BPCE - 2020 Universal Registration Document

NON-FINANCIAL PERFORMANCE STATEMENT

PUTTING OUR COOPERATIVE IDENTITY TO WORK FOR REGIONAL DEVELOPMENT

INTERNATIONAL ENVIRONMENT, GEOPOLITICAL AND DEMOGRAPHIC RISKS

OUR STRENGTHS / OUR SOLUTIONS • A cooperative, decentralized and supportive group, with powerful brands driven by regional banks working in the heart of the regions • A solid and diversified group that has shown it is capable of adapting, being resilient and transforming • Robust financial strength, ensuring the Group’s financial stability and a strong liquidity position • A prudent risk policy, a sound and diversified loan portfolio • Active participation in European projects (including the European Payment Initiative)

THE MAIN CHALLENGES • More frequent health/pandemic risk disrupting the global economy • Climate risk • Long-term impacts of low interest rates: risk of growing imbalances already observable (public debt, asset price bubbles leading to a financial crisis, etc. ) • US protectionism, risk of currency war and decline in globalization (competition between China and United States, doubts about multilateralism, organization of supply chains, etc. ) • Risk of an unstable European Union: hard Brexit, Italian government debt, security and migration context • Emergence of new financial markets or digital currencies, which are competing with existing payment systems (cryptocurrency, libra, etc. ) THE MAIN CHALLENGES • A proactive global response and a complementary system of monetary and budgetary policies to neutralize the risks of systemic deflation arising from the Coronavirus pandemic • After a very deep global recession in 2020 associated with Covid-19, we are seeing a technical recovery (varying from country to country) in 2021, which is still subject to the effective distribution of vaccines or treatments • Growth in France of between 5% and 7% per year in 2021, without regaining the level of wealth achieved at the end of 2019 (despite massive budgetary support and recovery plans), after a contraction of around 10% in economic activity; very moderate level of inflation • A debt monetization strategy implemented by central banks (FED/ECB), forging ahead with their ultra-accommodating policies • Historically low interest rate environment: pressure on brokerage fee income MACRO-ECONOMIC CONDITIONS

2

OUR STRENGTHS / OUR SOLUTIONS • Diversifying the Group’s revenues: ramping up the bancassurance model, providing solutions to all customer segments: individuals, professionals, companies, associations and local authorities • Guiding and supporting economic players • Developing business lines that are less sensitive to interest rates and developing fees and commissions • Building revenue synergies between business lines and exploring new growth drivers • Reducing costs by improving operational efficiency and controlling dividend payment costs

OUR STRENGTHS / OUR SOLUTIONS • Integrating digital technology across all business lines and customer journeys by creating leading digital services for the satisfaction of our customers (accessibility, ergonomics, simplicity, customization) and ramping up innovation and artificial intelligence, while ensuring compliance with the Responsible Digital Charter • Adapting the omnichannel distribution model, consulting, and remote transactions • Enhancing operational efficiency: customer self-service, paperless processes, simplification, process automation, integrated business line platforms and pooled functions • Enhancing security (authentication, payments, data protection) OUR STRENGTHS / OUR SOLUTIONS • Incorporating ESG criteria in financing, investments and sector policies • Helping our customers to address climate risk and gear up for the energy transition • Aligning our portfolios with the Paris Agreement • Reducing the Group’s carbon footprint • Steering savings towards a more responsible economy • Developing brokerage of green or social bonds • Supporting vulnerable customers • Implementing a responsible HR policy • Contributing to the promotion of the cooperative model OUR STRENGTHS / OUR SOLUTIONS • Proactive measures enabling us to achieve capital adequacy and liquidity positions well above the regulatory requirements • A strict capital adequacy management policy recognized by financial rating agencies • Responsible business lines development confirmed by non-financial rating agencies • A guarantee and solidarity mechanism, enshrined in the French Monetary and Financial Code, to guarantee the liquidity and capital adequacy of the Group and of BPCE’s affiliated institutions • A Code of Conduct and Ethics further strengthening the bonds of trust between Groupe BPCE and its customers

CHANGING REGULATORY ENVIRONMENT AND EVER TOUGHER REQUIREMENTS

THE MAIN CHALLENGES • Tighter regulations in all areas: soundness and security of the banking system, protection of customers and investors, fight against money laundering and the financing of terrorism, fight against corruption • Incorporation of ESG and climate risks • Greater demand for transparency • Unfair competition: regional differences, unregulated players

TECHNOLOGICAL INNOVATION, NEW ENTRANTS AND CYBERSECURITY

THE MAIN CHALLENGES • Presence of new players (fintechs, GAFA, neobanks, etc.), new technologies (Blockchain, AI, Chatbots, etc.) • Increasing digitalization of the economy and changes in customer practices and needs (remote consumption, real time, responsiveness, simplicity, transparency, customization expectations, etc.) • Rapid pace of technological change creating big expectations in terms of cybersecurity and data protection • New operating models (automation, digitalization)

CORPORATE SOCIAL RESPONSIBILITY

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 • The European Commission’s sustainable finance action plan and Green Deal

49

UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE