raiffeisen-2024-12-31-en

· Raiffeisen Group | Financial Year 2024


Consolidated business report	1

(1) Macroeconomic environment

(1.1) Hungarian economy

Hungary's economic performance has been very subdued during 2024. According to first estimates (which include GDP data for

2024 Q4), output for the year as a whole grew by 0.5% in raw terms and by 0.6% in adjusted terms compared to 2023. Growth

expectations gradually declined over the year, but the Q4 2024 GDP data beat analysts' consensus, with GDP volume rising by

0.5% on a quarterly and 0.2% on an annual basis. On the contribution side, services activity was mainly supportive, while a

decline in industrial, agricultural and construction output tended to dampen the recovery. On the consumption side, private

consumption showed a mixed picture, with some growth in household final consumption but a sharp fall in investment (both in

the private and public sectors) as market funding remains expensive and the lack of subsidies and EU funds is difficult to

replace. In addition, external demand has been very subdued in Europe and in other major export markets. This could turn

positively from 2025 onwards. After a high inflation period, consumption could continue to pick up on the back of falling

savings rates, and, assuming external demand strengthens, demand for capital investment could also start to rise, with all

sectors contributing positively to GDP growth alongside export demand from industry, which is still suffering from low capacity

utilisation. In addition, the base effect could be supportive in 2025, with upside risks to the expected GDP growth of 2.5% for

the year as a whole. The unemployment rate has been mixed over 2024, but has remained below its multi-year average and

below trend over the long term, with a 3-month moving average of 4.7% in December 2023 and 4.4% in December 2024. The

labour market remains tight, hence the pace of wage outflows is only moderating slowly (in November 2024 the annual growth

rate of average gross wages was 11.9%, which means a 13.5% increase for January-November). In 2025, it is expected to be

somewhere between 9-10%, rather than double digits. Inflation stood at 4.6% at the end of the year, while it was 3.7% for 2024

as a whole. The headline CPI is expected to decline further over 2025 and in the longer term, along which core inflation is also

expected to catch up to the 3% medium-term target within a few quarters. Against this backdrop, some technical factors and

stronger-than-expected food and fuel inflation have pushed up near-term inflation risks. Inflation is likely to average 4% in

2025, which means that monthly figures around the upper end of the central bank's 2-4% tolerance band could characterise

the coming quarters in particular. Regarding interest rate policy, in 2024 the effective interest rate declined further from 10.75%

to 6.5%, but in Q4 2024 the easing cycle stopped as the HUF showed greater vulnerability than before, and expectations of an

expected decline in developed market interest rates were reassessed. Interest rate cuts may continue in 2025: no rate cuts are

expected until mid-year, with three 25 bp cuts in late Q2 2025, i.e. in June, followed by September and December. The risk

premia that the market anticipates for HUF assets have widened somewhat over the past year, while the risk-free developed

market rate itself may be on a higher forward trajectory than previously thought. Against this backdrop, the EUR/HUF

exchange rate, which has risen from around 380 in the first half of last year to close to 410 by the end of the year, could

continue to move north in the short to medium term, with a trading range of 405-420 emerging in 2025.

(1.2) The banking sector

In the first three quarters of 2024, according to data of the National Bank of Hungary (NBH) the banking sector recorded a HUF

1,567 billion profit after taxation on consolidated level. The net interest income was 4% higher than in 2023, while fee and

commission income increased to a higher extent, by 15%.

Operating expenses increased by 4% compared to the same period of last year. In the first three quarters of 2024, net loss

allowance and risk provision decreased further (by 17%), contributing to the banking sector's results.

The sector’s net assets were HUF 94,458 billion, which represents an 6% increase compared to the same period of 2023.

Corporate loans decreased by 1%, while retail loans increased by 11% compared to last year. The balance of deposits from

customers also increased, the total balance of deposits from retail and non-financial companies increased by 7% compared to

the same period of last year.

The ratio of non-performing loans decreased slightly from 2.7% to 2.4% compared to the same period of last year.

The cost-to-income ratio (CIR) was 50.9% in the first three quarters of 2024, which is slightly better than the last year’s 52.4%.

The RoE and RoA ratios have also changed, decreasing to 19.5% (from 22.7%) and 2.2% (from 2.4%), respectively. The liquidity

status and capital adequacy of the sector are appropriate.

(*For the source of data please see https://statisztika.mnb.hu/publikacios-temak/felugyeleti-statisztikak/penz--es-hitelpiaci-

szervezetek/hitelintezeti-aktualis-publikaciok page published by the NBH.)

· Raiffeisen Group | Financial Year 2024


2	Consolidated business report

(2) Non-financial statement

For the short presentation of the company’s business model please see Section (4) Presentation of the business segment’s

performance .

The key non-financial performance indicators, which are important for the given business segments are included in Section (4)

Presentation of the business segment’s performance as well.

The descriptions of the company’s policies followed in respect of environmental protection, social and employment matters,

respecting the human rights, fighting against corruption and bribery, with references to the implemented control procedures,

the results of them, along with the risks in the listed areas that might have disadvantageous effects are included in the

following sections:

· (7.4) Fraud Risk Management

· (8) Environmental protection

· (9) Sustainability

· (10) Employment policy

· (11) Compliance activity

The services authorized beyond the regulatory audit that are to be disclosed in the business report and were provided by the

auditor to the entity and the companies controlled by it are included in section (13) Fees charged by the auditor.

(3) Business activity

(3.1) Balance sheet

The Group's total assets increased by 4.13% (HUF 183 billion) in 2024, and its market share has decreased during the year, from

6.00% at 2023 year-end to 5.86%.The outstanding growth in volumes of recent years continued during 2024, following the

slowdown observed in 2023, so there was an increase in both customer liabilities and customer assets.


(HUF million)	31.12.2024	31.12.2023	Change
Total assets	4,615,256	4,432,055	4.13%
Loans and advances to clients	1,872,028	1,763,536	6.15%
Deposits from customers	3,183,599	2,986,372	6.60%

The Group's loan/deposit ratio remained almost unchanged (60.57%), due to the nearly same increase in customer assets and

liabilities. This is in line with the current investment climate influenced by inflation and interest rates, a trend across the sector.

The Group’s own funds increased by 4.70% in 2024, primarily driven by outstanding profit after tax. The Group's capital level

remains stable, with a solvency ratio that climbed to 29.36%, thanks to a profitable period in recent years and additional core

and additional capital items provided by the owner


(HUF million)	31.12.2024	31.12.2023	Change
Own funds	507,082	484,317	4.70%
Solvency ratio	29.36%	27.73%	5.88%

In 2022, the Group launched the Euro Medium Term Note Programme (EMTN) with an envelope of EUR 2 billion and its local

Bond Programme with an envelope of HUF 100 billion, which were updated in the course of 2024. Under the programmes, the

Bank issued (partly green) MREL-eligible bonds to institutional and retail investors. Further emissions followed in 2024, under

more favourable macroeconomic conditions, totalling EUR 350.39 million. Thus, MREL closing stock increased by EUR 7.48 million

from 2023 to 2024.

· Raiffeisen Group | Financial Year 2024


Consolidated business report	3

(3.2) Profit or loss


Profit or loss item	2024	2023	Change
(HUF million)			(HUF million)	%
Net interest and dividend income	187,133	201,121	-13,988	-6.96%
Net income from commissions and fees	94,384	81,520	12,864	15.78%
Operating expenses	-87,811	-80,061	-7,750	9.68%
Risk cost	13,354	180	13,174	7318.89%
Other result	-72,090	-86,444	14,354	-16.60%
Profit before tax	134,970	116,316	18,654	16.04%
Tax expense	-19,018	-13,057	-5,961	45.65%
Profit for the year	115,952	103,259	12,693	12.29%

Operating expenses include personnel expenses, other administrative expenses and depreciation and amortisation, the fees paid to OBA and BEVA are presented in other

result.

In addition to impairment of financial assets, Risk cost also includes the amount of other provisions.

The Group recognised HUF 115,952 million for the business year, which was 12.29% higher than the result of the previous year.

The main components of profit are the following:

· Net interest income decreased by 6.96% compared to last year, reflecting the declining yield environment in the

forint market.

· Commission income improved significantly compared to the previous year, driven by higher income on payment

services and investment management fees.

· The increase in the Group's operating costs was primarily caused by the increase in wage costs compensating for

the exceptionally high inflationary environment of 2023 and the resources devoted to digital developments

supporting the Group's strategic objectives.

· During 2024, the Group recorded HUF 13,174 million lower risk costs compared to the previous year.

· In the other result category, the loss was lower than last year due to the Group’s share from the extraordinary

surtax charged on the banking sector and a lower revaluation loss contributed to a smaller loss compared to the

previous year.

· In 2024, the Group's tax liability increased by HUF 5,961 million compared to the previous year. This is primarily due to

higher business and corporate tax induced by higher sales and profit before tax.

The Group's revenue growth rate exceeded that of costs, resulting in a further improvement in the cost-to-income ratio in 2024

(32.02%). The Group’s return on equity was 24.52% in 2024.

(3.3) Events after the reporting date

The sole shareholder decided to pay a dividend of HUF 114,505 million aligned with the approval of the financial statements

and after the general reserve allocation. This amount consists of HUF 80,153 million forints to be paid out from current year's

after-tax profit and HUF 34,352 million to be distributed from retained earnings.

The final capital adequacy ratios considering the inclusion of current year’s profit and dividends are CET1 15.92%, TIER1 18.64%,

total capital adequacy ratio 22.73%.

(4) Presentation of the business segment’s

performance

(4.1) Corporate and Investment Banking business segment

The Group’s corporate and investment banking business segment maintained its dominant role in the commercial banking

market in 2024, further increased its loan portfolio, and, with its 8-10% market share, is one of the leading market players in the

mid and large corporate segment, and it belongs to the leading banks in export finance and treasury services as well.

· Raiffeisen Group | Financial Year 2024


4	Consolidated business report

The largest portion of the Group’s green assets arise from its project financing and syndication activity, which is an important

pillar of the ESG strategy of the entire banking group. In line with this, in 2024 the majority of newly disbursed project loans are

green loans, both in the property and non-property categories.

The expansion of the loan portfolio was achieved with a conservative business policy and risk-taking. Overall, the loan portfolio

remained of excellent quality.

The Group's trade and export financing area tried to maintain its previous business activity despite a significant reduction in

the range of supported programs in 2024. In the case of the Széchenyi program, the elimination of crisis support titles and the

reduction of the maximum available limits negatively impacted lending. For Exim, the only available supported and refinanced

program was the HUF 200 billion BGH Plus program, announced in the first quarter of 2024 and fully utilized within the same

quarter. Although Raiffeisen Bank Zrt. managed to participate in both supported programs at a rate exceeding its market

share, this could not compensate for the amortization of the previous supported loan portfolio in 2024.

The agriculture sector faced several adverse effects in 2024. Firstly, for the second time in three years, significant drought

affected key crop-producing areas in the country, causing substantial yield losses and severely impacting crop quality (high

toxin levels). In livestock farming, avian influenza has been a persistent issue for years, and spring frosts continue to decimate

fruit yields annually. The only positive news in the agricultural sector was the launch of the "CAP ST. II. Pillar" grant system in the

second half of 2024, which generated significant demand due to its highly favourable conditions (non-repayable grants,

interest subsidies, and guarantee fee subsidies). However, the evaluation of these applications is expected in the second and

third quarters of 2025, with financing opportunities becoming available during that period.

In 2024, the Group's documentary services area continued its successful operations, achieving a year-over-year revenue

increase of over 10%. This was accomplished despite the significant decline in the construction industry, which constitutes the

majority of documentary transactions. The decline was due to both a reduction in government orders and a noticeable

decrease in demand in the housing and office rental markets.

Important part of the Group's client service model is the financing of municipalities, entities owned by municipalities, non-profit

companies, associations, condominiums and other communities. It provides a full range of advanced financial services to its

clients and securely handles deposits placed with the Group. Services focus on managing clients' investments and providing

investment, development and project loans to municipalities, associations and condominiums. In the latter activities, ESG

aspects and sustainable financing come to the fore, so the Group strives to ensure that as much of the newly disbursed loans

as possible are green loans.

The Group supports the use of banking services for corporate and municipal clients through the continuous development of

digital channels. The role of the branch network and personal interactions has evolved, merging into a new "phygital" format. In

addition to the instant payment system, the Group supports clients with "QR code" and "Payment request" based payments, as

well as card acceptance solutions (POS and VPOS). The digital developments ensure efficient customer service and also

facilitate the use of ASP services by municipalities.

The financial institutions and custody segment had another successful year in 2024, similar to previous years, further

increasing its deposit and loan portfolios. Additionally, it was successful in expanding transaction volumes and products, with

particular emphasis on innovative cash management services. Despite increasing competition, the intensive growth of assets

under custody also continued.

The Group’s cash, foreign exchange and capital market department – according to the statistics of the National Bank of

Hungary – once again made the largest foreign exchange volume among banks in Hungary in 2024 and also was the biggest

player in the derivative section of Budapest Stock Exchange. In the first half of 2024, the Raiffeisen Bank Zrt. was the second-

largest primary dealer of Hungarian government securities, while it secured the fourth position in the second half of the year.

