2018 Registration Document Including the Annual ﬁnancial Report CONTENTS

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CRÉDIT FONCIER 2018 Registration document including the annual ﬁnancial report CONTENTS

Message from the Chairman and the Chief Executive Officer 2 Highlights of 2018 3 Key figures 4 1. PRESENTATION OF GROUPE CRÉDIT FONCIER 7 Presentation of groupe Crédit Foncier 8 Business and financial activity 13 2. CORPORATE GOVERNANCE REPORT 23 Corporate Governance Code 24 Administrative and executive bodies 30 Role and operating rules of governing bodies 50 Remuneration 56 Potential conflicts of interest 65 3. MANAGEMENT REPORT 67 Main transactions of the year 68 Capital transactions in 2018 69 Analysis of income and the balance sheet 70 Risk factors 74 Information on the internal control system 78 Prudential and regulatory information 83 Other disclosures 83 Outlook 84 Social, environmental and societal information 84 4. RISK MANAGEMENT REPORT 85 Introduction – general risks of groupe Crédit Foncier 86 4.1 General organisation & methodology 87 4.2 Capital and capital adequacy ratios 93 4.3 Credit and counterparty risks 96 4.4 Analysis of delinquencies 103 4.5 Risk mitigation techniques 104 4.6 Recommendations of the financial stability forum 106 4.7 Market risks 108 4.8 ALM risks 110 4.9 Operating risks 113 4.10 Non-compliance risk 118 5. FINANCIAL STATEMENTS 121 5.1 Consolidated financial statements 122 5.2 Parent company financial statements 199 6. LEGAL INFORMATION 237 General information 238 Ordinary General Meeting of May 31, 2019 241 Statutory Auditors’ special report on related party agreements and commitments 243 Persons responsible for the document and for auditing the financial statements 246 Cross-reference tables 247

Abbreviations used in the document: Thousands of euros: €k Millions of euros: €m Billions of euros: €bn 2018 REGISTRATION DOCUMENT including the annual financial report

This is a free translation into English of 2018 Registration document issued in the French language and is provided solely for the convenience of English speaking readers. In case of discrepancy, the French version prevails. Only the French version of the Registration document has been submitted to the Autorité des Marchés Financiers (AMF - French Financial Markets Authority). It is therefore the only version that is binding in law. The original French version was filed with the Autorité des Marchés Financiers (AMF – French Financial Markets Authority) on March 22, 2019, in accordance with Article 212-13 of the AMF’s General Regulation. It may be used in support of a financial operation if accompanied by a prospectus duly approved by the AMF. This document was produced by the issuer and its signatories are responsible for its content.

2018 Registration document CRÉDIT FONCIER 1 MESSAGE FROM THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER

LAURENT BENOÎT MIGNON CATEL Chairman of the BPCE Chief Executive Management Board Officer of Chairman of the Crédit Foncier

Board of Directors of

Crédit Foncier A new configuration for “ Crédit Foncier

On June 26, 2018, Groupe BPCE announced a new configuration • In financing for individuals, although loan production was for Crédit Foncier. From the start of the“ second quarter of impacted by the withdrawal of the APL Accession housing 2019, Crédit Foncier’s knowledge, expertise and activities will benefit and the reduction in the PTZ interest-free loan scheme, be integrated with Groupe BPCE’s different entities, under a it remained strong, at €7.1bn. responsible human resources approach in line with the Group’s • Loan production for investors, real estate professionals and tradition in this area. Public sector entities totalled €3.6bn, making 2018 one of This integration stems from the conclusions of a strategic review the best years ever in these segments. Crédit Foncier and performed over several months which showed that Crédit Foncier’s SOCFIM demonstrated their unique expertise by financing pure real estate financing model was no longer competitive or many major transactions. suited to circumstances, primarily because it does not offer • In real estate services, Crédit Foncier Immobilier enjoyed customers full banking services and because of its reliance on strong levels of activity in all its business lines (real estate the financial markets for funding. consulting and audit services, sales of residential property and groups of properties, valuations), generating revenues Crédit Foncier will refocus on two objectives: first, funding assets of €38.1m. for Groupe BPCE via Compagnie de Financement Foncier, mainly for Public sector loans, and second, managing the existing loan • Compagnie de Financement Foncier, a wholly-owned portfolio. subsidiary of Crédit Foncier, issued €5.7bn in covered bonds on very satisfactory financial terms thanks to its top-tier rating. Throughout 2018, Crédit Foncier continued to actively help • This strong sales performance was achieved while keeping customers achieve their real estate plans with its teams’ wide a tight rein on operating expenses (down 5.9% in relation to range of expertise – financing solutions for individuals, financing 2017 excluding provisions for the reorganisation) and with a for property developers via SOCFIM, long-term financing, Social fall in cost of risk (€60.6m in 2018, compared with €80.9m housing, project and infrastructure financing, real estate services in 2017). via Crédit Foncier Immobilier and covered bond issuance via Compagnie de Financement Foncier. Crédit Foncier’s extensive expertise and talent will combine with the strength of the Banque Populaire and Caisse d’Épargne networks across France to reinforce Groupe BPCE’s leadership on the real estate finance market.

2018 Registration document 2 CRÉDIT FONCIER HIGHLIGHTS OF 2018

CRÉDIT FONCIER REINFORCES ITS VISIBILITY AMONG ITS CLIENTS AND PARTNERS February-March ❯ Real estate markets conference at the Maison de la Mutualité conference center in Paris on February 1, followed by regional events in six cities across France between February 13 and March 30. March ❯ Rollout of remote electronic signatures on loan offers. May ❯ Start of online advertising campaigns. ❯ Renewal of the partnership agreement between SOCFIM and the Federation of Real Estate Developers (FPI). November ❯ New version of creditfoncier.com website. SOCIETAL AND ENVIRONMENTAL COMMITMENT March ❯ Associations’ Day, intended to raise awareness of Crédit Foncier’s patronage and CSR policies among members of staff. May-June ❯ European Sustainable Development Week from May 30 to June 5: quizzes and surveys of staff. June ❯ “Coups de Cœur” 2018: a financial contribution made by Crédit Foncier to associations supported by its employees. October ❯ 12th edition of the Charentonnaise race for companies in Eastern Paris. CRÉDIT FONCIER RESEARCH PUBLISHED ON WWW.CREDITFONCIER.COM January, April, September ❯ Results of the 10th, 11th and 12th Crédit Foncier/CSA surveys on sentiment among real estate professionals. February ❯ “The Real Estate Market” report, with a summary of 2017 and projections for 2018. May ❯ “The European residential real estate lending markets in 2017.” June ❯ “Do French people dream of owning a second home?” July ❯ “The path to acquiring a principal residence: from dream to reality.” September ❯ “Why are French people choosing to invest in the buy-to-let sector in 2018?” November ❯ “French people and commonhold property.” December ❯ Real estate key figures: “A Review of 2018 as seen by Crédit Foncier.” FUNDING January-December Benchmark issues by Compagnie de Financement Foncier: ❯ €1.0bn with a 10-year maturity in January; ❯ €1.5bn with a 5-year maturity in April; ❯ €1.25bn with an 8-year maturity in May; ❯ €1.0bn with a 10-year maturity in September. Total public issuance and private placements stood at €5.7bn as of December 31, 2018. Compagnie de Financement Foncier won the “Deal of the Year 2018” award for its leveraged CMS private placement. This was the first leveraged CMS covered bond issue for four years. COMPAGNIE DE FINANCEMENT FONCIER’S PARTICIPATION IN INTERNATIONAL CONFERENCES March ❯ Participation in the Information Management Network conferences in London and UBS in Amsterdam. April ❯ Participation in the EUROMONEY/ECBC conference in Vancouver. June ❯ Participation in the 19th Annual Financial Institutions Conference in Lausanne. ❯ Participation in the Global Borrowers & Bond Investors Forum in London. September ❯ Sponsorship of the EUROMONEY/ECBC Covered Bond Congress in Munich. November ❯ Participation in the Covered Bond Markets Conference in Berlin. NEW INDUSTRIAL MODEL FOR CRÉDIT FONCIER

On June 26, 2018 Crédit Foncier and Groupe BPCE announced their intention to set up a new industrial model for Crédit Foncier starting from April 1st, 2019. Thus, Crédit Foncier's knowledge, expertise and activities will be intergrated within Groupe BPCE's different entities, under a responsible human resources approach. The new configuration is characterized by the following orientations:

❯ new loan production will be redeployed within the Groupe BPCE's entities: financing activities for individuals will be integrated into the Banque Populaire and Caisse d'Épagne networks, Corporates financing activities will be redeployed within the Banque Populaire and Caisse d'Épagne networks for social housing and within Natixis for project and infrastructure finance;

❯ SOCFIM, which will become a subsidiary of BPCE SA, will position itself as a global player in Corporates real estate financing by combining long-term financing for real estate professionals with financing for developers;

❯ Crédit Foncier will be thus refocused on managing the existing loans portfolio and on refinancing, via Compagnie de Financement Foncier, the public sector assets granted by the Groupe BPCE's different entities ;

❯ Crédit Foncier Immobilier will become a subsidiary of BPCE SA.

2018 Registration document CRÉDIT FONCIER 3 KEY FIGURES 2,216 554,000 231 Employees* Customers Points of sale

* Groupe Crédit Foncier FTE headcount at December 31, 2018.

■ GROUPE CRÉDIT FONCIER ACTIVITY ❯ Loan production * ❯ Net covered bonds issuance (obligations foncières)

€bn €bn 11.8 8 12 10.7 10 9.6 2.9 6 6.1 5.7 2.6 3.6 5.2 8 8.8 4 6 7.1 7.1 4 2 2 0 0 2016 2017 2018 2016 2017 2018 Individuals Corporates

* Loan production excluding loan renegotiations – Management data.

❯ Loans outstanding * ❯ Assets managed for third parties

€bn €bn 100 92.5 85.8 84.9 8 80 5.8 5.9 6 5.4 46.1 40.1 38.2 60 4 40 2 20 46.4 45.7 46.7

0 0 2016 2017 2018 2016 2017 2018

Individuals Corporates

* Gross securities and receivables before impairment – Management data under IFRS 7.

■ CONSOLIDATED FINANCIAL DATA – IFRS ❯ Balance sheet total ❯ Equity attributable to equity holders of the parent

€bn €bn 130 4 3.7 127 3.5 3.4 120 114 110 3

80 2

40 1

0 0 2016 2017 2018 2016 2017 2018

2018 Registration document 4 CRÉDIT FONCIER ❯ Financial structure ❯ Capital ratios

(in €m) 2016 2017 2018 * Equity attributable to equity holders of the 12.6% 12.6% 11.5% 11.4% 11.7% 11.7% parent 3,517 3,659 3,443 10.3% 9.9% 9.2% Regulatory capital 3,642 3,882 3,528 o/w basic regulatory capital 3,629 3,871 3,520 o/w regulatory core capital 2,911 3,181 2,970 2016 2017 2018* * Fully loaded Basel III data. Global Tier Common Equity solvency ratio 1 ratio Tier 1 ratio

* Fully loaded Basel III data.

■ GROUPE CRÉDIT FONCIER RESULTS ❯ Summary income statement ❯ Business line contribution to groupe Crédit Foncier net banking income

-4% (in €m) 2016 2017 2018 13% Net banking income 797 555 561 -5% Holding 4% Gross operating income 286 82 -218 structure Income before tax 173 -19 -292 11% 1% 2% International corporates Net income attributable 11% to equity holders of the 9% 18% 18% parent 57 33 -194 76% 72% 73% Public sector

2016 Private sector

2017 Individuals

2018

■ OTHER INDICATORS ❯ Crédit Foncier’s ratings at December 31, 2018 S&P Moody’s Fitch Ratings Scope Ratings Long term A A1 A+ AA- Short term A-1 P-1 F1 Outlook Stable Stable Stable Stable

❯ Board of Directors at December 31, 2018

7 84% 50% 50%

Meetings Overall attendance rate Gender equality

2018 Registration document CRÉDIT FONCIER 5 2018 Registration document 6 CRÉDIT FONCIER PRESENTATION OF 1 GROUPE CRÉDIT FONCIER

PRESENTATION OF GROUPE CRÉDIT BUSINESS AND FINANCIAL ACTIVITY 13 FONCIER 8 Economic environment 13 Profile 8 European monetary policy 13 Crédit Foncier’s business lines 8 Regulatory changes 13 Activity of Crédit Foncier’s main subsidiaries 10 Individual customers 14 Positioning 11 Real estate investors and Public sector entities 17 Ratings 12 Real estate services 19 Crédit Foncier’s outlook 12 Financial operations 20

2018 Registration document CRÉDIT FONCIER 7 PRESENTATION OF GROUPE CRÉDIT FONCIER PRESENTATION OF GROUPE CRÉDIT FONCIER

PRESENTATION OF GROUPE CRÉDIT FONCIER

❯ PROFILE

Crédit Foncier is specialised in providing real estate financing and services in solutions for their real estate needs: individuals, real estate professionals and France. investors. Crédit Foncier provides all these players with its innovation and creativity as well as the experience it has gained on the real estate market for As a wholly-owned subsidiary of Groupe BPCE, the second-largest banking 165 years. group in France (1), Crédit Foncier serves all those who, for one reason or another, seek the expertise and unique insight that will help them find tailored

❯ CRÉDIT FONCIER’S BUSINESS LINES

Financing solutions for individuals: Crédit Foncier finances home d’Épargne network, which is another crucial historic player in this sector in ownership for both new and existing properties, in particular in the low-income France. Crédit Foncier also supports private sector partners and businesses home ownership segment. Crédit Foncier is also active in the buy-to-let sector serving Public sector entities with specific structures such as public-private and in financing senior citizens. It also offers solutions tailored to meet the partnerships (PPP). financing requirements of commonhold associations. It disseminates its expertise via a multi-channel distribution network comprising 231 points of Real Estate Services: with 18 offices across France, Crédit Foncier sale in France, 7,000 business partners in the real estate sector (2) and an Immobilier, a wholly-owned subsidiary of Crédit Foncier, offers a wide range of online platform. real estate services, including appraisal, audit, consulting and marketing. Crédit Foncier Immobilier serves property owners, developers, investors and Financing for real estate investors and professionals: Crédit Foncier financial institutions, helping them achieve their real estate plans and appraise helps private investors (real estate investment companies, investment funds, their assets. etc.) complete their transactions and finances real estate professionals (property developers, valuation agents, etc.) with its subsidiary SOCFIM. Crédit Financial Operations: the financial operations activity funds the loans that Foncier boasts recognised expertise in financing arrangement and syndication. Crédit Foncier grants to its customers and can also act for Groupe BPCE’s other banking networks. Financing for Public sector entities: Crédit Foncier finances the development plans of stakeholders in the Social housing market. It offers a This activity is entirely carried out by Compagnie de Financement Foncier, a servicing platform for regulated loan programmes in support of the Caisse wholly-owned subsidiary of Crédit Foncier, which issues obligations foncières.

(1) 21.5% market share in customer savings and 21.1% in customer loans (source: Banque de France Q3-2018 – all non-financial customers). (2) Crédit Foncier marketing research.

2018 Registration document 8 CRÉDIT FONCIER PRESENTATION OF GROUPE CRÉDIT FONCIER PRESENTATION OF GROUPE CRÉDIT FONCIER 1

❯ Crédit Foncier and its subsidiaries by division at December 31, 2018 (1)

ASSETS

LOANS TO INDIVIDUALS REAL ESTATE REAL ESTATE INVESTORS SERVICES AND PUBLIC SECTOR ENTITIES

• Real estate loans and related • Consulting, Valuation and • Investors services Research: Consulting & Audit, Expertise, Appraisals, Studies. • Social housing • Renovation loans • Project and infrastructure • Property investment • Brokerage: Investment, ﬁnancing commercial and residential • Buying in France property, management. • Real estate developers

CRÉDIT FONCIER IMMOBILIER - EXPERTISE LOCINDUS (Crédit Foncier 100%) (Crédit Foncier 74.82%) Expertise Real estate leasing

CRÉDIT FONCIER IMMOBILIER - ESTIMATION SOCFIM (Crédit Foncier 100%) (Crédit Foncier 99.99%) Appraisals Real estate development

LIABILITIES AND SHAREHOLDERS’ EQUITY

OBLIGATIONS FONCIÈRES

Crédit Foncier 100%

SUBSIDIARIES

(1) This presentation is mainly focused on the Group’s business lines and activities. Please refer to page 187 for the contribution of the business lines to net banking income (note 11.1 “Segment Reporting”).

2018 Registration document CRÉDIT FONCIER 9 PRESENTATION OF GROUPE CRÉDIT FONCIER PRESENTATION OF GROUPE CRÉDIT FONCIER

❯ ACTIVITY OF CRÉDIT FONCIER’S MAIN SUBSIDIARIES

❯ Compagnie de Financement Foncier

A credit institution licensed as a specialised credit institution and société de crédit foncier. Compagnie de Financement Foncier is a wholly-owned subsidiary of Crédit Foncier [A(stable)A1(stable)/A+(stable)/AA-(stable)] (1), and affiliated with BPCE [A+(stable)/A1(stable)/A+(stable)] (2). Its purpose is to fund mortgage and public-sector lending for its parent company as well as Groupe BPCE as a whole by issuing obligations foncières rated [AAA (stable)/Aaa (stable)/AAA (stable)] (3). Compagnie de Financement Foncier’s obligations foncières are French legal covered bonds that comply with the European directives UCITS 52-4 (4) and CRD (5) and with Article 129 of the European CRR (6). Compagnie de Financement Foncier’s balance sheet total amounted to €76.7bn at December 31, 2018 and its Tier 1 capital ratio stood at 21.7%.

❯ Locindus

Listed on the Paris stock exchange, Locindus specialises in financing commercial real estate, conventional mortgage loans and real estate leasing, and is a 74.82%-owned subsidiary of Crédit Foncier (7).

❯ SOCFIM

Crédit Foncier’s 99.99%-owned subsidiary that specialises in short-term financing for real estate professionals (developers, subdivision developers, property vendors, etc.).

❯ Crédit Foncier Immobilier

Crédit Foncier Immobilier is a wholly-owned subsidiary of Crédit Foncier and a major player in real estate services with a full range of services including consulting, brokerage, valuation, management and auditing of residential, tertiary and commercial real estate assets. Crédit Foncier Immobilier and its subsidiary Crédit Foncier Immobilier – Expertise have “Regulated by RICS” status. This recognition entails a common commitment for the use of professional standards based on the RICS Code of Ethics and Professional Conduct.

(1) Standard & Poor’s/Moody’s/Fitch/Scope Ratings. Ratings updated on the date of filing the 2018 Registration document. (2) Standard & Poor’s/Moody’s/Fitch Ratings. Ratings updated on the date of filing the 2018 Registration document. (3) Standard & Poor’s/Moody’s/Scope Ratings. Ratings updated on the date of filing the 2018 Registration document. (4) UCITS: Undertakings for Collective Investment in Transferable Securities directive. (5) CRD: Capital Requirements directive. (6) CRR: Capital Requirements Regulation. (7) For further details on the delisting offer on Locindus shares, please refer to the page 69.

2018 Registration document 10 CRÉDIT FONCIER PRESENTATION OF GROUPE CRÉDIT FONCIER PRESENTATION OF GROUPE CRÉDIT FONCIER 1

❯ POSITIONING

■ ANCHORED TO A SOLID BANKING GROUP: BPCE Since the merger-acquisition into the central institution, BPCE, of the respective holding companies owned by the Banque Populaire banks (BP Participations) and the Caisses d’Épargne (CE Participations), on August 5, 2010, Crédit Foncier has been a wholly-owned subsidiary of Groupe BPCE, France’s second-largest banking group.

9 MILLION OF COOPERATIVE SHAREHOLDERS

100% 100% (3) FNBP (1) FNCE (2)

BANQUES 50% 50% CAISSES 14POPULAIRES 15D’ÉPARGNE

BPCE

100% 71% (5)

SUBSIDIARIES (4) NATIXIS

(1) Fédération Nationale des Banques Populaires (The National Federation of Banques Populaires banks). (2) Fédération Nationale des Caisses d'Épargne (The National Federation of Caisses d'Épargne banks). (3) Via local savings companies (Sociétés Locales d’Épargne : SLE). (4) Banque Palatine, Crédit Foncier, BPCE International... (5) Float : 29%.

2018 Registration document CRÉDIT FONCIER 11 PRESENTATION OF GROUPE CRÉDIT FONCIER PRESENTATION OF GROUPE CRÉDIT FONCIER

❯ RATINGS

Compagnie de Crédit Foncier Affiliated with BPCE Financement Foncier ST A-1 A-1 A-1+ Standard & Poor’s LT A A+ AAA Outlook Stable Stable Stable ST P-1 P-1 Moody’s LT A1 A1 Aaa Outlook Stable Stable Stable ST F1 F1 Fitch Ratings LT A+ A+ Outlook Stable Stable ST Scope Ratings LT AA- AAA Outlook Stable Stable

■ STANDARD & POOR’S ■ FITCH RATINGS On October 19, 2018, Standard & Poor's upgraded the ratings of Groupe On December 4, 2018, Fitch Ratings upgraded the ratings of Groupe BPCE BPCE and Crédit Foncier to A+ and A respectively, with a stable outlook. and Crédit Foncier from A to A+. The ratings outlook was adjusted from positive to stable.

■ MOODY’S ■ SCOPE RATINGS On June 29, 2018, Moody’s upgraded the ratings of Groupe BPCE and Crédit Foncier from A2 to A1. The ratings outlook was adjusted from positive to On July 2, 2018, Scope Ratings kept Crédit Foncier’s ratings unchanged. stable. On July 2, 2018, Scope Ratings maintained the AAA rating with stable outlook for Compagnie de Financement Foncier’s privileged debt issuance programmes. This rating demonstrates the quality of Compagnie de Financement Foncier’s cover pool and the solidity of Crédit Foncier’s funding model, which is backed by Groupe BPCE.

❯ CRÉDIT FONCIER’S OUTLOOK

Groupe BPCE will integrate Crédit Foncier’s activities and teams ❯ by reinforcing the Group’s national loan monitoring and management platform. Groupe BPCE has announced a project to integrate Crédit Foncier’s activities and teams in Groupe BPCE’s banks from April 1, 2019. 3. Crédit Foncier will refocus on two objectives: Comprehensive integration of expertise and talents ❯ refinancing the Group via Compagnie de Financement Foncier, which will itself be repositioned on refinancing Public sector assets; The new organisation will integrate Crédit Foncier’s knowledge and expertise ❯ managing the existing portfolio of loans. into Groupe BPCE’s companies from three angles: The new organisation will cement the Group’s leadership on real estate 1. New loan production will be redeployed in the Group’s banks: financing markets by combining the expertise and many talents of Crédit ❯ financing activities for individuals will be integrated into the Banque Foncier with the power of the Banque Populaire and Caisse d’Épargne Populaire banks and the Caisses d’Épargne and coupled with an offer of networks throughout France. banking services to new customers; This integration project stems from the recognition that the pure real estate ❯ corporate financing activities will be redeployed within the Banque financing model is no longer competitive or suited to circumstances, primarily Populaire and Caisses d’Épargne networks for Social housing and within because it does not offer customers full banking services and because of its Natixis for project and infrastructure finance; reliance on the financial markets for funding. ❯ SOCFIM, which will become a subsidiary of BPCE SA, will position itself as Groupe BPCE is keen to respond fully to the new requirements of the real a global player in corporate real estate financing by combining long-term estate financing market and its customers. It is therefore seeking to combine financing for real estate professionals with financing for developers; Crédit Foncier’s competencies and expertise with the know-how of the Banque Populaire banks and the Caisses d’Épargne throughout France’s ❯ Crédit Foncier Immobilier, the real estate services, expertise and marketing regions and with that of Natixis, Banque Palatine and BPCE SA. subsidiary, will become a subsidiary of BPCE SA and work on behalf of the whole Group. Groupe BPCE is therefore seeking to adapt its organisation to the new 2. Groupe BPCE will capitalise on the specific expertise of Crédit requirements of the real estate financing market to better meet customers’ Foncier’s teams: expectations, use of new technology, competition from new players and the need to set up comprehensive automated processes underpinned by new ❯ by creating a national platform for driving real estate partnerships; digital tools, including virtual assistants. ❯ by developing a digital platform offering a full online home loan application By integrating Crédit Foncier’s activities and teams, Groupe BPCE intends to experience; strengthen its market share at over 25% of all real estate loans in France.

2018 Registration document 12 CRÉDIT FONCIER PRESENTATION OF GROUPE CRÉDIT FONCIER BUSINESS AND FINANCIAL ACTIVITY 1

At the filing date of this Registration document, the review of answers on higher than the assumptions used to calculate the provision recognised at reclassification proposals made to employees whose post is cut as part of the 31 December 2018 amounting to €334m. As a result, this could lead to an projet aimed to integrate Crédit Foncier's activities in Groupe BPCE banks about 10% increase of the said provision. indicates that the subscription rate to the voluntary redundancy scheme is

BUSINESS AND FINANCIAL ACTIVITY

❯ ECONOMIC ENVIRONMENT

After growing steadily since mid-2016, the global economy slowed in 2018. While the effects of the Brexit vote continue to be felt on UK growth, estimated at 1.4% in 2018 (1), the question of whether there will be an exit under the According to the International Monetary Fund, in 2018-2019, global growth is terms of the withdrawal agreement negotiated with the European Union or a (1) set to be flat against 2017 at 3.7% , slightly lower than in its previous “no deal” exit remains unresolved. In its assessment of the different withdrawal forecasts made in April 2018. scenarios, the Bank of England has warned that a no deal Brexit would cause a severe shock to the UK economy. This downgrading in forecasts was notably due to an unexpected decline in activity at the start of 2018 due to commercial tensions and an overall rise in In the event of a disorderly Brexit – the worst-case scenario – UK GDP would interest rates. shrink by around 8% in one year, unemployment would rise to 7.5% and inflation would hit 6.5%. The Bank of England also estimates that property Trade tensions between Washington and Beijing, and with Europe, have prices would slump by 30% and sterling would lose one-quarter of its value (3). intensified in recent months and threats of retaliatory measures have (1) escalated. To date, Washington has placed customs duties on $250bn of Growth remains strong in the United States, as the far-reaching fiscal stimulus Chinese imports and Beijing has responded by placing tariffs on $110bn of US continues to underpin private sector activity. The Federal Reserve expects goods. growth to pick up to 3.1% (4). A similar trend is being seen in Europe. The eurozone economy slowed in the On monetary policy, the Federal Reserve raised its key interest rate by a (2) third quarter of 2018 when GDP growth dipped to 0.2%, versus 0.4% quarter of a point to a range of 2.25%-2.50% (5), the fourth rate hike in 2018 recorded in the previous two quarters. The European Central Bank (ECB) has and the ninth since 2015. It explained its ongoing monetary tightening by the (2) therefore lowered its growth forecast for the eurozone to 1.9% for 2018, “continued strength of the economy”. dipping to 1.7% (2) in 2019. After peaking in 2017, global growth is showing signs of slowing except in the For France, the IMF expects growth of 1.6% in 2018 and 2019 after the United States. The euro’s rally against the dollar, higher oil prices and (1) upsurge to 2.3% in 2017 . Growth was slower than expected in the first half protectionist measures all dampened economic conditions. of 2018 due to temporary factors specific to France (tax rises for consumers, falling purchasing power, industrial action against the railway reform, etc.). 2019 is therefore expected to be a sluggish year as the recovery loses However, business investment – another driver of the economy – should hold momentum. up.

❯ EUROPEAN MONETARY POLICY

The European Central Bank has not changed its interest rates and as At the same time, the ECB will continue to fully reinvest the principal payments previously announced, in October it reduced its monthly asset purchases from maturing securities in its portfolio. So, in 2018, the ECB purchased under the programme launched in September 2014 from €30bn to €15bn (6). It €21.5bn (net of redemptions) in covered bonds under its CBPP3 programme. announced the end of its asset purchase programme in December 2018.

❯ REGULATORY CHANGES

Several laws and regulations likely to affect the environment in which groupe 2018. This directive has three core pillars (greater transparency, stronger Crédit Foncier operates took effect in 2018. These include: investor protection, more efficient markets) and increases investor protection by introducing new requirements (best execution, etc.); For the banking and financial sector:

❯ the second Markets in Financial Instruments directive (directive 2014/65/EU) or MiFID II, revising the first directive from 2004, took effect on January 3,

(1) International Monetary Fund (IMF), World Economic Outlook, October 2018. (2) European Central Bank (ECB), Governing Council press conference, December 13, 2018. (3) Bank of England, EU Withdrawal Scenarios and Monetary and Financial Stability, November 2018. (4) Federal Open Market Committee (FOMC), September 2018. (5) Federal Open Market Committee (FOMC), December 2018. (6) European Central Bank, Governing Council press conference, July 26, 2018.

2018 Registration document CRÉDIT FONCIER 13 PRESENTATION OF GROUPE CRÉDIT FONCIER BUSINESS AND FINANCIAL ACTIVITY

❯ the new European General Data Protection Regulation (GDPR) came into ❯ for purchases of existing properties requiring renovation work: on areas not force on May 25, 2018 (Regulation 2016/679 and directive 2016/680). GDPR experiencing a significant housing shortage; marks a major step forward in terms of data protection. It aims to emphasise ❯ for purchases of new properties: on areas with a tight housing market and the importance of data protection among data processors and to make towns covered by support contracts to redevelop former defence sites; professionals act more responsibly. The GDPR confirms and enhances the main provisions of the French data protection law that applied since 1978 and ❯ it also extends the PTZ scheme to sales of buildings requiring renovation significantly increases citizens’ rights by giving them more control over their work. data. Moreover, in decision number 2017-685 QPC dated January 12, 2018, the On November 16, 2018, the Financial Stability Board (FSB), in consultation Constitutional Council upheld the possibility of renegotiating payment with the Basel Committee on Banking Supervision (BCBS) and national protection insurance on an annual basis. The Council of State had referred a banking authorities, published a list of 29 banks qualified as Global question on the constitutionality of certain provisions of Article L. 313-30 and Systemically Important Banks (G-SIBs). Groupe BPCE, Crédit Foncier’s parent paragraph V of Article 10 of the Consumer Code, as drafted in Act group, is included on this list (Bucket 1). No. 2017-203 of February 21, 2017, to the Constitutional Council on October 12, 2017. Other laws on the real estate sector have or could have an impact on groupe Crédit Foncier’s business activity. Act No. 2018-1021 dated November 23, 2018 on housing, planning and digital technology (Elan Housing Act) was published in the Official Journal on The French 2018 Finance Act published in the Official Journal on November 24, 2018. Ministerial orders have to be published before certain December 31, 2017 and applicable in 2018 included several measures that measures take effect. This act comprises 232 articles to “Build more, better could potentially have a direct impact on groupe Crédit Foncier’s activity. quality and affordable homes” (section I), “Develop Social housing” (section II), In addition to the creation of a flat tax, the removal of the ISF wealth tax and “Meet the needs of every individual” (section III) and “Improve living conditions” the creation of the IFI tax on real estate wealth, and the reform of the (section IV). residence tax, the following points are noteworthy: Several important new regulations will take effect in 2019:

❯ extension and refocusing of the Pinel tax incentive; ❯ the full application of the Net Stable Funding Ratio (NSFR) in January 2019; ❯ withdrawal of the APL Accession housing benefit; ❯ Regulation (EU) 2017/1129 of June 14, 2017 revising the Prospectus directive ❯ extension of the Censi-Bouvard tax incentive (tax reduction for the acquisition was published in the European Union Official Journal on June 30, 2017. This of property for private lease as furnished property); regulation seeks to facilitate access to the capital markets without compromising on the information disclosed to investors and is a major ❯ extension and refocusing of the PTZ interest-free loan scheme. component of the capital markets union. It will take effect on July 21, 2019. Article 83 of the 2018 Finance Act extended the PTZ scheme for four years until December 31, 2021 and refocused its scope:

❯ INDIVIDUAL CUSTOMERS

Total building permits issued over one year from January to December 2018 ❯ Following on from the strong performance recorded the stood at 460,500, down 7.1% on the previous 12 months. New housing starts previous year, 2018 was another good year for the real estate over the same period came to 398,100, a decline of 7.0% (1). market. In the third quarter of 2018, property developers considerably reduced the While lending rates remain historically low and property prices number of new homes put on sale, which fell by 14.2% against the third quarter of 2017. Reservations were down by 8.9% on the third quarter of have not begun to fall significantly, activity is stagnating. 2017, at 27,400 units (2). However, the market remains robust, although it is being seriously impacted by the reform of government support Total new homes available for sale increased slightly to 109,800 units, up (2) measures. 0.3% versus the end of the third quarter of 2017 . In Existing properties, contrary to expectations, the volume of A smaller decline was recorded over one full year (October 2017 to September 2018), with reservations down 2.5% and the number of new real estate transactions should equal the previous year’s homes put on sale 6.9% lower than in the previous 12 months (2). levels. In New properties, the situation is more contrasted and the year was less bullish. This decline was not caused by marketing and sales issues, because demand was strong and housing stock for sale remained limited, but by longer However, improving lending conditions mitigated the decline construction times due to administrative constraints. in low-income families’ creditworthiness and real estate loan In addition, with the prospect of local elections in 2020 and uncertainty as to origination held up. how revenue from the residence tax (currently being phased out) will be replaced, town authorities are cautious and are granting few building permits.

EXISTING PROPERTY ■ FRENCH REAL ESTATE MARKETS IN 2018 The Existing property market showed signs of losing steam at the start of the year. RESIDENTIAL REAL ESTATE MARKET Improving lending conditions did not offset the decline in homebuyers’ NEW PROPERTY creditworthiness caused by the withdrawal of the APL Accession benefit and rising property prices, which outpaced revenue growth. Cuts to housing benefits had a negative impact on the New housing market. The PTZ interest-free loan scheme and the Pinel tax incentive were both However, the market was buoyed by low interest rates and by growing interest extended to 2021 but geographical restrictions were applied to new properties for existing property among young buyers, in particular those buying their first eligible for these schemes, focusing on areas facing a housing shortage. home. Investors also preferred Existing properties in areas with tight housing markets. The APL Accession housing benefit that helped low-income families buy a home was withdrawn.

(1) St@info, New housing construction, No. 162, January 2019. (2) CGEDD, Real Estate Environment, Q3 2018, No. 142, November 2018.

2018 Registration document 14 CRÉDIT FONCIER PRESENTATION OF GROUPE CRÉDIT FONCIER BUSINESS AND FINANCIAL ACTIVITY 1

Therefore, the number of real estate transactions should once again be close Crédit Foncier has also revamped and automated its processes for its partners to the symbolic one million mark this year. with the use of virtual assistants. Employees can therefore concentrate on tasks that add value and improve customer service. The year-on-year rise in prices to the end of the third quarter 2018 was stable at 2.9% (1). PRODUCT RANGE Over the same period, the annual transaction volume remained high. As of the end of September, 956,000 transactions had been completed over the A communication campaign was launched in the second half of 2018, with previous twelve months (1). three target markets:

❯ rental properties; REAL ESTATE LENDING MARKET IN FRANCE ❯ first-time home buyers; Lending institutions had a challenging start to the year as the lack of support ❯ services. measures for first-time home buyers hindered the closure of financing plans for low-income buyers. Crédit Foncier designed these campaigns to bolster its dominant position among its partners. In addition, French tax policy has refocused on property wealth and this is curbing individuals’ plans to invest in buy-to-let properties (2). With over 80% of its loan production arising from referrals, Crédit Foncier needs to communicate and establish a permanent sales presence in the BtoB Although inflation is rising steadily (3), the yield on government bonds – one of market. the sources of financing used by banks – has remained very low. This means lending conditions have remained particularly attractive for borrowers, and in Crédit Foncier also continued its efforts to facilitate home ownership among turn have mitigated the decline in creditworthiness among low-income families low-income families with the launch of the Community Land Trust (BRS) and first-time home buyers. In contrast, margins on home loans have programme, which allows buyers to purchase a home and to rent the land narrowed sharply. under a long-term lease agreement. On this point, the Haut Conseil de Stabilité Financière (the French Financial Due to its involvement in this new affordable housing solution, Crédit Foncier Stability Board) ensures that banks do not take excessive risks and that attended the event marking the launch of the national network of Office households remain solvent. Foncier Solidaire (OFS) community land trusts with the support of the French Minister for Urban Affairs and Housing, four years after the creation of the OFS The slowdown in the market has taken hold. Property prices are no longer was included in the ALUR Act on access to housing and urban renovation and aligned with buyers’ creditworthiness and demand has suffered. In response one year after this law took effect. to this contraction in demand, property prices showed the first signs of easing at the end of the year. COMMUNICATIONS Crédit Foncier is pursuing its fully digital communications strategy with several ■ CRÉDIT FONCIER’S ACTIVITY IN 2018 objectives: ORGANISATION ❯ to create traffic on the website creditfoncier.fr and in branches; Crédit Foncier began to digitalise its services in 2016, reinventing the customer ❯ to increase brand awareness. experience and improving operational efficiency for its partners. Crédit Foncier is present online with themed advertising throughout the year and is also on Facebook. Customers have seen the main benefits of the new technology as they can complete the full onboarding process electronically, including insurance Its communications campaigns are designed to reaffirm its positioning as a applications and accepting a loan offer. specialist in property financing, and to stand it apart from its peers with a strong new slogan, “Your home loan deserves a specialist”. With optimum confidentiality guaranteed by a secure document transfer solution and the use of electronic signatures, which have delivered Crédit Foncier is also stepping up its communications and presence among its considerable progress in terms of approving transactions, Crédit Foncier has partners, for example with a monthly newsletter, “Fils Info” newsflashes and successfully navigated its digital transformation. spotlights on different topics and markets.

INDIVIDUAL CUSTOMERS: LOAN PRODUCTION LOANS Distribution channel (in €m) 2016 2017 2018 Branch network 4,735 5,581 4,389 Foncier Patrimoine 395 433 415 Exclusive agents 1,501 2,231 1,848 Regional divisions 6,632 8,245 6,651 o/w network synergies 235 227 124 Crédit Foncier Travaux 165 177 270 Foncier Direct online 21 29 11 Individual customers - France 6,819 8,451 6,932 Belgium 191 302 220 Banco Primus 91 94 0 Individual customers - Outside France 282 396 220 TOTAL INDIVIDUAL CUSTOMERS 7,101 8,848 7,152

(1) INSEE/ Notaires de France/ BIEN/MinNot database, Quick Information, No. 311, November 2018. (2) The wealth tax (ISF) was replaced by the real estate wealth tax (IFI) on January 1, 2018. All individuals are liable for the IFI tax depending on the net value of their property assets. This includes all assets and rights to ownership held directly or indirectly. (3) The inflation rate rose from 0.7% in June 2017 to 2.3% in August 2018 (https://france-inflation.com/).

2018 Registration document CRÉDIT FONCIER 15 PRESENTATION OF GROUPE CRÉDIT FONCIER BUSINESS AND FINANCIAL ACTIVITY

❯ By distribution channel ❯ By market

3% 9% Misc.** Misc.** 10% 4% 28% Speciﬁc channels* Rental investment - New property ownership Existing property* 20% 26% €7.1bn 56% €7.1bn Exclusive agents Business providers Rental investment - New property

4% 35% 5% Renovations Existing property ownership* Walk-in customers * Including loan buyouts. * Internet, Travaux and Foncier Patrimoine. ** Misc. (Banco Primus, Belgium and “other” home ownership and buy-to-let loans). ** Belgium and Banco Primus.

Crédit Foncier’s market share in low-income home ownership loans stands at The other risk hanging over the property market is the clear decline in 28.8% for the distribution of PAS social loans and 8% for PTZ interest-free confidence in France. loans (1). Confidence among buyers is a decisive variable and the current social unrest could discourage French people from becoming property owners. ■ OUTLOOK FOR 2019 The risks of rising interest rates, high prices and low confidence are areas for concern that will affect activity levels in 2019. WILL THE PROPERTY MARKET EXPERIENCE The introduction of withholding tax on salaries and the psychological effect this A SHARP TURNAROUND OR A SOFT LANDING? could have may discourage buyers in the first quarter or even the first six After the record performance recorded in both 2017 and 2018, the outlook for months of the year, and this could cause property market activity to decline 2019 is less optimistic. further. The government has promised a supply-side shock with the Elan (2) Housing In these conditions, the outlook for 2019 remains uncertain. However, the Act. But higher social taxes on rental income (3) and the refocusing of the situation is set to worsen from 2020, when properties in areas with tight wealth tax on property assets have sent out negative signals and activity is housing markets are no longer eligible for the PTZ interest-free loan and when declining in New property and slowing in the Existing property segment. interest rates could rise. The property market could then enter a lasting recession if no alternative is found to neutralise the impacts of these two major Interest rates fell steadily throughout the year, being kept low by intense factors. competition among banks who consider home loans to be a key product for attracting new customers. The prospect of monetary policy normalisation by the European Central Bank is fanning expectations that interest rates will rise in the second half of 2019. However, the slowdown in economic growth could lead the ECB to postpone its decision. In this case, borrowing rates could remain low, benefiting first-time home buyers.

(1) SGFGAS personal guarantee provider; PAS market share at December 15, 2018; PTZ market share at September 30, 2018. (2) Act on housing, planning and digital technology. (3) The CSG and CRDS taxes both increased from 15.5% to 17.2% on January 1, 2018. This increase applies retroactively to some revenue received since the start of 2017, for example revenue received from land rental.

2018 Registration document 16 CRÉDIT FONCIER PRESENTATION OF GROUPE CRÉDIT FONCIER BUSINESS AND FINANCIAL ACTIVITY 1

■ SUMMARY ❯ Activity with Individuals

(in €m) 2016 2017 2018 Annual loan production 7,101 8,848 7,152 Direct loans to individuals 7,101 8,848 7,152 Acquisitions of mortgage loans - - - Outstanding loans at end of period 46,402 45,709 46,679 Direct loans to individuals 46,194 45,569 46,551 Mortgage-backed securities in Europe 208 140 128 Assets managed for third parties 5,763 5,927 5,350 Total outstanding loans 52,165 51,636 52,029

❯ REAL ESTATE INVESTORS AND PUBLIC SECTOR ENTITIES

CRÉDIT FONCIER’S ACTIVITY Businesses are benefiting from the economic recovery and ❯ Crédit Foncier’s activity was very strong throughout the year. With solid are less cautious. Rental values are continuing the rally that expertise in providing financing solutions for the Social housing market, Crédit began nearly three years ago. The investment market is being Foncier stepped up its production of unregulated loans designed to meet underpinned more by borrowing, which remains inexpensive, Social housing landlords’ recurrent needs: buyouts, new construction, loan than by rental yields. transfers, energy efficiency renovations, etc. As interest rates are low, requests to refinance Crédit Foncier loans indexed to the Livret A passbook savings The project financing market is now concentrated on public account rates remained high. service delegation agreements in a bullish environment for In addition, financing for low-income home ownership through the PSLA investments due to favourable borrowing conditions. rent-to-own loan scheme was strong throughout the year. However, given the uncertainty surrounding the post-Brexit The development of the intermediate rental housing scheme was also a key environment, a degree of caution is likely to temper the driver of growth in 2018. current state of euphoria. PROJECT AND INFRASTRUCTURE FINANCING THE MARKET The Public sector infrastructure market declined. Activity was stable for public ■ SOCIAL HOUSING service delegations but public-private partnership agreements contracted SOCIAL HOUSING sharply. Financing for the rollout of the super-fast fibre-optic broadband network under THE MARKET the “France Très Haut Débit” plan continued in 2018. 2018 was a year of reform in the Social housing sector in France. First of all with the Elan Act on housing, planning and digital technology, CRÉDIT FONCIER’S ACTIVITY which: In these conditions, Crédit Foncier had a good year, with eight deals ❯ will ultimately oblige certain Social housing organisations to merge so they completed. The usual process was followed, i.e. a joint approach with the become more efficient and can pool their resources (under the new law all local Caisse d’Épargne and a focus on intermediate-sized projects of between Social housing organisations must manage at least 12,000 homes); €30m and €100m. ❯ simplifies the terms of sale of Social housing with the goal of increasing annual sales volumes from 8,000 to 40,000 homes and helping Social housing OUTLOOK FOR 2019 operators find funding; Project financing for the super-fast fibre-optic broadband network will end in ❯ facilitates the transformation of office buildings into housing; early 2019. ❯ simplifies and improves urban planning procedures; From January 1, 2019 and until the end of the 2024 Olympic Games, Groupe BPCE will be a Premium Partner of one of the world’s most important sports ❯ will facilitate the imposition of rent caps with certain conditions in cities that events in terms of its media impact, and the biggest event ever organised in choose this option; France. ❯ introduces a new mobility lease; Through this partnership, Groupe BPCE will take part in a number of initiatives ❯ increases criminal and financial penalties for lessors that do not observe across France to finance sports activities and infrastructure. housing regulations. Secondly, with the creation of the RLS solidarity rent reduction to be applied by Social housing landlords to offset cuts in APL housing benefit received by Social housing tenants by lowering their rent by an equivalent amount. And finally with the decision by some players (for example, Action Logement and SNI group) to develop the intermediate rental housing scheme that was set up in 2014.

2018 Registration document CRÉDIT FONCIER 17 PRESENTATION OF GROUPE CRÉDIT FONCIER BUSINESS AND FINANCIAL ACTIVITY

REAL ESTATE INVESTORS AND PROFESSIONALS FINANCING FOR A HEATING NETWORK IN NANTES (PUBLIC SERVICE DELEGATION) THE MARKET Crédit Foncier was co-arranger with Caisse d’Épargne Bretagne Pays de The real estate investment market was particularly active in the first half of the Loire. year, with transactions totalling €12bn. The figure for the full year should amount to around €26.5bn, higher than in the previous two years (€25.6bn and €24.7bn respectively) (1). FINANCING FOR AN ENERGY RECOVERY UNIT IN VOSGES (PUBLIC SERVICE DELEGATION) Over the first nine months of the year, investments in office space dominated, accounting for 74% of volumes, followed by retail property, with 14% of Crédit Foncier was co-arranger for this deal with Caisse d’Épargne Grand Est volumes and logistics/business with 12%. While the logistics segment was Europe and Caisse d’Épargne Île-de-France. strong, investors are cautious on retail. The growth of e-commerce accounts (2) for these two contrasting trends . SOCIAL HOUSING On the rental market, take-up of tertiary property in Ile-de-France totalled nearly 1.9m m2 as of the end of September, 13% higher than the ten-year FINANCING FOR THE RENOVATION OF A NURSING HOME average. As a result of this high level of take-up, the vacancy rate dropped to The work includes improvements to existing buildings and the construction of an average of 5.5% in Île-de-France, with a sharp drop to 4.8% recorded in La a new Alzheimer’s care unit. Défense and 2.2% in Paris (3). Crédit Foncier provided financing to enable the owner of the buildings to improve residents’ quality of life, confirming its commitment to supporting CRÉDIT FONCIER’S ACTIVITY members of the social economy with long-term financing solutions adapted to their requirements. New loan production was strong, with a total of €1.3bn in new facilities granted in 2018 (before syndication). FINANCING FOR THE DEVELOPMENT OF INTERMEDIATE OUTLOOK FOR 2019 RENTAL HOUSING With the repositioning of Crédit Foncier’s activities within Groupe BPCE, the IN’LI SA, formed by the merger of four Action Logement subsidiaries long-term investor financing business will be transferred in full (front, middle specialised in intermediate rental housing in 2017, is the leading player on this and back office) to SOCFIM, which will become a subsidiary of BPCE SA, in market in Île-de-France. To finance its ambitious growth plan which provides the first half of 2019. for the construction of 80,000 new intermediate rental homes in Île-de-France, IN’LI chose Crédit Foncier to participate in the implementation of an €800m credit line to finance its everyday expenses. Crédit Foncier was mandated arranger in a pool of top banks, including one Banque Populaire bank and four ■ LANDMARK PROJECTS IN 2018 Caisses d’Épargne from Groupe BPCE, demonstrating the Group’s strong involvement in financing housing policy in France. REAL ESTATE INVESTORS AND PROFESSIONALS FINANCING OF A WAREHOUSE IN WISSOUS FINANCING FOR THE CONSTRUCTION OF RENT-TO-OWN Crédit Foncier arranged and provided financing for a new 54,000 m2 PROPERTIES FOR LE PUITS GAILLARD warehouse fully leased for 12 years. The warehouse is located in Wissous, Crédit Foncier financed the construction of 20 apartments and seven close to Paris Orly airport and the Rungis wholesale food market. single-family homes under a rent-to-own scheme in the Ile des Bois zone in Saint-Gilles (Finistère) realised by the Le Puits Gaillard construction and sale cooperative (SCCV), a subsidiary of SCIC Coop de Construction and OPH FINANCING FOR AN OFFICE COMPLEX IN BOULOGNE NEOTOA. This was part of a programme to build 40 new homes and enabled BILLANCOURT Crédit Foncier to contribute to the economic development of the greater Crédit Foncier financed the acquisition of an office complex covering 8,000 m2 Rennes area. in Boulogne Billancourt, which is leased to a major European company with a firm lease. The Saint-Gilles rent-to-own scheme was the tenth such project completed with SCIC Coop de Construction, further reinforcing the partnership between Crédit Foncier and this client. FINANCING FOR SEVERAL RETIREMENT HOMES OWNED BY THE LF RÉSIDENCES SENIOR REIT, MANAGED BY FINANCING FOR THE PURCHASE OF A PORTFOLIO OF LA FRANÇAISE REIM 128 BUILDINGS Over 2018, Crédit Foncier was involved in financing six retirement homes comprising 566 homes (with floor space of 25,478 m2) located in AMPERE Gestion (a subsidiary of CDC Habitat) and Swiss Life Asset Saint-Germain-en-Laye, Brest, Marseille, Cannes, Châlons-en-Champagne Managers, Real Estate France, acting on behalf of a consortium of five and Mulhouse. institutional investors, secured €650m in financing for Foncière Vesta with the support of Natixis and Crédit Foncier, acting as arrangers. Natixis and Crédit Foncier placed this loan with leading banks, including PROJECT AND INFRASTRUCTURE FINANCING 12 Groupe BPCE banks. This deal confirmed the Group’s ability to pool its FINANCING FOR THE ROLLOUT OF A FIBRE OPTIC entities’ knowledge and expertise to originate, arrange and serve as the NETWORK IN HAUTE-GARONNE leading financer for this large-scale transaction. In partnership with Caisse d’Épargne Midi-Pyrénées and Caisse d’Épargne Normandie, Crédit Foncier participated in arranging financing for a public service delegation for the rollout of fibre optics across the department.

(1) Immostat/Crédit Foncier Immobilier, Professional Real Estate Environment - Investment market, November 2018. (2) Crédit Foncier Immobilier, Professional Real Estate Environment - Rental market, November 2018. (3) Crédit Foncier Immobilier, Rental Market Environment, November 2018.

2018 Registration document 18 CRÉDIT FONCIER PRESENTATION OF GROUPE CRÉDIT FONCIER BUSINESS AND FINANCIAL ACTIVITY 1

■ SUMMARY ❯ Activity with real estate investors and Public sector entities

(in €m) 2016 2017 2018 Loan production 2,508 2,938 3,567 Public sector (1) 555 394 678 French local authorities 106 0 0 Social housing 321 329 516 Project and infrastructure financing 128 64 161 Private sector 1,953 2,545 2,889 Outstanding loans at end of period (2) 46,130 40,117 38,214 Public sector 40,405 34,591 32,323 French local authorities 16,184 14,778 13,027 Social housing 7,449 6,733 6,299 Project and infrastructure financing (3) 1,736 1,763 1,715 International public and sovereign sector (4) 15,037 11,317 11,282 Private sector 5,725 5,526 5,891 (1) Excluding loan renegotiations. (2) Gross amounts outstanding before impairment under IFRS 7. (3) Project and infrastructure financing was reclassified as Public sector Corporates for 2016. (4) Including French sovereign.

❯ REAL ESTATE SERVICES

Revenues from synergies with Groupe BPCE entities amounted to €555k, ❯ Crédit Foncier Immobilier – a Crédit Foncier subsidiary – accounting for 48.1% of total revenues, versus 39.7% in 2017. provides real estate services and ranks among the leaders in real estate advisory services in France. In 2018, its gross BROKERAGE revenues totalled €46.8m, up by 5.6% on 2017 (€44.3m). Net of grant-backs, total revenues came to €38.1m, compared INVESTMENT with €37.3m in 2017. 19.5% of revenues net of grant-backs The Capital Markets department completed 23 transactions in 2018 for a total (compared with 16.9% in 2017) were realised via synergies amount invested of €606.6m, up 10.2% on 2017 (€550m). 2018 was the best that Crédit Foncier Immobilier has developed with other year ever in terms of investments. entities of Groupe BPCE in order to serve them and their Total fee income for 2018 stood at €3.71m, an increase of 2.7% compared customers. with 2017 (€3.61m).

OFFICE SPACE VALUATION Crédit Foncier Immobilier’s Office Space department is mostly active in the small and medium surface area segment (below 1,500 m²) in the Paris central EXPERTISE business district. In 2018, Crédit Foncier Immobilier – Expertise valued 17,172 assets and In 2018, the Office Space activity expanded sharply, with 41 transactions generated revenues net of grant-backs of €15.8m. Customer acquisition was completed. It generated €569.9k in fees, an increase of 65% on 2017 successful throughout the year, with external revenues totalling €10.38m, (€345.3k). representing 65.7% of revenues, versus 54.6% in 2017.

RESIDENTIAL PROPERTY ESTIMATES (SEREXIM) Total revenues for the Residential Property department net of grant-backs Crédit Foncier Immobilier – Estimation performed 17,904 estimates in 2018 amounted to €10.47m in 2018, an annual increase of 17.2% (€8.93m in and generated total revenues net of grant-backs of €5.68m, compared with 2017), with 1,575 sales completed. The new residential property business was €6.28m in 2017. It mainly serves financial institutions, banks and credit buoyed by the strong market, with 1,286 sales completed (accounting for restructuring agencies in France and the contraction in revenues was mainly 81.6% of the total) and generating revenue of €8.38m, up by 23.4% in relation due to the loss of a long-standing client. to 2017 (€6.79m). Synergies with the Caisses d’Épargne and the Banque Populaire banks accounted for revenues of €5.06m, up by 30% against 2017 CONSULTING & AUDIT (€3.89m). In 2018, the Consulting & Audit department generated revenues net of In contrast, the Existing Property segment, including high-end properties grant-backs of €1.15m, down 20.1% in relation to 2017 (€1.44m). Its activity range ( «Millésime» brand), slowed, with overall revenues net of grant-backs of focused on three services: real estate strategy, asset repositioning and project €2.09m (including €86k for Millésime), versus €2.14m in 2017. management assistance, serving external customers and Groupe BPCE entities and their customers.

2018 Registration document CRÉDIT FONCIER 19 PRESENTATION OF GROUPE CRÉDIT FONCIER BUSINESS AND FINANCIAL ACTIVITY

❯ FINANCIAL OPERATIONS

Private placements amounted to nearly €1bn, confirming its long-standing ❯ Groupe Crédit Foncier’s financial operations activities consist positioning on this market. of the issuance of obligations foncières by Compagnie de Financement Foncier and of securitisations and bonds for French and German investors purchase the majority of Compagnie de Financement Foncier’s covered bonds, accounting for 54% of allocations. groupe Crédit Foncier, as well as short-term cash They are followed by investors from Benelux and nothern countries, with 14% management and derivatives transactions for interest rate risk and 10% respectively. Investors from outside the eurozone also have a management. significant presence. Asian and UK investors account for 14% of allocations, stable against 2017. The breakdown between different types of investors was well balanced in 2018. Amounts invested by central banks were relatively stable against last year, with 31% of the total. Other investors (banks, asset managers) ■ COVERED BONDS ISSUANCE accounted for between 27% and 29%, with insurers reducing their (OBLIGATIONS FONCIÈRES) investments in favour of bonds with longer maturities (over 15 years). THE MARKETS IN 2018 BREAKDOWN OF OBLIGATIONS FONCIÈRES ISSUED BY The covered bonds market recovered sharply in 2018 after three successive COMPAGNIE DE FINANCEMENT FONCIER IN 2018 years of decline. In 2018, €136bn in benchmark euro covered bonds were issued, an increase of 21.4% on 2017 (1). With covered bond redemptions totalling €86bn in 2018, net supply on the benchmark euro covered bonds market was positive by over €50bn, unlike in ❯ By type of investor previous years (2).

Germany (€29bn in issuance) and France (€25bn, 19% of the total) were extremely active. Canada and the Netherlands followed with around 9% of the 1% market each. New countries joined the euro covered bonds market in 2018, in Other particular Asian countries such as South Korea and Japan (in contractual format) (2). 12% 31% 2018 marked a turning point in the ECB’s Covered Bonds Purchase Insurance companies Central banks Programme (CBPP3) set up in October 2014. From October 1, the ECB & pension funds and ofﬁcial institutions began to gradually lower its net monthly purchases under the Asset Purchase Programme (APP) from €30bn to €15bn and to significantly reduce its participation in primary market issues, from 30% to 10% on average. It closed €5.7bn the programme in December. However, it will continue to reinvest income from maturing securities, which should amount to €22bn in 2019 and €25bn in 2020. 26% 29% The end of the CBPP3, positive net supply and a complex political situation in Asset managers Banks some countries (Italy, United Kingdom) led to a widening in covered bond spreads in 2018, by an average of 21 bps in peripheral countries and 14 bps in core countries, according to iBoxx indices (2). The covered bonds market should remain active in 2019, boosted by significant bond redemptions (€103bn, up 20% versus 2018) and technical factors (partial refinancing of the TLTRO, introduction of the NSFR). Natixis ❯ By region * forecasts put benchmark euro issuance at between €130bn and €140bn (2), with €26bn from German issuers and €25bn from French issuers. The final version of the European Covered Bonds directive, which the 3% European Commission presented in draft form in March 2018, could be Other approved by the European Parliament in the first quarter of 2019, marking the start of a period of between 12 and 24 months to allow Member States to 6% enact its provisions into national law. Asia 10% ACTIVITY IN 2018 Northern countries 40% Compagnie de Financement Foncier’s activity was strong in 2018, with total Germany issuance volume amounting to €5.7bn. 83% of the obligations foncières it 8% issued were placed with institutional investors via public issues, and 17% in United Kingdom private placements. On the public primary market, Compagnie de Financement Foncier made four 5% benchmark euro issues amounting to €4.75bn in 2018. Other Europe In the 1st and 2nd quarter, 3 benchmarks of €1bn, €1.5bn and €1.25bn were issued maturing in 10, 5 and 8 years. In September it placed another 10-year 14% 14% covered bond for €1bn. These issues once again demonstrated Compagnie Benelux France de Financement Foncier’s strong reputation and its robust signature among investors. * Excluding Eurosystem.

(1) Natixis, Covered Bond Market Weekly, December 19, 2018. (2) Natixis, Spread & Credit, Covered Bonds Outlook 2019, October 3, 2018.

2018 Registration document 20 CRÉDIT FONCIER PRESENTATION OF GROUPE CRÉDIT FONCIER BUSINESS AND FINANCIAL ACTIVITY 1

■ SECURITISATION AND COLLATERAL ■ MANAGEMENT OF DERIVATIVES MANAGEMENT Under its policy of optimising the management of its derivatives portfolio, where possible, groupe Crédit Foncier restricts the use of internal derivatives Crédit Foncier has several refinancing solutions to fund its outstanding loans, between Crédit Foncier and Compagnie de Financement Foncier. The volume depending on its needs. It did not carry out any public securitisation of swaps between the two companies was low throughout 2017 and 2018. transactions in 2018. Groupe Crédit Foncier completed an intragroup derivatives compression However, on July 6, 2018, Crédit Foncier completed a further sale of operation on February 21, 2018, for a nominal amount of €3.63bn and a value non-performing loans to individuals by selling disputed loans totalling €113.7m of €80.6m. to two investors. This transaction limited the increase in Crédit Foncier’s non-performing loan ratio and allowed it to recover some revenus associated In application of the European Market Infrastructure Regulation (EMIR), as of with its disputed receivables more quickly. It also demonstrated its capacity to the end of December 2018, the nominal amount of swaps cleared by repeat this type of transaction. LCH totalled €49.4bn. Crédit Foncier received external funding from Caisse des dépôts et consignations (CDC) (€4.1bn) and the European Investment Bank (EIB) (€0.85bn). This enabled groupe Crédit Foncier to optimise its high-quality ■ DISPOSALS AND REPAYMENTS OF PUBLIC assets by benefiting from collateralised funding. SECTOR SECURITIES/RECEIVABLES As well as these external funding sources, Crédit Foncier also used intragroup Crédit Foncier made no transfers of French public sector receivables in 2018. transfers and assignments of receivables. On the International public sector, a line of Spanish securities totalling €67m In 2018, Crédit Foncier funded its new loan production through sales and was reimboursed. assignments of receivables. In 2018, Compagnie de Financement Foncier However, acting through the department for External Receivables Funding and therefore directly acquired and funded €6.4bn (principal and related Asset Transfers, two Caisses d’Épargne sold outstanding loans from the receivables) in mortgage loans and/or Public sector loans granted by Crédit French local authorities portfolio. These two transactions allowed these Foncier. Transfers for collateral purposes (under L. 211-38 agreements) are Caisses d’Épargne to transfer these receivables on good financial terms and also prioritised. A total of €16.3bn was refinanced internally by such Crédit Foncier to use its expertise in transferring portfolios of receivables, in assignments with Compagnie de Financement Foncier. particular thanks to its knowledge of the market and its network of investors.

2018 Registration document CRÉDIT FONCIER 21 PRESENTATION OF GROUPE CRÉDIT FONCIER BUSINESS AND FINANCIAL ACTIVITY

2018 Registration document 22 CRÉDIT FONCIER CORPORATE GOVERNANCE 2 REPORT

CORPORATE GOVERNANCE CODE 24 REMUNERATION 56 Compliance with the AFEP/MEDEF Code recommendations 24 Remuneration of executive officers 56 Report pursuant to Article L. 225-37-2 of the Commercial Code ADMINISTRATIVE AND EXECUTIVE BODIES 30 on remuneration and benefits of any kind paid to the Chairman and the Chief Executive Officer as a result of their office 64 Executive Management and Executive Committee as of December 31, 2018 32 Composition of the Board of Directors 34 POTENTIAL CONFLICTS OF INTEREST 65

ROLE AND OPERATING RULES OF GOVERNING BODIES 50 Board of Directors 50 Committees created by the Board 51 Internal rules of the Board 52 Compliance charter for members of the Board of Directors of Crédit Foncier de France 54

2018 Registration document CRÉDIT FONCIER 23 CORPORATE GOVERNANCE REPORT CORPORATE GOVERNANCE CODE

CORPORATE GOVERNANCE CODE

❯ COMPLIANCE WITH THE AFEP/MEDEF CODE RECOMMENDATIONS

Crédit Foncier, whose share capital is not listed, is committed to running its The two other provisions cover the composition of the Appointments business and its administrative bodies in accordance with the corporate Committee and the Remuneration Committee. The Code stipulates that these governance practices in force in France, as detailed by the AFEP/MEDEF committees should have a majority of independent directors, whereas at Corporate Governance Code. Crédit Foncier, independent and non-independent directors are represented equally under the chairmanship of an independent director. As such, in order However, five provisions of this Code were not fully adopted. One concerns to prevent any impasse when voting, the internal rules of each committee the number of independent directors, which stands at 17% instead of the stipulate that the Chairman has the deciding vote. As such, this system affords recommended 33%, in order to establish a balanced representation of its a majority to the independent directors and thereby satisfies the two provisions shareholder BPCE, as well as BPCE’s shareholders Caisses d’Épargne and of the Corporate Governance Code. Banque Populaire banks. The second provision concerns the composition of the Audit Committee, on which the proportion of independent directors stands A table summarising all of the AFEP-MEDEF Corporate Governance Code at 33% instead of the recommended 66%. criteria that define Director independence is provided on pages 26 to 29. Furthermore, the Appointments Committee has implemented a procedure to The third provision concerns the term of Directors’ office. Although four years “Identify and manage (potential) conflicts of interest” when: office is recommended, Crédit Foncier’s bylaws have set the term of office of six years. This term meets the requirement for members of the Board of ❯ a Director is appointed; Directors to obtain more experience and a more comprehensive view of the ❯ a Director expresses a desire to “exercise additional responsibilities at entities Company’s activity over time. However, the recommendation to renew the outside groupe Crédit Foncier”. Board of Directors on a rotational basis is well applied.

2018 Registration document 24 CRÉDIT FONCIER CORPORATE GOVERNANCE REPORT CORPORATE GOVERNANCE CODE 2

❯ Summary table of compliance with the AFEP/MEDEF Code recommendations

The Board of Directors’ responsibilities Recommendations implemented Board of Directors: collegial body Recommendations implemented Diversity of organisational CSR methods Recommendations implemented, credit institutions within the scope of CRD IV are required to separate the functions of Chairman and Chief Executive Officer Board of Directors and communication with shareholders and markets Recommendations implemented Board of Directors and the Annual General Shareholders’ Meeting Recommendations implemented Composition of the Board of Directors: guiding principles Recommendations implemented Representation of shareholding and non-shareholding employees Not applicable Independent directors Recommendations partially implemented Assessment of the Board of Directors Recommendations implemented Board and Committee meetings Recommendations implemented Directors’ access to information Recommendations implemented Directors’ backgrounds Recommendations implemented Directors’ term of office Recommendations implemented except for Directors’ Term of Office Board committees: general principles Recommendations implemented Audit Committee Recommendations implemented except for the proportion of independent directors Appointments Committee Recommendations implemented Compensation Committee Recommendations implemented Number of terms for Chief Executive Officers and Directors Recommendations implemented Directors’ Code of Conduct Recommendations implemented Directors’ remuneration Recommendations implemented Termination of the employment agreement on appointment to a corporate office Recommendations implemented Directors’ and officers’ requirement to hold shares Not applicable Concluding a non-compete agreement with a Director Not applicable Remuneration of Directors Recommendations implemented Disclosures on the remuneration of Directors and policies on the award Recommendations implemented of stock options and performance shares Consulting with shareholders on the individual compensation of Directors Recommendations implemented

2018 Registration document CRÉDIT FONCIER 25 CORPORATE GOVERNANCE REPORT CORPORATE GOVERNANCE CODE

❯ Summary table of Director independence criteria

Criteria: L. MIGNON C. FABRESSE C. HALBERSTADT 1. Cannot have been, during the past five years: ❯ an employee or an executive director or officer of the Company; COMPLIANT COMPLIANT COMPLIANT ❯ an employee, executive director or officer, or Board member COMPLIANT COMPLIANT COMPLIANT of a company consolidated by the Company; ❯ an employee, executive director or officer, or Board member NON-COMPLIANT NON-COMPLIANT NON-COMPLIANT of the parent company of the Company or a company (BPCE) (BPCE) (BPCE) consolidated by that parent Company. 2. Cannot be an executive director or officer of a Company in which the Company directly or indirectly holds a Directorship, or in which an COMPLIANT COMPLIANT COMPLIANT employee designated as such or an executive director or officer of the Company (currently or within the past five years) holds a Directorship. 3. Cannot be a client, supplier, business banker, or investment banker: ❯ to a significant degree, of the company or its group; COMPLIANT COMPLIANT COMPLIANT ❯ or for which the company or its group represents a significant COMPLIANT COMPLIANT COMPLIANT share of their business. 4. Cannot have close family ties to a company officer. COMPLIANT COMPLIANT COMPLIANT 5. Cannot have been the company’s Statutory Auditor during the past COMPLIANT COMPLIANT COMPLIANT five years. 6. Cannot have been a Board member of the Company in the past twelve years. Loss of independent Board Membership takes place on COMPLIANT COMPLIANT COMPLIANT the twelve-year anniversary. 7. A non-executive director or officer cannot be considered independent if they collect variable remuneration in cash or securities, or any NON-COMPLIANT COMPLIANT COMPLIANT remuneration tied to the performance of the Company or of the group. 8. Board members who represent major shareholders of the Company or of its parent company may be considered independent if those shareholders do not play a role in controlling the Company. However, above a 10% threshold in terms of capital or voting rights, the Board, NON-COMPLIANT NON-COMPLIANT NON-COMPLIANT upon receiving a report from the Appointments Committee, always (BPCE) (BPCE) (BPCE) investigates independent status, taking into account the composition of the Company’s capital or the existence of a potential conflict of interest. SUMMARY NON-COMPLIANT NON-COMPLIANT NON-COMPLIANT

2018 Registration document 26 CRÉDIT FONCIER CORPORATE GOVERNANCE REPORT CORPORATE GOVERNANCE CODE 2

N. NAMIAS N. ETCHEGOÏNBERRY N. PLANTROU

COMPLIANT COMPLIANT COMPLIANT

NON-COMPLIANT NON-COMPLIANT COMPLIANT (BPCE) (BPCE)

COMPLIANT COMPLIANT COMPLIANT

NON-COMPLIANT NON-COMPLIANT NON-COMPLIANT (BPCE) (CE) (CE)

NON-COMPLIANT NON-COMPLIANT NON-COMPLIANT

2018 Registration document CRÉDIT FONCIER 27 CORPORATE GOVERNANCE REPORT CORPORATE GOVERNANCE CODE

Criteria: B. SOLANET P. DESVERGNES B. DUCHESNE 1. Cannot have been, during the past five years: ❯ an employee or an executive director or officer of the Company; COMPLIANT COMPLIANT COMPLIANT ❯ an employee, executive director or officer, or Board member COMPLIANT COMPLIANT COMPLIANT of a company consolidated by the Company; ❯ an employee, executive director or officer, or Board member of the parent company of the Company or a Company COMPLIANT COMPLIANT COMPLIANT consolidated by that parent Company. 2. Cannot be an executive director or officer of a company in which the Company directly or indirectly holds a Directorship, or in which an COMPLIANT COMPLIANT COMPLIANT employee designated as such or an executive director or officer of the Company (currently or within the past five years) holds a Directorship. 3. Cannot be a client, supplier, business banker, or investment banker: ❯ to a significant degree, of the Company or its group; COMPLIANT COMPLIANT COMPLIANT ❯ or for which the Company or its group represents a significant COMPLIANT COMPLIANT COMPLIANT share of their business. 4. Cannot have close family ties to a company officer. COMPLIANT COMPLIANT COMPLIANT 5. Cannot have been the company’s Statutory Auditor during the past COMPLIANT COMPLIANT COMPLIANT five years. 6. Cannot have been a Board member of the Company in the past twelve years. Loss of independent Board Membership takes place on COMPLIANT COMPLIANT COMPLIANT the twelve-year anniversary. 7. A non-executive director or officer cannot be considered independent if they collect variable remuneration in cash or securities, or any COMPLIANT COMPLIANT COMPLIANT remuneration tied to the performance of the Company or of the group. 8. Board members who represent major shareholders of the Company or of its parent company may be considered independent if those shareholders do not play a role in controlling the Company. However, above a 10% threshold in terms of capital or voting rights, the Board, NON-COMPLIANT NON-COMPLIANT NON-COMPLIANT upon receiving a report from the Appointments Committee, always (CE) (BP) (BP) investigates independent status, taking into account the composition of the Company’s capital or the existence of a potential conflict of interest. SUMMARY NON-COMPLIANT NON-COMPLIANT NON-COMPLIANT

2018 Registration document 28 CRÉDIT FONCIER CORPORATE GOVERNANCE REPORT CORPORATE GOVERNANCE CODE 2

J-P. DUMORTIER M. BRUNEL V. PANCRAZI

COMPLIANT COMPLIANT COMPLIANT

NON-COMPLIANT COMPLIANT COMPLIANT (BP)

NON-COMPLIANT COMPLIANT COMPLIANT

2018 Registration document CRÉDIT FONCIER 29 CORPORATE GOVERNANCE REPORT ADMINISTRATIVE AND EXECUTIVE BODIES

ADMINISTRATIVE AND EXECUTIVE BODIES

Crédit Foncier de France is incorporated as a French société anonyme (limited ❯ Executive Management, which is responsible for ensuring the day-to-day company) with a Board of Directors and is governed by Articles L. 225-17 to management of operations; L. 225-56 of the French Commercial Code. The Chief Executive Officer is invested with the broadest of powers to act on Laurent MIGNON has been Chairman of the Board of Directors since behalf of the Company under any circumstances. He exercises these powers May 17, 2018. within the limit of his mandate and subject to the powers expressly granted to him by the law governing the Annual General Shareholders’ Meeting and the The management of Crédit Foncier is divided between: Board of Directors. ❯ the Board of Directors, which sets the Group’s strategic guidelines; However, without this provision being binding on third parties, the Chief Executive Officer is required to respect the limits on his powers pursuant to The Board of Directors operates under the conditions laid down by law, Article 18 of the bylaws (See Additional information, page 239). Crédit Foncier’s bylaws and the internal rules adopted at its meeting of February 27, 2008;

2018 Registration document 30 CRÉDIT FONCIER CORPORATE GOVERNANCE REPORT ADMINISTRATIVE AND EXECUTIVE BODIES 2

❯ Governance chart of groupe Crédit Foncier

Board of Directors

• Determines the overall strategy for the Company's business activities and monitors its implementation.

Meets at least four times a year

Audit Committee Risk Management Remuneration and Appointments Committee Committee Selection Committee • Ensures that relevant • Assesses the quality of • Proposes to the Board • Puts forward candidates and consistent accounting internal control. the fixed pay for the Chief for the office of Director methods are used to prepare Executive Officer and Deputy and appraises the diversity the Company’s individual • Assesses the effectiveness Chief Executive Officers, of knowledge. and consolidated financial of the internal control determines the criteria for statements. and risk management variable remuneration and • Sets a target for gender systems. measures performance representation. • Issues an opinion against these criteria. the selection or the renewal • Defines the eligibility of the Statutory Auditors, • Submits proposals and criteria for independent reviews their auditing plan, recommendations to the directors. the results of their audits Board on the appointment, and recommendations. dismissal and replacement of the Chief Executive Officer or Deputy Chief Executive Officers.

Meets at least Meets at least Meets at least Meets at least four times a year four times a year once a year once a year

2018 Registration document CRÉDIT FONCIER 31 CORPORATE GOVERNANCE REPORT ADMINISTRATIVE AND EXECUTIVE BODIES

❯ EXECUTIVE MANAGEMENT AND EXECUTIVE COMMITTEE AS OF DECEMBER 31, 2018

Mr Éric FILLIAT Chief of Financial Mr Laurent MIGNON Mr François GUINCHARD Management Chairman Risk and Compliance Finance Division Division

Mr Jean-Pierre POUGET Deputy Chief of Financial Mr Benoît CATEL Ms Muriel COLLE Management Chief Executive Deputy CEO Finance Division Ofﬁcer Resources Division

Ms Corinne DECAUX Legal Affairs Mr Patrick CHASTANT General Inspection

Mr Mathieu LEPELTIER Finance Deputy CEO and Operations Retail and Corporate Banking

Mr Florent LEGUY Mr Alain DAVID Public Sector Corporates Development

Mr Gilles SCOTTO Ms Anne CORNET Mr Olivier AVIS Corporate Operations Individual Operations Deputy CEO Financial Operations Ms Fabienne Mr Alexandre BILLET AMBLARD LAROLPHIE Individual Customers Deputy, Marketing

Mr Olivier COLONNA Ms Anne-Marguerite GASCARD d’ISTRIA Crédit Foncier Immobilier Retail and Corporate Banking Division SOCFIM Real Estate Services Finance and Operations Division Resources and Steering Division Member of the Executive Management Committee

COMPOSITION OF EXECUTIVE MANAGEMENT (At December 31, 2018)

Mr Benoît CATEL, Chief Executive Ofﬁcer.

› Mr Éric FILLIAT, Chief of Financial Management Finance Division, Executive Director; › Ms Muriel COLLE, Deputy CEO Resources Division; › Mr Olivier AVIS, Deputy CEO Financial Operations; › Mr Mathieu LEPELTIER, Deputy CEO Retail and Corporate Banking.

2018 Registration document 32 CRÉDIT FONCIER CORPORATE GOVERNANCE REPORT ADMINISTRATIVE AND EXECUTIVE BODIES 2

■ OFFICES HELD BY EXECUTIVE OFFICERS

❯ Mr Benoît CATEL ■ Profile

Date of birth: Benoît CATEL is a graduate of the École Supérieure de Commerce of Lille, the IEP Paris and holds a DESCF 07/31/1962 (Master’s level diploma in Accounting and Finance). Nationality: Benoît CATEL joined Compagnie Bancaire in 1987, where he held various positions in accounting and finance, before moving to GMF Bank in 1992 as Head of Accounting. French He joined Groupe Caisse d’Épargne in 1994 at the Caisse d’Épargne Île-de-France Ouest, where he was Corporate address: successively Head of Accounting and then of Loan Production and finally, a member of the Management Board, 4, quai de Bercy in charge of the Finance and Risk department. Starting in 2001, he held the same position at the Caisse d’Épargne Côte d’Azur, before taking over the Development division as a member of the Management Board. 94220 Charenton-le-Pont In 2006, he was named Market Director for Local authorities, Social Housing and Social Economy Division at the Caisse Nationale des Caisses d’Épargne. In 2009 he was appointed Chief Executive Officer of Banque de la Réunion (a subsidiary of BPCE IOM) before becoming Chief Executive Officer of Volksbank Romania (Groupe BPCE) from 2012 to April 2015. He became Deputy Chief Executive Officer of Crédit Foncier in April 2015 and was appointed Chief Executive Officer on January 1, 2018. Expertise useful to the Board: international expertise in the field of retail banking; skills in sales, finance, and risk.

• Chief Executive Officer ■ Company, Offices and Positions of Crédit Foncier 2018 SOCFIM – SACS LOCINDUS * – SA Chairman of the Supervisory Board Chairman of the Board of Directors LA MONDIALE PARTENAIRE – SA and Chairman of the Appointments Committee Permanent Representative of Crédit Foncier, CRÉDIT FONCIER DE FRANCE – SA Director (until 05/29/2018) Chief Executive Officer COMPAGNIE DE FINANCEMENT FONCIER – SA CRÉDIT LOGEMENT – SA Chairman of the Board of Directors Permanent Representative of Crédit Foncier, and Chairman of the Appointments Committee Director CRÉDIT FONCIER IMMOBILIER – SA ENFI – SAS Chairman of the Board of Directors and Chairman Chairman of the Remuneration and Selection Committee

2017 CRÉDIT FONCIER DE FRANCE – SA COMPAGNIE DE FINANCEMENT FONCIER – SA Deputy Chief Executive Officer (until 12/31/2017) Director GCE FONCIER COINVEST – SAS CRÉDIT FONCIER IMMOBILIER – SA Chief Executive Officer (until 12/19/2017) Director SOCFIM – SACS LOCINDUS * – SA Member of the Supervisory Board Chairman of the Board of Directors LA MONDIALE PARTENAIRE – SA and Chairman of the Appointments Committee Permanent Representative of Crédit Foncier, Director

2016 CRÉDIT FONCIER DE FRANCE – SA LA MONDIALE PARTENAIRE – SA Deputy Chief Executive Officer Permanent Representative of Crédit Foncier, GCE FONCIER COINVEST – SAS Director Chief Executive Officer COMPAGNIE DE FINANCEMENT FONCIER – SA SOCFIM – SACS Director Member of the Supervisory Board CRÉDIT FONCIER IMMOBILIER – SA Director

2015 CRÉDIT FONCIER DE FRANCE – SA SOCFIM – SACS Deputy Chief Executive Officer Member of the Supervisory Board GCE FONCIER COINVEST – SAS Chief Executive Officer

* Listed company

2018 Registration document CRÉDIT FONCIER 33 CORPORATE GOVERNANCE REPORT ADMINISTRATIVE AND EXECUTIVE BODIES

❯ COMPOSITION OF THE BOARD OF DIRECTORS

Mr Laurent MIGNON BPCE, represented by Chairman of the Board of Directors Ms Meka BRUNEL Mr Nicolas NAMIAS Independent Director Director

Mr Nicolas PLANTROU Director Ms Valérie PANCRAZI Independent Director

Mr Pierre DESVERGNES Director Ms Bénédicte SOLANET Director

Mr Bruno DUCHESNE Board of Directors Director (December 31, 2018) Ms Catherine HALBERSTADT Director Mr Jean-Paul DUMORTIER Director

Ms Christine Ms Nicole FABRESSE ETCHEGOÏNBERRY Director Director

NON-VOTING DIRECTORS GOVERNMENT AUDITOR Mr Emmanuel POULIQUEN Mr Bernard ZAKIA

REPRESENTATIVES OF DE CENTRAL WORKS CONCIL Ms Christel ARNAUD SAINT MARTIN Ms Dominique DELAVEAU

17% Independent

Independent 50% Gender balance 50% Directors Women on the board Men

83% Group

2018 Registration document 34 CRÉDIT FONCIER CORPORATE GOVERNANCE REPORT ADMINISTRATIVE AND EXECUTIVE BODIES 2

■ CHANGES TO THE COMPOSITION OF THE BOARD OF DIRECTORS IN 2018 François RIAHI was appointed by François PÉROL as BPCE’s Permanent François PÉROL resigned from his directorship and as Chairman of the Board Representative to the Board of Directors, to replace Marguerite of Directors effective at the end of the Board meeting on May 16, 2018. BERARD-ANDRIEU, effective January 1, 2018. Laurent MIGNON was co-opted as Director by the Board of Directors on The Annual General Shareholders’ Meeting of May 16, 2018: May 16, 2018 effective May 17, 2018 and appointed as Chairman to replace François PÉROL. ❯ renewed Dominique GARNIER’s term as Director; Nicolas NAMIAS was appointed by Laurent MIGNON as BPCE’s Permanent ❯ renewed Christine FABRESSE’s term as Director; Representative to the Board of Directors, to replace François RIAHI on ❯ renewed Nicolas PLANTROU’s term as Director; June 1, 2018. ❯ renewed Pierre DESVERGNES’ term as Director; Laurent ROUBIN resigned from his directorship on November 1, 2018. ❯ acknowledged the expiry of the directorship of Gérard BARBOT and Anne-Claude PONT resigned from her directorship on November 7, 2018. decided not to fill the vacancy; Dominique GARNIER resigned from his directorship on November 30, 2018. ❯ renewed Emmanuel POULIQUEN’s term as non-voting Director; ❯ acknowledged the expiry of Jean-Marc CARCELES’ term as non-voting Director and decided not to fill the vacancy; ❯ acknowledged the expiry of Francis HENRY’s term as non-voting Director and decided not to fill the vacancy.

2018 Registration document CRÉDIT FONCIER 35 CORPORATE GOVERNANCE REPORT ADMINISTRATIVE AND EXECUTIVE BODIES

Risk Remuneration End of Attendance Management Audit and Selection Appointments Board of Directors Board role Start of term term rate Committee Committee Committee Committee L. MIGNON 05/17/2018 2022 OGM 80.00% M. BRUNEL (1) 05/10/2012 2020 OGM 71.43% 80% 100% P. DESVERGNES (2) 04/26/2010 01/10/2019(2) 28.57% B. DUCHESNE 05/03/2013 2020 OGM 57.14% J-P. DUMORTIER 06/24/2014 2022 OGM 100.00% 100% 100% N. ETCHEGOÏNBERRY 10/15/2009 2020 OGM 85.71% 100% 100% C. FABRESSE 05/03/2013 2024 OGM 85.71% C. HALBERSTADT 05/10/2012 2020 OGM 100.00% N. NAMIAS (3) 11/05/2010 2020 OGM 80.00% 33% 100% V. PANCRAZI (4) 05/02/2016 2022 OGM 100.00% 100% 100% 100% 100% N. PLANTROU 06/24/2014 2024 OGM 71.43% 80% 67% B. SOLANET 07/26/2016 2020 OGM 100.00% E. POULIQUEN 06/24/2014 2024 OGM 57.14% B. ZAKIA 09/28/2017 85.71% 40% 40% J-M. ARNAUD SAINT MARTIN (alt. S. CETINA) 10/25/2017 100.00% C. DELAVEAU (alt. S. LAHOGUE) 10/25/2017 100.00% F. PÉROL 04/26/2010 05/16/2018 100.00% G. BARBOT 07/23/2007 05/16/2018 100.00% 100% 100% D. GARNIER 10/15/2009 11/30/2018 100.00% 100% 100% A-C. PONT 02/17/2015 11/08/2018 100.00% 100% 100% F. RIAHI 11/05/2010 06/01/2018 100.00% 50% 50% L. ROUBIN 07/26/2016 11/01/2018 100.00% F. HENRY 05/02/2016 05/16/2018 0.00% J-M. CARCELES 05/10/2012 05/16/2018 0.00% (1) Chairman of the Remuneration and Selection Committee effective May 16, 2018. (2) The Board of Directors has learned of the passing of Mr Pierre DESVERGNES, who died on January 10, 2019. (3) Chairman of the Audit Committee effective November 8, 2018. (4) Chairman of the Audit Committee until November 8, 2018, Chairman of the Risk Management Committee effective November 8, 2018.

Chairman Chairman Director Member Director – Representative of BPCE Non-voting director Representative of the Central Works Council Government Commissioner

12 7 84%

Number of members Number of Board Average attendance at December 31, 2018 Meeting rate

2018 Registration document 36 CRÉDIT FONCIER CORPORATE GOVERNANCE REPORT ADMINISTRATIVE AND EXECUTIVE BODIES 2

■ OFFICES AND POSITIONS OF MEMBERS OF THE BOARD OF DIRECTORS

DIRECTORS REPRESENTING BPCE, 100% SHAREHOLDER OF CRÉDIT FONCIER ❯ Mr Laurent MIGNON ■ Profile

Date of birth: A graduate of the HEC business school and Stanford Executive Program, Laurent MIGNON worked in several 12/28/1963 divisions of Banque Indosuez over a period of more than ten years, including positions on the trading floor and in investment banking. Nationality: In 1996, he joined the London bank Schroders, then AGF in 1997 as Chief Financial Officer. He was appointed French a member of the Executive Committee in 1998, then Deputy Chief Executive Officer in charge of Banque AGF, Corporate address: AGF Asset Management, and AGF Immobilier in 2002, then Chief Executive Officer in charge of the Life and Financial Services and Credit Insurance Division in 2003, then Chief Executive Officer and Chairman of the 50, avenue Pierre Mendès France Executive Committee in 2006. 75201 Paris Cedex 13 Between September 2007 and May 2009, he was a managing partner at Oddo et Cie, alongside Philippe ODDO. In 2009, Laurent MIGNON was appointed Chief Executive Officer of Natixis and member of the Management Board of BPCE in 2013. On June 1, 2018, Laurent MIGNON was appointed Chairman of the Management Board of BPCE. Expertise useful to the Board: Extensive expertise in the areas of banking, insurance, and asset management, strategic vision in France and abroad, international experience.

• Chairman of the Management ■ Company, Offices and Positions Board of BPCE 2018 • Chairman of the Board of Directors NATIXIS * – SA CNP ASSURANCES – SA Date of first appointment: 05/17/2018 Chief Executive Officer (until 05/31/2018) Director Term of office ends: 2022 OGM ARKEMA * – SA NATIXIS * – SA Director Chairman of the Board of Directors NATIXIS INVESTMENT MANAGERS – SA BPCE – SACS Chairman of the Board of Directors (until 06/01/2018) Chairman of the Management Board AROP – ASSOCIATION CE HOLDING PARTICIPATIONS – SAS Director Director NATIXIS ASSURANCES – SA COFACE * – SA Director (until 06/07/2018) Chairman (until 06/01/2018) CRÉDIT FONCIER DE FRANCE – SA Chairman of the Board of Directors

2017 NATIXIS * – SA AROP – ASSOCIATION Chief Executive Officer Director ARKEMA * – SA NATIXIS ASSURANCES – SA Director Director NATIXIS INVESTMENT MANAGERS – SA COFACE * – SA Chairman of the Board of Directors Chairman

2016 NATIXIS * – SA AROP – ASSOCIATION Chief Executive Officer Director ARKEMA * – SA COFACE * – SA Director Chairman NATIXIS INVESTMENT MANAGERS – SA Chairman of the Board of Directors

2015 NATIXIS * – SA AROP – ASSOCIATION Chief Executive Officer Director ARKEMA * – SA COFACE * – SA Director Chairman NATIXIS INVESTMENT MANAGERS – SA Chairman of the Board of Directors

2014 NATIXIS * – SA NATIXIS INVESTMENT MANAGERS – SA Chief Executive Officer Chairman of the Board of Directors ARKEMA * – SA COFACE * – SA Director Chairman * Listed company

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❯ Ms Christine FABRESSE ■ Profile

Date of birth: A graduate of the École Supérieure de Commerce de Montpellier, Ms Christine FABRESSE began her career in 05/24/1964 the sales organization of Crédit Lyonnais Investment Bank before moving into human resources. She later held various positions at Groupe Crédit Agricole. Nationality: She joined Groupe Caisse d’Épargne in 2008 as Director of sales initiatives and then Head of retail banking for French the Caisses d’Épargne. Since 2009, she has been Head of retail banking for the Caisses d’Épargne. In Corporate address: April 2011, she was appointed Head of development for the Caisses d’Épargne within the Commercial Banking and Insurance business line of BPCE. 50, avenue Pierre Mendès France In June 2013, she was appointed Chairman of the Management Board for Caisse d’Épargne 75013 Paris Languedoc-Roussillon. On November 1, 2018, Christine FABRESSE was appointed a member of the Management Board of BPCE, and Chief Executive Officer in charge of Retail Banking and Insurance. Expertise useful to the Board: Banking strategy, human resources, distribution, communication/marketing, corporate transformation.

• Chief Executive Officer in charge ■ Company, Offices and Positions of Retail Banking Activities and Insurance, member of the Management 2018 Board of BPCE CRÉDIT FONCIER DE FRANCE – SA BPCE VIE – SA Director Director, Chairman of the Audit Committee • Member of the Board of Directors (until 12/12/2018) Date of first appointment: 05/03/2013 CAISSE D’ÉPARGNE LANGUEDOC-ROUSSILLON – Term of office ends: SACS BASTIDE LE CONFORT MÉDICAL * – SA 2024 OGM Chairman of the Management Board Director (until 10/30/2018) BPCE – SACS IT – CE EIG Permanent Representative of CEP Member of the Management Board Languedoc Roussillon, member of the Supervisory NATIXIS INVESTMENT MANAGERS – SA Board (until 10/15/2018) Permanent Representative of BPCE, Director COMPAGNIE DE FINANCEMENT FONCIER – SA BANQUE PALATINE – SA Director, member of the Audit Committee member of Chairman of the Board of Directors the Risk Management Committee (until 11/01/2018) FÉDÉRATION NATIONALE DES CAISSES BPCE – IT EIG D’ÉPARGNE – ASSOCIATION Permanent Representative of CEPLR, Director Director (until 10/15/2018) ERILIA – SA Director

2017 CRÉDIT FONCIER DE FRANCE – SA BPCE – IT EIG Director Permanent Representative of CEPLR, Director CAISSE D’ÉPARGNE LANGUEDOC-ROUSSILLON – ELLISPHERE – SA SACS Director (until 04/13/2017) Chairman of the Management Board ERILIA – SA IT – CE EIG Director Permanent Representative of CEP Languedoc- BPCE VIE – SA Roussillon, member of the Supervisory Board Director, Chairman of the Audit Committee COMPAGNIE DE FINANCEMENT FONCIER – SA Director, member of the Audit Committee and member of the Risk Management Committee

2016 CRÉDIT FONCIER DE FRANCE – SA COMPAGNIE DE FINANCEMENT FONCIER – SA Director Director, member of the Audit Committee and member CAISSE D’ÉPARGNE LANGUEDOC-ROUSSILLON – of the Risk Management Committee SACS BPCE – IT EIG Chairman of the Management Board Permanent Representative of CEPLR, Director IT – CE EIG ELLISPHERE – SA Permanent Representative of CEP Languedoc- Director Roussillon, member of the Supervisory Board ERILIA – SA Director

2015 CRÉDIT FONCIER DE FRANCE – SA COMPAGNIE DE FINANCEMENT FONCIER – SA Director Director, member of the Audit Committee and member CAISSE D’ÉPARGNE LANGUEDOC-ROUSSILLON – of the Risk Management Committee SACS BPCE – IT EIG Chairman of the Management Board Permanent Representative of CEPLR, Director IT – CE EIG ELLISPHERE – SA Permanent Representative of CEP Languedoc- Director Roussillon, member of the Supervisory Board

2014 CRÉDIT FONCIER DE FRANCE – SA IT – CE EIG Director Permanent Representative of CEP Languedoc- CAISSE D’ÉPARGNE LANGUEDOC-ROUSSILLON – Roussillon, member of the Supervisory Board SACS Chairman of the Management Board * Listed company

2018 Registration document 38 CRÉDIT FONCIER CORPORATE GOVERNANCE REPORT ADMINISTRATIVE AND EXECUTIVE BODIES 2

❯ Ms Catherine HALBERSTADT ■ Profile

Date of birth: In 1982, with two advanced degrees (in Accounting and in Business, Administration and Finance) from the 10/09/1958 Business School of Clermont-Ferrand, Catherine HALBERSTADT joined Banque Populaire du Massif Central, where she served as Head of Human Resources, then Chief Financial Officer and Chief Operations Officer and, Nationality: from 2000 onward, Deputy CEO. In 2008, Catherine HALBERSTADT became Chief Executive Officer of Natixis French Factor. Corporate address: She served as the Chief Executive Officer of Banque Populaire du Massif Central from September 1, 2010 until March 25, 2016. 50, avenue Pierre Mendès France In January 2016, Catherine HALBERSTADT was appointed a member of the BPCE Management Board in 75201 Paris Cedex 13 charge of Human Resources, Group Internal Communications and the Corporate Secretary’s Office. Expertise useful to the Board: General management of a bank.

• Chief Executive Officer, Human ■ Company, Offices and Positions Resources and Group Internal Communications and member 2018 of the Management Board of BPCE CRÉDIT FONCIER DE FRANCE – SA NATIXIS * – SA Director Permanent Representative of BPCE, Director • Member of the Board of Directors Date of first appointment: BPCE – SA BPI FRANCE FINANCEMENT 05/10/2012 Member of the Management Board in charge Director, Chairman of the Remuneration Committee, Term of office ends: of Human Resources and Internal Communication member of the Audit Committee and member 2020 OGM of the Risk Management Committee 2017 CRÉDIT FONCIER DE FRANCE – SA BPCE – SA Director Member of the Management Board in charge BPI FRANCE FINANCEMENT – SA of Human Resources and Internal Communication Director, Chairman of the Appointments Committee, Chairman of the Remuneration Committee, member of the Audit Committee, and member of the Risk Management Committee

2016 BANQUE POPULAIRE DU MASSIF CENTRAL – SA BPCE – SA Chief Executive Officer (until 03/25/2016) Member of the Management Board in charge CRÉDIT FONCIER DE FRANCE – SA of Human Resources and Internal Communication Director BPI FRANCE FINANCEMENT – SA Director, Chairman of the Appointments Committee, Chairman of the Remuneration Committee, member of the Audit Committee, and member of the Risk Management Committee

2015 BANQUE POPULAIRE DU MASSIF CENTRAL – SA BPI FRANCE FINANCEMENT – SA Chief Executive Officer Director, Chairman of the Appointments Committee, CRÉDIT FONCIER DE FRANCE – SA Chairman of the Remuneration Committee, Director member of the Audit Committee, and member of the Risk Management Committee

2014 BANQUE POPULAIRE DU MASSIF CENTRAL – SA BPI FRANCE FINANCEMENT – SA Chief Executive Officer Director, Chairman of the Appointments Committee, CRÉDIT FONCIER DE FRANCE – SA Chairman of the Remuneration Committee, Director member of the Audit Committee, and member of the Risk Management Committee * Listed company

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❯ BPCE – Permanent Representative ■ Profile Mr Nicolas NAMIAS

Date of birth: A graduate of the Institut d’Études Politiques de Paris, the École Supérieure des Sciences Économiques et 03/25/1976 Commerciales (ESSEC), and the École Nationale d’Administration, Nicolas NAMIAS began his career at the Ministry of the Economy and Finance, in the Treasury Division. He started at the “International financial and Nationality: monetary system” office, then moved to the “Savings and financial markets” office. French From July 2008 to May 2012, he was at Groupe BPCE, first with the Finance Division, then as Head of Corporate address: performance management for the retail banking business. 50, avenue Pierre Mendès France From 2012 to 2014, he was an advisor to the Prime Minister for financing the economy and international economic affairs. 75201 Paris Cedex 13 From 2014 to May 2018, Groupe BPCE/Natixis appointed him Head of Strategy and member of the Executive Committee, then Director of Finance and Strategy and as a member of the Executive Management Committee. Since June 1, 2018, Nicolas NAMIAS has been Chief Executive Officer in charge of Finance and Strategy and a member of the Management Board. Expertise useful to the Board: Finance, strategy, sales and insurance development, legal affairs.

• Chief Executive Officer, Finance, ■ Company, Offices and Positions Strategy and Legal Affairs, Corporate Secretary’s Office of the Supervisory 2018 Board and a member of the BPCE NATIXIS PARTNERS – SA NATIXIS COFICINE – SA Management Board Director (until 07/10/2018) Permanent Representative of Natixis, Director • Member of the Board of Directors NATIXIS PARTNERS ESPANA – SA (SPAIN) BPCE – SACS Date of first appointment: Director (until 01/17/2018) Chief Executive Officer of Finance and Strategy, 11/05/2010 IFCIC – INSTITUT POUR LE FINANCEMENT DU member of the Management Board Term of office ends: CINÉMA ET DES INDUSTRIES CULTURELLES – SA CRÉDIT FONCIER DE FRANCE – SA 2020 OGM Permanent Representative of Natixis, Director Permanent Representative of BPCE, Director NATIXIS ASSURANCES – SA CE HOLDING PARTICIPATIONS – SAS • Member of the Audit Committee Director (until 06/19/2018) Director Date of first appointment: BoD of 06/01/2018 2017 • Chairman of the Audit Committee NATIXIS PARTNERS – SA IFCIC – INSTITUT POUR LE FINANCEMENT DU Date of first appointment: Director CINÉMA ET DES INDUSTRIES CULTURELLES – SA BoD of 11/08/2018 NATIXIS PARTNERS ESPANA – SA (SPAIN) Permanent Representative of Natixis, Director Director NATIXIS ASSURANCES – SA • Member of the Risk Management Director Committee Date of first appointment: 2016 BoD of 06/01/2018 NATIXIS PARTNERS – SA IFCIC – INSTITUT POUR LE FINANCEMENT DU Director CINÉMA ET DES INDUSTRIES CULTURELLES – SA NATIXIS PARTNERS ESPANA – SA (SPAIN) Permanent Representative of Natixis, Director Director

2015 NATIXIS PARTNERS – SA Director

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DIRECTORS REPRESENTING THE CAISSES D’ÉPARGNE ❯ Ms Nicole ETCHEGOÏNBERRY ■ Profile

Date of birth: With a PhD in Information Technology, Ms Nicole ETCHEGOÏNBERRY began her career in Information Systems 12/17/1956 at Banque Courtois, then at the Fédération du Crédit Mutuel Midi Atlantique. After serving as Head of Development and Markets at Caisse Régionale du Crédit Agricole Mutuel of Toulouse, she joined Caisse Nationality: d’Épargne de Midi-Pyrénées in 2001 to manage the IT migration for banking operations. From 2002 to 2005, French she was also Head of Project Management of Siris, one of three IT communities in the Groupe Caisse d’Épargne. From 2005 to 2008, Ms ETCHEGOÏNBERRY was the Executive Manager of Gestitres, a former Corporate address: subsidiary of Groupe Caisse d’Épargne, specialising in securities accounts and custody of financial instruments. 12, rue de la Maison-Rouge – CS 10620 Beginning in July 2008, she chaired the Management Board of the Economic Interest Group (EIG) GCE 45146 Saint-Jean-de-la-Ruelle Business Services tasked with IT Project Management for Groupe Caisse d’Épargne. She has chaired the Management Board of Caisse d’Épargne Loire-Centre since August 1, 2009. Expertise useful to the Board: Information systems, finance, sales development, expertise in functions within deliberative bodies (Chairman of the Board of Directors, Director, etc.).

• Chairman of the Management Board ■ Company, Offices and Positions of Caisse d’Épargne Loire-Centre 2018 • Member of the Board of Directors ASSOCIATION HABITAT EN RÉGION TOURAINE LOGEMENT – SA HLM Date of first appointment: Permanent Representative of the CELC, Director Vice-Chairman of the Board of Directors 10/15/2009 Term of office ends: BPCE SOLUTIONS CRÉDIT – EIG CAISSE D’ÉPARGNE LOIRE-CENTRE – SACS 2020 OGM Permanent Representative of the CELC, Chairman of the Management Board Chairman of the Board of Directors NATIXIS – SA • Member of the Audit Committee BPCE IOM – SA Director Date of first appointment: Director BoD of 05/05/2015 ALBIANT-IT – SA BPCE SERVICES FINANCIERS – EIG Permanent Representative of the CELC, Director • Member of the Risk Management Chairman of the Board of Directors ASSOCIATION LES ELLES DE BPCE Committee BPCE - IT EIG Chairman of the Board of Directors Date of first appointment: Permanent Representative of CELC, Director ASSOCIATION PARCOURS CONFIANCE BoD of 05/05/2015 IT - CE EIG LOIRE-CENTRE Permanent Representative of CELC, Director member of the Supervisory Board FÉDÉRATION NATIONALE DES CAISSES D’ÉPARGNE BPCE TRADE – EIG – ASSOCIATION Permanent representative of CELC, Permanent Representative of the CELC, Director Chairman of the Board of Directors

2017 BPCE SOLUTIONS CRÉDIT – EIG IT - CE EIG Permanent Representative of the CELC, Permanent Representative of CELC, Chairman of the Board of Directors member of the Supervisory Board BPCE IOM – SA BPCE TRADE – EIG Director Permanent Representative of CELC, BPCE SERVICES FINANCIERS – EIG Chairman of the Board of Directors (since 05/12/2017) Chairman of the Board of Directors TOURAINE LOGEMENT – SA HLM BPCE - IT EIG Vice-Chairman of the Board of Directors Permanent Representative of CELC, Director CAISSE D’ÉPARGNE LOIRE-CENTRE – SACS Chairman of the Management Board

2016 BPCE SOLUTIONS CRÉDIT – EIG BPCE - IT EIG Permanent Representative of the CELC, Permanent Representative of CELC, Director Chairman of the Board of Directors IT - CE EIG BPCE IOM – SA Permanent Representative of CELC, Director member of the Supervisory Board BPCE SERVICES FINANCIERS – EIG CAISSE D’ÉPARGNE LOIRE-CENTRE – SACS Chairman of the Board of Directors Chairman of the Management Board

2015 BPCE SOLUTIONS CRÉDIT – EIG BPCE - IT EIG Permanent Representative of the CELC, Permanent Representative of CELC, Director Chairman of the Board of Directors CAISSE D’ÉPARGNE LOIRE-CENTRE – SACS BPCE IOM – SA Chairman of the Management Board Director BPCE SERVICES FINANCIERS – EIG Chairman of the Board of Directors

2014 BPCE SOLUTIONS CRÉDIT – EIG CAISSE D’ÉPARGNE LOIRE-CENTRE – SACS Permanent Representative of the CELC, Chairman of the Management Board Chairman of the Board of Directors BPCE IOM – SA Director

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❯ Mr Nicolas PLANTROU ■ Profile

Date of birth: A business school graduate holding a Master’s degree in Private law, he has held a number of positions over 12/14/1949 the years, starting his career with PriceWaterhouse and going on to head a law firm specializing in corporate law (he is a member of the Rouen Bar) and later an auditing firm. In the various offices in which he served in regional Nationality: and national firms, he acquired expertise recognized by the French Institute of Corporate Directors. He is a French certified corporate director. Corporate address: He is currently Chairman of the Steering and Supervisory Board of Caisse d’Épargne Normandie and Vice-Chairman of the BPCE Supervisory Board. 151, rue d’Uelzen – BP 554 Expertise useful to the Board: Accounting, auditing, corporate law and tax law. 76230 Bois-Guillaume

• Chairman of the Steering Committee ■ Company, Offices and Positions and the Supervisory Board of Caisse d’Épargne Normandie 2018 SOCIÉTÉ LOCALE D’ÉPARGNE ROUEN ELBEUF CE HOLDING PARTICIPATIONS – SA • Member of the Board of Directors YVETOT (COOPERATIVE) Chairman Date of first appointment: Chairman of the Board of Directors 06/24/2014 CHU CHARLES NICOLE Term of office ends: CAISSE D’ÉPARGNE DE NORMANDIE – SACS Vice-Chairman of the Supervisory Board 2024 OGM Chairman of the Steering and Supervisory Board, FÉDÉRATION NATIONALE DES CAISSES D’ÉPARGNE Chairman of the Remuneration Committee – ASSOCIATION • Member of the Remuneration and the Appointments Committee, member Director Committee of the Audit and Risk Management Committee FIL SEINE – FONDATION Date of first appointment: CRÉDIT FONCIER DE FRANCE – SA Vice-Chairman of the Board of Directors BoD of 05/02/2016 Director FONDATION BELEM • Member of the Appointments BPCE – SA Chairman Committee Vice-Chairman of the Supervisory Board and member of the Audit Committee Date of first appointment: BoD of 05/02/2016 2017 SOCIÉTÉ LOCALE D’ÉPARGNE ROUEN ELBEUF CRÉDIT FONCIER DE FRANCE – SA YVETOT (COOPERATIVE) Director Chairman of the Board of Directors BPCE – SA CAISSE D’ÉPARGNE DE NORMANDIE – SACS Vice-Chairman of the Supervisory Board Chairman of the Steering and Supervisory Board, and member of the Audit Committee Chairman of the Remuneration Committee and CE HOLDING PARTICIPATIONS – SA the Appointments Committee, member of the Audit Chairman and Risk Management Committee

2016 SOCIÉTÉ LOCALE D’ÉPARGNE ROUEN ELBEUF CRÉDIT FONCIER DE FRANCE – SA YVETOT (COOPERATIVE) Director Chairman of the Board of Directors BPCE – SA CAISSE D’ÉPARGNE DE NORMANDIE – SACS Vice-Chairman of the Supervisory Board Chairman of the Steering and Supervisory Board, and member of the Audit Committee Chairman of the Remuneration Committee CE HOLDING PARTICIPATIONS – SA and the Appointments Committee, member Director of the Audit and Risk Management Committee

2015 SOCIÉTÉ LOCALE D’ÉPARGNE ROUEN ELBEUF CRÉDIT FONCIER DE FRANCE – SA YVETOT (COOPERATIVE) Director Chairman of the Board of Directors BPCE – SA CAISSE D’ÉPARGNE DE NORMANDIE – SACS Vice-Chairman of the Supervisory Board Chairman of the Steering and Supervisory Board, and member of the Audit Committee Chairman of the Remuneration Committee CE HOLDING PARTICIPATIONS – SA and the Appointments Committee, member Director of the Audit and Risk Management Committee

2014 SOCIÉTÉ LOCALE D’ÉPARGNE ROUEN ELBEUF CRÉDIT FONCIER DE FRANCE – SA YVETOT (COOPERATIVE) Director Chairman of the Board of Directors CAISSE D’ÉPARGNE DE NORMANDIE – SACS Chairman of the Steering and Supervisory Board, Chairman of the Remuneration Committee and the Appointments Committee, member of the Audit and Risk Management Committee

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❯ Ms Bénédicte SOLANET ■ Profile

Date of birth: A graduate of the École Supérieure de Commerce de Lyon, Bénédicte SOLANET also earned a master’s 07/13/1970 degree in business law from the University of Lyon 3, a Professional Lawyer’s Certificate and a graduate degree in Accounting and Finance (DESCF). Nationality: She began her professional career in 1996 as a lawyer working for the law firm of Archibald Andersen in Lyon French before joining the Actor law firm and later Ernst & Young in Bordeaux. From 2001 to 2002, she was the Audit Corporate address: Manager on the banking team at Ernst & Young in Bordeaux. 455, promenade des Anglais In 2004, Bénédicte SOLANET joined the Caisse d’Épargne des Pays de la Loire in Nantes, where she held a series of positions, including Head of the Accounting department’s IFRS Programme, Head of the Risk 06205 Nice Cedex 3 Management department’s Risk Policy and Ventures Unit and then Project Manager in connection with the merger/migration of Caisses d’Épargne Bretagne and Pays de la Loire. In 2009, she headed the Change Management Team for GCE Business Services (with Caisses d’Épargne as the Project Owner) as part of the Securities Convergence Project. From 2011 to 2013 she was Director of Projects in the Group Projects department of BPCE SA. Bénédicte SOLANET joined Caisse d’Épargne Côte d’Azur as Strategic Planning Director in 2014 and, on February 1, 2015, became Corporate Secretary and Director of Strategic Planning and Quality. On April 27, 2018, Bénédicte SOLANET was appointed member of the Management Board in charge of the Resources and Transformation Division at the Caisse d’Épargne Côte d’Azur. Expertise useful to the Board: Business strategy, governance, accounting, auditing, corporate law and tax law.

• Member of the Management Board ■ Company, Offices and Positions in charge of the Resources and Transformation Division at the Caisse 2018 d’Épargne Côte d’Azur CRÉDIT FONCIER DE FRANCE – SA CAISSE D’ÉPARGNE CÔTE D’AZUR – SA Director Member of the Management Board in charge • Member of the Board of Directors of the Resources and Transformation Division Date of first appointment: 07/26/2016 2017 Term of office ends: CRÉDIT FONCIER DE FRANCE – SA 2020 OGM Director

2016 CRÉDIT FONCIER DE FRANCE – SA Director

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DIRECTORS REPRESENTING THE BANQUE POPULAIRE BANKS ❯ Mr Pierre DESVERGNES ■ Profile

Date of birth: After completing Master’s level studies in literature, Pierre DESVERGNES was appointed as Attaché to the 11/23/1950 (died 01/10/2019) Lycée de Dammarie-les-Lys (Seine-et-Marne) in 1975. He joined the Scholastic and University Board of Directors in 1982, and was appointed Accounting Officer for the Lycée Henry-Moissan in Meaux. In 1990, he Nationality: became Liaison Officer to Michel GELLY and then Vice-Chairman under Christian HÉBRARD. From 2002 to French 2018 he served as Chairman of CASDEN Banque Populaire. Corporate address: He was Vice-Chairman of ESPER and had served in turn as Director of Banque Fédérale des Banques Populaires, the central institution of the Groupe Banque Populaire from 2004 to 2009, and of Banques 91, cours des Roches – NOISIEL Populaires Participations from 2009 to 2010. 77424 Marne-la-Vallée Cedex Expertise useful to the Board: Effective general management of CASDEN in the field of human resources and banking production (savings and loans).

• Chairman of CASDEN Banque Populaire ■ Company, Offices and Positions • Member of the Board of Directors 2018 Date of first appointment: SAS FINANCE CASDEN BANQUE POPULAIRE – SA 04/26/2010 Permanent Representative of CASDEN Banque Honorary Chairman, Chairman (until 06/27/2018) Term of office ends: Populaire, Chairman 2024 OGM ARTS ET VIE – ASSOCIATION BPCE – SA Director Member of the Supervisory Board INTER PROMO – SARL and of the Appointments and Remuneration Manager (until 07/05/2018) Committee (until 06/27/2018) PARNASSE MAIF – SA CRÉDIT FONCIER DE FRANCE – SA Director Director

2017 SAS FINANCE CRÉDIT FONCIER DE FRANCE – SA Permanent Representative of CASDEN Banque Director Populaire, Chairman CASDEN BANQUE POPULAIRE – SA BUREAU DE MANAGEMENT FINANCIER – SA Chairman Director (until 10/20/2017) INTER PROMO – SARL PARNASSE FINANCE – SA Managing Partner Chairman of the Board of Directors (until 10/03/2018) BPCE – SA Member of the Supervisory Board and of the Appointments and Remuneration Committee

2016 SAS FINANCE CRÉDIT FONCIER DE FRANCE – SA Permanent Representative of CASDEN Banque Director Populaire, Chairman CASDEN BANQUE POPULAIRE – SA BUREAU DE MANAGEMENT FINANCIER – SA Chairman Director INTER PROMO – SARL PARNASSE FINANCE – SA Managing Partner Chairman of the Board of Directors BPCE – SA Member of the Supervisory Board and of the Appointments and Remuneration Committee

2015 SAS FINANCE CRÉDIT FONCIER DE FRANCE – SA Permanent Representative of CASDEN Banque Director Populaire, Chairman CASDEN BANQUE POPULAIRE – SA BUREAU DE MANAGEMENT FINANCIER – SA Chairman Director INTER PROMO – SARL PARNASSE FINANCE – SA Managing Partner Chairman of the Board of Directors BPCE – SA Member of the Supervisory Board and of the Appointments and Remuneration Committee

2014 SAS FINANCE BPCE – SA Permanent Representative of CASDEN Banque Member of the Supervisory Board and of the Populaire, Chairman Appointments and Remuneration Committee BUREAU DE MANAGEMENT FINANCIER – SA CRÉDIT FONCIER DE FRANCE – SA Director Director PARNASSE FINANCE – SA INTER PROMO – SARL Chairman of the Board of Directors Managing Partner

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❯ Mr Bruno DUCHESNE ■ Profile

Date of birth: A graduate of Essec with an advanced degree in Management Science and a Master’s degree in Management 09/06/1958 from the EM Lyon (Lyon Management School), Bruno DUCHESNE was Chief Administrative and Financial Officer, then Deputy Chief Executive Officer of the Information systems EIG of Caisses d’Épargne. He then Nationality: joined Caisse d’Épargne de Franche-Comté as a member of the Management Board in charge of Banking and French Information Systems. In 2000, he joined the Management Board as Head of Bank Operations, then the Resources Division, at Caisse d’Épargne Rhône-Alpes Lyon. In 2007 he was named Head of the Retail Banking Corporate address: Division of Caisse d’Épargne Rhône-Alpes. He became its Chief Executive Officer in December 2011. 5, avenue de Bourgogne – BP 63 In July 2012, he was named Chief Executive Officer of Banque Populaire Bourgogne Franche-Comté. 21802 Quetigny Cedex Expertise useful to the Board: Complex project management, financial management, overall retail banking strategy, organisation and management of commercial networks.

• Chief Executive Officer of Banque ■ Company, Offices and Positions Populaire Bourgogne Franche-Comté 2018 • Member of the Board of Directors IM BP – SCI BPCE – IT EIG Date of first appointment: Managing Partner Permanent Representative of BPFC, Director 05/03/2013 Term of office ends: BANQUE POPULAIRE BOURGOGNE BPCE VIE – SA 2020 OGM FRANCHE-COMTÉ Director Chief Executive Officer CRÉDIT FONCIER DE FRANCE – SA Director

2017 BANQUE POPULAIRE BOURGOGNE ALBIANT-IT – SA FRANCHE-COMTÉ Director (until 12/31/2017) Chief Executive Officer BPCE – IT EIG CRÉDIT FONCIER DE FRANCE – SA Permanent Representative of BPFC, Director Director BPCE VIE – SA NATIXIS ASSURANCES – SA Director Director (until 03/23/2017)

2016 BANQUE POPULAIRE BOURGOGNE ALBIANT-IT – SA FRANCHE-COMTÉ Director Chief Executive Officer BPCE – IT EIG CRÉDIT FONCIER DE FRANCE – SA Permanent Representative of BPFC, Director Director NATIXIS ASSURANCES – SA Director

2015 BANQUE POPULAIRE BOURGOGNE NATIXIS ASSURANCES – SA FRANCHE-COMTÉ Director Chief Executive Officer ALBIANT-IT – SA INFORMATIQUE BANQUE POPULAIRE – SA Director Permanent Representative of Banque Populaire BPCE – IT EIG Franche-Comté, Director (until 12/31/2015) Permanent Representative of BPFC, Director CRÉDIT FONCIER DE FRANCE – SA PRIAM BANQUES POPULAIRES – EIG Director Director (until 07/08/2015)

2014 BANQUE POPULAIRE BOURGOGNE NATIXIS ASSURANCES – SA FRANCHE-COMTÉ Director Chief Executive Officer ALBIANT-IT – SA INFORMATIQUE BANQUE POPULAIRE – SA Director Permanent Representative of Banque Populaire PRIAM BANQUES POPULAIRES – EIG Franche-Comté, Director Director CRÉDIT FONCIER DE FRANCE – SA Director

2018 Registration document CRÉDIT FONCIER 45 CORPORATE GOVERNANCE REPORT ADMINISTRATIVE AND EXECUTIVE BODIES

❯ Mr Jean-Paul DUMORTIER ■ Profile

Date of birth: A graduate of the Paris Institute of Political Science (Sciences Po) and the École Nationale d’Administration 12/20/1948 (ENA), Jean-Paul DUMORTIER has held various positions within several banks including the Caisse des dépôts et consignations. Currently executive director in a real estate company, he has also served as Chairman of the Nationality: French Federation of Property and Real Estate Companies (FSIF). French In April 2013, he was appointed Chairman of the Board of Directors of Banque Populaire Rives de Paris. Corporate address: Expertise useful to the Board: Finance, publicly traded companies, real estate investment. 76/78, avenue de France 75204 Paris Cedex 13

• Chairman of the Board of Directors ■ Company, Offices and Positions of Banque Populaire Rives de Paris 2018 • Member of the Board of Directors BANQUE POPULAIRE RIVES DE PARIS – SA IMOCONINVEST 2 OPCI Date of first appointment: Chairman of the Board of Directors Chairman 06/24/2014 Term of office ends: HABITAT RIVES DE PARIS – SCM CRÉDIT FONCIER DE FRANCE – SA 2022 OGM Chairman of the Board of Directors Director, member of the Remuneration and Selection IMOCONINVEST 1 OPCI Committee, member of the Appointments Committee • Member of the Remuneration Chairman IMOCONINVEST 3 OPCI Committee Chairman Date of first appointment: COFACE * – SA Director HOLDING WILSON – SAS BoD of 06/24/2014 Chairman • Member of the Appointments 2017 Committee Date of first appointment: BANQUE POPULAIRE RIVES DE PARIS – SA CRÉDIT FONCIER DE FRANCE – SA BoD of 12/11/2014 Chairman of the Board of Directors Director, member of the Remuneration and Selection HABITAT RIVES DE PARIS – SCM Committee, member of the Appointments Committee Chairman of the Board of Directors SOVAFIM – SA COFACE * – SA Director (until 11/01/2017) Director

2016 BANQUE POPULAIRE RIVES DE PARIS – SA CRÉDIT FONCIER DE FRANCE – SA Chairman of the Board of Directors Director, member of the Remuneration and Selection HABITAT RIVES DE PARIS – SCM Committee, member of the Appointments Committee Chairman of the Board of Directors SOVAFIM – SA COFACE * – SA Director Director

2015 BANQUE POPULAIRE RIVES DE PARIS – SA CRÉDIT FONCIER DE FRANCE – SA Chairman of the Board of Directors Director, member of the Remuneration and Selection HABITAT RIVES DE PARIS – SCM Committee, member of the Appointments Committee Chairman of the Board of Directors SOVAFIM – SA COFACE * – SA Director Director

2014 BANQUE POPULAIRE RIVES DE PARIS – SA CRÉDIT FONCIER DE FRANCE – SA Chairman of the Board of Directors Director, member of the Remuneration and Selection HABITAT RIVES DE PARIS – SCM Committee, member of the Appointments Committee Chairman of the Board of Directors SOVAFIM – SA COFACE * – SA Director Director * Listed company

2018 Registration document 46 CRÉDIT FONCIER CORPORATE GOVERNANCE REPORT ADMINISTRATIVE AND EXECUTIVE BODIES 2

INDEPENDENT DIRECTORS ❯ Ms Meka BRUNEL ■ Profile

Date of birth: A graduate of ESTP, Meka BRUNEL also holds an MBA from HEC. She joined Ivanhoé Cambridge Europe in 05/09/1956 2011. Nationality: She held the position of Executive President – Europe at Ivanhoé Cambridge Europe before being named Chief Executive Officer of GECINA. French Expertise useful to the Board: Real estate investment specialist for over 25 years, as well as in management Corporate address: and financing devoted to investments on a European scale (UK, France, Germany, Spain, Eastern and Central 14/16, rue des Capucines Europe). 75002 Paris

• Chief Executive Officer, ■ Company, Offices and Positions Director of Gecina 2018 • Member of the Board of Directors CRÉDIT FONCIER DE FRANCE – SA EPRA – SA Date of first appointment: 05/10/2012 Director, Chairman of the Remuneration and Selection Director Term of office ends: 2020 OGM Committee, Chairman of the Appointments Committee FSIF – SYNDICAT PROFESSIONNEL • Member of the Remuneration GECINA – SA Director and Selection Committee Director, Chief Executive Officer Date of first appointment: CONSEIL DE DÉVELOPPEMENT (CODEV) BoD of 05/10/2012 DE LA MÉTROPOLE DU GRAND PARIS (Greater Paris Region Development Council) • Chairman of the Remuneration Chairman and Selection Committee Date of first appointment: 2017 BoD of 05/16/2018 CRÉDIT FONCIER DE FRANCE – SA EUROPE IVANHOÉ CAMBRIDGE – SASU • Member of the Appointments Director, member of the Remuneration and Selection Chairman (until 01/05/2017) Committee Committee, Chairman of the Appointments Committee Date of first appointment: GECINA – SA BoD of 12/11/2014 Director, Chief Executive Officer • Chairman of the Appointments 2016 Committee CRÉDIT FONCIER DE FRANCE – SA EUROPE IVANHOÉ CAMBRIDGE – SASU Date of first appointment: Director, member of the Remuneration and Selection Chairman BoD of 04/06/2016 Committee, Chairman of the Appointments Committee

2015 CRÉDIT FONCIER DE FRANCE – SA EUROPE IVANHOÉ CAMBRIDGE – SASU Director, member of the Remuneration and Selection Chairman Committee, Chairman of the Appointments Committee

2014 EUROPE IVANHOÉ CAMBRIDGE – SASU Chairman

2018 Registration document CRÉDIT FONCIER 47 CORPORATE GOVERNANCE REPORT ADMINISTRATIVE AND EXECUTIVE BODIES

❯ Ms Valérie PANCRAZI ■ Profile

Date of birth: A graduate of the École Polytechnique, Ms PANCRAZI holds a post-graduate degree in Financial Markets from 02/02/1963 the University of Paris – Dauphine and a degree from the École Nationale des Ponts et Chaussées. She began her career in 1988 as Head of Securitization Transactions and International Finance for Groupe Compagnie Nationality: Bancaire (Paribas). In June 1992, she became CEO of Bear Stearns Finance SA. From February 1999 to French October 2004, Ms PANCRAZI held a series of positions at AXA RE, including Deputy Chief Executive Officer of AXA RE Finance, Liaison Officer to the Chairman and Director in charge of Corporate Finance. While at AXA Corporate address: Private Equity (now ARDIAN) from November 2004 to June 2007, she was Director in charge of private equity 6, avenue du Docteur Brouardel discretionary investment mandates for AXA Group entities in France and in foreign countries. Since 2009, 75007 Paris Ms PANCRAZI has been an independent consultant (VAP Conseils) and, since 2012, an expert in corporate finance and financial transactions advising the Paris Court of Appeals. Expertise useful to the Board: Structured finance, corporate finance, allocation and monitoring of non-publicly-traded investments, international financing and securitisation operations.

• Chairman of VAP Conseil ■ Company, Offices and Positions • Member of the Board of Directors 2018 Date of first appointment: CRÉDIT FONCIER DE FRANCE – SA POCLAIN – SAS 05/02/2016 Director, Chairman of the Risk Management Director Term of office ends: Committee, Member of the Audit Committee, 2022 OGM VAP CONSEILS – SASU Remuneration and Selection Committee, Chairman • Member of the Audit Committee and Appointments Committee Date of first appointment: GAGEO – SAS BoD of 05/02/2016 Director • Chairman of the Risk Management 2017 Committee CRÉDIT FONCIER DE FRANCE – SA FREY – SA Date of first appointment: Director, member of the Risk Management Committee, Director (until 05/10/2017) BoD of 11/08/2018 Chairman of the Audit Committee QUANTEL * – SA • Member of the Risk Management POCLAIN – SAS Member of the Supervisory Board Committee Director (until 06/30/2017) Date of first appointment: VAP CONSEILS – SASU BoD of 05/02/2016 Chairman • Chairman of the Audit Committee from 2016 05/02/2016 to 11/08/2018 CRÉDIT FONCIER DE FRANCE – SA FREY – SA • Member of the Remuneration Director, Member of the Risk Management Committee, Director and Selection Committee Chairman of the Audit Committee QUANTEL * – SA Date of first appointment: POCLAIN – SAS Member of the Supervisory Board BoD of 05/16/2018 Director VAP CONSEILS – SASU • Member of the Appointments Chairman Committee Date of first appointment: 2015 BoD of 05/16/2018 FREY – SA QUANTEL * – SA Director Member of the Supervisory Board POCLAIN – SAS VAP CONSEILS – SASU Director Chairman

2014 FREY – SA QUANTEL * – SA Director Member of the Supervisory Board VAP CONSEILS – SASU Chairman * Listed company

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NON-VOTING DIRECTORS ❯ Mr Emmanuel POULIQUEN ■ Profile

Date of birth: Emmanuel POULIQUEN, MD, Clinical Director at the Faculté de Médecine de Paris (Paris Medical School), 10/05/1948 Specialist in General and Thoracic Surgery, has practised at the Clinique du Ter de Ploemeur, where he was Chairman of the Management Board. He has been a Director of Banque Populaire Atlantique since 1994, and Nationality: was Vice-Chairman of the Board and Chairman of the Audit & Accounts Committee until April 25, 2012. He has French also been a Representative of Banque Populaire Atlantique to the Board of Directors of Caisse Régionale du Crédit Maritime Mutuel Atlantique since 2005. Corporate address: In April 2012, he was appointed Chairman of the Board of Directors of Banque Populaire Atlantique, which 1, rue Françoise Sagan – Saint Herblain became Banque Populaire Grand Ouest with the December 7, 2017 merger of the two Banques Populaires de 44919 Nantes Cedex 9 l’Ouest/Atlantique with the two Crédits Maritimes Atlantique/Bretagne-Normandie. Expertise useful to the Board: Strategy, finance.

• Chairman of Banque Populaire ■ Company, Offices and Positions Grand Ouest 2018 • Non-voting director BANQUE POPULAIRE GRAND OUEST (FORMERLY CRÉDIT FONCIER DE FRANCE – SA Date of first appointment: BANQUE POPULAIRE ATLANTIQUE) – SA Non-voting director 06/24/2014 Chairman of the Board of Directors Term of office ends: FONDATION BANQUE POPULAIRE 2024 OGM NATIXIS INTERÉPARGNE – SA Chairman of the Board of Director Director

2017 BANQUE POPULAIRE GRAND OUEST (FORMERLY CRÉDIT FONCIER DE FRANCE – SA BANQUE POPULAIRE ATLANTIQUE) – SA Non-voting director Chairman of the Board of Directors CRÉDIT MARITIME ATLANTIQUE BRETAGNE NATIXIS INTERÉPARGNE – SA NORMANDIE Director Non-voting director (until 12/07/2017)

2016 BANQUE POPULAIRE GRAND OUEST (FORMERLY NATIXIS INTERÉPARGNE – SA BANQUE POPULAIRE ATLANTIQUE) – SA Director Chairman of the Board of Directors CRÉDIT FONCIER DE FRANCE – SA CRÉDIT MARITIME ATLANTIQUE Non-voting director Permanent Representative of BPGO, CRÉDIT MARITIME ATLANTIQUE BRETAGNE Director (until 12/31/2016) NORMANDIE Non-voting director

2015 BANQUE POPULAIRE GRAND OUEST (FORMERLY CRÉDIT FONCIER DE FRANCE – SA BANQUE POPULAIRE ATLANTIQUE) – SA Non-voting director Chairman of the Board of Directors CRÉDIT MARITIME ATLANTIQUE BRETAGNE CRÉDIT MARITIME ATLANTIQUE NORMANDIE Permanent Representative of BPGO, Director Non-voting director NATIXIS INTERÉPARGNE – SA Director

2014 BANQUE POPULAIRE GRAND OUEST (FORMERLY NATIXIS INTERÉPARGNE – SA BANQUE POPULAIRE ATLANTIQUE) – SA Director Chairman of the Board of Directors CRÉDIT FONCIER DE FRANCE – SA CRÉDIT MARITIME ATLANTIQUE Non-voting director Permanent Representative of BPGO, Director CRÉDIT MARITIME ATLANTIQUE BRETAGNE NORMANDIE Non-voting director

2018 Registration document CRÉDIT FONCIER 49 CORPORATE GOVERNANCE REPORT ROLE AND OPERATING RULES OF GOVERNING BODIES

ROLE AND OPERATING RULES OF GOVERNING BODIES

❯ BOARD OF DIRECTORS

OFFICES AND POSITIONS OF MEMBERS BOARD MEETINGS OF THE BOARD OF DIRECTORS GENERAL POINTS Members of the Board of Directors of Crédit Foncier do not hold positions in Board meetings are convened by the Chairman in writing. An agenda and the Company. information pack are included with the notice of meeting. All members of the Board of Directors of Crédit Foncier were re-appointed at the General Meeting of May 10, 2012. At this meeting, the decision was taken NUMBER OF MEETINGS – MAIN TOPICS to extend the term of Directors’ offices from five to six years on a rolling basis, The Board of Directors met seven times in 2018 (on February 9, May 16, so that where possible an equal number of Board members are re-appointed June 26, August 1, November 7, November 21 and December 18). on a regular basis. The usual agenda at Board meetings included: On March 31, 2015, the Annual General Shareholders’ Meeting amended Article 14 of the Crédit Foncier bylaws such that Board members would no ❯ the report on the Company’s activities; longer be required to own 10 shares. ❯ budget approval and resource allocation; The tasks required of the Board of Directors are defined in the Company’s bylaws, so after the changes to European and French regulations, the ❯ reports on audits of Crédit Foncier’s activities (internal control, permanent January 17, 2018 meeting updated the bylaws to add four items: control), the ACPR (French Prudential Supervisory and Resolution Authority); ❯ developments concerning the Group’s risk exposure. ❯ the strategy and policy regarding risk-taking and the monitoring, management and mitigation of risk; ❯ the results of the review of liquidity risk policy, procedures and limits that are QUARTERLY MONITORING OF THE COMPANY’S not included in the risk appetite statement; ACTIVITIES The Board meets at least once every quarter. At each of these meetings, it ❯ regular checks on outsourced activities and the associated risks; reviews the information it has received about Company and Group activities. ❯ the annual review of the efficiency and effectiveness of the risk management function in terms of its positioning, resources and independence. The Board of Directors: There are no shareholders’ agreements affecting the Board’s composition or ❯ approved the 2017 financial statements (Board meeting of February 9, 2018); operations. ❯ examined the financial statements for the first quarter of 2018 (Board meeting of May 16, 2018); BOARD MEMBERS ❯ approved the financial statements for the 1st half of 2018 (Board meeting of August 1, 2018); The Board of Directors has 12 members elected by the Annual General Shareholders’ Meeting. The list of members is provided on page 34. ❯ examined the financial statements for the third quarter of 2018 (Board meeting of November 7, 2018); The composition of the Board of Directors is as follows: ❯ decided to postpone until the Board meeting of February 11, 2019 the review ❯ ten Directors appointed on the proposal of Groupe BPCE; of Crédit Foncier’s 2019 budget (Board meeting of November 7). ❯ two independent directors. STRATEGIC AND FINANCIAL PROJECTS There is also one non-voting director on the Board of Directors. The Board also examines any project whose financial or strategic importance warrants such an examination. It was called to deliberate on: PERSONS WHO REGULARLY ATTEND BOARD ❯ the reappointment of a Permanent Statutory Auditor (Board meeting of MEETINGS February 9, 2018); In respect of the activities it performs in the public interest (Article L. 511-32 of ❯ the specific agreement as to periodic control of Crédit Foncier’s IT activities the French Monetary and Financial Code), Crédit Foncier has a Government that are subcontracted to IT-CE (Board meeting of May 16, 2018); Auditor appointed by the Minister for the Economy. The Government Auditor (Mr Bernard ZAKIA) attends Board of Directors’ meetings and meetings of the ❯ Crédit Foncier’s strategic plan (Extraordinary Board meeting of June 26, Audit Committee and the Risk Management Committee. 2018); ❯ update on the project integrating Crédit Foncier’s operations into Groupe Delegates from the Central Works Council and the Statutory Auditors also BPCE (Board meetings of August 1, November 7, and December 18); attend meetings of the Board of Directors. ❯ update on discussions related to the European directive on covered bonds Meetings may be attended by any other person who may usefully contribute to (Board meeting of November 7); the Board’s deliberations. ❯ trend analysis for the Risk Appetite Framework (Board meeting of November 7, 2018); DUTIES AND POWERS OF THE BOARD ❯ the authorisation granted to implement the Project integrating Crédit In accordance with the law, the Board of Directors determines the overall Foncier’s operations into Groupe BPCE with the sales of the entities Crédit strategy for the Company’s business activities and monitors its Foncier Immobilier, SOCFIM, CFG, and Bien Ici, the closing or sale of ENFI implementation. The bylaws specify that the Board’s role is to deliberate on and the Belgian branch, and the implementation of the solution negotiated the Group’s strategy, the five-year business plan and the annual budget as with exclusive agents (Extraordinary Board meeting of November 21); presented by the Chairman. ❯ the General Inspection department’s 2019 audit plan (Board meeting of December 18); ❯ the authorisation for Crédit Foncier to submit the draft delisting offer covering all shares of Locindus not yet owned by Crédit Foncier (Board meeting of December 18).

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AUTHORISATION OF RELATED-PARTY AGREEMENTS RULES CONCERNING BOARD MEMBERS The Board was also asked to maintain various agreements classified as related-party agreements; these agreements are explained in the Statutory SPECIAL PROVISIONS CONCERNING BOARD MEMBERS Auditors’ special report and were mainly concluded with BPCE or subsidiaries The Board has adopted: of Crédit Foncier. The Board also authorised the signing of the rider to the Management Services Agreement between Crédit Foncier and Locindus, ❯ internal rules (February 27, 2008); which is part of the shutdown of commercial activity on April 1, 2019 (Board ❯ a compliance charter for members of the Board of Directors of Crédit Foncier meeting of December 18, 2018). (December 16, 2016); ❯ a procedure for identifying and managing potential conflicts of interest for BOARD MEMBER ATTENDANCE RATE members of the Board of Directors of Crédit Foncier (November 6, 2017). The Board’s overall attendance rate, i.e. the total number of members attending meetings divided by the total number of current members, was RULES RESTRICTING OR PROHIBITING TRANSACTIONS 84%. The level of attendance at the Board meeting called to review the 2017 INVOLVING SHARES OF COMPANIES ABOUT WHICH annual financial statements was 81%. BOARD MEMBERS HAVE INSIDE INFORMATION When called for due to the nature of the information transmitted to the Board, ASSESSMENT OF THE BOARD’S PERFORMANCE the Chairman will remind the Board members of their obligations as regards The Board of Directors reviewed the report of the Chairman of the inside information and draw their attention to the applicable regulations and Appointments Committee on the December 2017 outside assessment possible penalties. conducted by AeG in its meeting of February 9, 2018.

❯ COMMITTEES CREATED BY THE BOARD

The Company has the following committees: ❯ Remuneration and Selection Committee (rules of procedure approved by Board of Directors on December 12, 2007 and updated by the Board of ❯ Audit Committee (rules of procedure last updated by the Board of Directors Directors on November 7, 2018); on November 7, 2018); ❯ Appointments Committee (rules of procedure approved by the Board of ❯ Risk Management Committee (rules of procedure approved by the Board of Directors on February 17, 2015 and updated by the Board of Directors on Directors on July 28, 2015 and updated by the Board of Directors on November 7, 2018). November 7, 2018);

❯ Composition of committees at December 31, 2018 Remuneration Audit Committee Risk Management Committee and Selection Committee Appointments Committee Nicolas NAMIAS, Chairman Valérie PANCRAZI, Chairman Meka BRUNEL, Chairman Meka BRUNEL, Chairman Nicole ETCHEGOÏNBERRY Nicole ETCHEGOÏNBERRY Jean-Paul DUMORTIER Jean-Paul DUMORTIER Valérie PANCRAZI Nicolas NAMIAS Valérie PANCRAZI Valérie PANCRAZI Nicolas PLANTROU Nicolas PLANTROU

MAIN DUTIES AND POWERS The Risk Management Committee is also responsible for assessing the effectiveness of the internal control and risk management systems. AUDIT COMMITTEE At its Chairman’s initiative or at the request of a majority of its members, the The Audit Committee’s main tasks are to ensure the relevance and continued Risk Management Committee meets at least four times yearly: issues of application of the accounting methods adopted in drawing up the Company’s internal control are handled on a half-yearly basis. Additional meetings may be consolidated financial statements and the Company’s individual financial held as necessary. The Statutory Auditors may participate in meetings on statements and to recommend, where warranted, appropriate supplementary invitation by the Committee Chairman. efforts. It prepares the deliberations of the Board of Directors.

The Audit Committee issues an opinion on the selection or the renewal of REMUNERATION AND SELECTION COMMITTEE Crédit Foncier’s Statutory Auditors and reviews their auditing plan, the results of their audits and recommendations and ensures follow-up as needed. The Remuneration and Selection Committee is tasked with proposing the fixed pay of the Crédit Foncier’s Chief Executive Officer and Deputy Chief Executive At its Chairman’s initiative or at the request of a majority of its members, the Officer(s) to the Board. Audit Committee meets at least four times yearly: accounting and financial matters are handled on a quarterly basis. Additional meetings may be held as The committee is constantly kept informed on the Company’s remuneration necessary. The Statutory Auditors are invited to attend Audit Committee principles and, in particular, on specific rules applied to a number of meetings when the financial statements are examined (quarterly, half-yearly employees whose professional activity has a significant impact on the risk and annually), as well as other meetings, when appropriate and invited by the profile of Crédit Foncier. Committee Chairman. The Remuneration and Selection Committee meets at least once a year.

RISK MANAGEMENT COMMITTEE APPOINTMENTS COMMITTEE The Risk Management Committee’s main duty is to assess the quality of The responsibility of the Appointments Committee is to put forward candidates internal controls, in particular the consistency of the risk assessment, for the office of Director, appraise the diversity of knowledge, set a target for monitoring, and management systems, and to propose any additional gender representation and define the eligibility criteria for independent measures required as a result. It prepares the deliberations of the Board of directors. Directors. The Appointments Committee meets at least once a year.

2018 Registration document CRÉDIT FONCIER 51 CORPORATE GOVERNANCE REPORT ROLE AND OPERATING RULES OF GOVERNING BODIES

NUMBER OF COMMITTEE MEETINGS ❯ examined the risk report; AND ATTENDANCE RATES ❯ reviewed the summary of the permanent control results; ❯ reviewed the report established in accordance with order A-2014-11-03 on Committees internal control; Audit Committee ❯ examined the work carried out in 2018 by General Inspection and the 2019 Number of members at 12/31/2018 3 audit plan; Number of meetings 5 ❯ examined the reports on compliance, permanent control, the CBCP plan, and information system security; Average attendance rate 96% ❯ examined the action plans and systems implemented in response to the Risk Management Committee ECB’s recommendations; Number of members at 12/31/2018 3 ❯ examined the link between the Risk Appetite Framework (RAF) and the Number of meetings 5 remuneration policy; Average attendance rate 87% ❯ reviewed the mediator’s report for 2017; Remuneration and Selection Committee ❯ examined the prices of products and services; Number of members at 12/31/2018 4 ❯ reviewed groupe Crédit Foncier’s macro risk map; Number of meetings 5 ❯ examined the risk management policy; Average attendance rate 90% ❯ examined the remuneration policy and practice; Appointments Committee ❯ examined the implementation of audit recommendations each quarter; Number of members at 12/31/2018 4 ❯ conducted Executive Sessions with the Inspector General (May 14, 2018) and Number of meetings 3 with the Head of Risk Management (July 27, 2018 and December 12, 2018), without the presence of Crédit Foncier management. Average attendance rate 92% REMUNERATION AND SELECTION COMMITTEE The Remuneration and Selection Committee made proposals to the Board of PRESENTATION OF THE COMMITTEES’ ACTIVITIES Directors concerning: DURING THE FINANCIAL YEAR ❯ the 2018 remuneration policy; AUDIT COMMITTEE ❯ the presentation to Crédit Foncier of the regulated categories of staff In 2018, the Audit Committee: subsequent to CRD IV; ❯ the determination of the 2017 variable pay of corporate officers and the ❯ examined the financial statements for the periods ended December 31, 2017, remuneration of the corporate officer for 2018; March 31, 2018, June 30, 2018 and September 30, 2018; ❯ the determination of the remuneration of Laurent MIGNON as Director and ❯ examined the Supervisory Review and Evaluation Process (SREP) Chairman of the Board of Directors (committee of May 9, 2018); requirements for 2018; ❯ the components of the remuneration of the Chief Executive Officer for 2018 in ❯ examined the back-testing of the early repayment model; the context of the draft presented at the June 26, 2018 meeting of the Board ❯ examined the ex-post profitability of loans; of Directors. ❯ examined the audit plan of the team of Statutory Auditors; ❯ examined the issuances of Groupe Crédit Foncier for 2018; APPOINTMENTS COMMITTEE The Appointments Committee examined: ❯ examined the 2018 year-end figures and the draft budget for 2019; ❯ the results of the Board’s external collective and individual evaluation and ❯ held an Executive Session with the Statutory Auditors at the end of the follow-up on the ECB’s recommendation (committee of February 9, 2018); meeting of February 6, 2018, without the members of Crédit Foncier’s management team. ❯ taking into account the EBA’s September 2017 orientations on evaluating the fitness of members of the managerial body and holders of key positions (committee of May 7, 2018); RISK MANAGEMENT COMMITTEE In 2018, the Risk Management Committee: ❯ the annual implementation of an evaluation of the Board of Directors (committee of November 29, 2018). ❯ reviewed Crédit Foncier’s credit and financial risk exposure; The Appointments Committee also made proposals to the Board of Directors ❯ reviewed the annual Risk Appetite Framework (RAF) review; concerning: ❯ reviewed the enhanced compliance system within Groupe Crédit Foncier with ❯ the appointment of Laurent Mignon as Director and Chairman of the Board of respect to the French law separating and regulating banking activities (SRAB) Directors of Crédit Foncier (committee of May 7, 2018). and the Volcker Rule; ❯ proceeded to evaluate the Risk Function;

❯ INTERNAL RULES OF THE BOARD

The Board of Directors unanimously adopted these internal rules at its meeting ❯ specify the Directors’ obligations of professional secrecy and discretion; of February 27, 2008. ❯ define the penalties that apply in the event Directors fail to comply with any of The purpose of these rules is to supplement the bylaws of Crédit Foncier de their obligations. France, and in particular to: The rules may be amended at any time by a decision of the Board of ❯ specify the terms under which the Board of Directors may be convened; Directors. ❯ specify the terms under which the Directors attending the Board meeting may Each Director is individually bound to adhere to these internal rules. deliberate, by means of videoconferencing or other means of telecommunication;

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ARTICLE 1 – CONVENING THE BOARD A Director participating by means of videoconferencing or telecommunication, Directors may be convened to meetings by any means, including by e-mail. who cannot be considered present due to a malfunction, may give their proxy to a Director who is physically present, provided that they bring that proxy to The e-mails are sent to the address that each Director has conveyed to Crédit the attention of the Chairman of the Board. Directors may also indicate a proxy Foncier de France; it is the responsibility of each Director to inform Crédit in advance, stipulating that it will not take effect unless there is a malfunction in Foncier de France of any changes to their e-mail address. the system preventing them from being considered present any longer. Directors must be given notice within a reasonable period of time, and have However, a Director may not in a like manner subdelegate the proxy given to access to the information needed to make an informed decision for a sufficient him or her, which in such a case can no longer be exercised. period time before the meeting. Article 2.3 Minutes In accordance with Article 17 of the bylaws of Crédit Foncier de France, notice of the meeting may be given verbally and without delay if all Directors agree The minutes of the meeting indicate the names of the Directors present, those to it. considered present within the meaning of L. 225-37 of the Code of Commerce, and those excused or absent. These minutes indicate the Furthermore, the period of notice may be reduced in an emergency, with presence or absence of people called to the meeting for reasons required by emergency being defined as an exceptional situation (i) characterised by the law and the presence of any other person who attended all or some of the existence of a short timeframe imposed by a time-limited third party in which meeting. failure to meet the deadline would cause harm to Crédit Foncier de France, (ii) requiring a rapid response from Crédit Foncier de France that would be The occurrence of any technical incident disrupting the proceedings of a incompatible with the normal notice periods of the Board of Directors. meeting held by videoconferencing or telecommunication shall be mentioned in the minutes, including the interruption and restoration of a participant’s Furthermore, whenever confidentiality requires it, and particularly when sensitive attendance by means of videoconferencing or telecommunication. financial, commercial, or strategic information is at stake, the information may be communicated during the session. The minutes are signed by the meeting’s Chairman and at least one Director. If the meeting Chairman cannot do so, it must be signed by at least two Furthermore, the Chairman of the Board of Directors may, with the approval of Directors. the Directors, add items to the Board’s agenda during the session. If this occurs, the representation terms cannot be taken into consideration. The minutes are kept in special registry maintained in accordance with regulations. The copies or excerpts of the minutes are to be certified by the Chairman of the Board of Directors, the Chief Executive Officer, a Deputy Chief ARTICLE 2 – TERMS OF DELIBERATION FOR THE BOARD Executive Officer, or any qualified person. OF DIRECTORS Voting is by show of hands, unless, for any issues of a personal nature, a Article 2.4 Attendance record Director requests a secret ballot. At the head office, an attendance record is maintained, signed by the members of the Board of Directors and any other participants in the meeting, In accordance with Article 17 of the bylaws of Crédit Foncier de France, in their own name or on behalf of other Board members whom they are Directors are considered to be present for the purposes of calculating a representing. This record also mentions the names of the Director considered quorum and majority if they are attending the Board meeting by means of to be present because they attended the meeting by means of videoconferencing or other means of telecommunication that allow the videoconferencing or telecommunication. attendees to be identified and ensure their effective participation, in accordance with the regulations in force. Directors who participated in one or more Board meetings by videoconferencing or telecommunication must in any event at least once per This provision is not applicable when the purpose of the Board meeting is to year sign the Board attendance record next to the words “attended by means prepare the annual and consolidated financial statements or to establish the of videoconferencing or telecommunication” written in the record across from management report or Group management report. Likewise, the Chairman of their name by the Secretary. the Board of Directors may rule out these means of attendance depending on the agenda submitted to the Board; it shall inform the members of this decision before the meeting. ARTICLE 3 – PROFESSIONAL SECRECY AND DUTY OF DISCRETION Article 2.1 Implementation of the videoconferencing All members of the Board of Directors, as well as anyone who may be invited to or telecommunication system attend its meetings, are bound by an obligation of professional secrecy, as When the session is being held by means of videoconferencing or provided for in Article L. 511-33 of the French Monetary and Financial Code telecommunication, the identification and effective participation of the Board and by a duty of discretion regarding its discussions and any confidential members attending by such means must be ensured, in accordance with the information or information presented as confidential by the Chairman of the legal and regulatory provisions in force, by: meeting, as provided for in Article L. 225-37 of the French Commercial Code.

❯ transmitting at least the participants’ voice; and Article 3.1 Statement of confidentiality ❯ continually and simultaneously retransmitting the deliberations. The Chairman of the meeting states that the proceedings of a meeting are Whenever a Director wants to participate in the session by means of confidential whenever regulations or the interests of Crédit Foncier de France videoconferencing or telecommunication, he or she must visit a suitably or groupe Crédit Foncier may require it. equipped location and dial the telephone number given to him or her by Crédit This statement is recorded in the meeting minutes. Foncier de France. The means of videoconferencing and telecommunication must also ensure the Article 3.2 Measures taken to ensure confidentiality confidentiality of the proceedings. Consequently, anyone participating in the The Chairman of the meeting takes the measures necessary to ensure the meeting by such means must certify that the technical means he or she is confidentiality of discussions. This may require all persons taking part in a using fulfil this confidentiality requirement. meeting to sign a confidentiality agreement.

Article 2.2 Participation in Board of Directors meetings by videoconferencing or telecommunication ARTICLE 4 – FAILURE TO COMPLY WITH THE OBLIGATIONS OF BOARD MEMBERS A Director participating in the meeting by means of videoconferencing or telecommunication may represent another Director, provided that the If a Director fails to comply with an obligation, in particular the obligation of Chairman of the Board of Directors has the proxy of the represented Director discretion, the Chairman of the Board of Directors refers the matter to the on the day of the meeting. Board in order to issue a warning to said Director, notwithstanding any measures taken under the applicable legal, regulatory or statutory provisions. If the Chairman of the Board of Directors participates in the Board meeting by such means, the session shall be chaired by the Vice-Chairman of the Board, The Board of Directors may, when proposed by its Chairman, ask that the or by a Director designated for that purpose. Director be removed by the body or competent authority. If there is a malfunction in the videoconferencing or telecommunication system, Said Director is given advance notice of the penalties being considered, and as observed by the Chairman of the Board of Directors, the Board may hold will be able to present observations to the Board of Directors. He or she will valid proceedings and/or continue with only those members who are physically not vote on the penalty decision. present, provided that the quorum conditions are met.

2018 Registration document CRÉDIT FONCIER 53 CORPORATE GOVERNANCE REPORT ROLE AND OPERATING RULES OF GOVERNING BODIES

❯ COMPLIANCE CHARTER FOR MEMBERS OF THE BOARD OF DIRECTORS OF CRÉDIT FONCIER DE FRANCE

Members of the Board of Directors of Crédit Foncier de France (the “Board”) 1.4 - Diligence and effectiveness exercise their mandates in good faith, in accordance with the rules to ensure Board members actively participate, diligently and studiously, in the sessions independence, ethics, integrity, fairness, confidentiality, conduct, and as well as in the decisions of the Board and the specialised committees professionalism that are specific to their mandates. created within it of which they are members, and contribute to the collegiality and effectiveness of their work. ARTICLE 1 – PROFESSIONALISM He or she also attends the Annual General Shareholders’ Meetings. In accordance with Articles L. 511-51 and L. 511-52 of the French Monetary and Financial Code resulting from the enactment into local law of the CRD IV The Board member makes any recommendations that he or she feels would directive, Board members are required at all times to be honourable, improve how the Board operates. He or she helps periodically evaluate the knowledgeable, skilled, and experienced as needed to carry out their duties, to Board. devote sufficient time to carrying out their duties, and to follow the rules on With other Board members, he or she strives to complete the control holding multiple corporate offices. assignments effectively. In particular, he or she ensures that procedures are in place within the Company and groupe Crédit Foncier de France to enable 1.1 - Respect for corporate responsibility and good faith control in accordance with the laws and regulations in force. A Board member must at all times act in the corporate interest of Crédit Foncier de France (the “Company”) and not in any individual interest. He or He or she ensures that the Board’s deliberations result in formal, correctly she acts in good faith in all circumstances. reasoned decisions entered into the meeting minutes. Finally, a Board member also ensures that the actions carried out within the 1.5 - Duty to act and warn Company are consistent with the strategy of groupe Crédit Foncier de France A Board member has a duty to act and clearly express his or her viewpoint and that of Groupe BPCE. and questions. In the course of the debates, he or she strives to persuade the Board of the value of his or her positions. 1.2 - Holding multiple corporate offices and availability The Board member agrees to devote the necessary time and attention to his To that end, he or she has a number of ways to act and make his or her or her duties. positions known, express his or her disagreement, or warn the Board about anything that he or she feels could affect the interests of the Company and To that end, he or she ensures that the number and workload of his or her those of groupe Crédit Foncier de France, particularly by voting no or stating offices allow him or her sufficient availability. reservations during a meeting. In any event, the total number of offices held by the Board member must comply with the laws and regulations that apply to commercial companies, ARTICLE 2 – ETHICS and more particularly to credit institutions, as well as with the rules set by the 2.1 - Adherence to laws and bylaws Company. Board members must adhere to all laws and regulations relating to the As a reminder, under the terms of Article L. 511-52 II and III of the French Company, rules specific to the Company resulting from its bylaws and the Monetary and Financial Code, one executive office and two non-executive Board’s internal rules, and the applicable Governance Codes and best offices, or four non-executive offices may be held concurrently, with the practices. As a reminder, the Company refers to the Corporate Governance stipulation that offices held within a single Group count as only one office and Code for publicly traded companies published by the Association française that offices within companies whose purpose is not primarily commercial, des entreprises privées and the Mouvement des entreprises de France (the including when they have the form of commercial companies, are not counted. AFEP/MEDEF Code). When appointed or re-appointed to an office, the Board member must therefore declare to the Chairman of the Board and the Chief Executive Officer 2.2 - Integrity the responsibilities that he or she holds within entities outside groupe Crédit Any Board member who has been convicted of a crime with no further appeal Foncier de France. If during the course of his or her term, the Board member or stripped of his or her citizenship rights shall inform the Chairman of the wishes to carry out new responsibilities within entities outside groupe Crédit Board and the Chief Executive Officer. Foncier de France, he or she must notify the Chairman of the Board and the Chief Executive Officer of this. Nobody may be appointed a member of the Board – or remain one – if he or she has been given a sentence that prohibits him or her from managing or serving as Director for any business or company. 1.3 - Knowledge and skill The Board member shall be aware of the operating rules specific to the 2.3 - Impeccable credit Company’s legal form, the regulations that relate to his or her duties, and the internal operation of the Board, in order to best serve his or her term. He or The Board member must have impeccable credit. This condition is verified by she is up-to-date on the economic, social, and institutional environment, both the Risk Management Division of Crédit Foncier de France, which informs the nationally and internationally. Appointments Committee at the time of the appointment or re-appointment, and once per year during the Board member’s term. If the Board member More generally, he or she is informed about the strategy and business lines of already holds or has received a loan from Crédit Foncier de France, the groupe Crédit Foncier de France, their challenges, and their specifics. committee is informed of the conditions under which it was approved, and the changes that will be made over the lifetime of that loan. He or she shall strive to obtain, in as little time as is defined by the Board, whatever he or she deems essential in order to make informed decisions 2.4 - Benefits within the Board with full knowledge of the situation. The Board member may not solicit, receive, or accept any direct or indirect He or she seeks to update the knowledge that is useful to properly carrying benefit related to the office he or she holds within groupe Crédit Foncier de out his or her assignment, and takes part in training sessions held by the France. Company. Such sessions offer him or her the opportunity to learn about different subjects regarding his or her office, changes to groupe Crédit Foncier Likewise, the Board member may not receive benefits, particularly commercial de France’s business lines, and applicable regulatory changes. He or she may ones, that are outside the normal standards given to clients of institutions of ask the Company for any additional information he or she deems necessary to groupe Crédit Foncier de France. properly carrying out his or her assignment.

2018 Registration document 54 CRÉDIT FONCIER CORPORATE GOVERNANCE REPORT ROLE AND OPERATING RULES OF GOVERNING BODIES 2

ARTICLE 3 – CONFIDENTIALITY 3.4 - Blackout period for financial instruments issued 3.1 - Professional banking secrecy and duty of discretion by companies in groupe Crédit Foncier de France Members of the Board and its committees, as well as anyone who may be Without prejudice to the general duty to refrain mentioned in section 3.2 invited to attend their meetings, are bound by an obligation of professional above, Board members shall refrain from directly or indirectly conducting any secrecy, as provided for in Article L. 511-33 of the French Monetary and trade, whether on their own behalf or for another, of securities issued by Financial Code and by a duty of discretion regarding their debates and groupe Crédit Foncier de France companies that are tradeable on a regulated discussions and any confidential information they receive, as provided for in exchange or trading platform: Article L. 225-92 of the French Commercial Code. ❯ for a period of 30 calendar days prior to the date when the annual and Generally speaking, information is confidential if it relates to the activity of the half-year accounts are made public; Company or of groupe Crédit Foncier de France or any of its various entities ❯ for a period of 15 days prior to the date when the quarterly information is and had not been made public by the Company or the entity in question. made public. Exceptions may, however, be made to this ban in cases set out by 3.2 - Managing privileged information regulations. In accordance with Article 621-1 of the AMF’s general regulations, privileged information is “specific information that was not made public, which directly or indirectly concerns one or more issuers of financial instruments or one or more ARTICLE 4 – CONFLICT OF INTEREST financial instruments, and which if it were made public, would be likely to have The Board member shall strive to avoid any conflict that could exist between substantial influence on the prices of the financial instruments in question or on his or her own interests and those of the Company. He or she informs the the prices of financial instruments linked to them”. A Board member may not Board, its Chairman, and the Chief Executive Officer of any conflict of interest use privileged information to which he or she has access for his or her own that could be involved. In the event that a conflict of interest is unavoidable, he gain or for the gain of anyone else. In particular, in accordance with or she informs the Board and refrains from participating in debates or Article 622-1 of the AMF’s general regulations, whenever he or she possesses decisions regarding the materials in question. information not made public regarding the Company or any company of groupe Crédit Foncier de France, he or she shall refrain from using it to make The Board member must therefore in all cases preserve his or her trades or have a third party make trades involving its securities. independence of judgement, decision, and action. He or she avoids being influenced by anything that is contrary to the Company’s interests, which it is In accordance with Article 622-1 of the AMF’s general regulations, a Board their duty to defend. member must also refrain from communicating that information to any other person outside the normal course of his or her work, profession, or duties or As such, being a Board member is incompatible with the duties of an for purposes other than the reasons why it was communicated to him or her. employee or executive of any credit institution that is not part of Groupe BPCE. Only the Chairman of the Board of the Company and the Chief A Board member who holds open securities accounts, whether with a Executive Officer may jointly agree to grant an exception in light of the interests company of groupe Crédit Foncier de France or outside of it, agrees to of groupe Crédit Foncier de France. provide any information requested by the Company’s Compliance Division regarding his or her securities accounts and regarding the transactions In all cases, once a Board member is in or enters a business relationship with performed. The total confidentiality of the statements made in this setting is the Company or with any other entity of groupe Crédit Foncier de France as a guaranteed by the Company’s Compliance Division. However, it is client, supplier, or intermediary, whether he or she controls or leads the entity recommended that the Board members place their securities accounts under in question, or holds a corporate office within it or has any interest within it, he a management mandate to make it easier to comply with this charter. or she shall immediately inform the Board, its Chairman, and the Chief Executive Officer. The Chairman of the Board, after receiving notice from the Board members are at all times likely to possess privileged information about Chief Executive Officer, ensures that no preferential treatment is given to him the companies of groupe Crédit Foncier de France whose instruments are or her, and that no agreement requiring the prior authorisation of the Board tradeable on a regulated exchange or trading platform. has been made between that Board member and the Company without To that end, they are automatically on the list of “permanent insiders” having been authorised beforehand, per Articles L. 225-86 and L. 225-87 of regarding those companies’ financial instruments. Furthermore, under the the French Commercial Code. (1) Volcker Rule , Board members may not in any event invest in Covered Funds If there is any doubt as to a conflict of interest, the Board member shall ask mentioned on the list of prohibited securities published by the Compliance the Chairman of the Board or the Chief Executive Officer. Division.

3.3 - Trading financial instruments issued by Crédit Foncier ARTICLE 5 – APPLYING THE CHARTER de France In the event that a Board member is no longer in a position to carry out his or In accordance with Article 19-1 of Regulation 596/2014 (2), the Board her duties in accordance with the charter, either by their own doing, or for any members and people directly connected to them, report within three days to other reason including following the rules specific to the Company where he or Crédit Foncier de France as issuer and to AMF any trading of financial she serves, then he or she must inform the Chairman of the Board and the instruments issued by Crédit Foncier de France and tradeable on a regulated Chief Executive Officer, seek out solutions to remedy the problem, or if this is exchange or trading platform provided that the total amount of the trades is not possible, personally bear its consequences as to serving in his or her greater than €5,000 over the course of a calendar year. office. Board members agree to provide Crédit Foncier de France with a list of people If the Appointments Committee is aware of a difficulty, it may take up the who are directly connected to them, and to notify those people in writing of matter itself in order to confidentially seek out an amicable solution with the the reporting obligations mentioned above. A copy of this notification must be Board member in question. saved. Failing that, for the Board member in question to comply with the charter, the Board may propose to end his or her term in accordance with the procedures applicable to the member involved.

(1) Volcker Rule: An American regulation that came into effect on July 21, 2015 via the Merkley-Levin amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act of July 2010, being extraterritorial in scope and therefore applying to any institution with banking business in the United States, as well as the Group as a whole via a contagion effect. (2) MAR (Market Abuse Regulation) applicable from July 3, 2016.

2018 Registration document CRÉDIT FONCIER 55 CORPORATE GOVERNANCE REPORT REMUNERATION

REMUNERATION

❯ REMUNERATION OF EXECUTIVE OFFICERS

❯ Summary table of remuneration, stock options and shares owed to each executive officer

Paid in:

2014 2015 2016 2017 2018 2019 2020 2021 Fixed pay VERSEMENTMonthly payment MENSUEL

Variable pay for the year:

2013 50% 1/3 of 50% 1/3 of 50% 1/3 of 50%

2014 50% 1/3 of 50% 1/3 of 50% 1/3 of 50%

2015 50% 1/3 of 50% 1/3 of 50% 1/3 of 50%

2016 50% 1/3 of 50% 1/3 of 50% 1/3 of 50%

2017 50% 1/3 of 50% 1/3 of 50% 1/3 of 50%

50% paid 50% offerred over 3 years - amounts paid 50% offerred over 3 years - amounts due

(in €) 2017 2018 Benoît CATEL Remuneration owed during the year (itemised in the following table) 375,209 421,267 Value of options granted during the financial year - - Value of performance shares granted during the financial year - - TOTAL 375,209 421,267

❯ Summary of the remuneration of executive officers Amounts due in 2017: all remuneration granted on a pro rata basis in respect Amounts due in 2018: all remuneration granted on a pro rata basis in respect of duties performed in 2017, regardless of the date of payment. of duties performed in 2018, regardless of the date of payment. Amounts paid in 2017: all remuneration actually paid and received in 2017 in Amounts paid in 2018: all remuneration actually paid and received in 2018 in respect of duties performed in 2017, and, as relevant, in previous periods if respect of duties performed in 2018, and, as relevant, in previous periods if paid in several instalments. paid in several instalments.

2017 2018 (in €) Amounts due Amounts paid Amounts due Amounts paid Benoît CATEL Corporate Office 260,000 260,000 400,000 400,000 Variable remuneration 99,000 99,000 nd * 99,000 Extraordinary remuneration - - Supplementary pension 12,105 12,105 16,767 16,767 Attendance fees - - Benefits in kind 4,500 4,500 4,500 4,500 TOTAL 375,605 375,605 421,267 520,267 * The variable remuneration of the Chief Executive Officer is subject to meeting several performance criteria linked to the implementation of the restructuring project in all of its aspects. The Company’s Board of Directors will meet on May 6, 2019 in order to declare whether these criteria have been met. The amount of the Chief Executive Officer’s variable remuneration will appear in the June 30, 2019 update to the Registration document. The individual remuneration of Mr Benoît CATEL will be presented to the Annual General Shareholders’ Meeting for approval on May 31, 2019.

2018 Registration document 56 CRÉDIT FONCIER CORPORATE GOVERNANCE REPORT REMUNERATION 2

FIXED PAY BENEFITS IN KIND This remuneration includes a base salary and remuneration related to the Benefits in kind for the Chief Executive Officer include a car (around €450 per individual’s corporate office. month for 12 months). They are not granted stock options or subscription rights, or METHOD USED TO DETERMINE VARIABLE performance-related pay in the form of shares. REMUNERATION Under the terms of their appointment, the Chief Executive Officer and the APPLICATION OF THE “TEPA” LAW Deputy Chief Executive Officers receive variable remuneration that can represent 80% and 50% of their fixed pay, respectively. French law No. 2007-1223 of August 21, 2007 “to promote work, employment and purchasing capacity”, known as the “TEPA” law, governs At the beginning of each year, the Remuneration and Selection Committee salaries, benefits and severance pay for executive officers (Chairman and establishes the criteria for determining variable remuneration in accordance members of the Management Board, Chief Executive Officers and Deputy with the rules defined by Groupe BPCE. These criteria are mainly based on Chief Executive Officers) of companies whose shares are traded on a specific indicators for the group and Crédit Foncier. For the Chief Executive regulated market. In particular, according to this law, the compensation Officer, the indicators are 25% for financial performance, 25% for sales granted must be based on the beneficiary’s performance. performance and 25% for operating performance. With respect to the Groupe BPCE indicator, this indicator is 25%. The operating performance indicator is During its meeting on December 6, 2017, the Board of Directors of Crédit made up of four qualitative goals, while the other indicators are made up of Foncier defined the compensation framework for Benoît CATEL, Chief quantitative goals. Executive Officer, as proposed by the Remuneration Committee. When the annual accounts are closed, the Board of Directors consults the In the event of non-reappointment or the expiry of the corporate office, Remuneration and Selection Committee and determines the amount of the revocation or withdrawal of accreditation, not related to gross negligence, variable remuneration payable based on performance as measured by the gross misconduct, machinations or behaviour likely to be harmful to the defined criteria. For 2018, the Company’s Board of Directors will meet on interests of the Company in which he carried out his duties or to the Group of May 6, 2019 in order to declare whether these criteria have been met. which it is a member, and resulting in permanent departure from Groupe BPCE, and where the Company generates a net book profit for the last The amount paid during year N is the amount due for the year N-1. If the financial year preceding the termination of the corporate office; Benoît CATEL amount due in respect of year N-1 is more than €100,000, 50% of the amount will receive, in case of payment of an average amount equal to at least 50% of is paid in year N, with the balance paid in thirds over the years N+1 to N+3 to the maximum variable component over the course of the term of office served, which is applied an indexation coefficient set by BPCE. the full amount of the indemnity indicated below. In case of payment of at least 40% of the variable component, Benoît CATEL will receive 75% of the amount of the indemnity indicated below; in case of payment of at least 30% of the ATTENDANCE FEES variable component, he will receive 50% of the amount of this indemnity. The In accordance with the standards defined by Groupe BPCE, Directors’ fees gross amount of the indemnity will be equal to the sum of the last two years of paid by Group companies can be collected directly by members of these gross fixed and variable remuneration granted by the Company. companies’ Boards of Directors or Supervisory Boards. This scheme was supplemented, for all Company Directors, by the following Under a BPCE Directive dated December 17, 2010, attendance fees payable resolution adopted by the Board of Directors when it met on July 28, 2015: “in to BPCE representatives are payable to BPCE and not to the individual in the event of non-reappointment upon expiry of the term of office, removal from question. office or withdrawal of accreditation not associated with gross misconduct resulting in the permanent departure from Groupe BPCE, the indemnity will be The amount paid during year N is the amount due for the year N-1. paid only if the Company records a profit from its core businesses, excluding issuer spread and non-recurring items”.

❯ Components of Company Directors’ remuneration Employment Supplementary Restrictive covenant contract pension plan Severance pay fees Yes No Yes No Yes No Yes No Benoît CATEL Chief Executive Officer of Crédit Foncier de France Start of term 04/13/2015 XX X X End of term 04/13/2020

Benoît CATEL benefits from the “pension plan for executive officers of Groupe The amount paid to each Board member is determined according to the BPCE” as of January 1, 2018, according to the conditions applicable to standards defined by BPCE, based on actual attendance at Board of Groupe BPCE SA. Directors’ meetings. Members in attendance are paid €1,500 per meeting and are limited to a total of €7,500 per year in Directors’ fees on condition that they are physically present. The Chairman of the Board receives an additional ■ SUBSCRIPTION RIGHTS AND STOCK OPTIONS flat-rate fee of €25,000. Members who attend Audit Committee, Risk Management Committee, The stock option plan ended in September 2006 and no new plan has been Appointments Committee and Remuneration and Selection Committee set up. meetings are paid €1,000 per meeting on condition that they are physically present and up to the limit of €5,000 per year and per committee. The Chairman of each committee receives an additional flat-rate fee of €25,000. ■ REMUNERATION OF BOARD MEMBERS Any remaining monies are not distributed. Directors are not paid bonuses. The remuneration paid to members of the Board is disclosed pursuant to Article L. 225-102-1 of the French Commercial Code. Under a BPCE Directive dated December 17, 2010, attendance fees payable to BPCE representatives are payable to BPCE and not to the individual in Total attendance fees paid to Board members were set by the Annual General question. Shareholders’ Meeting of May 2, 2016 at €360,000. There has been no other remuneration paid by the Company for the Chairman and the members of the Board of Directors.

2018 Registration document CRÉDIT FONCIER 57 CORPORATE GOVERNANCE REPORT REMUNERATION

Total attendance fees paid to Board members for the year 2018 amounted to ❯ €45,000 for participating in Risk Management Committee meetings; €311,500: ❯ €36,000 for participating in Appointments Committee meetings; ❯ €140,500 for participating in Board meetings; ❯ €43,000 for participating in Remuneration and Selection Committee meetings. ❯ €47,000 for participating in Audit Committee meetings;

Crédit Foncier gross attendance fees (in €) For 2017 For 2018 Laurent MIGNON - 23,857 * Meka BRUNEL 38,000 44,500 Pierre DESVERGNES 7,500 3,000 Bruno DUCHESNE 6,000 6,000 Jean-Paul DUMORTIER 14,500 15,500 Nicole ETCHEGOÏNBERRY 10,500 17,500 Christine FABRESSE 7,500 4,500 Christine FABRESSE 3,000 * Catherine HALBERSTADT 7,500 * 7,500 * BPCE (Nicolas NAMIAS) - 15,000 * Valérie PANCRAZI 42,500 44,500 Nicolas PLANTROU 11,500 13,500 Bénédicte SOLANET 7,500 7,500 Emmanuel POULIQUEN 4,500 6,000 François PEROL 32,500 * 10,143 * Gérard BARBOT 39,500 27,500 Dominique GARNIER 17,500 15,500 Anne-Claude PONT 42,500 35,500 BPCE (François RIAHI) - 5,000 * Laurent ROUBIN 1,500 * 6,000 * Francis HENRY 3,000 0 Jean-Marc CARCELES 1,500 0

* Attendance fees paid to BPCE.

It should be noted that: ❯ the remuneration of Nicolas NAMIAS includes, in addition to attendance fees, the amounts owed for his participation in the Risk Management Committee as ❯ the remuneration of François PÉROL (until May 16, 2018) and a member and as Chairman (beginning November 8, 2018) and for his Laurent MIGNON (beginning May 17, 2018) includes, in addition to participation on the Audit Committee (since June 1, 2018); attendance fees, their remuneration as Chairman of the Board; ❯ the remuneration of Nicole ETCHEGOÏNBERRY, Jean-Paul DUMORTIER, ❯ the remuneration of Gérard BARBOT (until May 16, 2018) includes, in addition Dominique GARNIER, François RIAHI (until June 1, 2018) representing BPCE to attendance fees, the amounts owed for his participation in the and Nicolas PLANTROU, includes, in addition to attendance fees, the Remuneration and Selection Committee as Chairman and for his participation remuneration owed for their participation in the Audit Committee or Risk on the Appointments Committee; Management Committee or in the Remuneration and Selection Committee ❯ the remuneration of Meka BRUNEL includes, in addition to attendance fees, and the Appointments Committee; the amounts owed for her participation in the Appointments Committee as ❯ the remuneration of Christine FABRESSE is being collected by BPCE starting Chairman, and for her position as a member of the Remuneration and November 1, 2018 following her appointment as a member of the Selection Committee, and as Chairman beginning on May 16, 2018; Management Board of BPCE; until then, she had been Chairman of the ❯ the remuneration of Valérie PANCRAZI includes, in addition to attendance Management Board of Caisse d’Épargne Languedoc-Roussillon. fees, the amounts owed for her participation in the Audit Committee as Board members do not receive benefits in kind from Crédit Foncier. Chairman (until November 8, 2018) and as a member of the Risk Management Committee, and as Chairman from November 8, 2018, and member of the In addition, some Board members receive remuneration from BPCE (which Remuneration and Selection Committee and member of the Appointments controls Crédit Foncier de France) and, where applicable, from companies Committee from May 16, 2018; controlled by Crédit Foncier de France. ❯ the remuneration of Anne-Claude PONT includes, in addition to attendance fees, the amounts owed for her participation in the Risk Management Committee as Chairman and for her participation on the Audit Committee (until November 8, 2018);

2018 Registration document 58 CRÉDIT FONCIER CORPORATE GOVERNANCE REPORT REMUNERATION 2

❯ Remuneration received by non-executive directors and remuneration owned in respect of BPCE functions (controlling company) ❯ Pay statement: François PÉROL 2017 2018 (in €) Chairman of the Management Board (until May 31, 2018) Amounts due Amounts paid Amounts due Amounts paid Fixed pay 550,000 550,000 450,000 (1) 450,000 (1) Annual variable remuneration 927,300 911,621 490,365 903,527 Multi-annual variable remuneration 0 0 0 0 Extraordinary remuneration 0 0 0 0 Benefits in kind (company car, housing and other benefits) 0 0 0 0 Attendance fees 0 0 0 0 Other remuneration - - - - TOTAL 1,477,300 1,461,621 940,365 1,353,527 (1) Furthermore, François PÉROL received €39,193 as pay for assisting the Chairman of the Management Board with respect to the Crédit Foncier project, carried out under an employment contract from June 1 to 30, 2018.

Paid in: Variable pay 2017 2018 2019 2020 2021 2022 for the year: 2013 236,701 100 000 100 000 100 000 100 000 100 000

2014 211,414 210,273 100 000 100 000 100 000 100 000

2015 184,655 183,662 100 000 100 000 100 000 100 000

2016 278,850 138,672 100 000 100 000 100 000 100 000

2017 100 000 370,920 185,460 185,460 185,460 100 000

2018 100 000 100 000 245,182 81,727 81,727 81,727

Amount paid Amount due Amount deferred over 3 years - amounts paid Amount deferred over 3 years - amounts due

❯ Pay statement: Laurent MIGNON 2017 2018 (in €) Chairman of the Management Board (since June 1, 2018) Amounts due Amounts paid Amounts due Amounts paid Fixed pay na na 700,000 700,000 Annual variable remuneration na na 762,790 0 Multi-annual variable remuneration na na 0 0 Extraordinary remuneration na na 0 0 Benefits in kind (company car, housing and other benefits) na na 0 0 Attendance fees na na 0 0 Other remuneration na na - - TOTAL NA NA 1,462,790 700,000

Paid in: Variable pay 2017 2018 2019 2020 2021 2022 for the year: 2018 236 701 100 000 228,837 177,984 177,984 177,984

30% due 30% deferred over 3 years - amounts due

2018 Registration document CRÉDIT FONCIER 59 CORPORATE GOVERNANCE REPORT REMUNERATION

❯ Pay statement: Catherine HALBERSTADT

(in €) 2017 2018 Member of the Management Board – Group Human Resources Amounts due Amounts paid Amounts due Amounts paid Fixed pay 500,000 500,000 500,103 500,103 (1) Annual variable remuneration 449,600 169,000 435,970 280,829 Multi-annual variable remuneration 0 0 0 0 Extraordinary remuneration 0 0 0 0 Benefits in kind (company car, housing and other benefits) 44,080 (3) 44,080 (3) 44,080 (3) 44,080 (3) Attendance fees 0 0 0 0 Other remuneration - - na (2) - TOTAL 993,680 713,080 980,153 825,011 (1) The €103 difference compared to the expected amount comes from the calendar calculation method of the 13th month applied to the employment contract portion. (2) Under her employment contract, Catherine HALBERSTADT benefits from the BPCE SA incentive scheme. The individual amount granted to Catherine HALBERSTADT for 2018 is not yet known as of the publication date of the Registration document. (3) Of which €40,000 in housing benefits and €4,080 for a “company car” in-kind benefit.

Paid in: Variable pay 2017 2018 2019 2020 2021 2022 for the year: 2016 169,000 56,029 100 000 100 000 100 000 100 000

2017 224,800 74,933 74,933 74,933 100 000

2018 217,985 72,662 72,662 72,662

50% paid 50% due 50% deferred over 3 years - amounts paid 50% deferred over 3 years - amounts due

❯ Pay statement: François RIAHI

(in €) 2017 2018 Member of the Management Board − Group Finance, Strategy, Legal Affairs and Secretary’s Office of the Governing Bodies (from January 1 to May 31, 2018) Amounts due Amounts paid Amounts due Amounts paid Fixed pay na na 320,000 320,000 Annual variable remuneration na na 278,963 0 Multi-annual variable remuneration na na 0 0 Extraordinary remuneration na na 0 0 Benefits in kind (company car, housing and other benefits) na na 3,396 (1) 3,396 (1) Attendance fees na na 0 0 Other remuneration - - - - TOTAL NA NA 602,359 323,396 (1) €3,396 for a “company car” in-kind benefit.

Paid in: Variable pay 2017 2018 2019 2020 2021 2022 for the year: 2018 236 701 100 000 111,585 55,793 55,793 55,793

40% due 60% deferred over 3 years - amounts due

2018 Registration document 60 CRÉDIT FONCIER CORPORATE GOVERNANCE REPORT REMUNERATION 2

❯ Pay statement: Nicolas NAMIAS

(in €) 2017 2018 Member of the Management Board – Group Finance and Strategy (since June 1, 2018) Amounts due Amounts paid Amounts due Amounts paid Fixed pay na na 350,123 350,123 (1) Annual variable remuneration na na 305,223 0 Multi-annual variable remuneration na na 0 0 Extraordinary remuneration na na 0 0 Benefits in kind (company car, housing and other benefits) na na 0 0 Attendance fees na na 0 0 Other remuneration - - na 0 TOTAL NA NA 655,346 350,123 (1) The €123 difference compared to the expected amount comes from the calendar calculation method of the 13th month applied to the employment contract portion.

Paid in: Variable pay 2017 2018 2019 2020 2021 2022 for the year: 2018 236 701 100 000 152,612 50,871 50,871 50,871

50% due 50% deferred over 3 years - amounts due

❯ Pay statement: Laurent ROUBIN

(in €) 2017 2018 Member of the Management Board – Retail Banking and Insurance (until October 31, 2018) Amounts due Amounts paid Amounts due Amounts paid Fixed pay 500,000 500,000 427,687 427,687 (4) Annual variable remuneration 449,600 105,740 372,840 259,856 Multi-annual variable remuneration 0 0 0 0 Extraordinary remuneration 0 0 0 0 Benefits in kind (company car, housing and other benefits) 45,304 (1) 45,304 (1) 45,130 (2) 45,130 (2) Attendance fees 0 0 0 0 Other remuneration - - na (3) 0 TOTAL 994,904 651,044 845,657 732,673 (1) Of which €40,000 in housing benefits and €5,304 for a “company car” in-kind benefit. (2) Including a €36,667 housing allowance, €4,862 for a “company car” in-kind benefit, and €3,601 for unused paid leave. (3) Under his employment contract, Laurent ROUBIN benefits from the BPCE SA incentive scheme. The individual amount granted to Laurent ROUBIN for 2018 is not yet known as of the publication date of the Registration document. (4) The €88 difference compared to the expected amount comes from the calendar calculation method of the 13th month applied to the employment contract portion.

Paid in: Variable pay 2017 2018 2019 2020 2021 2022 for the year: 2016 105,740 35,056 100 000 100 000 100 000 100 000

2017 224,800 74,933 74,933 74,933 100 000

2018 186,420 62,140 62,140 62,140

50% paid 50% due 50% deferred over 3 years - amounts paid 50% deferred over 3 years - amounts due

2018 Registration document CRÉDIT FONCIER 61 CORPORATE GOVERNANCE REPORT REMUNERATION

❯ Pay statement: Christine FABRESSE

(in €) 2017 2018 Member of the Management Board – Retail Banking and Insurance (since November 1, 2018) Amounts due Amounts paid Amounts due Amounts paid Fixed pay na na 83,349 83,349 (3) Annual variable remuneration na na 72,660 0 Multi-annual variable remuneration na na 0 0 Extraordinary remuneration na na 0 0 Benefits in kind (company car, housing and other benefits) na na 813 (1) 813 (1) Attendance fees na na 0 0 Other remuneration - - na (2) 0 TOTAL NA NA 156,822 84,162 (1) €813 for a “company car” in-kind benefit. (2) Under her employment contract, Christine FABRESSE benefits from the BPCE SA incentive scheme. The individual amount granted to Christine FABRESSE for 2018 is not yet known as of the publication date of the Registration document. (3) The €16 difference compared to the expected amount comes from the calendar calculation method of the 13th month applied to the employment contract portion.

Paid in: Variable pay 2017 2018 2019 2020 2021 2022 for the year: 2018 236 701 100 000 36,330 12,110 12,110 12,110

50% due 50% deferred over 3 years - amounts due

❯ Summary of attendance fees and other remuneration received by non-executive directors of Crédit Foncier 2017 2018 (in €) Amounts due Amounts paid Amounts due Amounts paid DIRECTORS REPRESENTING THE CAISSES D’ÉPARGNE Nicole ETCHEGOÏNBERRY Attendance fees 10,500 15,500 17,500 10,500 Other remuneration na na na na TOTAL 10,500 15,500 17,500 10,500 Christine FABRESSE Attendance fees (1) 13,250 12,500 9,250 13,250 Other remuneration na na na na TOTAL 13,250 12,500 9,250 13,250 Nicolas PLANTROU Attendance fees (2) 80,619 33,750 103,167 80,619 Other remuneration na na na na TOTAL 80,619 33,750 103,167 80,619 Bénédicte SOLANET Attendance fees 7,500 4,500 7,500 7,500 Other remuneration na na na na TOTAL 7,500 4,500 7,500 7,500 na (not applicable): this type of remuneration was not applied to this person during the financial year in question. (1) Total amount of attendance fees – groupe Crédit Foncier. (2) Total amount of attendance fees – Groupe BPCE SA.

2018 Registration document 62 CRÉDIT FONCIER CORPORATE GOVERNANCE REPORT REMUNERATION 2

❯ Summary of attendance fees and other remuneration received by non-executive directors of Crédit Foncier 2017 2018 (in €) Amounts due Amounts paid Amounts due Amounts paid DIRECTORS REPRESENTING THE BANQUE POPULAIRE BANKS Pierre DESVERGNES Attendance fees (1) 32,200 32,200 14,969 32,200 Other remuneration na na na na TOTAL 32,200 32,200 14,969 32,200 Bruno DUCHESNE Attendance fees 6,000 7,500 6,000 6,000 Other remuneration na na na na TOTAL 6,000 7,500 6,000 6,000 Jean-Paul DUMORTIER Attendance fees 14,500 14,500 15,500 14,500 Other remuneration na na na na TOTAL 14,500 14,500 15,500 14,500 Dominique GARNIER Attendance fees (2) 23,250 21,000 20,250 23,250 Other remuneration na na na na TOTAL 23,250 21,000 20,250 23,250 na (not applicable): this type of remuneration was not applied to this person during the financial year in question. (1) Total amount of attendance fees – Groupe BPCE SA. (2) Total amount of attendance fees – groupe Crédit Foncier.

❯ Summary of attendance fees and other remuneration received by non-executive directors of Crédit Foncier 2017 2018 (in €) Amounts due Amounts paid Amounts due Amounts paid INDEPENDENT DIRECTORS Gérard BARBOT Attendance fees * 41,000 43,250 27,500 41,000 Other remuneration 4,033 13,250 na 4,033 TOTAL 45,033 56,500 27,500 45,033 Meka BRUNEL Attendance fees 38,000 39,500 44,500 38,000 Other remuneration na na na na TOTAL 38,000 39,500 44,500 38,000 Valérie PANCRAZI Attendance fees 42,500 32,250 44,500 42,500 Other remuneration na na na na TOTAL 42,500 32,250 44,500 42,500 Anne-Claude PONT Attendance fees 42,500 42,500 35,500 42,500 Other remuneration na na na na TOTAL 42,500 42,500 35,500 42,500 na (not applicable): this type of remuneration was not applied to this person during the financial year in question. * Total amount of attendance fees – groupe Crédit Foncier.

■ REMUNERATION OF STATUTORY AUDITORS Details on the remuneration of the Statutory Auditors are provided in note 11.6 of the consolidated financial statements on page 192 and in note 6.6 of the individual financial statements on page 232.

2018 Registration document CRÉDIT FONCIER 63 CORPORATE GOVERNANCE REPORT REMUNERATION

Board of Directors Members elected by the Annual General between 3 and 18 Shareholders’ Meeting Number of members at 12/31/2018 12 Number of Board meetings 7 Average attendance rate 84% Terms of office expiration dates 2020 – 2022 – 2024 AGM Minimum number of shares that must be 0 held Number of female Directors 6 (50%) Number of male Directors 6 (50%) Number of independent directors 2 (17%)

❯ REPORT PURSUANT TO ARTICLE L. 225-37-2 OF THE COMMERCIAL CODE ON REMUNERATION AND BENEFITS OF ANY KIND PAID TO THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER AS A RESULT OF THEIR OFFICE

Draft resolutions numbered from 8 to 9 submitted to the Combined General The remuneration and benefits that may be granted for financial year 2019 to Meeting of May 31, 2019 pursuant to Article L. 225-37-2 of the Commercial the Chairman and Chief Executive Officer are presented below. Code (law No. 2016 – 1691 of December 9, 2016) relate to the approval by the meeting of the principles and criteria for determining, allocating and The payment of the variable and exceptional (end of term, etc.) components of granting the components of fixed, variable and exceptional pay in the total remuneration is conditional upon an affirmative vote by the 2019 General remuneration and benefits packages for the Chairman and Chief Executive Meeting. Officer based on the office they hold for the period ending December 31, 2019.

❯ Table of remuneration and benefits granted to the Chairman and Chief Executive Officer for the year ending December 31, 2019

Name L. MIGNON B. CATEL Mandate of: Chairman of the Board of Directors Chief Executive Officer Fixed pay: NA NA (3) NA (3) Variable remuneration: NA NA (3) Supplementary pension: NA yes €25,000 as Chairman of the Board of Directors to which is Attendance fees: (1) no added €1,500 per meeting up to a maximum of €7,500 Benefit in kind (company car) NA yes Based on the variable component paid during the current term of office:

(2) End of term (TEPA law) NA if it is 50% on average, 100% of the gross allowance if it is 40% on average, 75% of the gross allowance (2) if it is 30% on average, 50% of the gross allowance (2) (1) Under a BPCE Directive dated December 17, 2010, attendance fees payable to BPCE representatives are payable to BPCE and not to the individual in question. Since January 1, 2012, the same has applied to the representatives of Crédit Foncier: any attendance fees due are paid to Crédit Foncier and not to the individual in question. (2) The gross amount of the indemnity will be equal to the sum of the last two years’ gross fixed and variable remuneration paid by the Company. (3) Available May 6, 2019. The information shall be included in the June 30, 2019 update of the Registration document.

2018 Registration document 64 CRÉDIT FONCIER CORPORATE GOVERNANCE REPORT POTENTIAL CONFLICTS OF INTEREST 2

POTENTIAL CONFLICTS OF INTEREST

MEMBERS OF THE BOARD OF DIRECTORS DISCLOSURE OF CONVICTION To the Company’s knowledge, to date, no member of Crédit Foncier’s Board In 2018, certain members of Crédit Foncier’s Board of Directors held executive of Directors has been convicted of fraud in the last five years. To the positions at BPCE, which owns 100% of Crédit Foncier. Company’s knowledge, to date, no member of Crédit Foncier’s Board of These Board members are: Directors has been declared bankrupt or in liquidation, or had assets placed in receivership, in the last five years. ❯ François PÉROL, Chairman of the Management Board of BPCE until April 30, 2018; EXECUTIVE OFFICERS ❯ Laurent MIGNON, Chairman of the Management Board of BPCE starting June 1, 2018; INDEPENDENCE AND INTEGRITY ❯ Catherine HALBERSTADT, member of the Management Board of BPCE; Executive officers may serve other mandates in accordance with the laws and regulations in force. ❯ Christine FABRESSE, member of the Management Board of BPCE starting November 1, 2018, formerly Chairman of the Management Board of Caisse d’Épargne Languedoc-Roussillon; CONFLICTS OF INTEREST ❯ Laurent ROUBIN, member of the Management Board of BPCE; To the Company’s knowledge: ❯ François RIAHI, member of the Management Board of BPCE; ❯ there are no conflicts of interest between any duties of executive officers with ❯ Nicolas NAMIAS, member of the Management Board of BPCE. respect to the issuing entity and their private interests or other duties; To the Company’s knowledge: ❯ there are no family relationships between executive officers. At the filing date of this document, no executive officer was linked to Crédit ❯ there are no potential conflicts of interest between the duties of the Foncier by a service agreement offering benefits. members of the Board of Directors with regard to the issuer and other private duties or interests. If required, the Board of Director’s internal rules and the Ethics and Compliance Charter govern the conflicts of interest of DISCLOSURE OF CONVICTION any member of the Board of Directors; To the Company’s knowledge, to date, no executive officer has, for at least ❯ there is no arrangement or agreement with an individual shareholder, the previous five years, been convicted of fraud, associated with bankruptcies, customer, supplier, or other, under which any of the members of the Board of receiverships or liquidations, convicted of a crime or subject to an official Directors has been selected; public sanction handed down by statutory or regulatory authorities, or disqualified by a court from acting as a member of the administrative, ❯ there are no family ties between the members of the Board of Directors; management or supervisory bodies of an issuer or from participating in the ❯ no restriction, other than legal, is accepted by any of the members of the management or conduct of the affairs of any issuer. Board of Directors regarding the disposal of their equity interest in the Company.

2018 Registration document CRÉDIT FONCIER 65 CORPORATE GOVERNANCE REPORT POTENTIAL CONFLICTS OF INTEREST

2018 Registration document 66 CRÉDIT FONCIER 3 MANAGEMENT REPORT

MAIN TRANSACTIONS OF THE YEAR 68 INFORMATION ON THE INTERNAL CONTROL SYSTEM 78 CAPITAL TRANSACTIONS IN 2018 69 Organisation of the internal control system 78 Compliance 80 ANALYSIS OF INCOME AND THE BALANCE Work carried out by the General Inspection department 80 SHEET 70 Procedures for auditing accounting and financial information 81 Crédit Foncier’s consolidated income statement 70 PRUDENTIAL AND REGULATORY Crédit Foncier’s parent company income statement 71 INFORMATION 83 Analysis of the consolidated balance sheet 72 Appropriation of income 73 OTHER DISCLOSURES 83 RISK FACTORS 74 Supplier and client payment terms 83 Risks relating to the macroeconomic environment 74 Investments 84 Risks relating to stricter regulatory requirements 74 Research and development activity 84 Risks related to groupe Crédit Foncier’s strategy 75 Main risks and uncertainties 84 Risks related to the activities of groupe Crédit Foncier 76 Environmental risks 77 OUTLOOK 84

SOCIAL, ENVIRONMENTAL AND SOCIETAL INFORMATION 84

2018 Registration document CRÉDIT FONCIER 67 MANAGEMENT REPORT MAIN TRANSACTIONS OF THE YEAR

MAIN TRANSACTIONS OF THE YEAR

INTEGRATION OF CRÉDIT FONCIER’S OPERATIONS ❯ in January 2019, all employees concerned who did not opt for the advance INTO GROUPE BPCE redundancy plan will be offered a similar position, in an equivalent category and the same geographical region in another Groupe BPCE company, with On June 26, 2018, Groupe BPCE and Crédit Foncier presented a plan to effect from April 1, 2019. Alternatively, after a cooling-off period if necessary, integrate Crédit Foncier’s activities and redeploy its knowledge and expertise employees who do not wish to accept the proposed reclassification may opt throughout Groupe BPCE. for voluntary redundancy with the same terms as under the advance plan; ❯ for employees whose position is maintained (around 600 people), various On July 20, 2018, Crédit Foncier’s Executive Management team began the provisions to maintain their employability (in particular via training) will be information and consultation process with the Works Council, and started available. In addition, if further redundancies prove necessary to adapt the negotiations with the labour unions pursuant to regulations. organisational structure and headcount to changes in the activities maintained Those negotiations led to the signing of two majority collective agreements on by Crédit Foncier, the employees concerned will benefit from the same October 26, 2018 regarding the plan’s implementation: provisions as those set out above.

❯ a GPEC agreement (strategic workforce planning); BUSINESS ACTIVITY ❯ a PSE agreement (employment preservation plan). In 2018, Crédit Foncier maintained a high level of activity across all of its After consulting the Works Council, the Crédit Foncier Board of Directors business lines, with a total loan production of €10.7bn (€11.8bn in 2017). confirmed the effective implementation of the project on November 21, 2018. ❯ for Individual financing, production reached €7.1bn (€8.8bn in 2017) in spite of The operational part of the integration, which will primarily take effect in the st the reduction of housing assistance (reduction in the PTZ interest-free loan 1 half of 2019, includes the following: scheme and virtual withdrawal of the APL Accession housing benefit); ❯ new loans would be redeployed in the Group’s entities: Individual Customer ❯ loan production for investors, real estate professionals and Public sector financing within the Banque Populaire banks and Caisses d’Épargne, entities totalled €3.6bn (€2.9bn in 2017), making 2018 one of the best years in Corporate financing within the Caisses d’Épargne and Banque Populaire these segments; banks for Social housing, and within Natixis for project and infrastructure financing; ❯ for real estate services, Crédit Foncier Immobilier enjoyed strong levels of activity in all its business lines, with total revenue of €38.1m (€37.3m in 2017); ❯ SOCFIM, which would become a subsidiary of BPCE SA, would position itself as a global player in corporate real estate financing by integrating long-term ❯ Compagnie de Financement Foncier, a wholly-owned subsidiary of Crédit financing for real estate professionals with financing for developers; Foncier, issued €5.7bn in covered bonds on very satisfactory financial terms. ❯ Crédit Foncier Immobilier would become a subsidiary of BPCE SA; DECLINE IN LEVEL OF EARLY REPAYMENTS ❯ Crédit Foncier will therefore refocus on managing its outstanding loans and on the funding of the assets – mostly in the Public sector – originated by the Groupe Crédit Foncier, like all other market participants, continues to face a Group, through Compagnie de Financement Foncier. high level of early repayments and home loan renegotiations by individual customers. The human resources provisions are primarily aimed at transferring within the Group’s entities those employees whose positions will be eliminated (about Nonetheless, the phenomenon has become less prevalent since the end of 1,400), and secondarily, to financially assist with outside mobility. 2017. The early repayment rate for Individual customers fell from 14.8% for 2017 to 7.6% for 2018. The GPEC agreement provides for the following: The renegotiation rate was 3.2% for 2018, compared to 5.5% for 2017. ❯ an “advance” voluntary redundancy plan allowing all employees whose positions will become redundant to leave on December 31, 2018 and to benefit from various support measures, including financial support (termination benefits, retraining leave, etc.);

2018 Registration document 68 CRÉDIT FONCIER MANAGEMENT REPORT CAPITAL TRANSACTIONS IN 2018 3

CAPITAL TRANSACTIONS IN 2018

■ RESTRUCTURING AND NEW INVESTMENTS FIDEPPP No material transactions. As part of the gradual sell-off of FIDEPPP’s assets, Crédit Foncier received the following:

❯ €820,847.51 on December 27, 2018, corresponding to a partial repayment of ■ TRANSACTIONS WITHIN GROUPE BPCE the amount of the released subscription. ECUFONCIER LOCINDUS On March 20, 2018, Crédit Foncier sold its stake in SCA Ecufoncier to BPCE SA for €1,653,699.70. In the framework of the restructuring project, announced by Groupe BPCE and Crédit Foncier on June 26, 2018 that consists in the integration of teams BPCE then dissolved the structure via a total transfer of assets and liabilities. and activities (including Locindus) within Groupe BPCE entities, Crédit Foncier launched a delisting offer for the shares of Locindus at €26.50 per share. FIDEPPP 2 On February 21, 2019, Crédit Foncier crossed the legal threshold of 95% of the capital and voting rights of Locindus. In 2018, Crédit Foncier paid out: The squeeze-out proceeding will be launched starting from March 1st, 2019. ❯ €240,000.00 on April 10, 2018; ❯ €99,000.00 on October 30, 2018.

2018 Registration document CRÉDIT FONCIER 69 MANAGEMENT REPORT ANALYSIS OF INCOME AND THE BALANCE SHEET

ANALYSIS OF INCOME AND THE BALANCE SHEET

❯ CRÉDIT FONCIER’S CONSOLIDATED INCOME STATEMENT

(in €m) 2018 2017 Interest and similar income 3,886 3,879 Interest and similar expenses -3,512 -3,557 Fee and commission income 213 281 Fee and commission expenses -17 -56 Net gains or losses on financial instruments at fair value through profit or loss -130 -110 Net gains or losses on financial instruments at fair value through other comprehensive income 24 10 Net gains or losses resulting from the derecognition of financial assets at amortised cost 1 Net income from insurance activities (1) 46 56 Income from other activities (1) 73 59 Expenses from other activities (1) -23 -7 NET BANKING INCOME 561 555 Operating expenses -754 -465 Depreciation, amortisation and impairment for property, plant and equipment and intangible assets -25 -8 GROSS OPERATING INCOME -218 82 Cost of risk -60 -81 OPERATING INCOME -278 1 Share in net income of associates 1 Gains or losses on other assets -1 -21 Change in the value of goodwill (2) -13 INCOME BEFORE TAX -292 -19 Income tax 100 54 NET INCOME -192 35 Non-controlling interests -2 -2 Net income attributable to equity holders of the parent -194 33 (1) For comparison purposes, for the year 2017, net income from insurance activities has been set aside from expenses and income from other activities and classified under a separate heading. (2) As the expertise segment is intended to be sold, Crédit Foncier has retained a conservative valuation of the group of assets by recognizing an impairment on goodwill amounting to -€13.2m.

Net banking income was €561m, a level substantially equivalent to what was achieved in 2017.

(in €m) 2018 2017 Change Net Banking Income (NBI) 561 555 1% o/w impact of IFRS valuations registered in net interest margin +16 -27 na ❯ Dual curve +1 +10 na ❯ Issuer spread ❯ CVA/DVA +15 -37 na NBI excluding impact of IFRS valuations 545 582 -6%

Net banking income excluding the impact of IFRS valuations amounted to Cost of risk improved to €60m versus €81m in 2017. This decline reflects €545m in 2018, compared with €582m in 2017. improvements in the level of risk on individual loans that have entered the balance sheet since 2011, and a favourable cost of risk on Corporates. Besides restructuring provisions related to the redeployment project (€334m), operating expenses dropped to €445m in 2018, a -5.9% decline from 2017. Net income attributable to equity holders of the parent totalled -€194m. This Excluding the impact of the Single Resolution Fund, the continued decrease in negative figure was due to the provision for the restructuring of Crédit Foncier. operating expenses since 2011 has now reached €205m, a 33% drop. This illustrates the major cost-cutting efforts carried out by Crédit Foncier in recent years.

12/31/2018 * 12/31/2017 * CET1 ratio 9.9% 10.2% Tier-1 ratio 11.7% 12.0% Global solvency ratio 11.7% 12.0% Leverage ratio 3.7% 3.8%

* Fully loaded Basel III data.

The global solvency ratio was 11.7% at the end of 2018, down from 2017 (12.0%) due to the impact of restructuring.

2018 Registration document 70 CRÉDIT FONCIER MANAGEMENT REPORT ANALYSIS OF INCOME AND THE BALANCE SHEET 3

❯ CRÉDIT FONCIER’S PARENT COMPANY INCOME STATEMENT

(in €m) 2018 2017 Net interest margin -17 1 Lease financing and equivalent 1 2 Income from variable-income securities 109 119 Fee and commission income and expenses 151 133 Gains or losses on trading book securities -1 7 Gains or losses on available-for-sale securities and equivalent - - Other banking income and expenses 56 91 Net banking income 299 353 Operating expenses -648 -358 Amortisation and depreciation of non-current assets -28 -6 Gross operating income -377 -11 Cost of risk -129 -7 Operating income -506 -18 Gains or losses on long-term investments 2 14 Income before tax -504 -4 Exceptional items - - Income tax 217 401 Movements in the fund for general banking risks and regulated provisions 35 7 NET INCOME -252 404

The parent company financial statements are prepared and presented under Other banking income and expenses decreased by €35m compared to French accounting standards and comply with Regulations No. 2014-07 set 2017. A provision for a customer dispute, for €17m, was written back in 2017. forth by the French accounting standards authority (ANC). Furthermore, the fees earned from Compagnie de Financement Foncier for the management of early repayments of Individual loans, directly correlated to their The significant transactions that occurred in 2018 are detailed in note 1 to the volume, dropped by half, to €17m. parent company financial statements. Operating expenses, depreciation and amortisation amounted to The main items of the income statement are detailed in note 5 to the parent -€676m in 2018, compared to -€365m in 2017, an increase of 85% (+€311m). company financial statements. Although its control of operating expenses continues, this progress is the result of €334m in one-time expenses from provisioning caused by the Net banking income for the parent company amounted to €299m, down by operational and human resources aspects of the process of integrating Crédit €54m compared to 2017. Foncier’s operations into Groupe BPCE. The net interest margin stood at -€17m in 2018, compared with +€1m in Cost of risk was negative at -€129m in 2018, compared to -€7m one year 2017. Though affected by multiple non-recurring items both in 2018 and in ago. This significant decline in risk is due to the convergence of the 2017, the net structural interest margin, which remained positive in 2018, provisioning rules between French standards and IFRS. From now on, the cost remains affected by the lasting low-rate environment, resulting in an early of risk includes, in particular, the impairment of non-doubtful customer loans repayment and renegotiation rate of about 11%. that have a significant increase in credit risk. This alignment of standards led to Income from variable-income securities fell by €10m in relation to 2017. an expense of €88m in 2018. This decline was primarily due to a €35m reduction in the dividend paid by Gains or losses on long-term investments posted a net gain of €2m in Compagnie de Financement Foncier. Conversely, Crédit Foncier collected a 2018. The 2017 gain (€14m) was mainly due to €18m in capital gains on the one-time dividend of €10m from Crédit Logement. disposal of financial assets. Fee and commission income was up by €18m. An extraordinary expense of Income tax showed a positive net balance of €217m. This amount primarily €16m was recorded in 2017 for an early repayment penalty on several bank corresponds to current taxes inherent to the tax deficit of the Crédit Foncier loans. Early repayment penalties collected from clients, meanwhile, were down tax consolidation group in 2018, amounting to +€211m. in 2018 (-€5m), due to the decrease in the early repayment rate in 2018 compared to the year before. Movements in the fund for general banking risks and regulated provisions showed net income of +€5m in 2018, compared with +€7m in Gains or losses on the trading book had risen by €9m in 2017 following 2017. Reversals of exceptional provisions representing the amortisation of the reversal of a provision on loans to French local authorities. capital gains on the disposal of loans prior to 2006 accounted for almost all of this total. Furthermore, given the size of the fund for general banking risks and the business redeployment project within Groupe BPCE, it was decided to add €30m to that fund.

2018 Registration document CRÉDIT FONCIER 71 MANAGEMENT REPORT ANALYSIS OF INCOME AND THE BALANCE SHEET

❯ ANALYSIS OF THE CONSOLIDATED BALANCE SHEET

ASSETS (in €m) 2018 2017 FTA Cash and amounts due from central banks 706 670 Financial assets at fair value through profit or loss 1,619 1,890 Hedging derivatives 3,851 5,201 Available-for-sale financial assets 153 174 Securities at amortised cost 10,094 10,235 Loans and receivables due from credit institutions 14,852 15,816 Loans and receivables due from customers 70,080 71,948 Revaluation adjustment on interest rate risk-hedged portfolios 4,695 5,064 Current tax assets 334 759 Deferred tax assets 124 169 Accrued income and other assets 1,171 1,211 Non-current assets held for sale 1,889 457 Insurance business investments 759 724 * Investment property 11 15 Property, plant and equipment 16 39 Intangible assets 3 5 Goodwill 0 13 TOTAL 110,357 114,390 * Pro forma.

LIABILITIES AND SHAREHOLDERS’ EQUITY (in €m) 2018 2017 FTA Financial liabilities at fair value through profit or loss 2,612 2,838 Hedging derivatives 7,577 8,036 Amounts due to credit institutions 28,231 29,483 Amounts due to customers 320 1,124 Debt securities 65,858 67,037 Revaluation adjustment on interest rate risk-hedged portfolios Current tax liabilities 2 2 Deferred tax liabilities 0 0 Accrued expenses and other liabilities 1,223 1,616 Liabilities associated with non-current assets held for sale 580 19 Provisions 436 147 Subordinated debt 10 291 Equity attributable to equity holders of the parent 3,443 3,700 o/w net income for the period -194 33 Non-controlling (minority) interests 65 97 TOTAL 110,357 114,390

The IFRS consolidated balance sheet total at December 31, 2018 Loans and receivables due from customers fell by €1.87bn (2.60%) amounted to €110.36bn, representing a decrease of 3.53% compared to mostly due to a decline in equipment loans. The early repayment rate for December 31, 2017. individual customers stood at 7.6% in 2018, compared with 14.8% in 2017. Working cash balances placed with the Banque de France amounted to Non-current assets held for sale, totalling €1.89bn, represent the assets of €0.7bn. six Crédit Foncier subsidiaries that are either being sold or where negotiations for the sale are at a very advanced stage. Financial assets at fair value through profit or loss were down by €0.27bn (14.34%), mainly attributable to the €0.16bn decline in loans to Accrued income and other assets remained stable. customers measured at fair value. Goodwill equal to €0.013bn for the Crédit Foncier Immobilier group was fully Available-for-sale financial assets were down by just €0.021bn, or impaired in 2018 following an update to the assessment of Crédit Foncier 11.49%, primarily due to the change in advances on shareholder current Immobilier. accounts recognised at fair value through other comprehensive income recyclable to income. Amounts due to credit institutions were stable, as the increase in term accounts was offset by the decline in margin calls. Loans and receivables due from credit institutions were down by €0.96bn (6.10%), primarily due to the €0.4bn reduction in ordinary and term Amounts due to customers declined €0.8bn, with that amount primarily due accounts. to the decrease in demand deposits and loans (€0.4bn) as well as a decrease in margin calls (€0.53bn).

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Debt securities (excluding those measured at fair value) amounted to Provisions increased by €0.289bn, primarily due to the restructuring provision €65.9bn, compared to €67bn at December 31, 2017. This decline was mainly that totalled €0.316bn for this item. due to the maturing in February of a public debt issue, totalling €0.951bn. Bond issuances and redemptions for Compagnie de Financement Foncier in Subordinated debt decreased by €0.28m, primarily due to the repayment of 2018 were virtually the same, i.e. €5.7bn. perpetual deeply subordinated notes of the same amount. Accrued expenses and other liabilities fell by €0.39m due to the change in Equity attributable to equity holders of the parent dropped €0.257bn, holding accounts that temporarily record collections awaiting to be assigned. primarily due to net income of -€0.194bn over the period, as well as -€0.041bn in negative fluctuation on unrealised losses on equity instruments Liabilities associated with non-current assets held for sale totalled valued through other comprehensive income. €0.58bn, which represents the non-equity liabilities of six subsidiaries of Crédit Foncier that are either being sold or where negotiations for the sale are at a very advanced stage.

❯ APPROPRIATION OF INCOME

Given the loss for the period of €252m, after taking into account €879m in The General Meeting decides to allocate earnings available for distribution, retained earnings, income available for distribution as of December 31, 2018 totalling €627m, to retained earnings. amounted to €627m.

2018 Registration document CRÉDIT FONCIER 73 MANAGEMENT REPORT RISK FACTORS

RISK FACTORS

The banking and financial environment in which groupe Crédit Foncier Risks currently regarded as significant by Crédit Foncier can be divided into operates exposes it to a number of risks and requires the implementation of five main categories: an exacting and rigorous monitoring and control policy for these risks. ❯ risks relating to the macroeconomic environment; Some of the risks incurred by groupe Crédit Foncier are described below. ❯ risks relating to stricter regulatory requirements; However, this is not an exhaustive list of all the risks to which the group is exposed in connection with its activity or considering the environment in which ❯ risks related to groupe Crédit Foncier’s strategy; it operates. Therefore, any unidentified risks or risks regarded as immaterial to date by groupe Crédit Foncier could have an adverse impact on its activity, ❯ risks inherent to the activities of groupe Crédit Foncier; financial position and/or earnings. ❯ environmental risks.

❯ RISKS RELATING TO THE MACROECONOMIC ENVIRONMENT

POTENTIAL IMPACT RELATED TO A PROTRACTED POTENTIAL IMPACT RELATED TO THE EXIT OF THE DEPRESSED ECONOMIC AND FINANCIAL ENVIRONMENT, UNITED KINGDOM FROM THE EUROPEAN UNION PARTICULARLY IN EUROPE The exit process that will see the United Kingdom leave the European Union European markets may experience disruptions affecting economic growth and was officially launched on March 29, 2017 when the United Kingdom triggered potentially impacting financial markets, both in Europe and in the rest of the Article 50 of the Treaty on the European Union. The United Kingdom and the world. European Union have two years to negotiate the exit terms. Crédit Foncier has run-off exposures to International public sector The potential impact of the withdrawal will depend on any agreements the UK counterparties: sovereigns and local authorities (cities, regions, provinces, is able to negotiate in order to continue to enjoy access to European markets cantons, etc.). These exposures are mainly concentrated in European Union during the transitional period or on a more permanent basis. Brexit could have countries, Switzerland, the United States, Canada and Japan and are adverse effects on the European and even the global economic climate and/or impacted by various macro-economic trends, primarily through the actions of on market conditions and could also fuel market volatility in particular on local central banks or structural reforms, which may affect the quality of the foreign exchange rates. exposures concerned over the long term. However, the impact on Compagnie de Financement Foncier should be limited If economic or market conditions in France or elsewhere in Europe were to as its Sterling exposures are hedged against exchange rate risk. The only deteriorate, Crédit Foncier’s markets of operation could be more significantly indirect risk, which has not yet been confirmed, would arise if Euro LCH disrupted, and its business, results and financial position could be adversely Clearnet, the clearing house of which Crédit Foncier is a member, relocates its affected. activity. There is uncertainty as to the possibility of a hard Brexit that could have consequences on financial markets, whose scale it appears difficult to assess. One particular concern among them is Brexit’s impact on the derivatives market, in which LCH Clearnet, based in London, has a very significant share of European interbank derivative clearing volume. For now, the discussions on the implementation of Brexit give no indication of what solution will be chosen. This risk is being monitored by Crédit Foncier.

❯ RISKS RELATING TO STRICTER REGULATORY REQUIREMENTS

POTENTIAL IMPACT OF THE TIGHTENING OF ❯ general trend of regulatory requirements, specifically supervisory regulations REGULATORY REQUIREMENTS AND SUPERVISORY relating to the adequacy of regulatory capital and the recovery and resolution MEASURES THAT COULD IMPACT GROUPE CRÉDIT mechanisms; FONCIER AND THE FINANCIAL AND ECONOMIC ❯ change in rules and procedures in the area of internal control; ENVIRONMENT IN WHICH IT DOES BUSINESS ❯ change in the competitive environment and prices; A number of laws and regulations have been proposed or adopted in response to the financial crisis, making several changes to the global financial ❯ change in financial reporting rules. sector. While these measures are intended to prevent the reoccurrence of The regulatory framework governing Crédit Foncier’s activities has already such events and their spreading to the entire financial system (their systemic changed significantly in the past few years, with: nature), they may significantly modify and continue to modify the environment in which groupe Crédit Foncier and other financial institutions operate. Some ❯ the application of the single supervisory mechanism and the single resolution of these measures could also increase groupe Crédit Foncier’s costs of mechanism; financing owing to greater prudential expense. These changes may include, ❯ the transposition of the CRD IV, the application by decree or regulation of the but are not limited to, the following aspects: principles for implementing financial ratios (leverage ratio, LCR, etc.); ❯ monetary policy, interest rate and other measures implemented by central ❯ the transposition of the EMIR and the European Mortgage Credit directive; banks and the regulatory authorities; ❯ the French law separating banking activities, and the French law on ❯ further development of policies implemented by the government or the transparency, the fight against corruption and the modernisation of the regulatory authorities likely to significantly influence the decisions of investors, economy, replacing the Sapin II law; in particular in the markets where groupe Crédit Foncier operates; ❯ guidelines issued by the EBA (interest rate risk management, liquidity risk management disclosures, etc.).

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The implementation and observance of these measures could: failing institution and to convert certain subordinated debts to equity. They also have extended powers that notably enable them to amend the terms of debt ❯ increase capital and liquidity requirements; instruments (including altering the maturity and/or the amount of interest ❯ generate a structural increase in funding costs; payable and/or temporarily suspending payments), discontinue the listing and admission to trading of financial instruments, dismiss managers or appoint a ❯ increase certain costs for groupe Crédit Foncier (notably compliance, temporary special administrator, or to issue equity or own funds. reorganisation, etc.). The resolution authorities are currently the resolution college of the French Groups that are directly supervised by the ECB, including BPCE and its Prudential Supervisory and Resolution Authority (ACPR) and the Single affiliates, are required to transpose these measures within reasonable Resolution Board established by Regulation (EU) No. 806/2014 of the timeframes, generating additional operational constraints for Crédit Foncier. European Parliament and of the Council of July 15, 2014. Under the Single On the whole, these developments could translate into lower earnings and/or Resolution Mechanism, the resolution college of the ACPR is responsible for profits, a reduction or a curtailment of particular activities and further asset implementing the resolution plans in line with the instructions of the Single write-downs. Resolution Board. The exercise of the powers described above by the resolution authorities could POTENTIAL IMPACT OF THE IMPLEMENTATION lead to the write-down or full or partial conversion of capital instruments and debt issued by Crédit Foncier, which could affect sources of funds available to OF THE EUROPEAN DIRECTIVE ON THE RECOVERY Crédit Foncier to make interest payments on such instruments. Furthermore, AND RESOLUTION OF CREDIT INSTITUTIONS under some market conditions, any interpretation that market participants may On May 6, 2014, the Council of the European Union adopted a directive make about the existence of these powers could have a negative impact on establishing a framework for the recovery and resolution of credit institutions the market value of capital instruments and the debt obligations issued by and investment firms (the Bank Recovery and Resolution Directive, BRRD), Crédit Foncier. supplemented by Regulation (EU) No. 806/2014 (known as the Single Resolution Mechanism or SRM) which was enacted into French law by The implementation of the resolution mechanism was accompanied by the Ministerial Order No. 2015-1024 of August 20, 2015. application of two new ratios that the main banking groups must observe: The measures set forth under the BRRD and their transposition into French ❯ the Minimum Requirement for own funds and Eligible Liabilities (MREL) at a law may impact the way in which credit Institutions, including groupe Crédit European level; Foncier, would be managed in the event of financial difficulties. ❯ the Total Loss Absorbing Capacity (TLAC) at an international level. The announced objective of the BRRD and the SRM is to give the resolution For Groupe BPCE, these ratios are currently observed on a consolidated basis authorities common tools and powers to intervene sufficiently early on and and are not calculated at the level of each affiliate. quickly if a bank should be weakened or failing. A bank is considered such when it no longer observes the terms of its licence, if it is unable to pay its debts or other commitments when they fall due, if it requests exceptional POTENTIAL IMPACT OF UNANTICIPATED FUTURE public financial support (subject to certain limited exceptions) or if the value of EVENTS ON THE FINANCIAL STATEMENTS OF GROUPE its liabilities exceeds its assets. CRÉDIT FONCIER The measures that the resolution authorities may take aim to ensure the The application of current IFRS standards and interpretations requires groupe continuity of the bank’s critical financial and economic operations while limiting Crédit Foncier’s entities to make use of certain estimates for the preparation of the wider impact of its collapse in order to: their financial statements, particularly accounting estimates related to determining: ❯ protect clients’ funds and assets, in particular customer deposits; ❯ provisions on non-performing loans and receivables; ❯ protect the finances of the bank’s member state by reducing government bailouts; ❯ provisions for potential litigation; ❯ avoid significant negative effects on financial stability. ❯ the fair value of certain assets and liabilities. To this end, four resolution tools are provided: the sale of business, use of a If these estimates prove to be significantly inaccurate, particularly in the event bridge bank, asset separation, and bail-in. of considerable or unanticipated market changes, or if the methods used to make the estimates require modification in line with future IFRS standards or The last option gives the resolution authorities the power to apply write-downs interpretations, groupe Crédit Foncier may be exposed to unanticipated (including reduction to zero) to certain rights of subordinated creditors of a losses.

❯ RISKS RELATED TO GROUPE CRÉDIT FONCIER’S STRATEGY

Crédit Foncier’s strategy followed since 2012 has five components: (i) the transfer of sales teams into Groupe BPCE in early 2019 and the development of the core business in France serving Crédit Foncier clients and disappearance of loan approval risk for Crédit Foncier. those of the Group’s retail banking networks; (ii) the management of the international loan portfolio; (iii) the development of new funding tools in addition Under the strategic plan, financial objectives have been established for groupe to obligations foncières; (iv) cost savings aimed at improving Crédit Foncier’s Crédit Foncier on the basis of assumptions. These assumptions do not, under ability to withstand changing economic cycles; and (v) the reinforcement of any circumstances, constitute projections or forecasts of expected results. synergies with Groupe BPCE. The actual results obtained by groupe Crédit Foncier may differ from these objectives for various reasons, including the occurrence of one or multiple The implementation of the project to integrate Crédit Foncier’s activities within risks as outlined in this section. Groupe BPCE, validated by the committees in late 2018, will lead to the

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❯ RISKS RELATED TO THE ACTIVITIES OF GROUPE CRÉDIT FONCIER

Groupe Crédit Foncier is exposed to various categories of risk that are income. Interest rates are sensitive to numerous factors that may be beyond inherent to banking activities. the control of groupe Crédit Foncier’s entities. There are three major categories of risk associated with the activities of groupe Market interest rate changes could directly affect loans outstanding through Crédit Foncier, as listed below. The following risk factors allude to, or give the observed early repayment level. This impacts liquidity and net banking specific examples of, various types of risk and describe some additional risks income. This is especially true in an environment of falling interest rates that is to which groupe Crédit Foncier is exposed. encouraging customers to renegotiate interest rates or repay their loans early. Rate changes also have an impact on interest income and expenses from assets and liabilities at floating rates, and through the rates of new assets and CREDIT AND COUNTERPARTY RISK liabilities. Credit risk is the risk of financial losses that arise when a counterparty is unable to meet its contractual obligations. It may result in a change in credit An adverse change in the yield curve could result in a decline in net interest quality or default by the counterparty. income from lending activities. Furthermore, groupe Crédit Foncier’s profitability may be adversely affected by an increase in interest rates over the Commitments exposed to credit risk consist of existing or potential receivables period during which short-term financing is available and by maturity and particularly loans, debt securities, equities, performance swaps, mismatches. performance bonds, or confirmed or undrawn facilities. Counterparty risk is the risk that the counterparty to a transaction might POTENTIAL IMPACT OF CHANGES IN HOUSING POLICY default before the settlement of all cash payments, whether the transaction is Until now, Crédit Foncier’s financing services primarily depended on public classified in the banking book or the trading book. The counterparty may be a policies supporting home buying (FGAS, APL, PTZ, etc.) and buy-to-let bank, a financial institution, a government entity or sub-entity, an investment investment (Pinel Act, etc.). With the shutdown od real estate loans fund, a non-public counterparty or an individual. production, the potential impact of changes in housing policy disappear for Crédit Foncier. For Crédit Foncier, counterparty risk is chiefly represented by exposure to counterparties on derivative transactions used for hedging purposes. These exposures are covered by margin calls to establish collateral. POTENTIAL IMPACT OF CREDIT RATINGS ON THE PROFITABILITY OF GROUPE CRÉDIT FONCIER FINANCIAL RISKS Credit ratings by rating agencies have a significant impact on the liquidity Asset and liability management covers three types of risk: liquidity risk, interest situation of Crédit Foncier and its subsidiaries on the financial markets. A rating rate risk and foreign exchange risk. downgrade could affect the liquidity situation of Crédit Foncier, increase its funding costs and limit access to capital markets, derivatives markets and ❯ Interest rate risk is the risk incurred in the event of interest rate fluctuations collateralised funding. An increase in credit spreads could make groupe Crédit due to all balance sheet and off-balance sheet transactions. In accordance Foncier’s funding costs significantly more expensive. with BPCE standards, groupe Crédit Foncier’s exposure to interest rate risk is assessed by determining an interest rate gap. Credit spreads are susceptible to unpredictable and highly volatile behaviour. The market’s perception of the issuer’s creditworthiness is also a factor in this ❯ Liquidity risk is the risk of not being able to honour one’s commitments or regard. not being able to unwind or offset a position within a given period and at a reasonable cost due to the market situation. Groupe Crédit Foncier’s exposure to liquidity risk is assessed by determining a liquidity gap. POTENTIAL IMPACT OF PROVISIONS ON THE RESULTS ❯ Foreign exchange rate risk is the risk incurred in the event of exchange rate OR FINANCIAL POSITION OF GROUPE CRÉDIT FONCIER fluctuations (against the euro) in respect of all balance sheet and off-balance As part of their lending activities, groupe Crédit Foncier’s entities periodically sheet transactions. set aside provisions for doubtful loans and receivables, which are booked in its income statement under “cost of risk”. The overall level of provisions is Sensitivity calculations and stress-test scenarios supplement this established based on the value of sureties, historical losses, the volume and measurement and analysis. To do this, Crédit Foncier uses the interest rate type of loans granted, market practices, loan arrears, economic conditions scenarios and indices submitted quarterly by BPCE. and other factors that reflect the recovery rate on various loans. While groupe Crédit Foncier entities strive to always have sufficient levels of provisions available, their lending activities may, in future, lead them to increase OPERATING RISKS provisions in the event of a rise in non-performing assets, a deterioration of Operating risk is the risk of losses due to inadequacies or weaknesses in economic conditions leading to an increase in counterparty defaults and internal processes, or due to external events, which may occur intentionally, bankruptcies or for any other reason. The results and financial position of accidentally or naturally. Internal processes include, but are not limited to, groupe Crédit Foncier may be adversely affected by any substantial increase in human resources and information systems, risk management systems and provisions for losses or a significant change in groupe Crédit Foncier’s internal control systems (including fraud prevention). External events include assessment of the risk of loss on its portfolio of non-impaired loans, by any floods, fires, storms, earthquakes and armed attacks. changes to IFRS accounting standards, or by the materialisation of any losses that exceed the established provisions for the relevant loans. POTENTIAL IMPACT OF INTEREST RATES REMAINING AT A VERY LOW LEVEL FOR A PROTRACTED PERIOD POTENTIAL IMPACT OF EXCHANGE RATE FLUCTUATIONS OF TIME ON THE ACTIVITY AND EARNINGS OF GROUPE ON THE RESULTS OF GROUPE CRÉDIT FONCIER CRÉDIT FONCIER Groupe Crédit Foncier’s entities may conduct some of their activities in Like the rest of the financial sector, Crédit Foncier has been operating in an currencies other than the euro; thus, their net banking income and results may environment of extremely low and in some cases negative interest rates since be impacted by changes in foreign exchange rates. As part of their 2015; today, this trend seems set to continue. comprehensive risk management policy, Crédit Foncier and its subsidiaries systematically complete transactions to hedge their exposure to exchange rate The net interest income earned by groupe Crédit Foncier over a given period risk. However, under extreme market conditions, some limited hedging may significantly influences the net banking income and profitability for this period. be insufficient to offset the adverse effects of exchange rate variations on operating income. In addition, significant changes to credit spreads, such as the widening of spreads observed recently, may influence groupe Crédit Foncier’s operating

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POTENTIAL IMPACT FROM THE INTERRUPTION OR POTENTIAL IMPACT OF REPUTATIONAL AND LEGAL RISKS FAILURE OF IT SYSTEMS USED BY GROUPE CRÉDIT THAT MAY HAVE AN ADVERSE IMPACT ON THE FONCIER OR THIRD PARTIES PROFITABILITY AND BUSINESS OUTLOOK OF GROUPE Like the majority of its competitors, groupe Crédit Foncier is highly dependent CRÉDIT FONCIER on its communication and information systems due to the quantity and The reputation of groupe Crédit Foncier is critical for attracting and retaining its increasing complexity of the transactions it performs. Any breakdown, customers. The use of inappropriate means to promote and market its interruption or failure of these systems may result in errors or interruptions in products and services, improper management of potential conflicts of systems used for customer management, general accounting, transactions interests, legal and regulatory requirements, ethical problems, laws on money and/or loan processing. laundering, requirements related to economic sanctions, and policies on information security and practices linked to sales and transactions could Groupe Crédit Foncier is also exposed to the risk of an operational failure or tarnish the reputation of groupe Crédit Foncier. disruption affecting one of its clearing agents, the forex market, clearing houses or other financial intermediaries or outside service providers. As Inappropriate behaviour by one of its employees, fraud, embezzlement or interconnectivity with its customers is increasing, groupe Crédit Foncier may other forms of wrongdoing committed by financial sector operators to whom also be increasingly exposed to the risk of operational failure by its customers’ groupe Crédit Foncier is exposed, any adjustment, restatement or correction information systems. to its financial results or any legal or judicial proceeding with a potentially unfavourable outcome could also hurt its reputation. Any damage to the The information systems of groupe Crédit Foncier and its clients, service reputation of groupe Crédit Foncier could result in a downturn in business, providers and counterparties may also be increasingly exposed to the risk of potentially harming its earnings and financial position. operational failure or disruptions resulting from the exploits of cyber criminals or cyber terrorists. Groupe Crédit Foncier cannot guarantee that such failures Improper management of these problems could also increase the litigation risk or disruptions of its systems or those of other parties will not occur or, if they of groupe Crédit Foncier, the number of judicial proceedings and the amount do, that they will be resolved in an adequate manner. of damages sought against groupe Crédit Foncier or even expose it to potential sanctions by the regulatory authorities. POTENTIAL IMPACT OF UNFORESEEN EVENTS THAT MAY CAUSE DISRUPTION TO THE ACTIVITIES OF GROUPE IMPACT OF GROUPE CRÉDIT FONCIER’S INABILITY TO CRÉDIT FONCIER AND LEAD TO LOSSES AND ADDITIONAL ATTRACT AND RETAIN QUALIFIED EMPLOYEES WHOSE COSTS PRESENCE MAY BE CRUCIAL FOR THE SUCCESS OF ITS Unforeseen events such a serious natural disaster, pandemic, terrorist attack ACTIVITIES AND IN RESPECT OF WHICH ANY or any other emergency can result in the sudden interruption in the activities of SHORTCOMINGS MAY AFFECT ITS PERFORMANCE groupe Crédit Foncier entities, leading to substantial losses if they are not The employees of the entities of groupe Crédit Foncier are the group’s covered or only partially covered by an insurance policy. These losses could greatest assets. Competition to attract qualified staff is intense in a number of include material property, financial assets, market positions or key employees. fields in the financial services sector. The income of groupe Crédit Foncier Furthermore, such events may disrupt the infrastructure of groupe Crédit depends on its ability to retain and motivate its current employees and to Foncier or parties with which it conducts its activities, generate additional attract new employees if warranted. costs (notably linked to relocation costs for the staff concerned) and add to the cost burden (such as insurance premiums). These events could exclude The recent decision to transfer Crédit Foncier’s activities to Groupe BPCE particular risks from insurance cover and therefore increase groupe Crédit beginning in 2019 may have non-negligible effects on Crédit Foncier’s ability to Foncier’s level of comprehensive risk. retain the qualified personnel needed for its business to run as it should and to preserve its performance level, beyond the potential impact of changes in the economic environment (particularly taxes or other measures aimed at limiting the compensation of employees in the banking sector).

❯ ENVIRONMENTAL RISKS

Conscious of its major role in contributing to an economy with a lower carbon In order to adapt to the consequences of climate change, Crédit Foncier de footprint, Groupe BPCE is continuing its efforts to take climate risk into France put in place a series of measures: account and to deploy measures taken to reduce it. Climate change risk is integrated in the identification and management of its risks in the same way as ❯ climate risks that may directly impact Crédit Foncier are dealt with in the other types of risk and it is an integral part of the TEC 2020 strategic plan. context of the PUPA (Emergency and Business Continuity Plan), which includes the management of extreme weather events that may affect the Groupe BPCE participates, like all other banking groups, in the ACPR (French premises (for example, storms, heat waves , Seine flood ...); Prudential and Resolution Authority) in accordance with Article 173, paragraph ❯ climate / environmental risks related to the operational activity are also taken V of the Energy Transition Law for Green Growth. into account insofar as Crédit Foncier's customers may themselves be Since 2016, the general credit risk policy includes the risk related to climate exposed to climate risks. Thus, in the event of a proven climate risk, such as change and integrates social and environmental responsibility in major risk floods, for instance, Crédit Foncier has set up a customer assistance system evolution. Climate risk is also integrated into the macro-mapping of risks. allowing them to temporarily postpone settlement of their maturities; Crédit Foncier applies the group's policy. ❯ with regard to clients and projects financed, as of April 1, 2019, it will not be possible to adopt a commitment policy aimed at funding only projects that take into account CSR issues because the Crédit Foncier activity will be refocused on the management of its outstandings with no new customers.

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INFORMATION ON THE INTERNAL CONTROL SYSTEM

❯ ORGANISATION OF THE INTERNAL CONTROL SYSTEM

As a credit institution, Crédit Foncier de France is subject to extensive legal Second-level permanent control is also exercised by central divisions and regulatory obligations that govern its operations and control its activities. independent of the operational structures, hierarchically assigned to the These obligations were established by the French Monetary and Financial executive director responsible for the Risk and Compliance Division: Code and the regulations set forth by the French Banking and Financial Services Regulatory Committee (CRBF) and in particular, with regard to ❯ the Risk department measures, controls and oversees credit and counterparty internal controls, the decree dated November 3, 2014. Groupe Crédit Foncier risk, as well as financial and operating risks; is supervised by the European Central Bank as part of the Single Supervisory ❯ The Compliance department is responsible for managing non-compliance Mechanism, in liaison with the ACPR. risks and controlling investment services. It also covers ethics and the prevention of money laundering and fraud. This department also includes the Head of Investment Services Compliance (RCSI); ■ INTERNAL CONTROL PLAYERS ❯ the Permanent Control Coordination department is responsible for ensuring cross-business control functions within groupe Crédit Foncier. It provides a Crédit Foncier’s control system relies on two levels of permanent control and strong functional reporting line between permanent control teams, ensuring one level of periodic control. the existence and effectiveness of the permanent control structure; ❯ The Chief Information Security Officer (CISO) of groupe Crédit Foncier defines FIRST-LEVEL PERMANENT CONTROL the information systems security policy and leads a network of contacts within the company. He also monitors the compliance of the company’s practices First-level permanent control is provided by operational staff under the with the personal data protection regulations in force (CNIL, GDPR); supervision of their line managers. The control procedures are specified in procedural and operating manuals, and unit heads are responsible for ❯ the groupe Crédit Foncier Contingency and Business Continuity Plan (CBCP) producing and updating these manuals. must be kept up to date and in working order to ensure that Crédit Foncier will be able to continue operating following the materialisation of a major risk. SECOND-LEVEL PERMANENT CONTROL Furthermore, the “Accounting Audit” unit, which reports to the Deputy Chief Financial Officer but has no operational duties, is responsible for auditing the Second-level permanent control is carried out by units dedicated solely to that accounting and regulatory data generated by Crédit Foncier and its function and distinct from the operational units. Those units are functionally subsidiaries. The unit is functionally assigned to the Risk and Compliance assigned to the Risk Management and Compliance Division. They ensure Division of Crédit Foncier. adherence to the internal procedures and the legal and regulatory requirements, as well as proper risk management. They define and implement a control plan each year. They ensure that the operational controls (first level) PERIODIC CONTROL are implemented, and carry out complementary controls. The results of their Periodic control is the responsibility of Crédit Foncier’s General Inspection controls are periodically reported to the Permanent Control Coordination Division. department and a summary is presented to Crédit Foncier’s Internal Control Committee. The shareholder’s control unit may also contribute to periodic control by auditing groupe Crédit Foncier and forwarding recommendations to Crédit Foncier’s General Inspection Division, which supervises their implementation.

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■ STRUCTURE OF INTERNAL CONTROL The organisational structure of groupe Crédit Foncier’s internal control is as follows:

BPCE Supervision and Control

Board of Directors

Guarantors of the Quality Executive Management Risk Management Committee of the Internal Control System

Audit Committee

Internal Control Committee Umbrella Committees Executive Risk Management Committee

Periodic Control General Inspection Division

Credit risks Financial risks Non-ﬁnancial Other risks risks (operating risks, non-compliance risks)

Second-level 2LPC Functions: Risks, Compliance, ISS, CBCP, Accounting Audit Permanent Control

Coordination of Permanent Controls

Second-level Permanent Control

First-level Operational permanent control by units under the supervision of their line management Permanent Control

2018 Registration document CRÉDIT FONCIER 79 MANAGEMENT REPORT INFORMATION ON THE INTERNAL CONTROL SYSTEM

THE INTERNAL CONTROL COMMITTEE It meets at least quarterly, and its main tasks, covering both the parent company and the consolidated scope, are to: The Internal Control Committee meets six times a year, chaired by the Chief Executive Officer of Crédit Foncier, the Heads of permanent control and ❯ create and update the General Risk Policy; periodic control, and the Director of the Risk and Compliance Division of ❯ analyse and monitor the Group’s general risk profile, based on risk scoring, Crédit Foncier. measurement and evaluation systems and major exposures; Its main duties are to: ❯ measure the quality of commitments and recoveries on the basis of summary reports; ❯ ensure that permanent controls for business activities are comprehensive and well-organised and that risk monitoring and management systems are ❯ verify that the various risk management or monitoring procedures (risk effective; maps, etc.) are correctly applied; ❯ supervise actions aimed at ensuring good risk management, compliance of ❯ risk steering: monitor risks, review capital adequacy ratios, develop and operations and internal procedures, quality and availability of the data analyse stress tests, and review operating risks. processed by Information Systems, and the security of the systems; ❯ ensure that any deficiencies identified by the permanent control units are CORPORATE GOVERNANCE resolved. The Executive Management is responsible for managing groupe Crédit This committee also assumes the responsibilities of a Compliance Committee. Foncier. It is in charge of the management of risks and internal controls. The conclusions of the committee’s work are regularly reported to the Risk The Board of Directors exercises control over the management of the Management Committee, which is an offshoot of the Board of Directors. Company and directs strategy. It is involved in the most important decisions and is kept regularly informed of changes in major management ratios and indicators. Its work is prepared by the Audit Committee and Risk Management THE EXECUTIVE RISK MANAGEMENT COMMITTEE Committee, which carry out the essential tasks of ensuring that relevant and Chaired by the Chief Executive Officer of Crédit Foncier, the Executive Risk consistent accounting methods are used to prepare the Company’s individual Management Committee is aimed at defining the Risk Policy, controlling its and consolidated financial statements, of supervising internal controls, proper performance, and more generally, ensuring the monitoring and particularly the measurement, monitoring and risk management systems, and management of the risks of Crédit Foncier and its subsidiaries, in accordance when necessary, of proposing appropriate additional courses of action. with the general risk policy defined by Groupe BPCE.

❯ COMPLIANCE

An integral part of the internal control system required by regulations for notifying the executive directors and the Board of Directors. It performs applicable to credit institutions, the compliance control system refers to the set first- and second-level permanent controls of non-compliance risks (including of resources assigned to ensuring compliance with provisions specific to the risk of misconduct). Its activities include general and financial ethics, banking and financial activities, business and ethical standards, Group combating money laundering and terrorism financing, fraud prevention and regulations and directives issued by the executive directors enforcing the specific checks on the compliance of investment services, compliance with the guidelines set out by the supervisory body. law on the separation and regulation of bank activities and the Volcker Rule. The Compliance department reports to the executive director responsible for The Compliance department works alongside the Permanent Control the Risk and Compliance Division and observes the BPCE Risk, Compliance Coordination department and provides functional supervision of the and Permanent Control Charter of March 29, 2017. To this end, it is compliance staff in the various operational departments and support functions. responsible for identifying, assessing and monitoring non-compliance risk (including the risk of misconduct), through a transaction and procedure Executive Management, the Internal Control Committee, the Risk Management monitoring system that is adapted to the size and complexity of the bank’s Committee, the Board of Directors and the central institution of Groupe BPCE operations, for contributing to the drafting of the risk management policy, and are kept constantly informed of its activities.

❯ WORK CARRIED OUT BY THE GENERAL INSPECTION DEPARTMENT

■ Reports on the audits performed are presented to Crédit Foncier’s Executive ORGANISATION AND RESOURCES OF Management, the Risk Management Committee, and if appropriate, to the THE GENERAL INSPECTION DEPARTMENT executive bodies of the subsidiaries in question. Information is also provided at Executive Committee meetings, allowing a final review of recommendations The General Inspection department is responsible for assessing risks and prior to implementation. A summary report on the follow-up of reviewing the permanent control system. recommendations is also presented to the above-mentioned bodies as well as It reports on its audits to the Chief Executive Officer and to the Risk to the Executive Committee. The Executive Committee also reviews any Management Committee. recommendations that prove difficult to implement. As of the end of 2018, the department had a staff of 18 employees. All were university graduates drawn from a number of complementary fields (accounting, finance, law, marketing). ■ INSPECTION ASSIGNMENTS CONDUCTED IN 2018 An annual audit plan is prepared by the Crédit Foncier General Inspection department, working in conjunction with Executive Management and in Overall, Crédit Foncier’s General Inspection Division completed its audit consultation with BPCE’s General Inspection department. The plan is schedule in 2018. The General Inspection assignments were included in the approved by Crédit Foncier’s Executive Management and submitted to the Annual Audit Plan approved by the Audit Committee on December 12, 2017, Risk Management Committee. It covers the General Inspection department’s covering groupe Crédit Foncier’s different sectors of operation: loans to scope of intervention, with a long-term plan based on an audit cycle of at most individuals, Corporates, support activities, subsidiaries (SOCFIM) and four years; intrinsically risky activities are audited more frequently. During the outsourced services. year, special audits or reviews may be conducted at the behest of the Chief Executive Officer or Risk Management Committee.

2018 Registration document 80 CRÉDIT FONCIER MANAGEMENT REPORT INFORMATION ON THE INTERNAL CONTROL SYSTEM 3

■ A detailed statistical report is prepared quarterly to provide the Executive FOLLOW-UP ON RECOMMENDATIONS Management, the Executive Committee, the Risk Management Committee FROM PREVIOUS ASSIGNMENTS and the Board of Directors with a clear summary report including potential requests to extend or abandon recommendations (with the associated Monitoring of the implementation of audit recommendations is based on the reasons). Recommendations not implemented according to the initial timetable reports submitted by the audited entity’s management, indicating the are specifically reviewed by the Executive Committee. percentage of completion and including, if necessary, an action plan and a new deadline. When an entity is re-audited, the status of previous recommendations is systematically examined. The audited units now enter the reports into the Group Intranet database. These reports must be accompanied by supporting documentation provided by the audited entity and containing all the necessary proof of completion. The General Inspection department systematically verifies whether the audit recommendations have actually been implemented by checking documents when the completion rate reaches 100%.

❯ PROCEDURES FOR AUDITING ACCOUNTING AND FINANCIAL INFORMATION

Following the migration to the Caisses d’Épargne shared Information System, ■ the Accounting department encountered problems in monitoring holding COMPANY AUDIT COMMITTEE accounts. The Accounting department set up a plan to clear backlogs, Accounting and financial statements (annual and half-year consolidated structured into an individual operational committee, a monthly Steering financial statements) are presented to the Audit Committee. This committee Committee, a special workshop inside and outside accounting, and a monthly analyses the statements, receives the conclusions of the Statutory Auditors anomaly-tracking workshop. These workshops have made it possible to and submits its own conclusions to the Board of Directors. greatly reduce accounting holdings. The solution for identifying temporary holdings was delivered in January 2019 to allow more efficient monitoring and control of these accounts. ■ STRUCTURE OF GROUPE CRÉDIT FONCIER’S ACCOUNTING FUNCTION Accounting at groupe Crédit Foncier is performed by the Accounting ■ ROLE OF THE CENTRAL INSTITUTION department. The department is directly responsible for preparing the financial BPCE’s Accounting department is responsible compliance with standards, statements and regulatory filings for all Group entities, with the exception of supervision, appraisal, oversight, forecasting and regulatory monitoring and it SOCFIM and Banco Primus, which have their own Accounting departments. In represents the Group for prudential and accounting matters. addition, within Crédit Foncier there are decentralised accounting entities performing account-keeping and justification tasks, in particular for financial In this capacity, it defines and updates the Group’s accounting standards, operations, under delegation agreements. comprised of a Group Accounting Plan and accounting rules and methods applicable to all Group entities. These rules and methods include general accounting tables and are summarised in a manual used by all the Group’s institutions. This manual is regularly updated as changes in accounting regulations occur. Furthermore, the rules for preparing the half-year and annual financial statements are the subject of a specific report aimed at harmonising accounting procedures and statements across the different companies in the Group.

2018 Registration document CRÉDIT FONCIER 81 MANAGEMENT REPORT INFORMATION ON THE INTERNAL CONTROL SYSTEM

Crédit Foncier’s Accounting department is structured as follows:

❯ Crédit Foncier’s Accounting department Main responsibilities Main responsibilities in compiling Services in accounting system operations and summarising data Reporting and overviews Individual financial statements: ❯ balance sheets, income statements and notes to the financial statements of these entities ❯ account-keeping for Crédit Foncier, Compagnie de Financement Foncier and Locindus, and preparation of ❯ summary monthly results statements for the Group’s two the individual financial statements main credit institutions (Crédit Foncier and Compagnie de Financement Foncier) ❯ tax returns ❯ balance sheets, income statements and notes to the Consolidated financial statements: financial statements for groupe Crédit Foncier ❯ centralisation of consolidation packages ❯ consolidated quarterly results for the Group ❯ preparation of the consolidated financial statements ❯ consolidated monthly results under French standards ❯ implementation of consolidation procedures (using Groupe BPCE’s BFC software) Regulatory and prudential disclosures ❯ regulatory reporting at the Company level (Unified ❯ reporting to the ACPR and the ECB (via BPCE, central Financial Reporting System, etc.) institution) ❯ calculating specific ratios for the Compagnie de Financement Foncier ❯ prudential reporting on a consolidated basis to the ACPR and/or the ECB (via BPCE, central institution) in cooperation with the Risk Division Operational accounting ❯ monitoring and control of the interface between the loan ❯ reports on outstanding loans and loan payment flows management system, accounting software packages and reporting databases, in cooperation with ITCE, an IT service provider ❯ account-keeping for loan chains and peripheral chains Subsidiary Accounting ❯ account-keeping for non-banking subsidiaries ❯ balance sheets, income statements and notes to and preparation of individual financial statements the financial statements of these entities ❯ tax returns

■ Summary reports are then drafted and circulated to the Accounting ACCOUNTING AND REGULATORY AUDIT department, the Permanent Control Coordination department and the The organisational principles applicable to the audit of accounting activities – in Statutory Auditors. a decentralised structure – are formally set out in a document entitled “Control of the quality of accounting and financial information” which was approved by Consolidation packages are drafted by subsidiaries and certified by their the Internal Control Coordination Committee on June 9, 2016. respective Statutory Auditors. These documents are then reviewed in detail and checked for consistency by the Consolidation Unit. The Auditing and Regulatory Audit unit, which reports to the Deputy Chief Financial Officer, also reports functionally to the Head of Permanent Control All of these prudential and regulatory reports are centralised by BPCE, which Coordination. Operational accounting controls are the responsibility of the runs automated consistency controls before sending them to the ACPR. functions directly involved in generating accounting data. The Audit unit will be the Statutory Auditors’ primary contact for the purposes The audits are set out in an annual audit schedule, proposed by the of their audit work. It will also ensure that the Statutory Auditors’ Accounting and Regulatory Audit unit, submitted to the Permanent Control recommendations are implemented. Coordination department and approved by the Internal Control Committee. These audits include: ■ AUDIT OF FINANCIAL DATA ❯ in-depth verifications during the quarterly closing of accounts, primarily relating Financial data disclosed to third parties (regulatory output intended specifically to the proper supporting documents (on and off-balance sheet accounts); for the ACPR and Registration documents submitted to the AMF) are carefully ❯ regular checks on key regulatory and tax disclosures and issues relating to audited by the competent departments (Management Control, Financial summary statements. Management, General Accounting, Compliance).

2018 Registration document 82 CRÉDIT FONCIER MANAGEMENT REPORT PRUDENTIAL AND REGULATORY INFORMATION 3

PRUDENTIAL AND REGULATORY INFORMATION

Crédit Foncier also publishes a Risk Management report (on page 85 of this Registration document) that includes information and indicators pursuant to applicable regulations.

OTHER DISCLOSURES

❯ SUPPLIER AND CLIENT PAYMENT TERMS (1)

SUPPLIER PAYMENT TERMS Pursuant to Article L. 441-6-1 of the French Commercial Code, Crédit Foncier does not use supplier credit to finance its working capital requirements. On average, supplier invoices are paid 27 days after receipt.

❯ Received invoices unpaid as of the closing date of the year

(in €k) 1 to 30 days 31 to 60 days 61 to 90 days 91 days or more Total A) Payment delay interval Number of invoices involved 36 3 2 - 41 Total amount of invoices involved, including tax 240 69 2 - 311 The percentage of received invoices that were unpaid on the closing date is less than 1% Percentage of total amount of purchases including tax for the year of the total amount of the year’s purchases including tax. B) Invoices excluded from (A) relating to disputed or unbooked debts and receivables Number of invoices excluded Nil Total amount of excluded invoices Nil C) Reference payment terms used (contractual or legal – Article L. 441-6 or Article L. 443-1 of the French Commercial Code) Payment terms used to calculate overdue payments Contractual terms: within 30 days of invoice date

CUSTOMER PAYMENT PERIOD ❯ Invoices issued but not settled at the balance sheet date

(in €k) 1 to 30 days 31 to 60 days 61 to 90 days 91 days or more Total A) Payment delay interval Number of invoices involved 2 1 0 15 18 Total amount of invoices involved, including tax 151 3 0 595 749 The percentage of issued invoices that were unpaid on the closing date is less Percentage of total amount of purchases including tax for the year than 1% of the total amount of the year’s sales including tax. B) Invoices excluded from (A) relating to disputed or unbooked debts and receivables Number of invoices excluded Nil Total amount of excluded invoices Nil C) Reference payment terms used (contractual or legal – Article L. 441-6 or Article L. 443-1 of the French Commercial Code) Payment terms used to calculate overdue payments Contractual terms: Invoice date

(1) The information below does not include banking and related operations.

2018 Registration document CRÉDIT FONCIER 83 MANAGEMENT REPORT OUTLOOK

❯ INVESTMENTS

IN 2019 IN 2017 Crédit Foncier made no material investments (larger than €30m requiring a Crédit Foncier made no material investments (larger than €30m requiring a qualified majority of the Board of Directors) between January 1, 2019 and the qualified majority of the Board of Directors) during the year. date when this Registration document was filed. To the Company’s knowledge, there is no agreement in place to make such IN 2016 an investment in the future. Crédit Foncier made no material investments (larger than €30m requiring a qualified majority of the Board of Directors) during the year. IN 2018 Crédit Foncier made no material investments (larger than €30m requiring a qualified majority of the Board of Directors) during the year.

❯ RESEARCH AND DEVELOPMENT ACTIVITY

In 2018, Crédit Foncier did not conduct any research and development activities.

❯ MAIN RISKS AND UNCERTAINTIES

Information about the main risks and uncertainties is described in chapter 4, “Risk Management report”.

OUTLOOK

On June 26, 2018, Groupe BPCE announced a project to integrate Crédit Foncier’s activities and teams into Groupe BPCE from April 1, 2019.

SOCIAL, ENVIRONMENTAL AND SOCIETAL INFORMATION

EXTRA-FINANCIAL PERFORMANCE DECLARATION Article L. 225-102-1 also states that the companies under the control of a In accordance with Article L. 225-102-1 of the French Commercial Code, company that includes them in its consolidated financial statements are not Crédit Foncier is required to publish an Extra-Financial Performance Statement required to publish an Extra-Financial Performance Statement. (DPEF). Consequently, information about Crédit Foncier is included in Groupe BPCE’s Crédit Foncier, which is 100% owned by BPCE, is consolidated into Groupe Extra-Financial Performance Statement, which can be viewed on BPCE’s BPCE. In its 2018 Registration document, Groupe BPCE publishes a website: consolidated Extra-Financial Performance Statement that relates to all https://www.groupebpce.fr/en/Investors/Results/Registration-documents companies included in the scope of consolidation in accordance with Article L. 233-16.

2018 Registration document 84 CRÉDIT FONCIER RISK MANAGEMENT 4 REPORT

INTRODUCTION – GENERAL RISKS OF 4.6 RECOMMENDATIONS OF THE GROUPE CRÉDIT FONCIER 86 FINANCIAL STABILITY FORUM 106 4.6.1 CDOs and exposures to monoline insurers and other 4.1 GENERAL ORGANISATION credit enhancers 106 & METHODOLOGY 87 4.6.2 Leveraged Buyouts (LBOs) 107 4.1.1 Responsibilities of the Risk, Compliance, Permanent Control, Information Systems Security and Contingency 4.7 MARKET RISKS 108 and Business Continuity Plan departments 87 4.7.1 Equity risk 108 4.1.2 Organisation of the Risk, Compliance, Permanent 4.7.2 Settlement risk 109 Control, Information Systems Security and Contingency And Business Continuity Plan departments 88 4.8 ALM RISKS 110 4.1.3 Information systems and quality of groupe Crédit Foncier data 91 4.8.1 Methodology for assessing structural risks 110 4.1.4 Review of risk management procedures and methods 91 4.8.2 Liquidity risk monitoring 111 4.8.3 Interest rate risk monitoring 112 4.2 CAPITAL AND CAPITAL ADEQUACY 4.8.4 Foreign exchange risk monitoring 112 RATIOS 93 4.2.1 Regulatory framework 93 4.9 OPERATING RISKS 113 4.2.2 Scope 93 4.9.1 General framework 113 4.2.3 Composition of regulatory capital 93 4.9.2 Governance 113 4.2.4 Capital requirements and capital adequacy ratios 94 4.9.3 Management environment 113 4.2.5 Leverage ratio 95 4.9.4 Organisation of the Contingency and Business Continuity Plan (CBCP) 114 4.3 CREDIT AND COUNTERPARTY RISKS 96 4.9.5 IT risks 114 4.9.6 Legal risks 114 4.3.1 Analysis of commitments 96 4.9.7 Insurance 116 4.3.2 Commitments by customer portfolio 99 4.9.8 Other risks: caisse de retraite (French Pension Fund) of Crédit Foncier for employees who joined the Group 4.4 ANALYSIS OF DELINQUENCIES 103 before March 1, 2000 117 4.4.1 Delinquencies 103 4.4.2 Cost of risk for the period 103 4.10 NON-COMPLIANCE RISK 118 4.10.1 General framework 118 4.5 RISK MITIGATION TECHNIQUES 104 4.10.2 Financial security 118 4.5.1 Collateral valuation and management 104 4.10.3 Compliance 119 4.5.2 Main providers of credit protection 104 4.10.4 Ethics 119 4.5.3 Effect of credit risk mitigation techniques 104 4.5.4 Balance sheet and off-balance sheet netting 105 4.5.5 Brokerage risk 105

2018 Registration document CRÉDIT FONCIER 85 RISK MANAGEMENT REPORT INTRODUCTION – GENERAL RISKS OF GROUPE CRÉDIT FONCIER

INTRODUCTION – GENERAL RISKS OF GROUPE CRÉDIT FONCIER

Groupe Crédit Foncier is potentially exposed to three types of risk: However, groupe Crédit Foncier does not conduct any proprietary trading and therefore does not directly assume any market risk on its ordinary transactions ❯ credit and counterparty risks: section 4.3; other than ALM: section 4.7. ❯ structural risks (liquidity risk, interest rate risk and foreign exchange risk): The other risks to which groupe Crédit Foncier’s business lines are exposed section 4.8; are: ❯ operating risks: section 4.9. ❯ settlement risk: section 4.7.2; ❯ non-compliance risk: section 4.10.

2018 Registration document 86 CRÉDIT FONCIER RISK MANAGEMENT REPORT 4.1 GENERAL ORGANISATION & METHODOLOGY 4

4.1 GENERAL ORGANISATION & METHODOLOGY

❯ 4.1.1 RESPONSIBILITIES OF THE RISK, COMPLIANCE, PERMANENT CONTROL, INFORMATION SYSTEMS SECURITY AND CONTINGENCY AND BUSINESS CONTINUITY PLAN DEPARTMENTS

The Risk, Compliance and Permanent Control departments are part of the and internal standards applicable to banking, finance and insurance activities. Risk and Compliance Division. This division also covers the Information As part of this effort, the Compliance department performs all tasks that Systems Security and the Contingency and Business Continuity Plan (CBCP) ensure the compliance of transactions carried out by Groupe BPCE departments. companies, affiliates and subsidiaries, ensuring that the interests of its customers, employees and partners are respected at all times. In accordance with the principles determined for the Compliance department, 4.1.1.1 RESPONSIBILITIES OF THE RISK the role of Crédit Foncier’s Compliance Division is to: DEPARTMENT ❯ prevent, identify, assess and monitor non-compliance risks as defined in The Risk Management Division has two main objectives: Article 10 p) of the aforementioned Order, in particular via a transaction monitoring system and procedures adapted to the size and complexity of ❯ to define and implement risk monitoring and control measures within the activities, and a risk measuring system; scope defined in the French Order of November 3, 2014; ❯ contribute to the drafting of risk policies and monitor their implementation at ❯ to develop and integrate risk monitoring and control procedures that meet the an operational level; requirements of European directives and their application in French law. ❯ inform executive directors, the supervisory body and the Group Risk, Crédit Foncier’s Risk department covers all types of risk: credit, counterparty, Compliance and Permanent Control Division (DRCCP); market and financial risk (interest rate, foreign exchange and liquidity risk), ❯ safeguard the image and reputation of Crédit Foncier and Groupe BPCE with operating risk and settlement-delivery risks. It provides ex-ante analysis their customers, employees and partners; through delegations as well as ex-post analysis and control of risks. Its scope of consolidation also covers all Group subsidiaries (for which it approves the ❯ prevent money laundering and terrorism financing as provided under Chapter appointment of Risk managers). III of the above-mentioned Order; While the primary responsibility for risk management lies with the business ❯ prevent internal and external fraud mentioned in Article 10 j) of the same lines that execute and manage transactions, the Risk Management Division is Order. responsible for ensuring that the risks taken by the Institution are compatible The Compliance Division is responsible for ensuring the consistency of all with its risk policy and profile, as well as with its profitability objectives. compliance controls, with each operational or control office retaining Crédit Foncier’s organisation is based upon an adaptation of Groupe BPCE’s responsibility for the compliance of its activities and operations. It provides risk management charter, taking into account changes in regulations and the secretarial services for the New Products, Activities & Services Committee, European banking environment. In particular, the charters specify that the leads the Regulatory Monitoring Coordination Committee and oversees the decision-making body and the executive body must promote the institution’s operational implementation of new regulatory provisions. risk culture through all levels of the organisation, and that the Risk department The Compliance Division is also the main contact for the Autorité des Marchés coordinates the dissemination of the risk culture to all employees, in Financiers, the joint AMF-ACPR unit for coordinating controls on marketing conjunction with all the other departments. and the Commission Nationale de l’Informatique et des Libertés (CNIL – French data protection agency). It interacts with the ACPR on matters within its remit. Finally, as a second-level permanent control function, it maintains 4.1.1.2 RESPONSIBILITIES OF THE COMPLIANCE close relations with all offices involved in performing internal controls. DEPARTMENT Article L. 512-107 of the French Monetary and Financial Code gives the 4.1.1.3 RESPONSIBILITIES OF THE PERMANENT central institution responsibility “for determining the organisational principles and conditions of the internal auditing mechanism of the group and of each of CONTROL COORDINATION DEPARTMENT the networks and providing monitoring of said organisation and of the The Permanent Control Coordination Division: management and quality of the financial situation of the affiliated institutions, inter alia through on-the-spot inspections within the scope of the intervention ❯ validates and guarantees – vis-à-vis the entity’s different business lines – the described in the fourth paragraph of Article L. 511-31”. exhaustiveness of the permanent control mechanisms covering the biggest risks, taking into account specific operating requirements and constraints; In practice, the general organisational principles of internal control at Groupe BPCE are defined by the Group internal control umbrella charter, which ❯ coordinates the networks of permanent control correspondents and operating applies to all Groupe BPCE institutions monitored on a consolidated basis. risk officers and the subsidiaries; Given the scope of Groupe BPCE, multiple levels of intervention and ❯ contributes to defining core controls; responsibility have been identified in the compliance process: ❯ validates control plans and ensures they are duly implemented in order to ❯ BPCE, as the central institution, determines the organisational principles and guarantee risk management and transaction compliance; conditions of the internal control framework of Groupe BPCE and each of its institutions; ❯ analyses the results of controls carried out, suggests corrective measures to eliminate malfunctions and monitors their implementation; ❯ the Group institutions. ❯ advises, educates and trains the various individuals involved in managing risks The Compliance department, which has access to dedicated resources and is and permanent control; considered to encompass all compliance functions as defined in the Risk, Compliance and Permanent Control Charter of Groupe BPCE, conducts ❯ provides secretarial services for the Internal Control Committee and follows up Level 2 permanent controls pursuant to Article 11a) of the Order of on its decisions; November 3, 2014 on the internal control of companies in the banking sector, ❯ provides, for the Risk and Compliance Division, the interface with the DOMO payment services and investment services subject to ACPR supervision. As (Project Management and Organisation Division) and monitoring of risk-related such, it oversees the compliance of the operations, organisation and internal IT projects. procedures of Groupe BPCE companies with legal, regulatory, professional

2018 Registration document CRÉDIT FONCIER 87 RISK MANAGEMENT REPORT 4.1 GENERAL ORGANISATION & METHODOLOGY

4.1.1.4 RESPONSIBILITIES OF THE INFORMATION 4.1.1.5 RESPONSIBILITIES OF THE CONTINGENCY SYSTEMS SECURITY DEPARTMENT AND BUSINESS CONTINUITY PLAN The main responsibilities of the Head of Information Systems Security are as DEPARTMENT follows: The Contingency and Business Continuity Plan (CBCP) department is ❯ to define the Company’s information systems security policy and apply it responsible for ensuring that the continuity plan is operational, including in the across the different entities; event of an extreme shock. To do this, it has the following structure: ❯ to lead the team of Information Systems Security Officers in the Company’s ❯ the CBCP manager is responsible for the correct implementation and various entities; execution of the plan. He coordinates the crisis decision unit and organises the CBCP officers’ network. He regularly organises tests and drills to assess ❯ to assist the IT Project Management and Organisation Division in the implementation and execution of the Plan; implementing information systems security standards; ❯ the CBCP officers represent the core business lines and support functions. ❯ to supervise the information systems security management implemented by They are responsible for maintaining key elements of the plan in working order IT-CE and BPCE-IT (IT service providers) for the Crédit Foncier scope; and for reporting information in a crisis situation; ❯ to serve as a point of contact on information systems security issues for ❯ drills ensure that the entire plan is operating properly, including the crisis Groupe BPCE ad hoc committees; decision unit, tools (technical tests), logistics (transfer of operational staff to ❯ to educate users in the business lines and support functions about the issues, the three backup sites), the subsidiaries and essential outsourced services. risks and rules affecting information systems security.

❯ 4.1.2 ORGANISATION OF THE RISK, COMPLIANCE, PERMANENT CONTROL, INFORMATION SYSTEMS SECURITY AND CONTINGENCY AND BUSINESS CONTINUITY PLAN DEPARTMENTS

It is the permanent point of contact for the Group Risk, Compliance and 4.1.2.1 GROUPE BPCE’S RISK, COMPLIANCE AND Permanent Control Division and is responsible for applying national PERMANENT CONTROL DEPARTMENTS procedures and plans initiated at Group level throughout the entity. Groupe BPCE’s Risk, Compliance and Permanent Control departments are This system is rounded out by a unit coordinating permanent controls and comprised of the Group Risk, Compliance and Permanent Control Division of operating risks, which provides cross-business control throughout groupe Groupe BPCE. Crédit Foncier.

KEY TASKS OF COMMITTEES RESPONSIBLE 4.1.2.2 CRÉDIT FONCIER’S RISK MANAGEMENT FOR RISK MANAGEMENT DIVISION The Risk Management Division manages, monitors and controls risks through Groupe Crédit Foncier’s Risk Management Division reports to Groupe BPCE’s several committees which it organises and/or in which it participates. The Risk, Compliance and Permanent Control Division. Executive Risk Committee is the Umbrella Committee covering the entire risk management system in conjunction with the Internal Control Committee. It is positioned at the highest level of Crédit Foncier’s organisation to ensure it is independent from the operating activities that generate net banking income.

2018 Registration document 88 CRÉDIT FONCIER RISK MANAGEMENT REPORT 4.1 GENERAL ORGANISATION & METHODOLOGY 4

❯ Risk department – Structure of committees

• Central risk committee Groupe Crédit Foncier Executive Risk • Sets risk policy (including Committee counterparty limits) and the broad Internal principles for ALM risks Control Committee • Controls its proper execution • Includes Compliance • Monitors consolidated risks • Monitors equity and regulatory New Product ratios Approval Committee

Internal Information Operational Provisions Systems Security Risks Committee Committee Committee • Validates Crédit Foncier's provisioning methods and levels

Crédit Foncier National Commitments National Committee Watch List and ALM and Liquidity Committee on Sensitive Issues Litigation Committee Oversight Committee • Applies ex-ante the • Monitors and decides • Decides on the debt • Declines detailed guidance commitment policy in on guidance for Individual collection strategy and based on the risk policy accordance with the customers reviews developments in structure or delegated (losses, provisions, etc.) sensitive Corporate cases • Deals with interest rate, authority (provisions, losses, etc.) liquidity and foreign exchange risks

Individual Commitments Committee on Sensitive Committee on Sensitive Financial Management Committee Issues for Private Issues for Corporate Committee Individuals Commitments clients Business Line Committees Cash Flow Committee (acting within delegation limits)

Tariff Policy Committee

Crédit Foncier’s risk management system has been implemented in ❯ coordinate actions aimed at ensuring proper risk management, compliance of accordance with banking regulations and the governance principles operations and internal procedures, quality and availability of the data established by the central institution of Groupe BPCE, which wholly owns processed by information systems, and the security of said systems; Crédit Foncier. ❯ oversee the resolution of malfunctions identified by the General Inspection The Executive Risk Committee is chaired by the Chief Executive Officer. It Division and ensure that recommendations are implemented; meets at least quarterly, and its main tasks, covering both the parent company ❯ supervise regulatory monitoring and ensure that the main regulations are and the consolidated scope, are to: applied within Crédit Foncier; ❯ prepare and update the general risk management policy; ❯ ensure the function of the Volcker Committee pursuant to a US law known as ❯ analyse and monitor the Group’s general risk profile, based on risk scoring, the Dodd-Frank Wall Street Reform and Consumer Protection Act, which has measurement and evaluation systems (stress tests, etc.) and major added new section, section 13, to the Bank Holding Company Act of 1956 exposures; (the “BHC Act”), section 13, commonly referred to as the “Volcker Rule”. ❯ monitor Risk Appetite Framework (RAF) indicators; Several other committees, which the Risk Management Division participates in or provides secretarial services for, contribute to risk monitoring and ❯ measure the quality of commitments and recoveries on the basis of summary management. These include: reports; ❯ National Commitment Committees and Business Line Commitment ❯ verify that the various risk management or monitoring procedures (risk Committees, which take decisions regarding exposure amounts and risk levels maps, etc.) are correctly applied; based on the amount of authority delegated to each committee under the ❯ consolidate risk monitoring: review capital adequacy ratios, develop and delegation system; analyse stress tests, monitor capital, review operating risks. ❯ Provisions Committees, which approve Crédit Foncier’s provisioning methods The Internal Control Committee is chaired by the Chief Executive Officer and levels; and meets regularly (at least quarterly), bringing together representatives from ❯ Watch List & Sensitive Operations Committees (Corporates), the National the control functions. Its main duties are to: Sensitive Operations Committee (Individuals) and the business line Sensitive Operations Committee (Individuals and Corporates) for decisions on how to ❯ ensure that permanent controls for business activities are comprehensive and deal with loans considered to be at risk or that have the potential to become well-organised and that operating and compliance risk monitoring and so in the future. These committees decide how to classify the receivables management systems are effective; concerned and how they should be managed;

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❯ Committees that approve products, activities and services (new banking or financial products); 4.1.2.5 INFORMATION SYSTEMS SECURITY Crédit Foncier has its own Head of Information Systems Security with a ❯ Executive Management Committee, which receives a report on own capital dedicated team that takes action on any problem relating to information every six months; systems security. ❯ Operating Risks Committee. The governance of Crédit Foncier’s information systems security is structured The ALM and Liquidity Steering Committee is the decision-making body around: responsible for financial management within the limits set by Executive Management based on recommendations made by the Executive Risk ❯ an Information Systems Security Policy specific to Crédit Foncier, which is Committee, and in accordance with Groupe BPCE rules. coordinated with Groupe BPCE’s Information Systems Security Policy and rules; The implementation of the management guidelines and decisions of this committee is carried out by: ❯ bodies such as the Internal Security and Continuity Committee, chaired by an executive director; ❯ the Cash Flow Committee (bimonthly, alternating with the Financial ❯ a plan designed to raise the awareness of company employees about cyber Management Committee), which conducts operational liquidity management; and security risks; ❯ the Financial Management Committee, which is responsible for analysing ❯ an information systems security permanent control mechanism combined with all disposals (internal and external) and hedging transactions and for making the production of a quarterly security report (security indicators). the associated decisions; and ❯ the Tariff Policy Committee, which adjusts the pricing of Crédit Foncier’s products on a monthly basis in line with the volume and margin sales targets set by Executive Management. 4.1.2.6 CONTINGENCY AND BUSINESS CONTINUITY PLAN Crédit Foncier’s business continuity measures are operational and have been 4.1.2.3 CRÉDIT FONCIER’S COMPLIANCE DIVISION tested on a yearly basis since 2008 in order to contend with the major risks linked to the unavailability of staff, sites or information systems, or the Crédit Foncier’s Compliance Division, which is part of the Risk and combination of the three aforementioned risks (city-wide crises such as the Compliance Division, reports to the Risk, Compliance and Permanent Control flooding of the Seine or a flu pandemic). In December 2018, the Business Division (DRCCP) of Groupe BPCE. Continuity activity was assigned to the Director of Permanent Control and The Compliance Division is independent of all the other business lines, in Operating Risks. accordance with banking regulations. In accordance with the Group Risk, A network of fourteen CBCP officers, who coordinate all the critical activities Compliance and Permanent Control Charter dated March 29, 2017 and the continued under the plan, is responsible for updating the procedure. The function organised by the DRCCP, it is responsible for the prevention, CBCP officers update processes for scaled-back operations, as well as identification, assessment and monitoring of banking compliance risks, the human and technological requirements, in order to restart activity in the four compliance of investment services, general and financial ethics, financial backup sites within accepted time frames. security (anti-money laundering and terrorist financing and combating internal or external fraud). The Compliance Division also oversees the Group The governance of Crédit Foncier’s business continuity plan is structured permanent control monitoring solution on behalf of Crédit Foncier. around:

❯ a business continuity policy specific to Crédit Foncier and backed by Groupe 4.1.2.4 CRÉDIT FONCIER’S PERMANENT CONTROL BPCE standards and guidelines; ❯ bodies such as the Internal Security and Continuity Committee, chaired by a COORDINATION DIVISION member of Executive Management, and semi-annual plenary meetings with The Permanent Control Coordination Division provides cross-business control the network of CBCP officers; functions within groupe Crédit Foncier. This structure, which guarantees the ❯ a Level 1 and Level 2 permanent control mechanism based on Group existence and effectiveness of the permanent control system, works in close guidelines. collaboration with the second-level permanent control teams. Employees dedicated to second-level permanent controls work within the operational entities.

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❯ 4.1.3 INFORMATION SYSTEMS AND QUALITY OF GROUPE CRÉDIT FONCIER DATA

4.1.3.1 ACCOUNTING CONSISTENCY OF RISK The monitoring structure has the following objectives: DATA ❯ to ensure the compliance of monthly ratings by detecting any malfunctions as soon as possible; In accordance with Basel II and then Basel III requirements, Groupe BPCE entities must ensure that all data provided to the Group’s regulated ❯ to implement appropriate corrective action based on the situations information systems have undergone a procedure to ensure accounting encountered. consistency. Crédit Foncier complies with this requirement. This system also controls the accuracy and consistency of segmentation, ratings and information on guarantees, commitments and incidents/defaults. Each indicator result is analysed and a standard alert threshold is set, beyond 4.1.3.2 DATA QUALITY which corrective measures are triggered. A comprehensive data quality oversight and process monitoring system has been set up and enhanced in line with Groupe BPCE standards. These indicators are now analysed and used by Crédit Foncier. Monitoring plays an essential role in following up ratings models, in risk analysis and for reporting (internal risk and business line reporting).

❯ 4.1.4 REVIEW OF RISK MANAGEMENT PROCEDURES AND METHODS

As a general rule, the business lines are responsible (Level One) for the risks Crédit Foncier’s system, validated by its Board of Directors, is part of the they assume as a result of their transactions, both at the time they are entered general framework for the Group’s risk appetite, which was validated by the into and throughout the term of each transaction. The Risk Management BPCE Supervisory Board and submitted to the European supervisor. This Division lays down the principles for intervention, risk monitoring and general framework draws in turn on a framework document that gives both a management by preparing a risk policy in line with the Groupe BPCE policy qualitative and quantitative description of risks Crédit Foncier is willing to take. and disseminating it to the business lines. It also describes the governance and operational principles in force and is updated once a year to incorporate any new regulatory developments. Commitment selection and monitoring is based on: Meanwhile, the operational mechanism for risk appetite is based on indicators ❯ application of risk policies in our fields of operation (loans to individuals and broken down by major risk category and is structured around a series of private- and public-sector Corporates), in accordance with the Group’s credit thresholds linked to the different respective levels of delegated authority, policies; namely: ❯ establishment of delegations of authority, primarily for the individual and ❯ the operational limit for which executive managers may decide, either directly public-sector corporate portfolios; or through committees that they chair, that the risk exposure must go back ❯ system of established limits for our primary corporate exposures, allowing us under the limit or that an exception may be established; to manage concentration risk; ❯ the resilience threshold: breaching this threshold may pose a risk to business ❯ assessment system to determine the borrower’s solvency and transaction continuity and/or stability. Any such breach must be reported to the quality using internal ratings and counter-analyses; Supervisory Board and is subject to a specific action plan. ❯ risk monitoring provided through the following mechanisms: quarterly portfolio Furthermore, Crédit Foncier has established a system for monitoring all other reviews, sensitive operations committees and internal, external and regulatory risks defined in the Order of November 3, 2014. reporting; Crédit Foncier is part of the system dedicated to the Recovery and ❯ risk oversight leading to the measurement and upstream management of Restructuring Plan, implemented at the Group level, which covers all BPCE these indicators. institutions.

4.1.4.1 MACRO RISK MAP 4.1.4.3 AUTHORISATIONS AND RISK CONTROL Crédit Foncier’s macro risk map is a core component of the overall risk PROCEDURES management framework, enabling it to meet the obligations of the regulator (Order of November 3, 2014); namely to: The Commitment Committees are responsible for authorising commitments taken by groupe Crédit Foncier and its subsidiaries within the limits they have ❯ have a summary overview of key exposures; been assigned. They decide on whether credit risk should be assumed for a counterparty or group of counterparties, based on the institution’s delegation ❯ determine which risks are a priority and prepare action plans for system, the limits applicable to the entity and the current risk policy. implementation; ❯ follow up on these risks in line with the established risk appetite and the The limits system has several levels: individual counterparty limits and sector permanent control framework. limits. Crédit Foncier’s risk map covers all the risks to which groupe Crédit Foncier is exposed and takes into account the specific characteristics of Compagnie de INDIVIDUAL LIMITS Financement Foncier. Groupe BPCE’s entities must each observe individual transaction limits that define the rules on risk diversification within the portfolios while respecting regulatory limits for controlling large exposures. 4.1.4.2 RISK APPETITE Validated by the Executive Risk Committee, these individual limits – examined Crédit Foncier’s risk appetite is defined as the level of risk it is ready to accept and proposed by the Risk Management Division – are updated, checked, with the goal of increasing its profitability. It is aligned with the institution’s monitored and included in reports by the Risk Management Division. operating environment, strategy and business model, while incorporating customer interests.

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SECTOR LIMITS INTERBANK COUNTERPARTIES At Groupe BPCE, the internal rating of banking counterparties is performed by Crédit Foncier has set limits on target sectors based on risk and delinquency Natixis, with all counterparties rated at least once a year. Crédit Foncier uses analyses. the internal rating established at the Groupe BPCE level and monitoring is These limits are monitored and presented to the Executive Risk Committee on conducted by the Risk Committee. a quarterly basis. 4.1.4.5 RISK MONITORING 4.1.4.4 PROCEDURES FOR ASSESSING Risk monitoring involves two main procedures:

CREDITWORTHINESS ❯ quarterly review of portfolios to ensure the overall quality of exposures and Credit application analysis tools are organised into two systems: verify the calculation of the cost of risk;

❯ the counter-analysis system; ❯ monitoring of “sensitive operations” at least monthly for Corporates and on request for retail customers. ❯ the creditworthiness assessment system based on a loan score when granting credit, and regular monitoring. Specific procedures are applied to structured products for French public sector entities. COUNTER-ANALYSIS SYSTEM REVIEW OF PORTFOLIOS Counter-analysis is related to the delegation scheme, which provides for three levels of assessment: Regular reviews are conducted to assess the quality of exposures. This involves a detailed analysis of the quality of commitments between the ❯ at the business line level for the retail portfolio, with participation in Risk business lines and the Risk Management Division. This analysis applies to all of Management Committee meetings; the Risk Management Division has a right Crédit Foncier’s significant commitments. to overrule; ❯ at National Commitments Committee meetings, at which a Risk Management MONITORING OF SENSITIVE OPERATIONS Division representative expresses an independent opinion based on its counter-analysis. The Risk Management Division has no vote in the decision Committees review operations considered to be at risk or that have the but it can overrule decisions made; potential to become so in the future, and decide on the classification of the ❯ for transactions over a certain amount, the Group Risk Management Division receivables concerned (performing, non-performing, in litigation) and how they is asked to give its approval. should be managed. Credit applications are first analysed by the business lines (Individual Customer Sales and Commitments teams) and are then re-examined by a specialised INDIVIDUALS independent unit. Reviews are performed by a bi-monthly Business Line Committee and a National Committee that meets on request, depending on the amount of This re-examination is carried out under the sole responsibility of the Risk receivables. These committees review loans at risk and recommend individual Management Division for all financing requests that require a decision by the provisions where necessary. National Commitment Committee and, in some cases, the Business Line Commitment Committee (in accordance with the delegation system). CORPORATES RATINGS SYSTEM This monitoring is carried out by means of the groupe Crédit Foncier’s Watch List. The Watch List is reviewed each quarter. It includes all counterparties Each counterparty must be rated on the basis of an internal rating-based requiring close attention due to the potentially high risk they represent. The methodology applied by asset class. Watch List pertains to performing and non-performing loans alike, but not loans in litigation. Placement on the Watch List does not automatically suspend lines of credit or classify the counterparty as non-performing. INDIVIDUAL CUSTOMERS PORTFOLIO The Individual customer rating system is specific to Crédit Foncier (real estate In addition, counterparties in difficulty are reviewed more frequently via the loans with no deposit accounts). Watch List Committees and the business line Sensitive Operations Committees. When granting credit, an initial score is assigned based on both an expert system and a statistical score. Loans in litigation are also examined each quarter as part of a special review. Risk monitoring on the loan portfolio is carried out using monthly ratings based on the features of the transaction and the borrower at the time the loan is FRENCH PUBLIC SECTOR granted, as well as any payment incident information. In conjunction with Groupe BPCE, which has signed the GISSLER Charter, groupe Crédit Foncier closely monitors Public sector structured products in The rating is determined using two statistical models that evaluate real estate order to anticipate market changes affecting these transactions with relevant transactions and assign consistent risk classes based on transaction and customers. borrower characteristics.

PUBLIC AND PRIVATE SECTOR CORPORATES PORTFOLIO 4.1.4.6 CONSOLIDATED RISK MONITORING On the Corporates market, each counterparty is rated on the basis of a single Risk monitoring is carried out at multiple levels: internal rating-based methodology used throughout Groupe BPCE, even if the customer does business with several entities. ❯ consolidated oversight of exposures, used to draw up internal and external reports. Analyses are conducted through a series of reports, mainly This portfolio is rated using internal rating tools established by Groupe BPCE. comprising management reporting prepared for the Risk Executive This rating system is based on quantitative and qualitative assessments of Committee, in addition to COREP reporting. Risk assessment also involves creditworthiness for corporate Public and Private sector counterparties, as well the production of indicators on outstandings and delinquencies; as on an expert system. ❯ monitoring of capital and ratios, ensuring compliance with prudential ratios Ratings of Corporate asset classes are reviewed every year or every and setting standards for allocating capital to the business lines, based on six months, depending on the customer. ROE (Return on Equity); ❯ consolidation of the cost of risk for the year and projections for the INTERNATIONAL PUBLIC SECTOR (IPS) following year, and ensuring that this cost is factored into the tariffs applied by The method used to rate assets in the IPS portfolio combines expert analysis Crédit Foncier; with an approach based on external ratings. ❯ updating the risk management policy and the macro risk map; ❯ coordinating the risk appetite framework.

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4.2 CAPITAL AND CAPITAL ADEQUACY RATIOS

❯ 4.2.1 REGULATORY FRAMEWORK

Since January 1, 2014, directive 2013/36/EU of June 26, 2013 (Capital regulators, but with macroeconomic assumptions defined at the Groupe Requirements Directive – CRD IV) and Regulation (EU) No. 575/2013 of BPCE level over a two-year horizon. This consolidated Group-based stress June 26, 2013 (Capital Requirements Regulation), which are to be applied test factors in the specificities of each major Groupe BPCE entity (Natixis, immediately, have implemented Basel III regulations in Europe. CRD IV was Crédit Foncier and the Banque Populaire and Caisse d’Épargne networks). It enacted into French law by the Order of November 3, 2014. applies to all portfolios exposed to credit and counterparty risks, regardless of the approach used to calculate risk-weighted assets, and is based on detailed Groupe Crédit Foncier uses the standardised approach to calculate capital information cross-checked against that used for Group COREP reporting and requirements for all its portfolios. portfolio risk analysis. Groupe Crédit Foncier’s capital is monitored with the dual purpose of IFRS 9 “Financial Instruments” adopted by the European Commission on complying with regulatory ratios and optimising the allocation of capital and November 22, 2016 and applicable as of January 1, 2018 defines the rules for return on capital generated by its activities. This monitoring is presented every classifying and measuring financial assets and liabilities, the impairment six months to Executive Management. methodology for the credit risk of financial assets, and hedge accounting, except for macro-hedging, which the IASB is currently studying in a separate Groupe BPCE carries out internal stress tests in terms of credit risk based on draft standard. an overall methodology that is similar to that of the stress tests performed by

❯ 4.2.2 SCOPE

The prudential consolidation scope as defined in the European Capital The credit institutions whose individual management ratios are supervised Requirements Regulation CRR is identical to the accounting scope of within the framework of group consolidated management ratios, in compliance consolidation (See note 12 of Crédit Foncier’s consolidated financial with the provisions of the Order of November 3, 2014 governing prudential statements at December 31, 2018). monitoring on a consolidated basis, have been identified in the statutory scope of consolidation (See note 12.2 of Crédit Foncier’s condensed consolidated financial statements at December 31, 2018).

❯ 4.2.3 COMPOSITION OF REGULATORY CAPITAL

Regulatory capital is determined in accordance with the European CRD IV Autorité de Contrôle Prudentiel et de Résolution (ACPR – French Prudential directive and the European CRR Regulation, which came into effect on Supervisory and Resolution Authority). It is broken down into three categories: January 1, 2014, taking into account the national options specified by the Common Equity Tier One, Additional Tier One and Tier Two capital.

(in €m) 12/31/2018 12/31/2017 Total prudential capital 3,528 3,882 Tier-1 capital 3,520 3,871 Common Equity Tier 1 (CET1) 2,970 3,181 Tier-1 capital instruments 1,732 1,732 Retained earnings 1,281 1,604 Unrealised or deferred capital gains and losses -120 -227 ❯ Goodwill receivables - -13 ❯ Other intangible assets -6 -5 Temporary adjustments related to minority interests - 19 Prudential filters 83 81 Temporary adjustments related to prudential filters - 19 ❯ Deferred tax assets dependent on future profits and resulting from temporary differences -1 -1 ❯ Deferred tax assets dependent on future profits and resulting from temporary differences (above 10% threshold) - - Other adjustments - -28 Other adjustments during the transitional period - - Additional Tier 1 (AT1) capital 550 690 Tier 2 capital (T2) 8 11 Tier 2 capital instruments (T2) - 10 Collective provisions for credit risk - - Other temporary adjustments to Tier-2 capital - 1

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❯ 4.2.4 CAPITAL REQUIREMENTS AND CAPITAL ADEQUACY RATIOS

Groupe Crédit Foncier calculates regulatory capital requirements for both credit risk and operating risk according to the standardised method under current regulations. Groupe Crédit Foncier is not prudentially exposed to market risk.

(in €m) 12/31/2018 12/31/2017 REQUIREMENTS FOR CREDIT RISK (1) 2,255 2,299 Public administrations 34 49 Institutions 23 20 Regional administrations 402 421 Corporates 362 381 Retail customers 119 116 Mortgage-backed exposures 1,121 1,102 Exposures at default 144 148 Equities 20 17 High risk exposures 2 Securitisations 2 4 Other assets 28 37 MARKET RISK-WEIGHTED EXPOSURES (2) TOTAL REQUIREMENTS FOR OPERATING RISK (3) 101 111 CREDIT VALUE ADJUSTMENT (4) 44 45 EXPOSURE RELATED TO THE LCH DEFAULT PREVENTION FUND (5) 8 6 CAPITAL REQUIREMENTS (1)+(2)+(3)+(4)+(5) 2,407 2,462

At December 31, 2018, 46.6% of these capital requirements were linked to The average credit risk weighting (excluding the “other assets” class) is 26%, mortgage-backed exposures and 36.7% represented requirements for reflecting the low level of risk on groupe Crédit Foncier’s portfolio of loans, with Corporates, retail customers and regional administrations. most exposures backed by mortgages or guarantees.

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❯ Credit risk-weighted exposures with breakdown of VAR according to Basel III regulatory weightings Public administrations Regional Retail Mortgage- Expo- High (in €m) and central Institu- adminis- Corpo- custo- backed sures at risk Securi- Weighted At 12/31/2018 banks tions trations rates mers exposures default Equities exposures tisations Total assets Net exposure (on-and off-balance sheet) 17,963 19,021 24,431 7,576 2,197 37,917 1,761 291 67 111,225 Value at risk 17,613 18,978 23,936 5,616 2,131 36,666 1,751 291 67 107,049 Weighting after taking into account the credit risk mitigation technique 0% 16,906 17,629 3,656 66 45 38,301 2% 447 447 9 7% 12 12 1 10% 15% 20% 485 571 17,235 661 52 19,004 3,801 35% 32,894 32,894 11,513 50% 112 331 2,935 1,182 1,327 5,886 2,943 75% 2,131 2,432 4,562 3,422 100% 83 3,512 14 1,650 190 5,450 5,450 150% 15 195 101 25 336 503 250% 111 111 277 350% 1,250% 1 1 17 Other transactions 24 21 45 17 Total value at risk 17,613 18,978 23,936 5,616 2,131 36,666 1,751 291 67 107,048 27,952 Total weighted value at risk 430 289 5,021 4,524 1,492 14,010 1,801 247 24 27,838 Average weighting 2% 2% 21% 81% 70% 38% 103% 85% 150% 36% 27% Other non-credit obligation assets 346 Exposure related to default prevention fund 97 Operating risk-weighted exposure 1,267 Credit value adjustment 544 TOTAL WEIGHTED EXPOSURE 30,206

At December 31, 2018, the solvency ratio was 11.73% and the Common Equity Tier One (CET1) ratio was 9.87%. The Tier One ratio was 11.70%.

❯ 4.2.5 LEVERAGE RATIO

The main purpose of the leverage ratio is to provide an additional risk measure Leverage ratio disclosure has been mandatory since January 1, 2015. for capital requirements. The ratio reported at December 31, 2018 was 3.27%. This ratio takes into The leverage ratio is the ratio between Tier 1 capital and the exposure account all the provisions of the CRR and Commission Delegated Regulation consisting of assets and off-balance sheet items, restated to account for (EU) 2015/62 of October 10, 2014, with the exception of the treatment of derivatives, securities financing operations and other items deducted from intragroup operations for which BPCE is awaiting a favourable opinion by the regulatory capital. ECB that would enable it to exclude them from the calculation of the leverage ratio.

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4.3 CREDIT AND COUNTERPARTY RISKS

Unless otherwise mentioned, the data shown in the tables and charts in this section are management figures matching accounting data, balance sheet commitments (excluding off-balance sheet commitments and financial guarantees given) representing the overall exposure to credit risk under IFRS consolidated gross figures (performing and non-performing).

❯ 4.3.1 ANALYSIS OF COMMITMENTS

In the interest of clarity and consistency, since the decree of end-2008 Crédit required under this framework and the capital disclosures required by Foncier has chosen to unify the disclosures provided under IFRS 7, Pillar 3 of amendment IAS 1 form an integral part of the financial statements reviewed by Basel III (Title I, section 8 of Regulation (EU) No. 575/2013 of June 26, 2013) the Statutory Auditors (with the exception of disclosures indicated as and the Financial Stability Forum (G7). The risk management disclosures “unaudited”).

4.3.1.1 OVERALL CREDIT RISK EXPOSURE (IFRS 9 SUMMARY) OVERALL NET CREDIT RISK EXPOSURE

Consolidated contribution (in €m) 12/31/2018 12/31/2017 Overall net credit risk exposure (1) 106,790 109,203 Central banks 706 671 Financial assets at fair value through profit or loss (excl. variable-income securities) 1,588 1,838 Hedging derivatives (2) 3,862 5,201 Available-for-sale financial assets (excl. variable-income securities) 136 2,166 Interbank transactions 10,807 11,439 Customer transactions 81,733 80,197 Held-to-maturity financial assets 30 30 Other assets related to insurance activities 80 Sub-total (excluding financial guarantees given and signed commitments) 98,862 101,622 Financial guarantees given 1,553 1,573 Signed commitments 6,375 6,008 (1) Net outstandings after impairment. (2) Amounts offset under liabilities (See the consolidated financial statements).

OVERALL GROSS CREDIT RISK EXPOSURE

Change Dec. 2017/ (in €m) 12/31/2018 12/31/2017 Dec. 2018 OVERALL GROSS CREDIT RISK EXPOSURE (1) 107,720 110,139 -2.20% Of which exposures without financial guarantees and signed commitments 99,792 102,547 -2.69% Of which outstanding customer loans 84,893 85,825 -1.09% Of which outstanding customer loans (excl. French sovereign) 83,190 83,942 -0.90% ❯ Retail 46,679 45,709 2.12% of which outstanding direct loans (France and Europe) (2) 46,551 45,569 2.15% of which securities backed by residential mortgage loans (RMBS) in Europe (3) 128 140 -8.22% ❯ Corporates, Public and Private sector 38,214 40,117 -4.74% Public sector Corporates 32,323 34,591 -6.56% of which direct loans to the French public sector 21,041 23,273 -9.59% of which French local authorities (FLA) 13,027 14,778 -11.85% of which Social housing 6,299 6,733 -6.45% of which Infrastructure Project Financing 1,715 1,763 -2.73% of which direct loans and commitments on International public sector and sovereigns 11,282 11,317 -0.31% of which French sovereigns 1,703 1,884 -9.59% of which International 9,579 9,434 1.54% Private sector Corporates 5,891 5,526 6.61% of which direct loans and commitments 5,891 5,526 6.61% Of which banks and others 14,899 16,722 -10.90% (1) Gross outstandings before impairment, excluding reverse mortgages (€800m). (2) Compensatory effect of the PTZ tax credit starting in March 2016. (3) Including the Elise mutual fund and CFHL.

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Total outstanding customer loans were stable at €84.9bn (-1.1%) at investments made with the Banque de France (considered an exposure to the December 31, 2018. However, we note: French sovereign issuer); IPS outstandings are up due to advantageous exchange rates and interest rate valuations. Private Corporate outstandings ❯ a €1.9bn decrease in corporate, Public sector and Private sector assets to are up €365m; €38.2bn (-4.7%); ❯ a €970m increase in retail assets to €46.7bn (+2.1%); This decline was partly due to the amortisation of French local authority outstandings (-€1.8bn) and Social housing outstandings (-€434m) and the fall This increase is due to strong production levels and a sharp decline in the in the French sovereign (-€181m), partly due to the change in the amount of early repayment rate.

EXPOSURES TO CREDIT RISK BY CATEGORY

12/31/2018 12/31/2017 Exposures to credit risk by category (in €m) Amounts % Amounts % Public administrations 17,613 16% 17,775 17% Institutions 18,978 18% 15,626 15% Regional administrations 23,936 22% 25,747 25% Corporates 5,616 5% 5,920 6% Retail customers 2,131 2% 2,009 2% Mortgage-backed exposures 36,666 34% 35,479 34% Exposures at default 1,751 2% 1,810 2% Equities 291 0% 272 0% High risk exposure 0 0% 21 0% Securitisations 67 0% 81 0% Other assets 1,062 na 5,740 na CREDIT RISK EXPOSURE 108,111 100% 110,479 100% REMINDER OF CREDIT RISK EXPOSURE AT DECEMBER 31, 2016 119,877

Under COREP as interpreted by CRR/CRD IV since March 31, 2014, by convention, results are presented by final exposure category (after substitution of the final counterparty’s exposure category, for exposures covered by a personal guarantee).

❯ Exposures by Basel category ❯ December 31, 2018 ❯ December 31, 2017

15% 47% 16% 45% Banks and other Retail Banks and other Retail 6% 5% Private sector Private sector corporates €99,792M corporates €102,547M

32% 34% Public sector corporates Public sector corporates

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4.3.1.2 BREAKDOWN OF CREDIT RISK EXPOSURES 4.3.1.2.1 BREAKDOWN BY REGION

Breakdown of exposures by region 12/31/2018 12/31/2017 France 85% 85% Other European Economic Area countries 9% 9% ❯ o/w Italy 4% 4% ❯ o/w United Kingdom 1% 1% ❯ o/w Belgium 1% 1% ❯ o/w Spain 1% 1% ❯ o/w Germany <0.5% <0.5% ❯ o/w Portugal <0.5% <0.5% ❯ o/w Poland <0.5% <0.5% ❯ o/w Netherlands <0.5% <0.5% ❯ o/w Ireland <0.5% <0.5% Switzerland 1% 1% North America (US and Canada) 3% 3% Japan 2% 2% Other <0.5% <0.5% Balance sheet total 100% 100% BALANCE SHEET ASSETS (in €m) 99,792 102,547 Note: Commitments in the European Economic Area mainly include assets eligible for sociétés de crédit foncier. The other commitments in the European Economic Area are almost entirely made up of commitments with banks for cash management or derivatives transactions. Note: As a reminder, commitments in the United States consist only of loans to highly rated states or local authorities or loans guaranteed by the federal government and do not include any direct or indirect real estate exposures.

4.3.1.2.2 BREAKDOWN BY BUSINESS SECTOR The breakdown of balance sheet assets by business sector covers loans to Corporate customers. It also includes RMBS (Residential Mortgage-Backed Securities) exposures in Europe, for which the risk is ultimately linked to individual customers.

Breakdown of credit risk exposures by business sector (excluding direct loans to individual customers) 12/31/2018 12/31/2017 Administration 40% 39% Finance-Insurance 30% 31% Property leasing 16% 15% Pharma-Health 7% 7% Real estate 3% 2% Services 1% 2% Utilities 1% 1% Other 2% 3% Balance sheet total 100% 100% BALANCE SHEET ASSETS (in €m) 53,240 56,970

Note: Insurance Finance intragroup exposures represent 21.89% of the total amount.

4.3.1.2.3 BREAKDOWN BY PRODUCT FAMILY

Product families (as a %) 12/31/2018 12/31/2017 Loans (1) 75% 74% Short-term credit facilities 11% 11% Bonds (Banking) 10% 10% Securitisation <0.5% <0.5% Derivatives 4% 5% Equity/Funds 0% 0 Other on-balance sheet products 0% 0 Bonds (Trading (2)) 0% 0 Balance sheet total 100% 100% BALANCE SHEET ASSETS (€m) 99,792 102,547 (1) Customer loans excluding short-term credit facilities. (2) Groupe Crédit Foncier does not hold any trading securities; bonds are held in connection with credit transactions or for hedging the ALM portfolio.

2018 Registration document 98 CRÉDIT FONCIER RISK MANAGEMENT REPORT 4.3 CREDIT AND COUNTERPARTY RISKS 4

❯ 4.3.2 COMMITMENTS BY CUSTOMER PORTFOLIO

Run-off loan portfolio assets have been significantly reduced following the 4.3.2.1 INDIVIDUAL CUSTOMERS disposal of a pool of Portuguese mortgage-backed securities in 2015, and a 4.3.2.1.1 DIRECT LOANS portfolio of Hungarian receivables at the end of 2018. The biggest exposure to risk is still an exposure to Spanish mortgage-backed securities, which has a DIRECT REAL ESTATE LOANS high percentage of payments past due by 90 days or more (25.1%). Finally, by taking possession of real estate properties received as guarantees, Banco The vast majority of outstandings are backed by Basel III-eligible guarantees, Primus has built an asset portfolio undergoing sale. with a high proportion of first-ranking mortgages. A portion of regulated loan production is also backed by a SGFGAS counter-guarantee. The remaining outstandings are backed by a guarantee provided by Compagnie Européenne 4.3.2.1.2 POSITIONS ON RESIDENTIAL de Garantie (formerly SACCEF), Crédit Logement or a mutual guarantee company. Pledges may be added to these guarantees. MORTGAGE-BACKED SECURITIES (RMBS) IN EUROPE Exposure in this category stood at €128m at December 31, 2018. It is divided ❯ Internal scoring into Spanish RMBS, amounting to €43m, fully covered by a bank guarantee, and residual exposures to CFHL-1 2014, CFHL-2 2015, and Elise.

70% 12/31/2017 12/31/2018 67% 4.3.2.2 PRIVATE SECTOR PORTFOLIO 64% €45,240M €46,062M The Private sector portfolio includes loans granted to Corporates. Portfolio 60% outstandings amounted to €5.9bn at December 31, 2018 versus €5.5bn at year-end 2017 (+6.61%).

50% The main exposures concern the activities in France of long-term investors, real estate development and corporate finance, which totalled €5.2bn at end-December 2018 versus €4.7bn at year-end 2017 (+11.5%). 40% International private sector corporate assets decreased 17% to €0.66bn at end-December 2018 and have a Public sector guarantee in the amount of 30% €0.5bn.

21% 20% 20% ❯ Breakdown by rating Internal rating of the French private sector portfolio (excluding public-private partnerships). 10% 5% 6% 6% 4% 4% 60% 3% < 0.5%< 0.5% 0% 56% Favourable Acceptable Uncertain Default Not rated Not rated Crédit Foncier subsidiaries and branches 50% 12/31/2017 12/31/2018 (exemptions) 47% €4,730M €5,235M LOAN RESTRUCTURING AND AUTO LOAN ACTIVITY 40%

(BANCO PRIMUS) 36% Banco Primus, a Crédit Foncier subsidiary headquartered in Lisbon, distributes auto loans in Portugal (for second-hand vehicles). It is also overseeing the 31% run-off of a portfolio of mortgage loans in Spain and Portugal and auto loans in 30% Hungary.

20% Total outstandings at December 31, 2018 (in €m) 480 Of which auto loans (Portugal) 297 Of which run-off portfolios 183 11% 10% Loans at risk (payment past due by 90 days or more) 11.8% 8% 6% 5% Average loan-to-value ratio (mortgage business) 86%

0% < 0.5%< 0.5% 0% 0% New loan production originating in Portugal was €99m in 2018, a 4.6% Favourable Acceptable Uncertain Default Not Not increase from 2017. Outstanding loans totalled €480m at December 31, 2018, rated rateable compared to €492m at December 31, 2017. Note: Amounts excluding Public-Private Partnerships. The percentage of payments past due by 90 days or more fell from 13.3% at end-2017 to 11.8%, reflecting control of delinquencies. The re-rating of the portfolio under IFRS 9, which began in late 2017, continues to reduce the portion of unrated loans, which stood at 8% at December 31, 2018, compared with 11% at December 31, 2017.

2018 Registration document CRÉDIT FONCIER 99 RISK MANAGEMENT REPORT 4.3 CREDIT AND COUNTERPARTY RISKS

4.3.2.3 PUBLIC SECTOR PORTFOLIO ❯ Breakdown by rating 4.3.2.3.1 FRENCH PUBLIC SECTOR 4.3.2.3.1.1 FRENCH LOCAL AUTHORITIES (FLA) 12/31/2017 12/31/2018 100% ❯ French local authorities portfolio €6,733M €6,299M ❯ Breakdown by rating 90%

80% 78% 76% 12/31/2017 12/31/2018 70% 100% €14,778M €13,027M 60% 90% 88% 88% 50% 80% 40% 70% 30% 60%

20% 18% 50% 12% 10% 9% 40% 6% < 0.5%< 0.5% < 0.5%< 0.5% 1% 0% 0% 30% Favourable Acceptable Uncertain Default Not rateable Not rated

20%

11% Note: The entire portfolio has been rated since March 2018. 10% 5% 5% 2% < 0.5%< 0.5% < 0.5%< 0.5% 1% 0% 0% Favourable Acceptable Uncertain Default Not rateable Not rated 4.3.2.3.2 INTERNATIONAL PUBLIC AND SOVEREIGN SECTOR Note: The rating percentages are calculated based on the FLA outstandings At December 31, 2018, Crédit Foncier’s exposure to sovereign and (the principal amount, accrued interest and unpaid amounts). The total International public sector counterparties amounted to €11.3bn. Exposure to exposure amounts to €13,027m and represents the fair value of FLA portfolio. the French sovereign issuer, included in this amount, totalled €1.7bn. Exposure to international issuers breaks down as follows: The entire portfolio has been rated since March 2018. ❯ exposure to international sovereigns amounted to €3.5bn; ❯ exposure to IPS was €6.6bn (including counterparty Hydro-Québec, which is 4.3.2.3.1.2 SOCIAL HOUSING covered by an explicit guarantee by the Province of Quebec). This category In collaboration with Groupe BPCE, this business line originates regulated also includes securities issued by local authorities in eurozone countries loans (state-sponsored lease-to-own loans – PSLA, intermediate rental loans (including Italian regions and the autonomous communities in Spain), the – PLI) and unregulated loans for providers of Social housing. United States (states and counties) and Japan (prefectures). Furthermore, in the Social housing sector, the majority of assets consist of Exposures in the international securities portfolio shrank from one period to the state-subsidised rental accommodation loans (PLS) for which Crédit Foncier next due to amortisation and the discontinuation of new commitment took part in auctions until June 2012. These transactions are backed by origination. guarantees provided by local authorities or by mortgages. Note that the above-mentioned outstandings are the net carrying amounts under IFRS without taking swaps into account (the securities in the portfolio, most of which are classified as Loans and Receivables, are micro-hedged). Some of the changes in outstandings can be due to fluctuations in the rate of the hedged component and in the exchange rate for securities in foreign currencies. It should be noted that foreign currency assets are automatically subject to interest rate and currency hedges at the moment of their inclusion on the balance sheet (See sections 4.8.3 and 4.8.4 of this report).

2018 Registration document 100 CRÉDIT FONCIER RISK MANAGEMENT REPORT 4.3 CREDIT AND COUNTERPARTY RISKS 4

❯ Exposures in the IPS portfolio by internal rating (1) (2) ❯ Breakdown of IPS outstandings by country ❯ December 31, 2018 2,500 <0.5% 4% 1,883 1,739 1,756 1,755 B+ / B- AAA / AA 3% 11% 2,000 1,428 BB+ / BB- AA- 1,335

1,500 25% BBB+ / BBB- €6,611M 1,000 608 562 57% 543 560 443 A+ / A- 500 367

101 100 0

Italy Spain Japan Portugal Canada* Switzerland United States ❯ December 31, 2017 December 2017: €6,568M December 2018: €6,611M

* Including Hydro-Québec. 3% 14% BB+ / BB- AAA / AA ❯ Breakdown of Sovereign exposure by internal rating (excluding France) 27% ❯ December 31, 2018 BBB+ / BBB- €6,568M 8% A+ to A 9% 47% A+ / A- AA-

€3,524M (1) The IPS portfolio includes Hydro-Québec, a corporate entity guaranteed by a foreign local authority. The internal rating according to the NIE scale is shown since March 2018. 92% (2) Including Hydro-Québec. A- to BBB+

The ratings of counterparties in the IPS portfolio are reviewed each year by ❯ December 31, 2017 Crédit Foncier’s Risk Management Division. The quality of the portfolio remained excellent overall, with 72% of holdings rated A or higher at December 31, 2018, compared to 70% in 2017. 9% Internal ratings are on average as prudent as the ratings published by rating A+ to A agencies. Crédit Foncier has renewed its approach to rating assets in the IPS portfolio. €3,388M 91% A- to BBB+

At December 31, 2018, the proportion of assets in the Sovereign portfolio (excluding France) are rated higher than BBB+ was stable compared to December 31, 2017. Crédit Foncier uses Groupe BPCE’s internal rating system.

2018 Registration document CRÉDIT FONCIER 101 RISK MANAGEMENT REPORT 4.3 CREDIT AND COUNTERPARTY RISKS

❯ Breakdown of Sovereign outstandings by country ❯ Exposures to banks by internal rating (excluding France) ❯ December 31, 2018

3,500 2% 3% Not speciﬁed AAA 2,943 3,039 3,000 3% 1% BBB AA 2,500

2,000 91% €15,643M A 1,500

1,000

485 500 445

0 Poland Italy ❯ December 31, 2017

December 2017: €3,388M December 2018: €3,524M 3% 3% Not speciﬁed AAA The increase in exposures to Poland and Italy is linked to changes in the net 4% 2% book value caused by interest rate and foreign currency effects (See above). BBB AA

4.3.2.4 BANKING SECTOR Given the structure of its activities and its funding needs, Crédit Foncier has 88% liabilities in its interbank relationships. Most exposures to banking €16,716M A counterparties result from hedging requirements associated with its various activities. Since 2014, in accordance with the European Market Infrastructure Regulation (EMIR), a significant number of transactions are cleared through a clearing house (LCH Clearnet). With respect to intragroup operations, Crédit Foncier has a €11.4bn exposure to BPCE, which is lower than at year-end 2017. This exposure is composed of €2.5bn in “L. 211-38” operations (backed by FLA loans) and direct loans to BPCE amounting to €6.6bn and backed by a loan portfolio. It should be noted that a portion of banking exposures (€533m) consists of long-term loans granted to Swiss cantonal banks and transactions carried out as part of IPS loan origination. Transactions with banks involve high gross volumes (nominal amounts) ultimately accounting for lower net amounts due to valuations and the netting impact (derivative transactions are accompanied by hedging mechanisms in the form of collateralisation). The charts below present the balance sheet value of these transactions, which does not necessarily accurately detail the credit risk incurred on derivatives transactions.

2018 Registration document 102 CRÉDIT FONCIER RISK MANAGEMENT REPORT 4.4 ANALYSIS OF DELINQUENCIES 4

4.4 ANALYSIS OF DELINQUENCIES

❯ 4.4.1 DELINQUENCIES

Exposures 12/31/2018 12/31/2017 Percentage Percentage of non- of non- Percentage performing Percentage performing of non- loans (excl. of non- loans (excl. Balance performing subsidised Balance performing subsidised (in €m) sheet loans sector) sheet loans sector) Retail 46,679 6.44% 6.42% 45,709 6.09% 6.06% Direct loans (France and Europe) 46,551 6.46% 6.44% 45,569 6.11% 6.08% RMBS in Europe 128 - - 140 - - Public sector 32,323 <0.5% <0.5% 34,591 <0.5% <0.5% French public sector 21,041 <0.5% <0.5% 23,273 <0.5% <0.5% IPS and Sovereigns (direct loans and commitments) 11,282 - - 11,317 - - Corporates – Private sector 5,891 5.27% 4.12% 5,526 7.43% 6.29% Exposure to banking sector and other 14,899 - - 16,722 - - TOTAL 99,792 3.35% 3.27% 102,547 3.14% 3.07%

The main event in the 2018 was the application of the principle of classifying the entire portfolio as non-performing after 90 days past due (until year-end 2017, the default rate for the retail portfolio was calculated from 180 days past due). The 90-day rule increased non-performing retail exposures in France from €2.7bn to €2.9bn.

❯ 4.4.2 COST OF RISK FOR THE PERIOD

(in €m) 2018 2017 Net charge to provisions and provisions for impairment -29 74 o/w Insurance business investments Recoveries of bad debts written off 4 10 o/w Insurance business investments Irrecoverable loans not covered by provisions for impairment -35 -165 o/w Insurance business investments TOTAL COST OF RISK -60 -81

Cost of risk improved to -€60m at the end of December 2018, versus -€81m in December 2017.

2018 Registration document CRÉDIT FONCIER 103 RISK MANAGEMENT REPORT 4.5 RISK MITIGATION TECHNIQUES

4.5 RISK MITIGATION TECHNIQUES

❯ 4.5.1 COLLATERAL VALUATION AND MANAGEMENT

For the financing of professional assets or home loans of significant amounts, showing annual pricing trends or by an appraiser, depending on the type the real estate assets pledged as collateral are appraised by an expert opinion and/or amount of the collateral. (Crédit Foncier Immobilier – Expertise). The terms of these valuations were unchanged in 2018. Among the loans guaranteed by a first-ranking mortgage or a lender’s preferential claim, some are doubly secured by an additional guarantee from a Crédit Foncier periodically (1) updates the mortgage values of pledged mutual guarantee company or local authority, which is also the predominant collateral. These values may be updated automatically using real estate Indices guarantee in the Social housing market.

❯ 4.5.2 MAIN PROVIDERS OF CREDIT PROTECTION

The main providers of personal guarantees to Individual customers are the ❯ CEGC (Compagnie Européenne de Garanties et Cautions, formerly SACCEF) SGFGAS, mortgage insurance companies (e.g. CEGC [formerly SACCEF]) as is a company that specialises in bank loan surety and is owned by Natixis well as other credit institutions (mainly Crédit Logement and intragroup bank Garanties; guarantees): ❯ among the providers of guarantees there are also a variety of mutual ❯ the Société de Gestion du Fonds de Garantie à l’Accession Sociale à la guarantee societies; Propriété (SGFGAS) provides a guarantee from the French state for loans to ❯ NHG is a guarantee provided by the Dutch government on mortgages low-income first-time home buyers. These loans are governed by regulated acquired by Crédit Foncier in late 2007; loan agreements and guaranteed by first-rank collateral (mortgage or lender’s preferential claim); ❯ other providers of guarantees are credit institutions, mainly providing intragroup guarantees (Caisses d’Épargne and BPCE), or Public sector ❯ Crédit Logement is a financial institution, a subsidiary of most major French entities (mainly for Public-Private Partnerships). banking networks;

❯ 4.5.3 EFFECT OF CREDIT RISK MITIGATION TECHNIQUES

Crédit Foncier’s portfolio is predominantly covered by first-ranking mortgages or eligible personal guarantees.

Providers of credit protection ❯ December 31, 2018 ❯ December 31, 2017 5% Developer loans, 4% bridging loans, others Developer loans, 5% bridging loans, others Other secured 23% 5% 26% exposures Local authorities Other secured Local authorities and French sovereign exposures and French sovereign 11% 10% Other sureties (including Other sureties (including SACCEF guarantees) (2) SACCEF guarantees) (2) 12% €85bn 24% €86bn International First-rank mortgages 26% local authorities and other protection (1) 12% International First-rank mortgages local authorities and other protection (1) <0.5% Mortgage securitisation (RMBS) 19% <0.5% 18% First-rank mortgages only Mortgage First-rank mortgages only securitisation (RMBS)

(1) Outstandings covered by a FGAS guarantee for €22.4bn at December 31, 2018 vs. €21.5bn at December 31, 2017.

(2) Other secured exposures including Crédit Logement for €7.54bn at December 31, 2018 vs. €6.1bn at December 31, 2017.

(1) Annually for housing collateral in the retail-individuals portfolio and semi-annually for other portfolios (retail-professional and corporate).

2018 Registration document 104 CRÉDIT FONCIER RISK MANAGEMENT REPORT 4.5 RISK MITIGATION TECHNIQUES 4

❯ 4.5.4 BALANCE SHEET AND OFF-BALANCE SHEET NETTING

Groupe Crédit Foncier assesses exposures tied to derivatives by applying an to intra-group transactions, as Crédit Foncier is covered under the exemption add-on to current exposures. granted by the ACPR to Groupe BPCE. Groupe BPCE has a policy of systematically entering into framework As an issuer of covered bonds, Compagnie de Financement Foncier is also agreements with its banking counterparties. Most of the time, these are exempted from the clearing obligation for its derivatives, provided that it meets collateralisation agreements with margin call triggers that reduce the actual all the conditions set out in Article 1 of Commission Delegated Regulation (EU) exposure. In the specific case of Compagnie de Financement Foncier, these 2015/2205 of August 6, 2015 supplementing Regulation (EU) No. 648/2012 of agreements are asymmetrical, meaning that only the counterparties provide the European Parliament and of the Council. collateral if needed. Likewise, securitisation vehicles whose underlying assets are entirely The main measures provided for in the EMIR are currently being implemented composed of mortgage loans do not fit the EMIR definition. As such, by Crédit Foncier. Crédit Foncier is a direct member of LCH Clearnet Ltd, and securitisation fund derivatives originated by Crédit Foncier are not under the contributes £19m to its guarantee fund. The clearing obligation does not apply clearing obligation.

❯ 4.5.5 BROKERAGE RISK

Brokerage risk is defined as the risk of default by an instructing party or ❯ it does not engage in proprietary trading. It operates on the markets for asset counterparty in a transaction involving financial instruments in which the liable and liability management operations (security issuances, security purchases, company has a performance bond (Order of November 3, 2014). cash lending/borrowing, etc.) and to hedge its assets and liabilities against interest rate risk. In the context of its activities, Crédit Foncier has low exposure to this risk: The execution of market trades is centralised in a dedicated department. It is ❯ in the absence of deposit account holdings, its activities on behalf of third regulated by a financial charter that defines its missions, structure and control parties are limited to the execution of some securities transaction orders. procedures for ALM and financial activities. The activities of the desks in These are all cleared by Natixis Eurotitres and order compliance is regularly charge of their execution are also regulated by risk mandates satisfying the monitored; requirements of the Volcker Rule and the French law on the Separation and Regulation of Banking Activities (SRAB).

2018 Registration document CRÉDIT FONCIER 105 RISK MANAGEMENT REPORT 4.6 RECOMMENDATIONS OF THE FINANCIAL STABILITY FORUM

4.6 RECOMMENDATIONS OF THE FINANCIAL STABILITY FORUM

In its report of April 7, 2008, the Financial Stability Forum (FSF) – G7 issued a ❯ other subprime and Alt-A exposure and exposure to US mortgages more series of recommendations in response to the financial crisis, particularly in generally; terms of financial transparency, valuation, risk management and rating ❯ special purpose entities; agencies. ❯ Leveraged Buyouts (LBOs). In the conclusions of the Senior Supervisors Group report, the FSF called for improved financial communication in the following five areas: These disclosure requirements were discussed in a working group involving the FBF (French Banking Federation), the SGCB (Corporate Secretariat of the ❯ exposure to CDOs (Collateralised Debt Obligations) or direct exposure to Prudential Control Committee) and the AMF (French Financial Markets monoline insurers; Authority) in order to adapt the FSF recommendations for France. Financial ❯ exposure to CMBS (Commercial Mortgage-Backed Securities); information tables were drawn up to meet these five requirements.

❯ 4.6.1 CDOS AND EXPOSURES TO MONOLINE INSURERS AND OTHER CREDIT ENHANCERS

counterparty other than the monoline insurer. These guarantees generally 4.6.1.1 COLLATERALISED DEBT OBLIGATIONS cover Public sector financing transactions (loans or securities) extended (CDOS) directly to a sovereign state or to a local authority or public institution. Groupe Crédit Foncier has no exposure to CDOs. These commitments are legally structured as financial guarantees (and not CDS) and constitute an additional security for the underlying asset. These guarantees are neither valued nor recognised on Crédit Foncier’s balance sheet (only the enhancement premium is recognised as an expense when the 4.6.1.2 CREDIT ENHANCERS guarantee is extended outside of the underlying security or loan). 4.6.1.2.1 ENHANCED ASSETS The breakdown of this monoline-insured portfolio is based on the nominal The book value of credit-enhanced assets shown in the table below does not value of the investment holdings at December 31, 2018, according to the initial correspond to direct exposures to monoline insurers. It represents secondary credit enhancer (without taking into account takeovers of certain companies guarantees extended by monoline companies to Crédit Foncier on some of its by rival monoline insurers that have since taken place). assets. In all cases, Crédit Foncier holds an initial claim against a primary ❯ Enhanced assets Fair value adjustments Residual Gross Fair value of for monoline exposure to notional Fair value of enhancements credit risk counterparty Gross notional amount of Fair value of enhancements Fair value of net of hedges (recognised risk from 12/31/2018 amount of hedged hedged before hedges and before on the monoline (in €m) enhancements instruments instruments adjustments purchased adjustments enhancement) insurers Enhancements acquired from monoline insurers On CDOs (US residential market) with subprime underlyings On CDOs (US residential market) with non-subprime underlyings Counterparty risk on other transactions 1,481 1,481 1,893 TOTAL AT 12/31/2018 1,481 1,481 1,893 TOTAL AT 12/31/2017 1,446 1,446 1,854

The breakdown of underlying assets by intrinsic rating is shown below:

12/31/2018 Nominal (in €m) % Monoline Monoline rating AAA/AA- A+/A A-/BBB+ BBB/BBB- Total FGIC Not available 117 117 8% MBIA BBB 13 81 51 145 10% AGMC A 896 77 145 1,118 75% AGC A- 101 101 7% TOTAL 13 1,094 128 246 1,481 100% % 1% 74% 8% 17%

2018 Registration document 106 CRÉDIT FONCIER RISK MANAGEMENT REPORT 4.6 RECOMMENDATIONS OF THE FINANCIAL STABILITY FORUM 4

4.6.1.2.2 BREAKDOWN OF GROSS EXPOSURES rating of the underlying asset is consistent with its pre-enhancement Basel II BY UNDERLYING RATING (NOMINAL rating at the same date. It should be noted that the National Public Finance Guarantee (formerly MBIA) is no longer rated by S&P as of December 2017, VALUE) and that its rating was downgraded by Moody’s on January 17, 2018 from A3 to Baa2. The credit enhancer’s rating is the lower of the two best ratings from Standard & Poor’s, Moody’s and Fitch Ratings at December 31, 2018. The intrinsic

❯ 4.6.2 LEVERAGED BUYOUTS (LBOS)

Definition of an LBO: 4.6.2.3 CHANGE IN EXPOSURE TO LEVERAGED ❯ a structured credit transaction involving leverage, i.e. bank debt, set up for the BUYOUTS buyer of a target company; Crédit Foncier’s LBO exposures decreased by 85%, from €59m to €9m, net ❯ with or without the participation of the target’s management; of provisions, in connection with a decline in gross value. ❯ a holding company is created whose capital is wholly or partly owned by one or more financial sponsors. The presence of a financial sponsor and a holding company is what qualifies 4.6.2.4 BREAKDOWN OF LBO FINAL SHARES this type of transaction as an LBO. BY BUSINESS SECTOR AND REGION 100% of LBO outstandings are related to target companies in the real estate 4.6.2.1 EXPOSURE TO LEVERAGED BUYOUTS sector. 100% of the target companies acquired through leveraged buyout deals are (LBOS) based in France. At December 31, 2018, groupe Crédit Foncier identified four leveraged buyout deals amounting to €28m, a decrease of 66% compared with the end of 2017. This fluctuation is due to a repayment equal to €50m (HIME SA).

4.6.2.2 EXPOSURE TO LEVERAGED BUYOUTS

LBO exposures 12/31/2018 12/31/2017 Total (gross) 28 81 Provisions -19 -22 TOTAL (NET OF PROVISIONS) (in €m) 9 59 Number of deals 4 5

2018 Registration document CRÉDIT FONCIER 107 RISK MANAGEMENT REPORT 4.7 MARKET RISKS

4.7 MARKET RISKS

In accordance with Crédit Foncier’s Financial Charter, transactions carried out Crédit Foncier does not carry out short-term transactions to take advantage of by Crédit Foncier and recorded on the balance sheet are categorised based price fluctuations. on their management strategy as soon as they are implemented. Owing to the nature of its activity, groupe Crédit Foncier is not prudentially exposed to market risk.

❯ 4.7.1 EQUITY RISK

4.7.1.1 INVESTMENT APPROACHES 4.7.1.2 OBJECTIVES AND PROCEDURES In 2007, groupe Crédit Foncier established an investment policy for real estate investment vehicles (SIIC, OPCI and closed funds) and equity investments in Investments by BPCE entities (excluding Natixis) are regulated by a list of order to develop growth drivers for Crédit Foncier’s financing and related authorised financial products and an approval procedure for new financial activities. In the context of redeploying Crédit Foncier’s operations into Groupe products. These operational safeguards ensure that financial products are BPCE, Crédit Foncier intends to withdraw from its portfolio of holdings. At used appropriately and comply with regulations and Groupe BPCE risk December 31, 2018, these commitments totalled €51.3m, stable against standards. December 31, 2017. With regard to long-term equity holdings, Crédit Foncier The use of financial products by Groupe BPCE entities is validated by the New does not include this portfolio in its daily VaR monitoring. Financial Products and New Financial Activities Committee and must comply Investments in real estate assets of groupe Crédit Foncier and non-group with risk limits (market, credit risk, etc.) and the constraints set forth in the investments may not exceed 5% of its own regulatory capital. Financial Management Charter for each category (justification of the hedging strategy for ALM products, daily liquidity for proprietary trading assets, etc.). In addition, specific measures for processing investment requests have been established by Groupe BPCE for the following financial products: 4.7.1.3 ACCOUNTING TECHNIQUES AND VALUATION METHODS ❯ funds for listed equity; Exposures to shares in the banking book are recognised on the balance sheet ❯ funds for unlisted equity (private equity/infrastructure/real estate); in accordance with IFRS 9: ❯ securitisation vehicles; and ❯ equity instruments designated at fair value through other comprehensive ❯ structured products whose structure and pay off have been approved by the income; New Financial Products and New Financial Activities Committee. ❯ financial assets at fair value through profit or loss; For Crédit Foncier and its subsidiaries, new investments (equity investments ❯ securities at amortised cost. and real estate funds) are validated by the Executive Management Committee and the Board of Directors where appropriate, depending on the amount The applicable accounting techniques and valuation methods are provided in involved. They are reviewed for compliance with the Volcker Rule and the accordance with accounting rules and principles for determining the French law on the Separation and Regulation of Banking Activities. accounting category. In accordance with Groupe BPCE rules and in keeping with established thresholds, new investments are sent to the Group Investment Committee. The investment rules for real estate funds (including listed real estate investment companies, known as SIIC) follow the same process.

4.7.1.4 CRÉDIT FONCIER’S EXPOSURE At December 31, 2018, groupe Crédit Foncier’s exposure to equity risk amounted to €159m, compared to €155m at December 31, 2017. It breaks down as follows:

At 12/31/2018 Cost or Fair value or Net unrealised capital Gross unrealised Gross unrealised (in €m) historical value adjusted value gains or losses capital gains capital losses Assets measured at FV through OCI 112 140 28 35 -7 Assets measured at FV through P&L – non-standard 18 21 3 3 Assets measured at FV through P&L – excl. trading 29 31 2 2 TOTAL 159 192 33 40 -7 TOTAL AT 12/31/2017 155 201 46 49 -3

Source: accounting data (IFRS consolidation at December 31, 2018).

At December 31, 2018, the total unrealised gains or losses (consolidated figures) on equity exposures in the banking book amounted to €33m, booked to unrealised or deferred capital gains and losses, or deferred through OCI-NR or profit or loss depending on the type of securities.

2018 Registration document 108 CRÉDIT FONCIER RISK MANAGEMENT REPORT 4.7 MARKET RISKS 4

❯ 4.7.2 SETTLEMENT RISK

This risk materialises when settlement and/or delivery in a transfer system monitored in real time on dedicated workstations (recognition of cash inflows, does not proceed as anticipated, most often due to a third party. any reminders sent to paying counterparties according to common practice and trading hours and additional searches depending on the system being Most cash transactions carried out at Crédit Foncier are conducted in used). connection with ALM activities. Transactions are centralised and processed by the Treasury back office. If a settlement counterparty permanently defaults, which is extremely rare for capital market transactions (and is currently limited to technical difficulties This entity manages cash flow and conducts cash flow forecasting (24 hours) rather than actual defaults), and if the Banque de France cash flow position for Crédit Foncier and Compagnie de Financement Foncier. becomes negative as a result:

Groupe Crédit Foncier accesses large-value settlement systems through ❯ for transactions in euros: a hedge is preferably sought on the market. accounts with BPCE. Failing this, Compagnie de Financement Foncier calls on the end-of-day Compagnie de Financement Foncier uses a settlement system. For borrowing facility provided by the Central Bank and compensation is transactions in local currencies or small-value transactions in euros, it uses requested from the defaulting party for the amount of the loss suffered; accounts held with BPCE. Daily procedures for settlement risk monitoring ❯ for foreign currency transactions: an agreement has been negotiated with include: BPCE allowing issuances even in the absence of foreign currencies in the ❯ at the end of the day on D-1 for the Euro and on D-2 for foreign currencies, account opened with BPCE. preparing the forecast schedule of outflows and inflows taking place on D. Groupe Crédit Foncier has drawn up a business continuity plan under an This forecast data for cash flows at D are adjusted by the front office; agreement with BPCE (See section 4.9.4 for more details). ❯ at D, the execution of the day’s scheduled disbursements and placements, after recognition by the Market back office. For income, the cash inflows are

2018 Registration document CRÉDIT FONCIER 109 RISK MANAGEMENT REPORT 4.8 ALM RISKS

4.8 ALM RISKS

Groupe BPCE, the central institution, monitors the consolidated structural risks At groupe Crédit Foncier level, financial risks are managed and monitored by for groupe Crédit Foncier and its subsidiaries. The national monitoring the Executive Risk Committee, the ALM and Liquidity Steering Committee, approach relies on the National ALM Committee (Comité de Gestion Actif which meet at least every quarter. Passif) and Groupe BPCE’s Risk Management Executive Committee, which both meet at least once every quarter.

❯ 4.8.1 METHODOLOGY FOR ASSESSING STRUCTURAL RISKS

Groupe Crédit Foncier also has a significant portfolio of securities and 4.8.1.1 MEASUREMENT OF LIQUIDITY, INTEREST collateral that can be assigned instantly as repos with the ECB or the market. RATE AND EXCHANGE RATE RISKS Liquidity steering was carried out at the level of groupe Crédit Foncier, as well Liquidity and interest rate risks are measured using different, complementary as of the following entities: methods depending on the analysed period. These methods include: ❯ Locindus on an individual basis as a financing company; ❯ a static approach that covers on- and off-balance sheet transactions existing at the closing date. Static processing takes account of the stock of ❯ Banco Primus, Compagnie de Financement Foncier and the Crédit transactions and all flows from contracted commitments; Foncier parent company plus SOCFIM as liquidity sub-groups. ❯ a dynamic approach taking into account business forecasts for the current ❯ Interest rates and following years. Dynamic processing takes into account likely events The general principle is to back operations, either by micro-hedging (for loans resulting from the firm or optional underwriting of commitments and uncertain with a unit amount of over €5m, or for any derivatives trading by customers) or events resulting from future activities. by macro-hedging through fair value hedges. For both of these approaches, asset and liability run-off is subject to The financial instruments used to hedge interest rate risk are primarily interest assumptions or conventions: rate swaps and cap purchases, intended primarily to cover the rate caps sold ❯ for products with a contractual due date (contractual products of finite to customers and incorporated into certain products. duration), the run-off is the balance sheet item’s contractual amortisation; The hedges are mainly carried out through Crédit Foncier as a parent ❯ balance sheet items without a contractual due date, such as capital and company, including the issuance and acquisitions of assets from Compagnie reserves, are subject to specific maturity rules derived from BPCE standards. de Financement Foncier: in practice, the external hedging swaps made by Crédit Foncier result in a mirror swap between Crédit Foncier and Compagnie Moreover, assumptions specific to particular products are modelled and used de Financement Foncier. to adjust run-off. These are mainly assumptions concerning customers’ propensity to repay the loan in advance (early repayments) and the Through this strategy, the Crédit Foncier parent company becomes groupe disbursement rate of the loans granted, known as deferred payments. Crédit Foncier’s main counterparty with outside participants for asset- and liability-side interest rate swaps, making netting transactions possible while Crédit Foncier uses specific early repayment or renegotiation rate assumptions reducing Crédit Foncier’s net exposure. In addition, it reduces the outstanding for each type of loan, based on the type of customer (Individual, Professional, swaps of Compagnie de Financement Foncier. Institutional) and the type of rate (fixed, adjustable or variable-rate). In general, this strategy does not apply to cross-currency swaps for hedging Asset and Liability Management uses a dedicated software package that foreign-currency issues or swaps structured to hedge private issues, for which interfaces with most of the Group’s management data. Compagnie de Financement Foncier continues to hedge itself directly on the Liquidity and interest rate risks are limited by the definition of a Risk Appetite market. Framework (“RAF”), whose levels have been validated by the Board of ❯ Foreign exchange Directors. Groupe Crédit Foncier does not have any open foreign exchange positions, and its policy is based on not assuming any foreign exchange risk. Consequently, all assets and liabilities in non-euro currencies are 4.8.1.2 MANAGEMENT GUIDELINES systematically micro-hedged upon their recognition in the balance sheet. ❯ Liquidity Hedging may be realised through foreign exchange swaps, term loans or Crédit Foncier’s refinancing is mainly carried out through the issuance of currency swaps. Residual mismatches may appear (transactions of very small obligations foncières by Compagnie de Financement Foncier. Additional amounts that are difficult to hedge, mismatches between cash flows received funding needs are met through BPCE. and paid, impairment of loans in foreign currencies, etc.). These mismatches, which must be kept within allowed limits, are monitored by the Risk and Funding is carried out under the terms of the financing plan proposed by the Compliance Division’s Financial Risk unit. This division is responsible for Financial Management Division and validated with the ALM and Liquidity reporting overruns or open positions and for asking the operating division to Steering Committee. This financing plan is included in Groupe BPCE’s resolve them. It is also in charge of reporting to the ALM and Liquidity Steering financing budgets, as presented and set by its ALM Committee. Committee and the Executive Risk Committee.

2018 Registration document 110 CRÉDIT FONCIER RISK MANAGEMENT REPORT 4.8 ALM RISKS 4

❯ 4.8.2 LIQUIDITY RISK MONITORING

4.8.2.1 FUNDING OF GROUPE CRÉDIT FONCIER 4.8.2.2.3 CASH PROJECTIONS AND LIQUIDITY STRESS TESTS In 2018, Compagnie de Financement Foncier issued €5.7bn in obligations foncières. Groupe Crédit Foncier also has a pool of eligible liquid assets. Gross On each of its balance sheets (Crédit Foncier and Compagnie de Financement assets that were eligible for ECB refinancing operations amounted to €11bn Foncier), Crédit Foncier makes liquidity projections under its central scenario (nominal amount before haircut if pledged, and without recognising the over one year and in stressed situations: regulatory overcollateralisation ratio of Compagnie de Financement Foncier). ❯ a three-month severe stress scenario (maintaining a proportion of new loan At December 31, 2018, groupe Crédit Foncier had no funding from the ECB. production and some refinancing facilities) and subject to limits. These measures verify that the liquidity buffer can cover post-stress cash flow requirements; 4.8.2.2 INDICATORS AND COMPLIANCE ❯ a “catastrophic” three-month stress scenario with no new issuances and no renewal of financing; the liquidity position observed is compared with the WITH LIMITS liquidity buffer. Liquidity risk management at groupe Crédit Foncier involves several indicators During the 1st half-year, the stress scenarios were updated and added to and limits that are adjusted according to the observation period. (gaining a systemic crisis scenario and a specific crisis scenario). Furthermore, the liquidity buffer basis used to observe adherence to the limit was expanded: 4.8.2.2.1 OVERNIGHT LIMIT It now includes all securities eligible for the Liquidity Reserve, taken into account when calculating the LCR. Groupe Crédit Foncier’s overnight fundraising capacity is subject to a €2bn limit. This amount must be continuously covered by a similar asset (net value The new system went into effect on June 30. The stress test limit was after haircut) deposited in a 3G pool and not used. observed for 2018. In 2018, Crédit Foncier only occasionally resorted to very short-term funding (overnight – weekly), within the limit defined by BPCE, for the needs of the 4.8.2.2.4 LIQUIDITY GAP Crédit Foncier parent company. Similarly, static liquidity is monitored by measuring the liquidity gap for each sub-group (Crédit Foncier and Compagnie de Financement Foncier). 4.8.2.2.2 LCR (LIQUIDITY COVERAGE RATIO) Within the scope of Crédit Foncier, the parent company, the static liquidity gap At December 31, 2018, Crédit Foncier’s LCR (for the Crédit Foncier and is controlled by a one-year limit mechanism (2m, 5m and 11m) and a five-year SOCFIM liquidity subgroup) exceeded 110%, well above the regulatory limit of observation threshold. As of December 31, 2018, this limit was respected. 100% applicable since January 1, 2018. Compagnie de Financement Foncier’s liquidity ratio was also above 110%. It must also have a one-year cash surplus available at all times. 4.8.2.3 LIQUIDITY CONTINGENCY PLAN A liquidity contingency plan has been devised for groupe Crédit Foncier, Crédit Foncier and Compagnie de Financement Foncier on the basis of Groupe BPCE’s liquidity contingency plan. The plan sets out liquidity measurements and the associated governance structure according to three stress scenarios: tension, severe stress and catastrophic stress.

4.8.2.4 ENCUMBERED ASSETS/UNENCUMBERED ASSETS ENCUMBERED ASSETS ❯ Template A – Assets Carrying amount of Fair value of Carrying amount of Fair value of encumbered assets encumbered assets unencumbered assets encumbered assets 010 040 060 090 010 Assets of the reporting institution 81,608 28,749 030 Equity instruments 172 172 040 Debt securities 143 143 9,974 8,935 120 Other assets 81,465 18,604

❯ Template B – Collateral received Fair value of encumbered Fair value of collateral received or own collateral received or own debt debt securities issued available securities issued for encumbrance 010 040 130 Collateral received by the reporting institution 150 Equity instruments 160 Debt securities 230 Other collateral received Own debt securities issued other than own 240 covered bonds or ABSs

2018 Registration document CRÉDIT FONCIER 111 RISK MANAGEMENT REPORT 4.8 ALM RISKS

❯ Template C – Encumbered assets/collateral received and associated liabilities Assets, collateral received and own debt Matching liabilities, contingent liabilities or securities issued other than covered bonds securities lent and encumbered ABSs 010 030 Carrying amount of selected financial 010 liabilities 82,405 81,608

As for the information required on assets that are unencumbered and unavailable for encumbrance, the following appear under “other assets” (Template A – line 120): accrual accounts, deferred tax assets and the revaluation adjustments of debt securities, for a carrying amount of €6bn.

❯ 4.8.3 INTEREST RATE RISK MONITORING

4.8.3.1 SCOPE AND METHODOLOGY 4.8.3.2.2 ECONOMIC VALUE OF EQUITY (OUTLIER TEST) Groupe Crédit Foncier observes three key indicators to manage interest rate risk: The outlier test, which calculates the sensitivity of the economic value of equity to a 200-basis-point increase or decrease in interest rates, was within the ❯ the management of groupe Crédit Foncier’s static interest rate gap over 10 required limits at December 31, 2018. years, with limits expressed as amounts; ❯ the sensitivity of the economic value of equity (outlier test), calculated using the Group’s standards, in line with EBA Guidelines; 4.8.3.2.3 SENSITIVITY OF NET INTEREST MARGIN ❯ the sensitivity of the net interest margin over the first four years to interest rate In accordance with the group framework for managing interest rate risk, the fluctuations under four scenarios (increase, drop, curve flattening and curve sensitivity of groupe Crédit Foncier’s net interest margin is measured steepening). according to various rate scenarios. Besides a baseline scenario, net interest margin is projected according to four 4.8.3.2 INDICATORS AND MONITORING OF LIMITS scenarios. The sensitivity of the net interest margin to the four rate scenarios is subject to 4.8.3.2.1 STATIC GAP LIMIT limits established for each of the four projection years. The static gap limits were observed at December 31, 2018. The limits were updated as of January 1, 2018 and were observed across all time periods as of December 31, 2018.

Year 1 Year 2 Year 3 Year 4 -5% -8% -10% -13%

❯ 4.8.4 FOREIGN EXCHANGE RISK MONITORING

Groupe BPCE centrally monitors the entities’ foreign exchange risk through ❯ for Compagnie de Financement Foncier and Crédit Foncier, €3m per currency single-currency stress tests. The results are subject to a limit that is calibrated and €5m for the position across all currencies; to equity. On a quarterly basis, information is provided to the ALM and Liquidity Steering As of December 31, 2018, this limit was respected. Committee and the Executive Risk Committee regarding compliance with these observed limits. Groupe Crédit Foncier also monitors its foreign exchange risk exposure via internal foreign exchange limits for spot contracts calibrated in view of the observed positions:

❯ in consolidated view, €5m per currency and €8m for the position across all currencies;

2018 Registration document 112 CRÉDIT FONCIER RISK MANAGEMENT REPORT 4.9 OPERATING RISKS 4

4.9 OPERATING RISKS

Groupe BPCE defines Operating Risk (OR) as the risk of loss resulting from BPCE’s approach to operating risk is governed by the guidelines and unsuitable, inadequate or faulty procedures, personnel, information systems or corporate governance for operating risk (standards, definition of an OR policy external events. This definition includes, in particular, accounting, legal, to be implemented in all Groupe BPCE institutions). It relies on an Operating regulatory and tax risks, as well as risks related to the safety of persons and Risks Division with appointed operating risk managers with their own network property and of information systems. It also includes internal and external of OR officers for each business line. The approach is supervised at Groupe fraud risk, modelling risk and reputation risk. BPCE level by the Non-Financial Risk Committee, which meets quarterly to examine the effectiveness of measures implemented and to analyse the main Operating risk is inherent to all of groupe Crédit Foncier’s business activities. It current and potential risks identified within Group institutions. is analysed, managed and measured using a comprehensive mechanism that focuses on identifying and appraising risks (and creating action plans to control them), actively managing acknowledged incidents and monitoring risk-predicting indicators.

❯ 4.9.1 GENERAL FRAMEWORK

Groupe Crédit Foncier’s approach to operating risk is managed by its Risk (DRCCP) and on the operating risk policy (included in Crédit Foncier’s risk Management Division and is based on group standards and methods issued policy). by Groupe BPCE’s Risk, Compliance and Permanent Control Division

❯ 4.9.2 GOVERNANCE

Operating risk management is part of groupe Crédit Foncier’s risk structure. It ❯ to the Operating Risks Committee, for updating operating risk management is managed by a specialised unit independent of operating activities that procedures, major incidents, developments and organisational improvements; reports to the Risk Management Division. There are three kinds of reporting for ❯ to BPCE’s Risk Management Division: COREP. operating risk: The Risk Management Division is responsible for managing operating risk and ❯ to the Executive Risk Committee (Risk Management Division) that reports to coordinating its activities with the Permanent Control Coordination Unit and the Executive Management and to the Risks Committee; the Compliance and Financial Security Division.

❯ 4.9.3 MANAGEMENT ENVIRONMENT

❯ risk-related incidents are logged in a dedicated incident database, updated by 4.9.3.1 MANAGEMENT NETWORK the management network as risks occur and develop; the database is used to Operating risk monitoring and control are delegated to managers of the monitor corrective action plans and analyse risk exposures and the resulting different business lines or subsidiaries who assume responsibility vis-à-vis losses over time; Executive Management and the Risk Management Division. ❯ Key Risk Indicators (KRI) are used in the main risk areas to provide a warning Each manager and subsidiary adapts the system in close contact with the Risk in entry into a critical phase seems imminent. Management Division. All of this data is stored in a shared database that is accessible across all of groupe Crédit Foncier (OSIRISK). Members of these local OR networks receive training from the Risk Management Division through a half- or full-day session that teaches the Controls on OR incident collection developed by the Risk Division are basics on OR and the monitoring tool (no training carried out in 2018). designed to ensure that OR incidents are comprehensively reported relying on financial statement analysis (profits and losses, provisions), mediation, claims One session on operating risk was held for new hires. and sensitive operations committees. Incident valuation controls are carried out with the help of the business line managers each time an incident is logged in the tool. Risk mapping controls are performed annually across the 4.9.3.2 METHODS AND TOOLS entire scope. In terms of methods and tools, groupe Crédit Foncier uses the group’s The DRCCP also conducts second-level controls on the institutions’ OR OSIRISK application to implement the directives issued by BPCE’s Risk systems. Management Division and to collect the information needed to manage operating risks. In 2018, 195 incidents were reported for an aggregate amount of potential losses of €6.19m. The method relies on three key elements that are part of a routine step-by-step interactive approach: The consistency of the overall procedure is ensured by the Operating Risks Division and by different operating units. ❯ mapping of operating risk events: each business line identifies and assesses the main operating risks to which it is vulnerable. The assessment relies on When calculating capital requirements, groupe Crédit Foncier currently applies determining the recurrence of risk and its potential financial impact, but also the Basel II standardised approach. At December 31, 2018, the required on identifying preventive measures that exist or need to be put in place to capital reserve to cover operating risk totalled €101.4m. manage and reduce the impact of these risks. The map is updated at least once a year or whenever a change to the procedures and the organisational structure is made;

2018 Registration document CRÉDIT FONCIER 113 RISK MANAGEMENT REPORT 4.9 OPERATING RISKS

❯ 4.9.4 ORGANISATION OF THE CONTINGENCY AND BUSINESS CONTINUITY PLAN (CBCP)

Carrying on from 2016 and 2017, the Recurring Operational Maintenance plan It should be noted that one of the above is a specific platform for activities was continued in 2018. The new system currently includes: linked to financial operations. This platform was established in a location that is accessible 24 hours per day, 365 days per year, and can be available for use ❯ 69 maintained critical activities, providing for a tight recovery schedule that within four hours of the CBCP being activated. runs from 4 hours to 10 days after the crisis unit is activated; The organisation of tests and drills carried out during 2018 intended to meet ❯ Up to 209 employees that can be mobilised, including: regulatory obligations under the Order of November 3, 2014 (formerly CRBF ❯ 142 staff members in fixed positions at pre-established locations, 97-02) and to check that the (fixed and nomadic) recovery systems are continuously operational, especially: ❯ 65 “nomad” workers who can connect to Crédit Foncier’s information system remotely, ❯ testing the systems and identifying areas of improvement; ❯ 28 CBCP representatives and their alternates in the business lines and ❯ training in preparation for any disaster; support functions; ❯ reporting on continuity measures to third parties; ❯ four back-up user locations that can accommodate 69 people over two shifts in case the head offices are unavailable or inaccessible. ❯ training and educating plan participants who can be mobilised.

❯ 4.9.5 IT RISKS

Besides recurring operational monitoring and management activities pertaining ❯ finalisation of the update to the sensitive assets classification for the current to Information Systems Security, the following actions were taken in 2018: year attached to the IS Security risk map for 2018;

❯ intrusion testing on a sensitive service provider; ❯ implementation of the ISS permanent control system for the current year; ❯ active involvement in Crédit Foncier’s various digital projects in Information ❯ finalisation of the GDPR compliance project; Systems Security, business continuity and the protection of personal data; ❯ end of 2018: Replacing the Information Systems Security Officer with a new ❯ the establishment of protective measures in response to cyberattacks of a employee and separating out Information Systems Security from the moderate scale. Such attacks have not compromised the integrity of Crédit Contingency and Business Continuity plan (CBCP was transferred to Foncier’s data; Crédit Foncier’s DRCCP). ❯ finalisation of the updating of Crédit Foncier’s compliance analysis in line with BPCE’s Level 2 Information Systems Security policy and its integration with the group tool;

❯ 4.9.6 LEGAL RISKS

In relation to the legal risks inherent in its activities, Crédit Foncier is governed purpose vehicle in connection with a defeasance structure. Any liability on the by applicable laws and regulations in its capacity as a credit institution and part of Crédit Foncier was ruled out by a decision handed down on April 11, investment service provider. Most of these laws and regulations are to be 2018 by the Cour de Cassation, in a new ruling. Under the terms of this ruling, found in the French Monetary and Financial Code (provisions related to the borrower, which is now in compulsory liquidation, and its associates, were banking activities, and more specifically, to credit activities, provisions related ordered to repay the loan to the defeasance structure. to investment services and French financial markets authority regulations) and in the Consumer Code (provisions governing relations with individual A second case, which is currently suspended, had been brought by the borrowers). defeasance structure that transferred the receivable, which claimed there was an irregularity in the transferred receivable if it could not be recovered. Crédit Foncier strictly complies with regulations protecting the rights of individuals (related to professional secrecy and data protection) and governing These two disputes were reported to AGF in respect of the liability warranty. In the conditions related to its product distribution (banking and financial June 2016, in accordance with the arbitration clause of the collateral solicitation and provisions relating to banking and insurance brokerage). agreement, Crédit Foncier was forced to file an arbitration request against ALLIANZ group seeking recognition of its right to benefit from the liability The legal function is part of the Legal Affairs Division and is responsible for warranty. These proceedings are ongoing. helping manage the legal risks that Crédit Foncier is exposed to via its different businesses. *** In July 2008, Crédit Foncier financed the construction of a hospital in Saudi Arabia. After payment of the first two tranches of the loan, Crédit Foncier 4.9.6.1 EXCEPTIONAL EVENTS AND LITIGATION opposed the release of the third tranche due to multiple confirmed breaches of contract by the borrower and its Director. As no agreement was reached On February 4, 2004, Crédit Foncier acquired Entenial, formerly known as between Crédit Foncier and the borrower to revise the financing terms, Crédit Comptoir des Entrepreneurs, from AGF. This acquisition included a guarantee Foncier terminated the financing agreement in July 2009, with all sums loaned from AGF (now known as ALLIANZ) to assume its liabilities. immediately falling due, and initiated protective measures on the guarantees it held. The borrower then filed a counter-claim against Crédit Foncier for A damages claim was brought against Crédit Foncier, subrogated to Entenial, improper breach of loan, while the guarantor contested the validity of its for a breach in its duty to advise the borrower when any loan originated by undertaking. Comptoir des Entrepreneurs (Entenial) is subsequently sold to a special

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Three arbitration proceedings were initiated and the rulings handed down were Following a campaign in the press, notably on the Internet, Crédit Foncier and in favour of Crédit Foncier. The claims of the borrowing company and other French banks received a number of claims from borrowers claiming that guarantor were rejected in their entirety and the appeals to declare the rulings the effective annual interest rate (TEG rate) on their loan was incorrect, and a null and void that were subsequently brought before the Paris Court of Appeal number of legal claims were filed against it on this matter. An appropriate and the Court of Cassation were dismissed. The borrowing company and defence was made in response to these claims both in and out of court. guarantor have filed two applications for judicial review. In October 2018, the arbitration tribunals rejected these appeals, deeming that applications for A set of decisions favourable to the interests of lenders, now quite substantial judicial review were filed late, and therefore ineligible. in number, has gradually accumulated and is invoked to bolster the position of the creditor in ongoing proceedings, with the claims being rejected in nearly all A third arbitration case was being appealed to have the ruling declared null cases. and void by the Paris Court of Appeal (proceedings ongoing). *** Moreover, the associates of the borrower exercised their right to discontinue the contracts they had entered into with the borrower owing to the interruption The difficulties encountered by a major operator in the Overseas territories of the operation in an attempt to hold Crédit Foncier liable and to seek remedy (DOM) led it to plan for a divestment scheme involving asset disposals. Various of the resulting damage claimed. The case is being heard by the Commercial companies of that operator were forced to file for bankruptcy in late 2016, Court of Paris. including the borrowing company, which was placed in court-ordered receivership. *** With respect to the borrowing company, the Court handling the insolvency Certain individuals invested in hotel and tourism residences via a company for proceeding handed down a rehabilitation plan in the first quarter of 2018, the purposes of using these residences under the loueur en meublé which the legal representatives appealed. professionnel (commercial furnished property) taxation law, sometimes under the Robien scheme. They did so by taking out loans with several different During the third quarter, the Court of Appeals struck down the trial court’s banks, including Crédit Foncier, in such a way that each bank was unaware of ruling and declared the conversion of court-ordered receivership into the loans provided by the other banks. Now that they are unable to make the compulsory liquidation for all of the Group’s companies; the Court did not payments on the loans, which had become higher than the rent received, and approve an offer to purchase the assets from an institutional investor, at a after exhausting the income arising from the VAT reimbursement, the investors price that would have been enough to eliminate the liabilities. An appeal was are accusing the Company of having tricked them and encouraged them to filed by the Group’s manager. take on disproportionate loans by using criminally reprehensible practices with The loan declared as a liability in the proceeding is being challenged. the aid of the banks, whose liability is invoked, as they consider the Company to be acting on their behalf. *** A complaint against persons unknown has been filed. The managers of the No other government, legal or arbitration proceedings exist, including any structure, and the associated notaries, have been charged with forging public other proceeding of which the Company is aware, pending or scheduled, or documents and aiding organised fraud. The notary publics were accused of which threaten or is likely to have, or have had over the last 12 months, a lending credibility to the financial arrangements offered to investors by the significant impact on the financial situation or profitability of the Company Company. and/or groupe Crédit Foncier. Crédit Foncier brought civil action in April 2010. In October 2012, the Aix en Provence court of appeal cancelled the charges laid against the banks concerned, in the absence of serious corroborating 4.9.6.2 MATERIAL CONTRACTS evidence, and granted them official witness status. Crédit Foncier was not Crédit Foncier is not bound by any contracts that may confer a right or an concerned by the charges. obligation on an entity of the Group likely to significantly affect its ability to meet its obligations, relating to securities issued, towards the owners of such Several press articles have reported this dispute, which involves a large securities. number of banks. Simultaneously with the monitoring of the criminal proceeding, enforcement proceedings have been initiated to recover delinquencies. Whenever possible, 4.9.6.3 DEPENDENCY Crédit Foncier implements solutions negotiated with borrowers. Crédit Foncier is not dependent upon any specific patents, licences, industrial *** procurement contracts, or commercial or financial agreements. Due to financial difficulties experienced by a developer that can no longer meet the delivery schedule for properties sold off-plan (VEFA sales), some projects were halted. Since then all the properties have been delivered, enabling investors to take possession of their stakes. The risk is no longer material. ***

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❯ 4.9.7 INSURANCE

Since January 1, 2011, Crédit Foncier has benefited from the business Crédit Foncier also holds a comprehensive professional liability policy covering insurance programmes subscribed by BPCE, covering all Group entities. It is all its activities, including those carried out by its subsidiaries. It also has insured against employer liability risks. It also benefits from several types of corporate officers’ and Directors’ liability coverage. policies covering third-party liabilities and property damage that may be caused by its employees in the course of their work. The main policies taken out for 2018 have the following features: It is covered against the risk of theft, computer fraud and other forms of fraud. In addition, “loss of banking activity” is covered, although the Company’s computer data is backed up and its management units and business continuity plan are divided up between several sites.

Corporate comprehensive property damage Multi-risk guarantee covers all movable property (including all IT equipment) and Crédit Foncier’s immovable insurance property for such events as fire, theft, water damage and other damages, etc. Consequences to the property’s damage. Financial consequences of the Company’s liabilities. Coverage for consequential losses incurred as a result of banking activity. Fraud and valuables insurance Coverage of financial losses incurred by the Company due to fraud or malicious acts, including computer fraud as defined by the French Penal Code. Coverage of financial losses incurred by the Company due to the theft, deterioration or destruction of valuables. Coverage for consequential losses incurred as a result of banking activity. Cyber-risk insurance Coverage of intangible damage: computer fraud, personal data leaks and accidents. Coverage of consequential losses, extra intervention costs and claims expenses. Loss of guarantees Crédit Foncier is covered against financial losses due to both partial and total property damage (e.g. fire, hail, lightening, etc.) that would make it impossible to exercise its mortgage rights. Employee protection Insurance Collective coverage of death, work incapacity and disability risks through a supplementary collective social security scheme, participation in which is mandatory for all company employees. Coverage amount (capital or annuity) is set as a percentage of gross annual salary. Operational civil liability Coverage for the financial consequences of civil liability claims against the Company or its staff for bodily injury, property damage and consequential losses caused to third parties. Professional civil liability Coverage for the financial consequences resulting from any claim made by a third party against the Company and its civil liability for genuine or assumed professional misconduct committed in the performance of its activities. This guarantee covers the following risks in particular: (i) activities involving real estate loans and banking operations (Individual and Corporate), (ii) financial transactions, (iii) real estate activities, (iv) international activities, (v) discretionary asset management. Civil liability for regulated activities Regulated activities (i.e. financial intermediation, insurance brokerage, real estate transactions/management) are covered by a separate policy.

Directors’ and corporate officers’ civil liability Coverage for the financial consequences of the civil or joint liability of the Directors and corporate officers arising from professional misconduct committed in their capacity as insured parties of Crédit Foncier, its subsidiaries or external entities.

2018 Registration document 116 CRÉDIT FONCIER RISK MANAGEMENT REPORT 4.9 OPERATING RISKS 4

❯ 4.9.8 OTHER RISKS: CAISSE DE RETRAITE (FRENCH PENSION FUND) OF CRÉDIT FONCIER FOR EMPLOYEES WHO JOINED THE GROUP BEFORE MARCH 1, 2000

In accordance with the provisions of Article 116 of the Fillon law of August 21, Crédit Foncier has thus outsourced all of its risk pertaining to pensions 2003, Crédit Foncier’s Caisse de Retraite (pension fund), created in 1989, was currently being paid out (3,484 pensions). Given the mechanisms in place and changed to a supplementary pension fund management institution, taking the the amounts transferred, Crédit Foncier has also largely covered its risk relative name CRCFF-IGRS; this operation was approved by the decision of the to current employees, who are the future beneficiaries of the scheme (1,055 Autorité de Contrôle des Assurances et Mutuelles (ACAM – Insurance and current employees or former Crédit Foncier employees who are beneficiaries Mutual Company Regulatory Authority) on March 11, 2009, published in the and are still working, who joined the group before 2000). In 2010, the Journal Officiel of April 3, 2009. management of the liquidation of pensions for members of the CRCFF plan was transferred to an external company. As part of the transformation, the former retirement fund transferred all of its reserves and provisions covering the associated risk to insurers on March 31, 2009: mainly AXA, as well as CARDIF and SOGECAP.

2018 Registration document CRÉDIT FONCIER 117 RISK MANAGEMENT REPORT 4.10 NON-COMPLIANCE RISK

4.10 NON-COMPLIANCE RISK

Non-compliance risk is monitored by the Compliance Division, which has two separate departments: Compliance and Financial Security. The Head of Compliance is responsible for the compliance of Crédit Foncier’s investment services.

❯ 4.10.1 GENERAL FRAMEWORK

Non-compliance risk monitoring and control is based on the approach This dual approach combining operational and supervisory controls is implemented by BPCE. Non-compliance risk management is based on the supplemented by operating risks logged in the Group tool. mapping approach used by Group Compliance. This makes it possible to maintain an ongoing overview of: Non-compliance risk controls are mainly based on being compliant with provisions of the AMF General Regulation and the Consumer Code with ❯ non-compliance risks on the basis of 12 aggregated risks (including money respect to real estate financing in the Individual sector, as well as laundering risk) broken down into 119 detailed risks for Crédit Foncier’s scope know-your-customer rules for both individuals and companies. The controls of of business; approved products, services and activities also focused on the product offering, the conditions for putting products on the market, the associated ❯ the framework put in place to prevent or mitigate these risks and to ensure advertising and all of the associated documentation (internal sales resources that the most significant risks are subject to controls and action plans aimed and client and partner documents). at more effective risk management, if necessary. Non-compliance risks are monitored using a dual approach: Non-compliance risk management also relies on the provision of regulatory training adapted to the functions performed by Crédit Foncier’s staff and ❯ the performance of Level 2 controls by the Compliance Division. Accordingly, training covering anti-money laundering and counter terrorist financing. and taking any regulatory developments into account, compliance standards and procedures continue to be updated as required. The majority of the Specific action plans for the operating units are drawn up to address results of the controls of these procedures are documented in Groupe malfunctions identified during controls, or operating risk incidents that are BPCE’s permanent control tool; repeatedly logged. These action plans are being monitored by the permanent control representatives and presented to the Internal Control Committee. The ❯ results from first-level controls are analysed for non-compliance issues listed in customer complaint handling system helps identify malfunctions. Group compliance standards or resulting from thematic approaches.

❯ 4.10.2 FINANCIAL SECURITY

The prevention of money laundering and terrorist financing is carried out via Under anti-money laundering regulations arising from the Third European due diligence control measures involving all Groupe BPCE entities at every directive, anti-money laundering procedures are based on prior analysis level of the banking and lending process. These measures meet objectives for carried out before entering into a new customer relationship. Diligence is commitment security and customer relationship quality. Coordination is adapted to the complexity and risk inherent to each type of customer and/or provided by the Financial Security department within the Compliance Division, transaction. Screening for potential terrorists is routine. The process is fully which implements the policies, standards and IT tools adopted by BPCE. automated and allows the user to refuse to do business with the customer if there is even the slightest doubt about his or her identity. Staff awareness and vigilance are ensured by procedures and training. A training programme systematically followed by new recruits is complemented Changes related to the enactment of the Fourth Anti-Money by employee training courses run by the Financial Security Division. The Laundering/Terrorism Financing directive have been taken into account, purpose of these classroom training courses is to educate sales and namely the extension of the Politically Exposed Persons (PEP) framework to management staff about fraud risk and the prevention of money laundering French residents and the treatment of Beneficial Owners. and terrorism financing risks. Supervision of lending activities, which represent the bulk of the business of Employees take an e-learning course on anti-money laundering procedures Crédit Foncier and its subsidiaries, is carried out at every stage in the life of a every two years. Some employees completed this course in 2017 with the loan, from relationship forming to repayment. In doing so, anti-money remainder doing so in 2018. laundering efforts rely on multi-criteria analysis to identify risky situations and adapt both sales procedures and subsequent controls.

2018 Registration document 118 CRÉDIT FONCIER RISK MANAGEMENT REPORT 4.10 NON-COMPLIANCE RISK 4

❯ 4.10.3 COMPLIANCE

❯ Banking compliance ❯ Directive No. 2014/65/EU on markets in financial instruments In addition to implementing the general framework for managing compliance The Compliance Division met with the operational divisions to carry out the risk described above, the Compliance Division coordinates various processes. operational implementation of the MIFID II Regulation that came into effect on January 3, 2018. For one aspect of this implementation, Crédit Foncier has The Compliance Division oversees the compliance and inventory of Essential joined BPCE’s ARM (Approved Reporting Mechanism) service as well as an Outsourced Services as defined in Articles 231 to 240 of the Order of APA (Approved Publication Arrangement). November 3, 2014 on the internal control of companies in the banking sector, payment services and investment services. ❯ Bank Holding Company Act It also coordinates the review/creation/validation process for new products. In light of its activities in the United States and its status as a Financial Holding Following this process, a decision is made by the Products and Services Company (FHC), Groupe BPCE is directly affected by the provisions of the Approval Committee. This committee met six times in 2018 under the Bank Holding Company Act (BHC) and International Banking Act (IBA). As a chairmanship of the Chief Executive Officer. The aim of this process is to subsidiary of BPCE SA, Crédit Foncier is a stakeholder in the declaration and ensure, in accordance with Article 35 of the aforementioned Order of certification process that applies to all entities controlled by BPCE SA. The November 3, 2014, that all impacts have been analysed and factored in by the purpose of this process is to declare all companies operating in the United operational and support teams. The Compliance Division, which serves as States (via US-located offices) as well as all investments in shares, equity Secretary to this committee, ensures that the New Products and Services stakes, or convertible bonds in US companies. The certification of Crédit Approval Committee has all the information required to make an informed Foncier did not show any investments in shares, equity stakes, or convertible decision. The Compliance Division expresses an opinion on items within its bonds in US companies within its scope. remit. In this regard, the Compliance Division ensures that decisions are ❯ Volcker Rule and French law separating and regulating banking followed and that and pre-conditions are met before the new products and activities (SRAB) services are taken to market. Crédit Foncier is subject to French law No. 2013-672 of July 26, 2013 Pursuant to Article 40 of the Order of November 3, 2014, the Compliance separating and regulating banking activities (“SRAB”) and, as a subsidiary of Division leads the Monthly Regulatory Monitoring Committee, which brings BPCE SA, with section 13 of the Bank Holding Company Act in the United together the main support and operational divisions of Crédit Foncier. States (“BHCA”), as amended by section 619 of the American law known as ❯ Investment service compliance the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111–203, H.R. 4173), and the corresponding regulations (the “Volcker Crédit Foncier’s customer investment services business is marginal, with a Rule”). relatively small volume of transactions. In accordance with Market Abuse regulations, controls mainly involve the analysis of atypical orders. The opening The Compliance Division serves as SRAB Volcker officer for Groupe Crédit of securities accounts and the sale of debt hedging products are also Foncier, a function shared with Crédit Foncier’s Risk Division. controlled. In application of the Volcker Rule, the Compliance Division has completed the For its proprietary investment services, which relate to its funding, cash final certification stage for the Crédit Foncier entities concerned. In particular, management and balance sheet hedging activities, Crédit Foncier applies the the Senior Management report, which describes the advanced compliance European Market Infrastructure Regulation (EMIR). programme, was validated by the Executive Management Committee of Crédit Foncier and by its Board of Directors. All sub-certifications by Crédit Foncier ❯ Depositary function entities were transferred to Groupe BPCE for final certification. The annual statement of assets in the inventory was sent to the management company, in accordance with Article 323-52 of the AMF General Regulation, accompanied by a “description of the means and procedures by which the depositary will transmit to the securitisation vehicle all relevant information that the securitisation vehicle needs to perform its duties.” Compliance produced the report on the asset custody functions it provides as depositary for securitisation vehicles.

❯ 4.10.4 ETHICS

In 2018, the Compliance Division finalised the whistle-blowing procedure and At the same time, relevant persons individually receive a reminder of each the procedure for reporting infractions required by the Belgian branch. The period when they are prohibited from buying or selling shares. The list of Compliance Division enforces the rules on market manipulation set out in persons concerned was updated following the introduction of the Group Risk, Regulation (EU) No. 596/2014 of the European Parliament and of the Council Compliance and Permanent Control Charter on March 29, 2017 in order to relating to closely associated persons and permanent insiders. An integrate second-level controllers. implementation instruction distributed to all employees covers their obligations.

2018 Registration document CRÉDIT FONCIER 119 RISK MANAGEMENT REPORT 4.10 NON-COMPLIANCE RISK

2018 Registration document 120 CRÉDIT FONCIER 5 FINANCIAL STATEMENTS

5.1 CONSOLIDATED FINANCIAL 5.2 PARENT COMPANY FINANCIAL STATEMENTS 122 STATEMENTS 199 5.1.1 Consolidated income statement 122 5.2.1 Parent company balance sheet – Assets 199 5.1.2 Comprehensive income 124 5.2.2 Parent company balance sheet – equity and liabilities 200 5.1.3 Consolidated balance sheet 125 5.2.3 Off-balance sheet items 201 5.1.4 Changes in consolidated equity 126 5.2.4 Income statement 202 5.1.5 Consolidated cash flow statement (indirect method) 128 5.2.5 Notes to the parent company financial statements 203 5.1.6 First-time application of IFRS 9 129 5.2.6 Report of the Statutory Auditors on the parent company 5.1.7 Summary of the notes to the consolidated financial financial statements 233 statements 133 5.1.8 Report of the Statutory Auditors on the consolidated financial statements 195

2018 Registration document CRÉDIT FONCIER 121 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

5.1 CONSOLIDATED FINANCIAL STATEMENTS

❯ 5.1.1 CONSOLIDATED INCOME STATEMENT

(in €m) Notes FY 2018 Interest and similar income 4.1 3,886 Interest and similar expenses 4.1 -3,512 Commission income 4.2 213 Commission expenses 4.2 -17 Net gains or losses on financial instruments at fair value through profit or loss 4.3 -130 Net gains or losses on financial instruments at fair value through other comprehensive income 4.4 24 Net gains or losses arising from the derecognition of financial assets at amortised cost 4.5 1 Net income from insurance activities 4.8 46 Income from other activities 4.6 73 Expenses from other activities 4.6 -23 NET BANKING INCOME 561 Operating expenses 4.7 -754 Depreciation, amortisation and impairment for property, plant and equipment and intangible assets -25 GROSS OPERATING INCOME -218 Cost of credit risk 7.1.1 -60 OPERATING INCOME -278 Gains and losses on other assets 4.8 -1 Change in the value of goodwill 3.4 -13 INCOME BEFORE TAX -292 Income tax 10 100 Income net of tax from discontinued operations NET INCOME -192 Non-controlling interests 5.18 -2 NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT -194

2018 Registration document 122 CRÉDIT FONCIER FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 5

❯ Consolidated income statement at December 31, 2017

(in €m) FY 2017 * Interest and similar income 3,879 Interest and similar expenses -3,557 Commission income 281 Commission expenses -56 Net gains or losses on financial instruments at fair value through profit or loss -110 Gains or losses on available-for-sale financial assets 10 Income from other activities 151 Expenses from other activities -43 NET BANKING INCOME 555 Operating expenses -465 Depreciation, amortisation and impairment for property, plant and equipment and intangible assets -8 GROSS OPERATING INCOME 82 Cost of risk -81 OPERATING INCOME 1 Share in net income of associates 1 Gains or losses on other assets -21 Change in the value of goodwill INCOME BEFORE TAX -19 Income tax 54 Net income after tax from discontinued operations or activities being sold NET INCOME 35 Non-controlling interests 2 Net income attributable to equity holders of the parent 33 Earnings per share 0.09 Average earnings per share 0.09 Diluted earnings per share 0.09 * Data presented as per IAS 39.

2018 Registration document CRÉDIT FONCIER 123 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

❯ 5.1.2 COMPREHENSIVE INCOME

(in €m) FY 2018 NET INCOME -192 ITEMS THAT CAN BE RECLASSIFIED IN NET INCOME -51 Revaluation of financial assets at fair value through other comprehensive income recyclable to income Revaluation of derivatives hedging items that can be recycled to income -69 Other items recognised through other comprehensive income recyclable to income Related taxes 18 ITEMS THAT CANNOT BE RECLASSIFIED IN NET INCOME 10 Revaluation (or actuarial gains and losses) of defined-benefit plans 3 Revaluation of own credit risk on financial liabilities designated at fair value through profit or loss 22 Revaluation of equity financial assets recognised at fair value through other comprehensive income -8 Other items recognised through other comprehensive income not recyclable to income Related taxes -7 GAINS AND LOSSES RECOGNISED DIRECTLY IN OTHER COMPREHENSIVE INCOME (AFTER TAX) -41 COMPREHENSIVE INCOME -233 Attributable to equity holders of the parent -235 Non-controlling interests 2

❯ Comprehensive income at December 31, 2017

(in €m) FY 2017 * NET INCOME 35 Revaluation of own credit risk on financial liabilities designated at fair value through profit or loss -18 Taxes 4 ITEMS NOT RECYCLABLE TO INCOME -14 Change in value of available-for-sale financial assets 40 Change in value over the period recognised in other comprehensive income 46 Change in value over the period reclassified in income -6 Change in value of cash flow hedging derivatives 169 Change in value over the period recognised in other comprehensive income 169 Taxes -64 ITEMS RECYCLABLE TO INCOME 145 GAINS AND LOSSES RECOGNISED DIRECTLY IN OTHER COMPREHENSIVE INCOME (AFTER TAX) 131 COMPREHENSIVE INCOME 166 Attributable to equity holders of the parent 164 Non-controlling interests 2 * Data presented as per IAS 39.

2018 Registration document 124 CRÉDIT FONCIER FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 5

❯ 5.1.3 CONSOLIDATED BALANCE SHEET

❯ Assets 12/31/2017 IAS 39 after IFRS 9 reclassi- (in €m) Notes 12/31/2018 01/01/2018 (1) fications (2) Cash and amounts due from central banks 5.1 706 670 670 Financial assets at fair value through profit or loss 5.2.1 1,619 1,890 1,890 Hedging derivatives 5.3 3,851 5,201 5,201 Financial assets at fair value through other comprehensive income 5.4 153 174 174 Securities at amortised cost 5.5.1 10,094 10,235 10,002 Loans and receivables due from credit institutions and similar items at amortised cost 5.5.2 14,852 15,816 15,816 Loans and receivables due from customers at amortised cost 5.5.2 70,080 71,948 72,075 Revaluation differences on interest rate risk-hedged portfolios 4,695 5,064 5,064 Insurance business investments 759 724 724 Current tax assets 334 759 759 Deferred tax assets 10.2 124 169 214 Accrued income and other assets 5.8 1,171 1,211 1,211 Non-current assets held for sale 5.9 1,889 457 457 Investment property 5.10 11 15 15 Property, plant and equipment 5.11 16 39 39 Intangible assets 5.11 3 5 5 Goodwill 3.4 0 13 13 TOTAL ASSETS 110,357 114,390 114,329 (1) The transition from the balance sheet at December 31, 2017 under IAS 39 to the balance sheet at January 1, 2018 under IFRS 9 is presented in section 5.1.6. (2) The December 31, 2017 amounts correspond to the published balance sheet after reclassifications with no change in the method for valuing financial assets and liabilities presented in IFRS 9 format (See note 5.1.6 § 1).

❯ Equity and liabilities 12/31/2017 IAS 39 after IFRS 9 reclassi- (in €m) Notes 12/31/2018 01/01/2018 (1) fications (2) Financial liabilities at fair value through profit or loss 5.2.2 2,612 2,838 2,838 Hedging derivatives 5.3 7,577 8,036 8,036 Debt securities 5.13 65,858 67,037 67,037 Amounts due to credit institutions and similar items 5.12.1 28,231 29,483 29,483 Amounts due to customers 5.12.2 320 1,124 1,124 Current tax liabilities 2 2 2 Accrued expenses and other liabilities 5.14 1,223 1,616 1,616 Debts associated with non-current assets held for sale 5.9 580 19 19 Provisions 5.15 436 147 127 Subordinated debt 5.16 10 291 291 Shareholders’ equity 3,508 3,797 3,756 ❯ Equity attributable to equity holders of the parent 3,443 3,700 3,659 Share capital and additional paid-in capital 5.1.4 1,731 1,731 1,731 Retained earnings 2,026 2,044 2,160 Gains and losses recognised directly in other comprehensive income -120 -75 -232 Income for the period -194 ❯ Non-controlling interests 5.18 65 97 97 TOTAL LIABILITIES AND EQUITY 110,357 114,390 114,329 (1) The transition from the balance sheet at December 31, 2017 under IAS 39 to the balance sheet at January 1, 2018 under IFRS 9 is presented in section 5.1.6. (2) The December 31, 2017 amounts correspond to the published balance sheet after reclassifications with no change in the method for valuing financial assets and liabilities presented in IFRS 9 format (See note 5.1.6 § 1).

2018 Registration document CRÉDIT FONCIER 125 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

❯ 5.1.4 CHANGES IN CONSOLIDATED EQUITY

Share capital and additional paid-in capital Retained earnings

Net remuneration on perpetual Perpetual subordinated Additional deeply subordinated notes in retained Retained (in €m) Share capital paid-in capital notes earnings earnings Equity at January 1, 2017 after allocation 1,331 400 550 -24 1,618 Dividends paid in 2017 on 2016 income Interest on deeply subordinated notes (net of tax) -23 Impact of early adoption of IFRS 9 on own credit risk Gains or losses recognised directly in other comprehensive income EX Permanent impairment in IAS 39 reclassification from retained earnings to unrealised gains/losses through OCI-NR 6 FTA impact of provisions for credit risk -115 FTA IFRS 9 – recycling OCI 2008 reclassification FTA IFRS 9 – recycling ex-AFS OFIS Net income Other changes 24 -25 Shareholders’ equity at December 31, 2017 FTA 1,331 400 550 -23 1,484 Allocation of net income for the period 33 Equity at January 1, 2018 after allocation 1,331 400 550 -23 1,517 Dividends paid in 2018 on 2017 income Interest on deeply subordinated notes (net of tax) -23 Gains or losses recognised directly in other comprehensive income Other changes 4 Net income Impact of changes in scope Other changes 23 -22 SHAREHOLDERS’ EQUITY AT DECEMBER 31, 2018 1,331 400 550 -23 1,499

2018 Registration document 126 CRÉDIT FONCIER FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 5

Gains and losses recognised directly in other comprehensive income Recyclable Non-recyclable Revaluation of equity financial Revaluation of own Net assets recognised credit risk on Revaluation income Total equity at fair value financial liabilities (actuarial gains attributable attributable Equity through other designated at fair and losses) on to equity to equity attributable to Total Hedging comprehensive value through profit defined-benefit holders of holders of non-controlling consolidated derivatives income or loss plans the parent the parent interests equity

-200 -141 -14 -3 3,517 96 3,613 -1 -1

-23 -23

-14 -14 -14

117 29 146 146

-6 0 0 -115 -115 37 37 37 120 120 120 33 33 2 35 -1 -1

-83 39 -28 -3 33 3,700 97 3,797 -33

-83 39 -28 -3 0 3,700 97 3,797 -3 -3

-23 -23

-51 -8 16 2 -41 -41 -4 0 0 -194 -194 2 -192 0 -31 -31 1 1

-134 27 -12 -1 -194 3,443 65 3,508

2018 Registration document CRÉDIT FONCIER 127 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

❯ 5.1.5 CONSOLIDATED CASH FLOW STATEMENT (INDIRECT METHOD)

(in €m) FY 2018 FY 2017 Income before tax -292 -19 Net depreciation and amortisation of property, plant and equipment, and intangible assets 8 8 Goodwill impairment 13 Net charge to provisions and provisions for impairment (including insurance companies’ technical reserves) 191 -93 Share in net income of associates -1 Net cash flows generated by investing activities -370 -16 Other changes -695 219 Total non-monetary items included in net income before tax -853 117 Net increase or decrease arising from transactions with credit institutions -619 -1,330 Net increase or decrease arising from transactions with customers 1,230 4,435 Net increase or decrease arising from transactions involving financial assets and liabilities -49 -5,506 Net increase or decrease arising from transactions involving non-financial assets and liabilities -719 377 Income taxes paid 747 173 Net increase (decrease) in assets and liabilities resulting from operating activities 590 -1,851 Net cash flows generated by operating activities (A) -555 -1,753 Net increase or decrease related to financial assets and equity investments 447 47 Net increase or decrease related to investment property 13 9 Net increase or decrease related to property, plant and equipment, and intangible assets -3 1 Net cash flows generated by investing activities (B) 457 57 Net increase (decrease) arising from transactions with shareholders -37 -24 Net increase or decrease generated by financing activities -281 0 Net cash flows generated by financing activities (C) -318 -24 Impact of changes in exchange rates (D) TOTAL NET CASH FLOWS (A+B+C+D) -416 -1,720 Cash and amounts due from central banks 670 2,401 Cash and net balance of accounts with central banks (assets) 670 2,401 Balance of accounts with central banks (liabilities) Net balance of demand transactions with credit institutions 591 580 Current accounts with overdrafts 723 778 Demand accounts in credit -132 -198 Demand repurchase agreements 0 Opening cash and cash equivalents 1,261 2,981 Cash and amounts due from central banks 705 670 Cash and net balance of accounts with central banks (assets) 705 670 Net balance of demand transactions with credit institutions 140 591 Current accounts with overdrafts 304 723 Demand accounts and loans 0 Demand accounts in credit -164 -132 Closing cash and cash equivalents 845 1,261 NET CHANGE IN CASH AND CASH EQUIVALENTS -416 -1,720

2018 Registration document 128 CRÉDIT FONCIER FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 5

❯ 5.1.6 FIRST-TIME APPLICATION OF IFRS 9

The principles and impacts related to the first-time application of IFRS 9 as of between IAS 39 and IFRS 9 by class of financial asset and liability. The January 1, 2018 are described in the significant events of the year (note 1.3.2). principles for classifying financial instruments under IFRS 9 are presented in note 2.5.1. The table below provides a breakdown of the impacts of the change related to the reclassifications and to the application of the new provisioning method

■ IMPACTS OF THE CHANGE RELATED TO THE RECLASSIFICATIONS AND TO THE APPLICATION OF THE NEW PROVISIONING METHOD BETWEEN IAS 39 AND IFRS 9 BY CLASS OF FINANCIAL ASSET AND LIABILITY

Impacts of the change Impairment or provisions for Cancel- 12-month lation of Balance and lifetime collective Balance sheet under IAS 39 Balance sheet under IFRS 9 IFRS 9 sheet after expected provisions at December 31, 2017 at January 1, 2018 reclassi- reclassi- credit under (in €m) fications fications Value * losses IAS 39 (in €m) ASSETS ASSETS Cash and amounts due Cash and amounts due from from central banks 670 670 670 central banks Financial assets at fair value through profit or loss 1,838 -1,838 Financial assets at fair value 1,890 1,890 1,890 through profit or loss Hedging derivatives 5,201 5,201 5,201 Hedging derivatives Available-for-sale financial assets 2,367 -2,367 Financial assets at fair value through other comprehensive 174 174 174 income Loans and receivables due from credit institutions 11,436 -11,436 Loans and receivables due from customers 79,750 -79,750 10,002 10,002 238 -5 10,235 Securities at amortised cost Loans and receivables due from credit institutions and similar items at amortised 15,816 15,816 15,816 cost Loans and receivables due from customers at amortised 72,075 72,075 -188 61 71,948 cost Revaluation differences on Revaluation differences on interest rate risk-hedged interest rate risk-hedged portfolios 5,064 5,064 5,064 portfolios Held-to-maturity financial assets 30 -30 Current tax assets 759 759 759 Current tax assets Deferred tax assets 214 214 -82 57 -20 169 Deferred tax assets Accrued income and other Accrued income and other assets 6,461 -4,526 1,935 1,935 assets Non-current assets held for Non-current assets held for sale 457 457 457 sale Investment property 15 15 15 Investment property Property, plant Property, plant and and equipment 39 39 39 equipment Intangible assets 5 5 5 Intangible assets Goodwill 13 13 13 Goodwill TOTAL ASSETS 114,319 10 114,329 156 -136 41 114,390 TOTAL ASSETS

* This relates to the change in the way the asset is measured.

2018 Registration document CRÉDIT FONCIER 129 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

Impacts of the change Impairment or provisions for Cancel- 12-month lation of Balance and lifetime collective Balance sheet under IAS 39 Balance sheet under IFRS 9 IFRS 9 sheet after expected provisions at December 31, 2017 at January 1, 2018 reclass- reclassi- credit under (in €m) ifications fications Value * losses IAS 39 (in €m) LIABILITIES LIABILITIES Financial liabilities at fair Financial liabilities at fair value value through profit or loss 2,838 2,838 2,838 through profit or loss Hedging derivatives 8,036 8,036 8,036 Hedging derivatives Amounts due to credit Amounts due to credit institutions 28,002 1,481 29,483 29,483 institutions and similar items Amounts due to customers 587 537 1,124 1,124 Amounts due to customers Debt securities 67,037 67,037 67,037 Debt securities Current tax liabilities 2 2 2 Current tax liabilities Accrued expenses Accrued expenses and other and other liabilities 3,624 -2,008 1,616 1,616 liabilities Liabilities associated with Liabilities associated non-current assets held for with non-current assets sale and discontinued held for sale 19 19 19 operations Provisions 127 127 20 147 Provisions Subordinated debt 291 291 291 Subordinated debt Shareholders’ equity 3,756 3,756 41 3,797 Shareholders’ equity Equity attributable to equity holders Equity attributable to equity of the parent 3,659 3,659 41 3,700 holders of the parent Share capital and additional Share capital and additional paid-in capital 1,731 1,731 1,731 paid-in capital Retained earnings 2,122 38 2,160 -116 2,044 Retained earnings Gains or losses recognised Gains and losses recognised directly in other directly in other comprehensive income -227 -5 -232 157 -75 comprehensive income Revaluation differences Revaluation differences on on employee benefits -3 -3 -3 employee benefits Hedging derivatives -83 -83 -83 Hedging derivatives Own credit risk -28 -28 -28 Own credit risk Revaluation of equity financial Reval. of equity financial assets recognised at fair assets -118 -118 157 39 value Available-for-sale financial assets -113 113 Income for the period 33 -33 Income for the period Non-controlling interests 97 97 97 Non-controlling interests TOTAL LIABILITIES 114,319 10 114,329 41 20 0 114,390 TOTAL LIABILITIES * This relates to the change in the way the asset is measured.

2018 Registration document 130 CRÉDIT FONCIER FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 5

■ SUMMARY OF RECLASSIFICATIONS BETWEEN IAS 39 AND IFRS 9 BY CATEGORY ❯ Financial assets

(in €m) 01/01/2018 Carrying Carrying amount amount under under Financial assets under IAS 39 Classification under IFRS 9 IAS 39 IFRS 9 Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss 1,838 1,890 o/w Securitisation funds Financial assets at fair value through profit or loss (a) 3 3 o/w UCITS and other securities measured at fair value excluding trading securities Financial assets at fair value through profit or loss (d) 52 o/w Loans and receivables designated at fair value Financial assets at fair value through profit or loss (b) 1,382 1,382 o/w Trading derivatives Other financial assets at fair value through profit or loss 453 453 Available-for-sale financial assets 2,367 174 Fixed-income securities Financial assets at fair value through OCI (c) 2,141 Variable-income securities – Investments in associates Financial assets at fair value through OCI (d) 201 148 Loans and receivables – Advances to associates Financial assets at fair value through OCI 25 26 Loans and receivables * 91,186 97,999 Loans and receivables due from credit institutions and similar Loans and advances items at amortised cost (e) 11,436 15,816 Loans and advances Loans and receivables due from customers at amortised cost 72,036 71,948 Fixed-income securities Securities at amortised cost (c) 7,714 10,235 Held-to-maturity financial assets Securities at amortised cost (c) 30 Accrued income and other assets (e) 6,461 1,935 TOTAL 101,882 101,998 * Impairment on a portfolio basis is recognised as a deduction from assets, like individual impairment, and is therefore included in the carrying amount of the instruments.

Application of IFRS 9 criteria (note 5.2) relating to the business models and (d) non-consolidated UCITS units totalling €0.02bn are considered non-SPPI contractual characteristics of financial instruments led the Group to make the debt instruments under IFRS 9 and are therefore classified as “Financial following modifications to the classification of financial assets compared with assets at fair value through profit or loss”. Other variable-income securities IAS 39: managed under a trading business model were reclassified as “Financial assets at fair value through profit or loss” under IFRS 9, for €0.032bn; (a) fixed-income securities classified as “Financial assets designated at fair value” under IAS 39 and managed under a trading business model are (e) margin calls and deposits paid totalling €4.5bn that were recorded under classified as “Financial assets at fair value through profit or loss” under accrual accounts under IAS 39 at December 31, 2017 were reclassified as IFRS 9; “Loans and receivables due from credit institutions and similar items at amortised cost” at January 1, 2018. (b) loans and receivables classified as “Financial assets designated at fair value” under IAS 39 and managed under a trading business model are The impacts of the changes in classification and the application of the new classified as “Financial assets at fair value through profit or loss” under provisioning method are shown in the following two tables. IFRS 9, for €1.4bn; (c) debt instruments (fixed-income securities) totalling €2.14bn classified as “Available for sale assets” under IAS 39 were reclassified as “Securities at amortised cost” under IFRS 9, for €2.32bn, as were Held-to-maturity assets, for €0.03bn;

2018 Registration document CRÉDIT FONCIER 131 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

❯ Impacts of the change in impairment or provisions for expected credit losses Closing balance of impairment or provisions for Opening balance of Impact of changes actual credit losses impairment or provisions in valuation category on under IAS 39 and for expected credit losses impairment or provisions Classification IAS 37 at under IFRS 9 for credit losses Financial assets under IAS 39 under IFRS 9 12/31/2017 at 01/01/2018 at this date Loans and receivables due from customers Securities Available-for-sale securities at amortised cost 5 -5 Loans and receivables Loans and receivables due from customers due from customers 867 995 -128 Off-balance sheet Off-balance sheet commitments commitments 10 30 -20 TOTAL 877 1,030 -153

❯ Other information Fair value profit or loss Fair value profit or loss which would which would have been recognised have been recognised in other Fair value at the in income if the items comprehensive income if the items (in €m) balance sheet date had not been reclassified had not been reclassified Financial assets reclassified from “Available-for-sale financial assets” to “Financial assets at amortised cost” 2,140 -183 Financial assets reclassified from “Financial assets at fair value through profit or loss” to “Financial assets at amortised cost” n/a n/a n/a Financial assets reclassified from “Financial assets at fair value through profit or loss” to “Financial assets at fair value through other comprehensive income” n/a n/a n/a Financial liabilities reclassified from “Financial liabilities at fair value through profit or loss” to “Financial liabilities at amortised cost” n/a n/a n/a TOTAL 2,140 -183

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❯ 5.1.7 SUMMARY OF THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5.12 Amounts due to credit institutions and customers 162 Note 1 General background 134 5.13 Debt securities 162 1.1 Groupe Crédit Foncier 134 5.14 Accrued expenses and other liabilities 163 1.2 Guarantee mechanism 134 5.15 Provisions 163 1.3 Significant events 134 5.16 Subordinated debt 164 1.4 Post-balance sheet events 136 5.17 Ordinary shares and equity instruments issued 164 5.18 Non-controlling interests 165 Note 2 Applicable accounting standards and comparability 136 5.19 Change in gains and losses recognised directly in 2.1 Regulatory framework 136 other comprehensive income 166 2.2 Accounting standards 136 5.20 Offsetting of financial assets and financial liabilities 166 2.3 Use of estimates and judgements 137 5.21 Transferred financial assets and other financial 2.4 Presentation of the consolidated financial assets pledged and received as collateral that can statements and balance sheet date 137 be sold or repledged 168 2.5 General accounting principles and measurement methods 137 Note 6 Commitments 170 6.1 Loan commitments 170 Note 3 Consolidation 140 6.2 Guarantee commitments 170 3.1 Scope of consolidation – consolidation and valuation methods 140 Note 7 Exposure to risks 171 3.2 Consolidation rules 141 7.1 Credit risk 171 3.3 Changes in scope of consolidation during fiscal 7.2 Market risk 175 year 2018 142 7.3 Interest rate risk and exchange rate risk 175 3.4 Goodwill 142 7.4 Liquidity risk 175 Note 4 Notes to the income statement 143 Note 8 Employee benefits and similar 176 4.1 Interest and similar income and expenses 143 8.1 Payroll costs 176 4.2 Fee and commission income and expenses 144 8.2 Employee benefits 176 4.3 Net gains or losses on financial instruments at fair value through profit or loss 145 Note 9 Fair value of financial assets and liabilities 180 4.4 Net gains or losses on financial instruments at fair 9.1 Fair value of financial assets and liabilities 182 value through other comprehensive income 146 9.2 Fair value of financial assets and liabilities at 4.5 Net gains or losses on financial instruments at amortised cost 185 amortised cost 147 4.6 Income and expenses from other activities 147 Note 10 Taxes 185 4.7 Operating expenses 148 10.1 Income tax 185 4.8 Gains or losses on other assets 148 10.2 Deferred tax assets and liabilities 186 4.9 Net income from insurance activities 149 Note 11 Other information 187 Note 5 Notes to the balance sheet 149 11.1 Segment reporting 187 5.1 Cash and amounts due from central banks 149 11.2 Information on finance and operating leases 187 5.2 Financial assets and liabilities at fair value through 11.3 Related-party transactions 189 profit or loss 149 11.4 Interests in non-consolidated structured entities 190 5.3 Hedging derivatives 153 11.5 Locations by country 192 5.4 Financial assets at fair value through other 11.6 Fees paid to Statutory Auditors and members of comprehensive income 157 their networks 192 5.5 Assets at amortised cost 158 5.6 Equity instruments designated at fair value through Note 12 Scope of consolidation 192 other comprehensive income 159 12.1 Securitisation transactions 192 5.7 Reclassification of financial assets 159 12.2 Scope of consolidation at December 31, 2018 193 5.8 Accrued income and other assets 160 12.3 Unconsolidated subsidiaries and affiliates 194 5.9 Non-current assets held for sale and associated liabilities 160 5.10 Investment property 160 5.11 Fixed assets 161

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NOTE 1 GENERAL BACKGROUND

provides for redundancy for economic reasons for those concerned, subject to 1.1 GROUPE CRÉDIT FONCIER the terms of the Crédit Foncier employment framework (termination benefits Crédit Foncier, a subsidiary of BPCE, is a specialist in real estate and Public aligned with seniority), will therefore only apply in exceptional cases to sector financing. It operates on the individual customers’ market (real estate employees not wishing to take advantage of the more beneficial terms of the financing, valuation and services), the private corporate market and the Public GPEC agreement. sector market. The GPEC agreement provides for the following:

❯ an “advance” voluntary redundancy plan allowing all employees whose 1.2 GUARANTEE MECHANISM positions will become redundant to leave on December 31, 2018 and to benefit from various support measures, including financial support (termination Crédit Foncier is a direct subsidiary of BPCE. As such, it is covered by its benefits, retraining leave, etc.). As of December 31, 2018, 126 employees had parent company guarantee and the Groupe BPCE guarantee and liquidity volunteered for this option; mechanism. As a direct subsidiary, Crédit Foncier does not contribute to the network solidarity mechanism and will not be called upon in the event of a ❯ in January 2019, all employees concerned who did not opt for the advance Banque Populaire or Caisse d’Épargne default. redundancy plan will be offered a similar position, in an equivalent category and the same geographical region in another Groupe BPCE company, with effect from April 1, 2019. Alternatively, after a cooling-off period if necessary, employees who do not wish to accept the proposed reclassification may opt 1.3 SIGNIFICANT EVENTS for voluntary redundancy with the same terms as under the advance plan; 1.3.1 INTEGRATION OF CRÉDIT FONCIER’S ❯ for employees whose position is maintained (around 600 people), various provisions to maintain their employability (in particular via training) will be OPERATIONS INTO GROUPE BPCE available. Employees concerned by any subsequent redundancies will benefit TIMELINE AND CONTENT from the same provisions as those set out above. On June 25 and 26, 2018, respectively, the BPCE Supervisory Board and the Accounting impacts at December 31, 2018 Crédit Foncier Board of Directors gave their approval in principle to start a In accounting terms, the integration of Crédit Foncier’s activities and the project to integrate Crédit Foncier’s operations and reorganise its expertise transfer of its expertise within Groupe BPCE will not call into question its throughout Groupe BPCE’s entities. operation as a going concern within the meaning of IAS 1. This project On July 20, 2018, Crédit Foncier’s Executive Management team began the constitutes a restructuring as per IAS 37. The conditions that justify the information and consultation process with the Works Council as provided for recognition of a provision for restructuring costs are met. in Articles L. 1233-30 and L. 2223-31 of the French Labour Code, and started This provision will cover expenses arising for internal and external mobility, the negotiations with the labour unions pursuant to regulations. expenses arising from the closure of the branch network and compensation These negotiations led to the signing of two majority agreements on the for exclusive agents. implementation of the project on October 26, 2018 – an Occupation and Skills The provision recorded for this purpose under operating expenses at Forecasting (GPEC) agreement and an employment protection plan (PSE). The December 31, 2018 amounted to €334.2m before tax and breaks down as employment protection plan is subject to administrative approval and was follows: approved by the competent Regional Directorate for Enterprise, Competition Policy, Consumer Affairs, Labour and Employment (DIRECCTE) in ❯ human resources costs: €234.3m. These essentially comprise termination December 2018. benefits, the cost of retraining leave and various support measures based on assumptions regarding the choices made by employees between After consulting the Works Council, the Crédit Foncier Board of Directors reclassification within Groupe BPCE or voluntary redundancy; confirmed the effective implementation of the project at its meeting of November 21, 2018. ❯ operational costs: €99.9m. These mainly include the costs of the discontinuation of lending activities (lease termination costs, compensation for The operational part of the integration, which will primarily take effect in the exclusive agents, the scrapping of branch fixtures and fixed assets). 1st half of 2019, includes the following: Under the operational part of the project, the transfers to BPCE of the ❯ new loan production will be redeployed in the Group’s entities: Individual consolidated subsidiaries SOCFIM and Crédit Foncier Immobilier, scheduled to customer loans within the Banque Populaire banks and Caisses d’Épargne, be completed in 2019, fall within the scope of IFRS 5, in particular the Corporate financing shared by the Caisses d’Épargne and Banque Populaire provisions covering assets held for sale, which stipulate that an asset or group banks for Social housing, and Natixis for project and infrastructure financing; of assets held for sale be recognised at the lower of their carrying amount and their fair value less costs relating to the sale. Accordingly, a conservative ❯ SOCFIM, which will become a direct subsidiary of BPCE SA, will position itself valuation of Crédit Foncier Immobilier led to the recognition of impairment on as a global player in corporate real estate financing by combining long-term the full amount of the corresponding goodwill at December 31, 2018 (€13.2m). financing for real estate professionals with financing for developers; ❯ Crédit Foncier Immobilier will become a direct subsidiary of BPCE SA; 1.3.2 FIRST-TIME APPLICATION OF IFRS 9 ❯ the special expertise and the projects initiated by Crédit Foncier will continue in the Group's national networks; Groupe Crédit Foncier has applied IFRS 9 on financial instruments, which replaces IAS 39, since January 1, 2018. The options selected are described ❯ Crédit Foncier will refocus on managing its outstanding loans and on the below and the accounting principles in note 2.5. The main impacts of the funding of Public sector assets originated by the Group, through Compagnie first-time application of IFRS 9 on the balance sheet at January 1, 2018 are as de Financement Foncier. follows: On December 20, 2018, Crédit Foncier filed a delisting offer for the shares in its subsidiary Locindus. Subject to approval by the Autorité des Marchés CLASSIFICATION AND MEASUREMENT Financiers (AMF, French Financial Markets Authority), the delisting will be carried out in the first quarter of 2019. Most financial assets that were measured at amortised cost under IAS 39 continue to meet the conditions for measurement at amortised cost under At the end of the delisting offer period on February 22, 2019, the Group had IFRS 9. acquired the required 95% of shares and the AMF was informed of the decision to delist the shares. The main reclassifications are as follows: Human resources provisions are consistent with the aim of the project – the Structured loans granted to local authorities that were designated at fair value development of Crédit Foncier’s activities and the reorganisation of its through profit or loss under IAS 39 are now classified as non-SPPI (solely expertise in Groupe BPCE’s entities. Accordingly, employees whose positions payments of principal and interest) financial assets under IFRS 9, in “Assets at will become redundant (around 1,400 people) will primarily be transferred to fair value through profit or loss.” As these assets were previously measured at other Group entities, with financial arrangements in place to facilitate external fair value through profit or loss under IAS 39, this reclassification has no mobility where applicable. The employment protection plan agreement, which impact on the Group’s capital.

