BPCE - 2019 Universal Registration Document

NON-FINANCIAL PERFORMANCE REPORT

PUTTING OUR COOPERATIVE IDENTITY TO WORK FOR REGIONAL DEVELOPMENT

INTERNATIONAL ENVIRONMENT, GEOPOLITICAL AND DEMOGRAPHIC RISKS

OUR STRENGTHS / OUR SOLUTIONS • A decentralized and united cooperative group with strong brands operating directly in local regions • A dynamic, diversified group that has shown it is capable of adapting and transforming • Consistently robust financial strength, ensuring the Group’s financial stability • A conservative risk policy and a moderate risk profile

THE MAIN CHALLENGES • More frequent health/pandemic risk disrupting the global economy • Climate risk • US protectionism, risk of currency war and decline in globalization (competition between China and United States, doubts about multilateralism and the structure of value chains) • Risks to European Union stability: Brexit, Italian banking risk, derailment of public debt subsequent to fiscal measures associated with Covid-19, widening of sovereign spreads • Long-term impacts of low interest rates: risk of growing imbalances already observable (public debt, reformation of asset price bubbles, etc.) • Emergence of new financial markets or of financial and monetary assets competing against existing payment systems: cryptocurrencies, Libra, etc.

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MACRO-ECONOMIC CONDITIONS

OUR STRENGTHS / OUR SOLUTIONS • Diversifying Group revenues and developing growth drivers: expanding the bancassurance model, becoming a pure player in payments • Developing the business lines that are the least dependent on interest rates and fees • Building revenue synergies between business lines and exploring new growth drivers

THE MAIN CHALLENGES • Severe global recession triggered by Covid-19, followed by a vigorous spring-back, potentially sparking inflationary tensions (supply/demand imbalance) • Steep artificial contraction (intensity associated with length of mandatory confinement period) in French growth, also followed by a vigorous spring-back • Rushed monetary and fiscal initiatives aimed at mitigating the adverse economic and social consequences of mandatory confinement • Persistently low interest rates: a risk for retail banking activities, especially in France

CHANGING REGULATORY ENVIRONMENT AND EVER TOUGHER REQUIREMENTS

OUR STRENGTHS / OUR SOLUTIONS • Proactive measures allowing us to achieve regulatory solvency and liquidity targets ahead of schedule • A policy of maintaining high capital adequacy recognized by the rating agencies, allowing us to develop our businesses on favorable terms while offering our stakeholders a high level of protection, as confirmed by ESG rating agencies • A Code of Conduct and Ethics further strengthening the bonds of trust between Groupe BPCE and its customers

THE MAIN CHALLENGES • Increase in regulations in all areas: banking, prudential, customer and investor protection, anti-money laundering and counter terrorist financing, anti-corruption

• Incorporation of ESG and climate risks • Uncertainty about future developments • Unfair competition: regional differences, unregulated players

TECHNOLOGICAL INNOVATION, NEW ENTRANTS AND CYBERSECURITY

OUR STRENGTHS / OUR SOLUTIONS • Accelerating the digital transformation by creating leading digital services to enhance customer satisfaction (user friendliness, simplicity, personalization) • Developing data centric companies to provide more personalized customer services • Developing partnerships with fintechs • Enhancing operational efficiency: customer self-service, process optimization and simplification through the use of integrated business platforms and pooled functions

THE MAIN CHALLENGES • Arrival of new players (fintechs, GAFA, neo-banks) and new technologies (blockchain, AI, chatbots, etc.) • Increasing digitalization of the economy and changing customer practices and needs (real time, fast response, simplicity, transparency, etc.) • Rapid pace of technological change creating big expectations in terms of cybersecurity and data protection • New operating models (automation, digitalization)

CORPORATE SOCIAL RESPONSIBILITY

OUR STRENGTHS / OUR SOLUTIONS • Incorporating ESG criteria in financing, investments and sector policies • Helping customers address climate risk and gear up for the energy transition • Steering savings towards a more responsible economy • Developing brokerage of green or social bonds • Reducing the Group’s carbon footprint • Supporting vulnerable customers

THE MAIN CHALLENGES • Global commitment to combating climate change • Declaration made by French banks to help develop a low-carbon, greener, and more inclusive economy • Rising inequality, regional imbalances, increasing social unrest • Inclusion of vulnerable persons amid rising poverty

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UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE

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