BPCE - 2018 Registration document

5 FINANCIAL REPORT

BPCE management report

NET BANKING INCOME ➡

Change 2018/2017

2018 (254)

2017 (260)

€m +6

%

in millions of euros

Financial management

(2%)

Holding company

748 494

644 384

+104 +110

+16% +29%

NET BANKING INCOME

In 2018, BPCE’s net banking income totaled € 494 million, up € 110 million compared with 2017. BPCE is responsible for ensuring the liquidity and capital adequacy of the Group by guaranteeing that the regulatory ratios are met. These businesses are included in the Financial Management business line, for which net banking income was - € 254 million in 2018, an increase of € 6 million compared with 2017.

The net banking income of the holding company came to € 748 million, an increase of € 104 million over the period, attributable in particular to an increase in dividends received (of which + € 45 million related to Natixis and an exceptional dividend of + € 14 million related to Crédit Logement in 2018). Also of note is a decrease in expenses related to issues of perpetual deeply subordinated notes following redemptions of € 1,063 million in 2017.

OPERATING EXPENSES ➡

Change 2018/2017

2018 (265) (299) (564)

2017 (245) (304) (549)

€m

%

in millions of euros

Payroll costs

(20)

+8% (1%) +3% (1%)

Other expenses

+5

Gross operating expenses

(15)

Rebilled expenses

524 (40)

527 (21)

(3)

Net operating expenses

(19) (41) (60)

+89% +35% +43%

Charges from exceptional projects

(160) (200)

(119) (140)

OPERATING EXPENSES

Non-tax deductible expenses Disclosure of expenditure on luxuries

At - € 200 million, operating expenses in 2018 increased by € 60 million compared with 2017, mainly due to digital activities, key regulatory programs, strategic projects and the contribution to the Single Resolution Fund.

In accordance with the provisions of Article 223 quater and quinquies of the French General Tax Code, the financial statements for the past fiscal year include € 168,260.90 in non-deductible expenses pursuant to Article 39.4 of the same Code. The resulting additional tax was € 57,932. No other non-tax deductible expenses were 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 came to € 391 million. Proposed allocation of net income A proposal will be made to the General Shareholders’ Meeting to allocate the net profit for the period of € 390,468,286.00 as follows, as proposed by the Management Board: dividend payment of € 403,040,426.36 to the shareholders, i.e. ● € 12.3715 per share;

Cost of risk Cost of risk stood at - € 2 million for 2018.

Net gains or losses on long-term investments Net gains or losses on long-term investments were - € 352 million in 2018. They consisted of changes in provisions for investments in associates, in particular BPCE International (- € 121 million), 3F Holding GmbH (- € 128 million), Banque Palatine (- € 52 million), i-BP (- € 27 million) and Crédit Foncier (+ € 14 million). Income tax In 2018, as a result of tax consolidation income, the gain in income taxes after taking into account changes in provisions and other adjustments was € 451 million, up € 227 million relative to 2017. This change is mainly attributable to changes in assumptions which impacted the calculation of the provision for corporate tax refunds for subsidiaries in the context of tax consolidation in the amount of € 165 million.

544

Registration document 2018