Additionally, the Bank was once again awarded the title of Domestic Equity Trading Platform of the Year for its Raiffeisen

Online Broker service in 2024.

(4.2) Retail clients

The Retail Division also had a successful year in 2024: by the end of 2024, the number of retail individual (Mass) and Premium

banking customers exceeded the year-end 2023 figures by 2%; revenues increased despite unexpected tax changes, and

Raiffeisen Bank Zrt.'s NPS (Net Promoter Score) remained among the best among leading universal banks (annual NPS: 25).

The outstanding results were partly due to the improving economic environment (declining inflation, rising real wages) and

partly to the Group's internal business development activities. 2024 was a year of product innovation and optimization in retail

account products: in February, the Group introduced 2 new premium accounts, and in November, a new retail account (called

Active account), while suspending the sale of previous account products. The goal is to make the Group’s account product

portfolio easy to understand and transparent for customers, and to increase synergy and interoperability between segments.

In the spirit of optimization, the Group is also continuing to simplify the bankcard offerings. The Group’s acquisition goals were

greatly supported by the implementation of the online account opening function in the myRaiffeisen mobile application in

2024, which is becoming increasingly popular among the customers.

· Raiffeisen Group | Financial Year 2024


Consolidated business report	5

The Group continued its digital developments across various platforms to provide customers with a modern, high-quality

customer experience in managing their everyday finances. Our digital strategy continues to focus on expanding the functions

of the myRaiffeisen mobile application and the range of online products. Thanks to these developments, the number of online

account openings and online product applications has significantly increased, and more services are available 24/7 in the

application. In 2024, the Group plays a leading role in introducing innovative payment solutions, such as implementing cash-in

ATMs in several branches and being the first in the market to introduce qvik payment acceptance. For sustainable

development, the Group has also made carbon footprint tracking available in the myRaiffeisen application.

Investor activity and appetite remained high among customers in 2024. There was strong interest and demand for investment

funds, and demand for government securities remained relatively stable despite changes in the market interest rate

environment. Interest in other savings options continued to stagnate among retail customers due to the low-interest

environment.

The division also continued its successful business activities in retail lending. Demand for retail mortgage loans increased

significantly, especially in the second half of the year. Demand for personal loans also grew significantly, exceeding

expectations, while the sale of baby loan remained balanced even after regulatory tightening at the beginning of the year. The

stabilization of macroeconomic conditions resulted in an interest rate level supportive of lending, further strengthened by the

increase in real wages.

In lending, a key objective is to meet customer needs where security and predictability are the main priorities. Another strategic

focus is digitalization, where most customers already used the fully online application process for personal loans, and even

more existing customers applied for overdrafts and credit cards online. The Group aims to make this application option

available for more products and a wider range of customers in the near future.

Overall, a key goal remains to continuously improve the customer experience in retail lending, with digitalization playing a

crucial role. The Group is confident that with further improvements in external conditions, lending will remain strong, further

supported by the new worker loan scheme starting in January 2025.

The Group's market share in retail loan portfolios did not change significantly, standing at 5.5% at the end of December 2024.

(4.3) Private Banking clients

The aim of Raiffeisen Private Banking is to preserve, increase and pass on the family wealth of high-net-worth clients from

generation to generation. With the expert work of experienced consultants, the Group provides its key clients with safety,

comfort, discretion and customised tailor-made solutions.

Raiffeisen Private Banking had an extremely successful year in 2024. Thanks to the honourable trust of its clients, the assets

entrusted to management reached HUF 1,295 billion by the end of the year, which represents an increase of nearly 30% in a

single year. In order to ensure effective and efficient service of the increased wealth, and maintain the brand promise, the

capacities have also been increased. The visible expansion of Private Banking continuously strengthens the Group's market

position.

Constitute and maintain the satisfaction of key private customers is inconceivable without personalized solutions and the

highest level of service. Accordingly, Raiffeisen Private Banking continued to invest significantly in 2024 in introducing new

products and services, as well as in developing the knowledge base of IT systems and banking advisors.

Recently, digitalization has received a special focus, as a result of which not only customers can manage their finances

smoothly and independently, but employees can also be available at access points far from their workplace. During 2024, there

was a strong focus on reducing administrative burdens, resulting in the Group significantly reduced paper consumption and

the number of signatures.

(4.4) Financial institutions

The financial institutions segment is of strategic priority for the Group, which continues to grow dynamically, thanks to its

comprehensive and unique customer service model, a wide range of products and continuous innovation.

The key target group of the business segment remains domestic insurance companies, investment fund managers, funds, as

well as domestic and international financial institutions and investment service providers, which are supported by new,

innovative solutions and products to serve their clients at a high level, fast and securely. In addition to the above, the domestic

and international banking relationships were in focus as well along with – considering the Group’s strategy, furthermore

adhering to strict compliance principles – international payment service providers and Raiffeisen Bank Zrt.’s contracted

currency exchange brokers. Since 2021, the Group's financial institutions business segment has successfully effected the

professional coordination of payment service providers (PSPs) within the banking group and implemented the strategy for this

market segment.

· Raiffeisen Group | Financial Year 2024


6	Consolidated business report

Assets in the financial institutions area continued to increase significantly throughout 2024, building on the high levels achieved

in previous years, while maintaining a moderate risk profile and a low capital requirement character. Despite market

turbulence and regulatory changes, deposits successfully expanded. In addition to interest income, the increase in fee and

commission income also contributed to the significant above-plan results. The business segment continues to be characterised

by a stable stock of liabilities and long-term, reliable customer relationships. The risk cost of the area is extremely moderate,

and its cost-to-income ratio has stabilized at a very low level.

With the support of strengthened group-wide management at its headquarters in Vienna and through the Vienna parent

bank’s direct relationships with central securities depositories in Central and Eastern Europe, the Group provides priority

custody services for the management of clients' investments directed to this region. In 2024, the Group's custody department

continued its successful operations, maintaining an intensive growth trend in both the number of domestic clients and the

assets under custody, despite the changing market and regulatory environment and increasing competition.

Clear positive feedback from both customers and the profession proves that the Group is one of the strongest brands in the

regional financial and capital markets, as well as in serving financial institutions and product innovations.

(4.5) Subsidiaries

Raiffeisen Corporate Lízing Zrt.

Since 2014, the Company, which is 100% Bank-owned, has been the unified entity within the Raiffeisen Leasing group for

providing financial leasing services exclusively to non-consumer clients, as well as special state-supported loan schemes for

financing the purchase of assets, vehicles, and equipment.

The Company has been a significant player in the medium and large corporate segment for years, primarily by serving the

leasing needs of banking clients. The passenger car and heavy commercial vehicle financing business is a key strategic focus.

The Company continued its previously initiated strategy in 2024, in which, in addition to leasing financing of vehicle and/or

asset investments of medium and large corporate customers, increasing emphasis is placed on boosting leasing services for

the micro and small enterprise segment. In addition to its own sales channels, special emphasis is placed on mobilizing the

Bank's medium and large corporate sales network and exploiting sales synergies related to common customers. The goal

remains to maintain the good quality of the portfolio , keep costs low through cost-effective operation, and establish and

maintain long-term profitable operation.

Raiffeisen Autó Lízing Kft.

The Company is 100% owned subsidiary of Raiffeisen Corporate Lízing Zrt.. The popularity of operating lease dropped

significantly due to the accounting method prescribed by IFRSs and due to the availability of finance leases with preferential

interest conditions (NHP, EXIM, KAVOSZ) and as a consequence of that a decrease occurred in the vehicle and asset financing

provided without fleet service. The strategy of the Company is the demand-based client servicing and individual management

of transactions and it does not put an emphasis on concluding new businesses in operating leasing arrangements.

Raiffeisen Biztosításközvetítő Kft.

The Bank was the sole owner until 30.06.2024, when it was terminated by legal succession following an ownership decision. The

Company's main activity was insurance brokerage, primarily for member companies of the Raiffeisen Bank Group.

At the beginning the main source of revenue of the Company stemmed from small and medium enterprise segment but later it

began to sell its insurance products also in large enterprise and leasing segment as well.

The Bank has started to operate as a dependent single agent effective from 1 April 2022. From this date, in addition to the

products transferred from the Company, the Bank will also manage the portfolio of insurance policies currently actively sold by

the Bank, and therefore the Bank will also realise the commission income related to these products.

The 2022 legislative change also allowed dependent single agents to maintaining stocks of competing products. With regards

to this, the Company has transferred its entire stock to the Bank with effect from 1 May 2023, from which date the Bank will

also realize the related commission income. From autumn 2023, insurance related to leasing products will also be sold through

the dependent single agent. These transformations had a significant impact on commission income. Thus, in October 2023, the

owner of the Company decided to merge its 100% share in Raiffeisen Biztosításközvetítő Kft. into SCT Kárász utca Kft.

RB Szolgáltató Központ Kft.

The Company was founded by the Bank in order to open and operate a banking operating center in Nyíregyháza. Its activity

began as call center and sales activity and that extended to phone collection, credit assessment and banking operation

activities.

· Raiffeisen Group | Financial Year 2024


Consolidated business report	7

The Company finances asset purchases necessary to its operation from investment loans, its financial situation and liquidity is

stable, its operation is profitable.

The number of the Company’s employees increased to over 400 and remained above that level throughout 2023 and 2024. It

operates by improving its processes and further enhancing the quality of its service. In accordance with the Group’s strategy, it

moved to a new headquarters in June 2022, allowing colleagues to perform their banking operations tasks in a more modern

working environment that better supports the processes.

RB Szolgáltató Központ Kft. ceased its activities on 31.12.2024 based on a decision of the owner. The entire staff and equipment

necessary for the performance of the activities were taken over and purchased by the owner Raiffeisen Bank Zrt. The Bank will

continue to carry out the previous activities of RB Szolgáltató Központ Kft. at the same level starting on 1 January 2025.

Raiffeisen Befektetési Alapkezelő Zrt.

The Company is a 100% owned subsidiary of the Bank. The Company's assets under management grew at a strong pace in

2024, albeit at a slower pace than in previous years and the market average. In the first quarter of the period, assets under

management expanded steadily, but stagnated after March, due to the declining investor interest in short-term bond funds.

Investors' focus increasingly shifted to actively managed funds that change their portfolios quickly. June brought new

momentum in asset changes, partly as a result of the weakening of the forint, and partly due to the fact that demand for

mixed and equity funds, which were less popular in previous years, and for the aforementioned managed funds with an

absolute return target, was able to more than compensate for the outflow of assets from bond funds. The summer months

brought an even smaller slowdown, but the Company ended the year with an asset growth above the market average. In

addition to managed funds with a mixed and absolute return objective, assets managed in ESG funds also benefited from the

segment rotation that is otherwise typical at the sector level, while real estate base assets eroded further due to less

competitive performance. Another benefit of the year was the increased investor interest in funds and series not denominated

in forints.

The Company's operating profit developed favourably, in which, in addition to the rapid growth of revenues, also the controlled

costs played a role.

In recent years, the Company has revamped its product set to align with market challenges. The first step in this process was

the creation of three funds targeting different risk levels, equipped with active management and stringent risk control, in

collaboration with the Austrian asset manager of the Raiffeisen Group. Additionally, in recent years, euro- and dollar-

denominated series have been launched for the majority of the managed funds alongside the forint series. As a result of the

next step in the product set transformation, the Company now manages five ESG-focused funds, ensuring that clients can

choose between traditional and ESG products across all major asset classes. Furthermore, the Company successfully executed

a strategic shift in its absolute return funds, significantly increasing their popularity. The success of the Company is signalled

by its operations having been awarded with a number of prizes in the past years.

SCT Kárász utca Kft.

It is a 100% owned subsidiary of the Bank. The activity of the Company is facility management.

Its business activities for 2022 and 2023 focused on the management and operation of the properties it owns, which is not

expected to change during the 2024 financial year.

Raiffeisen Ingatlan Üzemeltető Kft.

It is a 100% owned subsidiary of Raiffeisen Befektetési Alapkezelő Zrt. The activity of the Company is facility management,

such as managing shopping centers, office buildings, industrial and commercial properties, banking branch offices.

It performed also in 2024, in the name of its largest client Raiffeisen Ingatlan Alap, complete financial and technical

management and renting-out activity.

(5) Corporate governance statement

Responsible corporate governance is a fundamental tool of the foremost goals of the Group, the precondition of long-term

value creation. The duty of corporate governance is to create an appropriate balance, operating order amongst owners, client,

employees, business partners and the wider public. The Raiffeisen Bank Zrt.full complies with relevant legislations and HNB’s

instructions and recommendations. The Group’s organisational setup and operating conditions are included in Article of

Association and in the Organisational and Operational Policy both accepted by the sole shareholder. The Group continuously

revises and improves its corporate governance practice

· Raiffeisen Group | Financial Year 2024


8	Consolidated business report

(6) Financial instruments

The Group prepares its financial statements in accordance with the requirements of IFRS.

