BPCE_REGISTRATION_DOCUMENT_2017

5 FINANCIAL REPORT

BPCE management report

BPCE INCOME STATEMENT ➡

Change 2017/2016

2016

€m

%

2017

in millions of euros

Net banking income Operating expenses

384

281

+103

NA

(140)

(205)

+65

(32%)

Gross operatingincome

244

76

+168

NA

Cost ofRisk

(1)

4

(5)

(125%) +96% +136%

Net gains or losses on long-term investments

262 505 224

134 214 247

+128 +291

Incomebeforetax

Incometax

(23)

(9%)

Charges/reversalsto fund for generalbankingrisks and regulated provisions NET INCOME

729

461

+268

+58%

2017 net income amounted to € 729 million, an increase compared

€ 244 million, cost of risk of - € 1 million, gains on long-term

with 2016 due mainly to the appreciation of investments in investmentsof € 262 million and tax incomeof € 224 million. consolidated companies. It also included gross operating income of NET BANKING INCOME ➡

Change 2017/2016

2016

€m

%

2017

in millions of euros

Lender of last resort Corporate center Holding company

(118) (142)

(421)

+303 (120)

(72%)

(22) 724 281

NA

644 384

(80)

(11%)

NET BANKING INCOME

+103

NA

€ 384 million, up

Net banking income for the Corporate center was - € 142 million in 2017, down € 120 million compared with 2016, mainly due to the early termination of RMBS-backed funding. This decrease is mainly due to the disposal of shares in a portfolio of mortgage loan securitizations which generated a net capital loss in 2017 versus capital gainsin 2016. Net banking income for the Holding business line totaled € 644 million, down € 80 million comparedwith 2016, due mainly to the decrease in dividends received (- € 51 million on BPCE International,- € 28 million on Banque Palatine and - € 23 million on Crédit Foncier).

In 2017, BPCE’s net banking income totaled

€ 103 million comparedwith 2016. BPCE is responsiblefor ensuring the liquidity and capital adequacyof the Group by guaranteeingthat the regulatory ratios are met. These businesses are included in the Lender of last resort business line, where net banking income was - € 118 million in 2017, an increase of € 303 million comparedwith 2016. 2016 net bankingincomeincluded a - € 341 million early repaymentbalance for SFH loans following the acquisition of lines held internally by SFH (offset by € 339 million in “Gains and losses on other assets” following the early redemptionof securities).

OPERATING EXPENSES ➡

Change 2017/2016

2016

€m +6

%

2017

in millions of euros

Payroll costs

(245) (304) (549)

(251) (319) (570)

(2%) (5%) (4%) +9%

Other expenses

+15 +21 +44 +66

Gross operatingexpenses

Rebilled expenses

527 (21)

483 (87)

Net operatingexpenses

(75%)

Chargesfrom exceptionalprojects

(119) (140)

(118) (205)

(1)

NA

OPERATINGEXPENSES

+65

(32%)

At - € 140 million, operatingexpenseswere down € 65 million in 2017 comparedwith 2016, due primarily to the € 45 million increase in central institution contributions.

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Registration document 2017