NATIXIS_REGISTRATION_DOCUMENT_2017

FINANCIAL DATA Statutory Auditors’ report on the consolidated financial statements

Impairment of loans and receivables on an individual basis

Risk identified and main judgements

Our audit approach

The Natixis group recognizesprovisionson an individualbasis to cover incurred credit losses on loans and receivables originated as part of its financingactivities. The determination of individual impairment allowances for non-performing loans requires a significant amount of judgement, particularly in terms of identifying impairment and calculatingthe impairmentloss to be recognized. We consideredindividualimpairmentto be a key audit matter as it is an area where estimation plays a significant role in the preparationof the financialstatements. Net exposure to credit and counterparty risk totaled €462,482 million at December 31, 2017 including €182,057 million in respect of loans and receivables. Individual impairment losses amounted to €1,620 million at December 31, 2017. Please refer to Notes 5.1, 5.2, 5.3, 5.23, 6.5, 6.16.1, 7.7 and 10.2 to the consolidated financial statements for more details The Natixis group is involved in litigationbefore the courts and is the subject of investigationsand requests for information from regulatoryand tax authoritiesin differentjurisdictions. The assessmentof the resulting legal and compliance(including tax) risks reflects management'sestimates as of the reporting date. The recognitionof a provisionand determinationof its amountas well as the financial informationdisclosed require, by their very nature, the exercise of judgement, not least because of the difficulty of estimating the outcome and financial consequences of ongoingproceedings. We therefore considered provisions for legal and compliance risks to be key point of the audit given the sensitivity of these provisions to the assumptions and options adopted by management. Provisions for litigation totaled €646 million at December 31, 2017 (provisions for litigation Note 6.16.2). For further details, please refer to Notes 5.14, 5.23, 6.16, 7.7 and 7.9 to the consolidated Provisions for legal and compliance risks Risk identified and main judgements

We evaluatedthe design and tested the effectivenessof the key controls put in place by the Natixis group in particular those relatedto: the identificationof indicatorsof impairment(such as past-due a payments)and the counterpartyrating process, the classificationof exposuresas non-performing, a the monitoringand valuationof guarantees, a the determination of individual impairment losses on a non-performing loans and the associated governance and validationsystem. In addition,we carried out a credit review, based on a sample of files selectedon the basis of materialityand risk criteria, in which we: took note of the latest available informationon the situationof a sensitiveand non-performingcounterparties, performedindependentanalysesof the assumptionsused and a the estimates of provisions drawn up by managementbased on informationprovidedby the institutionand externaldata, verified that estimated impairment allowances were correctly a recognized. We examined the identification, assessment and provisioning arrangementsfor legal and compliancerisks. We took note of the status of ongoingproceedingsand the main risks identifiedby the Group, mainly through regular discussions with management (and more specifically Natixis S.A.'s legal, compliance and tax departments) and by reviewing the documentationmade availableto us. Our work also involved assessing the reasonableness of the assumptions and data used by management to estimate the amount of provisions recognized at the reporting date. In particular, we engaged tax law specialists to conduct a critical review of analyses of the tax risks identified by Natixis and the relatedprovisions. We also carried out confirmation procedures with the Group’s legal advisorsregardingongoingproceedings. Finally, we checked that the provisions thus measured were correctly recognized and verified the related disclosures in the notes to the consolidatedfinancialstatements. Our audit approach

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Natixis Registration Document 2017