2019 Annual Report

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Annual Report 2019

Journey into a

New World

2019

1 Journey into a New World

2  Management Report

Foreword by the Management Board 8 We have embarked on a journey 12

Journey into a

new world

1 2 3 4

Contents

3  Annual Financial Statements 2019

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Annual Report 2019

Journey into a

New World

KARL MATTHÄUS SCHMIDT

Chairman of the Management Board, Quirin Privatbank AG

and founder of quirion

JOHANNES EISMANN

CFO/Board Member, Capital Markets

Dear shareholders, clients, business partners and friends of Quirin Privatbank,

This step focuses our business activities even more strongly on the needs of our clients. A growing number of people wish to manage their investments online. At the same time, many studies show how indispensable personal advice continues to be, also for younger clients. In addition, we make the most of quirion's potential as a motor of growth for the Bank as a whole, and attract new target audiences to our private bank. A quirion client today may well be one of the private bank tomorrow. In 2019 we set further milestones to ensure that our innovative business model enjoys success in practice.

One of the most successful years in its history

Initial experience in day to day business and the Bank's 2019 growth figures clearly indicate that we are on the right track and we closed the financial year with a record result of €5.9 million, significantly surpassing the expected result of €2.9 to €3.4 million and the previous year's result of €3.9 million. This encouraging development is accounted for by the private client business and, in particular, the capital markets business. The segment results for both business areas far exceeded expectations.

Private client business: strong growth in net cash inflows and managed assets

€5.9

million profit

2019

A new dimension

in financial consulting

In 2019 we embarked on a thrilling journey, a journey into a new dimension in financial consulting. As a modern private bank, more than six years ago we realised the key role that digitalisation was going to play in financial consulting in the future - and founded our subsidiary quirion. Now we have set another milestone. As a private bank for affluent private clients, we will grow even closer together with quirion in the future. We consistently combine online investing services and personal consulting to meet the changing needs of our clients. This is the prerequisite for sustaining our success of recent years well into the future.

In practical terms, this means that we will not only personally advise our clients of Quirin Privatbank in our 13 branches nationwide, but also those of our subsidiary quirion, should they opt for our premium quality services. The financial advisors at our branches can also explain the services quirion offers to new prospective clients.

In the private client business of Quirin Privatbank including quirion the number of clients rose by 66% to a total of 24,200. Assets under management­ at the end of the 2018 financial year totalled €3.4 billion; this figure had risen to €4.4 billion as at the end of 2019, with the inclusion of corporate clients and quirion. At €350 million, net cash inflows at Quirin Privatbank alone were up 60% on the very good previous year.

Compared to the previous year, equity initially decreased due to the dividend payment and was then increased to €57 million by the profit for the year and transfer to reserves. Compared to the previous year this represents an increase of €4.6 million. From a regulatory perspective, the total capital ratio at balance sheet date was a comfortable 22.6% (previous year 22%). The pre-tax return on equity for the bank as a whole was 13.8%.

New sustainable asset management highly popular

The majority of Quirin Privatbank's client funds - 74 % or €2.9 billion - is managed in our in-house asset management "Market - Opinion - Knowl-

€4.4

billion

assets under management

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€88

million in our

asset management

"Responsibility"

14,400

quirion clients

€3.0

million

dividend planned

edge". The strategic target for this rate was raised from 75% to 90%. Aimed at achieving a positive contribution to the United Nations' climate goals (Agenda 2030) and at addressing growing demand for sustainable invest- ments, in 2019 we established our in-house asset management "Respon- sibility". This has proved to be very popular with our clients, with €88 million under management by the year end. This makes it Quirin Privatbank's most successful product launch to date.

Online subsidiary trebles client base

In 2019 the bank's online subsidiary quirion accelerated its growth and shored up its position as one of the top three robo-advisors in Germany. At the end of the financial year quirion served around 14,400 clients - a trebling of the number of clients compared to the same period in 2018. Assets under management were more than doubled to €370 million at balance sheet date (end of 2018: €160 million).

Positive contribution of the capital markets business

In our second business area, the capital market business, companies and the entrepreneurs behind them are supported in their business ventures. In recent years, more than 300 transactions with a volume of over €13 billion have been conducted successfully.

Conditions for capital markets in 2019 remained challenging in view of Mi- FID II and the persistently low interest rate environment. Despite this, business in our Institutional Client area stabilised at a low level and the trading result improved moderately. In view of renewed positive developments in Corporate Finance's project business and in the capital markets service area, the capital markets business as a whole achieved an improvement in earnings compared to the previous year.

Higher dividend payment to shareholders

We are generally very satisfied with the development of business in 2019 - it was one of the most successful financial years in the Bank's history. The result enables us to strengthen the Bank's equity base by increasing revenue reserves.

At the Annual General Meeting the Management Board and the Supervisory Board of Quirin Privatbank will propose that a dividend again be paid to the shareholders. However, at 7 cents per share, in total €3 million, it will be

Annual Report 2019

Journey into a

New World

appreciably higher than in the previous year (2018: 3 cents). It is particularly satisfying that the bank was able to refinance past growth investments from sustainable business performance.

In normal circumstances, we would expect a very good business performance again for 2020 - for both our private clients business and our capital markets business. However, no-one can foresee how the current Cov- id-19 crisis will develop and what specific consequences it will spawn. One thing is certain, though: we will weather this crisis together - together with you, dear shareholders, clients and employees of Quirin Privatbank.

This is why I am closing with an unusual wish. Please stay healthy.

We have embarked

on a

journey

Annual Report 2019

Journey into a

New World

Why did we take this step?

We wanted to address the changed needs of our clients. Today, private bank clients are receptive to online solutions - and occasionally discover that an online investment offers a better option for their investment needs. Vice-versa, many online investors would like a personal advisor. This was endorsed by more than half of the 1,000 interviewees in February 2019.¹

Inspired by an ambitious aim, in 2019 we embarked on a journey - a journey into a new world of financial consulting.

Our aim, now and in the future, is to make Germany a better place for investors. We achieve this by rolling out a new model in financial consulting.

What is new about this banking model? Quirin Privatbank and its subsidiary quirion unite the hitherto separate worlds of online investment and personal consulting. quiri- on clients can seek advice from the private bank's advisors and prospective customers of Quirin Privatbank can take advantage of quirion's online services.

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We did our

homework

Annual Report 2019

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New World

Our new

service packages

oing our homework was important to roll out the new business model successfully. This primarily

Online

Online investing without consulting support¹

Hybrid

Online investing with personal consulting support¹

Personal

Personal investment advice with a comprehensive asset analysis

0.48%

p. a.

0.88%

p. a.

1.28%

p. a.²

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We streamlined our portfolio and parted company with real estate consulting and in- surances. This will let us focus more strongly in the future on our core competence of advising affluent private clients as part of our high quality asset management.

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We created a new fully fledged technical set-up for our online subsidiary quirion. This included a new front end, new products and the transition to a cloud-based application. At this point, I'd like to warmly thank all the colleagues who played a part in this important project and made it possible with untiring patience, passion and burning of the midnight oil.

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Wedid it!

Annual Report 2019

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The new business model is popular - we see it on a daily basis as we advise our clients.

Many quirion clients have already opted for a package that includes personal advice. By the end of 2019 around 8.3% of all quirion clients were using the premium package - and thus the personal consulting service of Quirin Privatbank.

Both companies benefit from the new business model - the growth figures for 2019 speak for themselves.

With a profit of €5.9 million Quirin Privat- bank can be proud of one of its most successful business results since the Bank's foundation in 2006. It has recorded the best client growth since 2009 and at €760 million the steepest growth in total assets under management since 2010. At €350 mil- lion, net cash inflows were 60% up on the previous year. At the end of 2019 the Bank held assets under management totalling €4 billion. Its client base has increased to 9,800, representing a rise of 7%.

Our online subsidiary quirion continued its success of recent years and even accelerated its pace - doubling the amount of assets under management and almost trebling the number of clients.

€760

million more assets under management

€4.0

billion total assets under management

9,800

clients

€370

million assets

under management

(+130 %)

14,400

clients

(+170 %)

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We have also made key personnel changes:

In Dr Christian Ohswald we have acquired a competent and committed Head of Private Banking Business for Quirin Privatbank AG and in Martin Daut an experienced and motivated digital and financial expert as CEO for quirion AG.

Annual Report 2019

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New World

"With intelligent concepts and its committed competent consulting team Quirin Privatbank provides its clients with solid added value. Capitalising on new growth stimuli in the private banking business my team and I will

further strengthen and extend the DR CHRISTIAN OHSWALD

Head of Private Banking Business,

Bank's position in the market." Quirin Privatbank AG

MARTIN DAUT

CEO of quirion AG

"In the current low interest rate environment savers cannot afford to ignore capital markets. quirion will continue to invest in technology, new products and market access to increase our appeal to clients and to make Germany a better place for investors."

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Satisfied clients, successful Bank

That we have struck the right chord with our clients is illustrated in diverse ways.

VON KUNDEN EMPFOHLEN

BESTE BANK

FÜR GELDANLAGE

Geprüfte Kundenbewertungen

Februar 2020 - www.whonance.de

Annual Report 2019

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New World

On WhoFinance clients say Quirin Privatbank is

Germany's best bank.¹

4.7 out of 5 and thus better than

other banks

24 top investment advisors in 9 branches nationwide

Thank you to all the Quirinians who have contributed to this superb result.

¹ Source: WhoFinance evaluation of 300,000 client ratings, February 2020.

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Private bank quality

with multiple-times

Annual Report 2019

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best of the test

PROF STEFAN MAY

Head of Investment Management, Quirin Privatbank AG

"The quality of quirion's portfolio matches that of prestigious, award- winning private banks as confirmed by a current survey on behalf of the Institut für Vermögensaufbau (IVA).¹ Therefore Quirin Privatbank clients need not fear any loss of quality when they switch to less expensive online products while quirion clients enjoy genuine private bank quality at an attractive price."

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We aspire to things great

We have accomplished much - but the journey still stretches out before us. We aspire to great things

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Sustainable investments encourage acceptance of shares.

• and we aim to give everything to achieve them.

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Establishing genuine hybrid financial consulting as a new banking model: every client gets exactly what

suits them.

