translation reserve

Consolidated profit

Total liabilitiesTotal subordinated liabilities

- of which subject to mandatory conversion and / or debt waiver

OFF-BALANCE-SHEET TRANSACTIONS

Contingent liabilities

Irrevocable commitments

Obligations to pay up shares and make further contributions

Credit commitments

31 .12 .2018

CHF

74'798'433

108'976'420

385'828'492

15'759'000

36'756

4'904'415

102'808'657

4'573'253

670'227

3'419'539

5'424'792

501'430

707'701'414-

-

35'059'981

608'522'810

4'993'873

7'984'404

805'033

217'512

-

27'500'000

1'685'610

16'655'718

(54'030)

4'330'503

707'701'414-

-

14'155'628

3'047'918

-

-

31 .12 .2017

CHF

30'949'514

117'177'302

368'433'145

13'769'000

454'151

4'168'829

170'360'165

4'751'983

734'085

2'051'693

6'947'446

1'327'737

721'125'050-

-

15'183'723

646'928'356

4'238'764

6'354'675

1'206'500

17'513

-

27'500'000

1'685'610

14'363'584

(20'809)

3'667'134

721'125'050-

-

13'645'586

3'209'280

-

-

39

CONSOLIDATED INCOME STATEMENT

RESULT FROM INTEREST OPERATIONS

Interest and discount income

Interest and dividend income from trading portfolios

Interest and dividend income from financial investments

Interest expense

Gross result from interest incomeChanges in value adjustments for default risks and losses from interest operations

Subtotal net result from interest operations

RESULT FROM COMMISSION BUSINESS AND SERVICES

Commission income from securities trading and investment activities

Commission income from lending activities

Commission income from other services

Commission expense

Subtotal result from commission business and services

RESULT FROM TRADING ACTIVITIES AND THE FAIR VALUE OPTION

OTHER RESULT FROM ORDINARY ACTIVITIES

Result from the disposal of financial investments

Income from participations

- of which, participations recognised using the equity method- of which, from other non-consolidated participations

Other ordinary income

Other ordinary expenses

Subtotal other result from ordinary activities

8'739'849

6'272

3'352'822

417'800

12'516'743 -

12'516'743

31'929'171

272'533

1'114'049

(4'630'419)

28'685'334

4'782'755

72'977

(30'569) (30'569)

-

-

(530'217)

(487'808)

2018CHF

2017CHF

6'119'747

3'712

1'442'910

428'306

7'994'675 -

7'994'675

29'795'830

204'479

878'861

(3'274'311)

27'604'859

4'172'512

(26'640)

146'821 146'821

-

12'869

-

133'050

4040

CONSOLIDATED INCOME STATEMENT

OPERATING EXPENSES

Personnel expenses

General and administrative expenses

Subtotal operating expensesValue adjustments on participations and depreciation and amortisation of tangible fixed assets and intangible assets

Changes to provisions and other value adjustments, and losses

Operating resultExtraordinary income

Extraordinary expenses

Changes in reserves for general banking risks

Taxes

Profit (result of the period)

(25'784'210)

(9'702'995)

(35'487'205)

(3'760'364)

(332'679)

5'916'77792'515

-

-

(1'678'789)

4'330'503

(23'991'529)

(8'361'546)

(32'353'075)

(2'591'394)

(173'832)

4'786'79553'745

-

-

(1'173'406)

3'667'134

2017CHF

2018CHF

41

CASH FLOW STATEMENT

Cash flow from operating activities (internal financing)

Result of the period

Changes in reserves for general banking risks

Value adjustments on participations, depreciation and amortisation of tangible fixed assets and intangible assets

Provisions and other value adjustments

Change in value adjustments for default risks and losses

Accrued income and prepaid expenses (other assets included)

Accrued expenses and deferred income (other liabilities included)

Previous year's dividend

Subtotal

Cash flow from shareholder's equity transactions

Share capital / participation capital / dotation capital, etc .

Recognised in reserves

Change in own equity securities

Subtotal

Cash flow from transactions in respect of participations, tangible fixed assets and intangible assets

Participations

Other tangible fixed assets

Intangible assets

Subtotal

Cash flow from banking operations Medium and long-term business (> 1 year)

Financial investments

Short-term business

Amounts due to banks

Amounts du in respect of customer deposits

Negative replacement values of derivative financial instruments

Amounts due from banks

Amounts due from customers

Mortgage loans

Trading portfolio assets

Positive replacement values of derivative financial instruments

SubtotalLiquid assets

SubtotalTotal

4'330'503

-

3'760'364

200'000

-

1'006'561

1'228'262

-

10'525'690

-

-

-

-

63'858

-

-

63'858

67'551'508

19'876'258

-

755'109

8'200'882

-

-

417'395

-

96'801'152-

-107'390'700

-

-

-

-

4'418

-

-

1'375'0001'379'418

-

33'221

-

33'221

-

2'305'657

1'297'006

3'602'663

-

-

38'405'546

-

-

17'395'347

1'990'000

-

735'586

58'526'479

43'848'919

43'848'919107'390'700

31 .12 .2018 31 .12 .2017

Cash in-flow CHF

Cash out-flow CHF

Cash out-flow CHF

Cash in-flow CHF

-

-

-

-

1'206

-

-

1'375'0001'376'206

-

-

-

-

194'260

945'633

3'565'851

4'705'744

-

-

22'565'322

2'408'874

-

134'609'091

4'329'000

383'331

-

164'295'618-

-170'377'568

3'667'134

-

2'591'394

-

-353'897

805'230

-

7'417'655

-

47'291

-

47'291

-

12'639

-

12'639

47'177'589

5'397'214

-

-

86'960'994

-

-

-

2'748'934

142'284'73120'615'252

20'615'252170'377'568

4242

STATEMENT OF CHANGES IN EQUITY

(CHF 1'000)

Equity at start of current periodAllocation to retained earnings reserve

Foreign exchange differences

Dividends and other distributions

Other allocations to (transfers from) the reserves for general banking risks

Profit (result of the period)

Equity at end of current period

27'500-

-

-

-

-

27'500

1'686-

-

-

-

-

1'686

14'3643'667

-

(1'375)

-

-

16'656

--

-

-

-

-

-

(21)-

(33)

-

-

-

(54)

3'667(3'667)

-

-

-

4'331

4'331

47'195-

(33)

(1'375)

-

4'331

50'118

Shar

e ca

pita

l

Capi

tal r

eser

ve

Reta

ined

ear

ning

s re

serv

e

Rese

rves

for g

ener

al

bank

ing

risks

Curr

ency

rese

rve

Resu

lt of

the

perio

d

Tota

l

43

1 - NOTES ON THE COMPANY NAME, LEGAL FORM AND HEAD OFFICE OF THE GROUP

Hyposwiss Private Bank Genève SA is the parent company of the Hyposwiss Group (hereinafter "The Group") . Hyposwiss has two subsidiaries, Mirelis Advisors SA, Genève and Fimanor Financial Management AG, Zurich, and a representative office in Tel Aviv, Israel and holds minority interests in Monaco Asset Management SAM, Monaco and Stavanger Asset Management Ltd, Stavanger, Norway .

Hyposwiss’ wholly-owned subsidiary, Mirelis Advisors SA Geneva, is registered with the US Securities and Exchange Commission (SEC) as a financial adviser providing asset management services for US citizens and residents . Fimanor Financial Management AG, Zurich is an independent asset manager affiliated with a self-regulatory organisation recognised by FINMA .

Hyposwiss holds minority ownership interests in the capital of asset management companies located in Monaco and Norway .

The group’s business scope includes asset management, securities trading and related services .

Number of employeesAt the end of 2018, the Group had 109 employees (102 .9 full-time equivalents), compared to 101 employees (94 .6 full-time equivalents) at the end of 2017 .

2 - CONSOLIDATION, VALUATION AND AC-COUNTING PRINCIPLES

Basic principles The Group’s financial statements are in accordance with the Swiss Code of Obligations,

the Swiss federal act on banks and savings banks, its implementing ordinance, and FINMA’s “Accounting rules for banks, securities dealers, financial groups and conglomerates” (ARB) as set out in its Circular 2015/1 . The consolidated financial statements have been established to present the economic situation of the Group such that a third party can form a true and fair view .

General valuation principles Assets and liabilities, as well as off-balance sheet items mentioned under a single heading, are evaluated individually .

Consolidation principlesScope and method of consolidationThe scope of consolidation includes the parent company and entities in which the Group holds more than 50% of the voting rights, as well as minority participation in which the Group has a significant influence . A list of fully integrated, equity and non-consolidated participations appears in Annex 4 .6 .

The Group companies are consolidated according to the full consolidation method . The subsidiaries are consolidated as of the date of effective transfer of control .

Minority participations between 20% and 50% interests are consolidated in accordance with the equity method .

Participations under 20% are not consolidated but included in the statement and valued at the date of acquisition, minus the necessary value adjustments .

December 31 is the closing date uniformly determined by all companies concerned with consolidation .

NOTES TO THE CONSOLIDATED 2018 FINANCIAL STATEMENTS

44

Transaction accountingAll transactions are booked as of the transaction date and are valued as of that date towards the calculation of results . All transactions concluded but not yet executed are entered in the balance sheet as of the date they are concluded .

Foreign currency conversion and precious metalsAccounts in foreign currencies from consolidated companies are converted to CHF using the exchange rate in effect on the date of the closing of the accounts, except for the capital, which is converted at the historical rate . Revenues and charges are converted at average monthly exchange rates . The main exchange rates used to convert foreign currencies and precious metals at closing date are as follows:

USD

EUR

GBP

Once of gold

0 .9857

1 .1259

1 .2505

1'259 .45

0 .9771

1 .1717

1 .3204

1'273 .89

31 .12 .2018 31 .12 .2017

Liquid assets, amounts due from banks and from customers, amounts due to banks and due in respect of customers depositsThese elements are recorded in the balance sheet at their nominal value . The value adjustments for doubtful loans are recorded as deductions of the amount due from customers .

Trading portfolio assetsSecurities and precious metals destined for trading are evaluated and recorded on the balance sheet at fair value . Profits and losses arising from the trading portfolios are recorded in the income statement under “Result from trading activities and fair value option” .

Income from trading portfolio interest and dividends is presented as income in the balance sheet .

Financial derivative instrumentsTrading portfolio assetsAll financial derivative instruments are valued at fair value . Positive or negative replacement values are reported on the balance sheet . The fair value results either from the price in an efficient and liquid market, or from the price offered by the market makers . Realized or unrealized results from transactions with financial derivative instruments for trading purposes or on behalf of clients are recorded as “Results from trading activities and the fair value option” .

Hedging instrumentsThe Group can use financial derivative instruments to reduce the risk of exchange rate fluctuations in its management of assets and liabilities . Such hedging transactions are valued by applying the same principles as are used with underlying hedging transactions . The results of hedging transactions are carried under the same account as the one that carries results for the hedged transaction .

Financial investmentsDebt instruments that are to be kept until maturity are listed in the balance sheet at amortized cost . Gains and losses due to a sale or an early redemption are accounted for proportionally and taking into account the original maturity date in the categories “Other Assets” and “Other Liabilities” . Changes in value related to default risk are registered immediately in the category “Changes in value adjustments for default risks and losses from interest operations” .