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Under IAS 39, securities held were either measured at amortised cost if they 1.3.4 CHANGE IN COST OF RISK were classified as loans and receivables or held-to-maturity financial assets, or at fair value if they were classified as available-for-sale assets. The The cost of risk amounted to -€60m in 2018, compared to -€81m in at classification depended mainly on the management strategy on initial December 31, 2017. This change notably reflects improvements in the credit recognition and the reclassification possibilities arising from the liquidity crisis risk of recent generations of loans and also includes non-recurring positive in 2008. Under IFRS 9, these securities portfolios are fully recognised at items for around +€7m. amortised cost due to their intrinsic characteristics and their business model. Investments in associates classified as available-for-sale financial assets under 1.3.5 IMPACT OF EARLY REPAYMENTS IAS 39 are measured at fair value through other comprehensive income not AND LOAN RENEGOTIATIONS recyclable to income under IFRS 9, with the minor exception of collective available-for-sale securities which are recorded at fair value through profit and Early repayments and loan renegotiations on home loans to individual loss. customers remained at a high level, but were down sharply in relation to 2017. The impact of the first-time application of IFRS 9 on opening equity related to The early repayment rate for individual customers fell from 14.8% for 2017 to classifications and valuations amounted to +€239m excluding tax impacts. 7.6% for 2018 (corresponding to €3.4bn in loan outstandings). The renegotiation rate stood at 3.2% for 2018, representing loan outstandings IMPAIRMENT of €1.4bn (compared with 5.5% and €2.5bn in 2017). The new method for measuring credit risk under IFRS 9 increases the amount The fixed-rate loan portfolio is fully hedged against interest rate risk and is of impairment on loans and securities measured at amortised cost or at fair therefore revalued in terms of the hedged interest rate risk via overall valuation value through other comprehensive income recyclable to income, and on adjustments. In accordance with IAS 39 (Groupe BPCE and therefore Crédit off-balance sheet commitments as well as on lease receivables, trade Foncier did not opt to apply phase 3 of IFRS 9 and continue to apply the receivables and contract assets. principles set out in IAS 39 for hedge accounting), these valuation adjustments There is now just one provisioning model, whereas IAS 39 allowed for different are regularly tested to justify keeping them on the balance sheet. models for: (i) instruments measured at amortised cost, (ii) debt instruments An impairment charge was recorded on these adjustments in previous years, measured as “Available-for-sale assets”, (iii) equity instruments measured as taking the reduction in valuation adjustments on macro-hedged assets to “Available-for-sale assets”, and (iv) instruments recognised at cost. This model €165.7m at December 31, 2017. applied in the same way to instruments measured at amortised cost and to debt instruments measured at fair value through other comprehensive income In 2018 this impairment was supplemented with an additional allocation of recyclable to income. However, under IFRS 9, equity instruments are no €149m, taking the total value adjustment to €315m as of this date. longer impaired since they are either measured at fair value through profit or loss or at fair value through other comprehensive income not recyclable to The net impact of the CFHL-1 and CFHL-2 securitisation transactions was income. -€8.6m for 2018. Under IAS 39, impairment on initial recognition was expressly prohibited. An asset or group of assets could be impaired only if: 1.3.6 BUYBACKS OF OBLIGATIONS FONCIÈRES

❯ there was objective evidence of impairment resulting from one or more events Crédit Foncier did not buy back any obligations foncières in 2018. having occurred since the initial recognition of the asset (i.e. loss events); and ❯ these loss events had an impact on the estimated cash flows of the financial 1.3.7 NON-CURRENT ASSETS HELD FOR SALE asset. On July 19, 2017, Crédit Foncier signed a Sale and Purchase agreement IFRS 9 now requires that entities recognise impairment at an earlier stage than setting out the terms of sale of its Portuguese subsidiary Banco Primus. under IAS 39, i.e. from the date of initial recognition of the financial instrument. Accordingly, application of the new IFRS 9 provisioning model leads to an The completion of the sale is subject to the approval of the Portuguese increase in the amount of impairment recorded on loans and securities carried supervisory authorities. The deadline was initially set at March 31, 2018, but at amortised cost or at fair value through other comprehensive income has been postponed to April 15, 2019. recyclable to income and on loan or guarantee commitments given (excluding those recognised at fair value through profit or loss) as well as on lease Pursuant to IFRS 5 “Non-current assets held for sale and discontinued receivables. operations”, Crédit Foncier: The impact of the first-time application of IFRS 9 on opening equity related to ❯ recognised consolidated assets in separate asset items for €442m and liability the implementation of the new impairment model was -€152m before tax, of items for €10m; which -€106m in impairment for expected credit losses (Stages 1 and 2) and ❯ made a value adjustment at the lowest of the assets’ carrying amount and -€46m for individual impairment (Stage 3). their fair value less costs relating to the sale. This fair value corresponds to the sale price and is unchanged against December 31, 2017. The total impact on opening equity therefore came to €87m before tax, with deferred tax assets and liabilities of -€45m, i.e. a positive impact net of tax of As indicated in point 1.3.1, as part of the integration of Crédit Foncier’s nearly €42m. operations into Groupe BPCE, the transfer of the consolidated subsidiaries SOCFIM and Crédit Foncier Immobilier, scheduled in 2019, also falls within the scope of IFRS 5. Accordingly: 1.3.3 MARKET PRICE VALUATION METHODS ❯ pursuant to IFRS 5, Crédit Foncier reclassified all the identifiable assets and The value of hedging instruments (swaps) is impacted by items that do not liabilities intended for sale into two separate balance sheet items, representing affect the fair value of the hedged financial assets and liabilities. Consequently, €1.4bn and €41m in assets for SOCFIM and Crédit Foncier Immobilier these items affect income and are listed below: respectively, and €553m and €19m in liabilities respectively; ❯ +€1m due to the impact of the “dual curve” method, compared to +€9.6m at ❯ Crédit Foncier has applied a conservative valuation on Crédit Foncier December 31, 2017; Immobilier’s assets, an impairment charge of €13.2m was thus recorded, ❯ +€15.2m due to the change in CVA/DVA on derivatives, compared to corresponding to its goodwill. -€36.5m at December 31, 2017. The total amount recorded in current assets and liabilities held for sale for the The change in CVA/DVA over the period was mainly due to the widening in two companies came to €1.9bn in assets and €0.6bn in liabilities. spreads on the covered bonds market.

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1.3.8 TAXES 1.4 POST-BALANCE SHEET EVENTS Taxes amounted to +€100m at December 31, 2018. No other event that is likely to have a material impact on the financial statements at December 31, 2018 occurred between the closing date and The deferred tax assets and liabilities recognised since December 31, 2017 February 11, 2019, the date of the Board of Directors’ meeting that examined take into account the tax rates approved in the 2018 French Finance Act, the financial statements. which gradually converge to 25.83%.

NOTE 2 APPLICABLE ACCOUNTING STANDARDS AND COMPARABILITY

❯ identification of specific performance obligations (or items) to be recognised 2.1 REGULATORY FRAMEWORK separately from one another; The consolidated financial statements of groupe Crédit Foncier were prepared ❯ determination of overall transaction price; under International Financial Reporting Standards (IFRS) as adopted by the European Union and applicable at that date, while maintaining certain ❯ allocation of transaction price to the various specific performance obligations; provisions of lAS 39 relating to hedge accounting. ❯ recognition of revenue when performance obligations are met. IFRS 15 applies to contracts entered into by an entity with its customers, with the exception of leases (covered by IAS 17), insurance contracts (covered by 2.2 ACCOUNTING STANDARDS IFRS 4) and financial instruments (covered by IFRS 9). If specific stipulations The standards and interpretations used and detailed in the annual financial relating to revenue or contract costs are given under a different standard, statements as at December 31, 2018 were complemented by standards, these will first be applied. amendments and interpretations whose application is mandatory for reporting periods starting from January 1, 2018. Work relating to the first-time application of IFRS 15 notably drew on self-assessments performed by the Company. This work helped identify the New IFRS 9 “Financial Instruments” was adopted by the European main items concerned, in particular: Commission on November 22, 2016 and is applicable retrospectively as of January 1, 2018. ❯ fee and commission income, notably that relating to banking services when this income is not included in the effective interest rate, or that relating to IFRS 9 replaces IAS 39 and defines the new rules for classifying and asset management or financial engineering services; measuring financial assets and liabilities, the new impairment methods for the ❯ income from other activities, in particular for services included in leases. credit risk of financial assets, and hedge accounting, except for macro-hedging, which the IASB is currently studying in a separate draft This work also confirmed that the Group is either only slightly or not affected standard. by certain issues relating to the first-time application of IFRS 15 such as real estate development, loyalty programs and telephony. Groupe BPCE used the option available in IFRS 9 not to apply the provisions of the standard relative to hedge accounting, and to continue to apply IAS 39 Based on the work performed, the Group did not recognise any material for the recognition of these transactions, as adopted by the European Union, impact related to application of IFRS 15, on either opening equity at January 1, i.e., excluding certain provisions relating to macro-hedging. In view of the 2018 or on income and expense items in fiscal 2018. limited volume of asset reclassifications, most transactions recognised using hedge accounting under IAS 39 continue to be disclosed in the same way Under the option available in IFRS 15, the Group elected not to restate from January 1, 2018. However, the information provided in the notes previous fiscal years published as comparative information for its financial observes the provisions of IFRS 7 as amended by IFRS 9. statements. Under the option available in IFRS 9, the Group elected not to restate previous The other standards, amendments and interpretations adopted by the fiscal years published as comparative information for its financial statements. European Union did not have a material impact on the Group’s financial statements. Groupe Crédit Foncier holds some fixed-rate loans with symmetrical prepayment clauses in its loan book. In an amendment to IFRS 9 published in October 2017, the IASB stated that negative prepayment compensation is not NEW STANDARDS PUBLISHED in itself incompatible with the notion of SPPI. The application of this AND NOT YET APPLICABLE amendment is mandatory as of January 1, 2019 and early application is possible. The “Prepayment Features with Negative Compensation” IFRS 16 amendment was adopted by the European Commission on March 22, 2018. IFRS 16 “Leases” will replace IAS 17 “Leases” and the interpretations related Groupe Crédit Foncier applied this amendment early, as of January 1, 2018. to the accounting of such contracts. The European Commission endorsed the standard on October 31, 2017 and it will apply from January 1, 2019. Regulation (EU) 2017/2395 dated December 12, 2017 relating to transitional arrangements for mitigating the impact of the introduction of IFRS 9 on capital As defined under IFRS 16, leases shall identify an asset and convey the right and for the large exposures treatment of certain public-sector exposures was to use this asset for a period of time. published in the OJ on December 27, 2017. Groupe BPCE has decided not to opt to neutralise IFRS 9 transitional impacts at the prudential level due to the From the lessor’s perspective, the impact is expected to be limited, as the limited impact when applying the standard. provisions will not change substantially in relation to the current standard. IFRS 15 “Revenue from contracts with customers” replaces the current IFRS 16 will primarily affect how the lessee recognises the lease. standards and interpretations related to the recognition of income. IFRS 15 was adopted by the European Union and published in the OJ on October 29, Under the current IAS 17, operating leases are not recognised on the balance 2016. It has been applicable retrospectively since January 1, 2018. The sheet, only the corresponding rental income is recorded in income. amendment entitled “Clarifications to IFRS 15”, published by the IASB on In contrast, for lessees, IFRS 16 requires that leases be recorded in the April 12, 2016, was adopted by the European Commission on October 31, balance sheet such that they convey the right to use the leased asset 2017 and is also applicable retrospectively as of January 1, 2018. presented among property, plant and equipment, and a lease liability. The Under this standard, recognition of revenue from ordinary activities now lease liability corresponds to the present value of lease payments that have not reflects the transfer of control of goods and services promised to customers in yet been paid, over the life of the contract. The Group has decided to opt for an amount corresponding to the consideration that the entity expects to the exception included in the standard of not modifying the accounting receive in exchange for these goods and services. IFRS 15 thus introduces a method for short-term leases (less than 12 months) or leases related to low new five-stage general approach for the recognition of income: value underlying assets. These leases will continue to be recognised as an expense for the period, with details provided in the notes. The right to use will ❯ identification of contracts with customers; be amortised on a straight-line basis while the lease liability will be calculated on an actuarial basis using the Group’s marginal borrowing rate.

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The expense on the lease liability will thus be included in interest income under The European Commission adopted this interpretation on October 23, 2018 net banking income and the amortisation expense on the right to use the asset and it will apply from January 1, 2019. The Group has begun to consider how will be recognised in operating expenses. it will identify and document uncertainties and fiscal risk, but it is not currently able to anticipate the impact. The Group began to analyse the impact of the application of this new standard following its publication by the IASB at the start of 2016. This work continued in 2018. Structural choices were made in terms of organisation and information systems during the 1st half of the year. In the 2nd half, work 2.3 USE OF ESTIMATES AND JUDGEMENTS focused on the operational implementation, which is currently being finalised Preparation of the financial statements requires Management to make ahead of the rollout planned in early 2019. estimates and assumptions in certain areas with regard to uncertain future Regarding groupe Crédit Foncier’s activities, the implementation of IFRS 16 events. will mainly affect real estate assets leased for operational purposes as offices These estimates are based on the judgement of the individuals preparing and sales branches. A material impact is therefore expected on “Property, these financial statements and the information available at the balance sheet plant and equipment” without modifying the relatively weak weighting of date. property, plant and equipment in total assets. Actual future results may differ from these estimates. For the first-time application of this standard, the Group has chosen the modified retrospective approach. This method involves assessing the amount With respect to the financial statements for the period ended December 31, of lease liabilities based on remaining lease payments using the present value 2018 in particular, accounting estimates requiring assumptions were mainly applicable to the remaining term of the contracts. The Group will apply the used for the following measurements: option not to recognise leases with a remaining term of less than 12 months on the balance sheet as of January 1, 2019. The right of use will be calculated ❯ the fair value of financial instruments determined on the basis of valuation using the amount of the lease liability determined on this date. Deferred tax models (note 9); assets and liabilities will be recognised separately. ❯ the amount of expected credit losses on financial instruments as well as on loan and guarantee commitments (note 6); IFRS 17 ❯ provisions recorded in the liabilities (note 5.15); IFRS 17 “Insurance Contracts” was published by the IASB on May 18, 2017 and will replace IFRS 4 “Insurance Contracts.” Subject to adoption by the ❯ provisions recorded under liabilities in the balance sheet and provisions for European Commission, this standard will be applicable as of January 1, 2021, insurance policies (note 8.2); with a comparison to January 1, 2020. ❯ deferred tax assets and liabilities (note 10.2); IFRS 17 establishes the principles of recognition, measurement, presentation ❯ goodwill impairment testing (note 3.4). and disclosure for the insurance contracts that fall within its scope. Judgement must also be exercised to assess the business model and whether Liabilities under these contracts, which are currently valued at historical cost, a financial instrument can be categorised as SPPI. The procedures are will be recognised at present value under IFRS 17. As such, insurance described in the relevant paragraphs (note 2.5.1). contracts will be valued based on their future cash flows, including a risk margin in order to factor in the uncertainty relating to these cash flows. IFRS 17 also introduces the concept of contractual service margin. This represents the insurer’s unearned profit and will be released over time as the 2.4 PRESENTATION OF THE CONSOLIDATED services are rendered to the insured. FINANCIAL STATEMENTS AND BALANCE The standard demands a more detailed level of granularity in calculations than SHEET DATE previously as it require estimates by groups of contracts. As no specific format is required under IFRS, the presentation used by the These accounting changes could modify the profile of insurance income (in Group for summarised statements follows Recommendation No. 2017-02 particular for life insurance) and also introduce greater volatility in income. issued by the Autorité des Normes Comptables (ANC – French National Accounting Standards Authority) on June 2, 2017. On November 14, 2018, the IASB decided to delay the implementation of IFRS 17 “Insurance Contracts” by one year to January 1, 2022. It also decided The consolidated financial statements are based on the financial statements at to defer the expiry of insurance companies’ temporary exemption from IFRS 9 December 31, 2018. The Group’s consolidated financial statements for the to January 1, 2022, to align it with the application of IFRS 17. period ended December 31, 2018 were approved by the Board of Directors on February 11, 2019. IFRIC 23 IAS 12 “Income taxes” gave no particular details on how to account for 2.5 GENERAL ACCOUNTING PRINCIPLES uncertainties in income taxes, and was clarified by IFRIC 23 “Uncertainty over Income Tax Treatments”, which was published in June 2017. This AND MEASUREMENT METHODS interpretation allows companies to take into consideration uncertainties about The general accounting principles set out below apply to the main items of the their tax position when calculating and recognising taxes payable and deferred financial statements. Specific accounting principles are presented in the notes taxes. to which they refer.

2.5.1 CLASSIFICATION AND MEASUREMENT OF FINANCIAL ASSETS IFRS 9 applies to groupe Crédit Foncier. On initial recognition, financial assets are classified at amortised cost, at fair value through other comprehensive income, or at fair value through profit or loss, according to the type of instrument (debt or equity), the characteristics of their contractual cash flows and how the entity manages its financial instruments (its business model).

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What type of ﬁnancial Debt instruments: loans and receivables, bonds Equity instruments asset is concerned?

What are Solely Payments Non-SPPI of Principal and Interest the characteristics (SPPI) Non-SPPI debt of its contractual SPPI debt instruments instruments cash ﬂows?

Collection of Collecte of Trading FVOCI What business model contractual contractual book irrevocable option is applied? cash flows cash flows without later + sale reclassification

Fair value through Its accounting other classification Amortised cost comprehensive Fair value through FVOCI without income (FVOCI) profit or loss (FVPL) later reclassification is therefore: with later reclassification

BUSINESS MODEL ❯ other disposals may also be compatible with the “hold to collect” model’s objectives if they are infrequent (even if their value is significant) or if their The entity’s business model represents the way in which it manages its value is insignificant when considered both individually and overall (even if financial assets to produce cash flow. Judgement must be exercised to they are frequent); assess the business model. ❯ a mixed business model under which assets are managed with the The choice of business model must take into account all information regarding objective of both receiving contractual cash flows and disposing of financial the manner in which cash flows were generated in the past, along with all assets (“hold to collect and sell model”); other relevant information. ❯ a model intended for other financial assets, especially those held for trading, For example: for which the collection of contractual cash flows is incidental.

❯ the way in which the performance of financial assets is assessed and For groupe Crédit Foncier, almost all assets are held in a “Hold to collect” presented to the main Company Directors; model: real estate financing (short or long term) for individuals and professionals and financing for local authorities using funded assets, ❯ risks which have an impact on the business model’s performance, in particular producing a margin that depends on the length of the loan and its credit risk. the way in which these risks are managed; ❯ the way in which Directors are paid (for example, if pay is based on the fair TYPES OF CONTRACTUAL CASH FLOWS: THE SPPI value of assets under management or on the contractual cash flows received); (SOLELY PAYMENTS OF PRINCIPAL AND INTEREST) TEST ❯ the frequency of, volume of and reason for sales. A financial asset is classified as generating solely payments of principal and Moreover, the choice of business model must be made at a level which interest if, on specific dates, it gives rise to cash flows that are solely payments reflects the way in which groups of financial assets are managed collectively of principal and interest on the outstanding amount due. The SPPI test should with a view to achieve a given economic objective. The business model is be performed for each financial asset on initial recognition. therefore not decided on an instrument by instrument basis, but rather at a The principal amount is defined as the financial asset’s fair value at its higher level of aggregation, by portfolio. acquisition date. Interest is the consideration for the time value of money and The standard provides for three business models: the credit risk incurred on the principal amount, as well as other risks such as liquidity risk, administrative costs and the profit margin. ❯ a business model whose objective is to hold financial assets in order to receive contractual cash flows (“hold to collect model”). This model, under which the concept of “holding” is relatively similar to holding to maturity, remains valid if disposals occur under the following conditions: ❯ the disposals are due to an increase in credit risk, ❯ the disposals occur just before maturity and at a price that reflects the contractual cash flows that are still owed,

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The instrument’s contractual terms must be taken into account to assess A debt instrument is valued at fair value through other comprehensive income whether contractual cash flows are solely payments of principal and interest. if it meets the following two conditions: All elements that may cast doubts as to whether only the time value of money and credit risk are represented must therefore be analysed. For example: ❯ the asset is held in a business model where the objective is both to collect contractual cash flows and to sell financial assets; and ❯ events that would change the amount and date of the cash flows. ❯ the contractual terms of the financial asset define it as SPPI within the Any contractual option that creates risk exposure or cash flow volatility that is meaning of the standard. not consistent with a basic lending arrangement, such as exposure to Equity instruments are, by default, recorded at fair value through profit or loss fluctuations in the price of stocks or of a market index, or the introduction of unless they qualify for an irrevocable option for valuation at fair value through leverage, would make it impossible to categorise contractual cash flows as other comprehensive income not recyclable to income (provided they are not SPPI; held for trading purposes and accordingly classified as financial assets at fair ❯ the applicable interest rate features (for example, consistency between the value through profit or loss), without subsequently being reclassified through rate refixing period and the interest calculation period). profit or loss. However, if opting for the latter category, dividends continue to be recognised in income. If a clear determination cannot be made through qualitative analysis, a quantitative analysis (a benchmark test) is carried out. This test involves All other financial assets are recorded at fair value through profit or loss. These comparing the contractual cash flows for the asset in question with the financial assets include financial assets held for trading purposes, financial contractual cash flows of a benchmark asset; assets at fair value through profit or loss and non-SPPI assets. Recognition at ❯ early repayment and extension conditions. fair value through profit or loss as an option for financial assets only applies in the case of the elimination or significant reduction of an accounting mismatch. For the borrower or lender, a contractual option permitting early repayment of This enables the elimination of accounting mismatches stemming from the financial instruments does not violate the SPPI test for contractual cash flows if application of different valuation rules to instruments managed under a single the early repayment amount mainly represents the unpaid amounts of principal strategy. and interest and, if applicable, a reasonable additional compensation for the early termination of the contract. Embedded derivatives are no longer recognised separately to their host contract when these are financial assets, such that the entire hybrid instrument If a clear determination cannot be made through qualitative analysis, a must be recognised at fair value through profit or loss when it does not meet quantitative analysis (a benchmark test) is carried out. This test involves the SPPI criteria. comparing the contractual cash flows for the asset in question with the contractual cash flows of a benchmark asset. For financial liabilities, the classification and measurement rules set out in IAS 39 are carried forward to IFRS 9 unchanged, with the exception of those Furthermore, although they do not strictly meet the criteria for compensation applicable to financial liabilities that the entity chooses to record at fair value of the time value of money, certain assets with a regulated rate are considered through profit or loss (fair value option), for which revaluation adjustments SPPI if this regulated interest rate provides consideration that corresponds related to changes in own credit risk are recorded under gains and losses substantially to the passage of time and presents no exposure to a risk that recognized directly in other comprehensive income, without being would be inconsistent with a basic lending arrangement. subsequently reclassified through profit or loss. Financial assets that generate SPPI are debt instruments such as fixed-rate The provisions of IAS 39 on the derecognition of financial assets and liabilities loans, variable-rate loans without an interest rate tenor mismatch or that are remain unchanged in IFRS 9. The amendment to IFRS 9 of October 12, 2017 not linked to a security or to a market index, and fixed-rate or variable-rate clarified the treatment under IFRS 9 of modifications of liabilities recognised at debt securities. amortised cost, if the modification does not result in derecognition: the profit or loss resulting from the difference between the original cash flows and the Non-SPPI financial assets include UCITS units, convertible bonds and modified cash flows discounted at the original effective interest rate must be mandatory convertible bonds with a fixed conversion ratio and structured recognised in profit or loss. loans to local authorities. To qualify as SPPI assets, the securities held in a securitisation vehicle must 2.5.2 FOREIGN CURRENCY TRANSACTIONS meet specific conditions. The contractual terms of the tranche must meet the SPPI criteria. The pool of underlying assets must meet the SPPI conditions. The method used to account for assets and liabilities relating to foreign The risk inherent in the tranche must be lower than or equal to the exposure to currency transactions entered into by the Group depends on whether the the underlying assets of the tranche. asset or liability in question is classified as a monetary or a non-monetary item. A non-recourse loan (e.g., infrastructure financing-type project financing) is a Monetary assets and liabilities denominated in foreign currencies are translated loan secured only by physical collateral. If there is no possible recourse to the into the functional currency of the Group entity on whose balance sheet they borrower, the structure of other possible recourses or protection mechanisms are recognised, at the exchange rate prevailing at the balance sheet date. All for the lender in the event of default must be examined in order to categorise resulting foreign exchange gains and losses are recognised in income, except these loans as SPPI assets: acquisition of the underlying asset, collateral in two cases: provided (security deposits, margin call, etc.), enhancements provided. ❯ only the portion of the foreign exchange gains or losses calculated based on the amortised cost of financial assets at fair value through other ACCOUNTING CATEGORIES comprehensive income is recognised in income, with any additional gains and Debt instruments (loans, receivables or debt securities) may be valued at losses being recognised in “Gains and losses recognised directly in other amortised cost, at fair value through other comprehensive income recyclable comprehensive income”; to income or at fair value through profit and loss. ❯ foreign exchange gains and losses arising on monetary items designated as A debt instrument is valued at amortised cost if it meets the following two cash flow hedges are recognised in “Gains and losses recognised directly in conditions: other comprehensive income”. Non-monetary assets carried at historical cost are translated using the ❯ the asset is held in a business model where the objective is to collect exchange rate prevailing at the transaction date. Non-monetary assets carried contractual cash flows; and at fair value are translated using the exchange rate in effect at the date on ❯ the contractual terms of the financial asset define it as SPPI within the which the fair value was determined. Foreign exchange gains and losses on meaning of the standard. non-monetary items are recognised in income if gains and losses relating to the items are recorded in income, and in “Gains and losses recognised directly in other comprehensive income” if gains and losses relating to the items are recorded in “Gains and losses recognised directly in other comprehensive income”.

2018 Registration document CRÉDIT FONCIER 139 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 CONSOLIDATION

Income and all components of other comprehensive income (gains or losses 3.1 SCOPE OF CONSOLIDATION – CONSOLIDATION recognised directly in other comprehensive income) are divided between the AND VALUATION METHODS Group and non-controlling interests. The comprehensive income of subsidiaries is divided between the Group and non-controlling interests, Groupe Crédit Foncier’s consolidated financial statements include the financial including when this division results in the allocation of a loss to non-controlling statements of all the entities over which it exercises control or significant interests. influence and whose consolidation has a material impact on the aforementioned financial statements. Changes to the percentage of interest in subsidiaries that do not lead to a change in control are recognised as transactions affecting equity. The scope of entities consolidated by groupe Crédit Foncier is described in note 12 “Scope of consolidation”. The effects of these transactions are recognised in other comprehensive income at their after-tax amount and therefore do not impact consolidated 3.1.1 ENTITIES CONTROLLED BY THE GROUP income attributable to equity holders of the parent. The subsidiaries controlled by groupe Crédit Foncier are fully consolidated. EXCLUSION FROM THE SCOPE OF CONSOLIDATION Non-material controlled entities are excluded from the scope in accordance DEFINITION OF CONTROL with the principle set out in note 12.3. Control exists when the Group has the power to govern an entity’s relevant Employee pension funds and supplementary health insurance plans are activities, when it is exposed to or is entitled to variable returns due to its links excluded from the scope of consolidation insofar as IFRS 10 does not apply to with the entity and has the ability to exercise its power over the entity to either post-employment benefit funds or other long-term employee benefit influence the amount of returns it obtains. plans to which IAS 19, “Employee Benefits”, applies. The existence and effect of potential voting rights that are currently exercisable Likewise, interests acquired with a view to their subsequent short-term or convertible are considered when assessing the control exercised. These disposal are recorded as available for sale and recognised in accordance with potential voting rights may result, for example, from call options for shares the provisions of IFRS 5 “Non-current assets held for sale and discontinued traded on the market, debt or equity instruments that are convertible into operations”. ordinary shares, or equity warrants attached to other financial instruments. However, potential voting rights are not taken into account to calculate the percentage of ownership. 3.1.2 INVESTMENTS IN ASSOCIATES AND JOINT Exclusive control is presumed to exist when the Group directly or indirectly VENTURES holds either the majority of the subsidiary’s voting rights, or at least half of an entity’s voting rights and a majority within the management bodies, or is in a DEFINITIONS position to exercise significant influence. An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in an entity’s financial and SPECIFIC CASE OF STRUCTURED ENTITIES operating policy decisions, without exercising control or joint control over those policies. It is presumed to exist if the Group holds, directly or indirectly, Entities described as structured entities are those organised in such a way that 20% or more of an entity’s voting rights. voting rights are not a key criterion when determining who has control. This is the case in particular when voting rights only apply to administrative duties and A joint venture is a partnership in which the parties which exercise joint control relevant activities are managed through contractual agreements. over the entity have rights over its net assets. A structured entity frequently exhibits some or all of the following Joint control is the contractually agreed sharing of control over a company characteristics: which exists only when the strategic decisions require the unanimous consent of the parties sharing control. (a) well-defined activities; (b) a specific and well-defined aim, for example: implementing a tax-efficient EQUITY METHOD lease, carrying out research and development, providing an entity with a Income, assets and liabilities of investments in associates and joint ventures source of capital or funding, or providing investors with investment options are accounted for in the Group’s consolidated financial statements using the by transferring associated risk and advantages to the structured entity’s equity method. assets; (c) insufficient equity for the structured entity to finance its activities without An investment in an associate or a joint venture is initially recognised at its subordinated financial support; acquisition cost and subsequently adjusted for the Group share in the income and other comprehensive income of the associate or joint venture. (d) financing through the issue, to investors, of multiple instruments inter-related by contract and which create concentrations of credit risk or The equity method is applied from the date on which the entity becomes an other credit (“tranches”). associate or a joint venture. On the acquisition of an associate or a joint venture, the difference between the cost of investment and the Group’s share The Group therefore uses, among others, collective investment vehicles within in the net fair value of the entity’s identifiable assets and liabilities is recognised the meaning of the French Monetary and Financial Code and equivalent in goodwill. When the net fair value of the entity’s identifiable assets and bodies governed by foreign law as structured entities. liabilities is higher than the cost of investment, the difference is recognised in income. FULL CONSOLIDATION METHOD The share of net income of entities accounted for under the equity method is The full consolidation of a subsidiary in the Group’s consolidated financial included in the Group’s consolidated income. statements begins at the date on which the Group takes control and ends on the day on which the Group loses control of this entity. When a Group entity carries out a transaction with a Group joint venture or associate, the profit and loss resulting from this transaction is recognised in The portion of interest which is not directly or indirectly attributable to the interests held by third parties in the associate or joint venture. Group corresponds to a non-controlling interest.

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The net investment in an associate or joint venture is subject to impairment 3.2.2 ELIMINATION OF INTRAGROUP testing if there is objective evidence of impairment arising from one or more TRANSACTIONS events occurring after the initial recognition of the net investment and if the events have an impact on estimated cash flows, provided this impact can be The impact of intercompany transactions on the consolidated balance sheet reliably calculated. In such cases, the total carrying amount of the investment and consolidated income statement is eliminated. Dividends, as well as gains (including goodwill) is subject to impairment testing according to the provisions and losses on intercompany asset disposals, are also eliminated. Where of IAS 36 “Impairment of Assets”. appropriate, capital losses from internal asset disposals resulting in impairment are maintained. EXCEPTION TO THE EQUITY METHOD When the investment is held by a venture capital organisation, an investment 3.2.3 BUSINESS COMBINATIONS fund, an investment company with variable share capital or a similar entity such as an insurance asset investment fund, the investor may choose not to In accordance with revised IFRS 3 and IAS 27: recognise the investment using the equity method. In this case, revised IAS 28 ❯ combinations between mutual insurers are now included within the scope of “Investments in Associates and Joint Ventures” authorises the investor to IFRS 3; recognise the investment at its fair value (with changes in fair value recognised in income) in accordance with IFRS 9. ❯ costs directly linked to business combinations are now recognised in net income for the period; These investments are therefore recognised as “Financial assets at fair value through profit or loss”. ❯ contingent considerations payable are now included in the acquisition cost at their fair value at the date of acquisition of a controlling interest in an entity, This exception does not apply to groupe Crédit Foncier. even if they are only potential. Depending on the settlement method, transferred considerations are recognised against: 3.1.3 INVESTMENTS IN JOINT ACTIVITIES ❯ equity and later price revisions will not be booked, DEFINITION ❯ or liabilities and later adjustments are recognised against income (financial liabilities) or according to the appropriate standards (other liabilities outside A joint activity is a partnership where parties that have joint control over an the scope of IFRS 9); entity have direct rights over the entity’s assets, and obligations in respect of its liabilities. ❯ on an entity’s acquisition date, non-controlling interests may be valued: ❯ either at fair value (method resulting in the allocation of a share of the Groupe Crédit Foncier does not hold this type of investment. goodwill to non-controlling interests), ❯ or at the share in the fair value of the identifiable assets and liabilities of the entity acquired (method similar to that applicable to transactions prior to 3.2 CONSOLIDATION RULES December 31, 2009). The consolidated financial statements are prepared using uniform accounting The choice between these two methods must be made for each business policies for reporting similar transactions in comparable circumstances. Where combination. material, consolidation adjustments are made to ensure the consistency of the valuation methods applied by consolidated entities. Whatever method chosen when the acquisition is made, increases in the percentage interest in an entity already controlled are systematically recognised in capital: 3.2.1 FOREIGN CURRENCY TRANSLATION ❯ when an entity is acquired, any share previously held by the Group must be The consolidated financial statements are expressed in euros. revalued at fair value through profit or loss. Consequently, in the event of a step acquisition, the goodwill is determined by referring to the fair value at the Balance sheet items of foreign subsidiaries and branches whose functional acquisition date; currency is not the euro are translated using the exchange rate in force at the balance sheet date. Income and expense items are translated at the average ❯ when the Group loses control of a consolidated company, any share exchange rate for the period, which is the approximate value of the transaction previously held by the Group must be revalued at fair value through profit or price if there are no significant fluctuations. loss. Foreign exchange rate adjustments arise from a difference in: All business combinations made prior to the review of IFRS 3 and IAS 27 are accounted for by applying the purchase method, except business ❯ net income for the period translated at the average rate and at the closing combinations involving two or more mutual insurers or entities under joint rate; control, as these transactions were explicitly excluded from the scope of ❯ equity (excluding net income for the period) translated at the historic exchange application. rate and at the year-end rate. The portion attributable to equity holders of the parent is recorded in equity 3.2.4 CONSOLIDATED ENTITIES’ BALANCE SHEET under “Foreign exchange rate adjustments” and the portion attributable to DATE minority shareholders under “Non-controlling interests”. The entities included in the scope of consolidation close their accounts on December 31.

2018 Registration document CRÉDIT FONCIER 141 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

reclassified all the identifiable assets and liabilities intended for sale into two 3.3 CHANGES IN SCOPE OF CONSOLIDATION separate balance sheet items. DURING FISCAL YEAR 2018 The following changes affected Groupe Crédit Foncier’s scope of BANCO PRIMUS consolidation in 2018: On July 19, 2017, Crédit Foncier signed a sale and purchase agreement setting out the terms of sale of its Portuguese subsidiary Banco Primus. ECUFONCIER The completion of the sale is subject to the approval of the Portuguese st The subsidiary Ecufoncier was sold to BPCE in the 1 half of 2018. supervisory authorities. The deadline for this approval was initially set at March 31, 2018, but has been postponed to April 15, 2019. SUBSIDIARIES OWNED BY LOCINDUS The subsidiaries Scribe Bail Logis and Scribeuro were subject to a full transfer OTHER COMPANIES st of assets to the subsidiary Locindus in the 1 half of 2018. As part of the integration of Crédit Foncier’s operations into Groupe BPCE, the transfer of the consolidated subsidiaries SOCFIM and Crédit Foncier COMPANIES HELD FOR SALE (IFRS 5) Immobilier, scheduled in 2019, also falls within the scope of IFRS 5. Due to the very advanced nature of disposal agreements regarding several consolidated subsidiaries, in accordance with IFRS 5, Crédit Foncier

3.4 GOODWILL This item comprises unallocated goodwill. Goodwill arising from transactions carried out during the year is detailed in note 12 “Scope of consolidation”.

(in €m) 12/31/2018 12/31/2017 Crédit Foncier Immobilier 13 TOTAL GOODWILL 0 13

(in €m) 12/31/2018 12/31/2017 Opening net value 13 13 Acquisitions Disposals Impairment -13 Foreign exchange rate adjustments Other changes Closing net value 0 13

IMPAIRMENT TESTS Goodwill totalling €13.2m at December 31, 2018 concerned only the subsidiary Crédit Foncier Immobilier. In accordance with applicable regulations, each goodwill item was tested for impairment based on the value in use of the Cash Generating Units (CGUs) to In view of this, for reasons of prudence, Crédit Foncier recorded a full provision which it is linked. for goodwill on its subsidiary Crédit Foncier Immobilier, in the amount of €13.2m. The value in use of CGUs is the result of a multi-criteria approach primarily relying on the discounted cash flow method based on medium-term plans drawn up for Group strategic planning purposes.

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NOTE 4 NOTES TO THE INCOME STATEMENT

HIGHLIGHTS securities at amortised cost, debt securities and subordinated debt. This item also includes interest receivable on fixed-income securities classified as Net Banking Income (NBI) includes: financial assets at fair value through other comprehensive income and hedging derivatives, it being specified that accrued interest on cash flow hedging ❯ interest income and expenses; derivatives is taken to income in the same manner and period as the accrued ❯ fees and commissions; interest on the hedged item. ❯ net gains or losses on financial instruments at fair value through profit or loss; Interest income also consists of interest on non-SPPI debt instruments not held under a trading model as well as interest on the related economic hedges ❯ net gains or losses on financial instruments at fair value through other (classified by default as instruments at fair value through profit or loss). comprehensive income; ❯ net gains or losses resulting from the derecognition of financial assets at The effective interest rate is the rate that exactly discounts estimated future amortised cost; cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or financial liability. ❯ net income from insurance activities; The effective interest rate calculation takes account of all transaction fees paid ❯ income and expenses from other activities. or received as well as premiums and discounts. Transaction fees paid or received that are an integral part of the effective interest rate of the contract, such as loan set-up fees and commissions paid to financial partners, are 4.1 INTEREST AND SIMILAR INCOME treated as additional interest. AND EXPENSES The Group has chosen the following option to account for negative interest: ACCOUNTING PRINCIPLES ❯ when income from a financial asset debt instrument is negative, it is deducted Interest income and expenses are recognised in the income statement for all from interest income in the income statement; financial instruments measured at amortised cost using the effective interest ❯ when income on a financial liability debt instrument is positive, it is deducted method, which include interbank and customer items, the portfolio of from interest expenses in the income statement.

FY 2018 (in €m) Interest income Interest expenses Net Loans or receivables due from credit institutions 41 41 Loans or receivables due from customers 2,004 2,004 Debt securities 540 540 Total financial assets at amortised cost (excluding finance leases) 2,585 2,585 Finance leases 19 19 Non-SPPI financial assets not held for trading 40 40 Amounts due to credit institutions -86 -86 Amounts due to customers -305 -305 Debt securities and subordinated debt -1,618 -1,618 Total financial liabilities at amortised cost -2,009 -2,009 Financial liabilities designated at fair value through profit or loss Hedging derivatives 1,197 -1,425 -228 Economic hedging derivatives 45 -78 -33 TOTAL INTEREST INCOME AND EXPENSES 3,886 -3,512 374

FY 2017 (in €m) Income Expense Net Loans and receivables due from customers 2,525 -457 2,068 Loans and receivables due from credit institutions 74 -174 -100 Finance leases 18 18 Debt securities and subordinated debt -1,528 -1,528 Hedging derivatives 1,219 -1,379 -160 Available-for-sale financial assets 43 43 Held-to-maturity financial assets Other interest income and expenses -19 -19 TOTAL INTEREST INCOME AND EXPENSES 3,879 -3,557 322

2018 Registration document CRÉDIT FONCIER 143 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

FY 2018 (in €m) Interest income Interest expense Net Total financial assets at amortised cost including finance leases 2,604 -2,009 595 o/w financial assets at amortised cost with a known credit risk 88 88 Total financial assets at fair value through other comprehensive income 0 0 0 o/w standard financial assets at fair value through other comprehensive income with a known credit risk

❯ commissions payable on occasional services are recognised in full in income 4.2 FEE AND COMMISSION INCOME when the service is provided (fund transfers, payment incident penalties, etc.); AND EXPENSES ❯ commissions payable on execution of a significant transaction are recognised ACCOUNTING PRINCIPLES in full in income on completion of the transaction. Fees and commissions are recorded based on the type of service rendered When there is some uncertainty about the amount of a commission (incentive and on the method of accounting for the financial instrument to which the fee in asset management, variable financial engineering commission, etc.), only service relates. the amount that the Group is already certain to receive, given the information available at the end of the fiscal year, is recognised. This line includes mainly fees and commissions receivable or payable on recurring services (payment processing, custody fees, etc.) and occasional Fees and commissions that form an integral part of the effective yield on an services (fund transfers, payment penalties, etc.), fees and commissions instrument, such as fees on loan commitments given or loan set-up fees, are receivable or payable on execution of significant transactions, and fees and recognised and amortised as an adjustment to the effective interest rate over commissions receivable or payable on trust assets managed on behalf of the the estimated term of the applicable loan. These fees and commissions are Group’s customers. recognised as “Interest income” rather than “Fee and commission income”.

However, fees and commissions that form an integral part of the effective yield Fiduciary and similar fees and commissions are those that result in assets on a contract are recorded as net interest income. being held or invested on behalf of individual customers, pension schemes or other institutions. Trust management services mainly cover the asset management business and custody services on behalf of third parties. COMMISSIONS ON SERVICES Commissions on services are analysed to separately identify their different items (or performance obligations) and to assign the appropriate share of revenues to each item. Each item is then recorded in the income statement by type of service provided, and according to the method used to recognise the associated financial instrument:

❯ commissions payable on recurring services are deferred over the period in which the service is provided (payment processing, securities deposit fees, etc.);

FY 2018 FY 2017 (in €m) Income Expense Net Income Expense Net Cash and interbank transactions 1 -6 -5 -30 -30 Customer transactions 76 -1 75 138 138 Financial services 9 -7 2 11 -18 -7 Sales of life insurance products 112 112 115 115 Payment services 1 1 1 1 Securities transactions -1 -1 1 -2 -1 Trust management services 6 6 7 7 Financial instruments and off-balance sheet transactions 7 -1 6 6 -5 1 Other fee and commission income/(expense) 1 -1 2 -1 1 TOTAL FEE AND COMMISSION INCOME AND EXPENSES 213 -17 196 281 -56 225

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“Gains and losses on hedging transactions” include gains and losses arising 4.3 NET GAINS OR LOSSES ON FINANCIAL from the revaluation of derivatives used as fair value hedges, as well as gains INSTRUMENTS AT FAIR VALUE THROUGH and losses from the revaluation of the hedged item in the same manner, the revaluation at fair value of the macro-hedged portfolio and the ineffective PROFIT OR LOSS portion of cash flow hedges. ACCOUNTING PRINCIPLES This item includes gains and losses (including the related interest) on financial assets and liabilities classified as held for trading or designated at fair value through profit or loss.

(in €m) FY 2018 Gains and losses on financial instruments mandatorily recognised at fair value through profit or loss * 25 Gains and losses on financial instruments designated at fair value through profit or loss -16 Gains and losses on hedging transactions -139 ❯ Ineffective portion of Fair Value Hedges (FVH) -139 Changes in fair value of fair value hedges 72 Changes in fair value of hedged items -211 TOTAL NET GAINS OR LOSSES ON FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS -130 * including foreign exchange economic hedging.

In 2018 this item was impacted by the following: -€149m - the impact of early repayments on hedging relationships: €15.2m - CVA/DVA impact: - impact of external securitisations: -€7m

(in €m) FY 2017 Gains and losses on financial instruments held for trading 115 Gains and losses on financial instruments designated at fair value through profit or loss -79 Gains and losses on hedging transactions -146 ❯ Ineffective portion of fair value hedges -146 Fair value adjustment on hedging instruments 401 Fair value adjustment on hedged items attributable to the hedged risks -547 TOTAL NET GAINS OR LOSSES ON FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS -110

FY 2018 Amounts recognised Amounts in other recognised in net comprehensive (in €m) income income Gains and losses on financial assets designated at fair value through profit or loss Gains and losses on financial liabilities designated at fair value through profit or loss -16 16 TOTAL NET GAINS AND LOSSES ON FINANCIAL INSTRUMENTS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS -16 16

2018 Registration document CRÉDIT FONCIER 145 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

Gains and losses on SPPI debt instruments managed under a hold to collect 4.4 NET GAINS OR LOSSES ON FINANCIAL and sell business model at fair value through other comprehensive income INSTRUMENTS AT FAIR VALUE THROUGH recyclable to income include: OTHER COMPREHENSIVE INCOME ❯ income and expenses recognised in net interest income; ACCOUNTING PRINCIPLES ❯ net gains or losses on debt financial assets at fair value through other Financial assets at fair value through other comprehensive income include: comprehensive income; ❯ impairment recognised in cost of risk; ❯ SPPI debt instruments managed under a hold to collect and sell business model at fair value through other comprehensive income recyclable to income. ❯ gains and losses recorded directly in other comprehensive income. If they are sold, changes in fair value are taken to income; ❯ equity instruments at fair value through other comprehensive income not recyclable to income. In the event of disposal, changes in fair value are not transferred to income but are taken directly to retained earnings. Only dividends affect income when they correspond to a return on investment.

❯ SPPI debt instruments managed under a hold to collect and sell business model at fair value through other comprehensive income recyclable to income FY 2018 Amount reclassified from Amount other recognised in comprehensive other income to net Amount comprehensive income on recognised in income over the derecognition (in €m) income period during the period Interest income and expenses and similar Net gains or losses on debt financial assets at fair value through other comprehensive income Cost of credit risk Gains and losses recognised directly in other comprehensive income TOTAL GAINS AND LOSSES ON FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME RECYCLABLE TO INCOME

❯ Equity instruments at fair value through other comprehensive income not recyclable to income

FY 2018 Amount recognised in Amount Amounts other reclassified as recognised comprehensive retained earnings in income income over the on derecognition (in €m) (dividends) period during the period Dividends 24 Gains and losses recognised directly in other comprehensive income -8 16 TOTAL GAINS AND LOSSES ON FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME NOT RECYCLABLE TO INCOME 24 -8 16

The sum of the amount recognised in other comprehensive income over the period and the amount reclassified as retained earnings on derecognition during the period corresponds to the line “Revaluation of equity financial assets recognised at fair value through other comprehensive income” in other comprehensive income.

(in €m) FY 2017 Gains or losses on disposal 5 Dividends received 11 Losses on disposals of securities -6 TOTAL GAINS OR LOSSES ON AVAILABLE-FOR-SALE FINANCIAL ASSETS 10

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4.5 NET GAINS OR LOSSES ON FINANCIAL INSTRUMENTS AT AMORTISED COST ACCOUNTING PRINCIPLES This item includes net gains or losses on financial instruments at amortised cost arising from the derecognition of financial assets at amortised cost (loans and receivables, debt securities) and financial liabilities at amortised cost.

FY 2018 (in €m) Gains Losses Net Loans or receivables due from credit institutions 1 1 Loans or receivables due from customers Debt securities TOTAL GAINS AND LOSSES ON FINANCIAL ASSETS AT AMORTISED COST 1 0 1 TOTAL GAINS AND LOSSES ON FINANCIAL LIABILITIES AT AMORTISED COST 0 0 0

4.6 INCOME AND EXPENSES FROM OTHER ACTIVITIES ACCOUNTING PRINCIPLES ❯ income and expenses on operating leases; Income and expenses from other activities mainly include: ❯ income and expenses on real estate development activities (revenues, purchases used). ❯ income and expenses on investment property (rental income and expense, gains and losses on disposals, depreciation, amortisation and impairment);

FY 2018 (in €m) Income Expense Net Income and expenses from real estate activities 3 -1 2 Income and expenses from leasing activities 5 -5 0 Income and expenses from investment property 5 5 Share of joint ventures 3 3 Transfers of expenses and income Other operating income and expenses 57 -16 41 Additions to and reversals from provisions to other operating income and expenses -1 -1 Other banking income and expenses 60 -17 43 TOTAL INCOME AND EXPENSES FROM OTHER ACTIVITIES 73 -23 50

Income and expenses from insurance activities are recorded in a separate item in 2018.

FY 2017 (in €m) Income Expense Net Income and expenses from insurance activities 92 -36 56 Income and expenses from leasing activities 7 -4 3 Income and expenses from investment property 5 -1 4 Share of joint ventures 1 1 Transfers of expenses and income 1 1 Other operating income and expenses 45 -16 29 Additions to and reversals from provisions to other operating income and expenses 14 14 Other banking income and expenses 47 -2 45 TOTAL INCOME AND EXPENSES FROM OTHER ACTIVITIES 151 -43 108

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Directive 2014/59/EU (BRRD – Bank Recovery and Resolution Directive), 4.7 OPERATING EXPENSES which establishes the framework for the recovery and resolution of banks and ACCOUNTING PRINCIPLES investment firms, and European Regulation 806/2014 (SRM Regulation), established the introduction of a resolution fund as of 2015. In 2016, this fund Operating expenses include mainly payroll costs (wages and salaries net of became a Single Resolution Fund (SRF) between the member states rebilled amounts), social security charges, and employee benefit expenses participating in the Single Supervisory Mechanism (SSM). The SRF is a such as pension costs. Operating expenses also include the full amount of resolution financing mechanism available to the resolution authority (Single administrative expenses and external services costs. Resolution Board), which may use this fund when implementing resolution procedures. CONTRIBUTIONS TO BANKING RESOLUTION In accordance with delegated Regulation 2015/63 and implementing MECHANISMS Regulation 2015/81 supplementing the BRRD directive on ex-ante The procedure for financing the deposit and resolution guarantee fund was contributions to financing mechanisms for the resolution, the Single Resolution changed by a Ministerial Order dated October 27, 2015. Board set the level of contributions to the Single Resolution Fund for 2018. The amount of contributions paid by the Group for the fiscal year totalled In 2016, the Autorité de Contrôle Prudentiel et de Résolution (ACPR – French €29m, of which €25m recognised as an expense and €4m in cash security prudential supervisory and resolution authority), in decision No. 2016-C-51 deposits recognised as an asset on the balance sheet (15% of funds in cash dated October 10, 2016, approved a method for calculating contributions to security deposits). The cumulative amount of contributions recognised on the deposit guarantee mechanisms that takes into account contributions made in assets side of the balance sheet totalled €17m at December 31, 2018. previous years. The total amount of contributions made to the fund for deposit, collateral and securities guarantee mechanisms in the form of refundable deposits, partner or association certificates totalled €0.3m.

(in €m) FY 2018 FY 2017 Payroll costs (1) -456 -254 Taxes and regulatory contributions (2) -49 -53 External services and other operating expenses -249 -158 Other administrative costs -298 -211 TOTAL OPERATING EXPENSES -754 -465 (1) Including a restructuring provision of €234,3m for the integration of Crédit Foncier activities into Groupe BPCE (see note 1.3.1). (2) Taxes and regulatory contributions included, in particular, the contribution to the SRF (Single Resolution Fund) for an annual amount of €25.1m (versus €23.5m in 2017) and the systemic risk tax on banks for an annual amount of €4.3m (versus €7m in 2017).

The breakdown of payroll costs is provided in note 8.1.

4.8 GAINS OR LOSSES ON OTHER ASSETS ACCOUNTING PRINCIPLES This item includes gains and losses on disposals of property, plant and equipment and intangible assets, as well as gains and losses on disposals of consolidated investments in associates.

(in €m) FY 2018 FY 2017 Gains or losses on disposals of property, plant and equipment and intangible assets used in operations 1 2 Gains or losses on disposals of consolidated investments -2 -23 TOTAL GAINS OR LOSSES ON OTHER ASSETS -1 -21

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The Group has taken out new policies to limit the longevity risk in case it differs 4.9 NET INCOME FROM INSURANCE ACTIVITIES from the original assumptions. ACCOUNTING PRINCIPLES The residual risk after reinsurance is recognised in the financial statements in Groupe Crédit Foncier sells reverse mortgage loans as defined in Article the form of a provision charged against outstanding reverse mortgage loans L. 314-1 of the French Consumer Code. These capitalised-interest loans are and booked as “Insurance business investments”. repayable on the death of the borrower, either by transfer of the property pledged as collateral in the amount of outstanding capital, capped at the value Interest income relating to these loans is recorded in “Revenues” and of the property, or by cash reimbursement of the capitalised debt. provisions and losses net of reversals are recognised in “Claims and benefits expenses”. In this respect, they correspond to the definition of contracts that incur insurance risk under IFRS 4. The recognition of this insurance income, in accordance with IFRS 4, also gave rise to an assessment of the adequacy of insurance liabilities. The From the lender’s point of view, these insurance contracts present the provisions were deemed adequate at the date of the assessment. following risks:

❯ risk of a longer life span than the estimated life expectancy of the contract’s beneficiary (“Longevity risk”); ❯ risk of a change in the value of the property (“Property risk”).

FY 2018 (in €m) Income Expense Net Earned premiums Revenues and other income from insurance activities 68 68 Amortisation of acquisition costs Claims and benefits expenses -22 -22 NET INCOME FROM INSURANCE ACTIVITIES 68 -22 46

NOTE 5 NOTES TO THE BALANCE SHEET 5.1 CASH AND AMOUNTS DUE FROM CENTRAL BANKS ACCOUNTING PRINCIPLES This item mainly includes cash and assets held with the central bank at amortised cost.

(in €m) 12/31/2018 01/01/2018 Cash Amount due from central banks 706 670 TOTAL CASH AND AMOUNTS DUE FROM CENTRAL BANKS 706 670

5.2 FINANCIAL ASSETS AND LIABILITIES AT FAIR 5.2.1 FINANCIAL ASSETS AT FAIR VALUE THROUGH VALUE THROUGH PROFIT OR LOSS PROFIT OR LOSS ACCOUNTING PRINCIPLES ACCOUNTING PRINCIPLES Financial assets and liabilities at fair value through profit or loss comprise Financial assets at fair value through profit or loss are: instruments held for trading, including derivatives, certain assets and liabilities ❯ financial assets held for trading, i.e. securities acquired or issued principally for that the Group chose to recognise at fair value at their date of acquisition or the purpose of selling them in the near term; issue using the fair value option available under IFRS 9, and non-SPPI assets. ❯ financial assets that the Group has chosen to recognise at fair value through profit or loss at inception using the fair value option available under IFRS 9. DATE OF RECOGNITION The qualifying criteria used when applying this option are described above; Securities are recorded in the balance sheet on the settlement/delivery date. ❯ non-SPPI debt instruments; Securities financing transactions are also recorded on the settlement/delivery ❯ equity instruments measured by default at fair value through profit or loss date. (instruments not held for trading purposes). When such transactions are recorded under “Assets and liabilities at fair value These assets are measured at fair value at the date of initial recognition and at through profit or loss”, the commitment is recorded as an interest rate each balance sheet date. Changes in fair value over the period, interest, derivative. dividends, and gains or losses on disposals on these instruments are recognised in “Net gains or losses on financial instruments at fair value through The First-In, First-Out (FIFO) method is applied to any partial disposals of profit or loss”, with the exception of non-SPPI debt financial assets whose securities, except in special cases. interest is recorded in “Interest income”. Financial assets in the trading book mainly include proprietary securities transactions, repurchase agreements and derivative instruments contracted by the group to manage its risk exposure.

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ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT This option may only be applied to eliminate or significantly reduce an OR LOSS accounting mismatch. Applying the option enables the elimination of accounting mismatches stemming from the application of different valuation IFRS 9 allows entities to designate financial assets at fair value through profit rules to instruments managed in accordance with a single strategy. or loss on initial recognition. However, an entity’s decision to do so may not be reversed. Compliance with the criteria stipulated by the standard must be verified prior to any recognition of an instrument using the fair value option.

12/31/2018 01/01/2018 Financial assets mandatorily at Financial assets mandatorily at fair value through profit or loss fair value through profit or loss Other financial assets Other financial Financial mandatorily assets assets recognised at Financial mandatorily at designated Financial fair value assets Financial fair value at fair value assets held through profit designated at assets held for through profit through (in €m) for trading or loss (1) fair value Total trading or loss profit or loss Total Bonds and other debt securities 23 23 3 20 23 Debt securities 23 23 3 20 23 Loans to customers excluding repurchase agreements 1,223 1,223 1,382 1,382 Loans 1,223 1,223 1,382 1,382 Equity instruments 31 31 32 32 Trading derivatives (2) 342 342 453 453 TOTAL FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 342 1,277 1,619 456 1,434 1,890 (1) Including non-SPPI assets that are not held for trading, including fund units. (2) This information is presented in consideration of netting effects, in accordance with IAS 32 (See note 5.20).

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FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS AND CREDIT RISK Exposure to credit risk can represent a significant share of the fair value of loans and receivables designated at fair value through profit or loss shown on the balance sheet. When protection is purchased on the implementation of such loans, the fair value of the related credit derivatives is shown.

12/31/2018 01/01/2018 Financial assets Financial assets designated at fair Related credit designated at fair Related credit value derivatives value derivatives Change in fair value Change in fair value attributable to credit Change in fair value attributable to credit Change in fair value of risk on the financial of related credit risk on the financial related credit asset derivatives asset derivatives Fair value Fair value Maximum of related Change Change Maximum of related Change Change credit risk credit over the over the credit risk credit over the over the (in €m) exposure derivatives Total period Total period exposure derivatives Total period Total period Loans to customers excluding repurchase agreements Repurchase agreements TOTAL

At December 31, 2018, the Group had not purchased protection to hedge against credit risk associated with loans and receivables designated at fair value through profit or loss at December 31, 2018 or December 31, 2017.

5.2.2 FINANCIAL LIABILITIES AT FAIR VALUE In practice, this option may be applied only under the specific circumstances THROUGH PROFIT OR LOSS described below: ❯ Elimination of or significant reduction in an accounting mismatch ACCOUNTING PRINCIPLES Applying the option enables the elimination of accounting mismatches These are financial liabilities held for trading or classified in this category on a stemming from the application of different valuation rules to instruments voluntary basis at initial recognition using the fair value option available under managed in accordance with a single strategy; IFRS 9. The trading book includes liabilities arising from short-selling transactions, repurchase agreements and derivative instruments. The ❯ Harmonisation of accounting treatment for performance management qualifying criteria used when applying this option are described above. and measurement These liabilities are measured at fair value at the date of initial recognition and The option applies for liabilities managed and measured at fair value, provided at each balance sheet date. that such management is based on a formally documented risk management policy or investment strategy, and that internal monitoring also relies on a fair Fair-value fluctuations over the period, interest, and gains or losses related to value measurement; these instruments are booked as “Net gains or losses on financial instruments Hybrid financial instruments containing one or more embedded at fair value through profit or loss”, except for fair value fluctuations attributable ❯ derivatives to the change in own credit risk for financial liabilities at fair value through profit or loss, which have been booked, since January 1, 2016, in “Revaluation of An embedded derivative is a component of a financial or non-financial hybrid own credit risk on financial liabilities designated at fair value through profit or (combined) instrument that qualifies as a derivative. It must be separated from loss” within “Gains and losses recognised directly in other comprehensive the host contract and accounted for as a derivative if the hybrid instrument is income”. If the liability is derecognised before its maturity (early redemption, for not measured at fair value through profit or loss, and if the economic example), fair value gains or losses attributable to own credit risk are directly characteristics and risks associated with the derivative are not closely related transferred to retained earnings. to those of the host contract. The fair value option may be applied to a financial liability when the embedded FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE derivative(s) substantially modify the cash flows of the host contract and when THROUGH PROFIT OR LOSS the separate recognition of the embedded derivative(s) is not specifically IFRS 9 allows entities to designate financial liabilities at fair value through profit prohibited by IFRS 9 (e.g. an early redemption option at cost embedded in a or loss on initial recognition. However, an entity’s decision to do so may not be debt instrument). The option allows the entire instrument to be measured at reversed. fair value, and therefore avoids the need to extract, recognise or separately measure the embedded derivative. Compliance with the criteria stipulated by the standard must be verified prior to any recognition of an instrument using the fair value option. This accounting treatment applies in particular to some structured debt issues containing material embedded derivatives.

12/31/2018 01/01/2018 Financial Financial liabilities liabilities designated designated Financial at fair value Financial at fair value liabilities through liabilities through issued for profit or issued for profit or (in €m) trading loss Total trading loss Total Trading derivatives * 468 468 580 580 Non-subordinated debt securities 2,144 2,144 2,258 2,258 TOTAL FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS 468 2,144 2,612 580 2,258 2,838 * This information is presented in consideration of netting effects, in accordance with IAS 32 (See note 5.20).

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❯ Conditions for designating financial liabilities at fair value through profit or loss 12/31/2018 Financial liabilities designated at fair Accounting Fair value Embedded value through (in €m) mismatches measurement derivatives profit or loss Debt securities 2,144 2,144 TOTAL 2,144 2,144

Financial liabilities designated at fair value under the fair value option consist solely of structured issuances carried out by Compagnie de Financement Foncier. Derivatives accounted for at fair value and embedded in these liabilities are not separable from the host contract.

FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS AND CREDIT RISK ❯ Financial liabilities designated at fair value through profit or loss for which credit risk must be recognised in other comprehensive income

12/31/2018 01/01/2018 Total changes in Total changes in Difference the fair value of Difference the fair value of between the financial liabilities between the financial liabilities carrying amount designated at fair carrying amount designated at fair and the value through and the value through Contractual contractual profit or loss Contractual contractual profit or loss Carrying amount due at amount due at attributable to amount due at amount due at attributable to (in €m) amount maturity maturity own credit risk Fair value maturity maturity own credit risk Customer term accounts and loans Non-subordinated debt securities 2,144 1,933 211 16 2,258 1,970 288 39 TOTAL 2,144 1,933 211 16 2,258 1,970 288 39

The total amount of changes in fair value reclassified to “Retained earnings” Under the early adoption of IFRS 9, Compagnie de Financement Foncier’s during the period concerns redemptions of “Debt securities” classified as issuer spread now directly impacts other comprehensive income. financial liabilities designated at fair value through profit or loss and amounted to €35m at December 31, 2018. For information, at December 31, 2018, the issuer spread is recognised in other comprehensive income for €16m (€39m at December 31, 2017). The amount contractually due on loans at maturity includes the outstanding principal amount at the balance sheet date plus accrued interest not yet due. In the case of securities, the redemption value is generally used.

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5.2.3 TRADING DERIVATIVES All derivative financial instruments are recognised on the balance sheet at the trade date and are measured at fair value at inception. They are remeasured at ACCOUNTING PRINCIPLES their fair value at each balance sheet date regardless of whether they were acquired for trading or hedging purposes. A derivative is a financial instrument or other contract with all three of the following characteristics: Trading derivatives are recognised on the balance sheet under “Financial assets at fair value through profit or loss” and “Financial liabilities at fair value ❯ its value changes in response to the change in a specific interest rate, financial through profit or loss”. Realised and unrealised gains and losses are taken to instrument price, commodity price, foreign exchange rate, index of prices or income on the “Net gains or losses on financial instruments at fair value rates, credit rating or credit index, or other variable, provided that, in the case through profit or loss” line. of a non-financial variable, this variable may not be specific to one of the parties to the contract; The notional amounts of derivative instruments are merely an indication of the ❯ it requires no initial net investment or an initial net investment that is smaller volume of the Group’s business in financial instruments and do not reflect the than would be required for other types of contracts that would be expected to market risks associated with such instruments. Positive or negative fair values have a similar response to changes in market factors; and represent the replacement value of these instruments. These values may vary significantly depending on changes in market data. ❯ it is settled at a future date.

12/31/2018 01/01/2018 Notional Positive fair Negative Notional Positive fair Negative (in €m) amount value fair value amount value fair value Interest rate derivatives 4,997 319 467 5,254 400 544 Currency derivatives 79 22 373 53 35 Forward transactions 5,076 341 467 5,627 453 579 Interest rate derivatives 475 1 1 382 Currency derivatives Options 475 1 1 382 TOTAL TRADING DERIVATIVES 5,551 342 468 6,009 453 579

The notional amounts of derivative instruments are merely an indication of the 5.3 HEDGING DERIVATIVES volume of the Group’s business in financial instruments and do not reflect the ACCOUNTING PRINCIPLES market risks associated with such instruments. A derivative is a financial instrument or other contract with all three of the The hedging relationship qualifies for hedge accounting if, at the inception of following characteristics: the hedge, there is formal documentation of the hedging relationship identifying the hedging strategy, the type of risk hedged, the designation and ❯ its value changes in response to the change in a specific interest rate, financial characteristics of the hedged item and the hedging instrument. In addition, the instrument price, commodity price, foreign exchange rate, index of prices or effectiveness of the hedge must be demonstrated at inception and rates, credit rating or credit index, or other variable, provided that, in the case subsequently verified. of a non-financial variable, this variable may not be specific to one of the parties to the contract; Derivatives contracted as part of a hedging relationship are designated according to the purpose of the hedge. ❯ it requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to Groupe BPCE used the option available in IFRS 9 not to apply the provisions have a similar response to changes in market factors; and of the standard relative to hedge accounting, and to continue to apply IAS 39 ❯ it is settled at a future date. as adopted by the European Union for the recognition of these transactions, i.e. excluding certain provisions relating to macro-hedging. All derivative financial instruments are recognised on the balance sheet at the trade date and are measured at fair value at inception. They are remeasured at their fair value at each balance sheet date regardless of whether they were FAIR VALUE HEDGES acquired for trading or hedging purposes. Fair value hedges are intended to reduce exposure to changes in the fair value of an asset or liability carried on the balance sheet, or a firm commitment, in Changes in the fair value of derivatives are recognised in income for the particular the interest rate risk on fixed-rate assets and liabilities. period, except for derivatives qualifying as cash flow hedges for accounting purposes or as net investment hedges in a foreign currency. The gain or loss on the revaluation of hedging instruments is recognised in income in the same manner as the gain or loss on the hedged item Derivatives may only be designated as hedges if they meet the criteria set out attributable to the risk being hedged. The ineffective portion of the hedge, if in IAS 39 at inception and throughout the term of the hedge. These criteria any, is recorded in the income statement under “Net gains or losses on include formal documentation that the hedging relationship between the financial instruments at fair value through profit or loss”. derivatives and the hedged items is both prospectively and retrospectively effective. Accrued interest on the hedging instrument is taken to income in the same manner as the accrued interest on the hedged item. Fair value hedges mainly consist of interest rate swaps that protect fixed-rate financial instruments against changes in fair value attributable to changes in Where identified assets or liabilities are hedged, the revaluation of the hedged market rates of interest. They transform fixed-rate assets or liabilities into component is recognised on the same line of the balance sheet as the hedged floating-rate instruments. and include mostly hedges of fixed-rate loans, item. securities, deposits and subordinated debt. The ineffective portion relating to the dual-curve valuation of collateralised Fair value hedging is also used to manage the overall interest rate risk position. derivatives is taken into account when calculating the effectiveness of a hedge. Cash flow hedges fix or control the variability of cash flows arising from If a hedging relationship ceases (investment decision, failure to fulfil floating-rate instruments. Cash flow hedging is also used to manage the effectiveness criteria, or because the hedged item is sold before maturity), the overall interest rate risk position. hedging instrument is transferred to the trading book. The revaluation difference recorded in the balance sheet in respect of the hedged item is amortised over the residual life of the initial hedge. If the hedged item is sold before maturity or redeemed early, the cumulative amount of the revaluation gain or loss is recognised in income for the period.

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CASH FLOW HEDGES ❯ quantitative testing: for other swaps, the change in the fair value of the actual swap must offset the changes in the fair value of a hypothetical instrument The purpose of cash flow hedges is to hedge the exposure to the variability of that exactly reflects the underlying hedged item. These tests are conducted cash flow that is attributable to a particular risk associated with a recognised prospectively at the date the instrument is designated as a hedge and asset or liability or with a future transaction (hedge of interest rate risk on retrospectively at each balance sheet date. floating-rate assets or liabilities, hedge of conditions relating to future transactions such as future fixed interest rates, future prices, exchange If a hedging relationship ceases, the revaluation adjustment is amortised on a rates, etc.). straight-line basis over the remaining term of the initial hedge, if the hedged item has not been derecognised. It is taken directly to income if the hedged The portion of the gain or loss on the hedging instrument that is deemed to be item is no longer recorded in the balance sheet. In particular, derivatives used an effective hedge is recognised on a separate line of “Gains and losses for macro-hedging may be disqualified for hedge accounting purposes when recognised directly in other comprehensive income”. The ineffective portion of the notional amount of the hedged items falls below the nominal amount of the the gain or loss on the hedging instrument is recorded in the income hedging instruments, for example in the case of the early repayment of loans statement under “Net gains or losses on financial instruments at fair value or the withdrawal of deposits. through profit or loss”. Fair value hedges mainly consist of interest rate swaps that protect fixed-rate Accrued interest on the hedging instrument is taken to income under interest financial instruments against changes in fair value attributable to changes in income in the same manner as the accrued interest on the hedged item. market rates of interest. They transform fixed-rate assets or liabilities into floating-rate instruments. The hedged items are accounted for using the treatment applicable to their specific asset category. Fair value macro-hedges are used to manage the overall interest rate risk position, in particular to hedge: If a hedging relationship ceases (because the hedge no longer meets the effectiveness criteria, the derivative is sold or the hedged item ceases to exist), ❯ fixed-rate loan portfolios; the cumulative amounts recognised in equity are transferred to the income statement as and when the hedged item impacts profit or loss, or immediately ❯ demand deposits; if the hedged item ceases to exist. ❯ PEL home savings deposits; ❯ the inflation component of Livret A passbook savings accounts. SPECIFIC CASES OF PORTFOLIO HEDGING (MACRO-HEDGING) Fair value micro-hedges are notably used to hedge: Documentation as fair value hedges ❯ fixed-rate liabilities; The Group documents macro-hedging of interest rate risk as fair value hedges ❯ fixed-rate liquidity reserve securities and inflation-indexed securities. by applying the so-called carve-out arrangements under IAS 39 as adopted by the European Union. Cash flow hedges fix or control the variability of cash flows arising from floating-rate instruments. Cash flow hedging is also used to manage the The version of IAS 39 adopted for use by the European Union does not overall interest rate risk position. include certain hedge accounting provisions that appear incompatible with the strategies implemented by European banks to reduce their overall exposure to Cash flow hedges are mainly used to: interest rate risk. The European Union’s carve-out allows for the application of ❯ hedge floating-rate liabilities; hedge accounting for interbank interest rate risk on customer transactions at fixed rates (loans, savings accounts and demand deposits The Group mainly ❯ hedge the risk of changes in value of future cash flows on liabilities; uses plain vanilla interest rate swaps designated at inception as fair value ❯ provide macro-hedging of variable-rate assets. hedges of fixed-rate deposits or loans. The main causes of ineffective hedging are related to: Macro-hedging derivatives are accounted for in the same manner as derivatives used to hedge the fair value of specific transactions ❯ ineffective dual-curve valuations: the value of collateralised derivatives (with (micro-hedging). margin calls yielding EONIA) is based on the EONIA discount curve, while the value of the hedged component of items covered by fair value hedges is In a macro-hedging relationship, gains and losses on the revaluation of the calculated using a Euribor discount curve; hedged item are recorded in “Revaluation differences on interest rate risk-hedged portfolios”, under balance sheet assets for hedges of a portfolio of ❯ the time value of options; financial assets and under balance sheet liabilities for hedges of a portfolio of ❯ over-hedging for asset-based testing of macro-hedges (notional amounts of financial liabilities. hedging derivatives higher than the nominal amount of the hedged items, in The hedges are deemed effective if the derivatives offset the interest rate risk particular where prepayments on the hedged items were higher than on the underlying fixed-rate portfolio. The ineffective portion relating to the dual expected); curve valuation of collateralised derivatives is taken into account. ❯ credit value adjustments and debit value adjustments linked to credit risk and own credit risk on derivatives; Effectiveness is tested in two ways: ❯ differences in interest rate fixing dates between the hedged item and the ❯ asset-based testing: for plain vanilla swaps designated as hedging hedge. instruments at inception, the Group verifies prospectively at the date the instrument is designated as a hedge and retrospectively at each balance The notional amounts of derivative instruments are merely an indication of the sheet date that no excess hedging exists; volume of the Group’s business in financial instruments and do not reflect the market risks associated with such instruments.

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12/31/2018 01/01/2018 Notional Positive fair Negative Notional Positive fair Negative (in €m) amount value fair value amount value fair value Interest rate derivatives 113,343 3,818 7,186 104,203 4,792 6,974 Equity derivatives Currency derivatives Other contracts Forward transactions 113,343 3,818 7,186 104,203 4,792 6,974 Interest rate derivatives 3,108 8 2 3,578 10 Equity derivatives Currency derivatives Other contracts Options 3,108 8 2 3,578 10 Fair value hedges 116,451 3,826 7,188 107,781 4,802 6,974 Interest rate derivatives Equity derivatives Currency derivatives 6,867 25 389 7,403 399 1,062 Other contracts Forward transactions 6,867 25 389 7,403 399 1,062 Cash flow hedges 6,867 25 389 7,403 399 1,062 Credit derivatives Hedges of net investments in foreign operations TOTAL HEDGING INSTRUMENTS 123,318 3,851 7,577 115,184 5,201 8,036

All hedging derivatives are included in “Hedging derivatives” in balance sheet assets and liabilities.

❯ Maturity of the notional amount of hedging derivatives at December 31, 2018

(in €m) < 1 year 1 to 5 years 6 to 10 years > 10 years Cash flow hedges Fair value hedges 14,189 25,847 18,720 57,695 Currency risk hedging 14,189 25,847 18,720 57,695 Cash flow hedges Fair value hedges 304 1,254 2,170 3,139 Hedging of other risks 304 1,254 2,170 3,139 Cash flow hedges Fair value hedges Hedges of net investments in foreign operations TOTAL 14,493 27,101 20,890 60,834

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HEDGED ITEMS ❯ Fair value hedges December 31, 2018 INTEREST RATE RISK HEDGING CURRENCY RISK HEDGING Hedged Hedged component component o/w revaluation remaining o/w revaluation remaining Carrying of the hedged to be Carrying of the hedged to be (in €m) amount component (1) recognised (2) amount component (1) recognised (2) ASSETS Financial assets at fair value through other comprehensive income Financial assets at amortised cost 6,846 1,473 5,373 5,588 998 4,590 Loans or receivables due from credit institutions 1,958 29 1,929 533 533 Loans or receivables due from customers 251 49 202 199 32 167 Debt securities 4,637 1,395 3,242 4,856 966 3,890 LIABILITIES Financial liabilities at amortised cost 55,695 3,787 51,908 3,138 400 2,738 Amounts due to credit institutions 396 396 Amounts due to customers Debt securities 55,289 3,787 51,502 3,138 400 2,738 Subordinated debt 10 10 TOTAL - FAIR VALUE HEDGING -48,849 -2,314 -46,535 2,450 598 1,852 (1) Excluding accrued interest. (2) Dedesignation, end of the hedging relationship.

The ineffective portion of hedging for the period is presented in note 4.3 “Gains and losses on financial assets and liabilities at fair value through profit or loss” or in the note on “Gains and losses recognised directly in other comprehensive income” for equity instruments recognised at fair value through other comprehensive income not recyclable to income.

❯ Cash flow hedges- Hedging of net investments in foreign operations

December 31, 2018 Balance of hedges due o/w effective and Fair value of Fair value of portion of o/w remaining hedged item the hedging hedges not ineffective o/w other fair to be (hypothetical (in €m) derivative due portion value items recognised derivative) Interest rate risk hedging Currency risk hedging -363 -182 -181 182 Hedging of other risks TOTAL – CASH FLOW HEDGES AND HEDGES OF NET INVESTMENTS IN FOREIGN OPERATIONS -363 -182 -181 182

The “Cash flow hedges” reserve corresponds to the effective portion of Recycling from “Cash flow hedges” to income is included either in net interest hedges not due and the balance of hedges that are due and remaining to be income or in income on derecognition of the hedged item in the same way as recognised, before tax, including the portion attributable to non-controlling the line impacted by the hedged item. interests.

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❯ Cash flow hedges and hedges of net investments in foreign operations – Details of other items recognised in other comprehensive income Reclass- ification of the Basis Hedged item Change in the effective adjustment partially effective portion in – non-financial or fully (in €m) 01/01/2018 portion income item extinguished 12/31/2018 Amount of equity for cash flow hedging o/w interest rate hedging o/w currency hedging -114 -68 -182 Amount of equity for net investment hedging TOTAL -114 -68 -182

5.4 FINANCIAL ASSETS AT FAIR VALUE THROUGH Equity instruments measured at fair value through other OTHER COMPREHENSIVE INCOME comprehensive income not recyclable to income On the balance sheet date, these instruments are carried at their fair value and ACCOUNTING PRINCIPLES changes in fair value are recorded under “Gains and losses recognised directly in other comprehensive income not recyclable to income” (as the foreign Financial assets at fair value through other comprehensive income are initially currency assets are not monetary assets, changes in the fair value of the recognised at fair value, plus any transaction costs. foreign currency component do not affect income). The principles used to determine fair value are described in note 9. Debt instruments measured at fair value through other comprehensive income recyclable to income The designation at fair value through other comprehensive income not recyclable to income is an irrevocable option that is applied on an On the balance sheet date, they are carried at their fair value and changes in instrument-by-instrument basis only to equity instruments not held for trading fair value (excluding accrued interest) are recorded under “Gains and losses purposes. Realised and unrealised impairment losses continue to be recorded recognised directly in other comprehensive income recyclable to income” (for in equity with no impact on income. These financial assets are not impaired. foreign currency monetary assets, changes in the fair value of the foreign currency component affect net income). The principles used to determine fair In the event of disposal, these changes in fair value are not transferred to value are described in note 9. income but directly to retained earnings. These instruments are subject to IFRS 9 impairment requirements. Information Only dividends affect income when they correspond to a return on investment. about credit risk is provided in note 7.1. If they are sold, these changes in fair They are recorded in “Net gains or losses on financial instruments at fair value value are taken to income. through other comprehensive income”. Interest income accrued or received on debt instruments is recorded under “Interest and similar income” based on the effective interest rate method. This method is described in note 5.5 “Assets at amortised cost”.

12/31/2018 01/01/2018 Equity Equity SPPI financial instruments SPPI financial instruments instruments designated at instruments designated at managed under fair value managed under fair value a hold to through other a hold to through other collect and sell comprehensive collect and sell comprehensive (in €m) business model income Total business model income Total Loans or receivables due from customers 13 13 26 26 Debt securities Investments in associates 140 140 148 148 Equities and other equity securities * Fair value of financial assets at fair value through other comprehensive income 13 140 153 26 148 174 o/w impairment for expected credit losses ❯ o/w gains and losses recognised directly in other comprehensive income on financial assets at fair value through other comprehensive income (before tax) 28 28 36 36 * Details are provided in note 5.6.

As of December 31, 2018, the gains or losses recognised directly in other comprehensive income include, more specifically, the revaluation of the “credit” component on sovereign securities.