The year 2019 rang in a new era of financial consulting. We are best equipped for the future with a portfolio ranging from "online investing only" and "online investing with personal advice" to our "all-inno-worries package with bespoke personal advice". Keenly aware of the needs of our clients and German investors, we have taken appropriate steps.

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Attracting more "savings book"

savers to capital markets.

We aim to devote all our energies to our next mission: showing Germans how to be better investors. Assets are being eaten away by inflation and negative interest rates. But it need not be so - the capital market offers all investors good opportunities to increase their assets over appropriate periods - regardless of whether for retirement provision or to achieve personal goals and wishes. We want to do our part in doubling the number of shareholders in Germany by 2030 - to around 25% of the population.

Many people still shy away from holding shares. Sustainable investments may well prompt a sea change and inspire greater acceptance of investing in shares. ESG (en- vironment, social, governance) investments offer people the opportunity to invest their money while at the same time keeping the interests of their grandchildren at heart. This way we may succeed in moving at least some of the €2,400 billion currently losing value in current and instant access savings accounts into profitable and thus future-focused investment options. We are well positioned to do so with our "Responsibility" asset management.

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Management report for the 2019 financial year

1. Underlying economic conditions

In Germany macroeconomic growth declined in 2019 and according to initial figures from the Federal Statistical Office, after 1.5% in 2018 will peg in at an average of 0.6% in 2019. The Federal Statistical Office reports that the average inflation rate for the year has increased slightly to 1.4%. According to Federal Employment Agency data only an average of 5% of the working population were registered as unemployed in 2019.

Global capital markets recorded significant gains in the 2019 financial year. Stock markets in particular experienced a sharp rise. The German DAX index gained approximately 25% in value. The US stock market rose in US dol- lars, the representative S&P 500 Index even measuring an increase of 29%. Measured by the MSCI World Index (in US dollars), global stock market investment in industrialised countries rose by around 25%. An increase in the value of many bond segments was also recorded for the year. Thus, from the beginning to the end of 2019, due to currency rate rises and despite low coupon yields, an increase in value of 4% was achieved with ten-year Federal bonds, and 9% with ten-year US government bonds.

Having reined in their monetary policy in 2018, the main central banks loosened it slightly again in the 2019 financial year. The Fed even resumed liquidity measures towards the end of the year, the ECB dropped its deposit interest rates during the year, which tended to support capital markets.

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2. Positioning of the Bank

Quirin Privatbank (hereinafter referred to as "Quirin Privatbank" or "the Bank") operates three strategic business areas through private banking, capital markets and its subsidiary, quirion AG (hereinafter referred to as "quirion"). The focus of activities in all three business areas is to provide appropriate services and to thereby generate commission income.

In private banking and with quirion, the bank adheres to the principle of providing fully independent investment advice ("fee-based advice"), which means that financial advice and services are paid for exclusively and directly by the client. Independent advice means both product and provider-neutral consulting focused entirely on the client's interests and hence not on selling specific products. Private banking and quirion have different target groups and therefore the needs of the clients and scope of advisory services differ, as does the range of products and services offered.

In private banking, we offer our wealthy private clients a personal and holistic service at 13 branches throughout Germany. We provide financial advice and assistance in terms of asset management and investment advice.

quirion is part of the Bank's digital strategy, in which the investment concept of Quirin Privatbank has been transferred to the digital world to make it accessible to all investors (so-calledrobo-advice).

In the capital markets business, the Bank supports and advises companies on equity and debt capital financing measures.

As part of its business strategy, Quirin Privatbank pursues the following overarching objectives:

• To further raise its public profile
• To become "the" bank/brand in Germany for independent investment advice
• To increase client assets under management in private banking
• To establish quirion in the top 5 for digital investment advice (so-calledrobo-advisor)

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Based on its business policy objectives, the Bank pursues company-focused aims of increasing company value, consolidating the ability to pay dividends while taking sustainable aspects into greater account.

In addition to the three strategic business areas mentioned above, the Bank operates the so-called BPO business (Business Process Outsourcing) in the context of its remaining contractual obligations. The Bank has transferred these activities to Avaloq Sourcing (Europe) AG. It is only involved in the BPO business to the extent that it functions as a banking partner for Avaloq Sourcing (Europe) AG for services that require a banking licence (e.g. the custody of securities by other securities clearing and deposit banks).

The Bank manages its business activities and business development according to financial and non-financial performance indicators, the amount and development of which are reported in the annual financial statements and management report. Net income and total capital ratio are among the most important financial performance indicators. Other financial performance indicators are the commission surplus and cost/income ratio (CIR). The CIR is calculated before the allocation of overhead costs and is defined as the ratio of operating costs to operating income. The most significant non-financial performance indicator is the amount of assets under management (AuM). Other non-financial performance indicators are customer figures and customer satisfaction.

Private banking business area

The private banking business area provides services to clients with liquid assets of €200,000 and above. The Bank offers its private banking services in branches nationwide and thus ensures locally based personal consulting for clients. Client services are provided exclusively by financial advisors who are permanent employees of the Bank. Financial advice is offered in the form of investment advice and asset management, with the Bank focusing especially on asset management.

The core element in the private banking business and basis for the current growth strategy is the asset management concept, which underpins the management of client assets as part of the Bank's services in this area.

The Bank's in-house asset management comprises three major building blocks bearing the title "Market - Opinion - Knowledge", which can be combined individually. Various investment strategies are possible within the blocks depending on the client's risk-bearing capacity. What is special

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about the concept is the combination of different, clearly defined sources of returns, each of which is subject to different fluctuation margins and risks. In 2019 an asset management strategy focusing on sustainability was added under the title "Responsibility".

quirion

As a 100% subsidiary of Quirin Privatbank, quirion AG operates an online platform through which private clients with a minimum investment amount of €1,000 are offered various forms of online asset management (known as "robo-advice"). Based on the "Market" and "Responsibility" components in Quirin Privatbank's asset management, quirion investors have ten different investment strategies at their disposal, with the difference depending on the client's risk tolerance level in the share quota. quirion's services, which are directed at digitally, or at least online savvy clients, are flanked by a sustainable investment strategy and pension plan management.

Capital markets business sector

In the capital markets business sector, companies and the entrepreneurs behind them are supported in their business ventures. The capital markets business offers access to national and international investors in the Euro- pean financial centres. In recent years, more than 300 transactions with a volume of more than €13 billion have been successfully carried out.

In order to best meet the demanding requirements of its clients, the capital markets business is divided into four areas, each with its own specialists.

Corporate Finance develops and implements customised financing concepts for its clients that reflect the client's objectives, whether it be equity, debt or hybrid financing, secondary placements, takeover bids, squeeze- outs, share and bond buyback programmes or stock market approvals and listings.

Our Institutional Client service offers a wide range of investment options, which are developed and organised with and for the clients, from trading in equities and ETFs to government and corporate bonds. It is specialised in the implementation of trading strategies under a best execution policy, and offers order routing to all major international stock exchanges. In this connection, it also regularly and successfully provides support to Corporate Finance with its capital market transactions.

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Institutional Research prepares fundamental company analyses, company studies, market analyses and industry reports, with the focus on selected German small and mid-caps. Corporate Finance's capital market transactions are supported by the aforementioned research findings.

Capital Markets encompasses the procedural and technical processing of capital market transactions and other related services.

3.Business development

Overview

Quirin Privatbank looks back on a highly successful business year. With profit after taxes of €5.9 million, the net result has improved by 50% compared to the previous year (€3.9 million). It must be noted that the previous year's result included quirion's earnings contributions prior to the spin-off as of 1 July 2018. The planned earnings corridor of €2.9 to €3.4 million was thus significantly exceeded. This encouraging development is accounted for by both the private client and, in particular, the capital markets business. The segment results for both business areas far exceeded expectations. The pre-tax return on equity for the Bank as a whole was 13.8%.

Private banking was able to continue its strong performance of the previous years and ratchet up growth of its clients and client assets. At around €350 million in 2019, net cash inflows from the 13 branches nationwide were up 60% compared to the net cash inflows of €220 million in 2018. Assets under management in private banking amounted to €3.9 billion as of 31 Decem- ber 2019. Together with corporate clients and quirion, Quirin Privatbank thus manages a total of €4.4 billion.

Some €2.9 billion of the client assets managed in private banking now fall within the scope of asset management. This corresponds to a share of 74%, an increase of three percentage points on the previous year. The strategic target for this rate has been raised from 75% to 90%.

Compared with the previous year, income from private banking was ramped up by 29% due to high net cash inflows and the positive performance of client portfolios. Since at the same time administrative expenses rose by only 12%, the contribution to earnings by the business sector in 2019 has im-

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proved significantly and is above the level expected. The CIR of the private banking business has thus improved from 85% to 75%.

quirion AG, which is included in the consolidated financial statements and whose client accounts and deposits are managed by Quirin Privatbank, has also continued to develop positively. At the end of the financial year, quiri- on managed around 14,400 clients and €370 million worth of client assets. With a growth of 170%, the number of clients almost trebled compared to the previous year.

Conditions for capital markets in 2019 remained challenging in view of Mi- FID II and the persistently low interest rate environment. Despite this, business in our Institutional Client service was stabilised at a low level and the trading result somewhat improved. In view of renewed positive developments in the project business of Corporate Finance and in Capital Markets, overall the capital markets business achieved an improvement in earnings in 2019 compared to the previous year. On this basis, the CIR has decreased from 48% to 42%.

The encouraging development in business was used to form a contingency reserve in accordance with section 340g HGB (German commercial code) and thus also to strengthen the bank's own regulatory capital.

Income

The bank's earnings are primarily determined by commission surplus, which increased for the bank as a whole by 25% from €42.7 million in the previous year to €53.3 million. Both business areas contributed to the significant improvement of the Bank's key earning component, especially the private banking business due to the positive development in client asset manage- ment.

Net interest income (including current income from equities and other variable -yield securities) is mainly generated by cash and cash equivalents invested predominantly in securities and, at €2.1 million, was approximately 22% lower than the previous year's figure of €2.7 million. The decline is due to both the significantly higher negative interest income on balances with banks, especially the Deutsche Bundesbank, and to the higher average cash reserve for the year. On the other hand, interest income from fixed-interest securities has also dropped as the result of maturities and fundamentally lower interest rates.