In accordance with the requirements of IFRSs and Accounting Law the Group shall from 2018 on – in accordance with IFRS9 –

classify its financial assets as measured at amortised cost, measured at fair value through other comprehensive income, or

measured at fair value through profit or loss, based on

· the Group’s business model to manage the financial assets; and

· the contractual cash flow characteristics of the financial assets.

A financial asset shall be measured at amortised cost, if both of the below conditions are met:

· the financial asset is held within a business model whose objective is to hold financial assets in order to collect

contractual cash flows; and

· the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of

principal and interest on the principal amount outstanding.

A financial asset shall be measured at fair value through other comprehensive income if both of the below conditions are met:

· the financial asset is held within a business model whose objective is achieved by both collecting contractual cash

flows and selling financial assets; and

· the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of

principal and interest on the principal amount outstanding.

A financial asset shall be measured at fair value through profit or loss, except when in accordance with the above it is

measured at amortised cost or at fair value through other comprehensive income.

The Group can at initial recognition irrevocably elect to present the subsequent changes in the fair value of certain equity

instruments, that otherwise would be measured at fair value through profit or loss, in other comprehensive income.

The Group may, at initial recognition, irrevocably designate a financial asset as measured at fair value through profit or loss if

doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an

'accounting mismatch') that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on

them on different bases.

The Group shall classify all financial liabilities as measured at amortised cost, except for those cases described in the

standards in detail, in which cases they shall be treated as financial liabilities measured at fair value through profit or loss.

The accounting policy of the Group and a number of disclosures requires the determination of fair value of financial assets and

liabilities. Fair value is determined for measurement and/or disclosure purposes based on the below methods.

All financial instruments are initially recognised at fair value plus directly attributable transaction costs (except for financial

instruments measured at fair value through profit or loss in which case transaction costs are charged directly to profit or loss).

The fair value is the price that the Group would receive in case of selling an asset or the Group would have to pay in case of

transferring a liability in an orderly transaction between market participants at the measurement date.

Subsequent to initial recognition the basis of determining fair value of financial instruments quoted in active markets is the bid

price in case of assets and the ask price in case of liabilities. If observable price is not available, fair value is determined using

valuation techniques that rely on observable market data. The method may be comparison with similar instruments for which

there is an observable quoted market price, discounted cash flow analysis, option pricing models and other valuation

techniques commonly used by market participants. Fair value of financial instruments may be determined using techniques

based entirely or partly on assumptions that are not underpinned by actual market transactions or observable market data.

The Group designed the following methodology to determine fair value:

Derivative transactions:

· Fair value of foreign currency forward and futures transactions is the difference between the forward exchange

rate, determined for the maturity of the transaction and prevailing at the valuation date, and the strike price,

discounted from date of maturity to valuation date.

· Raiffeisen Group | Financial Year 2024


Consolidated business report	9

· Fair value of cross currency swaps is the difference between the forward exchange rate, determined for the

maturity of the transaction and prevailing at the valuation date, and the strike price, discounted from date of

maturity to valuation date, calculated for the forward leg. Yield curves used for the purpose of the valuation

incorporate current market interest premium.

· Fair value of interest rate swaps and forward rate agreements (FRA) is the net present value of the expected future

cash flows discounted to the valuation date.

· Fair value of plain vanilla and exotic foreign currency options is determined using the modified Black-Scholes model.

In case of exotic options for which no closed formula exist, values are determined using iterative techniques.

· Fair value of cross currency interest rate swaps is the net present value of the expected future cash flows of the

instrument discounted to the valuation date, where we incorporate into the yield curve used for the purpose of the

valuation the interest rate premium (basis swap spread) representative to the market of those instruments (also

including country risk premium).

· Fair value of stock and index futures is determined based on the difference of the quoted price and the strike price.

Securities:

Fair value of securities measured at fair value through profit or loss or at fair value through other comprehensive income is

determined using market prices available in Bloomberg information system. It is the stock exchange closing price in case of

securities where it is available. In case of securities where stock exchange price is not available, the fair value is the net present

value of the expected future cash flows of the security discounted to the valuation date.

Loans:

Loans are basically measured at amortised cost which equals the amount at which the financial asset is measured at initial

recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest method of

any difference between that initial amount and the maturity amount and adjusted for any expected credit loss allowance

recorded.

To hedge the fair value changes of certain loans with fixed interest rate the Group entered into interest rate swaps. Such loans

hedged with IRS transactions are measured in the financial statements at amortised cost adjusted for fair value changes

attributable to the hedged risk.

Deposits:

The Group measures its deposits at amortised cost. Certain structured deposits contain embedded derivatives which are

separated from the deposits. The Group measures the embedded derivatives at fair values with its changes recognised in

profit or loss.

The Group involves certain deposits with fixed interest rate in hedge accounting. The fair value of those deposits is determined

by calculating the net present value of expected future cash flows discounted to the reporting date.

Bonds issued:

Non-structured self-issued bonds are measured at amortised cost and thus they are not revalued, except for bonds involved in

hedge accounting. In such cases only interest rate risk is hedged not credit risk.

Fair value of hedge-accounted issued bonds with fixed interest rate is the present value of future cash flows, whereas in case

of structured instruments the Group values the embedded derivative which is separated from the host contract.

Hedge accounting

The Group designated certain derivative instruments held for risk management purposes as hedging instruments designated

in hedge accounting. At inception of the hedge the Group formally documents the relationship between the hedging

instrument(s) and the hedged item(s), the risk management objectives and hedging strategy followed by entering into the

transaction and the method used for measuring hedge effectiveness. The Group evaluates at inception of the hedging

relationship and continuously thereafter whether the hedging instrument will be highly effective in offsetting the fair value

changes of the hedged item attributable to the hedged risk over the entire term of the hedging instrument and whether the

actual results fall within the 80-125 percent range.

· Raiffeisen Group | Financial Year 2024


10	Consolidated business report

(7) Basic principles of risk management and hedging

policy

The Group operates an independent, from business functions entirely separated risk management under the supervision of

deputy CEO responsible for risk management. The credit risk assessment and management of clients is a task assigned to the

Credit Risk Department and Retail and SME Risk Management Department, the analysis of market, operational and fraud risks

and compliance with Basel III regulations, capital adequacy calculations, developing credit risk models at the portfolio level is

the task assigned to Integrated Credit Risk Department.

(7.1) Credit Risk Management

Risk and credit assessment of non-retail clients is based on individual analysis and rating, typically with quarterly financial

monitoring and yearly limit review. In retail and micro enterprise financing there is an automated scorecard-based assessment.

Constraints of financing are represented by the desired balance of business and risk factors as determined by the owner and

the management of the Group, the act on financial institutions and other legislations and the framework defined by the

Group’s Credit Policy.

The economic crisis due to coronavirus pandemic did not cause in 2021 a systematic and mass increase in the balance of non-

performing loans, only a few clients became non-performing, amongst them some with relatively higher exposure. Thus, non-

performing rate for corporates was about 2% in 2021, for retail it stabilised at about 5%, remaining below the mid-term

strategic plan. This healthy level was also facilitated by measures for clearance of non-performing portfolio continuing in 2021

along with the application of standard workout methods. In 2022, the Group still did not experience any systematic portfolio

deterioration in the corporate segment, the NPE ratio remained at the previous low level, moreover further decreased in the

retail segment to a level of around 4%, while in case of the entire banking portfolio, also taking into account credit risk bearing

banking book securities, it was only 1.9%.

This stable/slightly positive trend has been maintained in the first half of 2023, with no meaningful inflows into the non-

performing portfolio and individual sporadic cases are counterbalanced by recoveries and returns, with the NPE ratio across

the entire bank portfolio, taking into account credit risk bearing banking book securities, declining to 1.7% by the end of 2023

In 2024, the Group’s non-performing loan portfolio increased slightly (by approximately HUF 2.4 billion), however, one of the

main drivers of this additions was the exchange rate change impact of non-performing corporate loans denominated in

foreign currency, in the amount of approximately +HUF 1.8 billion. The change in non-performing loans net of exchange rate

changes is negligible overall. In segment view, the decrease of recent years continued in the retail segment, while in the

corporate segment the newly recognized non-performing status of three corporate groups caused a noticeable increase. No

relevant systematic deterioration is noticeable in any segment. The problematic exposure management and collection efforts

also yielded significant results in 2024, significantly offsetting the emergence of new defaults. The ratio of non-performing

loans at bank level continued to decrease, to 1.3%.

Nevertheless,, current low default probabilities are expected to rise in the future. This is mainly due to the deterioration of the

business environment, supply chain problems, energy crisis, the high inflation environment, the narrowing of the demand and

investment side and negative developments in the real estate market, therefore the Group has carried out strengthened and

intensive monitoring activities related to these dimensions since October 2021 supplemented with portfolio stress testing. The

Group pays particular attention to analysing the expected direct and indirect impacts of increased geopolitical risks.

In retail segment, the portfolio remains stable with low default rates, however the Group is prepared to manage the risks

mainly arising from persistent inflation, changes in the interest rate environment and the slow economic recovery.

Payment moratorium: Participation in the payment moratorium, in accordance with the relevant guidance of EBA, did not

automatically trigger default and payment difficulty in 2020 and thus the Group pays particular attention to identifying

debtors presumably facing payment difficulties also during the term of the moratorium. In relation to clients opting in to

moratorium 2 starting in 2021, then 3 and 4 and in relation to clients opting-in to agricultural moratorium in the second half of

2022, the Group made in case of corporates an extraordinary individual risk review to recognise worsening risk profiles and to

determine defaults and eventually necessary restructuring. As a result of the assessments, it identified a few new restructured

portfolios with a relatively low exposure. The small portfolio that still participated in the moratorium 4 will resume its

repayments in accordance with the relevant new loan schedule at the end of 2023. The Group assessed clients entering into

moratorium 2 also in the retail segment. Clients in case of whom the Group identified financial difficulties, were reclassified to

non-performing status. If the client had no financial difficulties but has been in moratorium for more than 9 months, was

reclassified to Stage 2 and there is a close monitoring in place regarding the problems and financial difficulties of clients opting

out of moratorium 2. The Group repeated the procedures for assessing clients’ financial situation at the start of moratorium 3

and 4 and in justified cases, if information about the clients’ deteriorated financial situation became known since then, it

reclassified them to default, i.e., to Stage 3.

· Raiffeisen Group | Financial Year 2024


Consolidated business report	11

The payment moratorium ended at the end of 2023, but this did not result in a noticeable deterioration in the credit quality of

the portfolio either in 2023, nor in 2024. The Group will monitor and cure the transactions identified as forborne or non-

performing during the credit moratorium period in accordance with the normal recovery rules, provided that the relevant

preconditions are met.

The risk management procedures of the Group operate in accordance with the requirements of Basel III and IFRS9. Base data

necessary to sophisticatedly measure risks are contained in structured form in a modern data warehouse. From 2012 the

capital requirement of the whole banking portfolio (corporate, retail and SME) is quantified using the advanced, internal rating

based (IRB) methodology. During 2017 the municipality portfolio was returned to the standard methodology. The Group started

the same transformation in 2018 regarding financing the top segment of individuals which was completed in the last quarter

of 2019.

Capital requirement of baby loans, private banking and employee loans, as well as in retail segment the capital requirement of

products in crisis guarantee schemes related microsegment is calculated using the standard methodology.

Measuring and reporting risks is performed on a monthly and quarterly basis in compliance with the Group’s and regulator’s

requirements. The Group uses the results of risk models widely in pricing, in determining credit decisions and strategic

directions, thereby ensuring long-term capital adequacy, building up an profitable portfolio that is stable also in respect of

risks and the efficient usage of capital available.

The Group reacted also in its credit policy to the changes caused by coronavirus and the changes caused by the following

energy crisis, rising inflation and interest rate environment: in judging riskiness of industries, besides higher granularity, the

volume/probability of short-term effects and expected mid-term prospect also plays a particular role. Financing activity

targets industries with better conditions and clients with stronger resilience, whereas the more vulnerable part of the portfolio

requires a more cautious approach. In respect of the latter the Group acted with particular care also during determining

impairment and besides revisions of parameters and macro variables of the impairment models carried out taking a

conservative approach, it recognised additional impairment if necessary. In 2024, the most important risks covered by the

additional provisioning model on the corporate side are: real estate market yield risks, refinancing risk induced by the high

interest rate environment, inflation, supply chain squeeze, labour market difficulties and, as a new element, changes in

environmental impacts as additional risk factors. The Group continuously revises and if justified adjusts the adequate level of

related reserves.

During 2023, the Group developed its methodology for assessing sustainability-related transition risks, primarily environmental

risks, as part of the corporate lending process, which are applied to its corporate portfolio from the first quarter of 2024.

In the retails segment, the measurement of climate change and physical risks related to extreme climate events, as well as the

quantification of the negative effects to mortgage collateral exposed to them, have been developed by the Group and

incorporated into the impairment calculation during 2023.

