EXTRACT - hyposwiss.ch · administration’s «America first policy » and the rise of Eurosceptic...

ANNUAL REPORT 2016

EXTRACT

Summary

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

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

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

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

Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

– Consolidated balance sheet 35

– Consolidated income statement 36

– Cash flow statement 38

– Statement of changes in equity 39

– Notes to the 2016 Consolidated Financial Statements 40

Report of Statutory Auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

– Statutory balance sheet 67

– Income statement 68

– Appropriation of profit 70

– Statement of changes in equity 70

– Notes to the 2016 Financial Statements 71

Report of Statutory Auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

Group companies' addresses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

This report is available in English and French . The French version is the authoritative version .

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CorporateBODIES OF HYPOSWISS PRIVATE BANK GENÈVE SA

55

MANAGEMENT COMMITTEE

Niels Bom OlesenChief Executive Officer

Albert LawiDeputy Chief Executive Officer

Solly Alain LawiHead of Private Banking

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

Jean-Luc de Buman*Vice-chairman

Alain Bruno Lévy* Member, Secretary

Etude Junod, Muhlstein, Lévy & Puder, Geneva

William E. Mocatta 1 Member

Sir Elly Kadoorie & Sons Ltd, Hong Kong

Michel Broch*Member

Declan Mc Adams*Member

* Independent according to Circ . FINMA 08/241 Until April 2016

5

66

LetterTO SHAREHOLDERS

77

Dear Shareholders,

Faced with a challenging geopolitical, economic and financial environment, we steadfastly remain realistic and cautiously optimistic . This outlook was an influencing factor in the significant growth of Hyposwiss Private Bank Genève SA ( Hyposwiss ) . Successive acquisitions of targeted financial assets have enhanced our Bank's identity and competitiveness, consolidating its capital base .

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 .

▪ At the beginning of 2017, Wall Street’s optimism spread to other global stock exchanges that were lagging behind . This new dynamic is linked to expectations of an accelerated recovery of world growth .

▪ The United States is close to full employment, and the major infrastructure projects and tax cuts announced by the Trump administration are fueling consumer enthusiasm . Future tax reform combined with the repatriation of business activities in the United States could represent a bull potential of over 10% for earnings per share over the next three years . This improvement in earnings prospect propelled the stock indices to historic level and to record valuations . Since March 2009, the S&P 500 has recorded a 310% increase in share value, an annualized rate of 19% . It is the second longest bull market, after that of the 20th century with the "1988-2000" episode .

▪ The European Union (EU) forecast is better than expected . The monetary policy of the European Central Bank (ECB) continued to support its economic growth . We expect growth of 1 .8% to 2% in 2017 . This is appreciable given the risks associated with Brexit and upcoming elections . What is especially remarkable is that the European Commission foresees, for the first time since 2008, that all the 28 member countries of the EU will record positive growth in 2017 and 2018 . Shortly after the US, the European Union has officially emerged from its crises . We also expect an acceleration of activity in emerging countries which continue to drive global growth .

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I - ACCELERATION OF GLOBAL ECONOMY

Global growth is at 3 .1% in 2016, should reach 3 .4% in 2017 and 3 .6% in 2018 .Despite the criticism on the merits of globalization (which is delineated by international commercial, financial and industrial transactions), the vital objectives from an international stand-point are to foster a more resilient growth recovery and reduce social disparities . It is by being together that nations, at the international level, will be able to overcome the turbulence of our time and improve a common future .

▪ We live in an increasingly integrated and interconnected world marked by the rapid spread of ideas, information and technology . The globalized economy has produced a complex and interdependent network of trade and financial flows that have resulted in unprecedented economic advances, improving the standard of living of the most disadvantaged .

▪ During the last three decades, there has been a remarkable rise in living standards . The world's real GDP per capita has grown by nearly 3 .5 times and by 9 .5 times for the emerging countries of Asia, progressing at an astounding pace . The volume of world trade has multiplied by 16 . Finally, under China’s impetus, 600 million people have emerged from poverty in Asia alone .

▪ In 2016, international trade in goods and services had the slowest growth since 2009 . The reasons are both cyclical and structural . On the one hand, the difficult economic situation in many commodity-producing countries has stifled growth . On the other hand, slowing trade liberalization and China's structural shift towards a more insular economy have led to a loss of momentum in international trade . However, better results are expected over the next two years,

taking into account an improvement in several major emerging countries and a few developing countries which, in 2016, experienced exceptional difficulties during a period of domestic recession (Russia, Brazil, Argentina and Turkey) .

Developed countriesMuch of this acceleration in growth will come from better prospects in the United States, China, Europe and Japan . In many countries, downward pressure on overall inflation has weakened, partly as a result of stronger commodity prices . Oil prices rose in 2017 in the wake of the agreement reached by the main producers (OPEC) to reduce supply .

Emerging and developing countriesThese countries are populated by 6 billion people, accounting for 85% of the world's population which exceeded 7 .5 billion in 2016 . They will account for 2/3 of the world's GDP over the next seven years . Growth in emerging and developing countries is now at 4 .1% and is expected to reach 5% by 2018 .

▪ China remains a significant driver of the global economy . The upward revision of China's growth for 2017 is an important factor in the faster acceleration of the global economy . The Chinese economy grew by 6 .7%, driven by consumer demand .

▪ The construction sector and the real estate market benefited from public infrastructure spending . This improvement takes into account a rebalancing, focusing on consumption as opposed to exports . This transition phase includes an anticipation of the continuation of the fiscal stimulus . However, a sudden or disruptive slowdown remains a potential risk

I - Global EconomyII - Major Risks & ChallengesIII - Measures to be implemented

IV - Investment Policy V - Swiss Financial SectorVI - Hyposwiss Financial Results

99

given the persistence of rapid credit expansion, compromised corporate debt and continued State support for inefficient public enterprises .

▪ India’s growth forecast of 7 .5% was slightly revised downwards in 2016, resulting from a reduction in consumption . This decrease is related to liquidity shortages and the disruption of payments in connection with the partial withdrawal of banknotes, a measure put into place to fight against a parallel economy and to promote the use of credit .

▪ Latin America’s slowdown in growth is largely due to moderate recoveries in Argentina, Brazil and Mexico and a continuing economic deterioration in Venezuela . The Middle East’s growth for 2017 is impacted by a reduction in oil production in Saudi Arabia resulting from the recent agreement among producer countries, while civil conflicts and regional wars continue to weigh heavily on several other countries .

Evolution of financial markets and a new recovery cycleThe major revaluation of assets following the US presidential election have been interpreted as a prediction that the new administration’s fiscal policy will become more expansionary and will require faster interest rate increases from the Federal Reserve (Fed) .

Gradual stabilization of interest ratesIn this context, there has been a sharp rise in long-term interest rates in the United States, an appreciation in equity markets reaching new heights and an increase in long-term inflation expectations in developed countries. This was accompanied by sharp swings in the dollar and the yen .

Long-term nominal and real interest rates have increased considerably since August 2016, particularly in the United Kingdom (Brexit) and in the United States since the November 2016 election . The 10 year UK Treasury bonds rose from 0 .5% to 1 .5 %, and United States Treasury bonds

from 1 .4% to 2 .6% . These variations were largely impacted by the expected change toward a more expansionary United States fiscal policy . As interest rates rise, United States Treasury yields are expected to be close to 3% by the end of 2017 . However, rate increases will only occur if economic growth is strong enough to support them.

Exchange rates and capital flowsThe US dollar appreciated in real terms by more than 7% between August 2016 and March 2017 . The currencies in commodity-exporting developed countries also strengthened as a result of rising commodity prices, while the Euro and in particular the yen have weakened . The currencies of several emerging countries have substantially depreciated, mainly the Turkish lira and the Mexican peso, while the currencies of several commodity-exporting countries, such as Russia, have appreciated .

II - MAJOR RISKS & CHALLENGES

At the global level‚ vulnerability factors include an increasing reluctance towards international trade, migration and multilateral agreements in the United States and Europe . In addition, the high level of public and private debt; climate change, particularly in low-income countries; and in a number of developed countries, the persistence of slow growth and deflationary pressures . Significant downside risks include the adoption of inward-looking policies and a more pronounced tightening of global financial conditions; all of which could have an impact on the weakness of balance sheets in some parts of the Euro area and in some emerging countries .