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Following a weak 2018 the net trading income has increased a little and amounted to €2.2 million (previous year €1.3 million) in the year under re- view. Net trading income includes income from the reversal of the fund for general banking risks in accordance with section 340e paragraph 4 HGB amounting to €10,000 (previous year an expense of €1,000 from additions to the fund).

Other operating income amounted to €3.4 million and is thus close to the previous year's figure of €3.2 million. It includes income from the reimbursement of third-party costs passed on and from agency services in connection with the remaining BPO activities (€1.5 million), as well as income from the reversal of provisions (€0.5 million) and currency translation (€1.1 million).

Administrative expenses amounted to €46.5 million in the year under review and rose by 6 % compared with the previous year. This is due in particular to a rise in personnel costs entailed by the growth-induced increase in the number of employees and an earnings-related increase in variable remuneration components. Other administrative costs declined by 6%, although it must be taken into account that quirion was proportionately included in the previous year's figure up to the spin-off. These and other overheads are charged to the business areas according to their utilisation of the regulatory capitals.

Depreciation and amortisation rose from €0.8 million in the previous year to €0.9 million. The rise is largely due to unscheduled write-downs in the year under review.

Risk provisioning resulted in a charge against earnings of -€0.7 million for the 2019 financial year (previous year -€0.5 million). Besides loan loss provisions this figure also includes negative valuation effects for securities in the liquidity reserve.

Net income from financial assets amounted to €0.0 million compared to -€0.1 million in the previous year.

In accordance with section 340g HGB the Bank increased the fund for general banking risks by €5 million in the financial year under review. Together with the mandatory reserve pursuant to section 340e (4) HGB the fund amounted to €7.4 million as of the reporting date.

After taxes of €2 million (previous year €0.7 million), Quirin Privatbank gen-

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erated a net profit of €5.9 million for the 2019 financial year, thus significantly exceeding expectations.

In addition to the two members of the Management Board, the annual average number of employees for 2019 was 229 (previous year 218), with 235 employees (previous year 215) as of the balance sheet date.

Financial position

In addition to equity, the Bank finances the business in particular through overnight client deposits. The Bank's solvency was maintained at all times during the reporting period. For further details of the solvency situation and risks, please refer to the risk report.

The share capital of the Company amounts to €43,412,923 and is divided into 43,412,923 no-par value bearer shares with dividend entitlement. At the balance sheet date the share capital was held by the following share- holders:

The shares of Quirin Privatbank are listed in the Basic Board, a segment of the Open Market of the Frankfurt Stock Exchange.

In accordance with the Articles of Association, as of the reporting date the Company also had unutilised share capital of €21,706,000 ("authorised share capital 2018") and up to €17 million ("contingent capital 2018") to service financing instruments.

For further details regarding authorised and contingent capital, please refer to the notes to the annual financial statements.

Asset status

Total assets amounted to €609 million as of the reporting date, an increase of €123 million compared with the end of 2018. The balance sheet structure has changed moderately. The asset side of the balance sheet contin-

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ues to be dominated by the investment of client deposits. However, this is due to security maturities, which were only reinvested to a modest extent in 2019, and higher client deposits at balance sheet date, mainly comprising credit balances with the Deutsche Bundesbank, which rose by €241 million to €400 million as per the balance sheet date. By contrast, liabilities to banks decreased to €31 million (previous year €132 million). Compared to the previous year's balance sheet date, debt and other fixed-interest securities as well as shares and other variable-yield securities declined by a total of €28 million to €132 million. In the course of the year, interests in affiliated companies rose from €3 million to €7 million and loans and advances to customers, mainly resulting from client lending, increased slightly to €33 million.

The liabilities side of the balance sheet changed only marginally compared with the previous year. At €439 million, the main item is client deposits, which are €178 million higher than in the previous year (€261 million) at balance sheet date. By contrast, liabilities to banks decreased by €58 million to €68 million. Provisions increased by €4 million year-on-year to €16 million, while the fund for general banking risks rose from €5 million to €7 million. Other liabilities amount to €21 million (previous year €33 million).

Equity initially decreased by €1.3 million compared with year-end 2018 as a result of the dividend payment in June 2019 and increased to €57 million as a result of the profit for the year of €5.9 million and the revenue reserves allocated from it. This corresponds to an increase in equity of €4.6 million compared to the previous year.

In accordance with regulatory requirements, the Bank's core capital ratio remained comfortable at 22.6% (previous year 22.0%) at the balance sheet date (prior to the approval of the annual financial statements).

Overall statement on the economic situation

The Bank was able to continue its steady development of recent years in 2019. Since 2013, Quirin Privatbank has consistently reported positive operating results. As a consequence of the Bank's gratifying business perfor- mance, a dividend was paid to the shareholders for the first time in the 2017 financial year and in all subsequent years. At the Annual General Meeting in June 2020, the distribution of a dividend for the 2019 financial year should also be proposed in parallel with the strengthening of revenue reserves from profit shown on the balance sheet.

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A positive aspect is that the Bank can continue to refinance both past and future investments in growth from its sustained profitability. It should be mentioned that doing this (still) requires a fundamentally stable capital market environment.

Main features of the remuneration system

The remuneration of the employees is determined individually by the Executive Board, taking into account their performance and position. The remuneration of the Management Board is determined by the Supervisory Board. The remuneration systems of Quirin Privatbank consist of fixed and variable components. The variable remuneration components are contractually regulated, dependent on the achievement of certain corporate and/ or business area targets, or subject to other discretionary components.

Details of advances and loans granted, and contingent liabilities

At year end, there were no lines of credit for members of the Management

Board or the Supervisory Board.

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4.Risk report

Safeguarding the Bank's assets and securing long-term earnings requires a balance between the level of risk and earnings potential. To this end, the Bank has established a risk management system that is integrated into the Bank's strategy development process. This process is not solely geared to the business strategy, but also includes an assessment of the risk-bearing capacity of the Bank. It is forward-looking and has far-reaching implications for the commitment of resources. The Management Board is responsible for the strategy process and has defined the scope of action for the level of risk in its risk strategy. Bank-specific risk indicators are defined and included in regular reporting.

The Management Board has laid down guidelines regarding the Bank's risk culture. They are intended to improve the identification and management of risks, and ensure that decision-making processes deliver results that are balanced from a risk perspective.

Risk management is an overall Bank responsibility and follows the principle of the three lines of defence. This model ensures that risk management is firmly ensconced throughout the Bank. It includes the clear allocation of tasks, competences and responsibilities and forms the framework for a functioning control and monitoring system. Irrespective of the internal rules governing responsibility, the Management Board is responsible for the proper organisation of business and its further development. This includes responsibility for all material elements of risk management and the internal control system. Each specialist department (first line of defence) bears the prime responsibility for risks arising from operations. It ensures that operating activities are in line with business principles and internal guidelines. In coordination with the second line of defence, it develops an appropriate control environment to identify and monitor the risks associated with business processes.

The second line of defence is understood to mean the risk management functions and the control areas used to control and monitor the first line of defence. This includes the definition of methods and procedures for risk management, legal requirements and guidelines, the monitoring of risks and controls, and reporting to the Bank's executive bodies. A distinction is made between risk management and financial control. The risk management process involves monitoring and reporting on market price, counter-

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party, liquidity, operational and other risks. Financial control is responsible for monitoring and reporting business risks. In addition, the Processes & Projects department is responsible for managing and monitoring outsourc- ing management, and the IT security officer is responsible for IT risks. The appropriate regulations to counter risks arising from advisory errors, money laundering and fraud issued by the compliance department and the money laundering and fraud commissioners are regularly checked to ensure ad- herence. In addition, the compliance function, while considering the risks involved, is responsible for identifying the main legal regulations and requirements as well as the risks that may arise from non-compliance that could jeopardise the assets of the institution.

Internal audit (the third line of defence) has an independent monitoring function within the Bank. Among other things, it monitors the adequacy and effectiveness of risk management and the internal control system.

From the risk culture and principle of the three lines of defence, it follows that each employee of the Bank also has an individual responsibility for risk management.

The risk strategy is based on a risk inventory that is updated regularly in which the risks are defined, recorded and evaluated, and assigned to risk categories. The inventory also includes an assessment of the materiality of the risks affecting the Bank, taking into account relevant risk factors and its risk-bearing capital. For all material risks identified, the Bank stipulates the methods required to manage these risks. The entire risk is managed in such a way that the Bank's risk-bearing capacity is guaranteed at all times under the going concern approach.

The limit system is based on the upper loss limits decided by the Management Board. It is based on the risk appetite with due consideration being given to the Bank's risk-bearing capacity.

Through the established risk management and risk control, the Bank ensures that the main risks included in the risk-bearing capacity concept are covered at all times by the risk cover fund and that risk-bearing capacity is thus assured.

The Risk Committee of the Supervisory Board meets regularly and reports to the Supervisory Board meetings.

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The Bank distinguishes between the following risk categories:

• Counterparty default risk
• Market risk
• Liquidity risk
• Operational risk
• Business risk
• Other risk

The following overview shows the limit structure and utilisation of risks defined as material:

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the basis of actual values at the balance sheet date. Equity is supplemented by the fund for general banking risks and reduced by intangible assets and the amount of regulatory capital requirements (Pillar 1). In determining risk types, the Bank distinguishes between a standard scenario based on forecasts and stress tests that reflect the adverse development of risk positions. Own funds amounted to €51.3 million as of the reporting date; after deduction of the regulatory own funds requirements of €226.8 million for risk positions under Pillar 1, a free risk coverage potential of €25 million remains.

The total capital ratio was not less than 17.3% on the monthly reporting dates of the financial year and amounted to 22.6% on the balance sheet date.

Counterparty risk

Market risk

Operational risk

Business risk

Overall risk

The new BaFin circular (06/2019) must be observed to determine the ratio for sudden and unexpected interest rate changes in the banking book as at 31 December 2019. Under consideration of the new materiality thresholds for foreign currency items, transactions hitherto deemed negligible are now included in the determination of the interest rate change risk. Comparison with the previous determination of interest coefficients (previous year 2.4%) is only possible to a limited extent. As at 31 December 2019 the higher interest rate coefficient in the standard test was 0.43%.

Compared to the previous year, the utilisation of the overall risk in the standard scenario has risen by €0.8 million as of the reporting date. In the risk inventory, the level of liquidity risks was still deemed immaterial due to the Bank's adequate liquidity resources.