Debt instruments not marked for keeping until maturity are valued using the lowest value . The changes in value are recorded under “Other ordinary expenses” or “Other ordinary income” . A subsequent increase in the value of the security can be recorded up to the acquisition cost . This value adjustment is also recorded under “Other ordinary expenses” or “Other ordinary income” . Precious metals are valued at the applicable market price prevailing at the balance sheet date . Equity securities are valued on the principle of the

45

lowest value . Value adjustments are carried under “Other ordinary expenses” or “Other ordinary income” .

Non-consolidated participationsThese participations are valued individually at cost, less the economic necessary value adjustment .

Tangible fixed assetsInvestments in tangible fixed assets are capitalized as an asset if they are used for more than one accounting period and are recognised at acquisition cost .

Existing fixed assets are recorded in the balance sheet at cost, less any accumulated depreciation . They are depreciated linearly over the period of their estimated operating life . The value is reviewed annually . If this review reveals a change in an asset’s estimated operating life or a reduction in its value, the Group depreciates the residual book value accordingly or books impairment . Depreciation and impairments are charged to the position “Value adjustments on participations and depreciation and amortization of tangible fixed assets and intangible assets” in the income statement .

The estimated operating life for the various categories of fixed assets is as follows:

- IT equipment: maximum 3 years- Other fixed assets: maximum 5 years- Renovation costs: for the duration of the

lease, but maximum 8 years .

Gains or losses realized from the sale of tangible fixed assets are recorded under “Extraordinary income”, or “Extraordinary expenses” .

Intangible assetsIf the total cost of an acquisition is higher than the net assets purchased, the difference is considered as goodwill . Goodwill is amortised linearly over a period of 5 years .

Accrued income and prepaid expensesAssets and liabilities that result from interest, other profits and charges and other criteria in a specific time frame are presented in the accrued income and expenses section of the balance sheet .

TaxesTaxes are calculated on the Group entities’ income and capital; a deferred tax is calculated on the reserves . Taxes due on profits are carried as liabilities under “Accrued expenses and deferred income” . Deferred taxes resulting from temporary differences between the fiscal values and book values of assets and liabilities are recorded as deferred taxes under "Provisions" in the balance sheet .

Provisions For all potential and identifiable risks existing at the balance sheet date, specific provisions are constituted according to the principle of prudence . Individual valuation adjustments are booked directly to the corresponding position on the asset side . The provisions made to cover risks are entered on the balance sheet under “Provisions” .

Notes on non-performing loansLoans for which interest payments are more than 90 days overdue are classified as non-performing . The Group does not carry non-performing and/or doubtful loans separately in the income statement, booking them instead directly to the position “Changes in value adjustments for default risks and losses from interest operations” .

Reserves for general banking risksTo cover risks related to banking activities that are not covered by specific provisions, the Group allocates some “Reserves for general banking risks” . These reserves are part of shareholders’ equity and are subject to a deferred tax .

46

Pension schemes The terms “Pension schemes” include all plans, institutions and systems which give social benefits in case of retirement, death or disability of the Group’s employees .

An annual analysis is conducted to determine if there is in each pension schemes an economic benefit (surplus) or an economic obligation (deficit) other than the contributions paid and any related adjustments . In Switzerland, this analysis is carried out based on the financial statements of the pension schemes established in accordance with Swiss GAAP RPC 26 . Obligations are carried in the balance sheet under “Provisions” while the economic benefits are recorded in “Other assets” . The change in value of the benefits/obligations compared to the previous year is recorded as “Personnel expenses” in the income statement .

Contingent liabilities, irrevocable commitments, liabilities to pay in full and to make additional paymentsThese elements are presented in the off-balance sheet transactions at their nominal value . For foreseeable risks, the Group constitutes provisions that are carried as liabilities .

Modification of accounting and evaluation principlesNo changes were applied to the balance sheet and the evaluation principles in 2018 .

Particular events and events that occurred after the balance sheet closing dateThere were no particular events or events that occurred after the balance sheet’s date that could have an impact on the financial statements as of 31 December 2018 .

3 - RISK MANAGEMENT

The parent company has a risk management policy that incorporated all the regulatory obligations and specifies their implementation in the companies of the Group . The Board of Directors of Hyposwiss Private Bank Genève SA conducts

the annual assessment of the Group’s exposure to risks and attempts to limit their impact .

The risk management policy regarding credit risk and market risk is reviewed annually by the Management of the parent company . Each category of risk is assigned a precise limit, and the compliance with these limits is constantly monitored .

A Management Information System (MIS) allows members of management to be regularly informed on the Group’s assets and liabilities, financial situation, cash flows and results, as well as related risks .

Default RiskThe credit policy encompasses the management of downside risks of all commitments with counterparties, should they be unable to reimburse .

Credit risk relating to customersThis credit activity is limited to advances to customers fully secured by easy marketable assets . Values are reassessed and securities are monitored daily .

Credit risk to banking counterpartiesThe Group selects correspondents and counterparties with solid financial bases .

Country-related risksThe Group abstains from cultivating active relations with counterparties in countries with high risks, as determined by accredited credit agencies . Countries with deficient credit ratings are excluded from the Group’s field of activities . Country risks are assessed periodically and appropriate provisions are made for each case in accordance with predefined criteria .

Interest rate riskThe Group is not significantly exposed to interest rate risk . As customer deposits do not bear interest, the Group is mainly exposed to investment shortfalls .

47

Market risksMarket risk results from a potential loss due to fluctuations in foreign exchange rates, interest rates and market values of trading positions and other balance sheet positions . Trading positions are subject to limits and are assessed on a daily basis . The Group holds currency positions to meet clients’ demands .

Liquidity riskThe liquidity risk is defined as the risk for the Group of being unable to meet its payment obligations at any given moment . Each entity controls a comfortable level of liquidity related to regulatory requirements . The aim of liquidity-risk management is to ensure that the Group can continue to meet its commitments at all times, particularly if an event were to occur within the Group or the broader market that would have a significant adverse effect on the Group's capacity to obtain funding .

The Group manages the liquidity risks to which it is exposed in keeping with qualitative and quantitative requirements (i .e . it has adopted principles for managing and monitoring liquidity risk and liquidity ratios) .

The Group is required to have enough high-quality liquid assets to meet its liquidity needs over a 30-day period . The resulting liquidity ratio is monitored regularly and calculated automatically by the dedicated system .

The minimum liquidity coverage ratio required by FINMA was 90% at 31 December 2018 . To ensure it has sufficient liquidity, the Group also applies an additional buffer of 20% .

At least once per year, the Group conducts a stress test to identify and quantify the impact that the least plausible extreme scenarios would have on cash inflows and outflows and on the Group's liquidity position . Both the Bank and the Group ensure strict compliance with legally required liquidity ratios .

Operational risksOperational risks are defined as "Risks of direct or indirect loss resulting from an inadequacy or a failure related to procedures, human factors, systems or external events" . Procedures and internal directives on the organization and controls allow the Group to limit those risks .

Compliance and legal risksThe Compliance Officer monitors the Group’s compliance with the applicable laws and regulations and with the due diligence obligations imposed on financial intermediaries . The Compliance Officer monitors ongoing legislative developments of the relevant supervisory authorities as well as government, parliament and other organizations . The Compliance Officer also ensures that internal directives are adapted to comply with any new laws and regulations .

Notes regarding the methods applied for the identification of default risk and for the determination of the needs in value adjustmentWhen a client’s or a group’s liability exceeds the authorised limit, when an account shows a debit balance without having a liability limit, or when the collateral value falls below the established limit, the credit department informs the relationship manager to take corrective measures under supervision from the Credit Committee . Should the debtor be unlikely to meet his obligations, the loan becomes impaired . A specific value adjustment will be booked on a case-by-case basis upon decision by competent bodies, after a proper valuation of any collateral securities .

Notes regarding the evaluation of credit securities, particularly of important criteria applicable to the market value and collateral values . Loans are granted essentially on a secured basis in the form of lombard loans with readily marketable securities as collateral . Credit limits depend on the nature, the solvability and the negotiability of the security .

48

Business policy when using financial derivative instrumentsThe major part of trading derivative instruments results from fixed-term currency exchange transactions performed at the clients’ request . The Group may use financial derivative instruments for the purposes of its assets and liabilities management in order to reduce its exposure to interest rate and currency exchange risks . These transactions are recorded in accordance with the detailed principles of derivative instruments as described in the section “Consolidation valuation and accounting principles” .

49

Loans (before netting with value adjustments)

Amounts due from customers

Mortgage loans

- Residential property

Total loans (before netting with value adjustments)

31.12.201831.12.2017

Total loans (after netting with value adjustments)

31.12.201831.12.2017

Off-balance-sheet

Contingent liabilities

Irrevocable commitments

Total off-balance-sheet

31.12.201831.12.2017

Impaired loans / receivables

31.12.201831.12.2017

Secured by mortgage

Type of collateral

Other collateral

Unsecured Total

-

15'759

15'759

15'75913'769

15'75913'769

-

-

--

Gross debt amount

1'5401'451

385'222

-

-

385'222368'200

385'222368'200

10'476

1'626

12'10213'718

Estimated liquidation value

of collateral

--

2'146

-

-

2'1461'685

606233

3'680

1'422

5'102

3'137

Net debt amount

1'5401'451

387'368

15'759

15'759

403'127383'654

401'586382'202

14'156

3'048

17'204

16'855

Individual value

adjustments

1'5401'451

4 - BALANCE SHEET RELATED INFORMATION

4 .1 Presentation of collateral for loans/receivables and off-balance-sheet transactions, as well as impaired loans/receivables (CHF 1'000)

50

4 .2 Breakdown of trading portfolios and other financial instruments at fair value (Assets and liabilities) (CHF 1'000)

4 .3 Presentation of derivative financial instruments (Assets and liabilities) (CHF 1'000)

Assets

Trading portfolio assets

Debt securities, money market securities / transactions

- of which, listed

Equity securities

Precious metals and commodities

Other trading portfolio assets

Other financial instruments at fair value

Debt securities

Structured products

Other

Total assets

- of which, determined using a valuation model

- of which, securities eligible for repo transactions in accordance with liquidity requirements

Foreign exchange/precious metals

Forward contracts

Options (OTC)

Total before netting agreements

31 .12 .2018

- of which, determined using a valuation model

31 .12 .2017

- of which, determined using a valuation model

37

37

-

-

-

-

-

-

37

-

-

4'540

364

4'904

4'904

4'169

4'169

711'667

82'331

793'998

793'998

717'779

717'779

-

-

-

-

-

-

31 .12 .2018 31 .12 .2017

4'630

364

4 994

4 994

4 239

4 239

-

-

-

-

-

-

-

-

-

-

-

-

Posit

ive

repl

acem

ent

valu

es

Trading instruments Hedging Instruments

Cont

ract

volu

me

Neg

ativ

ere

plac

emen

tva

lues

Neg

ativ

ere

plac

emen

tva

lues

Posit

ive

repl

acem

ent

valu

es

Cont

ract

volu

me

302

298

140

12

-

-

-

-

454

-

-

51

Positive replacement values (after netting agreements) 3'432

Banks and securities dealers

-

Central clearing houses

1'472

Other customers

The Group does not practice netting .

