NATIXIS - 2018 Registration document and annual financial report

3 RISK FACTORS, RISK MANAGEMENT AND PILLAR III Risk management

Under its annual medium-term funding program in 2018, Natixis raised €11 billion net in resources with a term of more than one year (net the value of buybacks and calls) versus €10.6 billion in 2017. 29% of this program was achieved via structured private placements, with the remainder predominantly provided by BPCE as part of the Group’s medium-term funding policy approved by the Group ALM Committee.

2018 NET MLT FUNDING PROGRAM ■

2017* NET MLT FUNDING PROGRAM ■

25% Other long-term loans

15% Other long-term loans

2% Pfandbrief Bank funding

21% Natixis EMTNs

2% Pfandbrief Bank funding

29% Natixis EMTNs

44% Loans from BPCE

61% Loans from BPCE

* Proforma 2018.

next two years. Furthermore, the Fed will probably have to soften its program to shrink its balance sheet initiated at the end of 2017 in the event of a major economic slowdown. In Europe, the ECB still seems confident in its scenario of a gradual pick-up in inflation and confirmed the end of its balance sheet expansion in 2019. However, the global slowdown could stop it from implementing an exit from negative interest rates in the fall. Until now, the monetary environment has favored the Group’s short-term dollar issues. This is likely to continue because, due to the flattening of the yield curve, many investors are abandoning the long end and buying shorter maturities instead. In the Euro zone, the search for yield will undoubtedly encourage money market investors wanting to limit the cost of negative rates to continue to favor the longer portion (around one year) of their investment universe.

Bank funding Short-term funding

2018 was a year of stark contrasts on the financial markets. The euphoria at the start of the year, fueled by US fiscal stimulus plans, gradually gave way to concerns about the reorganization of world trade, political turmoil in Europe and the Brexit process. As expected, the Fed raised its interest rates at the end of each quarter of 2018. US long-term interest rates initially responded to the Fed’s intervention, peaking at 3.24% at the beginning of November. The sharp reversal of equity markets at the end of 2018 also led to a flattening of the yield curve. This movement suggests that the market anticipates a slowdown in US economic activity in the coming years. This uncertain economic environment is putting pressure on the Fed’s decision to consider three further interest rate hikes in the

NATIXIS’ SHORT-TERM ISSUANCE PROGRAM OUTSTANDINGS R (in millions of euros or euro equivalents)

Certificates of deposit

Commercial papers

Program amount

45,000* 25,100**

18,981

Outstandings at 31/12/2018

9,343

NEU CP program only. * Outstandings of the NEU CP and US CD programs. **

150

Natixis Registration Document 2018