BPCE_REGISTRATION_DOCUMENT_2017

5 FINANCIAL REPORT

IFRS Consolidated Financial Statements of BPCE SA group as at December 31, 2017

Impairment tests All goodwill has been impairment-tested,based on the assessmentof the value in use of the cash-generatingunits (CGUs) to which it is attached.

Key assumptions used to determine recoverable value Value in use is determinedbased on the discountedpresent value of the CGU’s future cash flows under medium-termplans drawn up for the purposes of the Group’s budget process.

The following assumptions were used:

Discount rate

Long-term growth rate

Retail Bankingand Insurance Insurance Specialized FinancialServices

11.50% 12.20% 8.50% 9.70% 10.80% 11.40%

2.50% 2.50% 2.00% 2.50% 2.50% 2.50%

BanquePalatine BPCE International

8.9% – 18.9%

1.9%– 5.3%

Asset & Wealth Management Equity interests (Coface) Corporate& Investment Banking

The discount rates were determined by factoringin the following: for the Asset & Wealth Management, Insurance, Specialized ● Financial Services and Corporate & Investment Banking CGUs, the risk-freeinterestrate of the Euro-Bundzone, averagedover a depth of 10 years, plus a risk premium calculated according to a sample of CGU-representative companies; for the Coface CGU, the benchmark interest rates used were ● determined according to a similar method as applied to the other CGUs, using samples of equivalent companies for insurance, services and factoring activities; for the Banque Palatine CGU, a risk-free rate (10-year OAT) over a ● depth of six years, plus a risk premium calculated based on a sample of listed European banks with a similar banking business, while factoring inthe specific characteristics of these institutions; for the BPCE Internationalsubsidiaries,the latest available market ● information. The long-term growth rates are based on the long-term inflation rates in their countriesof operation. These tests led to the recognition of goodwill impairment of € 66 million in2017. Sensitivity of recoverable values A 20 basis-point increase in discount rates combined with a 50 basis-point decrease in perpetual growth rates would reduce the CGUs’ valuein use by: -7.1% forthe Asset &Wealth Management CGU; ● -3.3% forthe Corporate &Investment Banking CGU; ● -5.3% forthe InsuranceCGU; ● -3.6% forthe Specialized Financial Services CGU; ● -2.6% forthe Coface CGU. ● These variations would not lead to the recognition of additional impairment.

Similarly,the sensitivityof these CGUs’ future cash flows, as forecast in the business plan, to changes in the main assumptionswould not significantly affect their recoverable value: for Asset & Wealth Management, a 10% decline in the equity ● markets would have a 8% negative impact on the CGU’s recoverable value and would not lead to the recognition of an impairment loss; for Corporate & Investment Banking, sensitivity to the dollar or to ● changesin the CAC 40 would have a limited impact on net banking income and would not result in recognitionof impairment; for Insurance, the main vector of sensitivity for life insurance is ● interest rates but various steps are being taken to reduce their impact (diversificationof investments, reserves, etc.). Accordingly, the impact on the income statement is limited and would not significantly impact the CGU’s value. For non-life insurance, the main vector of sensitivity is the loss ratio, which is notably measured via the combined ratio. Natixis’ strategic plan, New Dimension,sets this ratio at below 94%. A one-point deterioration in this ratio each year from 2018 in relation to the assumptions used to value the CGU would lead to a limited fall of 3% in this value, with noimpact onimpairment. for Specialized Financial Services, a one-point increase in the ● 3-month Euribor applied to the factoring business and the replication of a “2008/2009”-typecrisis (decline in new business and increase in cost of risk) in the leasing business would have a negative impact of 6% on the CGU’s recoverable value and would have noimpact interms of impairment; for Coface, the primary sensitivity vector is the loss ratio. The ● projected level of this ratio is below 54% (net of reinsurance) for 2017. A one-point increase in the loss ratio, relative to the assumptionsused for the DCF calculationover all years from 2018, would impact the averagemulti-criteriavalue by less than 5% and would not lead to the recognition of impairment on the CGU. A valuationat the lowest price of the year 2017 would have a limited impact on the weighted average valuation determined using the differentmethods (-2%).

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Registration document 2017