BPCE_REGISTRATION_DOCUMENT_2017

4 2017 ACTIVITIES AND FINANCIAL INFORMATION Groupe BPCE financial data

Groupe BPCE financial data 4.3

4.3.1

Groupe BPCE results

Groupe BPCE once againgeneratedsolid earnings,confirming the resilienceof its full-servicebankingmodel.

Groupe BPCE

Change

2017

€m

2016

%

in millions of euros

Net banking income Operating expenses

23,720 (17,099)

24,158 (438)

(1.8%)

(16,673)

(426)

2.6%

Gross operatingincome

6,621

7,485 (864)

(11.5%) 3.1 pts

Cost/incomeratio

72.1% 69.0% --

Cost ofrisk

(1,384)

(1,423)

39

(2.7%)

Share in incomeof equity-accounted associates

276

259

17

6.6%

Gains or losseson otherassets Change in thevalue of goodwill

88

203 (115)

(56.7%) (44.8%) (13.4%)

(85)

(154)

69

Incomebeforetax

5,516 (1,811) (681) 3,024

6,370 (854)

Incometax

(1,882)

71

(3.8%) 36.2%

Non-controllinginterests

(500)

(181)

EQUITYATTRIBUTABLETO EQUITYHOLDERS OF THEPARENT

3,988 (964)

(24.2%)

NET BANKING INCOME At December 31, 2017, Groupe BPCE’s net banking income amounted to € 23.7 billion, down 1.8% compared to 2016, when a capital gain of + € 831 million was recognized on the sale of Visa Europe shares. Excluding this capital gain, net banking income was up 1.7%, reflecting robust activity and the resilience of the Group’s business lines despite the lowinterest rateenvironment. Retail Banking and Insurance posted a dynamic sales performancein 2017. Retail banking recorded loan outstandings of € 543 billion at December 31, 2017, up 5.1% year-on-year. Home loans increased 4.8% year-on-year,equipmentloans 5.4% and consumerloans 9.8%. Retail banking continuedto contributeactively to the funding of the economy.The volume of new loans picked up in all segments,hitting a record peak of over € 125 billion in 2017 versus € 101 billion in 2016. Retail banking deposits and savings came to € 692 billion at December 31, 2017, up 4.4% since December 31, 2016. On-balance sheet deposits and savings (excluding centralized regulated deposits and savings) exceeded € 25 billion year-on-year and consisted predominantlyof demanddeposits, up15.6%. Growth drivers such as Payments and Insurance maintained solid momentumin 2017. Gross unit-linkedinflows climbed 84% (share of unit-linked assets in gross inflows: +12.4 points year-on-year). The non-life insurance portfolio grew 8.5% year-on-year, recording a 6.8% increase in Provident and Health insurance policies and 10.6% in Non-Life policies.

These improvementslimited the highly adverse impact of the interest rate environment on Retail Banking and Insurance revenues, which fell 1.6%. This revenue decline was offset by very robust growth in Asset & WealthManagementrevenues(+14.5%),driven by the rise in fees on assets under managementand incentive fees earned by asset management companies, and the solid showing by Corporate & Investment Banking, with revenues up 9.5%. OPERATING EXPENSES Operatingexpensescame out at - € 17.1 billion, up 2.6% comparedto 2016, impacted by efforts to ramp up the Group transformationand restructuring plans, with the aim of simplifying its structure and generating synergies. The resulting costs (mergers, migration to existing IT platforms, Natixis transformation and operational excellence plan) represented - € 297 million in 2017 versus - € 176 million in 2016. Restated for these items, operating expenses posted amoderate increase of 1.8%. Operating expenses for the Retail Banking and Insurance arm, excluding transformation and restructuring costs, increased slightly by 0.4%. The lion’s share of this increase stemmed from the development of activities in the Asset & Wealth Management and Corporate &Investment Banking business lines. The Group headcount dipped 1.6% year-on-year to 106,463 at December31, 2017. Gross operating income amounted to € 6.6 billion in 2017, down 11.5% on 2016. At 72.1%, the cost/income ratio climbed +3.1 pts versus 2016 (70.8% restated for 2017 transformation and restructuring costs).

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Registration document 2017