NATIXIS_SHARHOLDERS_MEETING_2018

MANAGEMENT REPORT AT DECEMBER 31, 2017

CHANGES IN REGULATORY CAPITAL, REGULATORY OWN FUNDS REQUIREMENTS AND RATIOS IN 2017 REGULATORY CAPITAL AND CAPITAL ADEQUACY RATIO

In accordance with the Basel 3/CRR regulatory framework, under Pillar I these ratios must exceed the minimum limits of 4.5%, 6% and 8%, respectively, in addition to the cumulative safety buffers of 5.75%, 7.25% and 9.25%, respectively for 2017, and 6.375%, 7.875% and 9.875%, respectively for 2018.

The 2017 CET1, Tier 1 and total ratios are presented below by major component. The same ratios for 2016 are shown by way of comparison.

TOTAL CAPITAL RATIO

REPORT

12.31.2017

12.31.2016

(inmillions of euros)

Shareholders’ equity (Group share)

19,795

19,836

Deeply subordinated notes (DSN)

2,232

1,611

Perpetual subordinated notes (PSN)

0

0

Consolidated shareholders’ equity (Group share), net of DSNs and PSNs

17,563

18,225

Minority interests (amount before phase-in arrangements)

137

90

Intangible assets

(511)

(521)

Goodwill

(3,131)

(2,945)

Dividends proposed to the General Shareholders’ Meeting and expenses

(1,160)

(1,130)

Deductions, prudential restatements and phase-in arrangements

(924)

(1,245)

TOTAL COMMON EQUITY TIER 1 CAPITAL

11,975

12,474

Deeply subordinated notes (DSN) and preference shares

2,397

1,979

Additional Tier 1 capital

0

0

Tier 1 deductions and phase-in arrangements

(101)

(208)

TOTAL TIER 1 CAPITAL

14,271

14,244

Tier 2 instruments

2,955

3,082

Other Tier 2 capital

0

100

Tier 2 deductions and phase-in arrangements

(686)

(628)

Overall capital

16,540

16,799

TOTAL RISK-WEIGHTED ASSETS

110,697

115,524

Credit risk-weighted assets

86,182

90,704

Market risk-weighted assets

9,730

11,111

Operational risk-weighted assets

14,784

13,709

Capital adequacy ratios Common Equity Tier 1 ratio

10.8%

10.8%

Tier 1 ratio

12.9%

12.3%

Total capital ratio

14.9%

14.5%

The following changes in Basel 3/CRR regulatory capital were recorded in 2017, after applying phase-in arrangements. Common Equity Tier 1 (CET1) capital totaled €12 billion at December 31, 2017, down €0.5 billion over the year. Shareholders’ equity (Group share) remained stable for the year at €19.8 billion, as the incorporation of net income for the year in the amount of €1.67 billion and the issuance of new deeply subordinated instruments in the amount of €0.5 billion (net the value of exercised calls) were primarily offset by the negative impact of translation adjustments in the amount of -€0.67 billion, dividend payments for 2016 in the amount of -€1.1 billion and the impact of acquisitions (including puts on minority interests) in the amount of -€0.34 billion. CET1 capital included a provision for 2017 dividends payable in cash in the amount of €1.16 billion (i.e. €0.37 per share) and was impacted by goodwill on acquisitions (-€0.2 billion). Even though the phase-in period

for deductions is coming to an end, the substantial reduction of the tax base for deferred tax assets to be deducted (-€0.325) more than offset this impact. Aside from the items above, Additional Tier 1 capital rose by €0.5 billion, primarily due to two issuances worth $500 million each for a total of €833 million and the exercise of a call option in October 2017 (€364 million of euros). The balance was primarily due to the change in the phase-in rate applied on items deducted from AT1 capital, as well as the items subject to these provisions. Tier 2 capital was down by -€0.3 billion for the year due to the impact of the prudential haircut on instruments eligible as Tier 2 capital, a reduction in excess provisions over expected losses and changes in the impact of phase-in arrangements over the period. At €110.7 billion, risk-weighted assets decreased €4.8 billion over the year.

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NATIXIS 2018 MEETING NOTICE

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