NATIXIS_SHARHOLDERS_MEETING_2018

MANAGEMENT REPORT AT DECEMBER 31, 2017

› the return on share capital of the entities that form the divisions is eliminated; › the cost of Tier 2 subordinated debt is now charged to the divisions in proportion to their regulatory capital; › the divisions are invoiced for an amount representing the bulk of Natixis’ overhead. The uninvoiced portion accounts for less than 3%, excluding the Single Resolution Fund (SRF), of Natixis’ total overhead. The Single Resolution Fund contribution is covered by the Corporate Center and is not charged back to the divisions. Deeply subordinated notes (DSNs) are classified as equity instruments; interest expense on those instruments is not recognized in the income statement. ROE and ROTE for Natixis and the business lines are calculated as follows: › the profit measure used to determine Natixis’ ROE is net income (Group share), minus the post-tax interest expense on DSNs. The equity used is average shareholders’ equity (Group share) under IFRS, after distribution of dividends, excluding average hybrid debt, and eliminating unrealized or deferred gains and losses recognized in equity; › business line ROE is calculated using: ◆ as the numerator: the business line’s pre-tax profit, as per the aforementioned rules, to which a normative tax is applied. The normative tax rate is determined for each of the divisions while taking into account the tax liability conditions of Natixis’ companies in the jurisdictions where they operate. It is determined once a year and does not factor in potential changes to the effective tax rate during the year, ◆ as the denominator: regulatory capital, calculated on the basis of 10.5% of RWA assigned to the division, plus goodwill and intangible assets related to the division; › Natixis’ ROTE is determined using, as the numerator, net income (Group share) minus the post-tax interest expense on DSNs. The equity used is average shareholders’ equity (Group share) under IFRS, after distribution of dividends, excluding average hybrid debt, average intangible assets and average goodwill.

NOTE ONMETHODOLOGY In accordance with European regulation 809/2004 relating to information contained in prospectuses, the financial statements for the year ended December 31, 2015, that were published in the 2016 registration document filed with the AMF on March 21, 2017, are included for reference in this document. Starting from the publication of annual earnings for 2017, the presentation of the divisions as well as the standards used to assess their performance are those included in the New Dimension plan presented in November 2017. Accordingly, the presentation of the divisions includes the following developments: › Investment Solutions has been split into two divisions: ◆ Asset & Wealth Management, ◆ Insurance; › within Corporate & Investment Banking: ◆ Global Finance and Investment Banking are now two distinct business lines, ◆ the creation of Global Securities & Financing (GSF), a joint venture between FIC and Equity derivatives. The joint venture comprises Securities Financing Group (SFG, formerly part of FIC) and Equity Finance (formerly part of Equity). GSF’s revenues are divided equally between Equity and FIC; › within Specialized Financial Services, the Payments business has been extracted from Payment Services to form a separate, stand-alone business line; › Financial investments has been eliminated and is henceforth incorporated in the Corporate Center. In addition, to comply with the requirements of the French law on the separation of banking activities, the Short-Term Treasury and Collateral Management activities, which used to be part of Global Markets, were transferred to the Finance Department on April 1, 2017. Nevertheless, to ensure comparability, in this management report CIB refers to CIB including Short-Term Treasury and Collateral Management activities. In addition, the following changes to the standards used to assess the performance of the divisions have been factored in: › regulatory capital allocated to the business lines was increased from 10% to 10.5% of Basel 3 average RWA; › rate of return on capital was reduced from 3% to 2%. As a reminder, the earnings of the Natixis business lines have been presented in accordance with Basel 3 regulations. Capital is specifically allocated to the Insurance business lines based on the Basel 3 accounting treatment for investments in insurance companies, as enacted into EU law by CRD IV and CRR (“Danish compromise”). The capital allocated to CEGC takes into account its exclusion from the “Danish compromise”. It is based on a 250% risk weighting of the value of the securities held by CEGC, which is the prudential treatment under the threshold mechanism applied to holdings of equity instruments issued by financial entities. The conventions used to determine the earnings generated by the various business divisions are as follows: › the business divisions record the return on regulatory capital allocated to them. By convention, the rate of return on regulatory capital is 2%;

KEY EVENTS FOR THE PERIOD CONTEXT

In 2017, Natixis operated in an environment marked by the ongoing normalization of the global economy and a rebound in international trade demonstrating the improvement in economic conditions. The global economy ended 2017 on solid ground: annual growth was at a one-year high of 3.9% in the third quarter, marking the fifth consecutive quarter of acceleration. Contributing to the global upturn were the emerging economies, whose currencies stabilized to trigger sharp disinflation, allowing some central banks (Brazil, Russia, India and Indonesia) to ease monetary conditions. Global trade also recovered. Inflation remained under control, going no higher than 2.9% globally.

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NATIXIS 2018 MEETING NOTICE