NATIXIS_REGISTRATION_DOCUMENT_2017

FINANCIAL DATA Parent company financial statements and notes

Write-downs for non-specific credit risk Financial assets that do not have individuallyallocated credit risk are included in groups of assets with similar risk characteristics. The compositionof these portfoliosof similar assets is based on two criteria:geographicalrisk and sectorrisk. Portfoliosare reviewedquarterlyand, where appropriate,loans in sectors or countries where economic circumstances suggest problemsmay arise are includedin the base for performingloans provisions. Each group of assets is assessed for objective evidence of impairmentbased on observabledata indicatinga likely decrease in the estimatedrecoverablecash flows for that group of assets. A collective write-down in the balance sheet liabilities is taken against any group of assets showing objective evidence of impairment. Assets belonging to that group, which are subsequentlyspecificallyidentifiedas impaired(specificrisk), are removedfrom the collectivewrite-downcalculationbase. Provisions for geographic risk are primarily based on each country’s internal rating, incorporating different parameters and indicators (political situation, performance of the economy and economicoutlook, banking systemsituation, etc.). Calculationof the impairmentloss is based on a correlationtable between the internal rating and provisioning rate, with a revision to the rate allocatedto a provisioningscale possible. Provisions for sector risk are based on combinationsof indexes specific to each sector (sector growth, cash held by businesses in the sector, cost of commodities, etc.). The method for calculating the impairment loss is the “expected loss” method calculatedat maturity. Loans on the watch list, for which a Basel default has been identified,are writtendown collectivelyby sector unless they are alreadysubjectto specificwrite-downs. Provisionsfor sector and country risk are shown under liabilities in the balancesheet. 2. Securities are, in accordancewith Book II - Title 3 “Accounting treatment of securities transactions”of Regulation No. 2014-07 of the ANC, classifiedaccordingto: their type: government securities (treasury bills and similar a securities),bonds and other fixed-incomesecurities(negotiable debt securities and interbankmarket instruments),shares and other variableincomesecurities; the economicpurpose for which they are held, into one of the a following categories: held for trading, held for sale, held for investment, other long-term securities, investments in associatesand investmentsin subsidiariesand affiliates. The buying and selling of securities are recorded in the balance sheet at the settlement-deliverydate. The applicable classification and measurement rules are as follows: securities held for trading: securities that are originally a bought or sold with the intention of reselling or repurchasing them in the short term, and securities held as part of a Securities portfolio

market-making operation. Securities bought or sold for the purposes of the specializedmanagementof a trading portfolio are also classed as securitiesheld for trading. To be eligible in this category, these securitiesmust, when initially recognized, be traded on an active market with easily obtainable prices representingactual and regularlyoccurringmarket transactions on an arm’s lengthbasis. On acquisition, securities held for trading are recognized at the price paid including any accrued interest. Transaction costs are recognizedin expenses. At each balance sheet date, they are measured at market value and the grand total of any valuation difference is recognized on the income statement under the heading, “Balance of transactionson securitiesheld for trading”. securities held for sale : securitieswhich are not classified in a any other categoryare consideredas securitiesheld for sale. They are reportedon the balancesheet at their purchaseprice, a excluding acquisition costs. Any difference between the purchaseprice (excludingaccrued interest)and the redemption price is recognized in income over the remaining life of the securities. They are valued at year end at the lower of their carrying a amount and their market value. Unrealized losses give rise to the recognition of an impairment loss, whose calculation factors in gains from any hedging transactions conducted. Unrealizedgains are not recognized. securities held for investment : securitiesheld for investment a are dated fixed-income securities acquired with the stated intentionof holding them to maturityand for which Natixis has the ability to hold themthroughto maturity. They are reported on the balance sheet at their purchase price, excluding acquisition costs. Any difference between the purchase price and the redemption price is recorded in income over the remaininglife of the securities. In line with regulatory requirements, unrealized losses are not subjectto impairment,unless there is a strong likelihoodthat the instruments will be sold before maturity due to unforeseen circumstances or if there is a risk of default by the issuer of these instruments.Unrealizedgains are not recognized. Investment securities, shares in affiliates and other a long-term securities: other long-term securities: investmentsmade by Natixis in j the form of securities, with the intention of forging lasting professionalrelationshipsand creating a special relationship with the issuingcompany,but withoutany influenceover the managementof the corporate entities in which investments weremade due to the low percentageof voting rights held. They are recognizedat their acquisitiondate at the purchase price excludingacquisitioncosts. They are included in the balance sheet at the lower of historical cost or value in use. Unrealized losses are subject to a provisionfor impairment. investments in associates: investments in the form of j securitiesthe durable possessionof which is deemeduseful to Natixis’business.

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Natixis Registration Document 2017