NATIXIS_REGISTRATION_DOCUMENT_2017

FINANCIAL DATA Statutory Auditors’ report on the parent company financial statements

Impairment of loans and receivables on an individual basis

Risk identified and main judgements

Our audit approach

Natixis S.A. recognizesprovisionson an individualbasis to cover incurred credit losses on loans and receivablesoriginatedas 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. Exposures to credit and counterparty risks from transactions with customers totaled €112,390 million at December 31, 2017, including €51,645 million in respect of credit transactions. Individual impairment losses amounted to €969 million at December 31, 2017. Please refer to paragraph 1 of Note 1 and to Notes 4, 16 and 30 to the parent company financial statements for more details. Natixis S.A. is involved in litigation before the courts and is the subject of investigations and 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 audit matter given the sensitivity of these provisions to the assumptions and options adopted by management. Provisions for litigation and other risks amounted to €1,089 million at December 31, 2017 (see Note 16 to the parent company financial statements). For more details, please refer to paragraph 10 of Note 1 and to Note 16 to the parent company financial statements. 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 Natixis S.A., in particularthose 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.

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Our audit approach

We examined the identification, assessment and provisioning arrangementsfor legal and compliancerisks. We took note of the status of ongoingproceedingsand the main risks identified by Natixis S.A., including through regular discussions with management (and more specifically Natixis S.A.'s legal, complianceand 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 specialistsin tax law to conduct a critical review of analyses of the tax risks identified by Natixis S.A. and the relatedprovisions. We also carried out confirmationprocedureswith Natixis S.A.'s legal advisorsregardingongoingproceedings. Finally, we checked that the provisions thus measured were correctly recognized and verified the related disclosures in the notes to the parentcompanyfinancialstatements.

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Natixis Registration Document 2017