▪ Geopolitical risks and a host of other non-economic factors continue to weigh on the prospects of different regions : civil wars and internal conflicts in parts of the Middle East and Africa, refugee and migrant issues in neighboring countries and Europe, acts of terror throughout the world and the prolonged effects of a drought in Africa .

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▪ For 2017, there is apprehension in Europe and the UK, particularly as a result of the implementation of Brexit, with elections anticipated in 2017 or 2018 . Elections are also expected in four important countries : the Netherlands, France, Germany and Italy, accompanied by a record "euroscepticism" . In Europe, the terms of the UK exit from the European Union remain unresolved due to the various upcoming electoral events, with possible negative economic repercussions, both in the short and longer term .

De-globalizationGlobalization has already lost momentum : fewer trade agreements, raised tariff barriers, questioning of existing treaties, bilateral approaches vs . multilateral approaches and a reduction in the mobility of capital . International trade is ebbing, thereby resulting in a decline in world GDP . We must go back to the interwar years to see a similar drop in world trade .

▪ The tendency towards de-globalization is unlikely to be reversed in light of Brexit, the Trump administration’s « America first policy » and the rise of Eurosceptic parties in Europe . This new structural trend could generate slower economic growth, more inflation and volatile economic cycles .

Geopolitical riskThe Trump administration seems to pursue a « United States retrenchment » policy, thereby shifting the global geopolitical balance . The world order that had prevailed since the end of the Cold War and during the Obama administration is being challenged . We can expect a fundamental redefinition of a new economic and financial order‚ with the re-examination of post-1945 multilateral agreements . The American withdrawal gives other global powers, such as China and Russia, room to maneuver . This comes at a time when Europe is going through institutional crises . In parallel, major geopolitical issues become more difficult to resolve : migratory crises, terrorism, tensions in the Middle East, environmental concerns .

III - MEASURES TO BE IMPLEMENTED

Budgetary, structural and monetary measures, adapted to each countryToday, we are at a crossroads where the world economy needs 2 prerequisites : anchored national policies combined with a strong commitment to international cooperation . The successful implementation of these policies will lead to a more resilient global economy as well as a sustainable and more inclusive economic growth . After six years of disappointing growth, the world economy is accelerating through a cyclical recovery that will result in job creation, a rise in income and an ultimate increase in prosperity .

▪ We therefore need to stimulate growth, with emphasis on productivity, through fiscal, monetary and structural measures, all adapted to the needs of each individual country . This would result in a sharing of the benefits of growth in a more equitable manner within a multinational framework, ensuring financial stability that is the very foundation of a more resilient global economy .

▪ Some developed countries, such as Germany and the United States, are now operating at almost full capacity . Their budgetary and fiscal policies must leverage potential output by investing in infrastructure and engaging in equitable tax reform that is conducive to productivity . On the other hand, these countries should be vigilant as to the sustainability of their public finances over the longer term in order to allow central banks' monetary policies to conduct monetary policies in a manageable trajectory . Structural reforms remain a priority everywhere, given the persistence of moderate productivity growth .

▪ The security of international capital markets is another universal priority during a period of sustained economic growth . It requires a strengthening, not a relaxation, of financial regulation in each country as well as at the multinational level . In particular, it is necessary

1111

to recapitalize some institutions, to clean up their balance sheets and to tackle the related risks prevalent in non-bank intermediaries . A stronger global security regime can protect countries that are vulnerable to contagion .

▪ Surveillance of the financial sector has become more complex over the past fifty years due to exponential financial activities that have been experiencing no more borders . To meet these challenges, the national regulatory authorities have initiated a consultation and coordination process under the aegis of the Basel Committee . The Basel Committee, created by the Central Banks in 1974, focuses on banking supervision . The Financial Stability Board, established by the G20 in 2008, develops international regulatory measures . That is why, even if the Basel III system is being set up, banks are already much better capitalized and less sensitive to market volatility than they were ten years ago . Continued international financial cooperation is essential, as it is the basis of the strength and stability of the global economy .

The digital technology revolutionThe social upheavals caused by globalization and, even more so, technological advances, are a major factor that will only intensify in the future . We are at the heart of the most important information and communication revolution in the history of mankind . More than 40% of the world's population has access to the Internet, with new users accessing the web each day .

▪ We must take advantage of this rapidly growing technological evolution . The World Bank's World Development Report 2016 argues that enlarged access to digital technologies promotes inclusiveness, efficiency and innovation . Effectively, this new technology enables disadvantaged populations to access a world of opportunities that were previously out of reach .

▪ « Access to all » means investing in infrastructure‚ engaging in reforms that strengthen competition in the telecommunications sector‚ encouraging

public-private partnerships and allowing for effective regulation .

▪ It has been proven that countries which complement their technology investments with wider economic reforms are reaping benefit of digital technology in the form of accelerated growth, more jobs and a better quality of services .

IV - INVESTMENT POLICY

Key elements for Asset ManagementToday, the world is emerging from the Great Recession, the worst economic crisis and hardship to which our generation has been subjected . Through multilateralism, we have surmounted the risk of another major depression that could have further destabilized the global economic order . By pulling together, world leaders - G20, Fed, IMF, ECB and the 27 of the European Union have overcome the entrenched obstacles to restore growth by rejecting protectionism .

▪ The cumulative crises have tested the ability of the international system to absorb the shocks of natural, geopolitical and financial events around the world . This has resulted in more robust multinational corporations and fostered their productivity . Diversified public-quoted companies listed on various stock exchanges have been able to react dynamically to changes . Investments in equities and bonds of those listed companies create opportunities in our managed portfolios, coming from customer savings deposited with the Bank .

▪ Our Research & Investment team ( R & I team ), responsible for managing the financial analysis of investment products, uses state-of-the-art technological tools to identify companies in different market segments, including cyclical and defensive stocks with small, medium or large capitalizations .

▪ With regard to asset allocation, the present normalization of corporate earnings and valuations favor a higher percentage of shares to

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be held in portfolios . Investment opportunities exist in all sectors, at all times, regardless of the economic cycle .

Growth and productivity potentials of developing and industrialized nations - propelled by technological advances in a hyper connected world in the digital age - are positive foundations for our overall investment strategy and value-added asset allocation .

Traditional and Alternative FundsInvestment funds remain an essential component in the construction of our portfolios thanks to their contribution to risk diversification and ability to generate performance in various market cycles . In 2016, we reorganized our Monitor List of funds, as to keep managed portfolios in line with our investment policy .

▪ Meanwhile, Hyposwiss strengthened its internal organization for distribution and marketing of collective investment schemes, including investment funds, structured products and exchange-traded funds "ETF" . In order to take advantage from short and medium term macroeconomic trends, we have increased allocations of ETFs in managed accounts .

Existing funds and new fundsThe management of our existing funds has been revitalized within Protea Orchard European Equity and Protea Orchard US Equity. Our investment strategy is to create a balance between capital preservation, income generation and sustainable growth .

▪ The R & I team has launched two new UCITS funds domiciled in Ireland and Luxembourg . One is a US equity fund focused on innovation in different sectors, including robotics, digitization of information and health, and the other is a bond fund .

▪ During the first half of 2016, traditional and alternative funds suffered from « hard landing » events related to the Chinese Stock Exchange . Nevertheless, some alternative strategies have successfully outperformed in this volatile environment due to their lower correlation with markets . In the second half of the year, traditional funds recovered, contributing positively to portfolio performances .

▪ Hyposwiss has delivered a solid cumulative performance year on year for the portfolios of its domestic and international investors . As part of its wealth management business, the Bank contributed to the increased performance of client assets . The global investment strategy‚ recommended by the R & I team‚ focuses on capital preservation and growth‚ with the optimal use of various financial instruments .

The year 2017 has started well, with a sharp rise of the stock markets which in the medium term should stay on track . Our diversified model portfolios in Euro and dollar US have outperformed their benchmarks .

V - SWISS FINANCIAL SECTOR

In 2016, the Swiss National Bank (SNB) maintained its accommodating monetary policy aiming at stabilizing prices and supporting the economic recovery . The SNB thus implemented a negative interest rate of -0 .75% on demand deposits held by banks and intervened in the foreign exchange market .

▪ Since the 2008 crisis, regulators have significantly tightened capital and liquidity provisions with the objective to reduce systemic risks and imposed international compliance for tax and money laundering . The Swiss financial center is at the heart of these measures, implementing banking regulations focused on protecting bank customers and ensuring the security and stability of the financial system.