In the retail segment in March 2020 the Group identified increased risks based on the industry classification of the client’s

employer, building categories of high/medium/low risk based on expected economic downturn and in November 2020 decided

to apply portfolio level management adjustments, so-called overlays to appropriately represent also these risks in impairment

calculation. Furthermore, it recognised additional impairment losses on the riskiest clients participating in the moratorium,

which was revised at each extension of the moratorium. At the end of June 2023, the management corrections affecting the

moratorium were phased out 6 months after the end of the general payment moratorium, as the transactions concerned will

be evaluated in normal monitoring processes and are again subject to days past due calculations, thus not carrying additional

risks. During 2021 and 2022, the Group fully examined changes in the income situation of customers in order to anticipate

potential problems. Due to the impact of energy market risks and increasing liquidity and profitability difficulties, the Group

made portfolio-level management adjustments in both the micro and small enterprise segments several times during 2022. In

2023 it continued to closely monitor the transactions concerned but did not see any reason to phase out the adjustments as a

consequence of persistent inflationary pressures and the economic downturn. As a result of monitoring, the scope of

transactions concerned was redefined and expanded with sole entrepreneurs financed in the retail segment and companies

operating in risky industries and their employees. In 2024, due to the slow but rising unemployment rate and a significantly

slower than expected recovery of economic growth in Hungary, the Group has maintained management overlays for the most

credit risk-sensitive customer groups, which have been fine-tuned to reflect the results of ongoing customer monitoring, due to

risks not covered by the model.

(7.2) Operational Risk Management

All organisational units participate actively in managing and as necessary decreasing the level of operational risk (department,

region, subsidiary). The Group makes significant efforts to improve the risk management organisation and increase risk

awareness, which includes identifying, collecting, assessing, reporting, monitoring and also managing operational risks

threatening to achieve the Group’s business goals. The main tools used to identify risks are collection of loss data, risk

indicators, scenario analyses and risk self-assessments. In course of this work the root causes of all identified operational risk

events are explored and used up in decisions on process improvements.

· Raiffeisen Group | Financial Year 2024


12	Consolidated business report

In order to further strengthen the operational risk management activity, the Group implemented those standards that comply

with the requirements imposed by the advanced measurement method.

The Group continues to efficiently operate the operational risk framework AMA (Advanced Measurement Approach) introduced

in 2016.

(7.3) Market and Liquidity Risk Management

Market and liquidity risk is managed within the Group at a number of levels using advanced methods and infrastructure,

monitoring is performed independently of business functions. Measuring and reporting risks is done on a daily/weekly/monthly

and quarterly basis in compliance with the requirements of the Group and the regulator. Grouping, measuring, managing of

risks and building economic capital is done in the framework of the Group’s ICAAP processes.

Measuring and controlling the risks is effected through complex risk, position, stop loss and VaR limit systems, the methodology

of which is in accordance with the requirements of the parent bank and the regulator. Management of market and liquidity

risks related to banking activity covers the following areas: trading book and banking book interest rate risk; the Group’s

liquidity risk also from going concern and stress point of view; the risk arising from illiquidity of market positions; share price

risk, foreign currency risk, risk inherent in option trading, counterparty risk of OTC derivative transactions. In addition to that,

this function of the Group ensures the independent pricing of various financial instruments in accordance with regulation

required by the parent bank and by IFRS 9. In addition to this, Market Risk function is responsible for controlling the market-

conformity of capital and money market transactions.

(7.4) Fraud Risk Management

Fraud risk is a dominant element of operational risks. The areas of the Group responsible for managing and handling fraud risk

pay special attention to all fraud incidents and continuously monitor and evaluate fraud trends. The insights gained from these

activities are consistently integrated into the core or monitoring processes. Group.

(8) Environmental protection

In 2024, the Group successfully conducted the annual surveillance audit of Raiffeisen Bank Zrt. Environmental Management

System operated according to the ISO 14001:2015 standard, as well as the Energy Management System according to the ISO

50001:2018 standard.

As part of the branch network re-design program, the renewal of mechanical and lighting systems to increase energy

efficiency (LED implementation) continued throughout 2024, with significant energy investments made at a total of 12

locations.

Following the first full year of operation of the solar power plant (HMKE) at the RBSC building in Nyíregyháza, actual production

and usage data show that the system provided 23% of the total electricity demand. This locally generated electricity

prevented the emission of approximately 29.29 tons of CO2 equivalent greenhouse gases into the environment in 2024. The

implementation of solar systems at branches will continue in 2025.

The "greening" of the Group's vehicle fleet did not stop in 2024. Utilizing the "RRF-10.10.1-24 Support for the acquisition of road

electric vehicles for businesses" grant, Raiffeisen Bank Zrt. commissioned a total of 16 Hyundai Kona EV vehicles. To reduce

operating costs, the Group also ensured the establishment of charging facilities for the cars. A total of 13 AC devices with a

maximum charging capacity of 11 kW were installed at eight locations in the country (Debrecen, Gödöllő, Nyíregyháza (2

locations), Kecskemét, Miskolc, Pécs, and Szeged). At the end of January 2025, another 9 EV chargers will be put into operation

at the AGORA headquarters.

(9) Sustainability

Our planet, the biodiversity and the quality of our life is largely impacted by the natural factors making up the biological

system. The business activity of the financial sector has a significant impact on the environment and on society. However, this

is a two-way relationship, the finance sector itself is also affected by environmental and social factors. The two most

significant environmental effects of these times are climate change and biodiversity loss.

Our planet, the biodiversity and the quality of our life is largely impacted by the natural factors making up the biological

system. The business activity of the financial sector has a significant impact on the environment and on society. However, this

· Raiffeisen Group | Financial Year 2024


Consolidated business report	13

is a two-way relationship, the finance sector itself is also affected by environmental and social factors. The two most

significant environmental effects of these times are climate change and biodiversity loss.

In terms of defining environmental, social and governance (ESG) risks, the Group follows EBA’s position and take on a prudential

view when it comes to ESG, elaborating on the risks related to it, i.e. ‘ESG risks materialize when the ESG factors affecting

institutions’ counterparties have a negative impact on the financial performance or solvency of such market players’. As ESG

refers to environmental, social and governance aspects, the Group identifies the following risks from these aspects. The

detailed information about ESG related topics is disclosed in the separate and consolidated non-financial statement.

Key considerations of ESG risks

Environmental risks

Environmental risks are driven by environmental factors. They should be understood as the financial risks posed by the

institutions’ exposures to counterparties that may both potentially contribute to or be affected by climate change and other

forms of environmental degradation (such as air pollution, water pollution, scarcity of fresh water, land contamination,

biodiversity loss and deforestation).

The Group identifies environmental risks as a result of the following factors:

· Transition-related risks: regulatory, technological and market changes that generate changes in the lending and

other risks arising in the course of banking activities related to climate change, environmental pollution and water

ecological processes.

· Physical risks: acute or chronic environmental events related to climate change, environmental pollution and aquatic

ecological processes that directly endanger the physical integrity and security of assets and/or customers financed

in the course of banking activities, thereby affecting their operability, income-generating capacity and value, as well

as the security of supply chains. Acute physical risks include: floods, storms, droughts, forest fires. Chronic physical

risks include: desertification, sea level rise, air and water quality, permanent deterioration of water volumes, and

persistent increase in temperature.

Social risks

Social risks arise from financial impact generated by misuse of human capital such the rights, well-being and interests of

people and communities.

Governance risks

Governance risks refer to the governance practice of the institutions’ counterparties, including the inclusion of ESG factors in

policies and procedures under the governance of the counterparties.

These risks affect:

· the value of the companies' assets, business model, income-generating capacity, supply chains, investable resources,

regulatory environment;

· household income, expenditure, and the value of their assets;

· and at the macroeconomic level, the value of capital assets, investment needs, productivity and competitiveness

levels, consumer preferences, and the related operation of public finances, interest rates and exchange rates.

These changes may be reflected in the Group's operations as follows:

· credit risk: increased defaults, depreciation of collateral;

· market risk: unexpected changes in asset price movements that are difficult to predict;

· operational risk: vulnerabilities in supply chains, physical operational risks;

· liquidity risk: increased liquidity needs, refinancing risk;

· reputational risks: reputational damage due to inadequate management of the above, risks of being painted ‘green’.

Risk framework

The Group takes these risks into account in its risk frameworks over different time horizons as follows:

· Raiffeisen Group | Financial Year 2024


14	Consolidated business report

Short term

Individual risks

The Group implicitly takes into account the mentioned risks in the corporate customer base during the annual review and

credit approval process. In 2023, a modification of the lending process was introduced, in the course of which the Group

explicitly analyses the environmental assessment of the customer and the loan objective on the business side ('ESG expert

opinion') and presents the identifiable environmental risk profile ('ESG risk assessment') as a separate part of the risk manager's

position on the risk side.

The Group conducts an increasing number of surveys to its customers in order to obtain access to their sustainability data (in

the form of an electronic questionnaire). In the survey, in addition to estimated and factual data related to GHG emissions, the

Group collects data on water and land use; waste production and environmental pollution characteristics. In addition to short-

term consideration, these data also serve as input for the assessment of medium-term (ESG score) and long-term (climate

scenarios). The Group has taken note of the National Bank of Hungary's recommendation for a customer questionnaire in this

regard and will supplement its own questions with the minimum set of questions recommended, in the future, keeping in mind

the deadlines set.

The Group is making efforts to obtain energy performance data for collaterals. Where the legal environment allows, it is a

mandatory condition to provide the related certificates in the case of new funding, and in the case of existing funding and/or

in the absence of a legal obligation, data collection is carried out on a ‘best effort’ basis within targeted campaigns.

The Group has implemented sector-wide lending policies to define sustainability financing conditions. By the end of 2024, it has

established clear lending policies in the following sectors: tobacco, coal, renewable energy, oil and gas; steel, nuclear energy,

real estate and construction and related raw materials.

Portfolio risks

With the help of scientific methodologies (PCAFs) and estimates, measurements were made regarding the financed GHG

intensity of the corporate customer base, which is published in the separate and consolidated non-financial statement for

2024 as the first time, section ‘E1-6: Gross scopes 1, 2, 3 and total GHG emissions’.

For the corporate segment the additional risk arising from ESG factors was considered using the Special Risk Factors (SRF)

Framework, primarily to account for unmodelled macroeconomic effects but also to cover environmental risks as a temporary

compensations of the model weaknesses. More details are disclosed under note (6.2) Credit risk.

Mid-term

Individual risks

In 2022, the Group introduced an ESG scoring system to assess customers in a standardized way from the environmental

perspective. The model was developed by the parent company (RBI), and its use is uniform for the medium-sized and large

corporate customers. The ESG score has no direct impact on the client's credit rating. The ESG model is based on an industry

base score, supplemented by an additional carbon dioxide emission factor. It is possible to deviate the industry average score

in this way in a positive or negative direction along individual customer specifics. During scoring, the risk analyst evaluates a

number of aspects based on the client's report, data reporting and disclosures, which, supplemented with the data of the

above-mentioned electronic questionnaire (where available), determines a final client score within the industry score limits. The

ESG score can provide guidance on the calibration of customers' expected environmental risks in the medium term, and as

such, it serves as input information for the above-mentioned sustainability assessments related to the lending process.

Portfolio risks

Based on the ESG Score mentioned above, the Group plans to introduce portfolio management tools in the future (sub-

portfolio level measurements, targets and limits), which will be broken down to a local level based on the parent company's

group-level limit management. In 2025, it is expected to introduce a monitoring process for the change in the average ESG

Score of the portfolio above 10%, as well as for the maximum amount of the part of the portfolio with the worst ESG Score.

Regarding the Group’s ambitions towards the 2015 Paris Agreement climate targets, the Group committed to reducing its

financed GHG emissions by 17% by the end of 2030, based on the level measured at the end of 2023. The objective for the

corporate client portfolio has been formulated as an overarching target and was approved by the Board of Directors. In the

coming years, this effort is expected to be further developed and detailed sector-specific goals may be developed.

Long-term

Portfolio risks

· Raiffeisen Group | Financial Year 2024


Consolidated business report	15

A long-term Climate Stress Test has been prepared at the level of the RBI Group and its subsidiaries, taking into account the

above-mentioned customer and collateral sustainability data, along the scenarios defined by the EBA. The Group's results have

been completed by the end of 2024, which examined the long-term impact of climate risks on the Group's profitability and

capital adequacy in each scenario. The results show that the Group is not exposed to significant risk overall over the

2030-40-50 time horizon, but there are portfolios that are more vulnerable under certain scenarios.

Reference to the non-financial disclosure

During the reporting period, it was determined that there are no financially material risks from climate change to the regular

risk parameters (market risk, credit risk, operational risk, and liquidity risk). The effects of climate change are only observed

through scenario analyses over longer periods. The effects from climate risks are incorporated into risk measurement and

limitation. Further information on the nature, extent and mitigation of climate change risk are available in the separate and

consolidated non-financial statement’s chapter IRO-1: ‘Process to identify and assess material impacts, risks and opportunities’.