2018 Registration document CRÉDIT FONCIER 157 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

of expected principal and interest repayments after restructuring. The discount 5.5 ASSETS AT AMORTISED COST rate used is the original effective interest rate. This discount is expensed to ACCOUNTING PRINCIPLES “Cost of credit risk” in the income statement and offset against the corresponding outstanding on the balance sheet. It is written back to net Assets at amortised cost are SPPI financial assets managed under a hold to interest income in the income statement over the life of the loan using an collect business model. Most loans originated by the Group are classified in actuarial method. The restructured loan is reclassified as performing (not this category. Information about credit risk is provided in note 7.1. impaired, Stage 1 or Stage 2) based on expert opinion when no uncertainty Financial assets at amortised cost include loans and receivables due from remains as to the borrower’s capacity to honour the commitment. credit institutions and customers as well as securities at amortised cost such When the extent of the restructuring is substantial (for example the conversion as treasury bills and bonds. of all or part of a loan into equity instruments), the new instruments are booked Loans and receivables are initially recorded at fair value plus any costs directly at fair value and the difference between the carrying amount of the related to their issuance, less any proceeds directly attributable to issuance. derecognised loan (or part of the loan) and the fair value of the assets received On subsequent balance sheet dates, they are measured at amortised cost in exchange is taken to income under “Cost of credit risk”. Any impairment using the effective interest method. previously recorded on the loan is adjusted and fully reversed if the loan is fully converted into a new asset. The effective interest rate is the rate that exactly discounts estimated future cash flows (payments or receipts) to the carrying amount of the loan at FEES AND COMMISSIONS inception. This rate includes any discounts recorded in respect of loans granted at below-market rates, as well as any external transaction income or External costs consist primarily of commissions paid to third parties in costs directly related to the issue of the loans, which are treated as an connection with the arrangement of loans. They essentially comprise adjustment to the effective yield on the loan. No internal cost is included in the commissions paid to business providers. calculation of amortised cost. Income directly attributable to the issuance of new loans principally comprises When loans are extended under conditions that are less favourable than set-up fees charged to customers, rebilled costs and commitment fees (if it is market conditions, a discount corresponding to the difference between the more probable than improbable that the loan will be drawn down). nominal value of the loan and the sum of future cash flows discounted at the Commitment fees received that will not result in any drawdowns are market interest rate is deducted from the nominal value of the loan. The apportioned on a straight-line basis over the life of the commitment. market interest rate is the rate applied by the vast majority of local financial Expenses and income arising on loans with a term of less than one year at institutions at a given time for instruments and counterparties with similar inception are deferred on a pro rata basis with no recalculation of the effective characteristics. interest rate. For floating or adjustable rate loans, the effective interest rate is adjusted at each rate refixing date. LOAN RENEGOTIATIONS AND RESTRUCTURING IFRS 9 requires that modified contracts for financial assets that are DATE OF RECOGNITION renegotiated, restructured or adjusted (whether due to financial hardship or Securities are recorded in the balance sheet on the settlement/delivery date. not), but not subsequently derecognised, be identified. Any profit or loss must be recognised as income in the event of modification. The gross carrying Securities financing transactions are also recorded on the settlement/delivery amount of the financial asset must be recalculated so that it is equal to the date. renegotiated or amended present value of contractual cash flows at the original effective interest rate. The materiality of the modifications is, however, The First-In, First-Out (FIFO) method is applied to any partial disposals of analysed on a case-by-case basis. securities, except in special cases. The treatment of loans restructured due to financial hardship is identical to For repurchase transactions, a loan commitment given is recorded between IAS 39: a discount is applied to loans restructured following a credit loss event the transaction date and the settlement/delivery date when such transactions as defined by IFRS 9 (impaired, Stage 3), to reflect the difference between the are recorded as “Loans and receivables”. present value of the contractual cash flows at inception and the present value

5.5.1 SECURITIES AT AMORTISED COST

(in €m) 12/31/2018 01/01/2018 Treasury bills and equivalent 4,182 4,729 Bonds and other debt securities 5,917 5,511 Impairment for expected credit losses -5 -5 TOTAL SECURITIES AT AMORTISED COST 10,094 10,235

5.5.2 LOANS AND RECEIVABLES DUE FROM CREDIT INSTITUTIONS AT AMORTISED COST

(in €m) 12/31/2018 01/01/2018 Current accounts with overdrafts 305 724 Accounts and loans 10,411 10,571 Other loans or receivables due from credit institutions 16 24 Guarantee deposits paid 4,120 4,497 TOTAL LOANS AND RECEIVABLES DUE FROM CREDIT INSTITUTIONS 14,852 15,816

Receivables relating to transactions with the network amounted to €232m at December 31, 2018 (€252m at December 31, 2017). The fair value of loans and receivables due from credit institutions is presented in note 9.2.

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5.5.3 LOANS AND RECEIVABLES DUE FROM CUSTOMERS AT AMORTISED COST

(in €m) 12/31/2018 01/01/2018 Current accounts with overdrafts 1 Other facilities granted to customers 70,880 72,902 Loans to financial sector customers 651 708 Short-term credit facilities 1,062 1,455 Equipment loans 14,878 15,938 Home loans 53,158 53,234 Finance leases 500 523 Other loans 631 1,044 Guarantee deposits paid 56 40 Gross loans and receivables due from customers 70,936 72,943 Impairment for expected credit losses -856 -995 TOTAL LOANS AND RECEIVABLES DUE FROM CUSTOMERS 70,080 71,948

The fair value of loans and receivables due from customers is presented in note 9.2.

5.6 EQUITY INSTRUMENTS DESIGNATED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME ACCOUNTING PRINCIPLES On following accounting dates, changes in the fair value of the instrument are recognised in Other Comprehensive Income (OCI). Equity instruments designated at fair value through other comprehensive income can include: These changes in fair value that accrue to other comprehensive income will not be reclassified to income in subsequent years (other comprehensive ❯ investments in associates; income not recyclable to income). ❯ shares and other equity securities. Only dividends are recorded in income when they fulfil the required conditions. On initial recognition, equity instruments designated at fair value through other comprehensive income are carried at fair value plus any transaction costs.

12/31/2018 01/01/2018 Dividends recorded Derecognition Dividends recorded Derecognition during the period during the period during the period during the period Equity Equity Equity Equity instruments instruments Cumulative instruments instruments Cumulative held at the derecognised Fair value at profit or loss held at the derecognised Fair value at profit or loss Fair end of during the date at the date Fair end of the during the the date at the date (in €m) value the period the period of sale of sale value period period of sale of sale Investments in associates 141 24 148 Shares and other equity securities TOTAL 141 24 148

Investments in associates include strategic equity interests and certain long-term private equity securities. As investments in associates are not intended for sale, they are recognised as equity instruments designated at fair value through other comprehensive income.

5.7 RECLASSIFICATION OF FINANCIAL ASSETS ACCOUNTING PRINCIPLES In that case, the reclassification is forward-looking and does not entail any reclassification that would affect prior periods. Fewer financial assets are reclassified under IFRS 9 than under IAS 39. It is no longer possible to reclassify a security at amortised cost just because of Crédit Foncier reclassified no financial assets in 2018. market illiquidity. A reclassification is possible only if management has made a strategic decision to change the business model. Such cases are therefore very limited (e.g., sale of a business division resulting in the transfer of the assets in question to the workout portfolio, business restructuring, etc.).

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5.8 ACCRUED INCOME AND OTHER ASSETS

(in €m) 12/31/2018 01/01/2018 Collection accounts 197 148 Prepaid expenses 20 17 Accrued income 13 17 Other accruals 396 406 Accrued income and prepaid expenses 626 588 Settlement accounts in debit on securities transactions Other debtors * 545 623 Other assets 545 623 TOTAL ACCRUED INCOME AND OTHER ASSETS 1,171 1,211 * From December 2018, insurance activities are reported on a separate line in balance sheet assets. Accordingly, to enable comparison against December 2017, insurance activities were removed from “Other debtors” and recognised in the specific item “Insurance business investments” on the assets side of the balance sheet.

Guarantees paid that were recorded under accrual accounts at December 31, 2017 were reclassified at January 1, 2018 as loans and receivables due from credit institutions (See note 5.5) or as assets at fair value through profit or loss depending on the associated business model (See note 5.2.1).

SOCFIM and Crédit Foncier Immobilier, scheduled in 2019, also falls within the 5.9 NON-CURRENT ASSETS HELD FOR SALE scope of IFRS 5. Accordingly, pursuant to IFRS 5, Crédit Foncier reclassified AND ASSOCIATED LIABILITIES all the identifiable assets and liabilities intended for sale into two separate balance sheet items, representing €1.4bn and €41m in assets for SOCFIM ACCOUNTING PRINCIPLES and Crédit Foncier Immobilier respectively, and €553m and €19m in liabilities Where a decision is made to sell non-current assets and it is highly probable respectively; that the sale will occur within 12 months, these assets are shown separately ❯ a conservative valuation of Crédit Foncier Immobilier led to the recognition of on the balance sheet on the “Non-current assets held for sale” line. Any impairment on the full amount of the corresponding goodwill at December 31, liabilities associated with these assets are also shown separately on the 2018 (€13.2m). balance sheet on the “Liabilities associated with non-current assets held for sale” line. The total amount recorded in current assets and liabilities held for sale for the two companies came to €1,889m in assets and €580m in liabilities. Once classified in this category, non-current assets are no longer amortised and are measured at the lowest of their carrying amount or fair value less sales costs. Financial instruments continue to be measured in accordance with IFRS 9. 5.10 INVESTMENT PROPERTY A non-current asset (or group of assets) is held for sale when its carrying ACCOUNTING PRINCIPLES amount is recovered by its sale. The asset (or group of assets) must be In accordance with IAS 40, investment property is property held to earn rent or immediately available for sale and it must be highly likely that the sale will be for capital appreciation, or both. completed within the next twelve months. The accounting treatment for investment property is identical to that used for On July 19, 2017, Crédit Foncier signed a Sale and Purchase agreement property, plant and equipment for all Group entities except for certain setting out the terms of sale of its Portuguese subsidiary Banco Primus. insurance entities, which recognise the property they hold as insurance The completion of the sale is subject to the approval of the Portuguese investments at fair value, with any adjustment to fair value recorded in income. supervisory authorities. The deadline for this approval was initially set at Fair value is calculated using a multi-criteria approach, by capitalising rent at March 31, 2018, but has been postponed to April 15, 2019. market rates and through comparisons with market transactions. Pursuant to IFRS 5 “Non-current assets held for sale and discontinued The fair value of the Group’s investment property is based on regular expert operations”, Crédit Foncier: valuations, except in special cases significantly affecting the value of the relevant asset. ❯ recognised consolidated assets in separate asset items for €442m and liability items for €10m; Investment property leased under an operating lease may have a residual value that will reduce the depreciable amount of the asset. ❯ made a value adjustment at the lowest of the assets’ carrying amount and their fair value less costs relating to the sale. This fair value corresponds to the Gains or losses on the disposal of investment property are recognised in sale price and is unchanged against December 31, 2017; income on the “Net income or expenses on other activities” line, with the exception of insurance businesses, which are recognised in “Income from ❯ as indicated in point 1.3.1, as part of the integration of Crédit Foncier’s insurance activities”. operations into Groupe BPCE, the transfer of the consolidated subsidiaries

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12/31/2018 01/01/2018 Accumulated Accumulated Gross depreciation Net Gross depreciation Net (in €m) amount and impairment amount amount and impairment amount Investment property Property recognised at fair value Property recognised at historical cost 26 -15 11 33 -18 15 TOTAL INVESTMENT PROPERTY 26 -15 11 33 -18 15

The fair value of investment property at December 31, 2018 amounted to €12m (€18m at January 1, 2018). The fair value of loans and receivables on investment properties is classified in Level 3 of the fair value hierarchy under IFRS 13.

corresponds to the asset's useful life. Where an asset consists of a number of 5.11 FIXED ASSETS components that have different uses or economic benefit patterns, each ACCOUNTING PRINCIPLES component is recognised separately and depreciated over a period that reflects the useful life of that component. This item includes property owned and used in the business, equipment acquired under operating leases, property acquired under finance leases and The depreciation and amortisation periods used by the Group are as follows: temporarily unlet assets held under finance leases. Interests in non-trading real estate companies (SCIs) are accounted for as property, plant and equipment. ❯ buildings: 20 to 60 years; In accordance with IAS 16 and IAS 38, property, plant and equipment and ❯ internal fixtures and fittings: 5 to 20 years; intangible assets are recognised as assets only if they meet the following ❯ furniture and special equipment: 4 to 10 years; conditions: ❯ computer equipment: 3 to 5 years; ❯ it is probable that the Company will enjoy future economic benefits associated ❯ software: not more than 5 years. with the asset; Other items of property, plant and equipment are depreciated over their ❯ the cost of the asset can be measured reliably. estimated useful life, which generally ranges from 5 to 10 years. Property, plant and equipment and intangible assets used in operations are initially recognised at cost plus any directly attributable acquisition costs. Property, plant and equipment and intangible assets are tested for impairment Software developed internally that fulfils the criteria for recognition as a whenever there is any evidence that they may be impaired at the balance non-current asset is recognised at its production cost, which includes external sheet date. If this is the case, the revised recoverable amount of the asset is charges and the payroll costs of employees directly assigned to the project. compared to its carrying amount. If the revised recoverable amount of the asset is lower than its carrying amount, an impairment loss is recognised in The component-based approach is applied to all buildings. income. After initial recognition, property, plant and equipment and intangible assets This loss is reversed in the event of a change in the estimated recoverable are measured at cost less any accumulated depreciation, amortisation or amount or if there is no longer any evidence of impairment. impairment. The depreciable amount of the asset takes account of its residual value where this is material and can be measured reliably. The accounting treatment of operating properties financed through lease financing agreements is described in note 11.2. Property, plant and equipment and intangible assets are depreciated or amortised in order to reflect the pattern in which the asset’s future economic Equipment leased under operating leases (Group as lessor) is recognised as benefits are expected to be consumed by the entity, which generally an asset on the balance sheet under property, plant and equipment.

12/31/2018 01/01/2018 Accumulated Accumulated Gross depreciation Net Gross depreciation Net (in €m) amount and impairment amount amount and impairment amount Property, plant and equipment Land and buildings 16 -8 8 17 -8 9 Equipment, furniture and other property, plant & equipment 101 -93 8 101 -71 30 TOTAL PROPERTY, PLANT AND EQUIPMENT 117 -101 16 118 -79 39 Intangible assets Leasehold rights 6 -3 3 7 -4 3 Software 20 -20 23 -22 1 Other intangible assets 1 1 TOTAL INTANGIBLE ASSETS 26 -23 3 31 -26 5

2018 Registration document CRÉDIT FONCIER 161 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

These instruments are recognised on the balance sheet under “Amounts due 5.12 AMOUNTS DUE TO CREDIT INSTITUTIONS to credit institutions”, “Amounts due to customers” or “Debt securities”. AND CUSTOMERS Securities are recorded in the balance sheet on the settlement/delivery date. ACCOUNTING PRINCIPLES Securities financing transactions are also recorded on the settlement/delivery These liabilities, which are not classified as financial liabilities at fair value date. through profit or loss, are carried at amortised cost under “Amounts due to credit institutions” or “Amounts due to customers”. The First-In, First-Out (FIFO) method is applied to any partial disposals of securities, except in special cases. Issues of debt securities (which are not classified as financial liabilities at fair value through profit or loss or through other comprehensive income) are For reverse repurchase transactions, a loan commitment received is recorded initially recognised at fair value less any transaction costs. They are between the transaction date and the settlement/delivery date when such subsequently measured at amortised cost at each balance sheet date using transactions are recorded as “Loans and receivables”. the effective interest method.

5.12.1 AMOUNTS DUE TO CREDIT INSTITUTIONS

(in €m) 12/31/2018 01/01/2018 Demand deposits 164 140 Repurchase agreements Accrued interest 4 Amounts due to credit institutions – repayable on demand 164 144 Term deposits and loans 27,126 27,856 Repurchase agreements Accrued interest -10 4 Amounts due to credit institutions – repayable at agreed maturity dates 27,116 27,860 Guarantee deposits received 951 1,479 TOTAL AMOUNTS DUE TO CREDIT INSTITUTIONS 28,231 29,483

The fair value of amounts due to credit institutions is presented in note 9.2. Receivables relating to transactions with the network amounted to €37m at December 31, 2018 (€46m at December 31, 2017).

5.12.2 AMOUNTS DUE TO CUSTOMERS

(in €m) 12/31/2018 01/01/2018 Current accounts in credit 49 463 Regulated savings accounts Demand deposits and loans 221 74 Term accounts and loans 46 49 Accrued interest Other customer accounts 267 123 Repurchase agreements Other amounts due to customers Guarantee deposits received 4 538 TOTAL AMOUNTS DUE TO CUSTOMERS 320 1,124

The fair value of amounts due to customers is presented in note 9.2.

Debt securities are classified based on the nature of the underlying, with the 5.13 DEBT SECURITIES exception of subordinated notes presented under “Subordinated debt”. ACCOUNTING PRINCIPLES A new category of liabilities eligible for the TLAC numerator (Total Loss Issues of debt securities not classified as financial liabilities at fair value through Absorbing Capacity requirement) was introduced by French law and profit or loss or through other comprehensive income are initially recognised at commonly referred to as "senior non-preferred". These liabilities have an fair value less any transaction costs. They are subsequently measured at intermediate rank between equity and other debts known as "senior amortised cost at each balance sheet date using the effective interest method. preferred". These instruments are recognised on the balance sheet under “Amounts due to credit institutions”, “Amounts due to customers” or “Debt securities”.

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(in €m) 12/31/2018 01/01/2018 Bonds 65,133 66,206 Interbank market instruments and negotiable debt securities Other debt securities that are neither non-preferred nor subordinated Non-preferred debt Total 65,133 66,206 Accrued interest 725 831 TOTAL DEBT SECURITIES 65,858 67,037

The fair value of debt securities is presented in note 9.2.

5.14 ACCRUED EXPENSES AND OTHER LIABILITIES

(in €m) 12/31/2018 01/01/2018 Collection accounts 459 673 Unearned income 21 33 Accounts payable 42 65 Other accruals 208 269 Accrued expenses and other liabilities 730 1,040 Settlement accounts on securities transactions 13 13 Other accounts payable 480 563 Other liabilities 493 576 TOTAL ACCRUED EXPENSES AND OTHER LIABILITIES 1,223 1,616

Guarantees received that were recorded under accrual accounts at December 31, 2017 were reclassified at January 1, 2018 to loans and receivables due from credit institutions (See note 5.5.2) or to assets at fair value through profit or loss (See note 5.2.1) depending on the associated business model.

The amount recognised in provisions is the best estimate of the expense 5.15 PROVISIONS required to extinguish the present commitment at the balance sheet date. ACCOUNTING PRINCIPLES Provisions are discounted when the impact of discounting is material. Provisions other than those relating to employee benefit commitments and similar, regulated home savings products, off-balance sheet commitments, Changes in provisions are recognised in the income statement on the line and insurance policies mainly consist of provisions for restructuring, claims items corresponding to the nature of future expenditure. and litigation, fines and penalties, and tax risks. Provisions are liabilities of which the timing or amount is uncertain, but which can be reliably estimated. They correspond to current obligations (legal or implicit), resulting from a past event, and for which an outflow of funds will probably be necessary to settle them.

Reversals Other (in €m) 01/01/2018 Increase Use unused changes 12/31/2018 Provisions for employee benefit commitments and similar 30 1 -3 -4 24 Provision for restructuring costs * 12 324 -1 -5 330 Legal and tax risks 44 6 -2 -5 -1 42 Loan and guarantee commitments 30 3 -12 -8 13 Other operating provisions 31 22 -7 -19 27 TOTAL PROVISIONS 147 356 -13 -41 -13 436 * o/w €316m for the provision for restructuring relating to the integration of Crédit Foncier’s activities within Groupe BPCE (See note 1.3.1).

2018 Registration document CRÉDIT FONCIER 163 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

Subordinated debt which the issuer is obliged to repay is classified as debt 5.16 SUBORDINATED DEBT and initially recognised at fair value less any transaction costs. It is ACCOUNTING PRINCIPLES subsequently measured at amortised cost at each balance sheet date using the effective interest method. Subordinated debt differs from other debt and bonds in that it will be repaid only after all the senior and unsecured creditors, but before the repayment of participating loans and securities and deeply subordinated notes.

(in €m) 12/31/2018 01/01/2018 Subordinated debt issued for trading purposes Subordinated debt designated at fair value through profit and loss Subordinated debt at fair value through profit or loss Term subordinated debt 10 10 Perpetual subordinated debt Perpetual deeply subordinated debt 280 Preference shares Mutual guarantee deposits Subordinated debt and similar 10 290 Accrued interest 1 Revaluation of the hedged component Subordinated debt at amortised cost 10 291 TOTAL SUBORDINATED DEBT 10 291

The fair value of subordinated debts is presented in note 9.2.

❯ Change in subordinated debt and similar during the year

(in €m) 01/01/2018 Issuance Redemption Other changes 12/31/2018 Subordinated debt issued for trading purposes Subordinated debt designated at fair value through profit and loss Subordinated debt at fair value through profit or loss Term subordinated debt 10 10 Perpetual subordinated debt Perpetual deeply subordinated debt 280 -280 0 Preference shares Mutual guarantee deposits Subordinated debt at amortised cost 290 -280 10 SUBORDINATED DEBT AND SIMILAR 290 -280 10

Deeply subordinated notes qualifying as equity instruments are presented in note 5.17.2.

5.17 ORDINARY SHARES AND EQUITY In addition, when an instrument qualifies as equity: INSTRUMENTS ISSUED ❯ its remuneration is treated as a dividend and therefore impacts equity along with the tax relating to this remuneration; ACCOUNTING PRINCIPLES ❯ it cannot be an underlying instrument eligible for hedge accounting; Financial instruments issued by the Group qualify as debt or equity instruments depending on whether or not the issuer has a contractual ❯ if the issue is in a foreign currency, the instrument is fixed at its historical value obligation to deliver cash or another financial asset to the holder of the resulting from its conversion to euros at its initial date of transfer to equity. instrument, or to exchange the instrument under conditions that are potentially Finally, when these instruments are issued by a subsidiary, they are included in unfavourable to the Group. This obligation must arise from specific contractual “Non-controlling interests”. When their remuneration is of a cumulative nature, terms and conditions, not merely economic constraints. it is charged to “Income attributable to equity holders of the parent” and increases the income of “Non-controlling interests”. However, when their remuneration is not of a cumulative nature, it is drawn from retained earnings attributable to equity holders of the parent.

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5.17.1 COOPERATIVE SHARES

12/31/2018 01/01/2018 Share Share Number of Nominal capital Number of Nominal capital (in €m) shares (in €) (in €m) shares (in €) (in €m) Ordinary shares Value at opening 369,833,533 3.60 1,331 369,833,533 3.60 1,331 Capital increase VALUE AT CLOSING 369,833,533 3.60 1,331 369,833,533 3.60 1,331

There are no special shares in the Group’s share capital.

5.17.2 PERPETUAL DEEPLY SUBORDINATED SECURITIES CLASSIFIED AS EQUITY

Nominal value Amount (in €m historical equivalent) (in original Redemption Interest Issuing entity Issue date Currency currency) option date step-up date Interest rate 12/31/2018 01/01/2018 Euribor 3-month Crédit Foncier 12/21/2015 Euro 550 12/21/2021 - +6.60% 550 550

EARLY REDEMPTION POSSIBILITIES AND TERMS subordinated notes. They will be repaid after holders of participating loans and securities and after ordinary subordinated and unsecured bonds. In The issuer will be able to exercise an early redemption option for the first time accordance with the provisions of IAS 32, financial instruments issued are at the end of a six-year period after the issue date, i.e. from December 21, classified as debt or equity depending on whether or not they include a 2021. This option can then be exercised on each anniversary of the issue contractual obligation to remit cash to their holder. date. Accordingly, this issue of perpetual deeply subordinated notes is now SUBORDINATION TERMS considered an equity instrument owing to a discretionary clause regarding the payment of a dividend. It is recorded under “Share capital and additional The bonds are direct, unconditional, non-guaranteed, lowest ranking paid-in capital” on the consolidated balance sheet. commitments. They have the same ranking as other existing or future deeply

5.18 NON-CONTROLLING INTERESTS Information regarding consolidated subsidiaries and structured entities for which the amount of non-controlling interests is significant in terms of the balance-sheet total of the subsidiaries is provided below:

Condensed financial information 12/31/2018 Non-controlling interests for 100% equity interests Income attributed to holders Percentage of non- Amount Dividend paid Percentage control controlling of non- to holders Net income OCI of non- of non- interests controlling of non- attributable to attributable to controlling controlling during the interests in controlling Total liabilities equity holders equity holders (in €m) interests interests period the subsidiary interests Assets and equity of the parent of the parent Locindus 25.18% 25.18% 2 65 2 687 428 10 10 Locindus subsidiaries 25.18% 25.18% 1 TOTAL 2 65 2 688 428 10 10

Condensed financial information 12/31/2017 Non-controlling interests for 100% equity interests Income attributed to holders Percentage of non- Amount Dividend paid Percentage control controlling of non- to holders Net income OCI of non- of non- interests controlling of non- attributable to attributable to controlling controlling during the interests in controlling Total liabilities equity holders equity holders (in €m) interests interests period the subsidiary interests Assets and equity of the parent of the parent Locindus 25.18% 25.18% 2 64 2 709 455 8 8 Locindus subsidiaries 25.18% 25.18% 2 8 2 3 3 Ecufoncier 95.00% 5.00% 31 33 TOTAL 2 97 2 750 457 11 11

2018 Registration document CRÉDIT FONCIER 165 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

5.19 CHANGE IN GAINS AND LOSSES RECOGNISED DIRECTLY IN OTHER COMPREHENSIVE INCOME ACCOUNTING PRINCIPLES In the event of disposal of equity financial assets recognised in other comprehensive income, changes in fair value are not transferred to income. These items are described as being not recyclable to income.

FY 2018 FY 2017 (in €m) Gross Income tax Net Gross Income tax Net Revaluation (or actuarial gains and losses) of defined-benefit plans 3 -1 2 Revaluation of own credit risk on financial liabilities designated at fair value through profit or loss * 22 -6 16 -18 4 -14 Revaluation of equity financial assets recognised at fair value through other comprehensive income -8 -8 40 -12 28 Items not recyclable to income 17 -7 10 22 -8 14 Revaluation of derivatives hedging items that can be recycled to income -69 18 -51 169 -52 117 Items recyclable to income -69 18 -51 169 -52 117 TOTAL GAINS OR LOSSES RECOGNISED DIRECTLY IN OTHER COMPREHENSIVE INCOME (AFTER TAX) -52 11 -41 191 -60 131 Attributable to equity holders of the parent -51 11 -41 191 -60 131 Non-controlling interests * Impact of issuer spread.

Financial assets and liabilities “under netting agreements not offset on the 5.20 OFFSETTING OF FINANCIAL ASSETS balance sheet” comprise transactions under netting agreements or similar AND FINANCIAL LIABILITIES agreements, but that do not meet the restrictive netting criteria set by IAS 32. This is particularly the case for derivatives or OTC repurchase agreements ACCOUNTING PRINCIPLES subject to master agreements under which the net settlement criteria or Financial assets and liabilities were offset on the balance sheet in accordance realisation of a simultaneous settlement of the asset and liability cannot be with IAS 32. Under this standard, a financial asset and financial liability are demonstrated or for which the offsetting right can only be exercised in the offset and a net balance is recorded in the balance sheet if and only if: event of default, insolvency or bankruptcy by one of the parties to the agreement. ❯ the Group has the legally enforceable right to offset the recorded amounts; and For these instruments, the “Related financial assets and financial instruments received as collateral” and “Related financial liabilities and financial instruments ❯ it has the intention either to settle the net amount or to simultaneously realise pledged as collateral” columns include in particular: the asset and settle the liability. ❯ for derivatives, the fair values of the reverse transactions with the same The amounts offset in Crédit Foncier’s consolidated financial statements are counterparty, as well as margin calls in the form of securities. the result of derivatives transactions with clearing houses, which fulfil the requirements of IAS 32. In practice, these transactions only involve vanilla Margin calls received or paid in cash are shown in the “Margin calls received interest rate swaps in euros, cleared by LCH. (cash collateral)” and “Margin calls paid (cash collateral)” columns.

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5.20.1 FINANCIAL ASSETS ❯ Financial assets under netting agreements offset in the balance sheet

12/31/2018 01/01/2018 Gross Net amount Gross Net amount amount of of financial amount of of financial financial assets financial assets Gross liabilities recognised Gross liabilities recognised amount of offset in the in the amount of offset in the in the financial balance balance financial balance balance (in €m) assets sheet sheet assets sheet sheet Derivatives (trading and hedging) 4,193 4,193 5,566 5,566 Financial assets at fair value 4,193 4,193 5,566 5,566 Repurchase agreements Other assets TOTAL 4,193 4,193 5,566 5,566

❯ Financial assets under netting agreements not offset in the balance sheet

12/31/2018 01/01/2018 Related Related Net amount financial Net amount financial of financial liabilities of financial liabilities assets and Margin assets and Margin recognised financial calls recognised financial calls in the instruments received in the instruments received balance received as (cash Net balance received as (cash Net (in €m) sheet collateral collateral) exposure sheet collateral collateral) exposure Derivatives 4,193 3,018 941 234 5,566 3,314 1,973 279 Repurchase agreements TOTAL 4,193 3,018 941 234 5,566 3,314 1,973 279

5.20.2 FINANCIAL LIABILITIES ❯ Financial liabilities under netting agreements offset in the balance sheet

12/31/2018 01/01/2018 Gross Net amount Gross Net amount amount of of financial amount of of financial financial liabilities financial liabilities Gross assets recognised Gross assets recognised amount of offset in the in the amount of offset in the in the financial balance balance financial balance balance (in €m) liabilities sheet sheet liabilities sheet sheet Derivatives (trading and hedging) 8,046 8,046 8,570 8,570 Repurchase agreements Other Financial liabilities at fair value 8,046 8,046 8,570 8,570 Repurchase agreements Other Debt Other liabilities TOTAL 8,046 8,046 8,570 8,570

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❯ Financial liabilities under netting agreements not offset in the balance sheet

12/31/2018 01/01/2018 Net amount Related Net amount Related of financial financial of financial financial liabilities assets and liabilities assets and recognised financial Margin recognised financial Margin in the instruments calls paid in the instruments calls paid balance pledged as (cash Net balance pledged as (cash Net (in €m) sheet collateral collateral) exposure sheet collateral collateral) exposure Derivatives 8,046 3,018 4,099 929 8,570 3,314 4,410 846 Repurchase agreements Other liabilities TOTAL 8,046 3,018 4,099 929 8,570 3,314 4,410 846

loaned. The amount disbursed in respect of the asset is recognised under 5.21 TRANSFERRED FINANCIAL ASSETS AND OTHER “Securities bought under repurchase agreements”. On subsequent balance FINANCIAL ASSETS PLEDGED AND RECEIVED sheet dates, the securities continue to be accounted for by the vendor in accordance with the rules applicable to the category in which they were initially AS COLLATERAL THAT CAN BE SOLD OR classified. The receivable is valued according to methods specific to its REPLEDGED category: at amortised cost when classified in “Loans and receivables”, or at fair value through profit or loss when it is considered part of a trading business ACCOUNTING PRINCIPLES model. A financial asset (or group of similar financial assets) is derecognised when the contractual rights to the asset’s future cash flows have expired or when such OUTRIGHT SECURITIES LENDING rights are transferred to a third party, together with virtually all of the risks and rewards associated with ownership of the asset. In such case, rights and Securities loaned under outright securities lending transactions are not obligations created or retained as a result of the transfer are recorded in a derecognised in the vendor’s accounts. They continue to be recognised in separate line under financial assets and liabilities. their original accounting category and are valued accordingly. For the borrower, the securities borrowed are not recognised. When a financial asset is derecognised, a gain or loss on disposal is recorded in the income statement reflecting the difference between the carrying amount of the asset and the consideration received. TRANSACTIONS LEADING TO SUBSTANTIAL CHANGES IN FINANCIAL ASSETS In the event that the Group has neither transferred nor retained virtually all of When an asset is subject to substantial changes (in particular following a the risks and rewards, but has retained control of the asset, the asset renegotiation or a remodelling due to financial difficulties) there is continues to be recognised on the balance sheet to the extent of the Group’s derecognition, as the rights to initial cash flows have essentially expired. The continuing involvement. Group considers that this is the case for:

In the event that the Group has neither transferred nor retained virtually all of ❯ changes leading to a change of counterparty, especially if the new the risks and rewards and has not retained control of the asset, the asset is counterparty has a very different credit quality than the previous counterparty; derecognised and all of the rights and obligations created or retained as a result of the transfer are recorded in a separate line under financial assets and ❯ changes intended to move from a very structured to simple indexing, as the liabilities. two assets are not exposed to the same risks.

If all the conditions for derecognising a financial asset are not met, the Group TRANSACTIONS LEADING TO SUBSTANTIAL CHANGES keeps the asset in the balance sheet and records a liability representing the obligations arising when the asset is transferred. IN FINANCIAL LIABILITIES A substantial change to the terms of a lending instrument must be recorded as The Group derecognises a financial liability (or a part of a financial liability) only the extinguishment of former debt and its replacement with a new debt. The when it is extinguished, i.e. when the obligation specified in the contract is amendment to IFRS 9 of October 12, 2017 clarified the treatment under discharged, terminated or expires. IFRS 9 of modifications of liabilities recognised at amortised cost, if the modification does not result in derecognition: the profit or loss resulting from REPURCHASE AGREEMENTS the difference between the original cash flows and the modified cash flows discounted at the original effective interest rate must be recognised in profit or Securities sold under repurchase agreements are not derecognised in the loss. To assess the substantial nature of the change, IFRS 9 includes a vendor’s accounts. A liability representing the commitment to return the funds threshold of 10% based on discounted cash flows, integrating potential costs received is identified and recognised under “Securities sold under repurchase and fees: when the difference is greater than or equal to 10%, all of the costs agreements”. This debt is a financial liability recorded at amortised cost or at or fees incurred are recognised as profit or loss on debt extinguishment. fair value through profit or loss when this liability is considered part of a trading business model. The Group may consider other changes to be substantial, such as a change of issuer (even within the same group) or a change in currency. The assets received are not recognised in the purchaser’s books, but a receivable is recorded with respect to the vendor representing the funds

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5.21.1 TRANSFERRED FINANCIAL ASSETS NOT FULLY DERECOGNISED AND OTHER FINANCIAL ASSETS PLEDGED AS COLLATERAL

Carrying amount Assets Outright transferred securities Repurchase or pledged as Securi- lending agreements collateral tisations 12/31/2018 Debt instruments 124 124 Loans to credit institutions Loans to customers 124 124 Debt securities Financial assets at fair value through profit or loss – Non SPPI 124 124 Loans or receivables due from credit institutions Loans or receivables due from customers 10,565 10,565 Debt securities 215 215 Other Financial assets at amortised cost 10,780 10,780 Total financial assets pledged as collateral 10,904 10,904 o/w transferred financial assets not fully derecognised -6,117 -6,117

In accordance with French law, the intrinsic guarantees attached to issues of covered bonds are not recognised under guarantee commitments given. The covered bonds issued by Compagnie de Financement Foncier benefit from a legal privilege consisting of eligible assets.

12/31/2017 Assets Outright transferred securities Repurchase or pledged lending agreements as collateral Securitisations Total Carrying Carrying Carrying Carrying Carrying (in €m) amount amount amount amount Fair value amount TOTAL FINANCIAL ASSETS PLEDGED AS COLLATERAL INCLUDING TRANSFERRED FINANCIAL ASSETS NOT FULLY DERECOGNISED 11,644 11,644 Financial assets designated at fair value through profit or loss 142 142 Available-for-sale financial assets 162 162 Loans and receivables 11,340 11,340 LIABILITIES ASSOCIATED WITH FINANCIAL ASSETS THAT ARE NOT FULLY DERECOGNISED 10,738 10,738 Financial assets designated at fair value through profit or loss 106 106 Loans and receivables 10,632 10,632

5.21.1.1 COMMENTS ON TRANSFERRED FINANCIAL with guaranteed refinancing operations, in particular with its parent company. ASSETS This type of sale as collateral involves the legal transfer of the associated contractual rights, and therefore the “transfer of assets” within the meaning of Securities repurchasing and lending the amendment to IFRS 7. The Group nevertheless remains exposed to Groupe Crédit Foncier repurchases and lends securities. virtually all the risks and benefits, and as such the receivables are maintained on the balance sheet. Under the terms of the agreements, the securities may be sold on by the purchaser throughout the duration of the repurchase or lending operation. The purchaser must nevertheless return them to the vendor at the transaction’s 5.21.1.2 COMMENTS ON FINANCIAL ASSETS PLEDGED maturity date. The cash flows generated by the securities are also transferred AS COLLATERAL BUT NOT TRANSFERRED to the vendor. In accordance with French law, the intrinsic guarantees attached to issues of covered bonds are not recognised under guarantee commitments given. The The Group believes that it has retained almost all of the risks and benefits of covered bonds issued by Compagnie de Financement Foncier benefit from a the securities repurchased or loaned. They have therefore not been legal privilege consisting of eligible assets. derecognised. Financing has been recorded in liabilities for the repurchasing or lending of financed securities. 5.21.1.3 FINANCIAL ASSETS RECEIVED AS COLLATERAL Transfers of receivables THAT CAN BE SOLD OR REPLEDGED Groupe Crédit Foncier sells receivables as collateral (Articles L. 211-38 and Groupe Crédit Foncier has not performed any materiel re-use operation to L. 313-23 et seq. of the French Monetary and Financial Code) in connection date.

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5.21.2 FULLY OR PARTIALLY DERECOGNISED FINANCIAL ASSETS FOR WHICH THE GROUP RETAINS AN ONGOING COMMITMENT Fully or partially derecognised transferred financial assets for which the Group retains an ongoing commitment consist of asset transfers to a deconsolidated securitisation vehicle in which the Group has an interest or an obligation, although these do not call into question the transfer of almost all of the benefits and risks relating to the assets transferred. Ongoing commitments retained by the Group in relation to securitisation vehicles at December 31, 2018 were as follows:

Operation (1) Year of origin Deconsolidating Derecognising Nature of units Total assets (2) Total liabilities (2) Elise 2013 yes yes FCC Units €18m Hedging derivatives, clean-up calls, fees, CFHL-1 2014 yes yes residual shares €33m Hedging derivatives, clean-up calls, fees, CFHL-2 2015 yes partially residual shares €63m €26m (1) See note 12.1. (2) Value of the share of units retained by the Group.

NOTE 6 COMMITMENTS

ACCOUNTING PRINCIPLES The effects of the rights and obligations covered by such commitments must be subject to the occurrence of conditions or subsequent transactions. Commitments are materialised by the existence of a contractual obligation and Commitments are broken down into: are binding. ❯ financing commitments (confirmed credit facilities or refinancing agreements); It must not be possible to deem commitments included in this item to be financial instruments falling within the scope of IFRS 9 for classification and ❯ guarantee commitments (off-balance sheet commitments or assets received measurement purposes. However, financing commitments and guarantees as collateral). given are covered by IFRS 9 provisioning rules, as set out in note 7. The amounts shown correspond to the nominal value of commitments given.

6.1 LOAN COMMITMENTS

(in €m) 12/31/2018 01/01/2018 Loan commitments given to 6,370 6,057 ❯ Credit institutions 5 39 ❯ Customers 6,365 6,018 Credit facilities granted 6,308 6,000 Other commitments 57 18 Financing commitments received from 2,229 3,269 ❯ Credit institutions 2,229 3,269 ❯ Customers

6.2 GUARANTEE COMMITMENTS

(in €m) 12/31/2018 01/01/2018 Guarantee commitments given to 1,561 1,573 ❯ Credit institutions 5 5 ❯ Customers 1,556 1,568 Guarantee commitments received from 63,101 138,423 ❯ Credit institutions 13,179 88,359 ❯ Customers 49,922 50,064

Guarantee commitments given are commitments by signature and assets “Assets pledged as collateral” are presented in note 5.21.1 “Transferred received as guarantees such as collateral other than that included in note 5.21 financial assets not fully derecognised and other financial assets pledged as “Financial assets received as collateral" that can be sold or repledged. collateral”. “Securities received as collateral” that can be sold or repledged are included in note 5.21 “Financial assets received as collateral that can be sold or repledged”.

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NOTE 7 EXPOSURE TO RISKS

The exposures to risks set out below are represented by credit risk, market risk, interest rate risk, foreign exchange rate risk and liquidity risk. Information on capital management and regulatory ratios is provided in the Risk Management report.

7.1 CREDIT RISK HIGHLIGHTS Credit risk is the risk that one party to a financial transaction fails to fulfil his obligations, causing the other party to incur a financial loss.

Performing, not at risk Perf., at risk In default IAS 39 Sector Collective Speciﬁc provisions provisions provisions

Stage 1 Stage 2 Stage 3

12-month Lifetime ECL Lifetime ECL expected In the event of a signiﬁcant increase Deterioration of credit risk IFRS 9 credit losses (ECL) in the credit risk to the point where the asset is non-performing

Material change Objective impairment in credit risk criterion

Transition IMPACTS Major impact Minor impact

Certain disclosures relating to risk management required by IFRS 7 are also 7.1.1 COST OF CREDIT RISK provided in the Risk Management report. They include: ACCOUNTING PRINCIPLES ❯ the breakdown of gross exposures by category and approach with distinction between credit risk and counterparty risk exposure; Cost of risk applies to debt instruments classified as financial assets at amortised cost or at fair value through other comprehensive income recyclable ❯ the breakdown of exposures by geographic area; to income as well as to financing commitments and financial guarantees given ❯ the credit risk concentration by borrower; that are not recognised at fair value through profit or loss. It also applies to receivables relating to leasing contracts, business loans and contract assets. ❯ the breakdown of exposures by credit rating. This item therefore covers net impairment and provision charges for credit risk. This information forms an integral part of the financial statements certified by the Statutory Auditors. Credit losses related to other types of instruments (derivatives or securities designated at fair value through profit or loss) recorded as a result of default by credit institutions are also included under this item. Irrecoverable loans not covered by provisions for impairment are loans that are permanently lost before being provisioned in Stage 3.

❯ Cost of risk for the period

(in €m) FY 2018 FY 2017 Net charge to provisions and provisions for impairment -29 -52 Recoveries of bad debts written off 4 10 Irrecoverable loans not covered by provisions for impairment -35 -39 TOTAL COST OF RISK -60 -81

❯ Cost of risk by asset type

(in €m) FY 2018 FY 2017 Interbank transactions Customer transactions -51 -72 Other financial assets -9 -9 TOTAL COST OF RISK -60 -81

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7.1.2 DETAIL OF FINANCIAL ASSETS AND More specifically, the change in credit risk is measured on the basis of the COMMITMENTS BY IMPAIRMENT STAGE following criteria: ❯ on the Individual Customer, Professional Customer, SME, Public sector and ACCOUNTING PRINCIPLES Social housing loan books: the measurement of the increase in credit risk Expected credit losses are represented by impairment of assets relies on a combination of quantitative and qualitative criteria. The quantitative classified at amortised cost and at fair value through other criterion is based on the measurement of the change in the probability of comprehensive income, and provisions for financing and guarantee default within one year since initial recognition (probability of default measured commitments. as a cycle average). Complementary qualitative criteria are used to classify as Stage 2 all contracts with payments more than 30 days past due (the From initial recognition, the financial instruments concerned (See 7.1.1) are presumption that amounts are past-due after 30 days is therefore not refuted), impaired or covered by a provision for Expected Credit Losses (ECL). rated at-risk, included on a watch list or undergoing adjustments due to financial hardship (forbearance); When the financial instruments have not been individually subject to objective evidence of loss, impairment or provisions for expected credit losses are ❯ for the Large Corporates, Banks and Sovereigns loan books, the quantitative measured based on past losses and reasonable and justifiable discounted criterion is based on the level of variation in the rating since initial recognition. future cash flow forecasts. The same qualitative criteria as for Individual Customers, Professional Customers and SMEs apply, as do complementary criteria based on the The financial instruments are divided into three categories (Stages) depending change in sector rating and the level of country risk; on the increase in credit risk observed since their initial recognition. A specific credit risk measurement method applies to each category of instrument: ❯ for Specialised Financing, the criteria applied vary according to the characteristics of the exposures and the related ratings system. Exposures rated by the tool dedicated to large exposures are treated in the same way as Stage 1 (S1) Large Corporates; other exposures are treated in the same way as SMEs. ❯ these are performing loans for which credit risk has not increased materially since the initial recognition of the financial instrument; For all these loan books, the ratings used to measure the increase in risk correspond to the ratings produced by internal systems when they are ❯ the impairment or the provision for credit risk corresponds to 12-month available, as well as on external ratings, particularly when an internal rating is expected credit losses; not available. ❯ interest income is recognised through profit or loss based on the effective The standard provides that the credit risk of a financial instrument has not interest rate method applied to the gross carrying amount of the instrument increased materially since its initial recognition if this risk is considered to be before impairment. low at the end of the fiscal year. This provision is applied to certain investment-grade debt securities held by Corporate & Investment Banking. Stage 2 (S2) ❯ performing loans for which credit risk has increased materially since the initial For Stage 1 and 2 financial instruments, expected credit losses are also recognition of the financial instrument are transferred to this category; measured on an individual basis, depending on the features of each contract. ❯ the impairment or the provision for credit risk is determined on the basis of the Expected credit losses on financial instruments classified as Stage 1 or financial instrument’s lifetime expected credit losses; Stage 2 are measured as the product of several inputs: ❯ like for Stage 1 outstandings, interest income is recognised through profit or ❯ flows expected over the lifetime of the financial instrument, discounted on the loss based on the effective interest rate method applied to the gross carrying valuation date – these flows are determined according to the characteristics of amount of the instrument before impairment. the contract, its effective interest rate and the level of early repayment expected on the contract; Stage 3 (S3) ❯ loss Given Default (LGD); These are loans for which there is objective evidence of impairment loss due to an event which represents a known credit risk occurring after the initial ❯ probabilities of Default (PDs), for the coming year in the case of Stage 1 recognition of the instrument in question. financial instruments and until the contract’s maturity in the case of Stage 2 financial instruments. ❯ As was the case under IAS 39, this category covers receivables for which a The Group draws on existing concepts and mechanisms to define these default event has been identified as defined in Article 178 of the EU Regulation inputs, and in particular on internal models developed to calculate regulatory of June 26, 2013 on prudential requirements for credit institutions. capital requirements and on projection models used in the stress test system. ❯ The impairment or the provision for credit risk is calculated based on the Certain adjustments are made to comply with the specifics of IFRS 9: financial instrument’s lifetime expected credit losses on the basis of the recoverable amount of the receivable, i.e., the present value of estimated ❯ IFRS 9 inputs aim to provide an accurate estimate of expected credit losses recoverable future cash flows taking into account the impact of any collateral. for accounting provision purposes, whereas prudential inputs are more cautious for regulatory framework purposes. Several of the safety buffers ❯ Interest income is recognised through profit or loss based on the effective applied to the prudential inputs are therefore restated; interest rate method applied to the net carrying amount of the instrument after impairment. ❯ IFRS 9 inputs must allow expected credit losses to be estimated until the contract’s maturity, whereas prudential inputs are defined to estimate ❯ Stage 3 also includes financial assets purchased or created and impaired for 12-month expected losses. Twelve-month inputs are thus projected over long credit risk at their initial recognition and for which the entity does not expect to periods; recover all of the contractual cash flows (Purchased or Originated Credit Impaired (POCI) assets). These assets may be transferred to Stage 2 if their ❯ IFRS 9 inputs must be forward-looking and take into account the expected credit risk improves. economic environment over the projection period, whereas prudential inputs correspond to the cycle’s average estimates (for PD) or bottom-of-the-cycle For operating lease or lease financing receivables – which fall within the scope estimates (for LGD and the flows expected over the lifetime of the financial of IAS 17 – the Group has decided not to make use of the option of applying instrument). The PD and LGD prudential inputs are therefore also adjusted the simplified approach proposed by IFRS 9 §5.5.15. based on this expected economic environment. Other than these few examples, the significant increase in credit risk is valued Inputs are adjusted to economic conditions by defining three economic on an individual basis by taking into account all reasonable and justifiable scenarios over a three-year period. The variables defined in each of these information and by comparing the default risk on the financial instrument at the scenarios allow for the distortion of the PD and LGD parameters and the end of the fiscal year with the default risk on the financial instrument at the calculation of an expected credit loss for each economic scenario. Inputs for date of its initial recognition. A counterparty-based approach (applying the periods longer than three years are projected on the principle of a gradual contagion principle to all loans to the counterparty in question) is also possible return to their long-term average. The models used to distort the PD and LGD if it gives similar results. In most cases, the measurement of the increase in the inputs rely on those developed as part of the stress test system for the risk leads to the recognition of an increase in Stage 2 before the transaction is purpose of ensuring consistency. These economic scenarios are associated individually impaired (Stage 3). with probabilities of occurrence, ultimately making it possible to calculate an average probable loss used as the IFRS 9 impairment amount.

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These scenarios are defined using the same organisation and governance as The Group uses the same impairment indicators for Stage 3 debt securities as that defined for the budget process, requiring an annual review based on those used for individually assessing the impairment risk on loans and proposals from the Economic Research department and approval by the receivables, irrespective of the portfolio to which the debt securities are Executive Management Committee. To ensure consistency with the budget ultimately designated. For perpetual deeply subordinated notes that meet the scenario, the central scenario corresponds to the budget scenario. Two definition of financial liabilities within the meaning of IAS 32, particular attention variants – an optimistic view and a pessimistic view – are also developed is also paid if, under certain conditions, the issuer may be unable to pay the around this scenario. The likelihood that the scenarios will occur is reviewed coupon or extend the issue beyond the scheduled redemption date. on a quarterly basis by the Group’s Watch List and Provisions Committee. The inputs thus defined allow expected credit losses for all rated exposures to be Impairment for expected credit losses on Stage 3 financial assets is valued, regardless of whether they belong to a scope approved using an determined as the difference between the amortised cost and the recoverable internal method or they are processed using the standard method for the amount of the receivable, i.e., the present value of estimated recoverable calculation of risk-weighted assets. Conservative default rules are applied to future cash flows, whether these cash flows come from the counterparty’s unrated exposures (the stakes are not material for the Group). These rules activity or from the potential activation of guarantees. For short-term assets involve assigning the highest rating on the internal scale in the absence of a (maturity of less than one year), there is no discounting of future cash flows. rating on approval and the lowest rating on the scale before the at-risk stage in Impairment is determined globally, without distinguishing between interest and the absence of a rating to date. principal. Expected credit losses arising from Stage 3 off-balance sheet commitments are taken into account through provisions recognised on the The mechanism for validating IFRS 9 inputs is fully integrated in the validation liability side of the balance sheet. Specific impairment is calculated for each mechanism for existing models within the Group. Inputs are subject to review receivable on the basis of the maturity schedules determined based on historic by an independent unit responsible for internal model validation, which is then recoveries for each category of receivable. examined by the Group Model Committee. Furthermore, the recommendations issued by the validation unit are subsequently monitored. For the purposes of measuring expected credit losses, pledged assets and other credit enhancements that form an integral part of the contractual conditions of the instrument and that the entity does not recognise separately METHOD FOR MEASURING ASSETS CLASSIFIED are taken into account in the estimate of expected cash flow shortfalls. AS STAGE 3 For debt instruments recognised on the balance sheet in the financial assets at Loans and receivables are considered as impaired and are classified as amortised cost category, impairment is recorded against the line on which the Stage 3 if the following two conditions are met: asset was initially shown for its net amount (regardless of whether the asset is ❯ there is objective evidence of impairment on an individual or portfolio basis: S1, S2 or S3). Impairment charges and reversals are recognised in the income there are “triggering events” or “loss events” identifying counterparty risk statement under “Cost of credit risk”. occurring after the initial recognition of the loans in question. Objective For debt instruments recognised on the balance sheet in the financial assets at evidence of impairment includes any payments that are past due by at least fair value through other comprehensive income category, impairment is carried three months, or regardless of whether any payment has been missed, the on the liabilities side of the balance sheet at the level of other comprehensive observation of financial hardship experienced by the counterparty leading to income recyclable to income, with a corresponding entry on the income the expectation that some or all of the amounts owed may not be recovered or statement under “Cost of credit risk” (regardless of whether the asset is S1, to the initiation of legal proceedings; S2 or S3). ❯ these events are liable to lead to the recognition of incurred credit losses, that is, expected credit losses for which the probability of occurrence has become For loan and financial guarantee commitments given, provisions are recorded certain. on the liabilities side of the balance sheet under “Provisions” (irrespective of whether the commitment given is S1, S2 or S3). Additions to/reversals from Debt instruments such as bonds or securitised transactions (ABS, CMBS, provisions are recognised in the income statement under “Cost of credit risk”. RMBS, cash CDOs) are considered impaired and are classified as Stage 3 when there is a known counterparty risk.

7.1.2.1 FINANCIAL ASSETS AT AMORTIZED COST BY IMPAIRMENT STAGE 12/31/2018 01/01/2018 Gross carrying Impairment for Net carrying Gross carrying Impairment for Net carrying (in €m) amount credit losses amount amount credit losses amount Debt securities 10,099 -5 10,094 10,240 -5 10,235 Stage 1 9,897 -1 9,896 10,033 -1 10,032 Stage 2 202 -4 198 207 -4 203 Stage 3 Loans and receivables due from credit institutions 14,852 14,852 15,816 15,816 Stage 1 14,852 14,852 15,812 15,812 Stage 2 13 13 Stage 3 -9 -9 Loans and receivables due from customers 70,936 -856 70,080 72,943 -995 71,948 Stage 1 61,260 -29 61,231 62,931 -36 62,895 Stage 2 6,425 -103 6,322 6,342 -107 6,235 Stage 3 3,251 -724 2,527 3,670 -852 2,818 TOTAL FINANCIAL ASSETS AT AMORTIZED COST 95,887 -861 95,026 98,999 -1,000 97,999 Stage 1 86,009 -30 85,979 88,776 -37 88,739 Stage 2 6,627 -107 6,520 6,562 -111 6,451 Stage 3 3,251 -724 2,527 3,661 -852 2,809

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7.1.2.2 FINANCING AND GUARANTEE COMMITMENTS BY IMPAIRMENT STAGE 12/31/2018 01/01/2018 Gross carrying Impairment for Net carrying Gross carrying Impairment for Net carrying (in €m) amount credit losses amount amount credit losses amount Loan commitments given 6,370 5 6,375 6,057 14 6,071 Stage 1 6,172 2 6,174 5,763 8 5,771 Stage 2 189 3 192 245 6 251 Stage 3 9 9 49 49 Guarantee commitments given 1,561 8 1,569 1,573 16 1,589 Stage 1 1,237 1,237 1,450 4 1,454 Stage 2 319 1 320 113 2 115 Stage 3 5 7 12 10 10 20 TOTAL COMMITMENTS GIVEN 7,931 13 7,944 7,630 30 7,660 Stage 1 7,409 2 7,411 7,213 12 7,225 Stage 2 508 4 512 358 8 366 Stage 3 14 7 21 59 10 69

7.1.3 MEASUREMENT AND MANAGEMENT OF Commitments exposed to credit risk consist of existing or potential receivables CREDIT RISK and particularly loans, debt securities, equities, performance swaps, performance bonds, or confirmed or undrawn facilities. Credit risk arises whenever a counterparty is unable to meet its payment Credit risk management procedures and assessment methods, risk obligations and may result from a reduction in credit quality or even default by concentration, the quality of performing financial assets, and the analysis and the counterparty. breakdown of outstandings are described in the Risk Management report.

7.1.4 GUARANTEES RECEIVED ON INSTRUMENTS IMPAIRED UNDER IFRS 9 The statement below shows the credit and counterparty risk exposure for all Groupe BPCE’s financial assets. This exposure to credit risk (determined without taking into account the impact of any unrecognised netting or collateral agreements) and to counterparty risk is based on the carrying amount of the financial assets.

Maximum risk Maximum risk exposure net of (in €m) exposure (2) Impairment impairment (3) Guarantees Classification of impaired financial instruments (1) Debt securities at amortised cost Loans and receivables due from credit institutions at amortised cost 3,251 -724 2,527 3,993 Loans and receivables due from customers at amortised cost Debt securities – Fair value through OCI recyclable to income Loans and receivables due from credit institutions – Fair value through OCI recyclable to income Loans and receivables due from customers – Fair value through OCI recyclable to income Financing commitments 9 9 Guarantee commitments 5 7 -2 TOTAL 3,265 -717 2,534 3,993 (1) Assets impaired after origination/purchase (Stage 3) or Purchased or Originated Credit-Impaired (POCI) assets. (2) Gross carrying amount. (3) Carrying amount in the balance sheet.

7.1.5 GUARANTEES RECEIVED ON INSTRUMENTS NOT COVERED BY IFRS 9 IMPAIRMENT RULES

(in €m) Maximum risk exposure * Guarantees Financial assets at fair value through profit or loss Debt securities 23 Loans 1,223 217 Trading derivatives 342 TOTAL 1,588 217 * Carrying amount in the balance sheet.

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7.1.6 CREDIT RISK MITIGATION MECHANISMS: The management of interest rate risk and foreign exchange risk is described in ASSETS OBTAINED BY TAKING POSSESSION the Risk Management report. OF COLLATERAL Not applicable in 2018. 7.4 LIQUIDITY RISK Liquidity risk is the risk that the Group will be unable to honour its payment commitments as they fall due and replace funds when they are withdrawn. 7.2 MARKET RISK The funding procedures and liquidity risk management arrangements are Market risk refers to the possibility of financial loss due to market trends, such disclosed in the Risk Management report. as: Disclosures on liquidity risk management required under IFRS 7 are given in ❯ interest rates: interest rate risk is the risk that the fair value or future cash flows the Risk Management report. of a financial instrument will fluctuate due to changes in market rates of interest; The table below shows amounts by contractual maturity date. ❯ exchange rates; Financial instruments marked to market on the income statement and held in ❯ prices: market price risk is the risk of a potential loss resulting from changes in the trading book, variable-income available-for-sale financial assets, market prices, whether they are caused by factors specific to the instrument non-performing loans, hedging derivatives and revaluation differences on or its issuer, or by factors affecting all market traded instruments. interest rate risk-hedged portfolios are placed in the “No fixed maturity” Variable-income securities, equity derivatives and commodity derivatives are column. These financial instruments are: exposed to this type of risk; and ❯ either held for sale or redeemed prior to their contractual maturity; ❯ more generally, any market data involved in the valuation of portfolios. ❯ or held for sale or redeemed at an indeterminable date (particularly where they Systems for the measurement and monitoring of market risks are presented in have no contractual maturity); the Risk Management report. ❯ or recorded on the balance sheet for an amount impacted by revaluation Disclosures on market risk management required under IFRS 7 are given in effects. the Risk Management report. Accrued interest not yet due is shown in the “Less than 1 month” column. The amounts shown are contractual amounts excluding projected interest. 7.3 INTEREST RATE RISK AND EXCHANGE RATE RISK Interest rate risk is the risk that unfavourable changes in interest rates will adversely impact the Group’s annual results and net worth. Exchange rate risk is the risk of losses resulting from changes in exchange rates.

Less than 1 to 3 3 months 1 to 5 Over 5 (in €m) 1 month months to 1 year years years Perpetual Total Cash and amounts due from central banks 705 705 Financial assets at fair value through profit or loss 1,619 1,619 Financial assets at fair value through other comprehensive income 1 152 153 Hedging derivatives 3,851 3,851 Securities at amortised cost 104 11 196 1,351 6,315 2,117 10,094 Loans and receivables due from credit institutions and similar items at amortised cost 7,843 4,313 1,731 198 726 41 14,852 Loans and receivables due from customers at amortised cost 736 698 3,165 16,049 46,062 3,370 70,080 Revaluation differences on interest rate risk-hedged portfolios 4,695 4,695 Financial assets by maturity 9,388 5,022 5,092 17,599 53,103 15,845 106,049 Financial liabilities at fair value through profit or loss 38 50 459 545 842 678 2,612 Hedging derivatives 7,577 7,577 Debt securities 1,202 1,031 4,362 24,299 30,794 4,170 65,858 Amounts due to credit institutions and similar items 3,536 4,446 10,939 3,552 5,758 28,231 Amounts due to customers 274 45 1 320 Subordinated debt 10 10 Financial liabilities by maturity 5,050 5,527 15,805 28,407 37,394 12,425 104,608 Financing commitments given to credit institutions 5 5 Financing commitments given to customers 749 79 1,964 2,257 1,316 6,365 Total loan commitments given 754 79 1,964 2,257 1,316 6,370 Guarantee commitments given to credit institutions 4 1 5 Guarantee commitments given to customers 353 55 324 614 210 1,556 TOTAL GUARANTEE COMMITMENTS GIVEN 353 55 324 618 211 1,561

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NOTE 8 EMPLOYEE BENEFITS AND SIMILAR

ACCOUNTING PRINCIPLES Revaluation differences on actuarial liabilities caused by changes in demographic and financial assumptions and past-experience effects are There are four categories of employee benefits: recorded in gains and losses recognised directly in other comprehensive ❯ short-term employee benefits such as wages, salaries, paid annual leave, income not recyclable to income; bonuses, and profit sharing and incentive schemes which are expected to be ❯ other long-term employee benefits include awards accruing to current paid within 12 months of the end of the period in which the employee renders employees and payable 12 months or more after the end of the period in the service are recognised in expenses; which the employee renders the related service. They mainly include ❯ post-employment benefits paid to retired staff break down into two long-service awards and deferred variable remuneration payable in cash and categories: defined-contribution plans and defined-benefit plans. not indexed to the share price. Defined-contribution plans such as French national plans are those for which These benefits are calculated using the same actuarial method as that applied Groupe BPCE’s obligation is limited to payment of a contribution; there is no for defined-benefit pension plans. The accounting method differs in terms of obligation for the employer regarding a certain level of benefits. Contributions revaluation differences on actuarial liabilities, which are recorded under paid into these plans are recognised as an expense for the period. expenses; Defined-benefit plans are those for which Groupe BPCE has undertaken to ❯ termination benefits are granted to employees on termination of their provide a given amount or level of benefits. employment contract before the normal retirement date, either as a result of a decision by the Group to terminate a contract or a decision by an employee to Defined-benefit plans are subject to provisions calculated based on an terminate a contract in exchange for a severance package. They are covered actuarial assessment of the amount of the obligation, taking into account by a provision. Termination benefits that are not expected to be paid within demographic and financial assumptions. When these plans are funded by the 12 months following the balance sheet date are discounted to present external funds meeting the definition of plan assets, the amount of the value. provision is reduced by the fair value of these assets. Share-based payments include payments in equity instruments or cash where The cost of defined-benefit plans recorded in expenses for the period the amount of the cash payment is indexed to the share price. includes: the service cost (representing the rights acquired by beneficiaries over the period), the service cost for prior periods (revaluation differences on A personnel expense is recorded for an amount equal to the fair value of the actuarial liabilities following an amendment or reduction in the plan), the net benefit awarded, spread over the vesting period. financial cost (effect of undiscounting the net obligation for interest income generated by plan assets) and the effect of pension drawdowns.

8.1 PAYROLL COSTS Payroll costs include all personnel expenses and the associated social security contributions and taxes. They include expenses for employee benefits and share-based payments.

(in €m) FY 2018 FY 2017 Wages and salaries -148 -158 Costs of defined-contribution plans -28 -15 Costs of defined-benefit plans 3 Other social security costs and payroll-based taxes * -277 -75 Employee incentives and profit-sharing -6 -6 TOTAL PAYROLL COSTS -456 -254 * o/w €234.3m of the provision for restructuring relating to the integration of Crédit Foncier’s activities within Groupe BPCE (See note 1.3.1).

The Group’s average headcount over the year, broken down by category, was and renamed CRCFF-IGRS. This decision was approved by the decision of as follows: 1,531 managers and 989 non-managers, representing a total of the Insurance and Mutual Company regulatory authority (ACAM) on March 11, 2,520 persons. 2009 and published in the Official Journal of April 3, 2009. The Employment and Competitiveness Tax Credit (CICE) is deducted from As part of the transformation, the former retirement fund transferred all of its payroll costs. It amounted to €1.45m in 2018 and €2m in 2017. reserves and provisions covering the associated risk to insurers on March 31, 2009: mainly AXA, as well as CARDIF and SOGECAP. The use of this tax is presented in section 6 “Social, environmental and societal information” of the Registration document. Crédit Foncier has thus outsourced all of its risk pertaining to pensions currently being paid out (3,484 pensions). Given the mechanisms in place and the amounts transferred, Crédit Foncier has also largely covered its risk relative to current employees, who are the future beneficiaries of the scheme (1,055 8.2 EMPLOYEE BENEFITS current employees or former Crédit Foncier employees who are beneficiaries The Group grants its staff a variety of employee benefits: and are still working, who joined the Group before 2000). In 2010, the management of the liquidation of pensions for members of the CRCFF plan ❯ a supplementary pension plan; was transferred to an external company. ❯ end-of-career awards; This new system had no impact on Crédit Foncier’s financial statements. ❯ long service awards. Employees hired after March 1, 2000, are members of the defined Employees who joined groupe Crédit Foncier prior to March 1, 2000 are Contribution Pension Plan (CGP) in place with the Group. covered by the following scheme: In terms of end-of-career benefits, employees are entitled to receive a Pursuant to Article 116 of the "Fillon Act" of August 21, 2003, Crédit Foncier’s one-time allowance at the time of their retirement that is directly proportional retirement fund (Caisse de Retraite du Crédit Foncier), which was set up in to their seniority. Employees also benefit from a flat-rate bonus for long service 1989, was transformed into a supplementary pension management institution awards.

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8.2.1 ANALYSIS OF ASSETS AND LIABILITIES RECORDED IN THE BALANCE SHEET

Post-employment defined-benefit plans Other long-term employee benefits Supplementary pension benefits End-of-career Long service (in €m) and other awards awards Other 12/31/2018 12/31/2017 Actuarial liabilities 34 3 13 50 61 Fair value of plan assets -24 -24 -31 Effect of ceiling on assets NET AMOUNT REPORTED ON THE BALANCE SHEET 10 3 13 26 30 Employee benefit commitments recorded in the balance sheet 10 3 13 26 30

Actuarial liabilities represent the Group’s obligation in respect of beneficiaries. When these plans are funded by assets meeting the definition of plan assets, They are calculated by independent actuaries using the projected unit credit the amount of the provision corresponds to actuarial liabilities less the fair method based on demographic and financial assumptions that are reviewed value of these assets. on a regular basis and at least once a year.

8.2.2 CHANGE IN AMOUNTS RECOGNISED ON THE BALANCE SHEET ❯ Change in actuarial liabilities Post-employment defined-benefit plans Other long-term employee benefits Supplementary pension benefits End-of-career Long service (in €m) and other awards awards Other FY 2018 FY 2017 ACTUARIAL LIABILITIES AT START OF YEAR 2 42 3 15 62 81 Enter 1 Service cost 2 1 3 3 Past service cost -2 -2 -19 Interest cost 1 Benefits paid -3 -2 -5 -6 Other -1 -1 1 Revaluation adjustments – demographic assumptions -1 -1 Revaluation adjustments – financial assumptions -2 -2 1 Revaluation adjustments – past-experience effect -2 -2 -1 Other (1) -2 -2 ACTUARIAL LIABILITIES AT END OF YEAR (2) 34 3 13 50 62 (1) IFRS 5. (2) Actuarial liabilities as of December 31, 2018 don't take into account any assumptions concerning the integration of Crédit Foncier's activities into Groupe BPCE, except for the "advance" voluntary departures.

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❯ Change in plan assets Post-employment defined-benefit plans Other long-term employee benefits Supplementary pension benefits End-of-career Long service (in €m) and other awards awards Other FY 2018 FY 2017 FAIR VALUE OF PLAN ASSETS AT START OF YEAR 2 30 32 26 Enter 1 Interest income Plan participant contributions 10 Benefits paid -5 -5 -5 Revaluation adjustments – return on plan assets -1 -1 Foreign exchange rate adjustments Other -2 -2 FAIR VALUE OF PLAN ASSETS AT END OF YEAR 24 24 32

Amounts paid in cash to beneficiaries reduce the amount of provisions Returns on plan assets are calculated by applying the same discount rate as recorded to this end by an equivalent amount. A total of -€4m was charged the one applied to gross liabilities (yield on AA-rated corporate bonds). The against pension plan assets. difference between the actual return at the balance sheet date and this financial income is a revaluation difference recorded for post-employment benefits.

❯ Revaluation adjustments on post-employment benefits

FY 2018 FY 2017 Supplementary pension benefits End-of-career (in €m) and other awards Total Total Cumulative revaluation adjustments at start of year -1 -1 -1 Revaluation adjustments over the period Adjustments to asset ceiling CUMULATIVE REVALUATION ADJUSTMENTS AT END OF YEAR -1 -1 -1

8.2.3 COST OF DEFINED-BENEFIT PENSION PLANS AND OTHER LONG-TERM EMPLOYEE BENEFITS EXPENSES FOR DEFINED-BENEFIT PENSION PLANS AND OTHER LONG-TERM EMPLOYEE BENEFITS The various components of the charge recognised for defined-benefit plans are included under “Payroll costs”.

Post-employment Other long-term employee (in €m) defined-benefit plans benefits FY 2018 FY 2017 Service cost -1 -1 27 Net interest cost -1 Other 1 1 TOTAL EXPENSES FOR THE YEAR -1 1 26

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8.2.4 OTHER INFORMATION MAIN ACTUARIAL ASSUMPTIONS FY 2018 FY 2017 End-of- Long End-of- Long career service career service benefits awards Other benefits awards Other Discount rate 1.19% 0.98% 1.04% 0.92% 0.71% 0.75% Inflation rate 1.70% 1.70% 1.70% 1.70% 1.70% 1.70% Wage growth rate 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% Rate of change in medical expenses DURATION 10 8 8 10 9 9

N/a: not applicable.

SENSITIVITY OF ACTUARIAL LIABILITIES TO CHANGES IN THE MAIN ASSUMPTIONS AND OTHER INFORMATION At December 31, 2018, a 0.25% increase or decrease in the discount rate on actuarial liabilities would have the following impact on these liabilities:

❯ Sensitivity test on actuarial liabilities

FY 2018 FY 2017 Post-employment Other long-term Post-employment Other long-term defined-benefit plans employee benefits defined-benefit plans employee benefits Other Other Long service benefits End-of-career Long service benefits (in €m) End-of-career awards awards (ATTFC) awards awards (ATTFC) 0.25% increase in the discount rate -0.82 ns -0.25 -1.01 ns -0.31 0.25% decrease in the discount rate 0.86 ns 0.26 1.05 ns 0.33 ns: not significant.

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NOTE 9 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

HIGHLIGHTS Instruments valued using non-adjusted prices quoted This section sets out the principles for measuring the fair value of financial on an active market (Level 1) instruments as defined in IFRS 13 “Fair Value Measurement” and the methods These mainly include equities, government bonds and bonds issued by large used by Groupe BPCE entities to measure the value of their financial Corporates, certain derivatives traded on organised markets (for example, instruments. standard options on the CAC 40 or Euro Stoxx indices). Financial assets and liabilities are recorded in the balance sheet either at fair For UCITS, fair value will be considered Level 1 if the net asset value is value or at amortised cost. An indication of the fair value of items measured at calculated daily and if orders can be placed at that value. amortised cost is provided in the notes. For instruments traded on an active market with a quoted price, the fair value LEVEL 2 FAIR VALUE is equal to the quoted price, corresponding to Level 1 in the fair value If there are no prices quoted on an active market, fair value can be determined hierarchy. using an appropriate method that follows valuation methods commonly used on the financial markets and giving preference to observable market inputs The fair value of other financial instruments not traded on an active market, (Level 2 fair value). including in particular loans, borrowings and derivatives traded over the counter, is calculated using valuation techniques that rely on widely used If the asset or liability has a contractual maturity date, the Level 2 inputs must models and observable data, corresponding to Level 2 in the fair value be observable for almost all its lifetime. Level 2 inputs include: hierarchy. When internal data or proprietary models are used (Level 3 in the fair value hierarchy), independent controls are used to validate the value obtained. ❯ quoted market prices, whether or not those markets are active, for similar assets or liabilities; DETERMINATION OF FAIR VALUE ❯ inputs other than quoted market prices which are observable for the asset or liability, for example: General principles The fair value is the price that would be received to sell an asset or paid to ❯ interest rates and rate curves observable at regular intervals, transfer a liability in a standard arm’s length transaction between market ❯ implicit volatilities, participants at the valuation date. ❯ credit spreads; Groupe Crédit Foncier assesses the fair value of assets and liabilities based on ❯ inputs corroborated by the market, meaning that they have been obtained the assumptions that market players would use to set the price of an asset or mainly from observable market data or corroborated using that data, by liability. These assumptions include, notably for derivatives, an assessment of correlation or other means. counterparty risk (CVA – Credit Valuation Adjustment) and of non-performance risk (DVA – Debit Valuation Adjustment). These valuation adjustments are measured using market inputs. Instruments valued using recognised models based on directly or indirectly observable inputs (Level 2) Fair value at the date of initial recognition ❯ Level 2 derivatives For the majority of the Group’s transactions, the trading price (i.e. the amount This category includes: paid or received) provides the best assessment of the fair value of the ❯ standard interest rate swaps or CMS, transaction at the date of initial recognition. If this is not the case, the Group adjusts the trading price accordingly. These adjustments are described in the ❯ Forward Rate Agreements (FRA), paragraph “Recognition of day one profit”. ❯ standard swaptions, FAIR VALUE HIERARCHY ❯ standard caps and floors, Level 1 fair value and the concept of an active market ❯ liquid currency forwards, Prices traded on an active market (Level 1 fair value) provide the most reliable ❯ liquid currency swaps and foreign exchange options, indication of fair value. Where such prices exist, they must be used without ❯ single-name or indexed (iTraxx, iBoxx, etc.) liquid credit derivatives, etc.; adjustment to measure fair value. ❯ Level 2 non-derivative instruments An active market is a market on which transactions for assets or liabilities occur with sufficient frequency and volume. Certain hybrid and/or long-maturity financial instruments are measured using a recognised model on the basis of market inputs derived from observable data A decrease in market activity can be seen through the following indicators: such as yield curves, implied volatility layers of options, market consensus data or active over-the-counter markets. ❯ a substantial decrease in the primary market for the financial asset or liability in question (or for similar instruments); Inputs relating to all such instruments were demonstrated to be observable. From a methodology perspective, observability is based on four inseparable ❯ a substantial decrease in trading volumes; criteria: ❯ a low price update frequency; ❯ the input comes from outside sources (via a well-known contributor), ❯ if actual prices are very volatile and vary considerably between different ❯ the input is refreshed periodically, sources; ❯ the input is representative of recent transactions, ❯ lower correlation with indices that had previously had a high correlation with the fair value of the asset or liability; ❯ their characteristics are identical to the characteristics of the transaction. ❯ a substantial increase in quoted prices or implicit liquidity risk premiums, The margin generated when these instruments begin trading is immediately yields, or performance indicators (e.g. probabilities of default and implicit loss recognised in income. expectations) compared to the Group’s estimates of expected cash flows, Instruments measured using Level 2 inputs include: given all available market data on credit risk or non-performance risk for the asset or liability; ❯ securities not listed on an active market, the fair value of which is based on ❯ a very wide bid-ask spread. observable market data (e.g. the use of market data put out by comparable listed companies, or the earnings multiple method);

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❯ shares of UCITS whose net asset value (NAV) is not determined and published Consequently, the following simplified assumptions were used: on a daily basis but is subject to regular reporting or which offer observable data from recent transactions; The carrying amount of assets and liabilities is deemed ❯ debt securities issued and designated at fair value. to be their fair value in certain cases These notably include: LEVEL 3 FAIR VALUE ❯ short-term financial assets and liabilities (whose initial term is one year or less) If there are insufficient observable inputs on the markets, fair value may be provided that sensitivity to interest rate risk and credit risk is not material measured using an internal method using unobservable data (Level 3 fair during the period; value). The model must be recalibrated periodically in light of recent transaction prices. ❯ demand liabilities; ❯ variable-rate loans and borrowings; Over-the-counter instruments valued using uncommon ❯ transactions in a regulated market (particularly regulated savings products), models or models that use a significant portion of whose prices are set by the public authorities. non-observable data (Level 3) When the valuations are not obtained using observable data or models FAIR VALUE OF LOANS TO CUSTOMERS recognised as industry standards, the valuation is considered non-observable. The fair value of loans is measured using internal valuation models that Instruments valued by specific models or using non-observable inputs more discount future payments of recoverable capital and interest over the specifically include: remaining loan term. Except for special cases, only the interest rate component is remeasured, as the credit margin is established at the outset ❯ unlisted equities, which are generally “equity interests”: BPCE, Crédit and not subsequently remeasured. Early repayment options are factored into Logement; the model via an adjustment to loan repayment schedules. ❯ certain UCITS when the net asset value is an indicative value (if the assets are illiquid, in case of liquidation, etc.) and when there are no prices to corroborate Fair value of interbank loans the value; The fair value of loans is determined based on internal valuation models that ❯ FCPRs (venture capital mutual funds): the net asset value is frequently an discount recoverable future payments of capital and interest over the indicative value because it is often not possible to exit such funds; remaining loan term. ❯ multi-asset structured products, options on funds, hybrid rate products, The interest rate component is remeasured, as is the credit risk component securitisation swaps, structured credit derivatives and fixed-income options where this is an observable piece of data used by the customer relationship products; managers or market participants. Failing that, the credit risk component is established at the outset and not subsequently remeasured, as with loans to ❯ securitisation tranches not quoted on an active market. These instruments are customers. Early repayment options are factored into the model via an frequently valued based on contributor prices (structurers for example). adjustment to loan repayment schedules.

TRANSFERS BETWEEN FAIR-VALUE LEVELS Fair value of interbank loans Information on transfers between fair value levels is provided in note 9.1.3. The The fair value of loans is determined based on internal valuation models that amounts shown in this note were calculated on the last valuation date before discount recoverable future payments of capital and interest over the the transfer. remaining loan term.

Recognition of day one profit The interest rate component is remeasured, as is the credit risk component where this is an observable piece of data used by the customer relationship As at December 31, 2018, the Group had no “Day one profit” to report. managers or market participants. Failing that, the credit risk component is established at the outset and not subsequently remeasured, as with loans to FAIR VALUE OF FINANCIAL INSTRUMENTS RECOGNISED customers. Early repayment options are factored into the model via an AT AMORTISED COST (SECURITIES) adjustment to loan repayment schedules. Fair value calculations for financial instruments that are not at fair value on the balance sheet are provided for information only and must only be interpreted Fair value of debt as estimates. The fair value of fixed-rate debt owed to credit institutions and customers with a term of over one year is deemed to be equal to the present value of future In most cases, the values provided are not intended to be realised and in cash flows discounted at the interest rate observed at the balance sheet date. practice they normally cannot be. In accordance with the method of debt valuation through profit or loss, own credit risk is recognised. Fair values calculated in this way are provided in the notes to the financial statements for information purposes only. They are not indicators used in the interest of overseeing commercial banking activities, for which the management model is mainly based on collection of contractual cash flows.