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▪ Developments in bank secrecy issues, the continued strengthening of fiscal transparency and the Automatic Exchange of Information (AEOI) continue to play a major role in the Swiss financial sector . Such requirements result in a fundamental structural change among financial institutions reducing the size of the banking sector . Digitization is also an important driver of this restructuring process .

▪ Within this framework, various regulatory proposals are being implemented by the Swiss authorities . This is the case with the Financial Market Infrastructure Act (FMIA), which came into force in early 2016, the Financial Services Act (FinSA) and Financial Institutions Act (FinIA), which are currently being finalized by Parliament .

▪ Switzerland has also adapted its legislation in other areas to include the AEOI and regulations of the Organization for Economic Co-operation and Development (OECD), both combating the erosion of the tax base and the transfer of profits to countries where taxation is low or nonexistent .

▪ In 2016 and early 2017, Hyposwiss Legal & Compliance division continued to be proactive to apply various guidelines and procedures that are aligned with regulatory requirements . In anticipation, new control criteria were set up to further enhance risk management .

▪ Today, the new regulatory framework is accepted among international clientele . Global standards against tax evasion have produced expected effects and refrained Swiss bank clients from relocating their assets to another financial center . Hyposwiss has the ability to attract new clients looking for worldwide investment opportunities and the safe environment Switzerland has always offered .

▪ Hyposwiss is well positioned to benefit from the upcoming shift in policy by central banks toward a normalization of interest rates, allowing for a better remuneration of savings . This should enable the SNB to put an end to its policy of low interest rates and to an overvalued Swiss franc .

Horizon 2020 : structural changeThe consolidation process among banks in the Swiss financial sector could still accelerate . Investment counseling and asset management in particular, which are characterized by personal relationships, have to cope with the applications of FinTech and advisory regulations . In the future, the option of concluding partnerships with FinTech may have to be considered to develop innovative services and protect the customer interface .

It is about having the capacity not only to adapt to change but to drive it, while anticipating the challenges of tomorrow .

VI - HYPOSWISS FINANCIAL RESULTS

Following the acquisition of the assets of IDB (Swiss) Bank Ltd « IDBS » in March 2016, Hyposwiss' balance sheet as at 31 December 2016 amounted to CHF 738 million, compared with CHF 534 million as at 31 December 2015 . The increase in the size of the balance sheet resulted from integration of the assets of the IDBS customer base . Hyposwiss' consolidated shareholders' equity amounted to CHF 45 million as at 31 December 2016 . The level of capital adequacy was 262 %, a solvency ratio of 20 .9 %, higher than the regulatory ratio of 10 .5 % . We maintain our strong capitalization with a capital surplus of CHF 23 million .

▪ Continuous pressure on returns : many investors remain defensive « risk off », causing a reduction in the volume of transactions and putting pressure on commission fees . The stricter regulation demands introduced, after the financial crisis, create additional operating

Client Assets : CHF 4 billion

Balance Sheet : CHF 738 million

Shareholder’s Equity : CHF 45 million

Earnings : CHF 8 .4 million

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expenses . As a consequence, invested clients assets produce, on average, lower margins .

▪ However, Hyposwiss' core business has evolved positively, generating strong operating results . The fact that we have managed to contain reduced margins has played an important role in our optimistic outlook .

▪ Hyposwiss managed to offset the outflow of tax-related assets, with new customer deposits through organic growth and targeted acquisitions . In 2016, the volume of customer assets with « Discretionary » or « Advisory » mandates and « Execution only accounts » reached CHF 4 billion in 2016, compared to CHF 3 .2 billion in 2015 . This increase resulted from the acquisition of IDB (Swiss) Bank Ltd (IDBS) client assets, the evolution of equity markets as well as the strong performances of portfolios .

As at 31 December 2016 the consolidated result shows a profit of CHF 8 .4 million . This result takes into account the dissolution of reserves for general banking risks for CHF 4 .75 mio and the dissolution of provisions for deferred taxes for CHF 1 .63 mio, hence a profit of CHF 2 mio excluding the dissolution of these two items .

▪ The investments held by Hyposwiss in asset management companies contribute to its profitability: Monaco Asset management SAM (AUM: CHF 2 .5 billion ), Hyposwiss Advisors SA – formerly Mirelis Advisors SA – ( AUM: CHF 140 mio ) and Stavanger Asset Management Ltd ( AUM: CHF 49 mio ) .

CONCLUSION

▪ Founded in 1889, Hyposwiss, our unified institution, entirely dedicated to wealth management business, has a solid identity that benefits from a team of qualified professionals, competitive, loyal and culturally diverse . Our Bank applies a dynamic and overall risk management with strict governance principles .

▪ The structure of our balance sheet is conservative, with adequate capital and external financing entirely from client deposits . Loans to customers are mainly Lombard loans and covered more than and fully financed by client deposits . For 2017, we anticipate that our activities will continue to generate positive results, in conformity with our budget .

▪ The proactive management leadership and the close-knit teams supported by the availability of partners prevail as essential elements for our bank’s future . Customer loyalty remains crucial, supported by stability, high quality standards and added value in terms of performance .

▪ We wish to express our gratitude to all our collaborators for their dedication and steadfast commitment . By combining our professionalism, we continue to build an institution that will stand for its performance and by the business passion of its leaders . We warmly thank our customers for their confidence . We are determined to continue to serve them in an environment of trust and friendship that characterizes the Hyposwiss Group .

Niels BOM OLESENChief Executive Officer

Solly S. LAWIChairman

Activity

REPORT

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HYPOSWISS ACTIVITY REPORT

GROWTH OF ASSETS UNDER MANAGEMENT

CONSOLIDATED KEY RESULTS IN 2016

Balance sheet : CHF 4 billion Shareholders equity : CHF 45 million Net profit : CHF 8.4 million

In billion CHF

Hyposwiss Private Bank Genève SAMonaco Asset Management SAM

2011

1.8

1.4

2012

2 .0

2 .1

2013

1 .4

2 .3

2014

3 .4

2 .5

2015

3 .2

2 .5

2016

4 .0

2 .5

MIRELIS HOLDING SA

HYPOSWISS PRIVATE BANK GENÈVE SASWITZERLAND

HYPOSWISSADVISORS SA

SWITZERLAND

MONACOASSET MANAGEMENT SAM

MONACO

STAVANGERASSET MANAGEMENT LTD

NORWAY

100 % 22.3 % 35 %

100 %

1818

Hyposwiss Private Bank Genève SA In million CHF

3’000

2’500

2’000

1’500

1’000

500

0

Monaco Asset Management SAMIn million CHF

4’500

4’000

3’500

3’000

2’500

2’000

1’500

1’000

500

02011

2011

2012

2012

2013

2013

2014

2014

2015

2015

2016

2016

1919

HYPOSWISS PRIVATE BANK GENÈVE SA

TOTAL CONSOLIDATED CLIENTS' ASSETS AT 31 DECEMBER 2016 : CHF 4 BILLION

Others

CHF

GBP

EUR

CAD

USD

Currency allocation as at 31.12.2016

53 .5 %

2 .3 %

14 .3 %

2 .4%

10 %

16 .8 %

Cash

Bonds & Bonds funds

Other funds and structured products

Hedge funds

Equities and Equity funds

Metals and Commodities

Others

34 .2%

1 .3 %

5 .6 %

30 .1 %

22 .4 %

0 .7 %

5 .6 %

2020

Economic

AND FINANCIAL OUTLOOK

2121

Long-term potential growth rate (march 2016)

ACCELERATED RECOVERY OF THE GLOBAL ECONOMY

▪ Global growth is now estimated at 3 .1% for 2016 and is expected to reach 3 .4% in 2017 and 3 .8% by 2018 . As of the middle of the previous year, global economic conditions have gained momentum . Favorable financing conditions, more stable commodity prices and robust economic growth in China contributed to this improvement . In addition, unemployment continued to decline in most regions .

