Segment reporting

The business activities of the LLB Group are divided into the following three business areas. These form the basis for the segment reporting.

• Retail & Corporate Banking segment encompasses the universal banking business in the home markets of Liechtenstein and Switzerland.
• Private Banking segment encompasses all the private banking activities of the LLB Group.
• Institutional Clients segment encompasses the financial intermediary and investment fund business as well as the asset management and wealth structuring activities of the LLB Group.

The segments receive comprehensive support from the Corporate Center. It comprises the following functions: finance, credit and risk management, legal and compliance matters, trading and securities administration, payment services, human resources management, communication and branding, corporate development, as well as logistics and IT services.

Following the management approach of IFRS 8 “Operating Segments” operating segments are reported in accordance with the internal reporting provided to the Group Executive Management (chief operating decision maker), which is responsible for allocating resources to the reportable segments and assessing their performance. All operating segments used by the LLB Group meet the definition of a reportable segment under IFRS 8.

In accordance with the principle of responsibility and based on the organisational structure, income and expenditure are allocated to the business divisions. The market interest rate method is used to divide interest income into interest margin contributions and structural (mismatch) contributions. The interest margin contributions are allocated to the business segments on the basis of client responsibility. The structural contributions, the income from financial investments and the valuation of interest rate hedging instruments are reported under the Corporate Center. Indirect costs, resulting from services provided internally, are accounted for according to the principle of causation and are recorded as a revenue increase for the service provider and as a cost increase for the service beneficiary. The remaining income and expenditure for overriding services which cannot be assigned to the segments are shown under Corporate Center. Furthermore, consolidation adjustments are reported under Corporate Center.

Transactions between the segments are executed at standard market conditions.