Breakdown by counterparties (CHF 1'000)

4 .4 Breakdown of financial investments (CHF 1'000)

Debt securities- of which, intended to be held to maturity

- of which, not intended to be held to maturity (available for sale)

Equity securities - of which, qualified participations *

Precious metalsReal estateTotal- of which, securities eligible for repo transactions

in accordance with liquidity requirements

80'87767'019

13'858

1'929-

20'924-

103'730

5'491

80'83267'002

13'830

1'053-

20'924-

102'809

5'462

31 .12 .201831 .12 .2018

Book value Fair value

31 .12 .201731 .12 .2017

* at least 10 % of capital votes

145'551131'659

13'892

1'682-

23'127-

170'360

5'462

145'516131'639

13'877

3'388-

23'127-

172'031

5'531

5252

4 .4 .1 Breakdown of counterparties by rating S&P (CHF 1'000)

From AAA to AA -

From A + à A -

From BBB + to BBB -

From BB + to B -

Lower than B -

Without rating

Participations valued using the equity method

with market value

without market value

Other participations

with market value

without market value

Total participations

2018

77'832

-

-

-

-

3'000

-

595

-

2

597

-

-

-

-

-

Acqu

isitio

n co

st

Accu

mul

ated

val

ue a

djus

tmen

ts a

nd c

hang

es in

bo

ok v

alue

(val

uatio

n us

ing

the

equi

ty m

etho

d)

Book

val

ue P

revi

ous

year

end

Recl

assifi

catio

ns

Valu

e ad

just

men

ts

Addi

tions

Chan

ges i

n bo

ok v

alue

in th

e ca

se o

f par

ticip

atio

ns

valu

ed u

sing

the

equi

ty m

etho

d/de

prec

iatio

n re

vers

als

Disp

osal

s

Book

val

ue a

s at

end

of c

urre

nt y

ear

Mar

ket v

alue

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

137

-

-

137

-

(64)

-

-

(64)

-

732

-

2

734

-

668

-

2

670

4 .5 Presentation of participations (CHF 1'000)

Debt securities Book value

Debt securities Book value

31 .12 .201731 .12 .2018

142'551

-

-

-

-

3'000

53

4 .6 Disclosure of companies in which the bank holds a permanent direct or indirect significant participation (CHF 1'000)

Company name and domicile

Full consolidation

Hyposwiss Advisors SA Geneva

Fimanor Financial Management AG Zürich

Equity method

Monaco Asset Management SAM Monaco, Monaco

Stavanger Asset Management LTD Stavanger, Norway

Asset management

Asset management

Asset management

Asset management

CHF

CHF

EUR

NOK

1'000

50

900

3'900

100%

100%

22%

35%

100%

100%

22%

35%

100%

100%

22%

35%

-

-

-

-

Busin

ess

activ

ity

Curr

ency

Shar

e of

vot

es (i

n %

)

Com

pany

cap

ital

(in 1

,000

s)

Hel

d di

rect

ly (i

n %

)

Shar

e of

cap

ital (

in %

)

Hel

d di

rect

ly (i

n %

)

The non-consolidated participation is related to the holding of a minimal share of Swift's capital .

5454

4 .8 Presentation of intangible assets (CHF 1'000)

Goodwill

Patents

Licences

Other intangible assets

Total intangible assets

11'674

-

-

-

11'674

(4'727)

-

-

-

(4'727)

6'947

-

-

-

6'947

-

-

-

-

-

-

-

-

-

-

1'297

-

-

-

1'297

(2'819)*

-

-

-

(2'819)

5'425

-

-

-

5'425

Cost

val

ue

Accu

mul

ated

am

ortis

atio

n

Addi

tions

Book

val

uePr

evio

us y

ear

Disp

osal

s

Influ

ence

of a

cha

nge

in

the

scop

e of

con

solid

atio

n

Amor

tisat

ion

Book

val

ue a

t end

of

cur

rent

yea

r

2018

4 .7 Presentation of tangible fixed assets (CHF 1'000)

Bank buildings

Other real estate

Proprietary or separately acquired software

Other tangible assets

Tangible assets acquired under finance leases:

- of which, bank buildings

- of which, other real estate

- of which, other tangible fixed assets

Total tangible fixed assets

2018

-

-

3'627

11'898

-

-

-

-

15'525

-

-

-

-

-

-

-

-

-

Acqu

isitio

n co

st

Accu

mul

ated

dep

reci

atio

n

Book

val

ue

Prev

ious

yea

r

Recl

assifi

catio

ns

Depr

ecia

tion

Addi

tions

Reve

rsal

s

Disp

osal

s

Book

val

ue a

t the

end

of

curre

nt y

ear

-

-

(459)

(480)

-

-

-

-

(939)

-

-

247

2'059

-

-

-

-

2'306

-

-

-

-

-

-

-

-

-

-

-

(3'130)

(10'343)

-

-

-

-

(13'473)

-

-

-

-

-

-

-

-

-

-

-

497

1'555

-

-

-

-

2'052

-

-

285

3'134

-

-

-

-

3'419

The Group has not concluded any operational leasing during the current year .

* Including a writedown of CHF 795'831 of the goodwill resulting from the acquisition of Fimanor Financial Management AG, Zurich, due to the decline in the company's assets under management .

55

Pledged / assigned assets

Amounts due from banks

Financial investments

Tangible fixed assets

Total pledged / assigned assetsAssets under reservation of ownership

4'929

41'667

-

46'596-

5'886

30'220

-

36'106-

2'140

-

-

2'140-

3'129

-

-

3'129-

31 .12 .2018 31 .12 .2017

4 .10 Disclosure of assets pledged or assigned to secure own commitments and of assets under reservation of ownership (CHF 1'000)

Assets pledged with bank counterparties represent margin deposits linked to derivative instruments .

4 .11 Disclosure of liabilities relating to own pension schemes, and number and nature of equity instruments of the bank held by own pension schemes

The Group has no liabilities relating to own pension schemes .Pension schemes do not hold any equity instruments of the Bank .

Indirect taxes

Settlement accounts

Employees' insurance contracts

Other assets and other liabilities

Total

212

-

262

27

501

228

-

221

879

1'328

454

-

262

89

805

897

86

221

3

1'207

31 .12 .2018

Other assets Other liabilities

31 .12 .201831 .12 .2017 31 .12 .2017

4 .9 Breakdown of other assets and other liabilities (CHF 1'000)

Book values Book valuesEffective commitments

Effective commitments

56

4 .12 Disclosure on the economic situation of own pension schemes

a . Employer contribution reserves (ECR)

Employer has no contribution reserve at December 31, 2018 (idem in 2017) .

b . Presentation of the economic benefit / obligation and the pension expenses

Pension plans protect the employees of the Bank and Hyposwiss Advisors SA against the economic consequences of retirement, disability and death .

The Group determines whether the level of coverage and the particular situation of the pension fund can lead to an economic advantage or commitment . The assessment is based on the annual accounts of the pension fund and the information provided by it on the financial situation in 2018 . The Bank's Board of Directors considers that any surplus within the meaning of the Mn 502 of FINMA Circular 2015/1 will be used for the benefit of policyholders . There is no economic benefit to the employer .

101% -

CHF

1'878'047

CHF

1'878'047

CHF

1'757'963- -

Over

fund

ing/

unde

rfun

ding

at

31 .

12 .2

018

Econ

omic

inte

rest

of

the

bank

/fina

ncia

l gro

up

Pens

ion

expe

nses

in p

erso

nnel

ex

pens

es

Chan

ge in

eco

nom

ic in

tere

st

(eco

nom

ic b

enefi

t/ob

ligat

ion)

ve

rsus

pre

viou

s ye

ar

Cont

ribut

ions

pai

d

for t

he c

urre

nt y

ear

31 .1

2 .20

17

31 .1

2 .20

17

31 .1

2 .20

18

31 .1

2 .20

18

Pension plan

(Patrimonia)

57

4 .13 Presentation of issued structured products

The Group does not issue any structured products .

4 .14 Presentation of value adjustments and provisions, reserves for general banking risks, and changes therein during the current year (CHF 1'000)

Provision for deferred taxes

Provisions for other business risks

Other provisions

Total provisionsReserves for general banking risksValue adjustments for default and country risks

- of which, value adjustments for default risks in respect of impaired loans / receivables

- of which, value adjustments for latent risks

-

14

4

18-

1'451

1'451

-

-

-

200

200- -

-

-

-

-

-

-- -

-

-

-

-

-

--

81

81

-

-

-

-

--

(12)

(12)

-

-

-

-

--

(4)

(4)

-

-

14

204

218-

1'539

1'539

-

Prev

ious

yea

r end

Past

due

inte

rest

, rec

over

ies

Use

in c

onfo

rmity

with

des

igna

ted

purp

ose

New

cre

atio

ns c

harg

ed to

inco

me

Curr

ency

diff

eren

ces

Bala

nce

at c

urre

nt y

ear e

nd

Rele

ases

to in

com

e

4 .15 Number and value of equity securities or options on equity securities held by all executives and directors and by employees, and disclosures on any employee participation schemes (CHF 1'000)

Nil

5858

4 .16 Disclosure of amounts due from/to related parties (CHF 1'000)

4 .17 Presentation of the maturity structure of financial instruments (CHF 1'000)

Holders of qualified participations

Group companies

Linked companies

Transactions with members of governing bodies

8'696

-

-

7'346

13'538

-

-

5'295

10'070

-

-

27

11'737

-

-

475

Amounts due from

Due

31 .12 .2018 31 .12 .201831 .12 .2017 31 .12 .2017

Amounts due to

Guarantees totaling CHF 26'658 (CHF 11'658 in 2017) were issued by the Group for the account of related companies, holders of qualified participations and governing bodies .Conditions applied to operations with related parties are in line with market conditions .