ECONOMIC AND FINANCIAL OUTLOOK

Global business cycle overview

Stronger growth dynamicsWeaker growth dynamics

Business cycle

JaponItaly

AustraliaCanada

France

South Korea

EM Asia

World

Eurozone

Germany

USAUK

China

Switzerland

22

GROWTH FORECAST IN ADVANCED AND EMERGING COUNTRIES

▪ Much of this acceleration will come from better prospects in the United States, Europe and Japan . In India and China, the upward revision of growth, around 7%, helps support the development of the international economy . In Latin America and the Middle East, recoveries are more moderate .

Advanced economies

United States

Japan

United Kingdom

Eurozone

Germany

France

Italy

Spain

Switzerland

Brazil

Mexico

Russia

Turkey

China

India

Indonésia

South Africa

1 .6

1 .0

1 .8

1 .8

1 .9

1 .2

0 .9

3 .2

1 .3

-3 .6

2 .3

-0 .2

2 .9

6 .7

7 .9

5 .0

0 .3

2 .2

1 .2

1 .7

1 .7

1 .7

1 .4

0 .9

2 .7

1 .5

0 .6

1 .5

1 .2

2 .5

6 .6

7 .0

5 .2

1 .0

2 .3

1 .0

1 .3

1 .6

1 .6

1 .5

1 .0

2 .2

1 .7

2 .2

2 .1

1 .5

3 .1

6 .3

7 .3

5 .4

1 .6

1 .7

2 .0

1 .9

-0 .3

0 .5

0 .6

-1 .7

-1 .7

1 .8

3 .0

1 .4

1 .3

4 .2

7 .8

4 .7

5 .6

2 .5

2 .6

1 .2

2 .2

2 .0

1 .7

1 .3

0 .8

3 .2

0 .8

-3 .8

2 .6

-2 .8

4 .0

6 .9

7 .2

4 .9

1 .4

2 .4

0 .4

3 .1

1 .2

1 .6

0 .6

0 .1

1 .4

2 .0

0 .5

2 .3

0 .7

3 .0

7 .3

6 .5

5 .0

1 .7

Emerging economies

2018 20182017 20172016 20162015 20152014 20142013Real GDP growth, in %

Real GDP growth, in %

2013

2323

USA

Acceleration of consumption, sustained by the continued decline in unemployment

▪ Essentially, the US economy is continuing its growth momentum and remains well-oriented . All business indicators remain at high levels, the technology sector is growing and investment prospects are more attractive, stimulated by the ingress of the Trump administration . The labor market has risen by almost any measure, and the unemployment rate has fallen to 4 .5% in 1Q-2017 .

Unemployment

CPIGDP

201020092008 2011 2012 2013 2014 2015 2016 2017

% y/y

10

8

6

4

2

0

-2

2424

EUROZONE

Growth in the European economy

▪ In the euro area, GDP grew to 1 .7% in 2016 and could reach 2% in 2017 . GDP has thus regained its previous levels from the beginning of the financial crisis . The ECB's expansionary monetary policy continued to support all countries in the euro area, with Germany as the principle driver .

▪ Economic growth has maintained solid grounds across the euro area . Low energy prices and favorable financing conditions stimulated domestic demand while exports increased slightly following the improvement in the global economy and weakness of the euro . Employment has regained dynamism and by the end of 2016, unemployment rates fell below the 10% threshold for the first time in five years .

Purchasing Managers Index (PMI)

2014

60

58

56

54

52

50

48

2015 2016 2017

GermanySpain

ItalyFrance

Baseline (50.00)

PMI Index

2525

EMERGING ECONOMIES

▪ Overall, growth is expected to pick up slowly over the next two years, aided by the gradual easing of recessions in Brazil, Russia and other commodity-producing countries .

▪ Emerging economies show contrasting results, reflecting differences in policies implemented to support activity, alleviate sensitivity to commodity price fluctuations, improve structural reforms and reduce financial vulnerabilities .

▪ The rising dollar and financing costs, through the rise in US interest rates, will weigh on the repayment capacity of emerging countries .

56

54

52

50

48

46

44

42

Russia

ChinaIndia

Brazil

2014 2015 2016 2017

BRIC's PMI manufacturing indexPMI Index

Baseline (50.00)

2626

SWITZERLAND

▪ The Swiss economy has gained momentum over the past year, continuing to recover from the strong appreciation of the Swiss franc at the beginning of 2015 . GDP grew by 1 .3% in 2016 (versus 0 .8% in 2015) .

▪ In 2016, the SNB pursued its expansionary monetary policy as to stabilize price developments support the domestic economy and foster financial recovery . The SNB thus took into account a moderate economic growth and a persisting negative inflation . As in 2015, its monetary policy was based on two pillars: applying a negative interest rate of -0 .75% to financial holdings held by banks and other market participants; intervening as often as necessary in the foreign exchange market .

▪ The SNB's interventions took place mainly in periods of increased uncertainty, during which the franc was highly sought as a safe investment . Only its purchases of currencies in June 2016, in the aftermath of the Brexit, were an exception due to the turmoil that this decision caused in the markets .

▪ The franc was slightly stronger at the end of the year compared to the euro, but this was partly offset by a slight weakening against the US dollar . The French presidential election of May 7, 2017, which confirmed the continuity of the country's commitment within the EU, could put an end to the rise of the Swiss franc against the euro .

EUR-CHF

USD-CHF

US dollar and Euro vs Swiss franc

GDP

3 .5

3 .0

2 .5

2 .0

1 .5

1 .0

0 .5

0 .0

-0 .5

1 .6

1 .5

1 .4

1 .3

1 .2

1 .1

1 .0

0 .9

GDP %Exchange

rate

20102009 2011 2012 2013 2014 2015 2016 1T-2017

2727

OIL

Rising commodity prices

▪ Although in stagnating in recent years, commodity prices have been partially recovering during 2016 . The price of Brent, at less than USD 30 in the beginning of 2016, increased during the first half of the year . It rose to USD 56 by the end of the year, after major oil-exporting countries (OPEC and non-OPEC) agreed to reduce production for the beginning of 2017 . Industrial metal prices also rose due to the recovery of the world economy .

▪ Taking into account the increase in production of shale oil in the United States, the change in barrel price is expected to fluctuate between USD 45-60 for 2017 .

Commodities (ex energy)

Brent crude oil (USD/bbl)

World trade

2010 2011 2012 20162013 20172014 20182015

9 .80

53 .65

1 .91

-9 .37

15 .11

7 .05

-

-6 .82

3 .76

6 .58

2 .79

2 .78

-

-1 .15

4 .14

-18 .23

0 .88

3 .50

-17 .31

-36 .28

2 .66

30 .33

20 .09

12 .38

-6 .78

-48 .62

3 .85

YoY change in %

Trend of energy prices since 2015Oil prices

Brent/WTIS&P Energy index

25

35

55

16045

120

65200

30

40

100

60

180

50

140

70220

Brent

WTI

S&P GSCI Energy

2015 2016 2017

2828

GOLD

▪ Over the course of 2016, gold, which is typically a safe alternative asset, experienced sharp fluctuations subsequent to the fall in commodity prices and the expectations of normalizing US monetary policy . The yellow metal thus strengthened to around USD 1,350/oz until November 2016 (US presidential election) and consolidated towards USD 1,200/oz in 1Q-2017 . Uncertainties were associated with both geopolitical risks and central bank's liquidity injections by way of continuous creation of paper money against the holding of gold paper . They remain one of the factors which prompt the use of a safe haven such as gold . At the same time, gold stocks, after a fall between August and December 2016, rebounded strongly and have regained stability within a bull cycle .

PRECIOUS METALS

Managed Money Position

COMEX Gold 82’464

COMEX Silver 75’475

COMEX Copper 78’511

NYMEX Platinum 25’763

NYMEX Palladium 16’937

World investment demand in precious metals

0 .4

0 .3

0 .2

0 .1

0

-0 .1

Number of contracts traded (in mio) on the COMEX and NYMEX stock markets

2014 20151T 1T 1T2T 2T3T 3T4T4T 4T

2016 2017

USD

CHF

GBP

EUR

Performance of gold in different currencies (USD, GBP, EUR, CHF) Basis 100 01 .01 .2008

240

220

200

180

160

140

120

100

80

2008 2010 2012 2014 20162009 2011 2013 2015 2017

2929

EXCHANGE RATE

▪ In 2016, the currency market was marked by the strength of the US dollar against major currencies, with real value appreciating by more than 7% between August 2016 and March 2017 .

▪ This movement in the dollar’s appreciation is the outcome of the improved US economy and the growing divergence between the United States versus the rest of the world in terms of growth and normalization of monetary policies .

