BPCE - 2018 Registration document

5 FINANCIAL REPORT

IFRS Consolidated Financial Statements of Groupe BPCE as at December 31, 2018

Impairment tests 3.5.2 All items of goodwill are impaired, based on the value in use of the cash-generating units (CGUs) to which they have been allocated. For the Coface CGU, a listed entity since June 2014, which is not one of Natixis’ core businesses and which is managed on an asset basis, as in previous years, value in use was supplemented by other approaches using market data including market multiples, stock market prices and brokers’ target prices. An average valuation was determined by weighting the different approaches, with the respective weighting of each approach unchanged compared with the previous fiscal year.

At December 31, 2018, as in 2017, the CGUs are the same as the divisions in Natixis’ “New Dimension” strategic plan, i.e. “Asset & Wealth Management”, “Corporate & Investment Banking”, “Insurance” and “Specialized Financial Services”. At December 31, 2018, the Regional banks CGU was equal to the sum of the CGUs of the following banks: BP Aquitaine Centre Atlantique, Banque Dupuy, de Perseval, Banque Marze, UGT Retail Groupe Banque Populaire Auvergne Rhône Alpes and Banque Populaire Méditerranée. Key assumptions used to determine recoverable value Value in use was primarily determined based on the estimated present value of the CGU’s future cash flows ( i.e. the Discounted Cash Flows (DCF) method) under medium-term plans drawn up for the purposes of the Group’s budget process.

The following assumptions were used:

Discount rate Long-term growth rate

Retail Banking and Insurance Regional banks Specialized Financial Services

7.5% - 7.75%

2.0% 2.5% 2.5% 2.5% 2.5% 2.5%

11.2% 10.2% 9.3% 8.7% 10.6%

Insurance

Equity interests (Coface)

Asset & Wealth Management Corporate & Investment Banking

The discount rates were determined by factoring in the following: for the Asset & Wealth Management, Corporate & Investment ● Banking, Insurance and Specialized Financial Services CGUs, the risk-free interest rate of the Euro-Bund zone, averaged over a depth of 10 years, plus a risk premium calculated according to a representative sample of companies from the CGU; 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 Populaire Regional Banks CGU, a risk-free rate ● (10-year OAT) over a depth of seven years, plus a risk premium calculated based on a sample of listed European banks with a similar banking business, while factoring in the specific characteristics of these institutions. The impairment tests performed at the level of each CGU led to the recognition of impairment on Crédit Foncier Immobilier (a Crédit Foncier subsidiary) in the amount of - € 13 million, and impairment on Ariès Assurances (a Banque Palatine subsidiary) for - € 3 million at December 31, 2018. Sensitivity of recoverable values A 30 bp increase in discount rates (assumption based on the historical annual variability observed over one year using 2012-2018 historical data) combined with a 50 bp reduction in perpetual

-4.8% for the Coface CGU; ● -7.2% for the Regional Banks CGU. ● These variations would lead to the recognition of additional impairment on the Regional Banks CGU ( € 3 million). Similarly, the sensitivity of these CGUs’ future cash flows, as forecast in the business plan, to changes in the main assumptions would not significantly affect their recoverable value: for Asset & Wealth Management, a 10% decline in the equity ● markets (a uniform decline across all years) would have a 5% negative impact on the CGU’s recoverable value and would not lead to the recognition of impairment; for Corporate & Investment Banking, sensitivity to the dollar or to ● changes in the CAC 40 would have a limited impact on net banking income and would not result in recognition of impairment; for Insurance, the main vector of sensitivity for life insurance is ● interest rates but various steps are being taken to reduce their impact (diversification of 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 4% in this value, with no impact on impairment;

growth rates would reduce the value in use of CGUs by: -9.7% for the Asset & Wealth Management CGU; ● -5.0% for the Corporate & Investment Banking CGU; ● -7.6% for the Insurance CGU; ● -5.3% for the Specialized Financial Services CGU; ●

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Registration document 2018