The stress scenario identified as relevant for the Bank captures historical periods of stress and models the potential consequences observed during the global financial crisis of 2007/2008, and covers the impact of market developments in the aftermath of Fukushima (2011) and from mid-2015 to early 2016.

In order to monitor susceptibility to losses, stress tests for the main risks of the Bank as well as sensitivity analyses are carried out on a quarterly basis and reported to the Bank's executive bodies.

The total utilisation rate for the stress scenario on the quarterly reporting dates was a maximum 56 %. Limit excesses due to warehouse items commissioned by clients were approved by the Management Board; the overall limit for the stress scenario was complied with in the reporting period.

For the risk-bearing capacity, the risk coverage potential is determined on

Counterparty default risk

In addition to traditional credit and creditworthiness risks, counterparty default risk includes issuer, country, structural and investment risks as well as disposal, migration and foreign currency risks.

Credit and creditworthy risks include the risk of a borrower or issuer failing to meet its contractual obligations or failing to meet them on time.

Counterparty default risk is defined as the risk of financial loss that can occur if the counterparty fails to meet contractual payment obligations. Settlement itself may fail if the Bank has already made an advance payment on delivery (reinstatement and settlement risks). Stock exchange, spot and cash transactions are excluded. The Bank does not carry out so-called free transactions.

At the Bank, country risks also covers country transfer risk.

Structural risks arise from the composition of the loan portfolio: cluster risks can arise from certain industry, sector or regional concentrations, such as the real estate sector or issues by the Federal Republic of Germany.

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Credit decisions are made in accordance with the Bank's current decision -making processes.

Loans are granted mainly in the form of securities-backed loans to private individuals and sole proprietorships. The lending business is primarily geared towards the national market.

The counterparty default risks for clients, counterparties, issuers and share- holdings, taking into account collateral and country risks, are measured by a Monte Carlo simulation (VaR) with a confidence level of 99% and 250 days of historical data using the zeb risk software zeb.controirisk. For the probability of default (PD), the Bank uses the corresponding historical default rates of Standard & Poor's (S&P) for counterparties and issuers for the respective risk classifications (assuming a probability of default of at least 0.03%) and the default probabilities of Schufa Holding AG, Wiesbaden, and Creditreform for private and corporate clients. Based on a loss given default (LGD) of 39 % (45% up to 30 September 2019), one million default scenarios are calculated.

In the results, open lines are offset at 10% against the unsecured expo- sure. Forward transactions are included at their credit equivalent value in accordance with the regulatory market valuation method. The Bank does not currently grant any foreign currency loans or hold any of its own investments in foreign currencies.

Of the gross exposure (market value or utilisation plus open lines) of €316 million (previous year € 357 million), an unsecured exposure of €167 million (previous year €259 million) remains after deduction of collateral. The collateral is valued at market value.

The Bank uses the expected and unexpected loss indicators for risk manage- ment.

The assumed probabilities of default are regularly reviewed in relation to the assumptions made.

Due to their insignificance, counterparty risks that may stem from unlisted (OTC) derivatives are currently only taken into account within the scope of regulatory capital adequacy.

The stress scenario takes into account the downgrading of the borrower's credit rating by one notch and the effects of reductions in the value of collateral (realisation risks).

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Furthermore, sensitivity analyses are used to determine the expected shortfall and concentration risk ratios as well as S&P's one-year migration rates for European companies.

Breakdown of loan portfolio based on internal credit ratings as at balance sheet date:

The internal credit ratings from 1 to 3 include investment grade shares.

The Bank has created risk provisions for defaulted loans in the amount of the respective unsecured exposure. No significant change in risk provisions is expected for the coming financial year.

Risk concentrations in currency loans, credit ratings, sectors or regions are currently considered immaterial in terms of risk for the Bank.

Market risk

Market risk takes account of interest risk in the banking book, exchange risk, foreign currency risk and credit spread risk (for securities holdings in the trading and investment portfolios).

Generally the Bank does not trade on its own account (nostro) in shares, derivatives or foreign currencies with the aim of generating short-term profits. Furthermore, the Bank does not carry out currency options or transactions in real estate and commodities. These activities are therefore excluded from the comments on market risks.

The Bank executes securities orders and forward exchange transactions on behalf of clients as commission transactions. Consequently, these are not taken into account when measuring market risks.

The currency, value and maturity-matched valuation units (micro hedges) of forward exchange transactions are valued in terms of risk on an indi-

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vidual transaction basis by using the mark-to-market accounting principle and fully included in the risk. These transactions relate to clients and their hedging activities and are of minor importance.

Risk utilisation is calculated daily based on the closing balances of the previous day. Limit excesses require the separate approval of the relevant au- thorised representative.

Market risks are calculated by the zeb.control.risk-Trading system using the historical simulation approach (VaR) with a 99% confidence level, a ten-day holding period for the trading and banking book and a 250-day observation period. The credit spreads are part of the VaR risk measure. The Bank uses the daily and sector-specific credit spread curves (annual yield curves) of an external market data provider.

The VaR contains the following individual results for interest rate risks, price, currency and credit spread risks (in €'000) as at 31 December 2019:

For the stress scenario, the holding period is increased to 30 days, the interest rate and credit spread curves are increased, and fluctuations in exchange rates are included. The sensitivity analyses show the impact of shifts in the interest yield curve on net present value.

Liquidity risk

The Bank must always ensure that it is able to meet its payment obligations at all times (insolvency risk). Liquidity risks include the risk of incurring higher refinancing costs resulting from a downgrade of its own credit rating or due to general increases of funding spreads in the market (funding costs risk) as well as market liquidity, call and maturity risks.

The Bank's refinancing is predominantly via client deposits and, to a lesser extent, via equity. In addition, the Bank can draw on the marginal lending facility or open market operations of the European Central Bank (ECB) and term deposits from institutional investors.

Call risks are managed by means of matching maturity liquid assets and by investing in short-term realisable assets.

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The Bank uses the zeb/integrated.treasury-manager system to measure liquidity risks. The individual payment cash flows are assigned to maturity bands according to their (remaining) term. Liquidity gaps are previewed in a liquidity gap analysis. The system compares these gaps with hypothetical congruent refinancing at current market conditions. This is used to calculate a theoretical present value refinancing loss, the effects of which are simulated for sensitivity analyses in the event of a change in the refinancing curve. The market liquidity risk (risk of a more difficult short-term realisa- tion of assets due to a lack of sufficient market liquidity) is taken into account by different recovery rates for securities.

The Bank has put in place contingency plans to counter potential liquidity crises.

The respective liquidity costs, benefits and risks are taken into account in the Bank's planning and are offset internally according to the source (inter- nal transfer pricing system).

Treasury is responsible for operational liquidity management. Its decision is based on the forecast refinancing requirement for the different time hori- zons.

The Bank's liquidity position was stable in the past financial year due to the high level of client deposits. As at 31 December 2019, the LCR ratio was 2.47 (regulatory minimum 1.0). For the 2019 financial year as a whole, the ratio was between 1.63 and 4.77.

The Bank also uses a liquidity at risk (LaR) approach to monitor liquidity risks. The LaR refers to the payout surplus that is not exceeded during a business day with a certain probability on the basis of historical data. With the LaR, the bank determines how much liquidity it should hold in order to meet its daily obligations. The calculated LaR for the period from 1 January to 31 December 2019 at a 99% confidence level was around €86 million (at a 95% confidence level around €66 million) and was secured by balances due on demand and the Lombard lending facility at the European Central Bank (ECB).

Quirin Privatbank is a member of the Compensation Scheme of German

Private Banks (EdB).

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Operational risk

The Bank defines operational risk as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

The Bank has created an organisational framework for systematically recording operational risks throughout the Bank. Loss incidents are promptly tracked and evaluated in a loss database.

Operational risk in the stress scenario is measured by using at least three times the gross average of the last three years, and for additional stress tests or sensitivity analyses, by trebling the Bank's highest historical loss in the loss database.

The Bank also uses an analytical self-assessment approach for the risk in- ventory, with which potential new risks can be identified. This indicator for operational risks is designed to highlight changes in measured risks against the previous year and identify new weaknesses in the organisation and in the processes and systems. Self-assessments are used to demand and follow up on risk reduction measures from the relevant areas.

These measures are accompanied by systematic reviews and enhancements to the internal control system, and by compliance regulations and through appropriate monitoring measures in the areas affected (e.g. legal department and HR).

Operational risks also include legal risks, which are managed by the legal department. Appropriate provisions have been set aside for open legal pro- ceedings.

The Bank's success depends to a large extent on committed employees. Regular analyses are therefore carried out on staff turnover, absenteeism and personnel development measures with a view to creating appropriate management controls.

The Bank has adopted an IT strategy including security guidelines. The security objectives are managed and monitored by the Information Security Officer.

The operational risks in the past financial year were consistently in line with the Bank's risk-bearing capacity. Looking ahead, no operational risks are expected to jeopardise the continued existence of the Bank as a going con- cern.

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Business risk

Cost risks, sales/revenue risks and strategic risks are grouped together under business risks.

Cost risks are calculated as variances of actual costs from targeted costs as a percentage of capacity utilisation. Variance and key ratio analyses are carried out for planning purposes and as part of the regular target/actual analyses.

Cost increases are contained within budget controls and budget account- ability. As part of the target/actual analyses, budget overruns are promptly discussed and approved.

In the case of sales/revenue risks, it is assumed that budgeted income will not be exceeded if budgeted expenses remain constant. A slump in turn­ over/sales is also contained in alignment with the cost risks through income monitoring and by those responsible for income. The sales/reve- nue risk is classified as significant in private banking, in particular due to the dependency on income from the performance of the equity and bond markets, which in turn have a direct impact on the level of assets under management.

The strategic risk of misjudging market potentials and trends is measured and analysed by means of deviations from key factors relevant to sales and turnover. As part of the strategy process, these analyses are incorporated into the strategic considerations and lead accordingly to possible changes and corrections.

Risk reporting includes the timely communication of risk-relevant information to the relevant decision makers in compliance with the requirements of BaFin's Minimum Requirements for Risk Management (MaRisk). In addition to daily reporting on the limit utilisation of market price risks and coun- terparty risks to the treasury, finance, front office and back office and the Management Board, supplemental in-depth monthly reports are issued to the same recipients, and a quarterly report is prepared for the Bank's executive bodies, which also receive a monthly report on business developments.