Performance of currencies against US dollar in 2016

Dollar performance against the major emerging currencies since 2015 (base 100) to date

▪ The currencies of exporting countries have strengthened, taking into account the appreciation of commodity prices . The rebound in the commodities sector, particularly oil, is benefiting countries whose exports account for a significant share of income . Oil prices depend on supply-demand stabilization agreements and continue to influence the exchange rates of emerging countries (including Russia) .

Canadian Dollar

Japanese Yen

Norvegian Krone

New Zealand Dollar

Australian Dollar

Swiss Franc

Danish Krone

Euro

Swedish Krone

British Pound

CAD

JPY

NOK

NZD

AUD

CHF

DKK

EUR

SEK

GBP

-1.07

-1.66

-2.80

-3.18

-7.30

-16.26

2.96

2.79

2.34

1.51

Basis 100 01 .01 .2016

J JJ J N DF FM A A S OM

JPM Latin America Dollar Index

JPM Asia Dollar IndexUSD Index

106

104

102

100

98

96

94

2016 2017

3030

CENTRAL BANKS

▪ Following the economic and financial crisis of 2008, nominal interest rates fell to historically low levels in 2016 . Central banks used non-standard measures to pursue appropriate monetary policies, taking into account the low levels of underlying inflation . Today, having overcome the crisis, such policies should lead to a process of gradual normalization of interest rates.

▪ Monetary tightening by the Fed: only the United States was the exception, with the rate of inflation now approaching the target . Given the favorable labor market situation and the satisfactory evolution of inflation in December 2016 and March 2017, the Fed raised the target rate with regards to its policy rate .

▪ Further monetary easing in the euro area: the ECB again strongly relaxed its monetary policy in 2016 . In March 2017, it declared it would continue purchasing its securities until at least the end of 2017 . However, the monthly amount of its purchases will be reduced to EUR 60 billion as of April 2017 .

▪ New measures in Japan: the persistently low level of inflation prompted the BoJ to take further monetary policy measures in 2016 . It declared that it would pursue its securities purchases and keep 10-year rates at zero until inflation exceeds 2% .

▪ Flexibility in emerging economies: in the context of a housing bubble, the Central Bank of China has continued to tighten its monetary policy . It is worth mentioning that the monetary authorities are also trying to stop capital outflows .

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 2017

3131

REBOUND OF THE BOND MARKET THANKS TO THE ACTIONS OF CENTRAL BANKS

▪ The Fed meeting in mid-March 2017 ended with a rate hike for the third time . The US central bank is expecting a "gradual normalization" of rates with three interventions for each of 2017 and 2018 .

▪ Given the improvement in growth prospects, the recovery in inflation and the gradual rate increase, yields will continue to rise in the medium term . The same trend is expected for the euro area and Switzerland .

Performance of the Barclays Global Aggregate

510

500

490

480

470

460

450

440

430Fed Taper Started

Climax of Taper Concern

ECB adopted negative rates

Fed signals New Rate Hikes

ECB QE

BOJ Rate Cut, ECB add QE, Fed Dot Reduction

Fed Rate Hike

Barclays Index

2014 20152014 2016 2017

BOND MARKETS

▪ Long-term nominal and real interest rates have risen significantly since August 2016, particularly in the United Kingdom (Brexit) and the United States subsequent to the November election . US Treasury yields are expected reach close to 3% by the end of 2017 . However, the Fed pointed out that rate increases will only occur if economic growth is strong enough to support them .

10-year government interest rates

7

6

5

4

3

2

1

0

Yield in %

German Bund UK Gilt

US Treasury

Italy BTP

20162015201420132012 2017

3232

STOCK MARKETS

▪ Equity markets are at their highest historical level . The enthousiasm on Wall Street since the US presidential election has spread over to other stock markets . This new dynamic is linked to the expectations of continued recovery in global growth .

▪ Since March 2009, stock appreciation has reached 310% for the S & P 500, which translates to an annualized rate of 19% . The Swiss stock market hit a new record, exceeding 10,000 points for the SPI index . It is the second longest bull market period of the 20th century since the "1988 to 2000" episode .

▪ The strong cyclical momentum is expected to boost corporate profits this year . The improvement in forecast earnings has propelled the indices to record valuations . The European equity market in particular has potential for catching up and could outperform in 2017 .

Multiple valuation of the major indices - Price Earning Ratio (PER)

PER

2015

22

20

18

16

14

12

10

Nikkei 225

Dax

Cac 40

S&P 500

Stoxx Europe 600

2016 2017

3333

STOCK MARKET INDICES

North/Latin America

Dow Jones Industrial AVG - USD

S&P 500 INDEX - USD

S&P/TSX COMPOSITE INDEX - CAD

MEXICO IPC INDEX

BRAZIL IBOVESPA INDEX- BRL

Europe/Africa/Middle East

EURO STOXX 50 Pr- EUR

FTSE 100 INDEX - GBP

CAC 40 INDEX - EUR

DAX INDEX - EUR

IBEX 35 INDEX - EUR

FTSE/MIB INDEX - EUR

AEX INDEX - EUR

OMX STOCKHOL 30 INDEX - SEK

SWISS MARKET INDEX - CHF

Asia / Pacific

NIKKEI 225 - JPY

HANG SENG INDEX

S&P NZX All Index

January to March

20172016

4 .55 %

4 .90 %

0 .40 %

6 .23 %

5 .47 %

3 .98 %

2 .41 %

2 .67 %

3 .88 %

9 .67 %

4 .23 %

5 .48 %

3 .62 %

4 .24 %

-0 .15 %

10 .58 %

1 .60 %

13 .42 %

9 .54 %

17 .51 %

6 .20 %

38 .93 %

0 .70 %

14 .43 %

4 .86 %

6 .87 %

-2 .01 %

-10 .20 %

9 .36 %

4 .86 %

-6 .78 %

0 .42 %

0 .39 %

5 .25 %

Sources : Bloomberg, Ernst & Young SA, BCA Research, Banque Julius Baer & Cie SA, World Bank, Swiss National Bank (SNB), G20, Organization for Economic Co-operation and Development (OECD), Thomson Reuters datastream, International Monetary Fund (IMF), UBS SA .

Perf . YtD (in local currency)

Consolidated

BALANCE SHEET

3535

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 .2016

CHF

51'564'766

204'138'296

233'824'054

9'440'000

70'820

6'917'763

217'537'754

5'516'852

539'825

1'970'491

5'112'962

925'000

737'558'583-

-

2'705'690

676'574'496

6'647'638

5'026'699

1'729'247

18'719

-

27'500'000

1'685'610

7'295'813

(68'100)

8'442'771

737'558'583-

-

15'909'054

2'402'281

-

-

31 .12 .2015

CHF

60'345'827

243'820'651

170'448'436

7'200'000

116'602

6'215'967

35'435'882

5'847'454

553'099

2'278'486

1'131'738

546'626

533'940'768-

-

3'720'410

475'263'307

5'888'429

3'949'547

2'313'991

1'653'761

4'750'000

27'500'000

1'685'610

7'025'015

(80'100)

270'798

533'940'768-

-

11'177'925

2'981'832

-

-

3636

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 operationsChanges 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

4'519'811

6'073

1'032'473

357'644

5'916'001-

5'916'001

25'911'660

181'250

917'161

(2'647'530)

24'362'541

3'951'324

541'655

33'700

33'700

-

49'414

-

624'769

4'084'125

12'073

345'309

(90' 835)

4'350'6721'259'332

5'610'004

23'707'575

86'561

1'235'242

(2'227'106)

22'802'272

4'002'204

-

55'261

55'261

-

179'191

(89'880)

144'572

2016

CHF

2015

CHF

3737

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 intangile assets

Changes to provisions and other value adjustments, and losses

Operating resultExtraordinary income

Extraordinary expenses

Changes in reserve for general banking risks

Taxes

Consolidated profit (result of the period)

(22'130'526)

(8'097'097)

(30'227'623)

(2'399'093)

(100'699)

2'127'220119'888

(28'343)

4'750'000

1'474'006

8'442'771

(20'405'858)

(7'948'934)

(28'354'792)

(1'492'320)

(1'328'076)

1'383'864315'404

(1'904'015)

500'000

(24'455)

