NATIXIS - 2018 Registration document and annual financial report

FINANCIAL DATA Parent company financial statements and notes

Provisions for non-specific credit risk Financial assets that do not have individually allocated credit risk are included in groups of assets with similar risk characteristics. The composition of these portfolios of similar assets is based on two criteria: geographical risk and sector risk. Portfolios are reviewed quarterly and, where appropriate, loans in sectors or countries where economic circumstances suggest problems may arise are included in the base for performing loans provisions. Each group of assets is assessed for objective evidence of impairment based on observable data indicating a likely decrease in the estimated recoverable cash flows for that group of assets. A collective write-down in the balance sheet liabilities is taken against any group of assets showing objective evidence of impairment. Assets belonging to that group, which are subsequently specifically identified as impaired (specific risk), are removed from the collective write-down calculation base. Provisions for geographic risk are primarily based on each country’s internal rating, incorporating different parameters and indicators (political situation, performance of the economy and economic outlook, banking system situation, etc.). Calculation of the impairment loss is based on a correlation table between the internal rating and provisioning rate, with a revision to the rate allocated to a provisioning scale possible. Provisions for sector risk are based on combinations of indexes specific to each sector (sector growth, cash held by businesses in the sector, cost of commodities, etc.). The method for calculating the impairment loss is the “expected loss” method calculated at maturity. Loans on the watch list, for which a Basel default has been identified, are written down collectively by sector unless they are already subject to specific write-downs. Provisions for sector and country risk are shown under liabilities in the balance sheet. 2. Securities are, in accordance with Book II—Title 3 “Accounting treatment of securities transactions” of regulation No. 2014-07 of the ANC, classified according to: their type: government securities (treasury bills and similar a securities), bonds and other fixed-income securities (negotiable debt securities and interbank market instruments), shares and other variable income securities; the economic purpose for which they are held, into one of the a following categories: held for trading, held for sale, held for investment, other long-term securities, investments in associates and investments in subsidiaries and affiliates. The buying and selling of securities are recorded in the balance sheet at the settlement-delivery date. The applicable classification and measurement rules are as follows: Securities held for trading : securities that are originally a bought or sold with the intention of reselling or repurchasing them in the short term, and securities held as part of a market-making operation. Securities bought or sold for the Securities portfolio

purposes of the specialized management of a trading portfolio are also classed as securities held for trading. To be eligible in this category, these securities must, when initially recognized, be traded on an active market with easily obtainable prices representing actual and regularly occurring market transactions on an arm’s length basis. On acquisition, securities held for trading are recognized at the price paid including any accrued interest. Transaction costs are recognized in expenses. At each balance sheet date, they are measured at market value and the grand total of any valuation difference is recognized on the income statement under the heading, “Balance of transactions on securities held for trading”. Securities held for sale : securities which are not classified in a any other category are considered as securities held for sale. They are reported on the balance sheet at their purchase price, excluding acquisition costs. Any difference between the purchase price (excluding accrued interest) and the redemption price is recognized in income over the remaining life of the securities. They are valued at year-end at the lower of their carrying amount and their market value. Unrealized losses give rise to the recognition of an impairment loss, whose calculation factors in gains from any hedging transactions conducted. Unrealized gains are not recognized. Securities held for investment : Securities held for a investment are dated fixed-income securities acquired with the stated intention of holding them to maturity and for which Natixis has the ability to hold them through to maturity. They are reported on the balance sheet at their purchase price, excluding acquisition costs. Any difference between the purchase price and the redemption price is recorded in income over the remaining life of the securities. In line with regulatory requirements, unrealized losses are not subject to impairment, unless there is a strong likelihood that the instruments will be sold before maturity due to unforeseen circumstances or if there is a risk of default by the issuer of these instruments. Unrealized gains are not recognized. Investment securities, shares in affiliates and other a long-term securities : Other long-term securities : investments made by Natixis in j the form of securities, with the intention of forging lasting professional relationships and creating a special relationship with the issuing company, but without any influence over the management of the corporate entities in which investments were made due to the low percentage of voting rights held. They are recognized at their acquisition date at the purchase price excluding acquisition costs. They are included in the balance sheet at the lower of historical cost or value in use. Unrealized losses are subject to a provision for impairment. Investments in associates : investments in the form of j securities the durable possession of which is deemed useful to Natixis’ business. They are recognized at their acquisition date at the purchase price excluding acquisition costs.

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Natixis Registration Document 2018