Key sources of estimation uncertainty and critical accounting judgments

In the double materiality analysis for the separate and consolidated non-financial statement in 2024, the financial materiality

of sustainability matters was considered in the short, medium, and long-term. In the short term, defined as the reporting

period of the consolidated financial statements, it was assessed that there were no financially material risks from

sustainability matters. As a result, the consolidated financial statements do not include any separate disclosure on

sustainability related uncertainties that materially affect the estimation assumptions. In the long term, which is considered as

ten years onwards, there is also a low chance of a material impact on the credit risk of our customer portfolio due to climate

change transition risk. For more details, please see the separate and consolidated non-financial statement’s chapter IRO-1:

‘Process to identify and assess material impacts, risks and opportunities’.

(10) Employment policy

The Group is one of the leading employers in the financial sector: at 2024 the average statistical number was 3,084. It is

especially important for the Group to carry out its activities as a fair and correct employer, on the one hand fully considering

and complying with the prescriptions of the Hungarian Labour Code, on the other hand ensuring favourable work and career

opportunities and continuous professional development and development as a leader to its employees.

Recruitment and selection is done centrally, in course of the activity of HR, paying attention to the core principles of inclusive

culture and taking care that diversity be a part of the daily selection practice. The Group’s selection practice is focused on

trained and qualified workforce, however at the same time it provides an opportunity also to graduates for intensive

professional development.

The Group pays attention to and strives for ensuring for its employees fair and competitive income compared to Hungarian

labour market. Fringe benefits, within the framework of Cafeteria system, provide a choice for the colleagues to select from a

wide range of benefit most fitting their personal needs.

All employees are covered by the performance development process operated by the Group, which provides a framework for

clear goal setting, constructive feedback and well-grounded performance evaluations. Performance-dependent financial and

moral rewards incentivise the colleagues to achieve outstanding performance.

The Group has a complex training and development activity, which is focused, besides developing professional knowledge and

skills, on programmes to improve personal, managerial, language and IT skills. At the end of the year, the Group’s employees

spent an average of 5.61 days on training and development events and programs, without e-learning 1.07 days. The continuous

development of employees’ digital skills has a major role in the training and development portfolio, that is supported with the

annual Digital Learning Week event starting from 2021 together with the numerous professional trainings. The Group supports

the colleagues in successful and effective coping with everyday performance challenges and stress situations with community

building and employee well-being programmes.

The Group operates a comprehensive and conscious succession planning practice, the goal of which on the one hand is the

retention of managers and employees working in key professional roles, on the other hand the succession planning and

development.

Workplace Council operates within the organisational framework of the Group, ensuring consideration of employee interests.

With the introduction of the flexible working framework in 2020, the Group organised, except for the critical business areas, the

employees’ working from home, which, subsequent to the pandemic, as a new standard will remain an integral part of the

operation and will continue to be operated in a framework and construction based on the field of work.

· Raiffeisen Group | Financial Year 2024


16	Consolidated business report

(11) Compliance activity

In accordance with the regulations and the requirements of NBH the Group operates for exploring and managing compliance

risks – as part of the internal defence lines – an independent organizational unit who performs the following functions:

· Controlling the compliance with ethical rules, issuing guidance on related questions, performing investigations of

notices

· Ensuring compliance with regulations on conflicts of interest and the control of that

· Organizing and operating anti-corruption measures within the group

· Maintaining the internal loan register

· FATCA/CRS monitoring and reporting

· Fighting against money-laundering and financing international terrorism, as well as organizing, governing and

coordinating the compliance with international sanctioning measures within the group, operating relating

monitoring system; operating a notification and control system, liaison with the competent authority.

· Ensuring and controlling the compliance with regulations regarding segregation of financing and investment

services, restricting the flow of information, prohibition of insider trading and market manipulation and employee

trading, and liaison with the competent authority.

· Ensuring and controlling compliance with regulations on investment related services (e.g. Bszt.), performing

defensive task related to client assets.

The organizational location of the compliance function and its scope of activities are in all respects in accordance with

relevant regulations, with HNB guideline on the system of lines of defence and the underlying EBA (GL2021/005) guideline.

(12) Research and development

The Group performs R+D activity during application development related to financial services, as well as in the implementation

of business and risk management modelling.

(13) Fees charged by the auditor

The following net fees were charged in 2024 and 2023by Deloitte Könyvvizsgáló és Tanácsadó Kft. and by Deloitte Üzletviteli és

Vezetési Tanácsaadó Zrt.:


(HUF million)	2024	2023
Audit of financial statements	230	236
Other assurance services	68	50
Total	298	286

· Raiffeisen Group | Financial Year 2024


Consolidated business report	17

(14) Branch network

The Group serves its clients through branches located at the following addresses as at 31.12.2024


· 1015 Budapest, Széna tér 1/a.	· 1023 Budapest, Bécsi út 27.
· 1024 Budapest, Lövőház u. 2-6.	· 1036 Budapest, Bécsi út 136.
· 1037 Budapest, Szépvölgyi út 41.	· 1045 Budapest, Árpád út 183-185.
· 1051 Budapest, Vörösmarty tér 4.	· 1055 Budapest, Szent István körút 27.
· 1061 Budapest, Andrássy út 1.	· 1062 Budapest, Váci út 1-3.
· 1066 Budapest, Teréz krt. 12.	· 1072 Budapest, Rákóczi út 44.
· 1085 Budapest, Üllői út 39-43.	· 1087 Budapest, Kerepesi út 9.
· 1106 Budapest, Örs vezér tere 25.	· 1114 Budapest, Bocskai út 1.
· 1115 Budapest, Etele út 68.	· 1117 Budapest, Hunyadi János út 19.
· 1123 Budapest, Alkotás utca 53.	· 1123 Budapest, Alkotás utca 55-61.
· 1133 Budapest, Váci út 116-118.	· 1139 Budapest, Váci út 81.
· 1148 Budapest, Örs vezér tere 24.	· 1152 Budapest, Szentmihályi út 137.
· 1173 Budapest, Ferihegyi út 74.	· 1181 Budapest, Üllői út 417.
· 1203 Budapest, Kossuth Lajos utca 21-29.	· 1211 Budapest, Kossuth Lajos u. 85.
· 2030 Érd, Budai út 22.	· 2040 Budaörs, Templom tér 22.
· 2100 Gödöllő, Gábor Áron u. 5.	· 2310 Szigetszentmiklós, Vak Bottyán u. 18.
· 2400 Dunaújváros, Vasmű út 39.	· 2500 Esztergom, Kossuth Lajos u. 14.
· 2600 Vác, Széchenyi u. 28-32.	· 2800 Tatabánya, Fő tér 20.
· 2900 Komárom, Mártírok útja 14.	· 3200 Gyöngyös, Fő tér 12.
· 3300 Eger, Jókai Mór utca 5.	· 3525 Miskolc, Erzsébet tér 2.
· 3527 Miskolc, Bajcsy Zs.u. 2-4.	· 4024 Debrecen, Piac u. 18.
· 4026 Debrecen, Péterfia utca 18.	· 4400 Nyíregyháza, Korányi Frigyes u. 5.
· 4400 Nyíregyháza, Kossuth tér 7.	· 5000 Szolnok, Szapáry út 22.
· 5600 Békéscsaba, Andrássy út 19.	· 6000 Kecskemét, Kisfaludy u. 5.
· 6200 Kiskőrös, Petőfi S. tér 8.	· 6500 Baja, Dózsa György út 12.
· 6500 Baja, Dózsa György út 12.	· 6720 Szeged, Széchenyi tér 3.
· 6722 Szeged, Kossuth Lajos sugárút 9-13.	· 6800 Hódmezővásárhely, Kossuth tér 6.
· 7100 Szekszárd, Széchenyi utca 37-39.	· 7400 Kaposvár, Berzsenyi utca 1-3.
· 7621 Pécs, Bajcsy Zs. u. 11.	· 7621 Pécs, Irgalmasok útja 5.
· 8000 Székesfehérvár, Palotai út 1.	· 8000 Székesfehérvár, Távírda utca 1.
· 8200 Veszprém, Mindszenty József u. 2.	· 8360 Keszthely, Széchenyi utca 1-3.
· 8400 Ajka, Szabadság tér 4.	· 8500 Pápa, Fő tér 15.
· 8800 Nagykanizsa, Deák tér 11-12.	· 8900 Zalaegerszeg, Kossuth u. 21-23.
· 9022 Győr, Arany János utca 28-32.	· 9024 Győr, Vasvári P. út 1/a.
· 9200 Mosonmagyaróvár Fő u. 26.	· 9400 Sopron, Széchenyi tér 14-15.
· 9431 Fertőd, Fő u. 12.	· 9700 Szombathely, Fő tér 36.

· Raiffeisen Group | Financial Year 2024


18	Consolidated business report

(15) Key financial indicators


(HUF million or %)	31.12.2024	31.12.2023
Key profitability and efficiency ratios
Number of branches	73	73
Net interest income	186,981	200,656
Net fee and commission income	94,384	81,520
Operating expenses	87,641	81,486
Cost to income ratio (without transaction fee and taxes)	32.02%	30.72%
Provisioning	13,277	986
Profit for the year	115,952	103,259
Return on equity after tax (ROE)	24.52%	25.26%
Return on assets after tax (ROI)	2.51%	2.33%
Net interest margin	4.20%	4.66%
Provisioning ratio	-0.69%	-0.05%
Total assets	4,615,256	4,432,055
Gross carrying amount of loans and advances to clients	1,928,211	1,830,052
Deposits from customers	3,183,599	2,986,372
Loan to deposit ratio	60.57%	61.30%
Deposits from banks	468,698	504,981
Key risk ratios
Impairment related to loans and advances to clients	56,183	66,516
NPL exposure	56,737	57,184
NPL ratio	2.94%	3.12%
NPL coverage ratio	99.02%	116.32%
Provisioning ratio	-0.69%	-0.05%
Total capital specific key ratios
Common equity tier 1 capital (CET1)	389,379	371,164
Additional tier 1 capital (AT1)	46,979	46,979
Tier 2 Capital	70,724	66,175
Total regulatory capital	507,082	484,317
Risk-weighted asset	1,727,082	1,746,597
CET 1 capital ratio	22.55%	21.25%
Tier 1 capital ratio	25.27%	23.94%
Total capital ratio	29.36%	27.73%
Leverage ratio	6.79%	6.32%
Liquidity risk specific key ratio
Liquidity coverage ratio (LCR)	176.60%	188.90%
LCR High Quality Liquid Assets	1,872,500	1,753,038
LCR Net Outflows	1,060,075	928,065
Net Stable Funding Ratio (NSFR)	145.39%	145.58%

Consolidated

non-financial statement

2024

· Raiffeisen Group | Financial Year 2024


	Consolidated non-financial statement

Table of contents

· Raiffeisen Group | Financial Year 2024


Consolidated non-financial statement	1

General information

Basis of preparation

BP-1: General basis for preparation of non-financial statement

In preparing this non-financial statement (‘Non-financial statement’ or ‘Sustainability statement’), Raiffeisen Group. (‘RBHU

Group’ or ‘Group’ or 'Bank') acknowledges certain inherent limitations due to the initial reporting under the Corporate

Sustainability Reporting Directive (CSRD). Consequently, comparisons over time may be constrained as frameworks for

sustainability reporting are continuously evolving. The data collection processes and methodologies for certain sustainability

metrics are still being refined. As such, some data points may be subject to estimation and may not capture all aspects of

performance accurately. Any future changes in structure or operations may impact the reported sustainability metrics. The

sustainability impacts reported herein are influenced by external factors such as regulatory changes, market conditions, and

technological advancements, which may affect the outcomes of our/RBHU Group’s sustainability initiatives.

We are committed to continuously improving our sustainability reporting processes and addressing these limitations in future

reports to provide more comprehensive and reliable information to our stakeholders.

Section 134/J (1) of the Accounting Act stipulates that RBHU Group must prepare its consolidated business report in the

electronic reporting format (XHTML) as specified in Commission Delegated Regulation (EU) 2019/815 (ESEF Regulation).

Additionally, the sustainability statements defined by the ESEF taxonomy in the consolidated sustainability statement are

required to be marked up using the XBRL markup language, including the disclosures mandated by Article 8 of Regulation (EU)

2020/852. However, given that the ESEF taxonomy for sustainability statements has not yet been adopted, the Consolidated

sustainability statement does not contain XBRL markups due to the absence of the relevant legislation.

The non-financial statement provides information on Raiffeisen Group. sustainability agendas and activities for the 2024

reporting period. This chapter represents the Bank’s summarized and consolidated sustainability statement according to

Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No

537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting,

OJ L 322, 16.12.2022, p. 15–80. (the ‘Corporate Sustainability Reporting Directive’ or ‘CSRD’) and local law (pursuant to sections

95/D-95/I of the Hungarian Act C of 2000 on Accounting).

The non-financial statement for 2024 is not published as a stand-alone report, but it is included as part of the 2024 annual

financial report in a separate chapter of the management report. In the management report, RBHU Group describes the direct

and indirect economic, environmental, and social impacts of business activities for the year 2024, which were identified as

material based on the double materiality assessment in accordance with the Commission Delegated Regulation (EU) 2023/2772

of 31 July 2023 supplementing Directive 2013/34/EU of the European Parliament and of the Council as regards sustainability

reporting standards, OJ L, 2023/2772, 22.12.2023 (the ‘European Sustainability Reporting Standards or ESRS’) In line with the

requirements in ESRS 1, RBHU Group has included the prescribed disclosures pursuant to the EU Taxonomy Regulation (Article 8

of Regulation (EU) 2020/852 and the accompanying delegated acts) as separately identifiable sections in this non-financial

statement.

