NATIXIS - Universal registration document and financial report 2019

FINANCIAL DATA Statutory Auditors’ report on the parent company financial statements

Impairment of customer loans and receivables on an individual basis Risk identified and main judgments

Our audit approach We evaluated the design and tested the effectiveness of the key controls put in place by Natixis, in particular those related to: the identification of indicators of impairment (such as past-due V

As part of its financing activities within the Corporate & Investment Banking division, Natixis recognizes provisions on an individual basis to cover incurred credit losses on loans and receivables granted to customers. The determination of individual impairment allowances for non-performing loans requires a significant amount of judgment, particularly in terms of identifying impairment and calculating the impairment loss to be recognized. We considered individual impairment to be a key audit matter as it is an area where estimation plays a significant role in the preparation of the financial statements. Receivables due from customers represented €138,055 million at December 31, 2019. Individual impairment losses amounted to €991 million at December 31, 2019. Please refer to paragraph 1 of Note 1 and to Notes 5, 14 and 31 to the parent company financial statements for more details. Provisions for legal and compliance risks Risk identified and main judgments Natixis is involved in litigation before the courts and is the subject of investigations and requests for information from regulatory and tax authorities in different jurisdictions. The assessment of the resulting legal and compliance (including tax) risks reflects management’s estimates as of the reporting date. The recognition of a provision and determination of its amount as well as the financial information disclosed require, by their very nature, the exercise of judgment, not least because of the difficulty of estimating the outcome and financial consequences of ongoing proceedings. We therefore considered provisions for legal and compliance risks to be a key audit matter given the sensitivity of these provisions to the assumptions and options adopted by management. Provisions for litigation and other risks amounted to €1,005 million at December 31, 2019 (see Note 17 to the parent company financial statements). For more details, please refer to paragraph 10 of Note 1 and to Note 17 to the parent company financial statements.

payments) and the counterparty rating process; the classification of exposures as non-performing, V the monitoring and valuation of guarantees; V

the determination of individual impairment losses on V non-performing loans and the associated governance and validation system. In addition, we carried out a credit review, based on a sample of files selected on the basis of materiality and risk criteria, in which we: took note of the latest available information on the situation of V sensitive and non-performing counterparties; performed independent analyses of the assumptions used and the V estimates of provisions drawn up by management based on information provided by the institution and external data; verified that estimated impairment allowances were correctly V recognized. Our audit approach We examined the identification, assessment and provisioning arrangements for legal and compliance risks. We took note of the status of ongoing proceedings and the main risks identified by Natixis, including through regular discussions with management (and more specifically Natixis’ legal, compliance and tax departments) and by reviewing the documentation made available to us. Our work also involved assessing the reasonableness of the assumptions and data used by management to estimate the amount of provisions recognized at the reporting date. In particular, we engaged tax law specialists to conduct a critical review of analyses of the tax risks identified by Natixis and the related provisions. We also carried out confirmation procedures with Natixis’ legal advisors regarding ongoing proceedings. Finally, we checked that the provisions thus measured were correctly recognized and verified the related disclosures in the notes to the parent company financial statements.

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NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2019