Other risks

Other risks deemed as immaterial for the Bank include the pension provision risk and the securitisation risk, which does not apply to the Bank. Accordingly, no effects are expected to jeopardise the continued existence of the Bank as a going concern.

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Summary and outlook for risk management

The Management Board has defined the Bank's risks in the risk strategy taking into account the business strategy and the risk-bearing capacity. Based on this, appropriate analyses, methods and performance indicators for measuring and monitoring risks have been developed and implemented. Risks in the standard scenario are identified on a daily basis, and the risks in the stress scenario are identified and monitored regularly.

The main risks of the Bank are covered by the risk coverage potential. The Bank's risk ratios were well regulated during the financial year 2019 and at the balance sheet date, and thus its risk-bearing capacity was assured (going concern).

At the beginning of 2020, the Bank adopted the new approach of the BaFin risk-bearing capacity guidelines of May 2018. Aside from the regulatory perspective, the Bank will also apply the cash value risk-bearing capacity approach from the economic perspective.

5.Opportunities and forecast report

Outlook on future conditions

Based on currently available initial indicators for industrialised countries overall and thus also for Germany, the economic prospects for 2020 look fairly subdued. Although the data do not reveal any signs of a recession in 2020, with regard to the development of capital markets little support may therefore be expected given the economic situation. By contrast, capital markets may hope to benefit from the anticipated monetary policy of key central banks, for a further loosening or at least not a tightening of monetary policy is also assumed for 2020. The US Federal Reserve, for instance, has announced that it will probably not raise interest rates in 2020.

Opportunities and risks

With the combination of an independent approach and asset management based on investment theories, Quirin Privatbank occupies a truly unique position among private banks in Germany. Our business model thus offers potential for further client growth, as well as an increase in the volume of assets under management and associated growth in earnings.

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The earnings potential depends to a certain extent on how the capital markets develop. The risk is that strong market volatility or prolonged periods of weakness may lead to a lower assessment basis for determining and settling advisory fees, and the return on investment expected by our clients may not be met. At the same time, the intense competition in the German banking sector must be seen as a risk with regard to the development of margins.

We base our growth opportunities on the Bank's growing reputation, high level of client satisfaction and the willingness of clients to recommend our Bank. The low and negative interest rate environment is also prompting many people to review the structure of their investments. Against this back- drop, the Bank will continue its targeted expansion of advisory and sales capacities in 2020 and subsequent years.

However, the planned increase in advisory and sales capacities also entails associated cost risks - especially if client and/or volume growth cannot be generated at the expected level or speed.

We also anticipate client and volume growth for quirion AG in 2020. The market for so-calledrobo-advisors grew strongly again in 2019. According to all forecasts, this dynamic growth, in which quirion AG as a subsidiary of Quirin Privatbank will participate, will continue in the upcoming years. With regard to the increasing market and intensity of competition and high client acquisition costs, there are risk factors for the business risks of the subsidi- ary, which can be transferred to the Bank via the provision of the necessary regulatory capital or valuation of the investment book value.

In the capital market business, the Bank continues to be exposed to stronger competition, which has put margins under sustained pressure in recent years. Opportunities in this business area lie in banks' continuing fundamental reluctance to engage in traditional lending business with SME corporate clients and the high corporate valuations currently prevailing on the capital market. Both on the debt and equity side, success in this respect however depends strongly on the performance and absorption capacities of issues on the capital markets. The new provisions in MiFID II regarding the separate billing of research services continue to be viewed as critical for business development in the capital market business.

The protracted phase of low interest rates continues to weigh on the Bank's earnings. On the one hand, average interest margins are declining, especially from the reinvestment of matured securities, and on the other, nega-

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tive interest rates for credit balances with the central and other banks compromise interest results.

Ultimately, the development of the regulatory environment must also be taken into account as a potential risk. This development affects the banking sector in general and Quirin Privatbank in particular. New regulatory requirements, which have already come into force or are foreseeable, are increasingly driving up costs, increasing complexity and tying up resources.

Forecast

We expect the positive developments of previous years to continue into the 2020 financial year and therefore anticipate positive marginal returns from the operative business across all business areas. Due to the planned continued growth investments the total capital ratio will likely decline slightly.

In the private banking business we have also set ourselves ambitious growth goals for 2020. We consequently base our assumptions on a significant rise in assets under management and, in turn, an increase in net commission income. As we plan administration costs on approximately the same level as in 2019, we expect an improvement in marginal returns for the business area overall in 2020.

The capital markets business is particularly difficult to predict due to the dependence on deal flow and the capital market environment. On the basis of conservative budget estimates, the Bank expects this business area to make a positive contribution to earnings in 2020, albeit significantly lower than in the current 2019 financial year.

Although we anticipate that treasury, which is primarily responsible for generating and managing the Bank's net interest income, will continue to make a positive contribution to the overall earnings of the Bank, it will not match the level of the previous financial year due to the persistence of low and negative interest rates.

On the whole, assuming that there are no major or prolonged upheavals in the capital markets, we expect the Bank's individual financial statements for 2020 to show a profit after tax of between €5.7 million and €6.2 million.

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Summary statement

Quirin Privatbank continues to face fierce competition, both in the high net worth market and in the capital markets business. Overall, we have set the course for the Bank's continued positive development by positioning and focusing the Bank and laying the foundation for future growth investments.

We are very satisfied with the business performance in 2019 and believe that the very good financial result and positive feedback from our clients reaffirm that our chosen course is correct. Against this backdrop, we have been able once again to strengthen the Bank's capital base by making allocations to statutory reserves and other reserves. In addition, we intend to propose to the Annual General Meeting that a dividend increased from 3 cents to 7 cents per dividend-bearing share be distributed again with the remaining balance sheet profit of €3.0 million. Furthermore, we are still able to finance investments to fuel future growth from the profitability of the Bank.

All in all, Quirin Privatbank's continued solid performance of the past years confirms that we have a sustainable business model with sound earnings potential.

However, the overall conditions look set to remain demanding. The prolonged low interest rates and the emerging economic risks combined with heightened geopolitical tensions and increasing regulatory requirements represent a challenging environment for the Bank.

Berlin, 26 February 2020

Quirin Privatbank AG

The Management Board

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Annex to Quirin Privatbank AG for the financial year 2019

A. General information on the preparation of the annual financial statements to 31 December 2019 and on the accounting and valuation methods

Preparation of the annual financial statements

Quirin Privatbank AG, based in Berlin, is registered in Section B of the Char- lottenburg District Court Commercial Register under the number HRB 87859 B.

The financial statements of Quirin Privatbank AG as at 31 December 2019 were prepared in accordance with the provisions laid down in the German Commercial Code (HGB) in conjunction with the relevant regulations of the Stock Corporation Act (AktG) and the Regulation on Accounting for Credit and Financial Service Institutions (RechKredV).

The structure of the balance sheet and the profit and loss account complies with section 2 of RechKredV, forms 1 and 3. The profit and loss account was prepared in vertical format. For reasons of transparency, the option pursuant to section 265 (8) HGB was applied. This option is similarly used for the "of which" items on the forms.

Accounting and valuation methods

The accounting and valuation methods applied to the items of the balance sheet and the profit and loss calculations correspond to sections 242 et seq. and 340 et seq. HGB as well as RechKredV in its current version. With the exception of low-value assets, the presentation, structure, method and valuation of the annual financial statements are consistent with the principles applied in the previous year. Loans and advances to customers and liabilities to customers include all loans and advances to clients and liabilities to clients with whom a direct relationship exists.

Assets and liabilities denoted in a foreign currency are translated in accordance with section 256a HGB in conjunction with section 340h HGB at the

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spot middle rate as at the reporting date. As a result, these financial statements include unrealised gains and losses from currency translation. These are reported under other operating income and expenses. If the residual term is more than one year, the amounts are translated using the mean spot rate at the time they arise. In the case of changes in exchange rates up to the balance sheet date, the valuation is generally based on the average spot exchange rate at balance sheet date, applying the lower of cost or market principle on the assets side and the highest value principle on the liabilities side.

Forward transactions are translated at the applicable forward rates on the balance sheet date.

Foreign exchange transactions are assigned to the trading book unless the valuation units fall under section 254 HGB. The valuation results of forward transactions are reported under net trading income. Split forward rates are used to value currency swaps. The accrual of swap positions is also included in the net trading income.

Cash funds and loans and advances to banks are shown at nominal value. Loans and advances to banks and liabilities to banks are partially offset under compensating balance agreements.

Loans and advances to customers are shown at nominal value. Specific provisions are set up that adequately provide for foreseeable risks. General provisions are created for latent risks relating to accounts receivable.

Debt and other fixed-income securities are recognised at cost and valued at the moderated lower of cost or market principle. Premiums and discounts from fixed-income securities acquired above or below par are amortised over the period. Debt and other fixed-income securities in the liquidity reserve are recognised at cost or valued at the lower of cost value at balance sheet date.

Equities and other variable-yield securities in the liquidity reserve are valued on the basis of market price at balance sheet date in accordance with the strict lower of cost or market principle. Equities and other variable-yield securities held as fixed assets are treated in accordance with the moderated lower of cost or market principle.

Financial instruments in the trading portfolio are valued in accordance with section 340e (3) sentence 1 HGB at their fair value as at balance sheet date

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after deducting a risk discount. The risk discount is calculated using the value-at-risk method and deducted from unrealised valuation gains in the trading portfolio. This is based on a ten-day holding period, an observation period of one year and a confidence level of 99.0%. In accordance with section 340c (1) HGB, the risk discount is recognised as an expense in the net income from the trading portfolio. In addition, part of the net income from the trading portfolio is allocated to the fund for general banking risks in accordance with section 340e (4) HGB. The criteria laid down by the Bank for the inclusion of financial instruments in the trading portfolio did not change in the financial year.

Accrued interest on loans and advances, liabilities and securities is added to the corresponding nominal amounts and shown in the respective balance sheet items.

Participating interests and interests in affiliated companies are valued at cost or at the lower of cost value.

