NATIXIS_REGISTRATION_DOCUMENT_2017

5 FINANCIAL DATA

Consolidated financial statements and notes

Fees and commissionsfor ongoing services, such as guarantee fees or management fees, are deferred over the period during which the serviceis provided. Fees and commissionsthat form an integral part of the effective yield on an instrument, for example loan set-up fees, are recognized and amortized as an adjustment to the effective interest rate over the estimated term of the applicable loan. These fees and commissionsare recognizedas interest income rather than fee and commissionincome.

“Operatingexpenses,”sinceNatixisconsidersthat its calculation is not basedon net income. The Employment Competitiveness Tax Credit (CICE) was consideredto fall under IAS 19 –EmployeeBenefits.As a result, this tax credit is presented as a deduction from the related payrollcosts. On October 6, 2017, the French ConstitutionalCouncil declared Article L.235 ter ZCA of the French General Tax Code in its version resulting in Law No. 2015-1786 of the December 29,2015 Amended Finance Act for 2015 to be unconstitutional. This article introduced an additional 3% contributionon distributedearnings. Until 2016, in accordance with IAS 12, the expense related to this contribution was recorded under tax for the period during which the payout decision was made. This amounted to €20.9 millionfor the 2016 fiscal year. In 2017, reimbursements receivedfor the 2012 to 2016 fiscal yearswere recognizedunder tax for a total of €105.6 million. Financial guarantee commitments not classified as derivatives are contracts requiring the issuer to make specific payments to repay the business guaranteed for a loss that it has incurred owing to the failure of a debtor to make the contractual installments due. The exercise of these rights is subject to the occurrenceof an uncertainfutureevent. In accordance with paragraph 43 of the amendment to IAS 39 and IFRS 4 (published by the IASB in August 2005and adopted by the EuropeanUnion), financial guaranteesgiven are carried at their fair value plus any transaction costs directly attributable to the issuance of the guarantees. For independent agreements entered into at market rates, fair value at the inception of the agreement is equal in theory to the amount of premium(s) received. All financial guarantees issued within Natixis are enteredinto at marketrates. Subsequently,financialguaranteesare statedat the higherof: the amount initially recognized upon inception less, where a appropriate, the amount of amortization recorded in line with the principles outlined in IAS 18 “Revenue”.This amortization represents the deferred recognition of the fees received over the periodcoveredby the guarantee;and the value determined under IAS 37 “Provisions, Contingent a Liabilities and Contingent Assets”, which is the amount that the entity would normally pay to settle the obligation or to transferit to a third party. All financialguaranteesissued by insurancesubsidiariesthat also meet the definitionof an insurancecontract were accountedfor in line with the requirementsof IFRS 4“InsuranceContracts”,as permittedby paragraphAG64 (a)of the amendment. Specific case of guarantees issued to mutual funds Natixis guaranteesthe capital and/or returns on shares in certain mutual funds. These guaranteesare executedsolely in the event that the net asset value of each of the shares in the fund at maturity is lower than the guaranteed net asset value. Under IAS 39,these guaranteesrepresentderivativeinstruments. Financing and guarantee 5.21 commitments a) Financial Guarantees Commitments given

Tax expenses 5.20 The tax expensefor the year comprises:

tax payableby French companiesat the rate of 44.43%for the a 2017 fiscal year and of 34.43%for the 2016 fiscal year, and by foreign companiesand branches at the local rate. In 2017, the French rate of 44.43% included exceptional and additional contributions of 5%, adopted as part of the AmendedFinance Act for 2017, which are applicable only for 2017 and affect businesses with revenue exceeding €1 billion and €3 billion, respectively, with companies whose revenue exceeds €3 billion being requiredto pay both the exceptionaland additional contributions; deferredtaxes arising from temporarydifferencesbetweenthe a book value of assets and liabilities and their tax basis, which are calculatedusing the balancesheet liabilitymethod. Deferred tax assets and liabilities are calculated at the level of each tax entity in accordancewith local tax rules and based on tax rates that have been enacted or substantivelyenacted at the date the temporary difference will reverse. Deferred taxes are not discounted. Deferred tax assets and liabilities are offset at the level of each tax entity. The tax entity may either be a single entity or, if applicable, a group of entities of which it is a part, that have electedfor Grouptax relief. Deferred tax assets are only recognized at the reporting date if the tax entity concerned is likely to recover tax savings over a fixed time period (10 years maximum). These savings will be realized by the deduction of temporary differences or tax loss carryforwardsfrom estimated future taxable income within that time period. The tax rate applied to deferred tax assets in France takes into account the tax cuts set out under the 2017 and 2018 Finance Acts. These acts provide for a gradual reductionof corporatetax, which (excluding the impact of the 3.3% social security contribution)will fall to 28% in 2020, 26.5% in 2021 and 25% in 2022 and thereafter. Other tax reformspassed in 2017 include the US tax cuts, which apply to income for fiscal years starting on or after January 1, 2018. The implementationof federal income tax reductionsalso includes a measure limiting the deduction of tax loss carryforwards and the implementation of a tax similar to corporatetax (Base Erosionand Anti-abuseTax [BEAT]payment). Neither of these changes were deemed likely to have a significantimpacton the incomegainedfrom the reductionin the federal tax rate. All temporary differences have been recognized regardless of their recovery or payment date. The net deferred income tax balance is shown in the balance sheet under “Deferred tax assets”. The value-addedcontribution,or “Cotisationsur la Valeur Ajoutée des Entreprises” (CVAE), is recorded in the accounts as

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Natixis Registration Document 2017