Based on RBHU Group’s double materiality assessment, the 2024 consolidated non-financial statement is organized according

to the ESRS disclosure framework. In terms of content, RBHU Group reports on its sustainability Strategy, the related impacts,

financial risks, opportunities and how it manages them, as well as considerations of stakeholders’ views. The reported key

figures relate to RBHU Group as a whole. The consolidated non-financial statement addresses all RBHU Group’s stakeholders.

The consolidated non-financial statement is published annually, and for the year 2024, it was released on 27 March 2025.

Deloitte Audit and Consulting Ltd. independently audited the consolidated non-financial statement with limited assurance for

the reporting year 2024. The option of excluding certain information relating to intellectual property, know-how, or the results

of innovations relating to disclosure has not been utilized in this sustainability statement.

The legal norms and recommendations indicated in this report do not necessarily constitute the full regulatory framework

applicable to the Bank; therefore, the Group disclaims any responsibility for its completeness. The referred regulations are

provided solely to assist with the interpretation of the text.

The permitted option of omitting the disclosure of impending developments or matters in the course of negotiation has not

been utilized by RBHU Group.

This report has been prepared on a consolidated basis. For details, please refer to the chapter entitled Scope of consolidation.

The scope of consolidation of the consolidated non-financial statement covers upstream and downstream value chains.

· Raiffeisen Group | Financial Year 2024


2	Consolidated non-financial statement

The consolidated non-financial statement is presented in million Hungarian Forints. If not stated otherwise, financial

information is presented in Hungarian Forints rounded to the nearest million.

Scope of consolidation

The scope of consolidation of the consolidated non-financial statement is generally the same as for the consolidated financial

statements, which are prepared in accordance with the International Financial Reporting Standards (IFRS) published by the

International Accounting Standards Board (IASB) and the international accounting standards adopted by the EU on the basis of

IAS Regulation (EC) 1606/2002, including the applicable interpretations of the International Financial Reporting Standards.

With this said there are same parts in the Report (as listed within this section), where RBHU Group has to deviate from the

general consolidation in order to provide material information, furthermore, provide a transparent and rational picture from its

ESG factors and aspects.

Further information regarding the scope of consolidation can be found in the consolidated financial statements in note (44)

Investments in subsidiaries.

BP-2: Disclosures in relation to specific circumstances

Time horizons

Explanations of time horizons in risk management

For climate and environment-related risk, RBHU Group differentiates between the impact expected in the short, medium and

long term in line with the European Central Bank (ECB) guide on managing climate-related and environmental risks and RBI

Group’s approach. As the planning horizon and average loan tenor are typically shorter than the time horizon in which the

effects of climate-related change and environmental degradation would primarily arise, a forward-looking approach is

considered with a longer-than-usual time horizon:

· Short term (up to three years) – risks mainly associated with transition risks (e.g. changes in legislation and

regulation, changes in technology), i.e. the ability of companies and customers to achieve the transition to a low-

carbon economy. The Bank sees opportunities both from supporting its customers with financing, allowing them to

achieve the transition to a low-carbon economy, as well as potentially increasing the financing directed at industries

that are already green (e.g. renewables) and supporting industries that are contributing to the development of a

circular economy.

· Medium term (more than three years, up to ten years) – risks driven by the paradigm shift in business models, the

emergence of new technologies and continuous updating of regulations, with potentially increasing risks from a

physical perspective (if CO2 reduction is not achieved as targeted). Both physical and transition risks will pose

challenges. Technological risks can arise if innovations in connection with energy efficiency result in old technologies

that RBHU Group has invested in becoming outdated and unprofitable. On the other hand, investments in new

technologies can also fail if they prove to be technically immature. Regulatory risk in connection with stricter

environmental protection laws and regulations can also make existing investments less profitable or even

unprofitable. The withdrawal of many investors from the fossil energy sector, especially coal and carbon-dependent

industries, is an indication that the corresponding assets of the customers or investees can be expected to fall in

value over the medium term (carbon bubble). On the other hand, RBHU Group sees a good opportunity in terms of

investing in new technologies that are more likely to be profitable in the medium term (and divesting from coal).

· Long term (more than ten years) – challenges will come from physical risks, their impact on customers’ business

models and supply chains, as well as on their ability to mitigate and ensure that their repayment capacity is not

severely affected. In the event of an insufficiently orderly climate transition, various long-term scenario analyses

suggest large losses, particularly for carbon-intensive industries.

Sources of estimation and outcome uncertainty

Quantitative information about key value chain activities is often based on averages, assumptions and estimates. RBHU Group

tries to obtain sustainability data directly from its clients. If estimates or quantitative information do not refer to the current

reporting date, they are disclosed in the respective chapters. Where this is not possible external data vendors or sector

averages are used. In most cases several data sources are used. As more sustainability-related information becomes available

and standardized, for example as a result of the adoption of ESRS, the Bank expects to be able to reduce the estimation

uncertainty related to it. The main metrics applied by RBI, and subsequently RBHU Group, using estimates based on indirect

sources, are Scope 3 emissions. This involves the provision of data quality information in alignment with PCAF (2022). The Bank

indicates a high level of measurement uncertainty where metrics or monetary amounts are disclosed.

· Raiffeisen Group | Financial Year 2024


Consolidated non-financial statement	3

For corporate customers as well as for project finance transactions, RBI Group has developed an ESG customer score by

measuring the impact of ESG-related risk through individual scores, which are sourced centrally to each NWU, therefore to

RBHU Group as well.

ESG customer score

The ESG customer score is used to:

· Assess the ESG performance of customers;

· Assess the mid- to long term-related risk arising from customers’ ESG behaviour;

· Identify customers with a restrictive, transformative, or supportive ESG performance and draw conclusions for the

underwriting decisions on certain customers.

The ESG score is based on the following components:

· Environmental: measures the impact of transition risk and physical risk; focus areas are to support transition to a

net zero greenhouse gas (GHG) emission, the circular economy and biodiversity; in addition, the Bank is able to

identify those customers that it would like to support further: either on their way to a low-carbon economy, as a

contributor to the circular economy, or due to their low impact/enabling function vis-à-vis the environment (already

green industries). The E score is determined on the basis of both quantitative and qualitative factors. Quantitative

factors that are considered in the E score relate to the following (this list is not exhaustive):

· Customer CO2 emissions (all 3 scopes);

· Energy consumption;

· CO2 reduction targets;

· Water use;

· Share of renewables, etc.

Qualitative factors address the actions that the company has put in place (if any) to tackle its environmental

footprint, including target setting.

· Social: capturing social risks at the customer level and identifying those with a negative impact on society and/or

that contradict the Bank’s internal societal standards and reflect negatively on its reputation. Positive impacts will

also be considered and potential support for such customers may subsequently be envisaged. Compliance with

existing health and human rights regulations has already been considered. A more extensive update of the ESG

scoring model was performed in relation to human rights. RBI Group, and RBHU Group has taken a closer look at the

following areas relating to its customers:

· Social/human rights-related Code of Conduct and supplier screening;

· Minimum safety standards in the work environment;

· Appropriate business behaviour;

· Supporting diversity and educational aspects at the employee level.

The respective social score questions for assessing social risks can be assigned to five major areas related to the

social aspects of a company:

· General information;

· Human capital/human rights;

· Responsible production;

· Product-related aspects;

· Customer-related aspects.

· Governance: governance-related risks at the customer level are measured by scoring questions on transparency,

business ethics, diversity, strategy and risk management, specifically at the top management level.

· Raiffeisen Group | Financial Year 2024


4	Consolidated non-financial statement

The ESG customer score is based on individual assessments by internal analysts. Qualitative and quantitative information on E,

S and G criteria is used to evaluate the customer. The ESG score is determined for all corporate credit customers. All customers

in the corporate, project finance and sovereign category have an ESG score. For financial institutions, the ESG score was rolled

out for year-end 2024.

Customer data collection

ESG data availability is crucial for the RBI Group and RBHU Group to develop internal customer ESG scoring, track the reduction

of financed emissions and make informed internal steering decisions. Many customers are not yet subject to a regulatory

reporting regime, which is why ESG data is not available for the entire portfolio. Additionally, data is subject to fluctuations in

quality. Often, estimated values – such as for Scope 3 emissions – are used. To improve the availability and quality of data, RBI

and RBHU Group uses a variety of internal and external ESG data sources:

· Client data

· ESG questionnaire

· Non-financial statements

· 3rd party data vendors

· Public databases

· Deal level data

· Energy Performance Certificates

Despite the poor availability, the highest priority is put on audited/verified client data, the lowest priority is given to estimates.

RBI has created a customer questionnaire that enables it to gather relevant information on environmental aspects directly

from its customers. Since the Bank already covers social and governance-related questions in the regular rating process, the

focus has been on collecting quantitative data on environmental topics.

The customer questionnaire covers the most important environmental aspects, in particular data on:

· GHG emissions;

· Reduction targets;

· Circular economy;

· Energy consumption;

· Water consumption;

· EU Taxonomy KPIs (Turnover, CAPEX). 

Every year the set of ESG data points is reviewed with the respective stakeholders – new data points are added while no

longer necessary ones get removed from the data collection. Social and governance-related information is gathered from both

annual reports and sustainability statements of the customers.

To further improve data availability and data quality, the Bank employs or plans to employ a mix of measures:

· Engaging with clients and create awareness;

· Will consider implementing detailed KPIs at board level;

· Performing data quality checks;

· Visualizing data collection progress through reports and dashboards.

The remaining topics included in the second pillar can be found in the specific CSRD chapters:

· Green Asset Ratio (see chapter entitled Regulatory disclosure requirement in accordance with Article 8 of the EU

Taxonomy Regulation);

· Financed emissions (see chapter E1-6: Gross scopes 1, 2, 3 and total GHG emissions);

· Raiffeisen Group | Financial Year 2024


Consolidated non-financial statement	5

· Target setting (see chapter E1-4: Targets related to climate change mitigation and adaptation).

Disclosures stemming from other legislation or generally accepted sustainability reporting

statements

Regulatory disclosure of ESG risks

Since the 2022 financial year, the RBI Group has been required to disclose the Implementing Technical Standards (ITS) on Pillar 3

disclosures on Environmental, Social and Governance (ESG) risks as published by EBA, in which RBHU Group was represented on

a consolidated basis. These standards aim to ensure that stakeholders are well informed about the ESG exposures, risks and

strategies of institutions, that they can make informed decisions and exercise market discipline. The aim is to guarantee the

improved consistency, comparability, and meaningfulness of disclosures by institutions.

According to Article 18a of Regulation (EU) 2021/637, Raiffeisen Bank Zrt. shall disclose the information referred to in Article

449a of Regulation (EU) No 575/2013 as amended by Regulation (EU) 2024/1623 as of 30 June 2025.

Incorporation by reference

Some ESRS disclosure requirements are closely linked to requirements that the Bank is already subject to, such as the

requirement in the Corporate Governance Code to describe its governance structure. All references are listed below:


Chapter in consolidated non-financial statement	Reference
Scope of consolidation	Consolidated financial statements
The role of the administrative, management and supervisory bodies	Corporate governance report

List of phased-in disclosure requirements


ESRS	Disclosure requirement
SBM-1	Breakdown of total revenue, as included in its financial statements, by significant ESRS.
SBM-1	List of additional significant ESRS sectors in which significant activities are developed or in which undertaking is or may be connected to material impacts
E1-9	Anticipated financial effects from material physical and transition risks and potential climate-related opportunities.

· Raiffeisen Group | Financial Year 2024


6	Consolidated non-financial statement

Governance

GOV-1: The role of the administrative, management and supervisory bodies

The organizational framework for governance, supervision and decision-making is set within the annual Responsible Corporate

Governance Statement of RBHU Group. For this reason, detailed information with regard to the composition of administrative,

management and supervisory bodies, general roles and responsibilities, procedures of the decision making and percentage of

independent members, please refer to Section 3 of RBHU Group’s Responsible Corporate Governance Statement. While this

report covers only ESG relevant aspects of the operation of these organizational units.


Organizational anchoring of sustainability in RBHU Group
Supervisory and Control level
Board of Directors
Audit Committee Risk Committee Remuneration Committee Nomination Committee
Management level
Management Board
Thematic level
Sustainability Council Sustainable Bond Committee
Implementation level
ESG business ambassadors	Sustainability Officers	Employees (specific units)
Responsible for the implementation of the ESG business strategy	Responsible for the establishment and further development of the local sustainability agenda	Responsible for the implementation of measures to achieve sustainability goals and tackle ESG risks

Supervisory and Control level

For detailed information with regard to the composition, general roles and responsibilities of the Supervisory and Control units

(including the Board of Directors, the Audit Committee, the Risk Committee, the Remuneration Committee and the Nomination

Committee), as well the procedures of the decision making, please refer to the Section 3 of RBHU Group’s Corporate

Governance Report.


