Basler Kantonalbank : Annual Report 2020 – Abridged Version

Annual Report 2020 - Abridged Version

Preface

Basel, 1 April 2021

Dear Clients

Not without reason does «From Basel. For Basel.» represent where the vision of Basler Kantonalbank begins. Ever since our foundation in 1899, we have felt a strong connection with the people and the economy of the Basel region. And this proximity was of particular importance in the crisis year 2020. We cannot remember any other recent event that changed our lives as suddenly and as radically as the global corona pandemic.

The pandemic has also had a strong impact on our banking opera­ tions and the financial markets, and reduced our business results, especially in the first half of 2020. Thanks to a strong recovery in the second half of the year, we were nonetheless able to achieve a consolidated profit of CHF 108.3 million, only slightly below the pre­ vious year's result. The increase in Bank Cler's profit and the in­ creased use of the joint group infrastructure also contributed sig­ nificantly to this encouraging result.

We would like to thank you, esteemed clients, for your loyalty and trust. And to thank our employees for their tireless commitment and their agility. Both were crucial for the seamless functioning of the Bank and the close support of our clients through the crisis, giv­ en the fact that within a matter of days around 70% of our employ­ ees switched to the home office. Thus our branches were open without interruption throughout the year, in compliance with pro­ tection concepts and the hygiene regulations of the Swiss Confed­ eration. Because the protection of our employees and our clients has top priority, most meetings took place over the phone or by video. With these, as well as with regular situation appraisals by our Head of Asset Management, we offered investors orientation on the stock and financial markets during the turbulent weeks.

In 2020, we were not only able to provide close support to our pri­ vate clients, but were also able to send a clear signal of our solidari­ ty with corporate clients. Group BKB provided rapid and uncompli­ cated assistance to larger companies, SMEs, tradespeople and self-employed persons in various ways to avert impending liquidity bottlenecks. Throughout the Group, more than 1,500 limits amounting to around CHF 160 million were granted for bridging loans to SMEs under federal and cantonal COVID-19 programmes. Since December 2020, there has also been a guarantee pro­ gramme for technology start-ups run by the Canton of Basel-Stadt, with Basler Kantonalbank acting as lender. We also have positive memories of the Support Your Locals campaign, which we sup­ ported with a large competition in the summer. And last but not least, as a 'consolation prize' for the cancellation of the PS Assem­ bly 2021, we will support Basel's gastronomy with around CHF 750,000.

Despite all the challenges in 2020, we have vigorously developed our banking business in line with our strategic priorities. With the continuous expansion of digital services, Bank Cler in particular gained access to new client groups with the Zak smartphone app - there are now around 40,000 users. The Group was also able to grow with existing clients. The Group's own investment solutions are in great demand. The volume rose in 2020 by a further 25% and is now over CHF 2 billion. Last year, 75% of newly invested funds flowed into the sustainable variants, showing that sustain­ ability continues to gain importance for our clients.

Our business model is built on security and stability. This approach proved itself in 2020 and was a central prerequisite both for sup­ porting our clients and for implementing our growth strategy. Thanks to its capital strength, high liquidity and strong market posi­ tion, Basler Kantonalbank is one of the strongest banks in Switzer­ land. This was also confirmed by Standard & Poor's in December 2020 with the renewal of the AA+ rating - the second-best rating in existence. We are also delighted to be able to continue to provide strong support to the Canton of Basel-Stadt in the crisis year of 2021, with an unchanged high total contribution of CHF 77.0 mil­ lion. The dividend of CHF 3.10 (gross) per BKB participation certifi­ cate also remains stable.

In 2021, we aim to further improve the way we interact with you, our valued clients. We will advise you even more consistently based on your goals. At the same time, we aim to become more ef­ ficient and faster in our core processes, such as mortgage origina­ tion, by using modern technologies. And we will focus even more on sustainability in our operations and offerings, as well as on the further development of our employees.

We now invite you to study our Annual Report 2020. You will find all the important information about the past business year. Of course, we are always open to your suggestions, praise and criticism.

We wish you much confidence and a speedy return to the normali­ ty we all long for. Above all, we wish you and your loved ones good health.

Kind regards

Basler Kantonalbank

Adrian Bult	Basil Heeb
Chair of the Bank Council	CEO

Preface

1 BKB Annual Report 2020 - Abridged Version

Contents

1. Management report
2. Group structure
3. Organisation charts

1. Bank Council & Executive Board

1. Positioning and brand
2. Strategy

1. Comments on the Group annual result

1. Share capital

1. Group BKB - Annual financial statements
2. Group BKB - At a glance
3. Group BKB - Balance sheet

1. Group BKB - Income statement
2. Group BKB - Cash flow statement

1. Group BKB - Statement of changes in equity
2. Parent company BKB - Annual financial statements
3. Parent company BKB - At a glance
4. Balance sheet - before appropriation of profit
5. Income statement
6. Appropriation of profit
7. Balance sheet - after appropriation of profit
8. Statement of changes in equity

Contents

2 BKB Annual Report 2020 - Abridged Version

Management report

3 Management report BKB Annual Report 2020 - Abridged Version

Group structure

Group BKB consists of the parent company Basler Kantonal­ bank, Bank Cler Ltd and Keen Innovation AG. Furthermore, Basler Kantonalbank holds a strategic participation of 33.3% in RSN Risk Solution Network AG, Zurich, and 33.3% in Pick-e- Bike AG, Oberwil.

The scope of consolidation of Group BKB consists of the par­ ent company BKB and the subsidiaries Bank Cler Ltd and Keen Innovation AG. Information on the registered office and security number of these companies is provided in the chap­ ter 'Notes on the Group'. The chapter 'Significant direct and indirect participations of the Group' also contains information on the registered office, share capital and participation quotas of listed and unlisted companies in the scope of consolidation of Basler Kantonalbank.

Basler Kantonalbank has held a majority stake in Bank Cler Ltd since 14 February 2000. The participation quota has been 100.0% of the capital and votes since April 2019. In October 2018, Basler Kantonalbank completed the acquisition of the Bank Cler shares tendered in the public purchase offer. The full acquisition was completed with the cancellation of the bearer shares of Bank Cler Ltd still in circulation and the delisting from the SIX Swiss Exchange as of 1 April 2019.

On 11 October 2018, Basler Kantonalbank founded Keen In­ novation AG, an independent subsidiary in which it holds a 100% stake. The new subsidiary was endowed with founding capital of CHF 0.1 million. Keen Innovation AG is not listed. RSN Risk Solution Network AG, Zurich, is one-third owned by Basler Kantonalbank. In addition, the cantonal banks of St. Gallen and Lucerne each hold one-third of the share capital of CHF 4.5 million. RSN Risk Solution Network AG is not listed.

Basler Kantonalbank likewise has a one-third holding in Picke -Bike AG, Oberwil. Other shareholders in the share capital of CHF 0.6 million, also with a one-third holding, are BLT Basel­ land Transport AG and EBM Energie AG (since 26 March 2019: Primeo Energie). Pick-e-Bike AG is not listed.

Group structure

4 Management report BKB Annual Report 2020 - Abridged Version