2017 ACTIVITIES AND FINANCIAL INFORMATION Significant events of 2017

Significant events of 2017 4.2


Economic and financial environment

FRENCH GROWTH ON THE MEND 2017 was a year of increasinglysynchronizedglobal growth, a break in the clouds driven by advanced and emerging economiesalike that ultimatelytriggeredno inflationarytensions liable to slow it down. It also saw all members of the euro zone – and France in particular – move forward on the road to recovery, starting to make up the ground lost since the sovereign debt crisis despite the euro’s moderate trend towards appreciation.A series of events combinedto stimulate economic activity. First, despite the rally launched in June ahead of OPEC’s decision to extend the production cut agreement signed in November 2016 until the end of 2018, oil prices stabilized at a relativelylow average of $54.2 per barrel (North Sea Brent), thus keeping inflation under control. Second, sovereign yields declined on both sides of the Atlantic in the wake of the French presidential election, due in large part to a paradoxical rise in inflation expectationsaffectingenergy prices and wages. Finally, alongsidethe spectacular take-off of bitcoin prices, most stock markets delivered strong performancesamid low volatility.The CAC 40 enjoyed its third straight year of gains, climbing 9.26% to end the year at 5,312.56 points onDecember29. As a result, global GDP grew byat least 3.7% in2017, getting more of a boost than it did in 2015-2013 (3% YoY) from the extension of exceptional monetary measures, the re-emergence of relatively expansionist fiscal policies and low inflation. It helped that the various economic regions managed to gradually get back in sync, from the end of the recessions in Russia and Brazil, to the economic resilience in China, to the bursts of energy in the US and European economies. The UK stoodout as an exception after Brexit 2016. France began catchingup to the euro zone growth rate in 2017, with French GDP climbing 1.9% versus 1% per year from 2014 to 2016. This performance was primarily fuelled by the recovery of exports, thanks largely to renewed tourism after the 2015 and 2016 terrorist Against this backdrop, Groupe BPCE implementedits digital strategy, consolidatedits businessline positionsand preparedits new strategic plan, which was initially presented at a focus group on the transformationof local banking activities in February 2017, followed by a full presentation inNovember 2017. Under the digital action plan, a new digital ecosystemdubbed “89C3” was installed in 2017 with the aim of developing the products and services of tomorrow in agile mode before rolling them out groupwide. The new system takes a seasonal approach, with each season spanning six months. The goal of 89C3: keep it simple for our customers,employeesand partners. 4.2.2

attacks, but still not fully tapping into the strengthof global demand. Additional contributing factors included the confirmed resilience of investment, the rebound in consumer spending, and a positive inventory effect. In particular, business investment kept up its momentum even after the government’s additional depreciation measure ended in April. Householdconsumptionimproved somewhat in the second half, helped by relatively low inflation, a slight upturn in wages and better job market conditions. Prices only rose 1% in 2017. The French unemployment rate fell 0.5 point to 9.3%, even after climbingslightlyin the summer,probablydue to the termination of the hiring aid mechanismfor SMEs. Finally, the public deficit fell from 3.4% of GDP in 2016 to 2.8% in 2017, but public debt continuedto balloon,reaching97.7%of GDP, as opposedto Germany where it slid to64.7%. The divide between Fed and ECB monetary policy widened even further in 2017. The Fed stuck to a cautious and gradual monetary tightening process, and began reducing its balance sheet size in October 2017. At the same time, it raised its key rates three times by 25 basis points, setting them in the 1.25% to 1.5% range at mid-December.Conversely, the ECB upheld its ultra-accommodating monetary policy, despite changing the tone of its message. On October 26, 2017, it announcedon the one hand that it would taper its net monthly asset purchases from € 60bn to € 30bn from January to September 2018, and on the other that the three key rates would remain unchanged for an extended period after the end of the bond buying program and that most of the maturing bonds would be reinvested on the financial markets. Sovereign yields took another tumble on both sides of the Atlantic,mainly due to renewedinflation expectationsand the gradual pace of monetary normalization.After the French presidentialelection, the 10-year OAT followed this trend, hoveringbetween0.5%and 0.8% fromMay to December versus 1.1% in February.


Significant events of the fiscal year

Season 1 began in February 2017 and ended in September 2017: 20 concrete projects targeting customers, employees and partners were initiated and incubated.On the heels of Season 1’s success, Season 2 was launched in October 2017 and will predominantly focus on digitizing the corporate customer offer, data analytics and improving the employee experience. Digital centers have already been opened in Aix-en-Provence, Toulouse, Nantes, Metz and Paris to service these projects. The centers boast all the necessarycoordination,expertiseand production capacities all in one place. These facilities are also available to the external digital ecosystem(fintechs,insurtechs, etc.) in a bid to place the Group squarely inthe center of innovation in the field.


Registration document 2017

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