Organizational unit	Executive/non-executive members	Female/male members	Female/male ratio (%)
Board of Directors	2 executives & 6 non-executives	2 female & 6 male members	25%-75%
Audit Committee	3 non-executives	3 female members	100% female
Risk Committee	3 non-executives	1 female & 2 male members	33%-67%
Remuneration Committee	3 non-executives	3 male members	100% male
Nomination Committee	3 non-executives	3 females	100% female

Management level

The highest decision body in RBHU Group in ESG matters are the Management Board. For more detailed information with

regard to the composition of the Management Board, procedures of the decision making and percentage of independent

members, please refer to Section 3 of RBHU Group’s Corporate Governance Report. The Management Board is responsible for

the oversight of impacts, risks and opportunities related to the bank’s own operations and value chain. All members of the

Management Board are engaged in this responsibility, ensuring comprehensive and effective governance.

The responsibilities of the bodies are clearly delineated within the internal bylaws of RBHU Group.

The Management Board is the most senior decision-making body for ESG-related strategies, policies and commitments. Each

board area must implement their respective sustainability strategies and integrate them into the performance management

process. This should be reflected in the ESG policies and conditions for the individual area.

· Raiffeisen Group | Financial Year 2024


Consolidated non-financial statement	7

The Management Board possesses sustainability-related expertise, both directly and through the supports of ESG experts.

RBHU Group ensures that Management Board members have specialized sustainability training by in-house experts. Expertise

and training enable the Management Board to effectively oversee the bank’s sustainability strategy, addressing its material

impacts, risks and opportunities. The Management Board assess and identify impacts, risks and opportunities through the

Sustainability Council and based on the discussions made within council sessions.


Organization unit	Executive/non-executive members	Female/male members	Female/male (%)
Management Board	6 executives	6 male members	100% male

Thematic level

Sustainability Council

The Sustainability Council has established as a core organizational component of decision facilitator, stakeholder dialog and as

part of sustainability management. It is composed of ESG and sustainability experts from the fields of economic,

environmental and social issues, alongside RBHU Group decision makers. The council is chaired by the CRO of RBHU Group.

Meetings are held at least twice a year and are organized by Strategy and Company Office. As a discussion and decision

facilitator platform the council is to advise on the development of sustainability agendas, it assist in defining important action

areas and focal points (materiality approach), advises on deriving targets and measures, and make recommendations.

As of 31 December 2024, the following members sit on the Sustainability Council:

· CEO;

· CRO (chairman);

· CFO (deputy-chair);

· Board member responsible for retail;

· Board member responsible for corporate;

· Head of Strategy and Company Office;

· Head of Human Resources Department;

· Head of Central Procurement and Outsourcing Department;

· Head of Integrated Risk Management Department;

· Head of Credit Risk Management;

· Head of Corporate Business Department; and

· CEO of Raiffeisen Investment Fund.

Sustainable Bond Committee

The Sustainability Bond Committee (hereinafter: “SBC”) was established as a body for monitoring the management of the

sustainability bond program in RBHU Group in line with the RBHU Group sustainability bond framework. The SBC is part of RBHU

Group’s Asset Liability Committee (as a subcommittee) and represents an extension of the management team. It comprises an

extended team of management and experts from Project Finance and Structured Products Department (hereinafter: “PFS”),

Treasury, and Strategy and Company Office (hereinafter: “SCO”).

The Sustainability Bond Committee has the following tasks:

· Setting of sustainability bond principles;

· Governing of the sustainability bond framework;

· Approval of eligible green and social assets for the sustainability bond portfolio in accordance with the RBHU Group

sustainability bond framework;

· Review and sign-off of the environmental and social impact reporting in accordance with the RBHU Group

sustainability bond framework.

· Raiffeisen Group | Financial Year 2024


8	Consolidated non-financial statement

Regular review of the eligible portfolio and the use of proceeds in accordance with the RBHU Group sustainability bond

framework.

Implementation level

ESG business ambassadors

Business ambassadors are experts within business units of RBHU Group responsible for the implementation of the ESG business

strategy. Business ambassadors work in close cooperation with ESG business teams of RBI, executing and implementing RBI

Group wide strategies and initiatives with local specifics, focusing strongly on ESG lending opportunities.

Sustainability Officers

Sustainability Officers are experts responsible for the establishment and further development of the local sustainability

agenda.

The tasks of Sustainability Officers covering the below themes:

· prepare the RBHU Group’s consolidated Sustainability Statement in line with CSRD requirements including the

coordination of relevant processes at professional level

· elaboration of RBHU Group’s long-term ESG strategy with the involvement of relevant stakeholders

· support relevant peer areas in execution of ESG tasks

· preparation of regular Sustainability Council meetings, coordination of proposals, facilitation of the meeting; and

· act as the RBHU Group’s main ESG single point of contact towards RBI, the regulator and the Auditor.

Employees (specific units)

Facility Management

The operation of RBHU Group Facility Management is carried out under the direct supervision of the CPO department, with the

CPO itself being part of the CFO organization. Facility Management is responsible for the daily operational management of

RBHU Group's headquarters and branch network, as well as coordinating its energy management and environmental

management activities. The first area of activity includes ensuring the operation, maintenance, and troubleshooting of energy

supply systems, preparing and assisting in the procurement of energy carriers (natural gas, district heating, electricity)

necessary for operation, and participating in the procurement process. The second area of activity includes tasks such as

operating and maintaining the certified Energy Management System (ISO 50001) and the Environmental Management System

(ISO 14001) at RBHU Group's headquarters and branch network and continuously improving energy management and

environmental performance. Furthermore, Facility Management is also responsible for preparing the annual energy

consumption report and for preparing the Scope 1 and 2 calculations, by collecting the relevant data and transferring it to the

colleagues dealing with ESG Cockpit data reporting.

Human Resource Department

HR Function sustainability activities include ensuring fair labor practices, enhancing employee well-being, providing training

and development opportunities, implementing ethical recruitment processes, providing a performance measurement

framework which aligned with broader environmental, social, and governance (ESG) goals.

Internal Controls

The Internal Control System supports the efficient design and effective implementation of the overall control environment to

achieve the organization’s operating, financial reporting, and regulatory compliance objectives. Through identification,

development, documentation, prioritization, and periodic control testing, the Internal Controls System helps to assure the

suitability of the control environment. It is a critical component of bank management; it allows the company to foresee

potential problems and thereby prevent or minimize the risk of unexpected losses or damage to its reputation.

The Internal Control System is taking part in the overall risk assessment procedure. During the operational risk assessment – in

alignment with the Bank's Operational Risk Management Framework – current and future risk exposures are identified and

evaluated. The outcome of the risk assessment reveals the Bank's risk profile, based on which the mitigation measures can be

defined.

· Raiffeisen Group | Financial Year 2024


Consolidated non-financial statement	9

In this regard, the risk assessment serves as a tool for monitoring and improving compliance to ensure the Bank operates

according to compliance principles and regulations.

Certain climate change and environmental risks are defined as compliance relevant risks. The Board of Directors receives a

quarterly summary report from the Bank's Compliance Officer, which includes assessments related to the compliance-relevant

climate change and environmental risks.

In 2024, the Internal Control System undertook a deep dive on the Implementation of the „Green Recommendation” of the

National Bank of Hungary in RBHU Group.

Credit Portfolio Management

Credit Portfolio Management is responsible for portfolio-level credit risk identification and steering. As such, it identifies and

manages portfolio risks by setting and monitoring portfolio limits and KPIs. In hierarchical terms, it is assigned to Financial

Institutions, Country and Portfolio Management, which reports directly to the head of Corporate Credit Risk Management. In

view of the significant and increasing importance of ESG risks and their potential steering impact Corporate Credit Risk

Management has assumed responsibility for steering and implementing ESG-related credit risk management processes,

including customer ESG classification, ESG underwriting aspects and activities, and portfolio ESG level targets steering and

monitoring. For the time being portfolio KPIs are targeting the average ESG score of the corporate credit portfolio. Other ESG

strategical KPIs and ESG risk assessment issues not strongly and directly impacting the creditworthiness of the customers are

managed by the Risk Controlling area.

Corporate Credit Risk Management

Corporate Credit Risk Management is a division assigned to the CRO, responsible for rating analysis, underwriting, contract-

and collateral management, portfolio management and credit risk methodology steering of corporate loan customers. In

terms of ESG and ESG risks, it performs ESG score analysis throughout the credit rating process. The rating analyst evaluates

the ESG score of the customer by considering both qualitative and quantitative facts and information. Qualitative facts include

the sustainability and annual report, policies, and mitigation aspects the corporate has in place, while quantitative aspects

involve quantitative environmental data such as emission data and energy consumption. For the social and governance score,

the analyst assesses the entire picture of the company, including the value chain and internal human resources topics. In

underwriting, underwriters use the ESG score of the customer and the ESG assessment of the industry, in addition to credit

rating aspects, to decide if a loan or limit application can be supported. Collateral management is responsible for assessing

ESG aspects, such as physical risks, during collateral valuation.

Integrated Risk Management

Integrated Risk Management fulfills the Risk Controlling duties for the Bank and reports to the CRO. With respect to ESG risk,

the main responsibilities of Integrated Risk Management are the integration of ESG risk to the ICAAP (e.g. risk assessment and

stress testing), disclosure reporting, HO calculated financed emission and green asset ratio controlling, reporting and

interpretation.

This department also covers several responsibilities related to ESG Risk Data Integration, acting as a coordinator between

head office sourced tasks and other delivery units of RBHU Group. It takes part in coordinating the local ESG data collection

and data sourcing, including the respective tools and platforms for customer data that support regulatory reporting and

rating generation. Additionally, it provides advisory functions on how to implement ESG-induced changes in the process

landscape of RBHU Group and on an ad-hoc basis might take part in client support and advisory on providing ESG-related data,

Green and Social flagging of the financed loans and advances.

Policy frameworks as governance instruments

Policies are a cornerstone of governance and managing impacts, risks and opportunities. The RBHU Group policy framework is

based on different types of internal regulations:

· Management Directives as framework regulations

· Operational Directives and Procedures for covering End-to-End processes

· Product Directives and Accounting Directives

· Standard Operating Procedures for covering detailed processes.

The entire Management is responsible for approving new, updated and cancelled Management Directives. Senior management

is responsible for approving new, updated and cancelled Operational Directives, Procedures, Product Directives, Accounting

Directives and Standard Operating Procedures. The rules stated in the internal policies are mandatory and binding, unless

otherwise stated in the policy itself. The scope of application is defined for each policy by the respective policy owners and

· Raiffeisen Group | Financial Year 2024


10	Consolidated non-financial statement

approved by the respective approval authorities. The RBHU Group policy database is the standard information platform for

RBHU Group and the official source for all RBHU Group internal policies. All employees at head office as well as employees in the

various units can access such data at all times. Information on new and updated policies is also sent to the relevant employees

on a regular basis. All policies must be kept up-to-date by the policy authors and owners and therefore updated in intervals as

may be required by applicable law, or if there is no such requirement, at least once every three years after approval.

GOV-2: Information provided to and sustainability matters addressed by the

undertaking’s administrative, management and supervisory bodies

The Management Board and relevant committees are informed on a regular basis about material impacts, risks, and

opportunities, including ad hoc meetings and the Sustainability Council. These updates are provided by senior management,

including the Chief Risk Officer and sustainability officers. This regular flow of information ensures that the Management

Board, the Board of Directors and its committees are well-equipped to oversee and guide the bank’s strategy and operations

regarding sustainability impacts, risks, and opportunities effectively.

The Management Board considers impacts, risks, and opportunities when overseeing the bank’s strategy, decision-making on

major transactions, and risk management processes. This involves an evaluation of how these factors align with and influence

the bank’s long-term strategic goals. When reviewing major transactions and strategic initiatives, the Management Board and

relevant committees assess the potential trade-offs associated with various impacts, risks, and opportunities. They ensure

that decisions are made with a comprehensive understanding. The Management Board and the Board of Directors ensure that

the bank’s strategic decisions and risk management practices also include a sustainability perspective. This approach enables

RBHU Group to address complex challenges while simultaneously seizing opportunities.

In 2024 the Management Board focused on the transition plan, the ESG data collection and regulatory compliance. In this

respect, the Management Board discussed the below-mentioned main topics within the reporting period and took the

necessary decisions.

Within the environmental perspective, the focus within the Management Board was placed on RBHU Group’s financed

emissions target with an update on the climate and environmental business strategy including transition plan. The

Management Board was informed and decided on topics pertaining to ESG risk management, disclosure requirements under

CSRD, the calculation of financed emissions, green volume developments, the development and management of ESG data

collection, and other supervisory and regulatory topics.

With regard to the social perspective, the Management Board discussed the Employee Engagement Survey 2024, received

updates on several policies such as the remuneration policy, policy in relation to the RBHU Group performance management

system and process, company car policy, the internal loan, the compliance function policy, the internal control system policy.