Purchased intangible assets and the tangible fixed assets are capitalised at acquisition cost less scheduled depreciation. Depreciation is calculated using the straight-line method over the respective useful life. Standard software is reported under intangible assets. Fixed assets with an acquisition value of less than €250 are immediately booked as expenses. As of 2019, independently usable fixed assets with an acquisition value of more than €250, but less than €800 are immediately booked as expenses. Up to 2018 low-value assets were posted as a collective item and depreciated over five years using the straight-line method.

Anticipated long-term impairments in the value of fixed assets are accounted for by unscheduled depreciation. If the reasons for these lower valuations no longer apply, the assets are written back to a maximum of the amortised cost.

Other assets are generally stated at nominal value.

Liabilities are included in the balance sheet at their settlement value.

Provisions take into account all foreseeable risks and uncertain contingent liabilities and are recognised in the amount of the required settlement amount, as determined based on prudent commercial judgement. Future price and cost increases are taken into account if there is sufficient objective evidence that they will occur. Provisions with a remaining term of more than one year are discounted using the average market interest rate of the

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past seven financial years corresponding to their remaining term as at the balance sheet date, as disclosed by the Deutsche Bundesbank.

Provisions for pension obligations are determined based on actuarial principles and are offset against assets that serve exclusively to settle pension obligations and similar obligations (cover assets) and are not accessible to all other creditors. The cover assets held to meet the obligations from pension plans are measured at fair value. If the amount of the obligations exceeds the fair value of the cover assets, an appropriate provision is set aside.

To hedge against general banking risks, a fund for general banking risks pursuant to section 340g HGB is shown on the liabilities side of the balance sheet. This fund includes mandatory sums set aside in accordance with section 340e

(4) HGB to offset the risk of future net expenses of the trading portfolio.

Formulation of valuation units

Valuation units within the meaning of section 254 HGB are set up for forward exchange transactions which the Bank concludes as part of its client business, and are hedged against the currency risks contained in these transactions by means of corresponding offsetting transactions. The valuation units are set up at micro level, i.e. the changes in value attributable to the hedged portion of the underlying transaction are offset by individual hedging instruments. The critical terms match method is used to demonstrate that the offsetting changes in value from the hedged item and the hedging instrument have been offset. This documents that the key parameters of the underlying transaction and the hedged item match. For this reason, it can be assumed that the changes in value relating to the hedged risk from the hedged item and the hedging transaction will fully offset each other until final maturity. The effective portion of a valuation unit is shown in the balance sheet using the net hedge presentation method ("Einfrie­ rungsmethode"). In addition, any ineffectiveness based on the unhedged risk is treated in accordance with general accounting regulations.

Valuation of interest rate instruments of the banking book

For the purpose of ensuring a loss-free valuation of the banking book or any excess liability, the future cash flows of all interest-bearing transactions with fixed interest rates are included in the evaluation. The cash values determined as of the balance sheet date are compared with the corresponding book values. In addition, appropriate pro rata risk and administrative costs are taken into account and are reported on the basis of the IDW

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statement on the loss-free valuation of interest-bearing transactions in the banking book (BFA 3). As at reporting date, there was no excess liability and therefore no requirement to create a provision.

B. Notes to the balance sheet

I. Assets

Debt and other fixed-income securities

As of the reporting date, the balance sheet item debt and other fixed-income securities includes €14,807,000 in securities from the liquidity reserve and €79,238,000 in securities held as fixed assets. Securities maturing in the past financial year amounted to €38,817,000. Equities and other variable -yield securities were partly purchased with the funds released. Debt and other fixed-income securities include securities with a book value of €36,499,000 that will mature in the following year.

Equities and other variable-yield securities

Of the securities reported under equities and other variable-yield securities, securities amounting to €8,149,000 are allocated to the liquidity reserve and €29,360,000 to fixed assets.

Trading assets

Trading assets and the risk premiums retained from the unrealised valuation advantages of these financial instruments can be broken down as follows as of the balance sheet date:

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The derivatives relate to positive market values of pending forward foreign exchange transactions held for trading. The nominal amount of these forward exchange transactions converted at the forward rate at transaction closing amounted to €1.723 million as of balance sheet date (previous year €2.4 million).

Breakdown of marketable securities

Financial assets

Interests in RIVA DI MORCOTE FINE ARTS GmbH, Berlin, are reported under participating interests. The share capital of the company amounts to €25,000. The Bank's interest in the share capital amounts to 5.288% and shown with an investment value of €1,000.

Interests in affiliated companies

The Bank holds 100% of the shares in quirion AG. The Bank is a financial service company with permission to provide financial services pursuant to section 32 (1) of the German Banking Act (KWG). It therefore qualifies as a large corporation within the meaning of section 340a (1) in conjunction with 340 (4) HGB. The share capital of the company amounts to €501,000 and the book value of the shareholding to €3,300,000.

Securities held as fixed assets

Securities allocated to fixed assets with a book value of €79,238,000 relate to bonds that serve the business in the long term and for which there is a general intention to hold them until maturity. In addition, shares in an investment fund with a book value of €29,360,000 are held as fixed assets.

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There were no shares in domestic investment funds or comparable foreign investment shares of more than 10% as of the balance sheet date (previous year €0).

For securities with a book value of €1,400,000 (previous year €31,328,000), taking into account deferred premiums, the application of the moderated lower of cost or market principle resulted in a waiver of write-downs of €100 (previous year €254,000) to the lower fair value as the write-downs are not considered to be permanent.

Assets analysis

The €183,000 (previous year €62,000) in write-downs on intangible assets in the financial year relate to unscheduled write-downs. In connection with the amendment to the accounting option for low-value assets as of 2019 the remaining collective items from 2016 to 2018 amounting to a value of €122,000 were posted as unscheduled write-downs.

Other assets

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Deferred expenses

Deferred expenses include accruals for deliveries and services with terms of up to one year amounting to €500,000 and for up to five years in the amount of €20,000.

Deferred taxes

Quirin Privatbank AG exercised the option under section 274 (1) sentence 2 HGB to omit surplus deferred tax assets amounting to €13,353,000 in the balance sheet.

Surplus deferred tax assets amounting to €1,944,000 are due to recognition and measurement differences between the commercial balance sheet and the tax balance sheet in provisions (€958,000), the fund for general banking risks (€2,296,000), securities (€517,000) and the company pension scheme (€397,000). In addition, there are surplus deferred tax assets resulting from tax losses carried forward (€11,410,000) pursuant to section 274 (1) sentence 4 HGB. These surplus deferred tax assets are based on an average tax rate of 31.2%.

Foreign currencies

The total volume of assets denominated in foreign currency amounts to the equivalent of €17,647,000.

II. Liabilities

Affiliated companies

Under other liabilities to clients, €1,980,000 (previous year €2,142,000) relates to non-securitised liabilities from the investment of free cash and cash equivalents in affiliated companies.

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Trading liabilities

As at balance sheet date, trading liabilities included the following financial instruments:

The sub-group "Other liabilities" mainly comprises endowment funds received but not yet passed on.

Liabilities from pension provisions were offset against securities acquired to cover these liabilities (cover assets) pursuant to section 246 (2) HGB. As of balance sheet date, the settlement amount of the offset liabilities amounting to €2,525,000 was offset by cover assets with a market value of the same amount (acquisition costs €2,315,000).

Provisions

As of balance sheet date, the breakdown of provisions is as follows:

Provisions

Annual Report 2019

Annual

Financial

Statements

Other provisions primarily relate to pending claims, reinstatement costs for leasehold improvements and archiving costs.

Fund for general banking risks

The fund for general banking risks in accordance with section 340g HGB amounts to €7,367,000 and includes the mandatory reserve of €1,367,000 pursuant to section 340e (4) HGB to offset the risk of future net expenses in the trading portfolio and €6 million to hedge against general banking risks. Since the portion of the fund for general banking risks relating to the allocation in accordance with section 340e HGB was slightly above 50% of the average of the last five annual net incomes from the trading portfolio in the year under review, an amount of €10,000 was added to the net income of the trading portfolio.

Equity capital

The share capital of the Company amounts to €43,412,923 and is divided into 43,412,923 no-par value bearer shares with dividend entitlement.

As of the reporting date, the (not utilised) authorisation under the Articles of Association to increase the share capital by up to €21,706,000 by issuing up to 21,706,000 no-par value shares against cash and/or non-cash contributions ("authorised capital 2018") exists until 14 June 2023. Shareholders are to be offered subscription rights. Subject to certain conditions and with the approval of the Supervisory Board, the Management Board is entitled to exclude shareholders' subscription rights. The approval of the Supervisory Board is required for the implementation of the capital increases by the Management Board.

In addition, there is up to €17,000,000 unutilised contingent capital to service convertible bonds and/or bonds with warrants, profit participation rights and/ or participating bonds, or combinations of these instruments ("contingent capital 2018"). The contingent capital increase will only be carried out to the extent that the option and/or conversion rights from bonds are exercised or option/conversion obligations from bonds are fulfilled, and to the extent that no cash settlement is granted or treasury shares or shares of another listed company or shares from an authorised capital are used for servicing.

Both the authorised capital and the contingent capital carry the same voting and profit rights from the date of their possible issue as the share capital issued to date.

As the main shareholder, Berliner Effektengesellschaft AG, Berlin, holds a 25.3% stake in the share capital of Quirin Privatbank AG. ODDO BHF Bel- gium S.A., Brussels, sold its stake in Quirin Privatbank in July 2019.

Foreign currencies

Liabilities denominated in foreign currencies had an equivalent value of €17,724,000.

Breakdown by residual term

C. Notes to the profit and loss account

Net commission income

The Bank's fee and net commission income includes fees from custody and asset management in private banking. In addition, fees from accompanying and implementing capital measures for clients of the capital markets business division are also shown here.

Commission income includes income of €367,000 and expenses of -€656,000 relating to other periods.

Other operating profit/loss

Other operating profit/loss includes the following items:

Other operating income

Other expenses include an amount of -€4,000 (previous year -€6,000) from reversing the discount of long-term provisions.

3

Administrative expenses

Other administrative expenses include income from refunds of €19,000 related to other periods.

Taxes on income and earnings

The reported income tax expense of €1,741,000 was significantly higher compared with the previous year (€677,000). In addition to advance tax payments made on the basis of advance payment notices for corporate income tax and trade tax, it relates to tax provisions of €1,426,000. In determining the tax expense, the Bank accordingly took into account its losses carried forward.