Assets / financial instruments

Liquid assets

Amounts due from banks

Amounts due from customers

Mortgage loans

Trading portfolio assets

Positive replacement values of derivative financial instruments

Financial investments

Total 31.12.2018Total 31.12.2017

Debt capital / financial instruments

Amounts due to banks

Amounts due in respect of customer deposits

Negative replacement values of derivative financial instruments

Total 31.12.2018Total 31.12.2017

74'798

108'976

100'607

-

37

4'904

22'224

311'547273'344

35'060

608'523

4'994

648'577666'351

74'798

108'976

385'828

15'759

37

4'904

102'809

693'112705'312

35'060

608'523

4'994

648'577666'351

-

-

-

-

-

-

-

--

-

-

-

--

-

-

215 924

15 759

-

-

35 839

267 522332'466

-

-

-

--

-

-

-

-

-

-

-

--

-

-

-

--

-

-

69 297

-

-

-

39 249

108'54685'695

-

-

-

--

-

-

-

-

-

-

-

-8'346

-

-

-

--

-

-

-

-

-

-

5'497

5'4975'462

-

-

-

--

At s

ight

Tota

l

Canc

ella

ble

With

in 1

2 m

onth

s to

5 y

ears

With

in 3

mon

ths

Afte

r 5 y

ears

With

in 3

to

12

mon

ths

No

mat

urity

59

Assets

Liquid assets

Amounts due from banks

Amounts due from customers

Mortgage loans

Trading portfolio assets

Positive replacement value of derivative financial instruments

Financial investments

Accrued income and prepaid expenses

Non-consolidated participations

Tangible fixed assets

Intangible assets

Other assets

Total assets

Liabilities

Amounts due to banks

Amounts due in respect of customer deposits

Negative replacement values of derivative financial instruments

Accrued expenses and deferred income

Other liabilities

Provisions

Reserve for general banking risks

Share capital

Capital reserve

Retained earnings reserve

Currency translation reserve

Consolidated profit

Total liabilities

4'745

51'566

346'639

-

37

1'085

73'423

1'466

670

-

-

-

479'631

27'862

525'888

2'172

6

-

-

-

-

-

-

-

-

555 928

-

43'759

327'750

-

454

826

138'771

1'035

734

-

-

-

513'329

9'598

532'923

2'629

624

-

-

-

-

-

-

-

146

545'920

70'053

57'410

39'189

15'759

-

3'819

29'386

3'108

-

3'420

5'425

501

228'070

7'198

82'635

2'822

7'978

805

218

-

27'500

1'686

16'656

(54)

4'331

151'773

30'950

73'418

40'683

13'769

-

3'343

31'589

3'717

-

2'052

6'947

1'328

207'796

667

118'924

1'610

5'731

1'207

18

-

27'500

1'686

14'364

(21)

3'520

175'205

Domestic

31 .12 .2018

DomesticForeign

31 .12 .2017

Foreign

4 .18 Presentation of assets and liabilities by domestic and foreign domicile (CHF 1'000)

6060

4 .19 Breakdown of total assets by country or group of countries (domicile principle ) (CHF 1'000)

4 .20 Breakdown of total assets by credit rating of country groups (risk domicile view) (CHF 1'000)

Switzerland

Europe

Central America

North America

Asia

Other

Total assets

31 .62%

28 .96%

23 .23%

10 .39%

4 .83%

0 .97%

100.00%

28 .35%

22 .96%

20 .22%

20 .20%

3 .29%

4 .98%

100.00%

223'742

204'945

164'420

73'535

34'206

6'853

707'701

204'487

165'543

145'800

145'659

23'740

35'896

721'125

AbsoluteAssets

31 .12 .2018

AbsoluteShare as %

31 .12 .2017

Share as %

1 & 2

3

4

5

6

7

Without rating

Total

Share as %Share as % CHFCHF

Net foreign exposure31 .12 .2018

Net foreign exposure31 .12 .2017

Rating as per FINMA correspondence tables

40 .35%

0 .92%

35 .16%

1 .94%

2 .91%

0 .23%

18 .49%

100.00%

46 .83%

3 .00%

35 .23%

0 .34%

0 .41%

0 .75%

13 .44%

100.00%

195'234

4'471

170'153

9'390

14'078

1'128

89'506

483'960

242'402

15'548

182'348

1'741

2'142

3'881

69'597

517'659

The Bank uses ratings provided by FINMA in its correspondence tables for the calculation of regulatory requirements . The rating given by the rating agency "Standard & Poor's" has been adopted .

The table above is presented by considering the customer's domicile for the categories "Amounts due from customers" and "Mortgage loans" while the domicile of the counterparty of the issuer is used for the categories "Amounts due from Banks" and "Financial invetments" and the domicile of the risk is used for all other asset items .

61

Assets

Liquid assets

Amounts due from banks

Amounts due from customers

Mortgage loans

Trading portfolio assets

Positive replacement values of derivative financial instruments

Financial investments

Accrued income and prepaid expenses

Non-consolidated participations

Tangible fixed assets

Intangible assets

Other assets

Total assets shown in balance sheetDelivery entitlements from spot exchange, forward forex and forex options transactions

Total assets

Liabilities

Amounts due to banks

Amounts due in respect of customer deposits

Trading portfolio liabilities

Negative replacement values of derivative financial instruments

Accrued expenses and deferred income

Other liabilities

Provisions

Reserves for general banking risks

Share capital

Capital reserve

Retained earnings reserve

Currency translation reserve

Consolidated profit

Total liabilities shown in balance sheetDelivery obligations from spot exchange, forward forex and forex options transactions

Total liabilitiesNet position per currency

OTHER

91

29'452

47'569

-

-

-

21'562

196

201

-

-

-

99'073

64'559

163'632

19'611

69'361

-

-

22

-

-

-

-

-

-

-

-

88'994

74'269

163'263369

USD

144

30'286

147'800

-

37

-

61'470

1'171

-

-

-

-

240'908

278'012

518'920

5'637

243'715

-

-

558

-

-

-

-

-

-

-

-

249'910

269'687

519'597(677)

EUR

5'180

39'906

150'842

-

-

-

11'314

161

469

-

-

-

207'872

145'313

353'185

2'834

233'406

-

-

41

-

-

-

-

-

-

-

-

236'281

116'366

352'647538

CHF

69'383

9'332

39'617

15'759

-

4'904

8'462

3'046

-

3'420

5'425

501

159'848

225'503

385'351

6'978

62'041

-

4'994

7'361

805

218

-

27'500

1'686

16'656

(54)

4'331

132'515

253'065

385'580(229)

4 .21 Presentation of assets and liabilities broken down by the most significant currencies for the Group (CHF 1'000)

6262

5 - OFF-BALANCE SHEET RELATED INFORMATION

5 .1 Breakdown and explanation of contingent liabilities (CHF 1'000)

5 .2 Breakdown of credit commitments (CHF 1'000)

Nil

5 .3 Breakdown of fiduciary transactions (CHF 1'000)

Other contingent liabilities

Performance guarantees and similar

Total

Fiduciary investments with third-party companies

Fiduciary loans

Total fiduciary transactions

Contingent assets arising from tax losses carried forward

Total

3'680

10'476

14'156

1'593

12'053

13'646

573'024

-

573'024

418'367

-

418'367

-

-

31 .12 .2018

31 .12 .2018

31 .12 .2018

31 .12 .2017

31 .12 .2017

31 .12 .2017

-

-

63

5 .4 Breakdown of managed assets and presentation of their development (CHF 1'000)

Calculation of managed assets include all client's investments deposited with the Group as well as those deposited with third-party banks and managed by the Group . Clients assets held by the Group acting only as custodian bank are excluded from this calculation . Assets managed by entities in which the Group holds minority interests are not included in the total assets managed by the Group .

Assets under discretionary asset management agreements include clients' assets for which investment decisions are made by the Group . Other managed assets are those for which investment decisions are made by the client .

Breakdown of managed assets

Assets in collective investment schemes managed by the bank

Assets under discretionary asset management agreements

Other managed assets

Total managed assets (including double counting)Of which, double counting

Total managed assets (including double counting) at beginning+/- net new money inflow or net new money outflow

+/- price gains / losses, interest, dividends and currency gains / losses

+/- others effects related to asset purchase transactions

Total managed assets (including double counting) at end

-

1'661'883

3'092'143

4'754'026-

-

1'562'918

3'055'381

4'618'299-

4'618'299438'424

(302'697)

-

4'754'026

3'980'216298'098 1

263'356

76'629 2

4'618'299

31 .12 .2018

31 .12 .2018

31 .12 .2017

31 .12 .2017

5 .5 Presentation of the development of managed assets (CHF 1'000)

The Group assesses the net inflow of new money based on deposits and withdrawals of customers' assets . Interest and dividend income relating to the managed assets is not considered as new money inflow . Market and currency fluctuations, charges, commissions and charged interest payments are not included in the net new money .

1 The net new money comes mainly from the integration of the client's assets of the company, Compagnie Privée de Conseils et d'Investissements SA, Genève, licenced authorised securities dealer, for an amount of CHF 303'432 (CHF 1'000), partly offset by partial or complete withdrawals of the assets of existing clients .

2 The purchase of assets for an amount of CHF 76'629 (CHF 1'000) comes mainly from the acquisition of the company Fimanor Financial Management AG, Zurich .

6464

6 - INCOME STATEMENT RELATED INFORMATION

6 .1 Breakdown of the result from trading activities and the fair value option (CHF 1'000)

Result from trading activities from:

- Interest rate instruments (including funds)

- Equity securities (including funds)

- Foreign currencies

- Commodities / precious metals

Total result from trading activities - of which, from fair value option

- of which, from fair value option on assets

- of which, from fair value option on liabilities

Negative interest

Negative interest relating to assets transactions (reduction in interest and discount income)

Negative interest relating to liability transactions (reduction in interest expenses)

Salaries

- of which, expenses relating to variable compensation

Social insurance benefits

Other personnel expenses

Total

Breakdown by business aera

Trading activity for the Group's own account

Trading activity for customers' account

Total result from trading activities

215

114

4'454

-

4'783114

114

-

-

215

3'961

(4)

4'172215

215

-

(289)

494

(378)

464

21'318

3'394

3'991

475

25'784

19'903

2'942

3'739

350

23'992

114

4'669

4'783

349

3'823

4'172

2018

2018

2018

2018

2017

2017

2017

2017

6 .2 Breakdown by underlying risk and based on the use of the fair value option (CHF 1'000)

6 .3 Result due to refinancing of trading positions and negative instruments (CHF 1'000)

6 .4 Breakdown of personnel expenses (CHF 1'000)

65

Office space expenses

Expenses for information and communication technology

Expenses for vehicles, equipment, furniture and other fixtures, as well as operating lease expenses

Fees of audit firm(s)

- of which, for financial and regulatory audits- of which, for other services

Marketing and public relations

Travelling expenses

Direct and indirect taxes

Other operating expenses

Total

Extraordinary income

Extraordinary expenses

Changes in the reserve for general banking risks

Changes to provisions and other liabilities

Provisions' release for deferred taxes

Expenses for current taxes

Total taxesWeighted average tax rate, based on the operating result

2'186

958

152

407

407-

312

801

513

4'374

9'703

1'788

816

146

387

35730

334

691

439

3'760

8'362

93

-

-

(333)

54

-

-

(174)

-

(1'679)

(1'679)28 .37%

-

(1'173)

(1'173)24 .50%

2018

2018

2018

2017

2017

2017

6 .5 Breakdown of general and administrative expenses (CHF 1'000)

6 .6 Explanations regarding material losses, extraordinary income and expenses, as well as material releases of hidden reserves, reserves for general banking risks, and value adjustments and provisions no longer required (CHF 1'000)

6 .7 Presentation of current taxes, deferred taxes, and disclosures of tax rate (CHF 1'000)

Report

OF THE STATUTORY AUDITOR ON THE

CONSOLIDATED FINANCIAL STATEMENTS

67

PricewaterhouseCoopers SA, avenue Giuseppe-Motta 50, case postale, CH-1211 Genève 2, Switzerland Téléphone: +41 58 792 91 00, Téléfax: +41 58 792 91 10, www.pwc.ch

PricewaterhouseCoopers SA is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.