270'798

2016CHF

2015

CHF

3838

CASH FLOW STATEMENT

CASH FLOW FROM OPERATING ACTIVITIES

(INTERNAL FINANCING)

Result of the period

Change 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)


SHORT-TERM BUSINESS






Mortgage loans



SubtotalLiquid assets

SubtotalTotal

8'442'771

-

2'399'093

-

-

-

492'408

-

11'334'272

-

12'000

-

12'000

13'274

-

-

13'274

-

-

201'311'189

759'209

39'682'355

-

-

45'782

-

241'798'5358'781'060

8'781'060261'939'141

270'798

-

1'492'320

-

-

1'296'969

-

-

3'060'087

----

63'252

-

-

63'252

-

-

-

-

-

37'212'876

-

48'905

6'533'218

43'794'999

28'473'045

28'473'04575'391'383

-

4'750'000

-

-

1'635'042

47'772

-

-

6'432'814

-

-

-

-

-

755'204

5'317'117

6'072'321

182'101'872

1'014'720

-

-

-

63'375'618

2'240'000

-

701'796

249'434'006

-

-261'939'141

-

500'000

-

-

1'724'978

-

418'512

-

2'643'490

-

118'330

-

118'330

-

118'389

535'832

654'221

23'164'456

23'893'269

16'700'795

6'400'970

1'815'852

-

-

-

-

71'975'342-

-75'391'383

31 .12 .2016 31 .12 .2015

Cash in-flow CHF

Cash out-flow CHF

Cash out-flow CHF

Cash in-flow CHF

3939

STATEMENT OF CHANGES IN EQUITY

(CHF 1'000)

Equity at start of current periodAllocation to retained earnings reserve

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

Other allocations to (transfers from) the other reserves

Profit (result of the period)

Equity at end of current period

27'500-

-

-

-

27'500

1'686-

-

-

-

1'686

7'025271

-

-

-

7'296

4'750-

(4'750)

-

-

-

(80)-

-

12

-

(68)

271(271)

-

-

8'443

8'443

41'152-

(4'750)

12

8'443

44'856

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

40

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 (hereafter « The Group ») . Hyposwiss owns 100% of the share of Mirelis Advisors SA, and holds minority interest in Monaco Asset Management SAM, Monaco and Stavanger Asset Management Ltd, Stavanger .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 .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 2016, the Group had 95 employees (89 .21 employees full-time), compared to 80 employees (74 .53 employees full-time) at the end of 2015 .

2 - CONSOLIDATION, VALUATION AND ACCOUNTING 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 principlesAssets 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 include 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 .

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

NOTES TO THE CONSOLIDATED 2016 FINANCIAL STATEMENTS

41

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 Or en USD

1 .0156

1 .0726

1 .2541

1'174 .95

0 .9896

1 .0819

1 .4671

1'063

31 .12 .2016 31 .12 .2015

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

Trading portfolio assetsSecurities and precious metals destined for trading are evaluated and carried to the balance sheet at fair value . Profits and losses arising from the trading portfolios are carried 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 instruments

Trading portfolio assetsAll financial derivative instruments are valued at fair value . Positive or negative replacement values are carried 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 carried to « 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 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 .

42

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

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 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

43

economic benefits are recorded in « Other assets » . The change in value of the benefits/obligations compared to 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 during 2016 .

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 2016 .

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 interests, the Group is mainly exposed to investment shortfalls .

Market risksMarket risk results from a potential loss due to fluctuations in foreign exchange rate, interest rate 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 .

44

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 authorized 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 loan with readily marketable securities as collateral . Credit limits depend on the nature, the solvability and the negotiability of the security .

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 » .

4545

LOANS

(before netting with value adjustments)


Mortgage loans

- residential property

TOTAL LOANS

(before netting with value adjustments)

31.12.201631.12.2015

TOTAL LOANS

(after netting with value adjustments)

31.12.201631.12.2015

OFF-BALANCE-SHEET

Contingent liabilities

Irrevocable commitments

TOTAL OFF-BALANCE-SHEET

31.12.201631.12.2015

IMPAIRED LOANS / RECEIVABLES

31.12.201631.12.2015

Secured by mortgage

Type of collateral

Other collateral

Unsecured Total

-

9'440

9'440

9'4407'200

9'4407'200

-

-

--

Gross debt amount

1'4511'370

233'632

-

-

233'632170'060

233'632170'060

13'144

1'220

14'36412'581

Estimated liquidation

value of collateral

--

1'643

-

-

1'6431'758

192388

2'765

1'182

3'9471'579

Net debt amount

1'4511'370

235'275

9'440

9'440

244'715179'018

243'264177'648

15'909

2'402

18'31114'160

Individual value

adjustments

1'4511'370

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)

46

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


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 .2016


31 .12 .2015


-

-

57

14

-

-

-

-

71

-

-

6'918

-

6'918

6'918

6'216

6'216

599'673

-

599'673

-

651'864

-

-

-

-

-

-

-

31 .12 .2016 31 .12 .2015

-

-

105

12

-

-

-

-

117

-

-

6'648

-

6'648

6'648

5'888

5'888

-

-

-

-

-

-

-

-

-

-

-

-

Posit

ive

re

plac

emen

t va

lues

Trading instruments Hedging instruments

Cont

ract

vo

lum

e

Neg

ativ

e re

plac

emen

t va

lues

Neg

ativ

e re

plac

emen

t va

lues

Posit

ive

repl

acem

ent

valu

es

Cont

ract

vo

lum

e

47

31 .12 .2016

31 .12 .2015

Positive replacement values (after netting agreements)

6'918

6'216

2'927

Banks and securities dealers

-

Central clearing houses

Positive replacement values (cumulative)

Negative replacement values (cumulative)

6'648

5'888

3'991

Other customers

Total after netting agreements (CHF 1'000)

Breakdown by counterparty (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

187'263177'567

9'696

3'861-

28'779-

219'903

5'618

186'929177'390

9'539

1'830-

28'779-

217'539

5'462

31 .12 .201631 .12 .2016

Book value Fair value

31 .12 .201531 .12 .2015

19'554-

19'554

4'115-

14'253-

37'922

5'612

19'379-

19'379

1'804-

14'253-

35'436

5'549

* at least 10% of capital or votes

4848

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

From AAA to AA -

From A + to A -

From BBB + to BBB -

From BB + to B -

Lower than B -

Without notation

PARTICIPATIONS VALUED USING THE EQUITY METHOD

with market value

without market value

OTHER PARTICIPATIONS

with market value

without market value

Total participations

31 .12 .201531 .12 .2016

Debt securities Book values

2016

19'379

-

-

-

-

-

186'929

-

-

-

-

-

-

595

-

2

597

-

-

-

-

-

Acqu

isitio

n co

st

Accu

mul

ated

val

ue a

djus

tmen

ts a

nd c

hang

es in

boo

k va

lue

(val

uatio

n us

ing

the

equi

ty m

etho

d)

Book

val

ue

Prev

ious

yea

r 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 / d

epre

ciat

ion

reve

rsal

s

Disp

osal

s

Book

val

ue a

s at

end

of c

urre

nt y

ear

Mar

ket v

alue

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(44)

-

-

(44)

-

(13)

-

-

(13)

-

551

-

2

553

-

538

-

2

540

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

4949

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

Mirelis Advisors SA Genève

EQUITY METHOD

Monaco Asset Management SAM Monaco

Stavanger Asset Management Ltd Stavanger

Wealth management

Wealth management

Wealth management

CHF

EUR

NOK

1'000

900

3'900

100%

22%

35%

100%

22%

35%

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 in

dire

ctly

(in

%)

The consolidation scope did not see any changes compared to 31 December 2015 .The non-consolidated participation is related to the holding of a minimal share of Swift's capital .

