NATIXIS_REGISTRATION_DOCUMENT_2017

RISKS AND CAPITAL ADEQUACY Summary of annual risks

The continuing uncertainty regarding the new legislative and regulatory measures makes its impossible to predict what impact they will have on Natixis. Natixis has incurred and may continue to incur significant costs in connectionwith updating or expanding its compliance structures and information technology systems in response to, or in anticipation of, the new measures. Despite its efforts, Natixis might find itself unable to achieve full compliancewith all applicable legislation and regulations, in which case it may be subject to penalties. Moreover, the new legislative and regulatory measures could require significantchangesto Natixis’businessand/or adversely impact the results of operations and financial condition of Natixis. The new regulationsmay require Natixis to raise new capital at a time when it is costly or difficult to do so, or could increasethe overallfundingcosts of Natixis. Risks related to Natixis’ operations Natixis may not achieve the goals of its strategic plan Natixis may be unable to meet the objectives set out in its “New Dimension” strategic plan for the period from 2018 to 2020, or in any future or replacementstrategic plan. The New Dimension plan, announced on November 20, 2017, aims to contributeto the developmentof high value-addedsolutionsfor Natixis’ clients. The strategy focuses on three initiatives: deepening the transformation of Natixis’ business models; investingin digital technologies;and seekingto becomeclients’ key representatives in areas where Natixis’ teams have developedstrongand recognizedexpertise. The New Dimension strategic plan contains forward-looking informationand guidelines, and while Natixis believes the plan provides a number of opportunities, it will face uncertainties given the potentially volatile state of financial markets and the global economy, and there is no guarantee that Natixis will achieve the goals of this new strategic plan or any other strategy it announces or undertakes in future periods. In particular,in connectionwith the NewDimensionstrategicplan, Natixis announcedcertain financialtargets, includingprofitability and risk-weightedasset growth rates, capital generationtargets and shareholder dividend objectives, as well as targets for regulatory capital ratios and strategic initiatives and priorities. The financial objectiveswere establishedprimarily for purposes of planning and allocationof resources,are based on a number of assumptions,and do not constitute projections or forecasts of anticipated results. The actual results of Natixis are likely to vary (and could vary significantly)from these targets. If Natixis does not realize these objectives,its financial conditionand the marketvalue of its securitiescould be adverselyaffected.

A substantial increase in asset impairment charges in respect of Natixis’ loan and receivables portfolio could adversely affect its results of operations and financial condition In connection with its lending activities, Natixis periodically establishesasset impairmentcharges, whenever necessary,to reflect actual or potential losses in respect of its loan and receivables portfolio, which are recorded in its profit and loss account under “cost of risk.” Natixis’ overall level of such asset impairmentcharges is based upon its assessmentof prior loss experience, the volume and type of lending being conducted, industry standards, past due loans, economic conditions and other factors related to the recoverability of various loans. AlthoughNatixisuses its best efforts to establishan appropriate level of asset impairment charges, its lending activities may require it to increase its charges for loan losses in the future as a result of increases in non-performing assets or for other reasons, such as deteriorating market conditions or factors affectingparticularcountries.Any significantincreasein charges for loan losses or a significantchange in the estimateof the risk of loss inherent in Natixis’ portfolio of non-impaired loans, as well as the occurrenceof loan losses in excess of the charges recordedwith respect thereto, could have an adverse effect on the resultsof operationsand financialconditionof Natixis. Changes in the fair value of Natixis’ securities and derivatives portfolios and its own debt could have an impact on the carrying value of such assets and liabilities, and thus on its net income and shareholders’ equity The carrying values of Natixis’ securities and derivatives portfolios and certain other assets are adjusted as of each financial statement date. The valuation adjustments include a componentthat reflects the credit risk inherent in Natixis’ own debt. Most of the adjustments are made on the basis of changes in fair value of the assets or liabilities during an accounting period, with the changes recorded either in the income statement or directly in shareholders’equity. Changes that are recorded in the income statement, to the extent not offset by opposite changes in the fair value of other assets, affect net revenues and, as a result, net income. In certain cases, fair value adjustmentsaffect shareholders’equity and, as a result, Natixis’ capital adequacy ratios. More generally, fair value adjustments may be required as a result of inherent uncertaintyin the models and parametersused in the valuation of Natixis’ securities and derivatives portfolios. This is particularly true where securities or derivatives are complex or do not have publicly quoted market prices, and valuation is based on internally-generated or otherwise non-standard modeling that ultimately relies to some degree on Natixis’ estimatesand judgment.

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Natixis Registration Document 2017