For own workforce topics the agenda included gender pay gap directive implementation roadmap and analysis, performance

bonus and annual salary increase, and role-based allowance incorporation to base salary. Cyber security information was

discussed with regard to the cyber security strategy and roadmap as well as the information and cyber security status of

RBHU Group, align with the local regulatory authority requirements and upcoming EU regulations. For data privacy the related

topics included data breaches and the review of the relevant enforcement practices of the National Authority for Data

Protection and Freedom of Information.

Regarding the governance perspective, the Management Board discussed, e.g., an update of the Code of Conduct, and received

regular compliance updates in the areas of anti-money laundering, financial sanctions, compliance governance and controls,

financial crime management, capital market compliance and safeguarding. Moreover, changes to the Organizational and

Operational Policy were discussed. In 2024 also FIT & Proper training was conducted to the Management Board.

List of impacts, risk and opportunities related items overviewed by the Management Board (either directly or via the

Sustainability Council):

· Environmental items: (i) climate change mitigation; (ii) climate change adaptation and (iii) energy;

· Social items: (i) adequate wages; (ii) working time; (iii) gender equality and equal pay; (iv) privacy; (v) cyber security;

· Governance items: (i) money laundering and counter terrorism; (ii) corruption and bribery and (iii) corporate culture.

These areas reflect RBHU Group’s commitment to address key sustainability challenges and leveraging opportunities that align

with its strategic goals.

· Raiffeisen Group | Financial Year 2024


Consolidated non-financial statement	11

GOV-3: Integration of sustainability-related performance in incentive scheme

Based on RBI’s Remuneration policies and practices related to the sale and provision of retail banking products and services

incentive schemes shall not promote the offer or provision of a specific product or category of products over other products,

such as products which are more profitable for the Relevant NWU or Relevant person, to the detriment of the consumer. At

RBHU Group, there is no part of the variable remuneration that depends on sustainability-related targets.

GOV-4: Statement on due diligence

The financial services sector itself has for years been confronted with many challenges and risks. In order to remain profitable

over the long term, these challenges call for a strong culture of risk management and sustainability. Compliance with

appropriate due diligence processes is therefore of particular importance. The following overview provides information on

which sections of the current sustainability statement contain core elements of due diligence.


Core elements of due diligence	Paragraph in sustainability statement
a) Embedding due diligence in governance, strategy and business model	ESRS 2 GOV-2: Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies
	ESRS 2 GOV-3: Integration of sustainability-related performance in incentive schemes
	ESRS 2 SBM-3: Material impacts, risks and opportunities and their interaction with strategy and business model
b) Engaging with affected stakeholders in all key steps of the due diligence	GOV-2: Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies
	SBM-2: Interests and views of stakeholders
	IRO-1: Description of the processes to identify and assess material impacts, risks and opportunities
	E1-2: Policies related to climate change mitigation and adaptation
	S1-1: Policies related to own workforce
	S1-2: Processes for engaging with own workers and workers’ representatives about impacts
	S4-1: Policies related to consumers and end-users
	S4-2: Processes for engaging with consumers and end-users about impacts
	G1-1: Corporate culture and Business conduct policies and corporate culture
	G1-2: Management of relationships with suppliers
c) Identifying and assessing adverse impacts	ESRS 2 SBM-3: Material impacts, risks and opportunities and their interaction with strategy and business model
c) Identifying and assessing adverse impacts	IRO-1: Description of the processes to identify and assess material impacts, risks and opportunities
d) Taking actions to address those adverse impacts	Respective sections on management of impacts, risks, and opportunities
e) Tracking the effectiveness of these efforts and communicating	E1-4: Targets related to climate change mitigation and adaptation
	S1-5: Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities

GOV-5: Risk management and internal controls over sustainability reporting

The Sustainability Statement was created in collaboration between units of RBHU Group with Strategy and Company Office as

leader of coordination. With this said data collection was carried out in the respective divisions on an ongoing basis. Draft

wording of the report was discussed by units, while division heads provided professional control over their respective parts.

Once the report is completed, approved by the Management Board, the Board of Directors, and the Audit Committee. Balanced

and comprehensive sustainability reporting is a priority for RBHU Group and its governing bodies, requiring compliance with all

statutory requirements. In this regard RBHU Group aims to tackle the risks arising out or in connection with preparing the

report.

Two main risks were identified in sustainability reporting: (i) the risk of overlooking material topics, leading to incomplete

report; and (ii) the risk of inaccurate data. To mitigate the first risk, a materiality assessment is conducted before report

preparation (see chapter SBM-3: Material impacts, risk and opportunities and their interaction with the strategy and business

model), ensuring all relevant topics are identified and addressed. There is a second risk that incorrect data is input into the

Sustainability Statement. To cover this risk, the content of the report is subject to internal controls and external audit.

· Raiffeisen Group | Financial Year 2024


12	Consolidated non-financial statement

Risk framework

Risk management is essential for implementing the ESG strategy and the associated risk control measures. RBI, and

subsequently RBHU Group gears its business model to the high-level strategic goal of creating long-term value in line with the

principles of responsible banking and regulatory requirements. In concrete terms, the Bank identifies, acknowledges, and aligns

the continuous development of its risk management approach with the additional risks originating from ESG.

Firstly, there was a focus on tackling climate and environment-related risks (transition and physical risks), not only via an

assessment at the counterparty level but also by considering the potential impact of those risks stemming from the

materiality assessment and the internal/external climate stress test. In the meantime, social and governance aspects are also

gaining increasing importance (as further described).

ESG-related risks have been accounted for by enhancing the existing classical four pillars of risk management on multiple

operational levels:

· Identification and definition of ESG risks;

· Measurement, methodologies and analytics;

· Steering approaches, reflecting risks and opportunities;

· Risk processes and governance.

ESG-related topics in the CRO area are addressed via the line organization, ensuring streamlined integration into daily

activities. The goal is to fully comply with regulatory requirements while aligning actions with the Bank’s business model. These

efforts closely adhere to the regulatory requirements outlined by the ECB and the EBA guides on climate-related and

environmental risks.

The risk perspective is enhanced by market and industry expectations, which are equally represented and integrated within the

ESG risk management processes.

When referring to the traditional four pillars of risk management, which are the foundation of the RBI Group risk management

approach, the Bank is currently focusing on addressing, quantifying, managing and further integrating the respective risks, as

well as the opportunities. The progress is measured via the regular monitoring and establishment of internal ESG KPIs. The

main topics reflected within each pillar are highlighted below (different time horizons are considered depending on the topic):


I. Identification & definition of ESG risks	II. Measurement methodologies & analytics	III. Steering approaches, reflecting risks & opportunities	IV. Risk processes and governance
• Climate-related and environmental risks	• Use of metrics for measurement of ESG on a customer and portfolio dimension:	• Sectoral strategies & special policies	• Credit processes enhancement
• Identifying risks according to: • Climate change • Circularity • Biodiversity	• Environmental, Social and Governance score • Green Asset Ratio • Financed GHG emissions	• Climate stress testing	• Prevention of liability, reputational and greenwashing risk in the design phase
• Social risks
• Governance risks

The ESG risk framework ensures implementation across the four risk management pillars, offering a high-level overview and

guidance for ongoing and planned risk management activities in the Group. These actions are motivated by the expectations

of internal and external stakeholders. The framework is reviewed on a yearly basis, updated to the latest available trends and

future expectations, and approved by the Management Board.

Identification of ESG risks

Proper identification, definition and understanding of ESG risks are crucial. In the first phase, RBI and subsequently RBHU Group

has particularly focused on climate-related and environmental risks, although social and governmental risks are also gaining

increasing attention in internal risk initiatives, especially with new regulations such as the upcoming new EBA guidelines. An

initial qualitative and expert-driven approach has been further supported by quantitative assessments including impact

analysis, materiality assessments, financed emissions calculations, and climate stress tests.

· Raiffeisen Group | Financial Year 2024


Consolidated non-financial statement	13

The definition of ESG risks and the transmission channels to traditional risk types are explained in more detail in the following

chapter. The knowledge gained is transferred across the organization through different training activities (training sessions for

new topics, regular exchange sessions, etc.). ESG risk training has become mandatory in the risk area.

The financed emission calculation has reinforced the above-mentioned definition process and supports the Bank in identifying

the top carbon-intensive industries in its non-retail portfolio; a more detailed description and results are included under the

chapter E1-6: Gross scopes 1, 2, 3 and total GHG emissions.

Topic-specific disclosure requirements

Environmental risk

Climate and environmental risks are driven by environmental factors (E risks). In the outside-in view, these risks should be

understood as the financial risks posed by the Bank’s exposures to counterparties that may potentially contribute to or be

affected by climate change or adaption, and other forms of environmental degradation (such as air pollution, water pollution,

scarcity of fresh water, land contamination, biodiversity loss and deforestation). Related to this, the Bank and its customers

have to comply with additional political and social demands, otherwise the financed portfolio may face additional risks relating

to physical damage or transition.

As such, E risks can result in additional capital requirements, expenditures and potential losses of revenue, which may lead to a

deterioration in the respective credit standing and therefore have an adverse effect on the business, financial position and

results of RBHU Group’s operations. Further information on the different climate-related risks, and their transmission channels

to the traditional risk types (market, liquidity, credit and operational risks) can be found in the section on the assessment of the

materiality of climate and environment-related risks.

Social and governance risk

In alignment with RBI Group approach, these risks are addressed in RBHU Group’s internal risk framework, building on the

existing structure and internal information. The Bank is therefore continuously updating and refining its approach to enhance

its positive impact and align itself with the latest industry standards:

· Social risks arise from the financial impact generated by the misuse of human capital, e.g. regarding the rights, well-

being and interests of people and communities. This could refer to working conditions, health and safety, employee

relations and diversity, employee training, inclusiveness, equality or community programs. Regarding all E, S and G-

related topics, the framework also considers the country-specific situation as well as the legal background. For

example, countries with low (or high) standards in social aspects such as human rights have a lower (or higher) score.

This also impacts the ESG score of the customer: identical corporates with different country risk may have different

ESG scores due to varying country scores

· Governance risks refer to the governance practices of the Bank’s counterparties, including the inclusion of ESG

factors in policies and procedures under the governance of the counterparties. This may include, but is not limited to,

executive pay, board diversity and structure, shareholder rights, bribery and corruption, compliance, ethical

standards (e.g. data ethics), fair tax strategy, etc.

Risk processes and governance

Steering approaches, reflecting risk and opportunities

The Management Board is the most senior decision-making body for ESG-related strategies, policies and commitments. The

Management Board is supported in its ESG decisions by the cross-functional Sustainability Council.

From a risk management and supervision perspective, environmental, social and governance (ESG) risks are viewed as cross-

dimensional risks that affect all areas of risk management. As such, the ESG risks are currently under incorporation into the

Bank’s risk strategy as driver of management of existing risk types. The materiality assessment described in separate chapter

forms the basis for implementation in the ICAAP framework and is expected to be further refined over the coming years as

methodologies are further developed and common practices evolve. As such, each relevant risk department (market,

operational, liquidity and credit risk) is responsible for measuring environmentally-driven risk in accordance to the materiality

levels. The risk strategy and risk regulations and processes are continuously updated, refined and adjusted to the current

standards.

The ESG risk management dimension is currently in the course of being incorporated into the Bank’s Risk Strategy, however

from pure ESG perspective there is no single indicator yet as of now on which a risk capacity/ tolerance framework can be

robustly built.

The main tools for managing and supervising environment-related risks as of year-end 2024 are:

· Raiffeisen Group | Financial Year 2024


14	Consolidated non-financial statement

· Environmental, social and governance score;

· Green Asset Ratio (GAR);

· Financed GHG emissions;

· Business policy on nuclear energy;

· Business policy on steel;

· Business policy on oil & gas;

· Business policy on real estate and construction;

· Business policy on thermal coal;

· Climate stress test methodology and results;

· Sustainability assessments in corporate lending and underwriting policy;

· RBHU Group ESG Rulebook.

Regarding specific reporting, ESG risk reports are continuously included, populated and distributed through the group risk

controlling reporting framework. These include: the financed emission calculation, physical risk assessment/vulnerability,

energy efficiency distribution, climate stress tests, exposure towards top polluters, ESG rating distribution and GAR results

report.

Steering approaches, reflecting risk and opportunities

RBHU Group has the intention to redefine and reshape its business in line with the latest market requirement and is committed

to meet regulatory requirements. Commitments have been made in the areas of thermal coal, nuclear power, arms and war

material, and gambling. Efforts have also been taken to (re)define the approach to industries with high CO2 emissions and/or

high negative environmental impacts by implementing the sector-specific group policies.

An overview of the existing policies can be found in chapter E1-2: Policies related to climate change mitigation and adaptation.

The results of the climate stress test can be found in chapter Climate stress testing.


Zeljko Obradovic		Tibor Gáspár
Chief Financial Officer		Head of Accounting Department


General information	1
Basis of preparation	1
Governance	6
Strategy related to sustainability	15
Impact, risk and opportunity management	25
Environmental information	37
Regulatory disclosure requirement in accordance with Article 8 of the EU Taxonomy Regulation	37
Climate change	115
Social information	138
Own workforce	138
Consumers and end-users	150
Governance information	170
Business conduct	170
Abbreviations	177