D. Other information

Derivative transactions

Derivative transactions relate to forward exchange transactions and currency swaps at the balance sheet date. Derivatives are only concluded on behalf of customers or clients. The risk positions are closed out by counter transactions with banks. Since hedging is generally carried out at micro lev- el, the hedged item and the hedging instrument combined into valuation units in accordance with section 254 HGB are predominantly allocated to the banking book.

The nominal amounts of the hedged items and hedging instruments included in the valuation units and the hedged risks were as follows as at 31 December 2019:

Annual Report 2019

Annual

Financial

Statements

Trading book

The values stated represent fair values based on the prices on the balance sheet date and exclude transaction costs. Risks arising from negative market values are covered by appropriate provisions to the extent required by commercial law. The derivatives allocated to the trading portfolio are reported at their positive or negative market values under trading assets and trading liabilities. There is nothing to indicate that the contractually agreed cash flows of these derivatives are affected in terms of amount, timing and security.

3

Members of the Management Board

Annual Report 2019

Annual

Financial

Statements

Members of the Supervisory Board

Karl Matthäus Schmidt

Chairman

Responsibilities

Private banking

Asset management

Risk management including legal affairs, compliance and lending back office

Marketing, HR, auditing

Banking, data protection

Memberships in other supervisory bodies

Member of the Supervisory Board of quirion AG, Berlin (as of 10/9/2019)

Johannes Eismann

CFO

Responsibilities

Capital markets business

Holger Timm

Chairman

Chairman of the Board

Tradegate AG Wertpapierhandelsbank, Berlin

Chairman of the Board

Berliner Effektengesellschaft AG, Berlin

Klaus-Gerd Kleversaat

Member of the Board

Tradegate AG Wertpapierhandelsbank, Berlin

Matthias Baller

In-house lawyer

Berliner Effektengesellschaft AG, Berlin

Carsten Bing

(as of 14.06.2019, Deputy Chairman)

Chief Executive Officer

Riedel Holding GmbH & Co. KG, Nuremberg

Anke Dassler (as of 14.06.2019)

Head of Accounting

Evonik Industries AG, Essen

Treasury

Lending market

Finance

Memberships in other supervisory bodies

Member of the Supervisory Board of quirion AG, Berlin

Dr Andreas Neuner and Mr Werner Karl-Wilhelm Taiber stepped down from the Supervisory Board of Quirin Privatbank with effect from 14 June and 31 July 2019 respectively. Ms Anke Dassler and Mr Carsten Bing were newly elected to the Supervisory Board of the Bank at the Annual General Meeting in 2019.

3

Remuneration of executive bodies

Remuneration of €100,000 was paid to the members of the Supervisory Board in the financial year. The Bank exercises its right under section 286

1. HGB not to disclose the total remuneration of the members of the Man- agement Board.

Details of advances and loans granted, and contingent liabilities pursuant to section 34(2) no. 2 of the German Accounting Directive for Banks and Financial Services Providers (RechKredV)

At year end, there were no lines of credit for members of the Management Board or the Supervisory Board.

Disclosure pursuant to section 34 (2) no. 4 and section 35 (4) and (6) RechKredV As of balance sheet date, liabilities from guarantees and indemnity agreements amounted to €1,354,000 (previous year €1,014,000) and there were no irrevocable loan commitments (previous year €0). As of balance sheet date, there were no indications that the Bank would be called upon from contingent liabilities or guarantees assumed.

Employees

The number of employees is made up as follows:

Annual Report 2019

Annual

Financial

Statements

E. Additional information

Disclosure pursuant to Article 434 (1) of the Capital Requirements Regulation (CRR II)

The disclosure information pursuant to Article 434 (1) CRR II can be found in the disclosure report published on the Bank's website.

Total other financial commitments

Future charges of €20,869,000 will result from rental, leasing, management and maintenance agreements over the remaining term of the major individual contracts, of which €13,480,000 relate to a residual term of between one and a maximum of nine years. In addition, there are €534,000 in rental guarantees assumed for the Bank as of 31 December 2019.

Significant events after the balance sheet date

No significant events occurred after the close of the financial year.

Appropriation of profits

The annual financial statements were prepared with partial appropriation of profits. Pursuant to section 150 of the Stock Corporation Act (AktG), an amount of €293,000 was transferred to statutory reserves. Furthermore, in

Number of employees

Male

Female

Total

Auditor's fee pursuant to section 285 No. 17 HGB

as of 31.12.2019

145

90

235

Annual average

142

87

229

accordance with the Bank's Articles of Association, the Management Board and Supervisory Board transferred €2,523,000 to other reserves. With regard to the remaining balance sheet profit of €3,039,000, the Management Board and the Supervisory Board will propose to the Annual General Meeting that a dividend of €0.07 per dividend-bearing share be paid.

The other audit services relate to the audit of the securities services business in accordance with section 89 WpHG (section 36 WpHG old version). Other non-audit services include general advisory services as part of project -related quality assurance.

Berlin, 26 February 2020

Quirin Privatbank AG

The Management Board

4

Auditor's report

We conducted our audit of the annual financial statements of Quirin Privat- bank AG, Berlin - consisting of the balance sheet as at 31 December 2019 and the profit and loss account for the financial year from 1 January to 31 December 2019, as well as the notes and the information relating to the accounting and valuation methods applied. In addition, we have audited the management report of Quirin Privatbank AG for the business year from 1 January to 31 December 2019.

In our opinion, based on the findings of our audit:

• these annual financial statements, in all material respects, give a true and fair view of the assets, financial position and financial performance of the Company as at 31 December 2019 as well as its financial perfor- mance for the financial year from 1 January to 31 December 2019 in accordance with German Legally Required Accounting Principles, and
• the accompanying management report as a whole provides a suitable view of the Company's position. In all material respects, this manage- ment report is consistent with the annual financial statements, complies with German legal requirements and suitably presents the opportunities and risks of future development.

In accordance with section 322 (3) sentence 1 of the German Commercial Code (HGB), we declare that our audit has not led to any reservations regarding the regularity of the annual financial statements and of the management report.

Basis of audit opinions

We conducted our audit of the annual financial statements and the management report in accordance with section 317 HGB and the EU Audit Regulation (No. 537/2014; hereinafter "EU-APrVO") and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institute of Public Auditors in Germany (IDW). Our responsibilities under those requirements and principles are further described in the "Auditor's responsibility for the audit of the annual financial statements and the management report" section of our auditor's report.

Annual Report 2019

Additional

Information

We are independent of the Company in accordance with the requirements of European law and German commercial and professional law, and we have fulfilled our other German professional responsibilities in accordance with these requirements. Furthermore, in accordance with Article 10 (2) (f) EU-APrVO, we declare that we have not provided non-audit services prohibited under Article 5 (1) EU-APrVO. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions on the annual financial statements and the management report.

Key audit matters in the audit of the annual financial statements

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements for the financial year from 1 January to 31 December 2019. These matters were addressed in the context of our audit of the annual financial statements as a whole and in forming our audit opinion thereon; we do not provide a separate opinion on these matters.

Determining and recording of commission income

Information on commission income is contained in the explanations on commission income in the notes as well as in the "Positioning of the Bank" and "Business Development" sections of the management report.

The financial statement risk

The amount of commission income is a key element of the profitability of Quirin Privatbank. Quirin Privatbank reports commission income of €65.0 million (previous year: €53.1 million) in its annual financial statements for the 2019 financial year.

Commission income from private banking results from fees for investment advice and asset management. In the capital markets business, the Bank mainly generates commission income from corporate finance business.

The risk for the financial statement lies in particular in the incorrect recording of the contract master data, such as fee rates or accounting periods, leading to the miscalculation of individual commission-relevant transactions and of commissions.

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Our audit approach

Based on our risk assessment and assessment of the risks of error, we have based our opinion on the results of key controls testing and substantive audit procedures. Our audit procedures included, but were not limited to, the following:

In our controls testing, we evaluated the implementation and effectiveness of the manual and IT application controls established by the Company to ensure the correct recording of billing-relevant contract and transaction data for the commission business.

For the IT systems to be used, with our IT specialists we examined in advance the effectiveness of the general IT controls that relate to the IT application controls and support their effectiveness.

As part of our substantive audit procedures, we used random examples to verify the proper calculation and accounting treatment of the commission income from individual transactions. We also reconciled the accounts with the documents underlying the calculation and recording of commission income.

Our conclusions

The manual and IT application controls that have been set up are suitable for ensuring the proper recording of contract master and transaction data in commission business and that commission income is calculated appro- priately.

Other information

Management is responsible for the other information. The other information comprises the annual report expected to be made available to us after the date of this audit opinion with the exception of the audited financial statements and management report and our audit opinion.

Our audit opinions on the annual financial statements and on the management report do not extend to the other information and, accordingly, we do not express an audit opinion or any other form of assurance conclusion thereon.

In connection with our audit, our responsibility is to read the other information and, in so doing, to consider whether the other information:

Annual Report 2019

Additional

Information

• is materially inconsistent with the annual financial statements, with the management report or our knowledge obtained in the audit, or
• otherwise appears to be materially misstated.

Responsibilities of management and the supervisory board for the annual financial statements and the management report

Management are responsible for the preparation of the annual financial statements that comply, in all material respects, with the requirements of German commercial law, and that the annual financial statements give a true and fair view of the assets, liabilities, financial position and financial performance of the Company in compliance with German Legally Required Accounting Principles. In addition, management are responsible for such internal control as they, in accordance with German Legally Required Accounting Principles, have determined necessary to enable the preparation of annual financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the annual financial statements, management are responsible for assessing the Company's ability to continue as a going concern. They also have the responsibility for disclosing, as applicable, matters related to going concern. In addition, they are responsible for financial reporting based on the going concern basis of accounting, provided no actual or legal circumstances conflict therewith.

In addition, management are responsible for the preparation of the management report, that as a whole provides an appropriate view of the Com- pany's position and is, in all material respects, consistent with the annual financial statements, complies with German legal requirements, and appropriately presents the opportunities and risks of future development. In ad- dition, management are responsible for such arrangements and measures (systems) as they have considered necessary to enable the preparation of a management report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate evidence for the assertions in the management report.

