1 Accounting and valuation principles

Principles that differ from those used in the consolidated financial statements are listed below.

General principles

The accounting and valuation principles of the parent company of Luzerner Kantonalbank AG are largely in line with those of the Group. In contrast to the consolidated financial statements, which are based on the ‘true and fair view’ principle, the statutory individual financial statements capture the bank's economic situation reliably, enabling third parties to form an accurate opinion. The statutory separate financial statements may be influenced by hidden reserves.

Investments

The shares and other securities of companies held as long-term investments shown under investments are carried at the acquisition value, less necessary operational and precautionary value adjustments.

Value adjustments and provisions

Value adjustments that have been released are transferred to ‘Other provisions’ as hidden reserves or reversed to ‘Changes in value adjustments for default risk and losses from interest operations’. ‘Other provisions’ can include hidden reserves. Value adjustments and provisions that are released (except tax and pension provisions) can be used in the same accounting period to form necessary operational value adjustments and provisions for other similar requirements as originally intended, as shown in Section 6.11 ‘Value adjustments and provisions / reserves for general banking risks’.

Reserves for general banking risks

The reserves for general banking risks are taxed.

Statutory capital reserve

Premiums from capital increases and non-repayable grants are recognised under the ‘statutory capital reserve’. The ‘Reserve from tax-exempt capital contributions’ is reported separately (‘of which’ item). This reserve includes amounts that can be distributed to shareholders without tax consequences in accordance with the capital contribution principle.

Statutory retained earnings

The ‘statutory retained earnings’ accrue in accordance with the provisions of the Swiss Code of Obligations. This means that the legally required allocations are accounted for here. The gain on disposal from trading in own shares and the dividend income thereof are allocated to ‘statutory retained earnings’. Here, a distinction is made between own shares held for trading and other own shares (see also the following Section ‘Own shares’).

Voluntary retained earnings

‘Voluntary retained earnings’ include all reserves that have the character of reserves formed as a precautionary measure to hedge latent future risks in the course of business of the bank and that are not accumulated within the scope of the statutory provisions on the appropriation of profits.

Own shares

A distinction is made between treasury shares held for trading and other own shares.