5050

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

Goodwill

Patents

Licences

Other intangible assets

Total intangible assets

2'792

-

-

-

2'792

(1'660)

-

-

-

(1'660)

1'132

-

-

-

1'132

-

-

-

-

-

-

-

-

-

-

5'317

-

-

-

5'317

(1'335)

-

-

-

(1'335)

5'113

-

-

-

5'113

Cost

val

ue

Accu

mul

ated

am

ortis

atio

n

Addi

tions

Book

val

ue p

revi

ous

year

Disp

osal

s

Influ

ence

of a

cha

nge

in th

e sc

ope

of c

onso

lidat

ion

Amor

tisat

ion

Book

val

ue a

s at e

nd o

f cur

rent

ye

ar

2016

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

Bank buildings

Other real estate

Proprietary or separately acquired software

Other tangible fixed 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

2016

-

-

3'098

10'735

-

-

-

-

13'833

-

-

-

-

-

-

-

-

-

Acqu

isitio

n co

st

Accu

mul

ated

dep

reci

atio

n

Book

val

ue p

revi

ous

year

Recl

assifi

catio

ns

Depr

ecia

tion

Addi

tions

Reve

rsal

s

Disp

osal

s

Book

val

ue a

s at e

nd

of c

urre

nt y

ear

-

-

(464)

(599)

-

-

-

-

(1'063)

-

-

582

173

-

-

-

-

755

-

-

-

-

-

-

-

-

-

-

-

(1'838)

(9'717)

-

-

-

-

(11'555)

-

-

-

-

-

-

-

-

-

-

-

1'260

1'018

-

-

-

-

2'278

-

-

1'378

592

-

-

-

-

1'970

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

5151

PLEDGED / ASSIGNED ASSETS



Total pledged / assigned assetsAssets under reservation of ownership

8'063

19'646

27'709-

3'430

19'292

22'722-

4'103

-

4'103-

4'484

-

4'484-

Book values

31 .12 .2016 31 .12 .2015

Book valuesEffective commitments

Effective commitments

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 held no equity instruments of the bank .

Compensation account

Deferred income taxes recognised as assets

Settlement account

Employees' insurance contracts

Other assets and other liabilities

Total

-

348

-

566

11

925

-

739

406

566

18

1'729

-

39

-

489

19

547

-

682

1'140

489

3

2'314

31 .12 .2016

Other assets Other liabilities

31 .12 .201631 .12 .2015 31 .12 .2015

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

52

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

a . Employer contribution reserves (ECR)

Employer has no contribution reserve at December 31, 2016 (nil in 2015) .

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

The three original pension plans have been unified and transferred to the « Fondation Patrimonia » on 1 January 2016, after informing and consulting employees and agreeing to the representatives of the employees and the employer .Pension plans protect the employees of the Bank and Mirelis 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 2016 . The Bank's Board of Directors considers that any surplus within the meaning of the Cm502 Circ .- FINMA 2015/1 will be used for the benefit of policyholders . There is no economic benefit to the employer .

-

-

-

104,7 %

-

-

-

-

CHF

-

-

-

1'676'122

CHF

-

-

-

1'676'122

CHF

766'418

600'904

172'894

-

-

-

-

-

-

-

-

-

Over

fund

ing

/ und

erfu

ndin

g at

end

of

cur

rent

yea

r

Econ

omic

inte

rest

of t

he b

ank

/ fin

anci

al g

roup

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 / o

blig

atio

n) v

ersu

s pr

evio

us y

ear

Cont

ribut

ions

pai

d fo

r the

cur

rent

pe

riod

31 .1

2 .20

15

31 .1

2 .20

15

31 .1

2 .20

16

31 .1

2 .20

16

Collective pension fund (La Bâloise)

Pension plan (CIEPP)

Complementary pension plan (Profond)

Pension plan (Patrimonia)

53

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)

Provisions 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

1'625

14

15

1'6544'750

1'370

1'370

-

-

-

-

-- -

-

-

-

-

-

-- -

-

-

-

-

-

--

46

46

-

-

-

-

--

35

35

-

(1'625)

-

(10)

(1'635)(4'750)

-

-

-

-

14

5

19-

1'451

1'451

-

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 .

5454

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)

Participations

Group companies

Linked companies

Transactions with members of governing bodies

3'881

-

541

262

14'296

-

-

3'497

8'514

42

-

122

8'619

10

-

93

Amounts due from

Due

31 .12 .2016 31 .12 .201631 .12 .2015 31 .12 .2015

Amounts due to

Guarantees totaling CHF 58’303 (CHF 19’879 in 2015) were issued by Hypowiss Private Bank Genève SA 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



Mortgage loans




Total 31.12.2016Total 31.12.2015

DEBT CAPITAL / FINANCIAL INSTRUMENTS




Total 31.12.2016

Total 31.12.2015

51'565

141'492

70'019

-

71

6'918

30'608

300'673377'982

2'706

676'574

6'648

685'928484'871

51'565

204'138

233'824

9'440

71

6'918

217'538

723'494523'584

2'706

676'574

6'648

685'928484'871

-

62'646

-

-

-

-

-

62'646-

-

-

-

--

-

-

131'392

7'240

-

-

136'853

275'48598'745

-

-

-

--

-

-

-

-

-

-

-

--

-

-

-

--

-

-

32'413

2'200

-

-

40'537

75'15037'166

-

-

-

--

-

-

-

-

-

-

4'078

4'0784'229

-

-

-

--

-

-

-

-

-

-

5'462

5'4625'462

-

-

-

--

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 1

2 m

onth

s

No

mat

urity

5555

ASSETS

Liquid assets



Mortgage loans





Non consolidated participations


Intangible assets

Other assets

Total assets

LIABILITIES





Other liabilities

Provisions


Share capital

Capital reserve



Consolidated profit

Total liabilities

-

59'822

158'709

-

105

3'227

15'721

274

553

-

-

-

238'411

3'340

379'233

2'486

74

-

-

-

-

-

-

-

-

385'133

60'346

183'998

11'739

7'200

12

2'989

19'715

5'574

-

2'278

1'132

547

295'530

380

96'030

3'403

3'875

2'314

1'654

4'750

27'500

1'686

7'025

(80)

271

148'808

-

56'924

215'473

-

57

3'748

183'296

455

540

-

-

-

460'493

294

594'772

2'591

8

-

-

-

-

-

-

-

-

597'665

51'565

147'214

18'351

9'440

14

3'169

34'241

5'062

-

1'970

5'113

925

277'066

2'412

81'802

4'057

5'019

1'729

19

-

27'500

1'686

7'296

(68)

8'443

139'894

Domestic

31 .12 .2016

DomesticForeign

31 .12 .2015

Foreign

4 .18 Presentation of assets and liabilities by domestic and foreign origin in accordance with the domicile principle (CHF 1'000)

5656

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

55 .35 %

21 .95 %

14 .28 %

5 .93 %

0 .91 %

1 .58 %

100.00 %

295'530

117'204

76'238

31'658

4'864

8'447

533'941

37 .56 %

19 .88 %

10 .46 %

26 .47 %

2 .01 %

3 .62 %

100.00 %

277'066

146'607

77'127

195'198

14'808

26'753

737'559

AbsoluteASSETS

31 .12 .2016

AbsoluteShare as %

31 .12 .2015

Share as %

1 & 2

3

4

5

6

7

Without notation

Total

Share as %Share as % In thousand CHF

In thousand CHF

Net foreign exposure / 31 .12 .2016

Net foreign exposure / 31 .12 .2015

Rating as per FINMA correspondance tables

23 .16 %

1 .69 %

17 .85 %

0 .47 %

0 .28 %

0 .13 %

8 .20 %

100.00 %

59 .74 %

2 .71 %

22 .61 %

0 .68 %

0 .27 %

0 .88 %

13 .11 %

100.00 %

106'650

7'775

82'213

2'166

1'284

585

37'738

238'411

275'102

12'502

104'105

3'140

1'227

4'044

60'373

460'493

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 counter-party or the domicile of the issuer is used for the categories "Amounts due from banks" and "Financial investments" and the domicile of the risk is used for all other asset items .