The supervisory board is responsible for overseeing the Company's financial reporting process for the preparation of the annual financial statements and of the management report.

4

Auditor's responsibilities for the audit of the annual financial statements and of the management report

Our objectives are to obtain reasonable assurance whether the annual financial statements as a whole are free from material misstatement, whether due to fraud or error, and whether the management report as a whole provides an appropriate view of the Company's position and, in all material respects, is consistent with the annual financial statements and the knowledge obtained in the audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future develop- ment, as well as to issue an auditor's report that includes our audit opinions on the annual financial statements and on the management report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with section 317 HGB and the EU Audit Regulation and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschafts- prufer (IDW) will always detect a material misstatement. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual financial statements and this management report.

We exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the annual financial statements and of the management report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to pro- vide a basis for our audit opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.
• Obtain an understanding of internal control relevant to the audit of the annual financial statements and of arrangements and measures relevant to the audit of the management report in order to design audit proce- dures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of these systems of the Company.

Annual Report 2019

Additional

Information

• Evaluate the appropriateness of accounting policies used by manage- ment and the reasonableness of estimates made by management and related disclosures.
• Conclude on the appropriateness of the management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor's report to the related disclosures in the annual financial statements and in the management report or, if such disclosures are inadequate, to modify our respective audit opinions. Our conclusions are based on the audit evidence ob- tained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to be able to continue as a going concern.
• Evaluate the overall presentation, structure and content of the annual financial statements, including the disclosures, and whether the annual financial statements present the underlying transactions and events in a manner that the annual financial statements give a true and fair view of the assets, financial position and financial performance of the Company in accordance with German Legally Required Accounting Principles.
• Evaluate the consistency of the management report with the annual financial statements, its conformity with German law, and the view of the Company's position it provides.

On the basis of sufficient appropriate audit evidence we evaluate, in par- ticular, the significant assumptions used by management as a basis for the prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express a separate audit opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that future events will differ materially from the prospective information.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant shortcomings in the internal control system that we identify during our audit.

4

We also provide those charged with governance with a statement that we have complied with the relevant independence requirements, and communicate to them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, the related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the annual financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter.

Other legal and regulatory requirements

Further information pursuant to Article 10 of the EU Audit Regulation.

We were elected as auditor by the Annual General Meeting on 14 June 2019. We were engaged by the Supervisory Board on 20 November 2019. We have been the auditor of Quirin Privatbank AG since the financial year 2018.

We declare that the audit opinions expressed in this auditor's report are consistent with the additional report to the Audit Committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report).

German public auditor responsible for the engagement

The German public auditor responsible for the engagement is Lars Protze.

Berlin, 3 March 2020

KPMG AG

Wirtschaftsprüfungsgesellschaft

Annual Report 2019

Additional

Information

In the event of publication or distribution of the annual financial statements and/or the management report in any version that deviates from the audited version (including translation into other languages), our prior approval is again required before reference can be made to our certification or our audit; please refer to section 328 of the German Commercial Code (HGB).

4

Report of the Supervisory Board

During the 2019 financial year, the Supervisory Board again performed its duties required of it by law and the Articles of Association, and regularly advised and supervised the Management Board of Quirin Privatbank AG on its activities. The Supervisory Board was directly and promptly involved in every decision of fundamental importance to the Company. It received information from the Management Board, in a timely manner and extensively, on all the major business developments at the Company, both orally and in writing.

The Management Board kept the Supervisory Board regularly informed of the business position and economic situation of its individual business ar- eas, and on its corporate planning, the risk situation and strategic orientation of the Bank. The Supervisory Board and the Management Board of the Company interacted closely on fundamental matters relating to manage- ment, the economic position and important business transactions. Outside the regular Supervisory Board meetings, the Management Board also kept the Chairman of the Supervisory Board and his two deputies informed on current business progress and key transactions. The Supervisory Board was involved in all decisions of major importance for the Bank and, to the extent required by legal or statutory requirements, giving its approval after extensive consultation and examination wherever required.

In the year under review the Supervisory Board held four regular meetings on 19 March, 14 June, 20 September and 12 December 2019. The meetings of the Supervisory Board were also attended by the Management Board and senior management. There is a Presiding Committee, an Audit Committee and a Risk Committee. Dr Andreas Neuner stepped down from the Supervisory Board of Quirin Privatbank effective of 14 June 2019. Ms Anke Dassler and Mr Carsten Bing were newly elected to the Supervisory Board of the Bank at the Annual General Meeting on 14 June 2019. At the Supervisory Board meeting also held on 14 June 2019, Ms Dassler was elected as a member and Chairman of the Audit Committee. Mr Bing was newly elected as a member of the Risk Committee. Mr Werner Karl-Wilhelm Taiber stepped down from the Supervisory Board of Quirin Privatbank effective 31 July 2019. At the Supervisory Board meeting held on 12 December 2019, Ms Dassler was elected as a member and Chairman of the Audit Committee. Apart from this, the composition of the committees has not changed. The

Annual Report 2019

Report of the

Supervisory

Board

Audit Committee met twice in the year under review and the Risk Committee once. The meetings of the Supervisory Board, the Risk Committee and the Audit Committee were also attended, as required, by employees from the Finance, Audit and Compliance departments as well as by the auditors.

In 2019, the focus of the Supervisory Board was again the strategic orientation of the Bank and driving forward the objective of further developing private banking, the capital markets business and the Bank's subsidiary quirion AG. In this context, the Supervisory Board devoted particular attention to the implementation of the growth strategy of private banking and the introduction of a new salary model for this business area. Additional focuses included the business performance of quirion AG, implementation of the growth strategy and its refinancing by the Bank. In addition, the Supervisory Board was kept informed on the implementation of regulatory adjustments with the monthly information from the Finance department on business development.

The Bank's business and risk strategy and risk-bearing capacity for the financial year were discussed with the Supervisory Board at the meeting of 20 September 2019 and IT strategy at the meeting of 12 December 2019.

The compliance report, the MaRisk compliance function report and the central office report pursuant to section 25h (4) in conjunction with section 25h (1) of the German Banking Act (KWG) ("fraud") for the financial year were submitted to the Supervisory Board by the Compliance Officer and discussed at the meeting on 19 March 2019.

The Supervisory Board received detailed reports from the Management Board at each meeting on the results of internal audits and on the Bank's current risk position.

The audit pursuant to section 89 (1) of the German Securities Trading Act (WpHG) for the financial year 2019 covering the period from 1 January 2019 to 31 March 2020 was conducted by KPMG AG Wirtschaftsprufungs- gesellschaft, Hamburg, as instructed by the Management Board. The audit report will be circulated to the members of the Supervisory Board upon completion of the audit.

4

Annual financial statements

The annual financial statements and consolidated financial statements for the financial year 2019, drawn up by the Management Board in accordance with the provisions of the German Commercial Code (HGB) and the German Stock Corporation Act (AktG), including the management report and the accounting records, were audited by KPMG AG Wirtschaftsprufungs- gesellschaft, Berlin, as elected at the Annual General Meeting on 14 June 2019 and appointed by the Supervisory Board, and issued with an unqualified audit opinion on 3 March 2020. The auditor's report was signed jointly by Lars Protze and Christian Ginzinger.

At its meeting on 20 March 2020, the Audit Committee dealt intensively with the documents for the 2019 annual and consolidated financial statements including the audit report, which were made available to the Supervisory Board and the Audit Committee in a timely manner. The auditors attended the aforementioned meeting of the Audit Committee, explained the key audit findings and audit matters of particular relevance, and were available to answer questions. The Chairman of the Supervisory Board reported on this in the subsequent plenary meeting of the Supervisory Board.

At its meeting on 20 March 2020, the Supervisory Board also worked hard on the annual and consolidated financial statements 2019 of Quirin Privat- bank AG prepared by the Management, by closely examining them and discussing them with the Management Board and members of the extended Management Board.

Following the final examination by the Audit Committee and its own review, the Supervisory Board raised no objections and approved the annual and consolidated financial statements for 2019, which were thus adopted. The Supervisory Board approved the Management Board's proposals to transfer €2,523,165.75 of the net profit for the year of €5,562,070.36 in the individual financial statements of the Company in accordance with section 24 (1) of the Articles of Association to other reserves, and to use the remaining unappropriated surplus to pay a dividend of €0.07 per dividend-bearing share.

Annual Report 2019

Report of the

Supervisory

Board

The Supervisory Board would like to thank the members of the Management Board and all employees for their great commitment and achievements in the 2019 financial year.

Berlin, 20 March 2020

Holger Timm

Chairman of the Supervisory Board

Our locations

Annual Report 2019

Locations

1

2

3

4

13

14

15

Hamburg

Mittelweg 161

20148 Hamburg

Bremen

Bürgermeister-Schmidt-Straße 76

28195 Bremen

Berlin

Kurfürstendamm 119

10711 Berlin

Hannover

Theaterstraße 3

30159 Hannover

Bautzen

Postplatz 3

02625 Bautzen

Düsseldorf

Königsallee 11

40212 Düsseldorf

Cologne

Spichernstraße 6

50672 Cologne

Frankfurt am Main Schillerstraße 20 60313 Frankfurt am Main

1 9 Wiesbaden

Paulinenstraße 4

65189 Wiesbaden

2 10 Hof

Lindenstraße 37

95028 Hof

3 11 Darmstadt

Friedensplatz 12

64283 Darmstadt

1. 12 Nuremberg, WirtschaftsRathaus Theresienstraße 9
   90403 Nuremberg
2. 13 Stuttgart

Theodor-Heuss-Straße 9

70174 Stuttgart

6 14 Munich

Karlstraße 10

80333 Munich

7 15 Freiburg

Bismarckallee 9

79098 Freiburg

8

4

Contact

Quirin Privatbank AG

Kurfürstendamm 119

10711 Berlin

T +49 (0)30 8902 1300

1. +49 (0)30 8902 1301

quirinprivatbank.de

info@quirinprivatbank.de

Annual Report 2019

Contact

Imprint

Imprint

Editor

Janine Pentzold

Corporate Communication

Quirin Privatbank AG

Design

Jonas Villmow

Corporate Communication & Marketing

Quirin Privatbank AG

Photographs

Sven Serkis, Lennard Pagel,

Adobe Stock, Unsplash