UNIVERSAL REGISTRATION DOCUMENT 2023

6 EARNINGS AND FINANCIAL POSITION Management report of the Board of Directors

6.1 MANAGEMENT REPORT OF THE BOARD OF DIRECTORS

6.1.1

EUROPEAN MACROECONOMIC AND FINANCIAL ENVIRONMENT

6.1.1.2 Financial markets in 2023 Risk assets delivered a solid performance and equity markets ended the year with low volatility. Interest rates proved highly volatile, fuelled by central bankers’ cautious approach to inflation prospects, which were deemed too high during the first three quarters of the year. Inflation figures for the last quarter are dampening the market’s interest rate expectations, generating a strong resurgence in risk appetite. Interest rate developments In 2023, long ‑ term interest rates were volatile, reflecting changes in market expectations about central bank interest rates. In the eurozone, the French 10 ‑ year peaked at the end of Q3 at over 3.5%, but ended the year at 2.54%. The risk premium on Italian sovereign debt fell by 30 basis points over the year to 120 bp. Outside the eurozone, with the exception of Japan, sovereign yields followed similar trends. In the United ‑ States, the 10 ‑ year rate peaked at 5% at the end of October and ended the year 3.86%. (a) Although general inflation continued the downward trend that began at the end of 2022, core inflation was still too stubborn in the view of the ECB, remaining above 5% on an annual basis through August. The latest figures for core inflation in the eurozone show price increases slowing to 3.4% year ‑ on ‑ year in December, allowing the ECB to put an end to its rate hike cycle. In Central and Eastern Europe, some central banks were able to start a cycle of rate cuts (Hungary), while others were more cautious (Romania and the Czech Republic) in waiting for inflation to return towards their targets.

6.1.1.1 Macroeconomic environment Trends on the financial markets in 2023 were punctuated by signs of a slowdown in inflation based on macroeconomic publications and by market expectations about the central banks’ reactions in this new environment. These expectations led to high volatility on the markets, particularly on interest rates. The cost increases caused by commodity prices had spread to all components of inflation in 2022, and core inflation only started to slow from September, though it remained at a level still well above the 2% target at the end of 2023. At the same time, industrial activity is in recession and the services sector is losing steam. Against this backdrop, by forecasting real GDP growth of 0.5% in 2023 and 0.8% in 2024, the European Central Bank (ECB) has less room for manoeuvre between the need to continue to bring down inflation and the need to drive activity. In conjunction with the US banking crisis, the weakest European banks suffered a crisis of confidence. As a result, the Swiss authorities organised the takeover by UBS of Crédit Suisse, which had been considered a systemic weak link in Switzerland or even at the European level. The leading indicators of activity in the eurozone weakened throughout the year, as evidenced by confidence surveys, manufacturing output and retail sales data. On the other hand, the labour market remained buoyant with an unemployment rate of 6.4%.

SOVEREIGN 10 ‑ YEAR YIELDS, %

6

6

5

5

4

4

3

3

2

2

1

1

0

0

Jan. 2023

Feb. 2023

Mar. 2023

Apr. 2023

May 2023

June 2023

July 2023

Aug. 2023

Sept. 2023

Oct. 2023

Nov. 2023

Dec. 2023

Jan. 2023

Feb. 2023

Mar. 2023

Apr. 2023

May 2023

June 2023

July 2023

Aug. 2023

Sept. 2023

Oct. 2023

Nov. 2023

Dec. 2023

Germany

France

Italy

Spain

Japan

UK

US

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Universal Registration Document 2023 GROUPAMA ASSURANCES MUTUELLES