NATIXIS - Universal registration document and financial report 2019

5 FINANCIAL DATA

Consolidated financial statements and notes

Revenues under the finance lease are recognized as income at the interest rate implicit in the lease so as to produce a constant periodic rate of return on the lessor’s net investment. Finance lease contract revenues corresponding to interest are recognized in the income statement under “Interest and similar income”. Assets provided under operating leases are shown in the balance sheet under property, plant and equipment or intangible assets in the case of equipment leases, and investment property in the case of property leases. Lease income from operating leases is recognized in the income statement on a straight-line basis over the lease term, under “Income or expenses from other activities”. Transactions where Natixis is the lessee The lease contracts taken out by Natixis are recognized on the balance sheet under “right-of-use” on the asset side and under “financial liabilities” on the liabilities side in respect of rents and other payments made over the duration of the lease, unless the lease term is 12 months or less or the underlying asset has a low value, as provided for under IFRS 16. 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. Lease term The use of rights is amortized on a straight-line basis and financial liabilities are amortized on an actuarial basis over the term of the lease. IFRS 16 defines the lease term as the non-cancellable period of a lease, together with both (a) periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and (b) periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option. In general, the term is 9 years for “3/6/9” real estate leases under French law. Outside France, and particularly in English-speaking countries (e.g., Natixis’ US subsidiaries), the term of real estate leases may range from 10 to 15 years. It is stipulated that a lease is no longer enforceable when the lessee and the lessor each has the right to terminate the lease without permission from the other party with no more than an insignificant penalty. Natixis assesses whether it is reasonably certain to exercise an option by considering all relevant facts and circumstances that create an economic incentive for it to exercise, or not to exercise, the option, such as: contractual terms and conditions for the optional periods V compared with market rates (amount of payments for the lease including payments resulting from termination penalties and residual value guarantees); significant leasehold improvements undertaken; V costs relating to the termination of the lease (negotiation costs, V relocation costs, costs of identifying another underlying asset suitable for the lessee’s needs, costs associated with returning the underlying asset in a contractually specified condition, etc.); the importance of the underlying asset for Natixis’ operations V considering whether it is a specialized asset or its location; its past practice of renewing leases of similar assets, but also its V strategy regarding the future use of the assets.

Measurement of lease liabilities At the lease commencement date, payment taken into account to determine lease liabilities include payments for the right to use the underlying asset during the lease term that are not paid at the commencement date, i.e.: fixed payments (including in-substance fixed payments), less any V lease incentives receivable. In-substance fixed lease payments are payments that may, in form, contain variability but that, in substance, are unavoidable; variable lease payments that depend on an index or a rate, initially V measured using the index or rate as at the commencement date; and, where applicable, any amounts expected to be payable by V Natixis to the lessor under residual value guarantees, purchase options or payments of penalties for terminating the lease. Payments taken into account to determine lease liabilities exclude value added tax and housing tax, which fall under the scope of interpretation of IFRIC 21 “Levies”, as well as property tax and insurance premiums charged (where applicable) by the lessor, which constitute variable lease payments (where the amounts reimbursed are not contractually predetermined). In accordance with IFRS 16, lease payments are discounted at the interest rate implicit in the lease, i.e. the lessee’s incremental borrowing rate, which is the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. Natixis applies the marginal rate to its lease payments. This marginal rate depends on the contract term and currency. It also takes into account Natixis’ credit spread and the entities being refinanced by Natixis. Lease liabilities are booked under “Accrual accounts and other liabilities” in the consolidated balance sheet. The interest expense relating to the financial liability is recognized under “Interest and similar expenses”. Recognition of a right-of-use asset At the inception of the lease, the right-of-use asset is recognized at a value equal to the lease liability amount at that date, adjusting for payments made to the lessor prior to or on that date and not therefore included in the measurement of the lease liability, less any lease incentives received. Where applicable, this amount is adjusted to take into account the initial direct costs incurred by the lessee and an estimate of the costs of dismantling and refitting, to the extent that the terms and conditions of the lease so require, in which case an outflow is likely and can be estimated to a sufficient degree of reliability. Right-of-use assets are recognized under “Property, Plant and Equipment” in the consolidated balance sheet, within the same line item as assets of the same nature and which are wholly owned. The right-of-use amortization expense is recorded in the income statement under “Depreciation, amortization and impairment of property, plant and equipment and intangible assets”. The value of rights of use may be subsequently adjusted in the event the lease is amended or the lease term re-estimated, and to factor in any contractual rent changes stemming from the application of an index or rate.

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NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2019