NATIXIS_REGISTRATION_DOCUMENT_2017

5 FINANCIAL DATA

Parent company financial statements and notes

ACCOUNTING PRINCIPLES AND VALUATION METHODS

NOTE 1

Natixis’ separate financial statements have been prepared and are presented in accordancewith RegulationNo. 2014-07of the Autorité des Normes Comptables (ANC – French accounting standards setter) dated November 26, 2014 relating to the financial statements of companies in the banking sector and RegulationNo. 2016-07dated November 4, 2016 relating to the FrenchGeneralAccountingPlan (PCG –Plan comptablegénéral). The financial statements for the fiscal year are presented in identical format to those for the previous fiscal year. Generally accepted accountingprinciples have been applied in compliance with the principleof prudencebasedon the followingprinciples: Going concern; a Consistency of accounting methods; a Principleof periodicity. a 1. Advances to banks cover all receivables other than those represented by a security, held in connection with banking transactionswith credit institutions,includingsubordinatedloans and reverse repo stock and securities. They are broken down between demand loans and deposits and term loans and time deposits. Customer loans comprise loans to economic operators other than banks, with the exceptions of those represented by a security, and reverse repo stock and securities.They are broken down by type of loan (current accounts overdrawn, commercial loans, cash loans, equipment loans, export credit, subordinated loans, etc.). Accrued interest is credited to the corresponding receivables itemon the incomestatement. Fees earned on the granting or acquisition of loans, as well as marginal transaction costs, are recognized using the effective interest rate actuarial method over the effective life of the loan. Recognition is shown as net interest income in net revenues. Fees and transactioncosts to be recognizedare included in the relevantloan book. Loans that have been granted on an irrevocable basis but have not yet given rise to any transfer of funds are included in off-balancesheet items under “Financingcommitmentsgiven”. Performingand non-performingloans are identifiedseparately. Loans for which there is an identified credit risk, regardless of any guarantees,that makes it probablethat Natixiswill be unable to recover all or part of the amount owed by the counterparty under the terms and conditions of the loan agreement, are considered to be non-performing.This correspondsto loans for which an event of default as defined in Article 178 of the European regulation dated June 26, 2013 relating to prudential requirementsapplicableto credit institutionshas been identified. In particular, loans that include payments over three months overdueare classifiedas non-performingloans.

When the initial payments of a loan turned non-performing become regular again, the loan in questioncan be reclassifiedas a performingloan. Loans accelerated by the lender and loans classified among non-performing loans for more than one year for which a write-offis plannedare deemedto be irrecoverable. The reversal of the effect of discounting on impairments of non-performing loans associated with the passage of time is recognizedunder “Interestand similar expenses”on the income statement. Specific case of receivables restructured due to the debtor’s financial situation Restructured loans correspond to loans with modified terms under which Natixis grants a concession to borrowers facing or likely to face financial difficulties. They are a combination of a concession granted by Natixis and financial difficulties experiencedby the borrower. The modifiedterms of restructuredloans must put the borrower in a more favorable situation (e.g. suspension of interest or principal payment,extensionof term, etc.) and are confirmedby the use of amendments that modify the terms of an existing contractor by the full or partial refinancingof an existingloan. Financial difficulties are determined by observing a number of criteria such as amounts past due for over 30 days or an at risk rating. The restructuringof a loan does not necessarilyresult in the counterpartybeing classifiedin the Basel defaultcategory,as the financial difficulty is addressed before the counterparty is downgradedinto the Basel defaultcategory. Specific write-downs Wherethere is a risk of partial or total non-recoveryof loans or of borrowers breaching their covenants, impairment charges or provisionscorrespondingto the amount of the probable loss are recognizedon the income statementunder “Provisionfor credit losses”. Impairment is assessed quarterly on a case-by-case basis taking into account an analysis of the risk and available collateral. Interestcorrespondingto the remunerationof impairedloans and receivables or to the reversal of the effect of discounting is recognizedas interestincome. Impairmentlosses are calculatedas the differencebetween the gross carrying amount of the receivable and the amounts thought to be recoverable(includingflows from the realizationof guarantees),discountedat the original effective interest rate for fixed-rate receivables or at the last effective interest rate determined according to the contractual terms for variable-rate receivables. Impairments on non-performingloans covering risks carried on the asset side of the balance sheet are deducedfrom the assets in question. Probable losses stemmingfrom off-balancesheet commitments are recognized as provisions on the liability side of the balance sheet.

Advances to banks and customer loans

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Natixis Registration Document 2017