Report of the statutory auditor to the General Meeting of Hyposwiss Private Bank Genève SA Geneva Report of the statutory auditor on the consolidated financial statements As statutory auditor, we have audited the consolidated financial statements of Hyposwiss Private Bank Genève SA, which comprise the balance sheet, income statement, cash flow statement, statement of changes in equity and notes (pages 38 to 65), for the year ended 31 December 2018. Board of Directors' responsibility The Board of Directors is responsible for the preparation of the consolidated financial statements in accordance with accounting rules for banks and the requirements of Swiss law. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditor’s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements for the year ended 31 December 2018 give a true and fair view of the financial position, the results of operations and the cash flows in accordance with accounting rules for banks and comply with Swiss law. Report on other legal requirements We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (art. 728 CO and art. 11 AOA) and that there are no circumstances incompatible with our independence. In accordance with art. 728a para. 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists which has been designed for the preparation of consolidated financial statements according to the instructions of the Board of Directors. We recommend that the consolidated financial statements submitted to you be approved. PricewaterhouseCoopers SA

Omar Grossi Lorenzo Morelli

Audit expert Auditor in charge

Audit expert

Geneva, 30 April 2019

6868

Available capital

Common Equity Tier 1 (CET1)

Tier 1 capital (T1)

Total capital

Risk-weighted assets (RWA)

RWA

Minimum capital requirements

Risk-based capital ratios as a percentage of RWA

Common Equity Tier 1 ratio

Tier 1 ratio

Total capital ratio

Additional CET1 buffer requirements as a percentage of RWA

Capital conservation buffer requirement as per the Basel minimal standards (2 .5% from 2019)

Countercyclical buffer requirement (art . 44a ERV) as per the Basel minimal standards

Bank G-SIB and/ or D-SIB additional requirements

CET1 available after metting the bank's minimum capital requirements as per the minimal standards

Target capital ratios according to appendix 8 CAO (% of RWA)

Capital buffer according to appendix 8 CAO

Countercyclical capital buffer (art . 44 and 44a CAO)

CET1 target ratio according to appendix 8 CAO in addition to countercyclical capital buffer according to art . 44 and 44a CAO

T1 target ratio according to appendix 8 CAO in addition to countercyclical capital buffer according to art . 44 and 44a CAO

Total capital target ratio according to appendix 8 CAO in addition to countercyclical capital buffer according to art . 44 and 44a CAO

Basel III leverage ratio

Total exposure (CHF)

Basel III leverage ratio (Tier 1 capital in percentage of total exposure)

1

2

3

4

4a

5

6

7

8

9

10

12

12a

12b

12c

12d

12e

13

14

Liquidity coverage ratio LCR

LCR Numerator: sum of High quality liquid assets (CHF)

LCR Denominator: sum of net cash outflows (CHF)

Liquidity coverage ratio (LCR) (in %)

15

16

17

31 .12 .18

99'335

47'886

207 .4%

30 .09 .18

76'021

57'898

131 .3%

30 .06 .18

96'788

53'965

179 .4%

31 .03 .18

131'009

56'962

230 .0%

31 .12 .17

140'145

53'950

259 .8%

7 - DISCLOSURE REQUIREMENTS AS PRESCRIBED IN THE FINMA CIRCULAR 2016/1 FOR THE GROUP (CHF 1'000)

7 .1 KM1 "Key prudential metrics"

42'373

42'373

42'373

140'888

11'271

30 .1%

30 .1%

30 .1%

1 .9%

0 .00%

0 .00%

26 .6%

2 .5%

0 .0%

7 .0%

8 .5%

10 .5%

723'608

5 .9%

38'139

38'139

38'139

160'395

12'832

23 .8%

23 .8%

23 .8%

1 .3%

0 .00%

0 .00%

20 .3%

2 .5%

0 .0%

7 .0%

8 .5%

10 .5%

734'526

5 .2%

31 .12 .2018

a

31 .12 .2017

e

69

7 .2 OV1 "Overview of risk-weighted assets"

7 .3 LIQA "Management of liquidity risks"

7 .4 CR1 "Credit quality of assets"

Credit Risk

Market risk

Operational risk Basic indication

Amounts below the thresholds for deduction (subject to 250% risk weight)

Total (1 + 20 + 24 + 25)

1

20

24

25

27

1

2

3

4

5'675

692

6'301

-

12'668

291

58

520

870

3'643

723

6'504

-

10'870

SA-BIS

Standard approach

Basic indicator approach

a

31 .12 .2018

RWAApproach

c

31 .12 .2018

Minimum capital

requirements

b

31 .12 .2017

RWA

Informations related to the operational risks are described in the notes to the consolidated financial statements of the Hyposwiss Group . For more details, please refer to the notes 3 in the consolidated financial satements .

Informations related to the default risk and the definition of the impaired loans are described in the notes to the consolidated financial statements of Hyposwiss Group . For more details, please refer to the notes in the consolidated financial satements .

Loans (excluding debt securities)

Debt securities

Off-balance-sheet exposures

Total

596'394

80'832

22'002

699'228

596'394

80'832

22'002

699'228

1'540

-

-

1'540

1'540

-

-

1'540

Defaulted exposures

Gross book values of

a b c d

Value adjustments/ impairmentsNon-defaulted

exposures

Net values(a + b - c)

7070

7 .5 CR3 "Overview of mitigation techniques"

7 .6 ORA "Operational risks: general guidance"

Loans (including debt securities)

Off-balance-sheet exposures

TotalOf which defaulted exposures

1'540

-

1'540 -

Exposures unsecured / book values

a c e&g

677'226

22'002

699'228 -

Exposures secured by collateral, of which:

secured amount

-

-

- -

Exposures secured by financial guarantees

or by credit derivatives, of which:

secured amount

Informations related to the operational risks are described in the notes to the consolidated financial statements of Hyposwiss Group . For more details, please refer to the notes in the consolidated financial satements .

The Group calculates its minimum regulatory capital requirements for operational risks based on the basic indicator approach .

Financial

STATEMENTS

73

STATUTORY BALANCE SHEET

ASSETS

Liquid assets

Amounts due from banks

Amounts due from customers

Mortgage loans

Trading portfolio assets

Positive replacement values of derivative financial instruments

Financial investments

Accrued income and prepaid expenses

Participations

Tangible fixed assets

Intangible assets

Other assets

Total assetsTotal subordinated claims

- of which subject to mandatory conversion and / or debt waiver

LIABILITIES

Amounts due to banks

Amounts due in respect of customer deposits

Negative replacement values of derivative financial instruments

Accrued expenses and deferred income

Other liabilities

Provisions

Reserves for general banking risks

Bank's capital

Statutory capital reserve

- of which tax-exempt capital contribution reserve

Statutory retained earnings reserves

Profit carried forward

Profit (result of the period)

Total liabilitiesTotal subordinated liabilities

- of which subject to mandatory conversion and / or debt waiver

OFF-BALANCE-SHEET TRANSACTIONS

Contingent liabilities

Irrevocable commitments

Obligations to pay up shares and make further contributions

Credit commitments

74'797'711

105'958'537

386'128'492

15'759'000

36'756

4'904'415

102'808'657

4'242'251

4'172'359

3'415'139

4'820'432

477'323

707'521'072300'000

-

35'059'980

608'522'810

4'993'873

7'791'658

716'404

217'513

-

27'500'000

1'685'610

1'685'610

6'874'952

9'833'400

4'324'872

707'521'072-

-

14'155'628

3'047'918

-

-

30'948'765

114'600'263

368'733'145

13'769'000

454'151

4'168'829

170'360'165

4'152'391

4'239'788

2'048'193

6'046'448

1'314'527

720'835'665300'000

-

15'183'723

646'928'356

4'238'764

6'207'322

991'025

17'513

-

27'500'000

1'685'610

1'685'610

6'874'952

7'623'400

3'585'000

720'835'665-

-

13'645'586

3'209'280

-

-

31 .12 .2018

CHF

31 .12 .2017

CHF

7474

RESULT FROM INTEREST OPERATIONS

Interest and discount income

Interest and dividend income from trading portfolios

Interest and dividend income from financial investments

Interest expense

Gross result from interest income

Changes in value adjustments for default risks and losses from interest operations

Subtotal net result from interest operations

RESULT FROM COMMISSION BUSINESS AND SERVICES

Commission income from securities trading and investment activities

Commission income from lending activities

Commission income from other services

Commission expense

Subtotal result from commission business and services

RESULT FROM TRADING ACTIVITIES AND THE FAIR VALUE OPTION

OTHER RESULT FROM ORDINARY ACTIVITIES

Result from the disposal of financial investments

Income from participations

Other ordinary income

Other ordinary expenses

Subtotal other result from ordinary activities

8'745'945

6'272

3'352'452

430'537

12'535'206 -

12'535'206

30'451'150

272'533

1'084'565

(4'608'616)

27'199'632

4'782'755

72'977

-

-

(530'216)

(457'239)

6'122'808

3'712

1'436'771

436'258

7'999'549 -

7'999'549

28'354'999

204'479

878'861

(3'058'502)

26'379'837

4'172'512

(26'640)

-

12'869

-

(13'771)

2018

CHF

2017

CHF

INCOME STATEMENT

75

OPERATING EXPENSES

Personnel expenses

General and administrative expenses

Subtotal operating expensesValue adjustments on participations and depreciation and amortisation of tangible fixed assets and intangible assets

Changes to provisions and other value adjustments, and losses

Operating resultExtraordinary income

Extraordinary expenses

Changes in reserves for general banking risks

Taxes

Profit (result of the period)

(25'177'153)

(9'121'395)

(34'298'548)

(3'529'094)

(332'679)

5'900'03363'567

-

-

(1'638'728)

4'324'872

(23'328'059)

(8'053'904)

(31'381'963)

(2'376'356)

(173'715)

4'606'09353'745

-

-

(1'074'838)

3'585'000

2018CHF

2017CHF

INCOME STATEMENT

7676

Profit

Profit carried forward

Distributable profit

APPROPRIATION OF PROFIT

- Allocation to statutory retained earnings reserve

- Allocation to voluntary retained earnings reserves

- Dividend

- New amount carried forward

Total as above

4'324'872

9'833'400

14'158'272

27'500

-

1'650'000

12'480'772

14'158'272

3'585'000

7'623'400

11'208'400

-

-

1'375'000

9'833'400

11'208'400

CHF CHF

31 .12 .2018 31 .12 .2017

APPROPRIATION OF PROFIT

(CHF 1'000)

Equity at start of reporting period

Change in profit carried forward

Dividends and other distributions

Other allocations to (transfers from) the reserves for general banking risks

Profit for the period

Equity at end of reporting period

47'269

-

(1'375)

-

4'325

50'219

7'623

3'585

(1'375)

-

-

9'833

1'686

-

-

-

-

1'686

3'585

(3'585)

-

-

4'325

4'325

6'875

-

-

-

-

6'875

-

-

-

-

-

-

27'500

-

-

-

-

27'500

Tota

l

Volu

ntar

y re

tain

ed e

arni

ngs r

eser

ves

and

profi

t car

ried

forw

ard

Capi

tal r

eser

ve

Profi

t for

the

perio

d

Reta

ined

ear

ning

s re

serv

e

Rese

rves

for

gene

ral b

anki

ng ri

sks

Bank

's ca

pita

l

STATEMENT OF CHANGES IN EQUITY

77

1 - COMMENTS ON BUSINESS ACTIVITY AND INDICATION OF NUMBER OF EMPLOYEES

1 .1 Indication of the legal name, legal form and registered office of the BankHyposwiss Private Bank Genève SA (hereinafter "the Bank") is a Swiss bank established in Geneva specialising in asset management for private clients . The Bank has two subsidiaries in Switzerland and a representative office in Tel Aviv, Israel and holds ownership interests in the capital of asset management companies located in Monaco and Norway . As of 31 December 2018, 97 .9 people were employed by the Bank (full-time equivalents) .

