NATIXIS - Universal registration document and financial report 2019

4 OVERVIEW OF THE FISCAL YEAR

Management report at December 31, 2019

Revenues from Investment Banking, including M&A activities, were up 4.8% year-on-year at constant exchange rates for cumulative revenues of €395 million. In 2019 Corporate & Investment Banking’s expenses totaled €2,235 million, up 1.5% at current exchange rates and stable compared with 2018 at constant exchange rates. Excluding Transformation & Business Efficiency costs recognized as a non-recurring item under financial communication, i.e. €27 million in 2019, expenses totaled €2,208 million in 2019, up 0.9% at current exchange rates and down 0.8% at constant exchange rates due to the decrease in variable expenses. Gross operating income totaled €1,102 million, up 3.6% compared with 2018 at current exchange rates and 0.6% at constant exchange rates. Excluding non-recurring items, the total was €129 million, up 8.4% at constant exchange rates. The cost/income ratio stood at

67.0% in 2019 (66.2% excluding non-recurring items), slipping 0.4 point compared with 2018 (67.4%), including non-recurring items. At €312 million, provision for credit losses gained 79.2% compared with 2018 including non-recurring items. Pre-tax profit stood at €786 million, down 13.1% compared with 2018 at current exchange rates and factoring in a capital loss on the disposal of the Brazil subsidiary (€14.5 million) recognized in the first quarter of 2019 under gains or losses on other assets. Excluding non-recurring items, pre-tax profit totaled €827 million, down 12.9% at constant exchange rates. ROE after tax totaled 8.4% in 2019, down 1.6 points compared with 2018 (10.0%). Excluding non-recurring items, ROE after tax totaled 8.9%.

Insurance 4.2.2.3

(in millions of euros)

2018 pro forma

Change 2019/2018

2019

Net revenues

846

790

7.1% 6.8% 7.6%

Operating expenses

(478)

(448)

Gross operating income Provision for credit losses Pre-tax profit

368

342

378

356

6.0%

Cost/income ratio Equity (Average)

56.5%

56.7%

926

848

ROE

27.9%

29.0%

Sales momentum in 2019 was excellent in personal protection insurance, casualty insurance and life insurance. With €10.1 billion in direct business premiums, life insurance inflows increased by 5% year-on-year, keeping the business robust despite a persistently low interest rate environment, higher capital markets and inflation. Premiums on unit-linked assets totaled €3.1 billion (-3%) and made up 30.6% of total gross inflows in 2019, down 2.6 points to 33.2% year-on-year but outperforming the market by 4 points at end-December 2019 (27%). Inflows invested in the “Euro” fund increased by 9% to €7.0 billion. Premiums on personal protection and payment protection insurance (€993 million) continued to increase at a steady pace (+12%) without any material impact from the Bourquin amendment and with the launch of the family insurance and funeral insurance in the Banque Populaire network, the impacts of which will only be clear from 2020. The non-life insurance portfolio grew by 5% to 6.1 million policies. Gross sales inched up 1% with stable results in the Caisse d’Epargne network and a 6% increase in the Banque Populaire network. Acquired premiums gained 6% to €1,577 million, with similar growth for both networks. This increase was driven by the core range, with an 8% jump in both auto insurance and multi-risk home insurance, 7% in personal accident and multirisk personal accident insurance, in line with portfolio growth.

Net revenues for Insurance businesses totaled €846 million, up 7.1% compared with 2018, resulting from: 9% net revenue growth in life insurance, propelled by the increase V in insurance assets under management (+14%), driven in turn by the ongoing roll-out of the offer in the Caisse d'Epargne network since 2016, and the revaluation of unit-linked policies. Despite the lower interest rates observed again in 2019, diluted yields were offset through the diversification of investment sources (private placements or the direct funding of the economy); 6% net revenue growth in personal protection insurance and in V payment protection insurance, reflecting the resilience of the business; 5% increase in property & casualty insurance: claims remained V under control despite the higher average cost of physical collateral (auto) and despite extreme weather events in 2019. The combined ratio stood at 91.7% — a slight improvement on 2018. Operating expenses edged up 6.8% to €478 million. The increase in expenses, which remained below net revenue growth, reflects business development and the implementation of the New Dimension plan’s strategic ambitions: deployment of a new individual personal protection insurance offering, the ongoing roll-out of strategic non-life insurance projects (#Innove2020, Purple#Care and #Pop’Timiz) and preparation for the implementation of IFRS 17. Gross operating income rose 8% to €368 million. The division’s ROE was 27.9%.

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NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2019