5757

ASSETS

Liquid assets



Mortgage loans





Non consolidated participations


Intangible assets

Other assets

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

Total assets

LIABILITIES



Trading portfolio liabilities



Other liabilities

Provisions


Share capital

Capital 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

189

17'879

49'041

-

-

3'316

29'056

71

167

-

-

-

99'719

88'988

188'707

173

83'663

-

499

18

47

-

-

-

-

-

-

-

84'400

101'409

185'8092'898

USD

86

74'226

116'250

-

53

513

182'900

377

-

-

-

-

374'405

260'887

635'292

196

390'280

-

5'406

573

-

-

-

-

-

-

-

-396'455

243'319

639'774(4'482)

EUR

517

97'480

52'666

-

-

736

119

89

371

-

-

-

151'978

63'735

215'713

2'257

145'229

-

251

45

-

-

-

-

-

-

-

-

147'782

66'859

214'6411'072

CHF

50'773

14'553

15'867

9'440

18

2'353

5'463

4'980

2

1'970

5'113

925

111'457

186'064

297'521

80

57'402

-

492

4'391

1'682

19

-

27'500

1'686

7'296

(68)

8'443

108'922

188'189

297'111409

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

5858

5 - OFF-BALANCE-SHEET RELATED INFORMATION

5 .1 Breakdown and explanation of contingent assets and 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

Guarantees to secure credits and similar

Total

Fiduciary investments with third-party companies

Fiduciary loans

Total fiduciary transactions

Contingent assets arising from tax losses carried forward

Total

2'567

13'342

15'909

375'715

757

376'472

246'041

246'041

31 .12 .2016

31 .12 .2016

31 .12 .2016

31 .12 .2015

31 .12 .2015

31 .12 .2015

-

11'178

11'178

332'829

872

333'701

2'697'086

2'697'086

5959

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

Calculation of managed assets include all clients' 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

+/- Other effects related to asset purchase transactions

Total managed assets (including double counting) at end

-

1'932'208

2'048'008

3'980'216-

3'164'165670'752

145'299

-

3'980'216

31 .12 .2016

31 .12 .2016

31 .12 .2015

31 .12 .2015

-

1'625'049

1'539'116

3'164'165-

3'377'706(41'314)

(172'227)

-

3'164'165

5 .5 Presentation of the development of managed assets

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 are not considered new money inflow . Market and currency fluctuations, charges, commissions and charged interest payments are not included in the net new money .

The net new money comes mainly from the integration of the clients' assets of IDB (Swiss) Bank Ltd, Genève, for an amount of CHF 1'106'228 (CHF 1'000), partly offset by partial or complete withdrawals of the assets of existing clients .

6060

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 asset 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 AREA

Trading activity for the Group's own account

Trading activity for customers' account

Total result from trading activities

-

253

3'504

194

3'951253

253

-

(384)

391

18'371

2'588

3'420

340

22'131

253

3'698

3'951

2016

2016

2016

2016

2015

2015

2015

2015

-

203

3'637

162

4'002203

203

-

(171)

171

16'917

1'889

3'116

373

20'406

212

3'790

4'002

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 interests (CHF 1'000)

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

6161

Office space expenses

Expenses for information and communications 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

Extrordinary 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

1'731

881

165

393

393

-

372

602

455

3'498

8'097

120

(28)

4'750

(101)

1'625

(151)

1'474n/a

2016

2016

2016

2015

2015

2015

1'829

857

179

378

378

-

527

566

485

3'128

7'949

315

(1'904)

500

(1'328)

125

(149)

(24)1 .77 %

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 disclosure of tax rate (CHF 1'000)

2016Extraordinary income mainly results from the dissolution of the reserve for general banking risks .

2015Extraordinary income results from the completion of Atlas Capital SA acquisition .The extraordinary expenses result from the finalization of the transfer of ownership with St-Galler Kantonal Bank .Regarding the changes in provisions and other value adjustments, and losses, this is a reimbursement of provisions related to the transaction with the St-Galler Kantonal Bank .

6262

7 - CAPITAL ADEQUACY DISCLOSURE AS PER CIRC.-FINMA 08/22 (CHF 1'000)

7 .1 Eligible Capital (CHF 1'000)

ELIGIBLE ADJUSTED (CET1)

Fully eligible issued and paid-up share capital

Retained earnings reserves, incl . Reserves for general banking risks / Profit (loss) carried forward for the current period

Share premium reserves, foreign exchange reserves (+/-)

Common equity Tier 1, before adjustments

GENERAL ADJUSTMENTS

Goodwill

Participations

Total general adjustmentsNet common equity Tier 1 after general adjustments (net CET1)

Credit risks

- of which on prices of securities in the trading portfolio of the bank

Non-counterparty related riskMarket risks- of which on interest rate instrument

- of which on equities held

- of which on currencies and precious metals

- of which on commodities

Operational risksTotal capital requirementsRisk-weighted positionsCountercyclical buffer In % of risk-weighted positions

27'500

14'295

1'686

43'481

5'113

540

5'65337'828

Capital requirement

7'566

195

158886

-

-

402

484

5'84614'456

180'70115

0 .0 %

Approach

AS-BRI

AS-BRIStandard approach

Basic indicator approach

31 .12 .2016

31 .12 .2016

31 .12 .2015

31 .12 .2015

27'500

11'695

1'686

40'881

1'132

553

1'68539'196

Capital requirement

7'173

202

182739

-

-

279

460

5'31313'407

167'59215

0 .0 %

7 .2 Minimum capital requirements (CHF 1'000)

6363

RATIOS

Ratio CET1

Ratio Tier 1

after deduction of countercyclical buffer

Ratio in respect of minimal capital requirements (Tier 1 and Tier 2)

after deduction of countercyclical buffer

Minimum Ratio CET1 (as per FINMA)

Minimum Ratio T1 (as per FINMA)

Minimum Capital Ratio (as per FINMA)

CET1 requirements according to CAO transitional provisions (in % of RWA)

- thereof capital buffer (in % of RWA)

- thereof countercyclical buffer (in % of RWA)

Available CET1 to cover the minimum and buffer requirements, after deducting AT1 and T2 which are fulfilled with CET1 (in % of RWA)

Capital target ratios for CET1 as per Circ . FINMA 11/2 plus the countercyclical buffer (in % of RWA)

Available CET1 (in % of RWA)

Available regulatory capital (in % of RWA)

20 .9 %

20 .9 %

20 .9 %

20 .9 %

20 .9 %

7 .0 %

8 .5 %

10 .5 %

5 .1 %

0 .6 %

0 .0 %

17 .4 %

7 .0 %

17 .4 %

20 .9 %

31 .12 .2016 31 .12 .2015

23 .4 %

23 .4 %

23 .4 %

23 .4 %

23 .4 %

7 .0 %

8 .5 %

10 .5 %

4 .5 %

0 .0 %

0 .0 %

19 .9 %

7 .0 %

19 .9 %

23 .4 %

LCR

High quality liquid assets ( HQLA )

Total of net cash outflows

Liquidity coverage ratio ( in % )

RATIOS

Eligible adjusted Tier 1

Total exposure

Leverage ratio

Average Q4

2016

Average Q2

2016

31 .12 .2015

Average Q3

2016

Average Q1

2016

31 .12 .2016

228'509

46'406

492 .4 %

296'313

57'041

519 .5 %

39'196

545'027

7 .2 %

257'474

52'732

488 .3 %

253'486

52'811

480 .0 %

37'828

754'994

5 .0 %

7 .5 Liquidity coverage ratio (CHF 1'000)

7 .4 Leverage Ratio (CHF 1'000)

7 .3 Capital ratios (in %)

ReportOF STATUTORY AUDITOR

6565

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 35 to 61), for the year ended 31 December 2016.

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 2016 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

Patrick Fritz Omar Grossi Audit expert Auditor in charge

Audit expert

Geneva, 27 April 2017

8888

GroupCOMPANIES' ADDRESSES

8989

HYPOSWISS PRIVATE BANK GENÈVE SA

Rue du Général-Dufour 3CH - 1211 Genève 11 Tél : +41 22 716 36 36Fax : +41 22 716 36 19info@gva .hyposwiss .chwww .hyposwiss .ch

HYPOSWISS ADVISORS SA

Rue de la Corraterie 14CH - 1204 Genève Tél : +41 22 310 76 40Fax : +41 22 310 76 39info@advisors .hyposwiss .chwww .hyposwiss .ch/advisors/

MONACO ASSET MANAGEMENT SAM

Villa les FleursBoulevard Princesse Charlotte 27MC 98000 - MonacoTél : +377 97 97 64 00Fax : +377 97 97 64 01info@monacoasset .comwww .monacoasset .com

STAVANGER ASSET MANAGEMENT SA

Jåttåvågveien 7 C Blokk/buildingPO Box 1304066 Stavanger - NorvègeTél . +47 910 02 401 eva@stavangeram .comwww .stavangeram .com

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 / 1211 GENEVA 11 / SWITZERLANDTEL .: +41 22 716 36 36 / INFO@GVA .HYPOSWISS .CHWWW .HYPOSWISS .CH

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