1 .2 Risk managementThe policy and risk management principles of Hyposwiss Private Bank Genève SA are described in the consolidated financial statements of the Group Hyposwiss . For more details, please refer to the notes in the consolidated financial statements .

2 - VALUATION AND ACCOUNTING PRINCIPLES

The financial statements of Hyposwiss Private Bank Genève SA have been drawn up in accordance with the provisions of the Swiss Federal Law on Banks and Saving Banks, its relevant implementing ordinance and guidelines on the accounting principles to be applied in the banking sector as stipulated by the Swiss Financial Market Supervisory Authority FINMA (Circular 2015/1) . The statutory financial statements have been drawn up in such a manner that third parties are able to form a reliable opinion . The annual

accounts may contain hidden reserves . Numbers in the appendix have been rounded for publication purposes . The valuation and accounting principles of the Group Hyposwiss apply to annual accounts of the Bank except for the following positions: Participations: Participations are recorded in the balance sheet at their acquisition cost, less any required write-down of their value . The Bank regularly performs impairment tests on the value of its participations . Income tax: Current taxes on income and the affecting capital for the corresponding period are calculated in accordance with the applicable tax regulations . Direct taxes outstanding at the end of the year are shown as liabilities in the balance sheet under “Accrued expenses and deferred income” . Reserves for general banking risks: Reserves for general banking risks are established preventively to cover the risks of the overall activities of the Bank . These reserves are considered part of the shareholders’ equity under the Capital Adequacy Ordinance (CAO) . They are constituted and dissolved under the rubric “Changes in reserves for general banking risks” .

Modification of accounting and valuation principlesIn comparison with last year, there were no changes in the accounting and valuation principles .

 NOTES TO THE 2018 FINANCIAL STATEMENTS

7878

3 - DETAILS ON THE INDIVIDUAL ITEMS IN THE NOTES TO ANNUAL FINANCIAL STATEMENTS

3 .1 Presentation of collateral for loans / receivables and off-balance sheet transactions, as well as impaired loans / receivables (CHF 1'000)

LOANS

(before netting with value adjustments)

Amounts due from customers

Mortgage loans

- Residential property

TOTAL LOANS

(before netting with value adjustments)

31 .12 .2018

31 .12 .2017

TOTAL LOANS

(after netting with value adjustments)

31 .12 .2018

31 .12 .2017

OFF-BALANCE-SHEET

Contingent liabilities

Irrevocable commitments

TOTAL OFF-BALANCE-SHEET

31 .12 .2018

31 .12 .2017

IMPAIRED LOANS / RECEIVABLES

31 .12 .2018

31 .12 .2017

387'668

15'759

15'759

403'427383'954

401'886382'502

14'156

3'048

17'20416'855

2'446

-

-

2'4461'985

906533

3'680

1'422

5'1023'137

385'222

-

-

385'222368'200

385'222368'200

10'476

1'626

12'10213'718

-

15'759

15'759

15'75913'769

15'75913'769

-

-

-

-

Secured by mortgage

Gross debt amount

1'5401'451

Unsecured

Net debt amount

1'5401'451

Other collateral

Estimated liquidation

value of collateral

--

Type of collateral

Total

Individual value

adjustments

1'5401'451

79

4'630

364

4'994

4'994

4'239

4'239

--

- -

- -

--

- -

- -

711'667

82'331

793'998

793'998

717'779

717'779

--

- -

- -

4'540

364

4'904

4'904

4'169

4'169

Posit

ive

re

plac

emen

t va

lues

Posit

ive

re

plac

emen

t va

lues

Cont

ract

vol

ume

Cont

ract

vol

ume

Neg

ativ

e

repl

acem

ent

valu

es

Neg

ativ

e

repl

acem

ent

valu

es

Trading instruments Hedging instruments

3 .2 Breakdown of trading portfolios and other financial instruments at fair value (assets and liabilities) (CHF 1'000)

3 .3 Presentation of derivative financial instruments (assets and liabilities) (CHF 1'000)

ASSETS

Trading portfolio assets

Debt securities, money market securities / transactions

- of which, lised

Equity securities

Precious metals and commodities

Other trading portfolio assets

Other financial instruments at fair value

Debt securities

Structured products

Other

Total assets - of which, determined using a valuation model

- of which, securities eligible for repo transactions in accordance with liquidity requirements

FOREIGN EXCHANGE / PRECIOUS METALS

Forward contracts

Options (OTC)

Total before netting agreements31 .12 .2018

- of which, determined using a valuation model

31 .12 .2017

- of which, determined using a valuation model

37

37

-

-

-

-

-

-

37-

-

31 .12 .2018 31 .12 .2017

302

298

140

12

-

-

-

-

454-

-

The Bank does not practice netting .

8080

Breakdown by counterparties (CHF 1'000)

3 .4 Breakdown of financial investments (CHF 1'000)

Positive replacement values (after netting agreements) 3'432-

Banks and securities dealers

Central clearing houses

Other customers

1'472

Debt securities- of which, intended to be held to maturity

- of which, not intended to be held to maturity (available for sale)

Equity securities- of which, qualified participations*

Precious metalsReal estateTotal- of which, securities eligible for repo transactions

in accordance with liquidity requirements

80'87767'019

13'858

1'929-

20'924-

103'730

5'491

80'83267'002

13'830

1'053-

20'924-

102'809

5'462

31 .12 .2018 31 .12 .201831 .12 .2017

Fair valueBook value

31 .12 .2017

* at least 10 % of capital votes

145'516131'639

13'877

3'388-

23'127-

172'031

5'531

145'551131'659

13'892

1'682-

23'127-

170'360

5'462

81

3 .4 .1 Breakdown of counterparties by rating S&P (CHF 1'000)

3 .5 Breakdown of other assets and other liabilities (CHF 1'000)

From AAA to AA -

From A + à A -

From BBB + to BBB -

From BB + to B -

Lower than B -

Without notation

Debt securities Book value

Debt securities Book value

31 .12 .201731 .12 .2018

77'832

-

-

-

-

3'000

Indirect taxes

Settlement amounts

Employees' insurance contracts

Other assets and other liabilities

Total

Pledged / assigned assetsAmounts due from banks

Financial investments

Tangible fixed assets

Total pledged / assigned assetsAssets under reservation of ownership

454

-

262

-

716

2'140

-

-

2'140-

212

-

262

3

477

4'929

41'667

-

46'596-

31 .12 .2018

Book values

Other assets

31 .12 .2018

31 .12 .2018

Book values

31 .12 .2017

Effective commitments

Other liabilities

31 .12 .2017

31 .12 .2017

Effective commitments

3 .6 Disclosure of assets pledged or assigned to secure own commitments and of assets under reservation of ownership (CHF 1'000)

Assets pledged with other bank counterparties represent margin deposits linked to derivative instruments .

142'551

-

-

-

-

3'000

685

86

221

-

991

228

-

221

866

1'315

3'129

-

-

3'129-

5'886

30'220

-

36'106-

8282

3 .7 Disclosure of liabilities relating to own pension schemes, and number and nature of equity instruments of the Bank held by own pension schemes

The Bank has no liabilities relating to own pension schemes .  Pension schemes do not hold any equity instruments of the Bank .

3 .8 Disclosure of the economic situation of own pension schemes

a. Employer’s contribution reserves (ECR) Employer has no contribution reserve as at December 31, 2018 (idem in 2017) .

b. Presentation of the economic benefit/economic obligation and pension’s liabilitiesPension plans protect the employees of the Bank against the economic consequences of retirement, disability and death . The bank shall determine whether the level of coverage and the particular circumstances of the pension fund can lead to an economic advantage or commitment . The assessment is based on the annual accounts of the pension fund and the information provided by it as the financial situation in 2018 . The Bank’s Board of Directors considers that any surplus pursuant to Mn 502 of FINMA Circular 2015/1 will be used for the benefit of policyholders . There is no economic benefit to the employer .

Pension plan (Patrimonia) 101% - -

CHF

1'831'545-

CHF

1'831'545

CHF

1'729'039

Over

fund

ing

/ und

erfu

ndin

g at

31 .

12 .2

018

31 .1

2 .20

18Ec

onom

ic in

tere

st

of th

e ba

nk /

finan

cial

gr

oup

Pens

ion

expe

nses

in

pers

onne

l exp

ense

s

31 .1

2 .20

17

Chan

ge in

eco

nom

ic in

tere

st

31 .1

2 .20

18

Cont

ribut

ions

pai

d fo

r the

yea

r

31 .1

2 .20

17

83

3 .9 Presentation of issued structured products

The Bank does not issue any structured products .

3 .10 Presentation of value adjustments and provisions, reserves for general banking risks, and changes therein during the current year (CHF 1'000)

3 .11 Presentation of the bank's capital (CHF 1'000)

Provisions for other business risks

Other provisions

Total provisionsReserves for general banking risksValue adjustments for default and country risks- of which, value adjustments for

default risks in respect of impaired loans / receivables

- of which, value adjustments for latent risks

Bank's capital

- of which, paid up

Participation capital

- of which, paid up

Total bank's capital

Authorised capital

- of which, capital increases completed

14

4

18-

1'451

1'451

-

25'000

25'000

2'500

2'500

27'500-

-

25'000

25'000

2'500

2'500

27'500-

-

25'000

25'000

2'500

2'500

27'500-

-

250'000

250'000

25'000

25'000

275'000-

-

250'000

250'000

25'000

25'000

275'000-

-

25'000

25'000

2'500

2'500

27'500-

-

-

200

200-

-

- -

-

-

--

12

12

-

14

204

218-

1'539

1'539

-

-

-

--

-

- -

-

-

--

(4)

(4)

-

-

-

--

81

81

-

Prev

ious

yea

r end

Tota

l nom

inal

va

lue

31 .12 .2018 31 .12 .2017

No,

of s

hare

s

Divi

dend

-bea

ring

capi

tal

Tota

l nom

inal

va

lue

No,

of s

hare

s

Divi

dend

-bea

ring

capi

tal

New

cre

atio

ns c

harg

ed

to in

com

e

Curr

ency

diff

eren

ces

Bala

nce

at c

urre

nt y

ear e

nd

Use

in c

onfo

rmity

w

hith

des

igna

ted

purp

ose

Rele

ases

to in

com

e

Past

due

inte

rest

, rec

over

ies

8484

3 .12 Number and value of equity securities or options on equity securities held by all executives and directors and by employees, and disclosures on any employee participation schemes (CHF 1'000)

Nil

3 .13 Disclosure of amounts due from / to related parties (CHF 1'000)

Holders of qualified participations

Group companies

Linked companies

Transactions with members of governing bodies

With voting rights:

Mirelis Holding SA

Without voting rights:

Mirelis Holding SA

90 .91

9 .09

100.00

8'696

47

-

7'346

13'538

-

-

5'295

25'000

2'500

27'500

90 .91

9 .09

100.00

11'737

302

-

475

10'070

302

-

27

25'000

2'500

27'500

31 .12 .2018

NominalHolders of significant participations and group of holders of participations with pooled voting rights

31 .12 .2018

Amounts due toAmounts due from

31 .12 .2017

31 .12 .2018

Nominal

31 .12 .2017

% of equity

31 .12 .2017

% of equity

Guarantees totaling CHF 26'658 (CHF 11'658 in 2017) were issued by the Bank for the account of affiliated entities, significant shareholders and governing bodies .

