BPCE - 2019 Universal Registration Document

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ACTIVITIES AND FINANCIAL INFORMATIONS 2019

GROUPE BPCE FINANCIAL DATA

LOAN OUTSTANDINGS UP 7.6% IN AN ENVIRONMENT OF PERSISTENTLY LOW INTEREST RATES The Banques Populaires consolidated their active role in financing the economy, with an annual increase of 7.6% in loan outstandings to €225.0 billion at end-2019. The growth in loan outstandings in the individual customer market (+8.8% to €118.6 billion) was buoyed by robust growth in home loan outstandings (+8.9% to €107.1 billion), amid low interest rates which bolstered demand. Consumer loans also contributed to the rise in total loan outstandings, with growth of 8.0% to €11.1 billion at end-2019. On the professional, corporate and institutional customer markets, growth in outstandings was also strong at +6.3% to €106.4 billion at end-2019, notably in equipment loans (+7.1% to €64.8 billion) and real estate loans (+8.5% to €23.2 billion).

Operating expenses stayed relatively stable (-€0.7 million or +0.0%) at -€4.4 billion, reflecting strong OPEX discipline by the institutions. Payroll costs decreased (+€11 million, i.e. -0.4%) to -€2.5 billion amid a reduction in the headcount, particularly in those institutions that were recently merged. Accordingly, Banque Populaire Aquitaine Centre Atlantique, Banque Populaire Alsace Lorraine Champagne, Banque Populaire Auvergne Rhône Alpes, Banque Populaire Grand Ouest and Banque Populaire Méditerranée together registered a decrease of 400 full-time equivalent employees. The reduction in payroll costs helped to offset the increases seen in other operating expenses (-€11 million, +0.6%). Transformation costs remained stable in 2019 at -€80.5 million, vs. -€80.7 million in 2018, and are split across nine institutions. The impacts mainly concern Banque Populaire du Sud (-€28.7 million) following the integration of the Banque Marze, Banque Dupuy, de Parseval and Crédit Maritime de Méditerranée entities as part of the Puissance 4 project, Banque Populaire Grand Ouest (-€23.3 million related to restructuring of the network which saw several branch closures) and Banque Populaire Auvergne Rhône Alpes (-€10.7 million related to Banco 2020 – transformation of the relationship model – with implementation between October 2018 and the start of 2020, the costs of which were attributed in 2019). The residual costs of the IT migration of Crédit Coopératif to the IT-CE platform came to -€5.1 million for 2019. Gross operating income came out at €2.1 billion, increasing by 2.8%, while the cost/income ratio improved 0.6 of a point to 67.7% in fiscal year 2019. The cost of risk decreased by -13%: decrease in S1/S2 compartment related to the improvement in ratings and the 2018 comparison base, however an increase in the S3 compartment. In the end, the cost of risk came out at 6.48% of NBI vs. 7.51% in 2018. The Banques Populaires contributed €1.7 billion to the Retail Banking and Insurance division’s income before tax, up +8.2% relative to 2018 (pro forma). CAISSES D’EPARGNE During fiscal year 2019, the Caisses d’Epargne saw continued strong activity levels, with new loans amounting to €60.5 billion, granted as part of their role in financing the French economy, i.e. +13.6% vs. 2018, close to its high of 2017 in real estate credit, thus confirming their banking strategy to provide additional banking products and services to individual customers and gain new corporate and professional customers. The number of principal active customers increased by 0.9%, active professional customers by 2.9% and active corporate customers by 7.0% in 2019. GROWTH OF 7.9% IN ON-BALANCE SHEET DEPOSITS AND SAVINGS (EXCLUDING CENTRALIZED SAVINGS) Despite the highly competitive savings market, the Caisses d’Epargne saw their On-balance sheet deposits and savings (excluding centralized savings) climb 7.9% ( i.e. +€18.0 billion) vs. 2018 to €246.9 billion.

LOAN OUTSTANDINGS (in billions of euros)

7.6 %

225

209

26.4

25.3

68.3

64

● Other ● Equipment loans ● Real estate loans

130.3

119.7

12.31.2019

12.31.2018

FINANCIAL RESULTS The Banque Populaire network’s net banking income totaled €6.4 billion in 2019, a slight increase compared to 2018 pro forma (+0.6% excluding the change in the home savings provision). Net interest income (1) came out at €3.6 billion, up €46.6 million year-on-year. The increase was driven primarily by BRED, in addition to the performances of its international banking and French overseas territories division and its capital markets and commercial banking activities in France. Fee and commission income declined slightly (-0.4%) to €2.6 billion, in particular account management fees, which were impacted by the various measures implemented to support purchasing power (price freeze, overhaul of the penalty fee framework, capping of fees on products for vulnerable customers). However, fees on payment instruments increased, as did loan fees, in connection with payment protection insurance fees. Income and expenses from other activities increased (+€8 million), underpinned by operating lease transactions (+€16 million), in connection with the new commissioning scheme for the leasing activity. Net income from insurance activities, which are mainly related to the Prépar Vie and Prépar IARD subsidiaries of BRED, increased significantly (+€13 million, i.e. +11%).

(1) Fees and commissions on centralized savings have been restated for net interest income and included in fee and commission income.

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UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE

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