NATIXIS - Universal registration document and financial report 2019

5 FINANCIAL DATA

Consolidated financial statements and notes

Note 2

Impact of the first-time application of IFRS 16

at January 1, 2019

Natixis began applying IFRS 16 “Leases”, which replaced IAS 17 “Leases”, on January 1, 2019. The provisions of IFRS 16, as compared to IAS 17, predominantly impact recognition of operating lease by lessees. Under IFRS 16, the definition of leases implies the identification of an asset and control by the lessee of the right to use the asset. Control is established if the lessee holds the following two rights throughout the period of use: the right to obtain almost all of the economic benefits arising from V use of the asset; the right to decide how the asset is used. V From the lessor’s standpoint, no impact of the first-time application of IFRS 16 was recorded at January 1, 2019, as the provisions were substantially unchanged relative to IAS 17. For lessees, IFRS 16 requires that all lease contracts be recorded as fixed assets in the balance sheet such that they convey the right to use the leased asset, with a corresponding financial liability entry under liabilities to reflect the lease and other payments to be made over the term of the lease. Previously, under IAS 17, operating leases did not lead to the recognition of the lessee’s right to use leased assets, and rents were recorded in income. In accordance with the exemption provided for by IFRS 16, Natixis has not changed the accounting treatment of short-term leases (less than 12 months) or leases relating to low-value underlying assets. Rents pertaining to these leases are expensed over the period under operating expenses. Natixis used the indicative threshold of USD 5,000 provided by the IASB (in the Basis of Conclusions) to define low-value assets and elected to exclude certain contracts where such exceptions have a non-material impact on its financial statements. These notably include vehicle leasing contracts. Natixis also took the option offered by IFRS 16 to not apply the standard to intangible assets. Details of the accounting principles applying to leasing contracts are presented in Note 6.2. of first-time application Given Natixis’ activities, IFRS 16 will be applied, to a very large extent, to real estate assets leased for use as offices. Natixis has chosen the modified retrospective method for the first-time application of this standard. Under this method, lease liabilities are measured based on residual payments at the transition date, using the discount rates appropriate to the residual terms of the leases. The option to not recognize contracts with a residual term of less than 12 months at January 1, 2019 in the balance sheet is applied and initial direct costs are excluded from the measurement of rights of use. Rights of use are measured using the amount of the lease liabilities determined at that date. Procedures and impact 2.1

No deferred tax is recorded at the initial recognition date, given that the value of the asset is identical to the value of the liability. Deferred tax is recognized when net temporary differences subsequently arise due to changes in amounts recorded for rights of use and lease liabilities. The application of IFRS 16 had no impact on the amount of Natixis’ opening shareholders’ equity. 2.1.1 At January 1, 2019, IFRS 16 lease liabilities recorded under “Accrual accounts and other liabilities” (Note 8.9) in the consolidated balance sheet amounted to €1.3 billion. This amount comprised the discounted value of lease payments remaining over the lease term (within the meaning of IFRS 16) at that date. The weighted average discount rate used at that date was 1.52%. The impact of lease liabilities may be compared with the information presented in Note 16.1 of Chapter 5.1 “Financial data – Consolidated financial statements and notes” in the 2018 Registration Document on the recognition by the lessee of minimum future payments in respect of operating leases and finance leases, including the following differences: rents under contracts already signed but whose underlying assets V had not yet been made available on the date of transition to IFRS 16 are not included in the calculation of rights of use and lease liabilities. These lease payments are, however, included in off-balance sheet commitments. These commitments stood at -€350 million at January 1, 2019; lease liabilities are initially determined by discounting the lease V payments over the term of the contracts in accordance with IFRS 16. The rents included in off-balance sheet commitments at December 31, 2018 were not discounted. The discounting effect observed at January 1, 2019 amounted to -€104 million; lease liabilities are initially determined based on rents excluding V VAT (whether or not it is recoverable). The rents recorded as off-balance sheet commitments at December 31, 2018 include non-recoverable VAT, however; contracts relating to low-value assets and short-term contracts V (including short-term contracts in force at the IFRS 16 transition date) are excluded from the calculation of lease liabilities in accordance with the exemptions provided for by IFRS 16. Short-term contracts are, however, included in off-balance sheet commitments at December 31, 2018. The breakdown of lease liabilities and off-balance sheet commitments by contractual maturity are presented in Note 6.1. Right-of-use assets at January 1, 2019 2.1.2 The initial value of right-of-use assets at January 1, 2019 came to €1.2 billion and is recorded under “Property, Plant and Equipment” (see Note 8.10) . It corresponds to (i) the initial amount of lease liabilities (ii) less the amount of provisions for rent-free periods existing at December 31, 2018 recognized in accordance with IAS 17 (subject to reversal at the date of first application and subtracted from the right of use). Specific information relating to leasing contracts is presented in Note 16.1. Lease liabilities at January 1, 2019

246

NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2019