Conditions applied to operations with related parties are in line with market conditions .

3 .14 Disclosure of amounts due from / to related parties (CHF 1'000)

85

Lawi Family

Solly S . Lawi

Solly A . Lawi

Albert Lawi

SFM Holding SA, Genève

Kadoorie Family

Maple Investment Ltd, Bermuda

Dwek Family

Ilann Dwek

Robert Dwek

Total

11 .66

11 .66

4 .86

44 .68

72.86

24.28

1 .93

0 .93

2.86

100.00

Shareholders of Mirelis Holding SA at 31 .12 .2018, are the following:

3 .15 Breakdown of total assets by credit rating of country group (risk domicile view ) (CHF 1'000)

1 & 2

3

4

5

6

7

Without notation

Total

40 .34%

0 .92%

35 .16%

1 .94%

2 .91%

0 .23%

18 .50%

100.00%

46 .81%

3 .00%

35 .23%

0 .34%

0 .41%

0 .75%

13 .45%

100.00%

195'162

4'471

170'153

9'390

14'078

1'128

89'506

483'888

242'265

15'548

182'348

1'741

2'142

3'881

69'597

517'522

CHFBreakdown as per FINMA correspondence tables

Net foreign exposure at 31 .12 .2018

Net foreign exposure at 31 .12 .2017

CHFShare as % Share as %

The Bank uses ratings provided by FINMA in its correspondence tables for the calculation of regulatory capital requirements . The rating given by the rating agency "Standard & Poor's" has been adopted .

The table above is presented by considering the customer's domicile for the categories "Amounts due from customers" and "Mortgage loans" while the domicile of the counterparty of the domicile of the issuer for the categories "Amounts due from banks" and "Financial investments" and the domicile of the risk is used for all other items .

8686

4 - BREAKDOWN OF OFF-BALANCE SHEET ITEMS

4 .1 Breakdown of fiduciary transactions (CHF 1'000)

4 .2 Breakdown of managed assets and presentation of their development (CHF 1'000)

Fiduciary investments with third-party companies

Fiduciary loans

Total of fiduciary transactions

Assets in collective investment schemes managed by the Bank

Assets under discretionary asset management agreements

Other managed assets

Total managed assets (including double counting)

- of which, double counting

Total managed assets (including double counting) at beginning

+/- Net new money inflow / Net new money outflow

+/- Price gains / losses, interest, dividends and currency

+/- Other effects

Total managed assets (including double counting) at end

31 .12 .2017

31 .12 .2017

31 .12 .2017

31 .12 .2018

31 .12 .2018Breakdown of managed assets

31 .12 .2018Presentation of the development of managed assets (CHF 1'000)

573'024

-

573'024

418'367

-

418'367

4'352'184414'029

(304'881)

-

4'461'332

3'841'535247'2931

263'356

-

4'352'184

Calculation of managed assets include all client's investments deposited with the Bank as well as those deposited with third-party banks and managed by the Bank . Clients' assets held by the Bank acting only as custodian bank are excluded from this calculation .

Assets under discretionary asset management agreements include clients' assets for which investment decisions are made by the Bank . Other management assets are those for which investment decisions are made by the client .

The Bank determines the amount of new money based upon deposits and withdrawals by the clients . Interest and dividend income generated by assets under management are not considered to be new money inflow . The net inflow of new money does not include market fluctuations and exchange rates, or fees, commissions and debited interest .

1 The net new money comes mainly from the integration of the clients' assets of the Company, Compagnie Privée de Conseils et d'Investissements SA, Genève, licensed authorised securities dealer, for an amount of CHF 303'432 (CHF 1'000), partly offset by partial or complete withdrawals of the assets of existing clients .

-

1'296'802

3'055'382

4'352'184-

-

1'369'189

3'092'143

4'461'332-

87

5 - INCOME STATEMENT RELATED INFORMATION

5 .1 Breakdown of the result from trading activities and the fair value option (CHF 1'000)

5 .2 Breakdown by underlying risk and based on the use of the faire value option (CHF 1'000)

5 .3 Net result due to refinancing of trading positions and negative interest (CHF 1'000)

5 .4 Breakdown of personnel expenses (CHF 1'000)

Breakdown by business area

Traging activity for the bank's own account

Trading activity for customers' account

Total result from trading activities

Result from trading activities from:

- Interest rate instruments (including funds)

- Equity securities (including funds)

- Foreign currencies

- Commodities / precious metals

Total result from trading activities- of which, from fair value option

- of which, from fair value option on assets

- of which, from fair value option on liabilities

Negative interest

Negative interest relating to asset transactions (reduction of interest income and discounts)

Negative interest relating to liability transactions (reduction in interest expenses)

Salaries

- of which, expenses relating to alternative forms of variable compensation

Social insurance benefits

Other personnel expenses

Total

2017

2017

2017

2017

2018

2018

2018

2018

114

4'669

4'783

349

3'823

4 172

215

114

4'454

-

4'783114

114

-

-

215

3'961

(4)

4'172215

215

-

(289)

494

(378)

464

20'800

3'345

3'903

474

25'177

19'308

2'912

3'672

348

23'328

8888

5 .5 Breakdown of general and administrative expenses (CHF 1'000)

5 .6 Explanations regarding material losses, extraordinary income and expenses, as well as material releases of hidden reserves, reserves for general banking risks, and value adjustments and provisions no longer required (CHF 1'000)

5 .7 Presentation of current taxes, deferred taxes, and disclosure of tax rate (CHF 1'000)

Office space expenses

Expenses for information and communication technology

Expenses for vehicles, equipment, furniture and other fixtures, as well as operating lease expenses

Fees for audit firm(s)

- of which, for financial and regulatory audits

- of which, for other services

Marketing and public relations expenses

Travelling expenses

Direct and indirect taxes

Other operating expenses

Total

Extraordinary income

Extraordinary expenses

Changes in the reserve for general banking risks

Changes to provisions and other liabilities

Current taxes

Total taxesWeighed average tax rate based on operational result

20172018

2018 2017

2018 2017

2'133

958

152

377

377

-

312

750

513

3'926

9'121

1'729

813

146

367

337

30

334

638

439

3'588

8'054

64

-

-

(333)

54

-

-

(174)

1'639

1'63927 .77%

1'075

1'07523 .34%

In 2017, the Bank has benefited from tax losses of CHF 984'164 .

89

9090

Report

OF THE STATUTORY AUDITOR ON THE FINANCIAL STATEMENTS

91

PricewaterhouseCoopers SA, avenue Giuseppe-Motta 50, case postale, CH-1211 Genève 2, Switzerland Téléphone: +41 58 792 91 00, Téléfax: +41 58 792 91 10, www.pwc.ch

PricewaterhouseCoopers SA is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.

Report of the statutory auditor to the General Meeting of Hyposwiss Private Bank Genève SA Geneva Report of the statutory auditor on the financial statements As statutory auditor, we have audited the financial statements of Hyposwiss Private Bank Genève SA, which comprise the balance sheet, income statement, statement of changes in equity and notes (pages 73 to 88), for the year ended 31 December 2018. Board of Directors' responsibility The Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of Swiss law and the company’s articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements for the year ended 31 December 2018 comply with Swiss law and the company’s articles of incorporation. Report on other legal requirements We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (art. 728 CO and art. 11 AOA) and that there are no circumstances incompatible with our independence. In accordance with art. 728a para. 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists which has been designed for the preparation of financial statements according to the instructions of the Board of Directors. We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company's articles of incorporation. We recommend that the financial statements submitted to you be approved. PricewaterhouseCoopers SA

Omar Grossi Lorenzo Morelli Audit expert Auditor in charge

Audit expert

Geneva, 30 April 2019

9292

6 - DISCLOSURE REQUIREMENTS AS PRESCRIBED IN THE FINMA CIRCULAR 2016/1 FOR HYPOSWISS PRIVATE BANK GENEVA SA (CHF 1'000)

6 .1 KM1 "Key prudential metrics"

ea

31 .12 .18

99'335

47'886

207 .4%

30 .09 .18

76'021

57'898

131 .3%

30 .06 .18

96'788

53'965

179 .4%

31 .03 .18

131'009

56'962

230 .0%

31 .12 .17

140'145

53'950

259 .8%

39'276

39'276

39'276

135'700

10'856

28 .9%

28 .9%

28 .9%

1 .9%

0 .00%

0 .00%

25 .4%

2 .5%

0 .0%

7 .0%

8 .5%

10 .5%

720'230

5 .5%

35'308

35'308

35'308

155'047

12'404

22 .8%

22 .8%

22 .8%

1 .3%

0 .00%

0 .00%

19 .3%

2 .5%

0 .0%

7 .0%

8 .5%

10 .5%

731'332

4 .8%

31 .12 .2018 31 .12 .2017

Available capital

Common Equity Tier 1 (CET1)

Tier 1 capital (T1)

Total capital

Risk-weighted assets (RWA)

RWA

Minimum capital requirements

Risk-based capital ratios as a percentage of RWA

Common Equity Tier 1 ratio

Tier 1 ratio

Total capital ratio

Additional CET1 buffer requirements as a percentage of RWA

Capital conservation buffer requirement as per the Basel minimal standards (2 .5% from 2019)

Countercyclical buffer requirement (art . 44a ERV) as per the Basel minimal standards

Bank G-SIB and/ or D-SIB additional requirements

CET1 available after metting the bank's minimum capital requirements as per the minimal standards

Target capital ratios according to appendix 8 CAO (% of RWA)

Capital buffer according to appendix 8 CAO

Countercyclical capital buffer (art . 44 and 44a CAO)

CET1 target ratio according to appendix 8 CAO in addition to countercyclical capital buffer according to art . 44 and 44a CAO

T1 target ratio according to appendix 8 CAO in addition to countercyclical capital buffer according to art . 44 and 44a CAO

Total capital target ratio according to appendix 8 CAO in addition to coun-tercyclical capital buffer according to art . 44 and 44a CAO

Basel III leverage ratio

Total exposure (CHF)

Basel III leverage ratio (Tier 1 capital in percentage of total exposure)

1

2

3

4

4a

5

6

7

8

9

10

12

12a

12b

12c

12d

12e

13

14

Liquidity coverage ratio LCR

LCR Numerator: sum of High quality liquid assets (CHF)

LCR Denominator: sum of net cash outflows (CHF)

Liquidity coverage ratio (LCR) (in %)

15

16

17

93

6 .2 OV1 "Overview of risk-weighted assets"

6 .3 LIQA "Management of liquidity risks"

6 .4 CR1 "Credit quality of assets"

5'608

692

5'940

-

12'240

297

58

491

847

3'718

723

6'142

-

10'583

SA-BIS

Standard approach

Basic indicator approach

Management of liquidity risks principles are described in the consolidated financial statements of the Hyposwiss Group . For more details, please refer to the notes in the consolidated financial statements .

Informations related to the default risk and the definition of the impaired loans are described in the consolidated financial statements of the Hyposwiss Group . For more details, please refer to the notes in the consolidated financial satements .

