BPCE_REGISTRATION_DOCUMENT_2017

FINANCIAL REPORT BPCE management report

Cost of risk In 2017, cost of risk was - € 1 million and mainly related to a reversal of provisions for guarantees granted to the Group’s institutions for + € 1 million and aloss of € 2 million onnon-performing securities. Net gains or losses on long-term investments Net gains or losses on long-term investments were € 262 million in 2017. They consisted of changes in provisions for investments in associates, in particular Natixis (+ € 452 million), BPCE International (- € 122 million), Crédit Foncier (- € 96 million), Banque Palatine (- € 30 million) and BPCE Immobilier d’Exploitation(+ € 55 million). In 2016, this item also included a dividend of € 58 million from BPCE Immobilier Exploitation. Income tax In 2017, as a result of tax consolidationincome, the gain in income taxes after taking into account changes in provisions and other adjustments was € 224 million,down € 23 million relative to 2016. Ongoing disputes with the DGFIP were settled in 2017, leading to a tax gain of € 29 million. The first amended Finance Act for 2017 introducing two additional contributionsof corporatetax (15% each) took the general corporate tax rate to 44.43% in 2017 for the BPCE tax consolidationgroup. The impact representsan additionalcharge of € 64 million.

Non-tax deductible expenses

Disclosure of expenditure on luxuries In accordancewith the provisionsof Article 223 quater and quinquies of the French General Tax Code, the financial statementsfor the past fiscal year include € 168,260.90 in non-deductible expenses with regards to Article 39.4 of the same code. The resulting additionaltax was € 74,340. No other non-tax deductibleexpenseswere incurred during the fiscal year. Fund for general banking risks and net income There was no activity in the fund for general banking risks and net income during the fiscal year. Net income cameout at € 729 million. Proposed allocation of net income A proposalwill be made to the Annual General Shareholders’Meeting to allocate the net profit for the period of € 728,462,840.04 as follows, as proposed by the Management Board: dividend payment of € 403,005,056.90 to the shareholders, i.e. ● € 12.9382 per share; an allocation of € 325,457,783.14 to “Retained earnings.” ● Given the payment on December 22, 2017 of an interim dividend of € 201,502,528.46,a decision taken by the ManagementBoard at its meeting of December 21, 2017, a residual dividend of € 201,502,528.44remains to be paid to the shareholders, i.e. € 6.4691 per share. Subsequentto this distribution,the balance of “Retainedearnings”is € 3,511,490,238.03. In accordancewith the provisions of Article L. 243 bis of the French General Tax Code, the table below shows the dividends paid out in respect of the threeprevious fiscal years:

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Fraction of the dividend eligible for the 40% tax deduction €499,995,144.11*

Fraction of the dividend ineligible for the 40% tax deduction

Balance sheet date

Dividend per share

31/12/2014 31/12/2015 31/12/2016

Category “A” and “B” shares Category “A”and “B” shares Category “A”and “B” shares

€16.052 €11.2364 €12.312

/ /

€349,996,600.88 €383,499,888.77

/ The exceptionalpay-outschargedagainst“additionalpaid-incapital”,decidedby the GeneralShareholders’Meetingsof May 16,2014and December 17,2014,are equivalentfor tax purposesto * dividendpay-outs.

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Registration document 2017