AFD - Universal Registration Document 2020

CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS Notes to the consolidated financial statements

This significant deterioration in risk is demonstrated by at least one of the following criteria being met: P downgrading of the counterparty’s internal rating between the state at inception of the contract and the current state, P placement of the counterparty under supervision, P 30 Ǿ days past due; P stage Ǿ 3: this category includes non-performing loans, i.e. outstandings (balance sheet and off-balance sheet) of third parties with: P significant arrears exceeding 90 Ǿ days (180 Ǿ days for local authorities); a significant unpaid rent is determined by the following two cumulative criteria: P the sum of unpaid loans on all credit obligations exceeds €500, P the sumof arrears on all credit obligations is greater than 1% of all credit obligations of the third party (excluding the balance to be paid and equity investments); P proven credit risk, P a restructured (“forborne”) credit which is more than 30 Ǿ days past due and/or a second forbearance during the probation period. The doubtful nature is applied to all exposures to the third party concerned, according to the contagion principle. In Ǿ 2020, the AFD Group analysed the new rules related to the application of the definition of default (EBA guidelines (EBA/ GL/2016/7) and thresholds defined by the European Union (Article Ǿ 1 of Regulation (EU) 2018/1845 ECB of 21 Ǿ November 2018). The application of this new regulation to the scope of non-sovereign loans did not have a material impact on the Group’s financial statements as at 31 Ǿ December Ǿ 2020. As of 1 Ǿ January 2021, the AFDGroupwill adopt this newdefinition for the scope of sovereign loans and does not anticipate any significant impact given the reserve account mechanism. Estimates of impairments and provisions The model used to estimate credit losses varies depending on the stage to which the outstanding amount relates and the type of outstanding amount involved. Impairment and provisions are calculated for non-sovereign loans issued by AFD, debt securities, financial guarantees and undisbursed balances that

have been authorised (by identifying a conversion factor and estimating early repayment). For stage Ǿ 1 loans, provisions are based on the calculation of the expected loss at one year, which takes into account the probability of default (which varies in particular according to the credit rating), the loss in the event of default, and exposure at default (varying according to the residual maturity and the conversion factor for off-balance sheet exposures). For loans in stage Ǿ 2, individual impairments or provisions are determined using the same calculation methodology, but based on a calculation at maturity (instead of after one year). Provisions and impairments are calculated quarterly by the Risk Monitoring Division. They are subject to a control plan and an analysis of changes. As of 31 Ǿ December Ǿ 2020, AFD’s collective provisions amounted to €403M. In the context of the Covid-19 crisis, AFD decided to set up a sectoral provision to cover potential risks: P in the aviation and tourism sectors particularly affected by this crisis, This provision was calculated on the basis of a rating downgrade of the performing counterparties concerned compared to their rating observed at 31 Ǿ December Ǿ 2020. The amount of the provision stands at €79M. Maximum credit risk exposure In total, the gross consolidated outstandings under Group risk exposure (excluding doubtful on non-sovereign) amounted to €36.1bn at 31 Ǿ December Ǿ 2020 (compared with €32.5bn at 31 Ǿ December 2019), of which €30.4bn in foreign countries and €5.8bn in French Overseas Departments and Collectivities. The parent company bears most of the Group’s credit risk (€33.5bn, i.e. 93% of outstanding loans). The AFD Group’s non-performing loans amounted to €1.2bn as of 31 Ǿ December Ǿ 2020, of which €2.8M in sovereign non- performing loans and non-sovereign non-performing loans. Non-sovereign non-performing loans are covered by impairments and provisions totalling €0.5bn, equivalent to a coverage ratio of 47.8%. The following figures only deal with non-sovereign loans, as sovereign loans are covered by the reserve account.

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2020 UNIVERSAL REGISTRATION DOCUMENT