593'321

80'831

22'002

696'154

593'321

80'831

22'002

696'154

1'540

-

-

1'540

1'540

-

-

1'540

Defaulted exposures

Gross book values of

a b c d

Value adjustments / impairmentsNon-defaulted

exposures

Net values(a + b - c)

a

31 .12 .2018

RWAApproach

c

31 .12 .2018

Minimum capital

requirements

b

31 .12 .2017

RWA

Credit Risk

Market risk

Operational risk

Amounts below the thresholds for deduction (subject to 250% risk weight)

Total (1 + 20 + 24 + 25)

1

20

24

25

27

1

2

3

4

Loans (excluding debt securities)

Debt securities

Off-balance sheet exposures

Total

9494

6 .5 CR3 "Overview of mitigation techniques"

6 .6 ORA "Operational risks: general guidance"

Loans (including debt securities)

Off-balance-sheet exposures

TotalOf which defaulted exposures

1'540

-

1'540 -

Exposures unsecured / book values

a c e&g

674'152

22'002

696'154 -

Exposures secured by collateral, of which:

secured amount

-

-

- -

Exposures secured by financial guarantees

or by credit derivatives, of which:

secured amount

Informations related to the operational risks are described in the consolidated financial statements of the Hyposwiss Group . For more details, please refer to the notes in the consolidated financial satements .

The bank calculates its minimum regulatory capital requirements for operational risks based on the basic indicator approach .

95

9696

Curriculum

VITAE

97

SOLLY S. LAWIChairman of the Board

Solly S . Lawi holds a Bachelor of Commerce (BCom) from McGill University and a law degree (L .LL) from the University of Montreal . He was admitted to the Quebec bar and started his career as a lawyer at Spector, Spiegel, Kravets & Associates in Montreal . In 1975, he joined Société Bancaire Barclays (Suisse) SA in Geneva as Senior Vice President before being appointed manager and member of the Management Committee . In 1986, following the ownership change of the bank to Société Bancaire Julius Baer SA, Mr . Lawi became Chief Executive Officer (CEO), Chairman of the Management Committee and then Vice Chairman of the Board of Directors . In 1997, he co-founded Mirelis InvesTrust SA (which became Mirelis Holding SA in 2015), a Geneva-based wealth management company, where he serves as a partner and Chairman of the Board of Directors . Since 2014, following the acquisition of Hyposwiss Private Bank Geneva SA by Mirelis InvesTrust SA, Mr . Lawi continues his active role as Chairman of the Board of Directors .

ALAIN BRUNO LEVY *Vice Chairman of the Board

Alain Bruno Lévy holds a doctorate in law from the University of Fribourg and is a member of the Geneva bar . He served as an adjunct professor at the University of Fribourg Faculty of Science for many years . He is a partner at Junod, Muhlstein, Lévy & Puder, where he specializes in commercial law, banking law, intellectual property and arbitration . Mr . Lévy previously served as Head of the Legal Department at the Swiss Federal Banking Commission (now FINMA) and President of the Swiss Bar Association . He currently sits on the boards of directors of numerous Swiss banks and other financial companies .

MICHEL BROCH *Member and Secretary of the Board

Michel Broch holds a law degree from the University of Fribourg and was admitted to the bar of Fribourg Canton in 1983 . He began his career with the Swiss Federal Insurance Court in Lucerne before moving to the Legal Department at the Swiss Federal Banking Commission (now FINMA) . He joined Ernst & Young in 1990 as a banking and financial advisor and eventually became a Partner and Board Member . In 2002 he became Chairman of the Executive Committee of Banque Safdié, and in 2005 he created his own consulting firm specializing in services for banks and other financial companies .

BOAZ BARACK *Member

Boaz Barack holds a PhD in international law from the University of Cambridge . In 1990, his asset management company was acquired by Rothschild Group . After spending 12 years with Credit Suisse AG as a member of senior management, he became a managing director at UBS AG . Mr . Barack is currently a member of the International Board of the Weizmann Institute of Science, a member of the Global Leadership Foundation (GLF) International Council and a member of the boards of directors of several companies . He is interested in new age banking and its focus on digitizing banking products and services .

MEMBERS OF THE BOARD OF DIRECTORS

9898

ERIC BERNHEIM *Member

Eric Bernheim earned a degree in electrical and electronic engineering from the Swiss Federal Institute of Technology in Zurich (EPFZ) and an MBA from INSEAD and began his career with General Motors and Alcatel . In 1987, he joined McKinsey & Company in Zurich and Geneva, where he was elected Senior Partner . His duties there involved advising Swiss and global companies in the pharmaceutical, chemical, energy, consumer goods, retail, manufacturing and insurance sectors . He also set up and managed the company’s offices in Geneva and North Africa and has led several sector-specific and operational practices around the world . In 2014, he left McKinsey and was named Director Emeritus . He served as interim CEO of Assura Group in 2016 before becoming Vice Chairman of its Board; he also sits on the Board of Directors of Oryx Energies SA . Mr . Bernheim is the Vice Chairman and Treasurer of the French National Contemporary Arts Center in Grenoble .

PHILIPPE PERLES *Member

Philippe Perles holds a degree in commercial and industrial sciences from the University of Geneva and began his career in managerial roles with several banks . As founder and President of Novéo Conseil SA, which has offices in Geneva, London and Paris, he has been involved in specific projects for the executive boards of various international banking groups over the past 18 years . Mr . Perles is an independent director at several banks and other financial companies and is a member of the Association Romande des Intermédiaires Financiers (ARIF), a self-regulatory organization under the Swiss Anti-Money Laundering Act (AMLA) .

NABIL JEAN SAB Member

Nabil Jean Sab holds a degree in economic and social sciences from the University of Geneva and began his career as a senior auditor at ATAG Ernst & Young SA . In 1993, he managed branch offices for ATAG Asset Management Ltd and AAM Banque Privée Ltd . In 2010, he founded Compagnie Privée de Conseils et d’Investissements SA, a wealth management company, where he is the majority shareholder and CEO .

* Independent members

AUDIT AND RISK COMMITTEEChairman : Michel BrochVice Chairman : Alain Bruno LévySecretary : Philippe Perles

COMPENSATION COMMITTEE Chairman : Eric BernheimVice Chairman : Alain Bruno LévySecretary : Solly S . Lawi

COMMITTEES OF THE BOARD OF DIRECTORS

99

NIELS BOM OLESENCEO

Niels Bom Olesen holds a Bachelor's in economics from the University of Kent, Canterbury, a banking diploma from the Danish Bankers Association, and a degree from the International Executive Program at INSEAD, France . Early in his career, Mr . Olesen worked at Crocker National Bank in Berkeley and California First Bank in San Francisco, before moving back to Denmark to work for Unibank A/S in Copenhagen . In 1991, he moved to Switzerland, where he created and managed Unibank's Swiss office, Unibank A/S (Switzerland) SA . In 1993, he joined Credit Suisse AG's Wealth Management division where he headed up teams in Geneva and Zurich . He came to Hyposwiss Private Bank Geneva SA in 2012 as Head of Private Banking and was appointed CEO in 2014 .

ROBERT DWEKCIO

Robert Dwek holds an MBA from New York University and began his career at Salomon Brothers Inc ., New York where he was Vice-President in the International Department . In 1983, he joined S .G . Warburg Soditic SA in Geneva as Senior Vice-President of the Capital Markets Division . In 1987, he moved to the Executive Committee of Soditic Asset Management SA, which became Atlas Capital Group after merging with Atlas Research & Consultancy in 2000 and the acquisition of Deltec Bank & Trust in 2002 . Mr . Dwek was a member of the Executive Committee of Atlas Capital Group . Following the merger of Atlas Capital SA with Mirelis InvesTrust SA in 2013 and the acquisition of Hyposwiss Private Bank SA in 2014, he became a member of the Hyposwiss Executive Board and Chief Investment Officer .

ALBERT LAWIDeputy CEO / Head of Private Banking

Albert Lawi holds a Bachelor's in commerce from McGill University and an MBA from the University of Toronto . He began his career in property investment in Canada . Then in 1981, he joined Société Financière Mirelis SA in Geneva and served as Deputy CEO until he co-founded wealth-management company Mirelis InvesTrust SA (now Mirelis Holding SA) with other members of the Lawi family in 1997 . Mirelis acquired Hyposwiss in 2014, and Albert Lawi became Deputy CEO and Head of Private Banking in 2017 .

MEMBERS OF THE EXECUTIVE BOARD

100100

SÉBASTIEN JOLIATCFO

After obtaining a Bachelor's in business administration (with a concentration in finance) from the University of Geneva, Sébastien Joliat joined Ernst & Young SA (Geneva) as a bank auditor in 1997 . In 2003, he went on to work for Banque Safdié SA, Geneva, as CFO for both the parent company and its domestic and international subsidiaries and offices . In 2011, Mr . Joliat joined Mirelis InvesTrust SA as CFO, a position he still holds following the acquisition of Hyposwiss Private Bank Geneva SA . He became a member of the Hyposwiss Executive Board and Head of the Finance, Trading, Risk and Compliance departments in 2014 .

RONI HOUGUICOO

Roni Hougui holds a Bachelor in mathematics and computer science from Ben-Gurion University, Israel, an MBA from Tel Aviv University and an Executive MBA in International Wealth Management from Carnegie Mellon University, Pittsburgh (USA) and the University of Geneva . He ran the IT development and consulting firm Vertical Software, which specializes in the banking and watchmaking sectors and has offices in the USA and Switzerland . In 1999, he joined Mirelis InvesTrust SA, where he developed the IT infrastructure while also working as a wealth manager and Head of Trading . He became a member of the Hyposwiss Executive Board and Chief Operating Officer in 2014 in charge of Information Technology and Operations .

101

102102

Group

COMPANIES' ADDRESSES

103

HYPOSWISS PRIVATE BANK GENÈVE SARue du Général-Dufour 3CP 5611CH - 1211 Geneva 11Tel : +41 22 716 36 36Fax : +41 22 716 36 19info@gva .hyposwiss .chwww .hyposwiss .ch

HYPOSWISS ADVISORS SARue de Hesse 7CH - 1204 Geneva Tel : +41 22 310 76 40Fax : +41 22 310 76 39info@advisors .hyposwiss .chwww .hyposwissadvisors .ch

MONACO ASSET MANAGEMENT SAMVilla les FleursBoulevard Princesse Charlotte 27MC 98000 - MonacoTel : +377 97 97 64 00Fax : +377 97 97 64 01info@monacoasset .comwww .monacoasset .com

STAVANGER ASSET MANAGEMENT SAJåttåvågveien 7 C Blokk/buildingPO Box 1304066 Stavanger - NorwayTel . +47 910 02 401 eva@stavangeram .comwww .stavangeram .com

FIMANOR FINANCIAL MANAGEMENT AGHufgasse 178008 Zürich

104104

Expect the expected

“In private banking, it’s time for common sense to be more common.”

HYPOSWISS PRIVATE BANK GENÈVE SARUE DU GÉNÉRAL-DUFOUR 3 − 1204 GENEVA − SWITZERLAND

TEL . : +41 22 716 36 36INFO@HYPOSWISS .CH − HYPOSWISS .CH