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9.1 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES 9.1.1 FAIR VALUE HIERARCHY OF FINANCIAL ASSETS AND LIABILITIES The following statement provides a breakdown of financial instruments by type of price and valuation model:

12/31/2018 Measurement Measurement techniques techniques Price quoted using using in an active observable data unobservable (in €m) market (Level 1) (Level 2) data (Level 3) Total FINANCIAL ASSETS 4,116 1,507 5,623 Derivatives 72 72 Interest rate derivatives 72 72 Financial assets at fair value through profit or loss – Held for trading * 72 72 Derivatives 259 11 270 Interest rate derivatives 237 11 248 Currency derivatives 22 22 Financial assets at fair value through profit or loss – Economic hedging 259 11 270 Debt instruments 1,246 1,246 Loans due from credit institutions and customers 1,223 1,223 Debt securities 23 23 Financial assets at fair value through profit or loss – Non-standard 1,246 1,246 Equity instruments 6 25 31 Equities and other equity securities 6 25 31 Financial assets at fair value through profit or loss – Excluding assets held for trading 6 25 31 Debt instruments 13 13 Loans due from credit institutions and customers 13 13 Equity instruments 140 140 Equities and other equity securities 140 140 Financial assets at fair value through other comprehensive income 153 153 Interest rate derivatives 3,825 3,825 Currency derivatives 26 26 Hedging derivatives 3,851 3,851 FINANCIAL LIABILITIES 9,746 443 10,189 Derivatives 26 26 Interest rate derivatives 26 26 Financial liabilities at fair value through profit or loss – Held for trading * 26 26 Derivatives 25 417 442 Interest rate derivatives 25 417 442 Financial liabilities at fair value through profit or loss – Economic hedging 25 417 442 Debt securities 2,144 2,144 Financial liabilities at fair value through profit or loss – Fair value option 2,144 2,144 Interest rate derivatives 7,188 7,188 Currency derivatives 389 389 HEDGING DERIVATIVES 7,577 7,577 * Excluding economic hedging.

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9.1.2 ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES CLASSIFIED IN LEVEL 3 OF THE FAIR VALUE HIERARCHY

Gains and losses recognised Transactions carried Transfers during during the period out during the period the period In the income statement On transactions On removed transac- from the tions in balance progress sheet at In other To at the the compre- Sales/ another From and Reclassi- reporting reporting hensive Purchases Redemp- reporting to another Other (in €m) 01/01/2018 fications date date income /Issues tions category level changes 12/31/2018 Financial assets 1,720 31 -8 3 -171 -60 -8 1,507 Debt instruments 3 -3 Debt securities 3 -3 Derivatives 93 1 -23 1 72 Interest rate derivatives 93 1 -23 1 72 Financial assets at fair value through profit or loss – Held for trading * 96 1 -23 -3 1 72 Derivatives 22 -11 11 Financial assets at fair value through profit or loss – Economic hedging 22 -11 11 Debt instruments 1,402 18 -118 -56 1,246 Loans due from credit institutions and customers 1,382 8 -108 -59 1,223 Debt securities 20 10 -10 3 23 Financial assets at fair value through profit or loss – Non-standard 1,402 18 -118 -56 1,246 Equity instruments 26 -1 25 Equities and other equity securities 26 -1 25 Financial assets at fair value through profit or loss – Excluding assets held for trading 26 -1 25 Debt instruments 26 3 -5 -1 -10 13 Loans due from credit institutions and customers 26 3 -5 -1 -10 13 Equity instruments 148 24 -8 -25 1 140 Equities and other equity securities 148 24 -8 -25 1 140 Financial assets at fair value through other comprehensive income 174 24 -8 3 -30 -1 -9 153 FINANCIAL LIABILITIES 479 -32 4 -23 15 443 Derivatives 49 -23 26 Interest rate derivatives 49 -23 26 Financial liabilities at fair value through profit or loss – Held for trading * 49 -23 26 Derivatives 430 -32 4 15 417 Interest rate derivatives 430 -32 4 15 417 FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS – ECONOMIC HEDGING 430 -32 4 15 417 * Excluding technical hedging.

At December 31, 2018, financial instruments valued by a technique that uses During the period, €31m in gains and losses were recorded in the income non-observable data included structured loans to local authorities recorded at fair statement for Level 3 financial assets and liabilities. During the period, -€8m in value and equities and advances to unconsolidated subsidiaries. gains and losses were recorded directly in other comprehensive income for Level 3 financial assets.

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9.1.3 ANALYSIS OF FAIR VALUE HIERARCHY TRANSFERS The amounts of transfers indicated in this statement are those of the last valuation preceding the transfer.

FY 2018 From Level 1 Level 1 Level 2 Level 2 Level 3 Level 3 (in €m) To Level 2 Level 3 Level 1 Level 3 Level 1 Level 2 FINANCIAL ASSETS Debt instruments Equity instruments Derivatives Other Derivatives Interest rate derivatives Financial assets at fair value through profit or loss – Economic hedging Debt instruments Debt instruments Equity instruments Equities and other equity securities Financial assets at fair value through other comprehensive income Hedging derivatives FINANCIAL LIABILITIES Financial liabilities at fair value through profit or loss – Held for trading * Derivatives 15 Interest rate derivatives 15 Financial liabilities at fair value through profit or loss – Economic hedging Debt securities Other financial liabilities Financial liabilities at fair value through profit or loss – Fair value option Hedging derivatives * Excluding technical hedging.

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Fair values calculated in this way are provided in the notes to the financial 9.2 FAIR VALUE OF FINANCIAL ASSETS statements for information purposes only. They are not indicators used in the AND LIABILITIES AT AMORTISED COST interest of overseeing retail banking activities, for which the management model is based on the collection of expected cash flows. For financial instruments not measured at fair value on the balance sheet, fair value calculations are provided for information purposes and must only be The simplified assumptions used to measure the fair value of instruments at interpreted as estimates. amortised costs are presented in note 9. In most cases, the values indicated are not liable to be realised and generally may not be realised in practice.

12/31/2018 12/31/2017 Measurement Measurement Measurement Measurement Price quoted techniques techniques Price quoted techniques techniques in an active using using in an active using using market observable unobservable market observable unobservable (in €m) Fair value (Level 1) data (Level 2) data (Level 3) Fair value (Level 1) data (Level 2) data (Level 3) FINANCIAL ASSETS AT AMORTISED COST 97,558 3,436 8,760 85,363 92,391 1,536 2,504 88,351 Loans and receivables due from credit institutions 14,851 4,109 10,742 11,423 788 10,635 Loans and receivables due from customers 73,455 663 72,792 70,733 1,536 1,716 67,481 Debt securities 9,252 3,436 3,988 1,829 10,235 10,235 FINANCIAL LIABILITIES AT AMORTISED COST 93,839 5,269 60,004 28,566 98,030 991 1,343 95,696 Amounts due to credit institutions 28,231 232 27,999 28,004 142 27,862 Amounts due to customers 320 53 267 587 463 124 Debt securities 65,277 5,269 59,719 289 68,998 991 297 67,710 Subordinated debt 11 11 441 441

NOTE 10 TAXES 10.1 INCOME TAX ❯ Income tax

ACCOUNTING PRINCIPLES (in €m) FY 2018 FY 2017 Income tax includes: Current income tax expense 162 599 ❯ current tax assets and liabilities calculated on the taxable income for the Deferred tax assets and liabilities -62 -545 period of each fiscal entity in the tax consolidation scope by applying the INCOME TAX 100 54 applicable tax rates and rules; ❯ deferred tax assets and liabilities (See 10.2).

2018 Registration document CRÉDIT FONCIER 185 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

❯ Reconciliation between the tax charge in the financial statements and the theoretical tax charge

(in €m) FY 2018 FY 2017 Net income attributable to equity holders of the parent -194 33 Change in the value of goodwill 13 Non-controlling interests 2 2 Share in net income of associates -1 Taxes -100 -54 INCOME BEFORE TAX AND CHANGE IN THE VALUE OF GOODWILL EXCLUDING SHARE IN INCOME OF ASSOCIATES (A) -279 -20 Standard income tax rate in France (B) 34.43% 34.43% Theoretical income tax expense (income) at the tax rate applicable in France (AxB) 96 7 Effects of permanent differences -3 -6 Reduced rate of tax and tax-exempt activities -1 -8 Difference in tax rates on income taxed outside France 2 1 Tax on prior periods, tax credits and other tax 9 Impact of tenor mismatch 6 51 Other items INCOME TAX EXPENSE (INCOME) 100 54 EFFECTIVE TAX RATE (INCOME TAX EXPENSE DIVIDED BY TAXABLE INCOME) 35.84% 270.00%

Deferred tax assets and liabilities are recognised as a tax benefit or expense in 10.2 DEFERRED TAX ASSETS AND LIABILITIES the income statement, except for: ACCOUNTING PRINCIPLES ❯ revaluation adjustments on post-employment benefits; Deferred tax assets and liabilities are recognised when temporary differences arise between the carrying amount of assets and liabilities on the balance ❯ unrealised gains and losses on financial assets at fair value through other sheet and their tax base, irrespective of when the tax is expected to be comprehensive income; recovered or settled. ❯ changes in the fair value of derivatives used as cash flow hedges; Deferred tax assets and liabilities are measured at the tax rates that are for which the corresponding deferred tax assets and liabilities are recognised expected to apply to the period when the asset is realised or the liability settled as unrealised gains and losses directly in other comprehensive income. based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets and liabilities are not discounted to their present value. Deferred tax liabilities and assets are offset at the level of each tax entity. The Deferred tax assets and liabilities on temporary differences arise from the tax entity may either be a single entity or a tax consolidation group. Deferred recognition of the items listed in the statement below (positive figures indicate tax assets are recognised only to the extent that it is probable that the entity deferred tax assets, while negative figures in brackets represent deferred tax will be able to recover them in the foreseeable future. liabilities):

(in €m) 12/31/2018 01/01/2018 Provisions for employee-related liabilities 7 10 Non-deductible impairment for credit risk 28 57 Other non-deductible provisions 100 42 Changes in fair value of financial instruments recorded in retained earnings 52 39 Other sources of temporary differences -40 66 Other balance sheet valuation items -133 -188 Deferred tax assets and liabilities related to timing differences 14 26 Deferred tax arising on the capitalisation of tax loss carryforwards Deferred tax on consolidation restatements and eliminations 110 143 Unrecognised deferred tax assets and liabilities NET DEFERRED TAX ASSETS AND LIABILITIES 124 169 Recognised: As assets in the balance sheet 124 169 As liabilities in the balance sheet

2018 Registration document 186 CRÉDIT FONCIER FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 5

NOTE 11 OTHER INFORMATION 11.1 SEGMENT REPORTING PRIVATE SECTOR CORPORATES A wholly-owned subsidiary of BPCE, groupe Crédit Foncier specialises in real Activities in this sector cover financing products and solutions for real estate estate financing for individuals and Corporates in France. professionals (developers, investors and corporations): Pursuant to IFRS 8, groupe Crédit Foncier’s organisation and management ❯ long or short-term financing through traditional or structured loan facilities; structures are grouped into four sectors. ❯ real estate leasing; Indirect income and expenses arising from support activities are reallocated to ❯ guarantees and other off-balance sheet commitments and related banking the Individual Customers and Public and Private sector Corporates segments. services (deposit and investment activity).

INDIVIDUAL CUSTOMERS PUBLIC SECTOR CORPORATES This sector involves four different activities: This sector covers financing products and solutions for French local authorities and Social housing providers (HLM Social housing management companies, ❯ financing for first-time home buyers and buy-to-let investors through the semi-public real estate companies), the Project and Infrastructure Financing granting of regulated or unregulated home loans; business (public-private partnerships, public service delegations) and the international portfolio (securities and receivables). ❯ real estate advisory and services; ❯ management of real estate loans for third parties; HOLDING STRUCTURE ❯ value-enhancement of Crédit Foncier’s property assets through rentals and Certain items that are considered as not related to the business lines are the sale of buildings. shown separately in this sector (including certain IFRS impacts, the contribution the Single Resolution Fund and provisions for restructuring relating to the project to reorganise Crédit Foncier’s activities within Groupe BPCE).

Private Individual sector Public sector Holding (in €m) Customers Corporates Corporates Structure FY 2018 Net banking income 408 102 75 -24 561 Operating expenses -354 -38 -28 -359 -779 Gross operating income 54 64 47 -383 -218 Cost/income ratio 86.8% 37.3% 37.3% n/a 138.9% Cost of risk -71 12 -1 -60 Gains and losses on other assets 1 -2 -1 Change in the value of goodwill -13 -13 Income before tax -16 76 46 -398 -292 Current and deferred taxes 30 -24 -16 110 100 Non-controlling interests -2 -2 NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 12 52 30 -288 -194

N/a: not applicable.

Individual Private sector Public sector Holding (in €m) Customers Corporates Corporates Structure 12/31/2018 Financial assets * 46,636 5,286 31,800 1,703 85,425 Other 24,932 24,932 TOTAL BALANCE SHEET ASSETS 46,636 5,286 31,800 26,635 110,357 * The breakdown of assets by sector is based on the distribution of commitments presented in the Risk Management report (overall gross exposure to credit risk, IFRS 7).

IAS 17 gives five examples of situations that lead to a lease being classified as 11.2 INFORMATION ON FINANCE AND OPERATING a finance lease: LEASES ❯ the lease transfers ownership of the asset to the lessee at the end of the lease ACCOUNTING PRINCIPLES term; Leases are analysed to determine whether in substance and economic reality ❯ the lease provides the lessee with the option to purchase the asset at a price they are finance leases or operating leases. that is expected to be sufficiently below the fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception of the FINANCE LEASES lease, that the option will be exercised; A finance lease is a lease that transfers to the lessee substantially most of the ❯ the lease term is for the major part of the economic life of the asset even if risks and rewards incidental to ownership of an asset. It is treated as a loan there is no transfer of ownership; granted by the lessor to the lessee in order to finance the purchase of an ❯ at the inception of the lease, the present value of the minimum lease asset. payments amounts to at least substantially all of the fair value of the leased asset; and ❯ the leased assets are of such a specialised nature that only the lessee can use them without major modifications.

2018 Registration document CRÉDIT FONCIER 187 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

IAS 17 also describes three indicators that may also individually or collectively Finance income corresponding to interest is recognised in the income lead to a lease being classified as a finance lease: statement under “Interest and similar income”. It is recognised based on a pattern reflecting a constant periodic rate of return on the net investment in the ❯ if the lessee can cancel the lease, and if the lessor’s losses associated with finance lease, using the interest rate implicit in the lease. The rate of return the cancellation are borne by the lessee; implicit in the lease is the discount rate that makes the following two items ❯ gains or losses from the change in the fair value of the residual value accrue to equal: the lessee; and ❯ the present value of the minimum lease payments receivable by the lessor ❯ the lessee has the ability to continue the lease for a second period at a rent plus the non-guaranteed residual value; that is substantially lower than the market rent. ❯ and the initial value of the asset (i.e. fair value at the inception of the lease, At the inception of the contract, the finance lease receivable is recorded on the plus any direct initial costs comprising expenses incurred specifically by the lessor’s balance sheet in an amount equal to the net investment in the lease, lessor to set up the lease). which corresponds to the minimum payments receivable from the lessee In the lessee’s financial statements, lease financing agreements with purchase discounted at the interest rate implicit in the lease plus any unguaranteed options are treated as the purchase of an asset financed by a loan. residual value accruing to the lessor. IAS 17 requires unguaranteed residual values to be reviewed on a regular OPERATING LEASES basis. If there is a reduction in the estimated guaranteed residual value, the income allocation over the lease term is revised (calculation of a new payment A lease which is not considered to be a finance lease is automatically classified schedule) and a charge is recorded in order to correct the financial income as an operating lease. already recorded. Assets provided under operating leases are shown in the balance sheet under Impairment on finance leases is determined in accordance with IFRS 9 using property, plant and equipment or intangible assets in the case of equipment the same method as that described for financial assets at amortised cost leases, and investment property in the case of property leases. Lease income (Note 5.5) and is recognised under “Cost of credit risk”. from operating leases is recognised in the income statement on a straight-line basis over the lease term, under “Income or expenses from other activities”.

11.2.1 LEASING TRANSACTIONS AS LESSOR

12/31/2018 01/01/2018 Term outstanding Term outstanding ≥ 1 year ≥ 1 year and and (in €m) < 1 year < 5 years > 5 years Total < 1 year < 5 years > 5 years Total Finance leases Gross investment 59 206 404 669 98 202 336 636 Present value of minimum lease payments receivable 45 167 380 592 45 154 308 507 Financial income not received 14 39 24 77 3 90 93 Operating leases Minimum lease payments receivable on contracts that cannot be terminated

12/31/2018 01/01/2018 Non-real Non-real Real estate estate Real estate estate (in €m) assets assets Total assets assets Total Finance leases Non-guaranteed residual value accruing to the lessor 117 117 158 158

CONTINGENT RENTAL INCOME FOR THE PERIOD RECORDED AS INCOME

(in €m) 12/31/2018 01/01/2018 Finance leases 2 Operating leases

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11.2.2 LEASING TRANSACTIONS AS LESSES ❯ Minimum future lease payments 12/31/2018 01/01/2018 Term outstanding Term outstanding ≥ 1 year ≥ 1 year and and (in €m) < 1 year < 5 years > 5 years Total < 1 year < 5 years > 5 years Total Operating leases Minimum future amounts payable on contracts that cannot be terminated 22 41 5 68 -20 -47 -13 -80 Minimum future payments receivable on sub-letting contracts that cannot be terminated

❯ Amounts recorded in net income

(in €m) 12/31/2018 01/01/2018 Operating leases Minimum payments -23 Contingent rental payments included in expenses for the period Income from sub-letting activities

eliminated in full on consolidation, so that only items that relate to 11.3 RELATED-PARTY TRANSACTIONS intercompany transactions between companies over which the Group Crédit Foncier’s related parties are considered to be all consolidated exercises significant influence (accounted for by the equity method) and companies, including those accounted for by the equity method, BPCE, IT intercompany transactions with BPCE are reported. The Group has no joint centres and the Group’s Company Directors. ventures consolidated under the proportional method. A list of fully consolidated subsidiaries showing the Group’s percentage 11.3.1 TRANSACTIONS WITH CONSOLIDATED interest is shown in the note on the Group’s scope of consolidation. COMPANIES All intercompany transactions carried out during the period and balances outstanding at the end of the period with fully consolidated companies are 12/31/2018 01/01/2018 Companies Companies accounted for accounted for by the equity by the equity (in €m) BPCE method * BPCE method * Loans 8,989 9,484 Other financial assets Other assets 338 758 Total assets with related parties 9,327 10,242 Debt 22,310 23,108 Other financial liabilities Other liabilities 586 564 Total liabilities with related parties 22,896 23,672 Interest and similar income and expenses 25 14 Fees and commissions -1 Net income from financial transactions -12 -10 Net income from other activities Total NBI on transactions with related parties 12 4 Commitments given 7,386 7,665 Commitments received 10,878 12,158 Commitments on forward financial instruments Total commitments with affiliates 18,264 19,823 * Equity method.

2018 Registration document CRÉDIT FONCIER 189 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

11.3.2 TRANSACTIONS WITH COMPANY DIRECTORS SECURITISATION Key management personnel are corporate officers and members of Crédit Securitisation transactions are generally established as structured entities in Foncier’s Board of Directors. Remuneration paid during financial year 2018 which assets or derivatives representing credit risk are isolated. amounted to €0.8m (including attendance fees), comprising mainly short-term These entities serve to diversify the underlying credit risks and to split them benefits as detailed in the Management report. into various levels of subordination (tranches) with a view, generally, to sell them to investors seeking a certain level of return, according to the degree of risk accepted. 11.4 INTERESTS IN NON-CONSOLIDATED These vehicles’ assets and the liabilities that they issue are rated by the rating STRUCTURED ENTITIES agencies which monitor that the level of risk associated with each tranche of risk sold is commensurate with the attributed rating. 11.4.1 NATURE OF INTERESTS IN NON-CONSOLIDATED STRUCTURED ENTITIES The kind of securitisation transactions used and which require the intervention of structured entities are as follows: A non-consolidated structured entity is a structured entity that is not controlled and is therefore not accounted for using the full consolidation method. As a ❯ transactions where the Group (or a subsidiary) sells on its own behalf to a result, the interests held in a joint venture or associate which is classed as a dedicated vehicle, in cash or synthetic form, the credit risk associated with structured entity falls within the scope of this note. one of its asset portfolios; ❯ securitisation transactions performed on behalf of third parties. These The same is true of controlled structured entities that are not consolidated for transactions consist of housing the assets belonging to another company in a threshold reasons. dedicated structure (generally a Special Purpose Entity [SPE]). The SPE issues This includes all structured entities in which groupe Crédit Foncier holds an shares that can, in certain cases, be subscribed for directly by investors, or interest and intervenes in one or more of the following capacities: subscribed for by a multi-seller conduit which refinances the acquisition of these shares through the issue of short-term notes (commercial paper). ❯ originator/structurer/arranger; ❯ placement agent; STRUCTURED FINANCING Structured financing covers the range of activities and products set up to ❯ manager; provide financing to economic players while reducing risks through the use of ❯ in any other capacity that has a major impact on the structuring or complex structures. These include the financing of movable assets (pertaining management of the transaction (e.g. provision of financing, guarantees or to aeronautic, marine or terrestrial transport, telecommunications, etc.), real structuring derivatives, tax investor, major investor, etc.). estate assets and the acquisition of targeted companies (LBO financing). In the special case of asset management, investments in private equity/venture The Group may need to create a structured entity that houses a specific capital structures or real estate funds are presented unless they are not financing transaction on behalf of a customer. It is a contractual and structural material for groupe Crédit Foncier. organisation. The particularities of these types of financing are related to risk management, with use of notions such as limited recourse or waivers of An interest in an entity is any kind of contractual or non-contractual connection recourse, standard and/or structural subordination and the use of dedicated that exposes groupe Crédit Foncier to the risk of a change in returns related to legal vehicles used in particular to carry a single-contract finance lease the entity’s performance. Interests in another entity may be evidenced by, representing the financing granted. among others, the holding of equity instruments or debt securities, as well as by other types of relationship, such as financing, short-term credit facilities, credit enhancement, provision of guarantees or structured derivatives. OTHER ACTIVITIES In note 11.4.2, groupe Crédit Foncier reports all of the transactions recorded The majority of this category is financing granted by the subsidiary SOCFIM to in its balance sheet under risks associated with holdings in the structured construction and sale companies. entities that are included in the aforementioned scope. The structured entities with which the Group has a relationship can be divided 11.4.2 NATURE OF RISKS RELATING TO INTERESTS into four categories: entities involved in asset management, securitisation IN NON-CONSOLIDATED STRUCTURED vehicles, entities created for structured financing activities and entities created ENTITIES for other types of transactions. Assets and liabilities recognised in the Group’s various balance sheet accounts relating to interests in non-consolidated structured entities contribute ASSET MANAGEMENT to determining the risks associated with these entities. Financial asset management (also known as portfolio management) consists of managing equity or funds entrusted by investors by investing in equities, The assets identified as such on the assets side of the balance sheet, along bonds, cash SICAV or hedge funds, etc. with financing and guarantee commitments given less guarantee commitments received, are used to assess the maximum loss exposure. The asset management line of business which uses structured entities is represented by collective management or fund management. More The “Notional amount of derivatives” item is the notional amount of options specifically, it encompasses collective investment vehicles within the meaning sold in relation to structured entities. of the French Monetary and Financial Code (other than securitisation The data in question are presented below, aggregated based on their activity structures) as well as equivalent vehicles governed by foreign law. These classification. notably include entities such as UCITS, real estate funds and private equity funds.

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Asset Structured Other (in €m) Securitisation management Financing activities 12/31/2018 Trading derivatives 86 86 Trading financial instruments (excluding derivatives) Financial instruments at fair value through profit or loss – Non SPPI 3 21 1 25 Financial instruments designated at fair value Equity instruments at fair value excluding assets held for trading 24 24 Financial assets at fair value through profit or loss 89 45 1 135 Financial assets at fair value through other comprehensive income Financial assets at amortised cost 18 7 46 71 Insurance business investments Other assets 7 7 TOTAL ASSETS 114 52 47 213 Financial liabilities at fair value through profit or loss 26 26 Provisions TOTAL LIABILITIES 26 26 Guarantees received Notional amount of derivatives 625 625 Maximum loss exposure 739 52 47 838 SIZE OF STRUCTURED ENTITIES 1,025 148 46 1,219 o/w size in which Crédit Foncier has an interest 417 148 46 611

Asset Structured Other (in €m) Securitisation management Financing activities 12/31/2017 Trading derivatives 115 115 Trading financial instruments (excluding derivatives) 3 3 Financial instruments designated at fair value Financial assets at fair value through profit or loss 118 118 Available-for-sale financial assets 46 46 Loans and receivables 23 7 49 20 99 Held-to-maturity financial assets Other assets 12 12 TOTAL ASSETS 153 53 49 20 275 Financial liabilities at fair value through profit or loss 49 49 Provisions TOTAL LIABILITIES 49 49 Financing commitments given 17 17 Guarantee commitments given 29 29 Collateral received Notional amount of derivatives 810 810 Maximum loss exposure 963 53 49 66 1,131 SIZE OF STRUCTURED ENTITIES 1,269 148 49 1,466 o/w size in which Crédit Foncier has an interest 489 148 49 686

2018 Registration document CRÉDIT FONCIER 191 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

11.4.3 INCOME AND CARRYING AMOUNT OF ASSETS ❯ it contributes to the success of the entity by transferring assets to it or by TRANSFERRED TO SPONSORED managing relevant activities. NON-CONSOLIDATED STRUCTURED ENTITIES When the Group entity’s role is limited to one of advisor, arranger, custodian or placement agent, the structured entity is not considered to be sponsored. A structured entity is sponsored by a Group entity when the two following criteria are both satisfied: For non-consolidated structured entities that the Group has sponsored without holding any interests, the impact on the financial statements is ❯ it is involved in the creation and structuring of the structured entity; presented below:

Asset Structured Other (in €m) Securitisation management Financing activities FY 2018 Net interest income Net fee and commission income -1 -1 Net gains or losses on financial instruments at fair value through profit and loss 3 3 Income from entities 2 2 Carrying amount of assets transferred to the entity during the fiscal year Nil

Asset Structured Other (in €m) Securitisation management Financing activities FY 2017 Net interest income Net fee and commission income -11 -11 Net gains or losses on financial instruments at fair value through profit and loss -37 -37 Income from entities -48 -48 Carrying amount of assets transferred to the entity during the fiscal year Nil

11.5 LOCATIONS BY COUNTRY Information about locations by country pursuant to the decree No. 2014-158 of February 20, 2014 amending Article L. 511-45 of the French Monetary and Financial Code is disclosed in the Registration document of Groupe BPCE.

11.6 FEES PAID TO STATUTORY AUDITORS AND MEMBERS OF THEIR NETWORKS

PWC network KPMG network MAZARS network Amount % Amount % Amount % Amounts in €k 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 Certification of financial statements 1,112 1,275 84% 85% 1,446 1,588 94% 93% 15 17 100% 100% Issuer 645 820 683 816 Fully-consolidated subsidiaries 467 455 763 772 15 17 Services other than certification of financial statements * 213 224 16% 15% 87 114 6% 7% Issuer 54 48 18 14 Fully-consolidated subsidiaries 159 176 69 100 TOTAL 1,325 1,499 100% 100% 1,533 1,702 100% 100% 15 17 100% 100% Change (in %) -12% -10% -12% * The main services other than the certification of the financial statements concern assignments relating to issues made by Compagnie de Financement Foncier, comfort letters relating to these issues, a review of the tax and accounting implications of certain material transactions and the completion of the CACEIS statement and other custodian reports.

NOTE 12 SCOPE OF CONSOLIDATION

guarantees, and sold to special purpose entities that finance their acquisition 12.1 SECURITISATION TRANSACTIONS by issuing securities underwritten by investors. ACCOUNTING PRINCIPLES Entities created specifically for this purpose are consolidated if the Group Securitisation is a financial engineering technique that aims to enhance exercises control over them. Control is assessed according to the criteria balance sheet liquidity. From a technical perspective, assets to be securitised provided in IFRS 10 and reiterated in 3.1.1. are grouped according to the quality of the associated collateral or

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DECONSOLIDATING SECURITISATION TRANSACTIONS At December 31, 2018, the net impact of the CFHL-2 transactions was CARRIED OUT WITH TOTAL OR PARTIAL DERECOGNITION +€1.6m. As a reminder, Crédit Foncier has completed two residential mortgage-backed The nature of the links with the operations Elise, CFHL-1 and CFHL-2 is loan securitisation transactions (Crédit Foncier Home Loans 1 in May 2014 described in note 5.21.2. and Crédit Foncier Home Loans 2 in August 2015). As the asset manager, Crédit Foncier does not have the ability to use its power to influence the variability of returns. Therefore, it does not control the 12.2 SCOPE OF CONSOLIDATION securitisation funds within the meaning of IFRS 10, and the funds are not consolidated. AT DECEMBER 31, 2018 Only those subsidiaries providing a material contribution are consolidated. For However, given its ongoing ties with CFHL-2, the criteria needed to establish entities meeting the definition of financial sector entities given in Regulation full derecognition of assets under IFRS 9 are not entirely met. As a result, the (EU) 575/2013 of the European Parliament and of the Council of June 26, transaction is deconsolidating in accordance with IFRS 10, and partially 2013 (the Capital Requirements Regulation or CRR), the accounting derecognised in accordance with IFRS 9. consolidation thresholds have been aligned, from December 31, 2017, with The transferred assets are recognised in proportion to Crédit Foncier’s those applied for the prudential scope of consolidation. Article 19 of the CRR continued involvement. As a result, the Group continues to recognise the sets a threshold of €10m in total balance sheet and off-balance sheet assets. maximum loss associated with each of the residual ties to the fund (swaps, For non-financial sector entities, materiality is assessed at the level of the clean-up calls, management fees) in balance sheet assets. consolidated entities. Based on the principle of ascending materiality, any entity included at a sub-consolidation level is included at all higher These adjustments led to the recognition of total assets of €63m and total consolidation levels, even if it is not material at those levels. liabilities of €26m at December 31, 2018. Control and interest percentages are indicated for each entity in the scope of The fair value of these residual ties is remeasured at each reporting date. consolidation. The interest percentage represents the Group’s direct or indirect ownership stake in the companies within the scope of consolidation. The interest percentage is used to determine the Group’s share of the Company’s net assets.

Consolidation Consolidated companies Legal form Registered office method % Control % Interest Financial institutions Compagnie de Financement Foncier SA 19, rue des Capucines 75001 PARIS Full 100.00 100.00 Comptoir Financier de Garantie (CFG) SA 19, rue des Capucines 75001 PARIS Full 100.00 100.00 Locindus SA 19, rue des Capucines 75001 PARIS Full 74.82 74.82 SOCFIM (2) SA 10, bld de Grenelle 75015 PARIS Full 99.99 99.99 Quinta da Fonte. Edifício D. João I – 1º 2770 – Banco Primus (2) SA 192 Paço de Arcos. Portugal Full 100.00 100.00 Non-financial companies Cofimab SNC 19, rue des Capucines 75001 PARIS Full 99.99 99.99 Crédit Foncier Immobilier (2) SA 19, rue des Capucines 75001 PARIS Full 100.00 100.00 Gramat Balard SARL 19, rue des Capucines 75001 PARIS Full 100.00 99.99 Vendôme Investissements SA 19, rue des Capucines 75001 PARIS Full 99.99 99.99 Foncier Participations SA 19, rue des Capucines 75001 PARIS Full 100.00 100.00 Société d’Investissement et de Participation Immobilière (SIPARI) SA 19, rue des Capucines 75001 PARIS Full 99.99 99.99 SEREXIM (2) SAS 19, rue des Capucines 75001 PARIS Full 100.00 100.00 Foncière d’Évreux SA 19, rue des Capucines 75001 PARIS Full 100.00 99.99 SOCFIM Participations Immobilières (2) SNC 10, bld de Grenelle 75015 PARIS Full 100.00 99.99 Crédit Foncier Expertise (2) SA 19, rue des Capucines 75001 PARIS Full 100.00 100.00 Oxiane SAS 19, rue des Capucines 75001 PARIS Full 100.00 74.82 Scribe Bail Logis (1) SAS 19, rue des Capucines 75001 PARIS Full 100.00 74.82 Scribeuro (1) SAS 19, rue des Capucines 75001 PARIS Full 100.00 74.82 (1) These subsidiaries were subject to a full transfer of assets to the subsidiary Locindus in the 1st half of 2018. (2) These subsidiaries are intended for sale in 2019.

2018 Registration document CRÉDIT FONCIER 193 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

12.3 UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES Following the publication by the French accounting standards authority (ANC) of a new Regulation 2016-09 dated December 2, 2016 on the Information to be included in the notes to consolidated financial statements prepared in accordance with IFRS, the following note lists companies that are not consolidated by the Group and material unconsolidated investments in affiliates that are not included in the scope of consolidation.

12.3.1 SUBSIDIARIES MORE THAN 50% OWNED BUT NOT CONSOLIDATED

% direct Unconsolidated subsidiaries Legal form Registered office or indirect holding Enfi SAS 19, rue des Capucines 75001 PARIS 100.00% Foncier Foreign 2008 SAS 19, rue des Capucines 75001 PARIS 100.00% Eurl Étoile Lauriston SARL 19, rue des Capucines 75001 PARIS 100.00% SOCFIM Investissements SAS 10, bld de Grenelle 75015 PARIS 99.05% Compagnie Foncière de Construction SAS 19, rue des Capucines 75001 PARIS 100.00% Compagnie Foncière de Développement SAS 19, rue des Capucines 75001 PARIS 100.00% Aguesseau Immobilier SNC 19, rue des Capucines 75001 PARIS 100.00% Montjoie Saint Denis SCI 19, rue des Capucines 75001 PARIS 100.00% Trésor République SCI 19, rue des Capucines 75001 PARIS 100.00% Berry Vendomois SCI 19, rue des Capucines 75001 PARIS 100.00% Sipari Velizy SAS 19, rue des Capucines 75001 PARIS 100.00% Stam Invest II SAS 6, place de la Madeleine 75008 PARIS 90.00% Sofipar Logement SNC 19, rue des Capucines 75001 PARIS 85.00% Sada Business Cent BO BOX 69806 Foncier Project Solutions SARL 11557 Riyadh Saudi Arabia 100.00% Ikor Sipari SCI 28, rue Escudier 92772 BOULOGNE BILLANCOURT 80.00% Foncier Titrisation SA 19, rue des Capucines 75001 PARIS 99.80% Foncier Pro SAS 134, boulevard Haussmann 75008 PARIS 65.00% Big Boss SCI 9, rue Benoît Malon 92150 SURESNES 55.56% Barrois La Reynie SCI 19, rue des Capucines 75001 PARIS 100.00%

Non-financial entities are excluded from the Group’s scope of consolidation based on materiality thresholds set by the Group (total assets €250m, net banking income €15m and net income of +/-€2m). These thresholds must be met for the past two consecutive years.

12.3.2 UNCONSOLIDATED INVESTMENTS IN AFFILIATES Affiliates are holdings in the capital of other legal entities, which may or may not be in the form of securities. Securities that represent over 10% of the capital are considered investments in affiliates.

% direct Unconsolidated subsidiaries Legal form Registered office or indirect holding Inter Immobilier SA 82, avenue Marceau 75008 PARIS 49.00% Consortium des Professionnels de l’Immobilier SAS 129, rue du Faubourg-Saint-Honoré 75008 PARIS 34.02% Centre Archives Diplomatiques SCI 52, rue Jacques Hillairet 75012 PARIS 34.00% H&T Conseil SA 2, rue Lord Byron 75008 PARIS 20.00% Vivapierre SPPICAV 8, rue Auber 75009 PARIS 15.85% Carres II SCI 21, avenue Marcelin Berthelot 38100 GRENOBLE 15.00% SAF Environnement SA 72, avenue Pierre-Mendès-France 75013 PARIS 12.00% Majestal 1 SPPICAV 9, rue Jadin 75017 PARIS 11.99% Ciloger 2 OPCI SPPICAV 147, boulevard Haussmann 75008 PARIS 10.21% FIDEPPP 1 FCPR 47, quai d’Austerlitz 75013 PARIS 15.78% FIDEPPP 2 FCPR 47, quai d’Austerlitz 75013 PARIS 12.50%

2018 Registration document 194 CRÉDIT FONCIER FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 5

❯ 5.1.8 REPORT OF THE STATUTORY AUDITORS ON THE CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2018 INDEPENDENCE Crédit Foncier de France S.A. We have conducted our audit assignment in accordance with the rules of Registered Office: 19 Rue des Capucines - 75001 Paris independence applicable to us, over the period from January 1, 2018 to the Share capital: €1,331,400,718.80 date of our report. In particular, we have not provided any services prohibited by Article 5, paragraph 1 of Regulation (EU) No. 537/2014 or by the Statutory To the Shareholders of Crédit Foncier de France S.A., Auditors’ Code of Ethics.

OPINION OBSERVATION In compliance with the assignment entrusted to us by your Annual General Without prejudice to the opinion expressed above, we draw your attention to Shareholders’ Meeting, we have audited the consolidated financial statements the changes in accounting method pursuant to the first-time application of of Crédit Foncier de France SA for the year ended December 31, 2018, as IFRS 9 on Financial Instruments, as described in Note 1.3.2 to the enclosed with this report. consolidated financial statements (“First-time application of IFRS 9”). In our opinion, the consolidated financial statements give a true and fair view of the results of the year and of the financial position and assets of all the JUSTIFICATION OF OUR ASSESSMENTS - KEY AUDIT consolidated entities included in the scope of consolidation at the end of the MATTERS year, in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union. Pursuant to the provisions of Articles L.823-9 and R.823-7 of the French Commercial Code regarding the justification of our assessments, we draw The opinion expressed above is consistent with the content of our report to your attention to the key audit matters which cover areas identified during our the Audit Committee. audit that we consider bear the biggest risks of significant misstatements, based on our professional judgement, as well as the responses we provided BASIS OF THE OPINION to these risks. These assessments were part of our audit of the consolidated financial AUDIT STANDARDS statements as a whole, and therefore contributed to the opinion expressed We conducted our audit in accordance with professional standards applicable above. We do not express an opinion on individual items of the consolidated in France. We believe that our audit has provided us with sufficient relevant financial statements. information on which to base our opinion. The responsibilities incumbent on us in respect of these standards are described in the section entitled “Responsibilities of the Statutory Auditors in respect of the audit of the consolidated financial statements” of this report.

❯ Project to integrate Crédit Foncier’s operations into Groupe BPCE

Risk identified Our audit approach As part of the plan to integrate Crédit Foncier’s activities and reorganise its expertise We have tested the completeness and accuracy of the basis used for within Groupe BPCE, Groupe Crédit Foncier has recorded provisions for restructuring. the calculation of provisions for employee-related expenses and the These provisions primarily cover the personnel expenses that are expected to be incurred other costs of the plan. further to the implementation of the collective agreements negotiated with the trade We have verified that the estimates made by Crédit Foncier unions (voluntary redundancy, transfers within Groupe BPCE, support for staff remaining incorporated all the measures included in the employment protection at Groupe Crédit Foncier and end-of-career support measures). They also cover other plans negotiated with the trade unions and the costs incurred and estimated costs, in particular real estate expenses and the cost of terminating contracts subject to provisions in terms of accounting standards. with exclusive agents. We assessed the reasonable and substantiated nature of the main Assessing provisions involves exercising judgement and is based on assumptions, in assumptions made with regard to available information. particular regarding employee take-up of the different components of the employment We tested the provision calculations and verified that labour law was protection plan. correctly applied in respect of the agreements negotiated as of We considered that these provisions for restructuring were a key audit matter, because December 31, 2018, based on samples. of: We reviewed the information presented in the notes to the financial ❯ the relative importance of the impacts of this project, statements. ❯ the importance of the assumptions used by management in calculating the amount of the provision, ❯ the complexity of the agreements and their interpretation in terms of labour law and accounting standards. The provision recorded for the restructuring plan at December 31, 2018 amounted to €334m. For further details on the accounting principles applied, the main assumptions made and the impacts, please refer to Notes 1.3.1 and 5.15 to the consolidated financial statements.

2018 Registration document CRÉDIT FONCIER 195 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

❯ Credit risks: impairment of loans to individuals

Risk identified Our audit approach Groupe Crédit Foncier records provisions to cover the risk of losses arising if its We reviewed the process used by the Risk Division to classify loans (as customers are unable to meet their financial commitments. In accordance with IFRS 9, Stage 1, 2 or 3) and assess the amount of ECL in order to determine since January 1, 2018, groupe Crédit Foncier records impairment for expected credit whether the estimates used comply with IFRS 9. losses (ECL) on performing loans (Stage 1), loans with a significant increase in credit risk We tested the main controls used by the Division to identify (Stage 2) and impaired loans. non-performing loans and assess hopes of recovery and impairment. Impairment for expected credit losses (on Stage 1 and Stage 2 loans) is calculated using We were also informed of the main conclusions of the specialised models developed by the Group that use various inputs (probability of default (PD), loss committees responsible for monitoring non-performing and impaired given default (LGD), forward-looking data, etc.) and specific adjustments as applicable. loans. Impaired loans (Stage 3) are subject to impairment calculated individually or statistically. For Stage 1 and Stage 2 impairment: This impairment is calculated by management based on estimated recoverable future ❯ we reviewed the methods used to identify the different inputs and cash flows and taking into account any available guarantees. expected credit loss calculation models and verified their compliance Assessing provisions involves exercising judgement when classifying exposures (as Stage with the applicable accounting standards, 1, 2 or 3) and when calculating recoverable future cash flows and recovery times. ❯ we examined the terms for identifying a significant increase in credit Given the importance of the use of judgement in determining impairment and the changes risk (SICR), arising from the application of the new standard (adapting of the operational method for ❯ we were informed of the system in place to periodically review the calculating expected credit losses, new calculation system, inputs, new control main inputs used in the calculation models, framework, etc.), we considered that the estimation of expected credit losses on loans to individuals at the date of first-time application of the new standard and at December 31, ❯ we tested the controls of data flows used to calculate expected 2018 was a key audit matter. credit losses, the reconciliation of data between the databases used for ECL calculations and accounting databases and the general As of December 31, 2018, outstanding loans to customers amounted to €70,080m controls of the IT applications used to calculated provisions, (including €46,636m in loans to individual customers). Total impairment for outstanding loans and similar items amounted to €856m, including €28m for Stage 1 loans, €1,104m ❯ we also made independent expected credit loss calculations on a for Stage 2 and €724m for Stage 3. sample basis. For further details on the accounting principles and exposures, please refer to Notes In view of how Groupe BPCE is organised, some of the work described 1.3.2, 1.3.4, 5.5.3, 7.1 and 11 to the consolidated financial statements. above was performed with the support of BPCE’s Statutory Auditors. The options chosen and the impact of the first-time application of IFRS 9 at January 1, For impairment of impaired loans (Stage 3), we examined the method 2018 are described in Notes 1.3.2 and 5.1.6 to the consolidated financial statements and used to revalue collateral for loans subject to provisions either the accounting principles are detailed in Note 7.1. The impact of first-time application of individually or as portfolios of similar receivables. IFRS 9 on opening equity related to the implementation of the new impairment model is We reviewed the information provided in the notes to the consolidated financial statements on credit risk hedging, including the effects of the -€152m before tax. first-time application of IFRS 9.

❯ Macro-hedging of fixed-rate loans

Risk identified Our audit approach Groupe Crédit Foncier manages its interest rate risk notably via interest rate swaps We analysed the methods for documenting macro-hedging classified as fair value hedges of fixed-rate outstandings. relationships by generation of loan set by the Group and reviewed their In the persistent low interest rate environment, which is causing a high level of early compliance with IFRS in conjunction with our specialists. repayments and renegotiations of macro-hedged loans, Crédit Foncier tests the We reviewed the control process that ensures the robustness of tests effectiveness of its macro-hedging by generation of loan (asset-based testing and used to classified interest rate swaps as macro-hedges and the tests valuation adjustment testing). conducted on value adjustments. We considered that the classification of swaps as macro-hedges and the resulting We assessed the assumptions used for projections regarding hedged account treatment was a key audit matter, because of: outstanding loans in relation to past observations and the early ❯ the risk of having to reclassify hedging relationships or accelerate the amortisation of repayment projections applied for the management of the Group’s certain amortised balances of swaps terminated because of observed and expected assets and liabilities. early repayments or renegotiations and their impact on new projections regarding the We also performed the following tests: hedged items, ❯ comparison of the outstanding loan and swap data used to perform ❯ the use of judgement in projecting outstanding amounts and in particular future early the asset-based test by generation of loan with data in the repayments or renegotiations, information system, ❯ the operational complexity of testing the effectiveness of hedges. ❯ verification that the effectiveness tests take into account amortised As of December 31, 2018, revaluation adjustments on interest rate risk-hedged portfolios balances of terminated macro-hedging swaps, amounted to €4,695m. For further details on the accounting principles and exposures, ❯ verification of ineffectiveness calculations. please refer to Notes 1.3.5, 4.3 and 5.3 to the consolidated financial statements. We verified that appropriate information is provided in the notes to the financial statements.

2018 Registration document 196 CRÉDIT FONCIER FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 5

❯ Financial operations and migration of IT systems

Risk identified Our audit approach In the first quarter of 2018, groupe Crédit Foncier de France migrated to a new Groupe We reviewed the system used by the bank’s management during the BPCE IT system for the management of its financial operations. year to secure the processing of its financial operations. This migration involved the recovery of data from the existing system, the configuration of In particular, we tested the operational efficiency of the manual controls the new system (valuation of instruments, interest calculation, accounting charts, etc.) and set up and performed a critical review of the new processes. the implementation of new automated or manual processes and controls. With the support of Groupe BPCE’s Statutory Auditors, we tested the The migration led groupe Crédit Foncier to implement a specific solution to secure the automated controls in the new application and verified the checks used, process for recording transactions completed during the year, including in particular the in particular in terms of user access rights. recording of the manual entries that proved necessary. We completed tests on the valuation of the securities portfolio on a We considered that this situation constituted a key audit matter in view of the volume of sample basis. manual entries and the critical nature of this information system in ensuring the quality of We tested bank reconciliation and verified that the value of derivatives accounting and financial information on financial instruments. matched that recorded by counterparties. We also performed a critical review of the documentation of micro-hedging transactions. We reviewed a sample of manual entries made during the year.

SPECIFIC VERIFICATION RESPONSIBILITIES OF THE STATUTORY AUDITORS IN RESPECT OF THE AUDIT OF THE CONSOLIDATED We also verified the information about the Group provided in the Group management report by the Board of Directors, as required by laws and FINANCIAL STATEMENTS regulations, in accordance with French generally accepted accounting principles. OBJECTIVES AND AUDIT APPROACH We are required to produce a report on the consolidated financial statements. We have no observations to make regarding the fair presentation of this Our objective is to obtain reasonable assurance that the consolidated financial information or its consistency with the consolidated financial statements. statements as a whole contain no material misstatements. Reasonable assurance corresponds to a high level of assurance, but there is no guarantee that an audit performed in accordance with professional standards will detect INFORMATION ARISING FROM OTHER LEGAL all material misstatements. Misstatements can arise from fraud or errors and AND REGULATORY OBLIGATIONS are considered material when it can be reasonably expected that they may - either individually or together - influence the decisions that users of the APPOINTMENT OF THE STATUTORY AUDITORS financial statements make based on their content. We were appointed Statutory Auditors of the company Crédit Foncier de France SA by the Annual General Shareholders’ Meeting on May 26, 2004, for As stipulated in Article L.823-10-1 of the French Commercial Code, our duty in KPMG SA and by the meeting of May 24, 2000 for PricewaterhouseCoopers certifying the financial statements does not consist in guaranteeing the viability Audit. of your Company or the quality of its management. As of December 31, 2018, KPMG SA was in its 15th successive year in office, In an audit performed in accordance with the professional standards and PricewaterhouseCoopers Audit in its 19th year. applicable in France, the Statutory Auditors use their professional judgement throughout the audit. In addition: RESPONSIBILITIES OF MANAGEMENT AND ❯ they identify and assess the risks that the consolidated financial statements contain material misstatements, caused by fraud or by error, establish and THE PERSONS IN CHARGE OF CORPORATE implement audit procedures to address these risks and gather sufficient and GOVERNANCE IN RESPECT OF THE CONSOLIDATED appropriate information to be able to form their opinion. The risk of not FINANCIAL STATEMENTS detecting a material misstatement caused by fraud is higher than the risk of not detecting a material misstatement arising from error, because fraud may Management is responsible for preparing true and fair consolidated financial involve collusion, forgery, voluntary omissions, false representations or the statements in compliance with the International Financial Reporting Standards circumvention of internal controls; (IFRS) as adopted in the European Union and for setting up the internal controls it deems necessary to ensure the preparation of consolidated financial ❯ they are informed of relevant internal controls for the audit in order to establish statements that are free of material misstatements, be they caused by fraud or appropriate audit procedures, and not for the purposes of expressing an by error. opinion on the effectiveness of the internal control system; ❯ they assess the appropriateness of the accounting policies used and whether When preparing the consolidated financial statements, management must the accounting estimates made by management are reasonable, and verify assess the Company’s ability to continue its operations, present information the information contained in the consolidated financial statements; relating to the continuity of operations in the financial statements, as appropriate, and apply the going-concern accounting principle, unless the ❯ they verify that management applies the going-concern accounting principle Company is to be wound up or cease trading. appropriately, and, depending on the information gathered, establish whether or not there is significant uncertainty arising from events or The Audit Committee is responsible for monitoring the process used to circumstances that may undermine the Company’s ability to continue its prepare the financial information and for verifying the effectiveness of internal operations. This assessment is based on information obtained up to the control and risk management systems, and of the internal audit, as applicable, date of the report, it being understood that subsequent circumstances or regarding the procedures for the preparation and treatment of accounting and events may threaten the continuity of operations. If the auditors conclude financial information. that there is significant uncertainty, they will draw the attention of readers of the report to the information provided in the consolidated financial The consolidated financial statements are the responsibility of the Board of statements regarding this uncertainty, or, if such information is not provided Directors. or is not relevant, they will issue a qualified opinion or refuse to issue an opinion;

❯ they assess the overall presentation of the consolidated financial statements and decide whether they reflect the underlying transactions and events in such a way as to present a fair view thereof;

2018 Registration document CRÉDIT FONCIER 197 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

❯ for the financial information of persons or entities included in the scope of The information contained in the report to the Audit Committee includes the consolidation, they collect sufficient and appropriate information to be able to biggest risks of significant misstatements that we identified during our audit of express an opinion on the consolidated financial statements. The auditors are the consolidated financial statements for the period, which constitute the key responsible for the management, supervision and completion of the audit of audit matters that we are required to describe in this report. the consolidated financial statements and for the opinion issued. We also issue the Audit Committee with the statement required under Article 6 of Regulation (EC) No. 537-2014 confirming our independence within the REPORT TO THE AUDIT COMMITTEE meaning of the rules applicable in France as stipulated in Articles L.822-10 to We submit a report to the Audit Committee setting out our audit work and the L.822-14 of the French Commercial Code and in the Statutory Auditors’ Code audit plan followed, as well as the conclusions of our work. We also draw its of Ethics. If need be, we discuss the risks relating to our independence and attention, if need be, to any significant internal control weaknesses we the safeguards applied with the Audit Committee. identified in the procedures used for the preparation and treatment of accounting and financial information.

The Statutory Auditors

Paris-La Défense, March 22, 2019 Neuilly-sur-Seine, March 22, 2019 KPMG S.A. PricewaterhouseCoopers Audit Xavier de Coninck Anik Chaumartin Partner Partner Marie-Christine Jolys Partner

2018 Registration document 198 CRÉDIT FONCIER FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS 5

5.2 PARENT COMPANY FINANCIAL STATEMENTS

❯ 5.2.1 PARENT COMPANY BALANCE SHEET – ASSETS

(in €k) Notes 12/31/2018 12/31/2017 Cash and amounts due from central banks 78 81 Treasury bills and equivalent 3.3 Loans and receivables due from credit institutions 3.1 8,456,489 10,027,460 ❯ Demand 130,747 532,490 ❯ Term 8,325,742 9,494,970 Loans and receivables due from customers 3.2 31,970,691 34,479,215 ❯ Other facilities granted to customers 31,970,332 34,478,896 ❯ Current accounts with overdrafts 359 319 Bonds and other fixed-income securities 3.3 140,769 149,391 Shares and other variable-yield securities 3.3 Equity interests and other long-term investments 3.3 109,139 108,318 Investments in affiliates 3.3 3,331,112 3,342,146 Lease financing and leases with purchase option 3.4 24,565 32,692 Operating leases 20 20 Intangible assets 3.5 19,511 22,620 Property, plant and equipment 3.5 15,823 38,586 Other assets 3.6 5,119,482 5,966,171 Accrual accounts 3.7 2,656,602 3,207,173 TOTAL 51,844,281 57,373,873

2018 Registration document CRÉDIT FONCIER 199 FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS

❯ 5.2.2 PARENT COMPANY BALANCE SHEET – EQUITY AND LIABILITIES

(In €k) Notes 12/31/2018 12/31/2017 Amounts due to central banks Amounts due to credit institutions 3.8 43,514,803 46,568,099 ❯ Demand 143,922 279,583 ❯ Term 43,370,881 46,288,516 Amounts due to customers 3.9 320,448 227,128 Regulated savings accounts 218 291 Other liabilities 320,230 226,837 ❯ Demand 274,442 176,921 ❯ Term 45,788 49,916 Debt securities 3.10 242,682 1,227,945 ❯ Interbank market instruments and negotiable debt securities 0 ❯ Bonds 242,682 1,227,945 Other liabilities 3.11 850,202 1,114,213 Accrual accounts 3.12 2,803,291 3,868,768 Provisions 3.13 736,581 423,756 Subordinated debt 3.14 561,190 841,929 Fund for general banking risks 306,912 336,912 Equity excluding fund for general banking risks 3.15 2,508,173 2,765,123 ❯ Subscribed capital 1,331,401 1,331,401 ❯ Additional paid-in capital 400,195 400,195 ❯ Reserves 133,140 133,140 ❯ Regulated provisions and investment subsidies 16,781 21,619 ❯ Retained earnings (+/-) 878,769 475,248 ❯ Net income for the period (+/-) -252,112 403,521 TOTAL 51,844,281 57,373,873

2018 Registration document 200 CRÉDIT FONCIER FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS 5

❯ 5.2.3 OFF-BALANCE SHEET ITEMS

(In €k) Notes 12/31/2018 12/31/2017 COMMITMENTS GIVEN Financing commitments Commitments given to credit institutions 4.1 34,352 26,500 Commitments given to customers 4.1 4,082,950 4,431,660 Guarantee commitments Guarantees given to credit institutions 4.2 15,547 Guarantees given to customers 4.2 1,165,059 1,011,882 Assets pledged as collateral 4.2 27,428,904 30,031,451 Commitments on securities 4.3 4,670 4,670 COMMITMENTS RECEIVED Financing commitments Commitments received from credit institutions 4.4 3,137 3,299 Guarantee commitments Guarantees received from credit institutions 4.4 5,324,956 4,739,586 Guarantees received from customers 4.4 9,924,423 12,012,129 Other commitments received 4.4 11,777,072 11,739,403 Commitments on securities 4.4 4,670 4,670 RECIPROCAL COMMITMENTS Sales and purchases of foreign currencies 4.5 2,822,342 3,461,083 Other financial instruments 4.5 131,855,865 124,535,362

2018 Registration document CRÉDIT FONCIER 201 FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS

❯ 5.2.4 INCOME STATEMENT

(in €k) Notes FY 2018 FY 2017 Interest and similar income 5.1 1,134,001 1,422,777 Interest and similar expenses 5.1 -1,151,250 -1,421,509 Income from lease financing and related transactions 5.2 6,800 7,772 Expenses on lease financing and related transactions 5.2 -5,411 -5,804 Income from variable-income securities 5.3 108,734 118,531 Fee and commission income 5.4 162,548 171,577 Fee and commission expenses 5.4 -10,885 -38,945 Gains or losses on trading book transactions 5.5 -1,287 7,357 Gains or losses on available-for-sale securities Other banking income 5.6 60,204 101,442 Other banking expenses 5.6 -4,375 -10,048 NET BANKING INCOME 299,079 353,150 Operating expenses 5.7 -647,548 -358,040 Depreciation, amortisation and impairment of intangible assets and property, plant and equipment -28,337 -6,562 GROSS OPERATING INCOME -376,806 -11,452 Cost of risk 5.8 -129,394 -6,994 OPERATING INCOME -506,200 -18,446 Gains or losses on long-term investments 5.9 2,127 14,294 INCOME BEFORE TAX -504,073 -4,152 Income tax 5.10 217,223 400,821 Movements in the fund for general banking risks and regulated provisions 5.11 34,738 6,852 NET INCOME -252,112 403,521

2018 Registration document 202 CRÉDIT FONCIER FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS 5

❯ 5.2.5 NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

Note 1 Legal and financial framework – significant events Note 4 Notes to off-balance sheet items 221 during the year 204 4.1 Financing commitments given 221 1.1 General framework 204 4.2 Guarantee commitments given 221 1.2 Guarantee mechanism 204 4.3 Commitments on securities 222 1.3 Significant events during 2018 204 4.4 Commitments received 222 1.4 Post-balance sheet events 205 4.5 Forward financial transactions 223 Note 2 Accounting principles and methods 205 Note 5 Notes to the income statement 224 2.1 Measurement and presentation methods 205 5.1 Interest and similar income and expenses 224 2.2 Changes to accounting methods 205 5.2 Income and expenses on lease financing and 2.3 Accounting principles and measurement methods 205 operating leases 224 5.3 Income from variable-income securities 224 Note 3 Notes to the balance sheet 211 5.4 Fees and commissions 224 3.1 Loans and receivables due from credit institutions 211 5.5 Gains or losses on trading book transactions 224 3.2 Customer transactions 212 5.6 Other banking income and expenses 225 3.3 Securities portfolios 214 5.7 Operating expenses 225 3.4 Lease financing and leases with purchase option 215 5.8 Cost of risk 226 3.5 Intangible assets and property, plant and 5.9 Gains or losses on long-term investments 227 equipment 215 5.10 Income tax 227 3.6 Other assets 215 5.11 Movements in the fund for general banking risks 3.7 Accrual accounts – assets 216 and regulated provisions 227 3.8 Amounts due to credit institutions 216 3.9 Customer transactions 217 Note 6 Other information 228 3.10 Debt securities 217 6.1 Transactions with related parties 228 3.11 Other liabilities 217 6.2 Statement of currencies positions as of 3.12 Accrual accounts – liabilities 217 December 31, 2018 229 3.13 Provisions 218 6.3 Statement of liquidity positions: liquidity risk 229 3.14 Subordinated debt 220 6.4 Five-year financial summary 230 3.15 Equity 220 6.5 Information on subsidiaries and affiliates 231 6.6 Fees paid to Statutory Auditors 232 6.7 Presence in uncooperative tax havens 232

2018 Registration document CRÉDIT FONCIER 203 FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS

NOTE 1 LEGAL AND FINANCIAL FRAMEWORK – SIGNIFICANT EVENTS DURING THE YEAR

On December 20, 2018, Crédit Foncier filed a delisting offer for the shares in 1.1 GENERAL FRAMEWORK its subsidiary Locindus. Subject to approval by the Autorité des Marchés Crédit Foncier is incorporated as a French société anonyme (limited company) Financiers (French Financial Markets Authority), the delisting will be completed with a Board of Directors. Crédit Foncier is a credit institution authorised to in the first quarter of 2019. carry out banking transactions and is subject to the provisions of the French Monetary and Financial Code applicable to credit institutions. Human resources provisions are consistent with the aim of the project – the development of Crédit Foncier’s activities and the reorganisation of its It is part of Groupe BPCE, which comprises the Banque Populaire network, expertise in Groupe BPCE’s entities. Accordingly, employees whose positions the Caisse d’Épargne network, the central institution BPCE and its will become redundant (around 1,400 people) will primarily be transferred to subsidiaries (1). other Group entities, with financial arrangements in place to facilitate external mobility where applicable. The employment protection plan agreement, which Crédit Foncier specialises in real estate and Public sector financing and provides for redundancy for economic reasons for those concerned, subject to operates on the individual customers’ market (real estate financing, valuation the terms of the Crédit Foncier employment framework (termination benefits and services), the private corporate market and the Public sector market. aligned with seniority), will therefore only apply in exceptional cases to employees not wishing to take advantage of the more beneficial terms of the GPEC agreement. 1.2 GUARANTEE MECHANISM The GPEC agreement provides for the following:

Crédit Foncier is affiliated to BPCE and is covered by its guarantee ❯ an “advance” voluntary redundancy plan allowing all employees whose mechanism. positions will become redundant to leave on December 31, 2018 and to As such, it is covered by its parent company guarantee and the Groupe BPCE benefit from various support measures, including financial support (termination guarantee and liquidity mechanism. As an affiliated subsidiary, Crédit Foncier benefits, retraining leave, etc.). As of December 31, 2018, 126 employees had does not contribute to the network’s solidarity mechanism and will not be volunteered for this option; called upon in the event of default by a Banque Populaire bank or Caisse ❯ in January 2019, all employees concerned who did not opt for the advance d’Épargne. redundancy plan will be offered a similar position, in an equivalent category and the same geographical region in another Groupe BPCE company, with effect from April 1, 2019. Alternatively, after a cooling-off period if necessary, employees who do not wish to accept the proposed reclassification may opt 1.3 SIGNIFICANT EVENTS DURING 2018 for voluntary redundancy with the same terms as under the advance plan; 1.3.1 INTEGRATION OF CRÉDIT FONCIER’S ❯ for employees whose position is maintained (around 600 people), various OPERATIONS INTO GROUPE BPCE provisions to maintain their employability (in particular via training) will be available. In addition, if further redundancies prove necessary to adapt the 1.3.1.1 TIMELINE AND CONTENT organisational structure and headcount to changes in the activities maintained On June 25 and 26, 2018, respectively, the BPCE Supervisory Board and the by Crédit Foncier, the employees concerned will benefit from the same Crédit Foncier Board of Directors gave their approval in principle for a project provisions as those set out above. to integrate Crédit Foncier’s operations and reorganise its expertise throughout Groupe BPCE’s entities. 1.3.1.2 ACCOUNTING IMPACTS AT DECEMBER 31, 2018 On July 20, 2018, Crédit Foncier’s Executive Management team began the In accounting terms, the integration of Crédit Foncier’s activities and the information and consultation process with the Works Council as provided for transfer of its expertise within Groupe BPCE will not call into question its in Articles L. 1233-30 and L. 2223-31 of the French Labour Code, and started operation as a going concern as described in Article L. 123-20 of the French negotiations with the labour unions pursuant to regulations. Commercial Code. These negotiations led to the signing of two majority agreements on the The conditions that justify the recognition of a provision for restructuring costs implementation of the project on October 26, 2018 – an Occupation and Skills pursuant to opinion 2000-01 of the French National Accounting Board (CNC) Forecasting (GPEC) agreement and an employment protection plan (PSE). The are met. employment protection plan is subject to administrative approval and was This provision will cover expenses arising for internal and external mobility, the approved by the competent Regional Directorate for Enterprise, Competition expenses arising from the closure of the branch network and compensation Policy, Consumer Affairs, Labour and Employment (DIRECCTE) in for exclusive agents. December 2018. The provision recorded for this purpose under operating expenses at After consulting the Works Council, the Crédit Foncier Board of Directors December 31, 2018 amounted to €334.2m before tax and breaks down as confirmed the effective implementation of the project at its meeting of follows: November 21, 2018. ❯ human resources costs: €234.3m. These essentially comprise termination The operational part of the integration, which will primarily take effect in st benefits, the cost of retraining leave and various support measures based on the 1 half of 2019, includes the following: assumptions regarding the choices made by employees between ❯ new loan production will be redeployed in the Group’s entities: Individual reclassification within Groupe BPCE or voluntary redundancy; customer loans within the Banque Populaire banks and Caisses d’Épargne, ❯ operational costs: €99.9m. These mainly include the costs of the Corporate financing shared by the Caisses d’Épargne and Banque Populaire discontinuation of lending activities (lease termination costs, compensation for banks for Social housing, and Natixis for project and infrastructure financing; exclusive agents, the scrapping of branch fixtures and fixed assets). ❯ SOCFIM, which will become a direct subsidiary of BPCE SA, will position itself In addition, a conservative valuation of Crédit Foncier Immobilier performed in as a global player in corporate real estate financing by combining long-term view of the planned disposal of this company under the operational part of the financing for real estate professionals with financing for developers; project, led to the recognition of additional impairment in the amount of €15m ❯ Crédit Foncier Immobilier will become a direct subsidiary of BPCE SA; for the corresponding shares at December 31, 2018. ❯ the special expertise and the projects initiated by Crédit Foncier will continue on a national level; ❯ Crédit Foncier will refocus on managing its outstanding loans and on the funding of Public sector assets originated by the Group, through Compagnie de Financement Foncier.

(1) Crédit Foncier prepares its own consolidated financial statements under International Financial Reporting Standards (IFRS) as adopted by the European Union. Groupe Crédit Foncier is consolidated in Groupe BPCE’s financial statements, which are available at the head office of the central institution BPCE SA and on the BPCE corporate website.

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1.3.2 CAPITAL TRANSACTIONS 1.3.5 PROVISIONS FOR PERFORMING LOANS BANCO PRIMUS From January 1, 2018, the methods used to estimate performing loans showing a material increase in credit risk since their initial recognition (Stage 2 On July 19, 2017, Crédit Foncier signed a protocol agreement for the sale of impairment) have been aligned with IFRS 9 in the consolidated financial its entire stake in the Portuguese subsidiary Banco Primus. The completion of statements. The impact of the change in calculation method resulted in an this transaction is subject to the approval of the Portuguese supervisory expense of €88m recorded under Cost of risk in the income statement. authorities. The deadline for this approval was initially set at March 31, 2018, but has been postponed to April 15, 2019. This provision fully replaces the former collective provisions covering exposures with similar risk profiles that were tested for impairment on a However, Crédit Foncier recognised the impact of this transaction as of 2017 collective basis. The reversal recorded in 2018 amounted to €37m, recognised by recording a net expense of €11m in “Gains or losses on long-term in Cost of risk. investments”.

CRÉDIT LOGEMENT 1.3.6 TAXES The Annual General Shareholders’ Meeting of Crédit Logement held on Pursuant to the tax consolidation agreement signed with BPCE (See October 26, 2018 approved the payment of an extraordinary dividend to note 2.3.13), Crédit Foncier recognised tax income of €170m corresponding shareholders. In view of its 6.99% holding in Crédit Logement, Crédit Foncier to the income tax saving returned to it by BPCE owing to the tax loss received an extraordinary dividend of €10.5m in addition to its annual dividend generated by the Crédit Foncier tax consolidation group over the fiscal year. of €8.0m. Similarly, under the tax consolidation agreement signed with Compagnie de Financement Foncier, Crédit Foncier recognised tax income corresponding to 1.3.3 TRANSFERS OF RECEIVABLES TO the income tax expense generated by its subsidiary owing to its own tax profit, COMPAGNIE DE FINANCEMENT FONCIER in the amount of €25m. In 2018, under its usual funding model, Crédit Foncier transferred outstanding The tax gains and losses of other consolidated subsidiaries led to the receivables to Compagnie de Financement Foncier for a total amount of recognition of additional tax consolidation income of €16m. €6,437m including accrued interest, plus €441m of financing commitments. The net losses recorded on these transactions, which are significant because 1.3.7 DEFERRED TAX ASSETS AND LIABILITIES interest-free loans account for the bulk of the pool of loans transferred, The 2018 French Finance Act, adopted by parliament and applicable as of amounted to €262m. In accordance with the accounting principles usually January 1, 2018, gradually lowers the corporate income tax rate from 34.43% applied, these losses were reflected in the balance sheet and will be amortised to 25.83% over the period to 2022. This Act amended the 2017 Finance Act, over the life of the receivables or until their early repayment date. The tax credit which already provided for a future tax reduction. on these loans, which is not transferrable, accrued to Crédit Foncier and will be amortised in the same manner. Crédit Foncier is concerned by these measures as it records deferred taxes related to the advance taxation of tax credits generated by the production of 1.3.4 IMPACT OF EARLY REPAYMENTS interest-free loans (PTZ). In the lasting environment of low interest rates, loan renegotiation volumes fell sharply for Crédit Foncier in 2018. Groupe Crédit Foncier’s early repayment 1.4 POST-BALANCE SHEET EVENTS rate on loans to individuals halved to 7.6% of outstanding amounts in 2018, compared with 14.8% the previous year. The corresponding reduction in No event likely to have a significant impact on the financial statements at assets for Crédit Foncier amounted to nearly €900m. Early repayment penalty December 31, 2018 occurred between the balance sheet date and fees totalled €4m in 2018. February 11, 2019, the date on which the Board of Directors approved the financial statements.

NOTE 2 ACCOUNTING PRINCIPLES AND METHODS 2.1 MEASUREMENT AND PRESENTATION 2.3 ACCOUNTING PRINCIPLES METHODS AND MEASUREMENT METHODS Crédit Foncier’s parent company financial statements are prepared and The financial statements for the fiscal year are presented in identical format to presented in accordance with the rules defined by BPCE pursuant to those for the previous fiscal year. Generally accepted accounting principles Regulation No. 2014-07 of the French national accounting standards authority have been applied in compliance with the principle of prudence based on the (Autorité des Normes Comptables – ANC). following principles:

From the 2018 financial year, new rules for calculating expected credit losses ❯ the going-concern principle; on performing loans mean that such credit losses are now presented as ❯ consistency of accounting methods from one period to the next; impairment under assets, and no longer as a provision under liabilities (sector provisions and formerly collective provisions). ❯ independence of fiscal years; and observance of the general rules governing the preparation and presentation of annual financial statements. 2.2 CHANGES TO ACCOUNTING METHODS The basic method for valuing accounting entries is the historical cost method There were no changes to accounting methods in respect of the 2018 fiscal and all balance sheet items are presented, as appropriate, net of amortisation, year. provisions and value adjustments. The texts adopted by the ANC that had mandatory application in 2018 did not have a significant impact on the parent company financial statements. Unless otherwise stated, Crédit Foncier did not elect to apply in advance the texts adopted by the ANC for which application is optional.

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The principal methods used are as follows: NON-PERFORMING LOANS AND RECEIVABLES Non-performing loans include all outstanding amounts – whether or not these 2.3.1 FOREIGN CURRENCY TRANSACTIONS are due or secured by a guarantee – owed by debtors for which a known credit risk has been individually identified on at least one commitment. Loans Income and expenses relating to foreign currency transactions are determined are considered “at risk” when it is probable that the Group will not collect all or in accordance with ANC Regulation No. 2014-07. part of the sums due under the terms of the commitments made by the counterparty, notwithstanding any guarantees or collateral. Receivables, liabilities and off-balance sheet commitments denominated in foreign currencies are valued at the exchange rate at the end of the fiscal year. Notwithstanding Regulation 2014-07 of the French National Accounting Corresponding income and expense items are translated into euros at the Standards Authority (ANC), non-performing loans are identified as loans with exchange rate on the date they are recognised in the income statement. amounts past due for over three months, in line with the default events described in Article 178 of EU Regulation 575-2013 of June 26, 2013 on Unsettled spot foreign currency transactions are valued at the exchange rate prudential requirements for credit institutions. at year end. Non-performing loans are considered to be irrecoverable when full or partial Foreign exchange swaps are recognised as coupled spot buy/sell forward collection is deemed to be highly unlikely and a write-off is considered. Loans transactions. Discounts or premiums on foreign exchange forward and futures and receivables whose terms have lapsed, terminated lease financing contracts used for hedging purposes are recognised in income on a pro rata agreements, and perpetual loans which have been rescinded, are considered basis. Currency swaps are subject to the provisions of ANC Regulation as irrecoverable. The existence of guarantees covering nearly all risks, along No. 2014-07. with the conditions for classification as non-performing loans and receivables, Unrealised or realised currency exchange gains and losses are recorded in the must be taken into consideration in order to qualify a non-performing loan as income statement under “Gains or losses on trading book transactions”. irrecoverable and to assess the associated impairment provision. A debt that has been classified as doubtful for more than one year is assumed to be irrecoverable, unless a write-off is not foreseen. Reclassification of a debt from 2.3.2 TRANSACTIONS WITH CREDIT INSTITUTIONS non-performing to irrecoverable does not automatically entail the AND CUSTOMERS reclassification of the counterparty’s other non-performing loans and commitments to irrecoverable. Loans and advances to credit institutions cover all loans and advances made in connection with banking transactions with the exception of those For non-performing loans and receivables, accrued interest or interest due but represented by a security. They also include securities received under not received is recognised in income from banking operations and impaired repurchase agreements, regardless of the type of underlying, and loans and accordingly. The same applies to interest on non-performing loans. advances relating to securities repurchase agreements. They are broken down Non-performing loans and receivables are reclassified as performing once the between demand loans and advances and term loans and advances. Loans to debtor resumes regular payments in accordance with the original repayment credit institutions are recorded in the balance sheet at their nominal value, with schedule, provided that the counterparty is no longer considered to be at risk the exception of buybacks of customer receivables, which are recorded at of default. cost, plus accrued interest and net of any impairment charges recognised for credit risk. IMPAIRMENT Amounts due from customers include loans to entities other than credit institutions, with the exception of debt securities issued by customers, assets Loans for which recovery is uncertain result in the recognition of an impairment purchased under resale agreements, and receivables corresponding to loss on the asset to cover the risk of loss. Impairment losses are calculated on securities sold under repurchase agreements. They are broken down between an individual basis, taking into account the present value of guarantees business loans, current accounts with overdrafts and other facilities granted to received. They are determined on at least a quarterly basis and are calculated customers. in reference to available guarantees and a risk analysis. Impairment losses cover at a minimum the interest not received on non-performing loans. Customer loans issued are recorded in the balance sheet at their nominal value, for the portion actually paid out, or at their acquisition cost for the Impairment for probable losses includes all impairment charges, calculated as repurchase of receivables, plus accrued interest and net of any impairment the difference between the principal outstanding and the projected cash flows charges recognised for credit risk. Amortised marginal transaction costs and discounted at the initial effective interest rate. Projected cash flows are fees are included in the relevant loan outstanding. Outstanding amounts not determined based on the type of receivables on the basis of historical losses paid out are recorded off-balance sheet under “Financing commitments and/or expert appraisals and are positioned over time using debt schedules given”. based on historic recovery records. Amounts due to credit institutions are recorded under demand deposits and Risk is assessed on a case-by-case basis for material loans and automatically current accounts or term deposits and borrowings. Amounts due to for others, based on the present value of guarantees received. When entering customers are classified into regulated savings accounts and other customer litigation, the value of the guarantee is discounted. deposits. Depending on the counterparty involved, these items may include When credit risk arises on off-balance sheet financing or guarantee repurchase agreements involving securities and other assets. Accrued interest commitments, the risk is recognised as a provision for risks and charges. is recorded on a separate line. Impairment charges and reversals booked for risk of non-recovery, and Guarantees received are recorded as an off-balance sheet item. They are expenses incurred for such impairment, are recorded under “Cost of risk”, revalued on a regular basis. The total carrying amount of all guarantees except for impairment for interest on non-performing loans and receivables, received for a given loan is limited to the outstanding amount of the loan. which is recorded as impaired interest under “Interest and similar income”. RESTRUCTURED LOANS When credit risk is identified on performing loans showing a significant increase in credit risk since their initial recognition, this risk is calculated using Within the meaning of ANC regulation No. 2014-07, restructured loans are lifetime expected credit losses. This credit risk is either recognised as non-performing loans and receivables whose initial characteristics (term, impairment under assets or as a provision under liabilities if the risk relates to interest rate) are modified to allow the counterparties to repay the amounts exposures to customers. From January 1, 2018, the method for measuring due. these performing loans is therefore aligned with the requirements of Stage 2 (S2) impairment under IFRS 9 applied in the consolidated financial statements. A discount is taken on restructured loans to reflect the difference between the present value of the contractual cash flows at inception and the present value of expected principal and interest repayments after restructuring. The discount REPURCHASE AGREEMENTS rate used for fixed-rate loans is the initial effective interest rate and the Collateralised repurchase agreements are recognised in accordance with discount rate used for variable-rate loans is the most recent effective interest Regulation No. 2014-07 of the French national accounting standards authority, rate prior to the restructuring date. The effective rate is the contractual rate. complemented by Instruction No. 94-06 as amended issued by the French This discount is expensed to “Cost of risk” in income and offset against the Banking Commission. corresponding outstanding in the balance sheet. It is written back to net interest income in the income statement over the life of the loan using an actuarial method. A restructured loan can be reclassified as a performing loan if the repayment terms are respected. When a loan that has been reclassified becomes overdue, regardless of the restructuring terms agreed, the loan is downgraded to non-performing.

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The collateralised assets continue to appear in the balance sheet of the An impairment loss may be recognised if there is a strong probability that the vendor, which records the amount collected under liabilities, representing its institution will not hold the securities to maturity due to new circumstances or if debt vis-à-vis the purchaser. The purchaser records the amount paid under there is a risk of default by the issuer. Unrealised capital gains are not assets, representing the amount due to the vendor. At each balance sheet recognised. date, the collateralised assets, as well as the debt vis-à-vis the purchaser or the amount due to the vendor, are valued according to the rules appropriate to Debt securities held to maturity cannot be sold or transferred into another each of these transactions. category of securities, with certain exceptions listed in Article 2341-2 of ANC Regulation No. 2014-07. 2.3.3 LEASE FINANCING AND LEASING INVESTMENTS IN ASSOCIATES AND AFFILIATES TRANSACTIONS Securities falling within this category are securities whose long-term holding is Opinion No. 2006-C of the Emergency Committee of the French National deemed useful for the activity of the Company, in particular by permitting the Accounting Board (CNC) stipulates that fixed assets intended for real estate or exercise of significant influence or control over the governance bodies of the non-real estate leasing, leases with a purchase option or operating leases be issuing companies. recorded in the lessor’s balance sheet assets. For this category of assets, as an exception to the rules of the French accounting plan regarding the Investments in associates and affiliates are recorded at cost, including recognition of assets, the notion of legal ownership is applied instead of the transaction costs, if the amounts are significant. notion of control. Fixed assets are posted at their starting value, and the They are individually valued at the balance sheet date at the lower of breakdown of assets by components does not apply for the lessor if the acquisition cost or value in use. Value in use is determined, in particular, on the servicing/replacement charges are contractually incumbent on the finance basis of criteria such as the strategic nature of the investment, the intention to lessee. In the event of a breach of contract, the component approach applies provide assistance or retain the investment, share price performance, net in a forward-looking manner. assets or revalued net assets and forecasts. Impairment is recognised for any Pursuant to this same opinion, the lessor has the option of amortising the unrealised capital losses, calculated for each line of securities, and is not offset relevant assets in its individual accounts, either over the life of the contract with unrealised capital gains. Unrealised capital gains are not recognised. (financial amortisation, i.e. equal to the fraction of lease acquired), or over the Gains or losses on disposals and movements in provisions are recognised normal useful life of the asset (straight-line/declining amortisation). The option under “Gains or losses on long-term investments”. chosen applies to all assets assigned to the same category. Securities recorded under investments in associates and affiliates cannot be Pursuant to provisions of ANC Regulation No. 2014-07, the marginal transferred to any other accounting category. transaction costs and fees that are spread over the life of the lease are included in the relevant outstandings. OTHER LONG-TERM INVESTMENTS Unpaid rent is identified, recognised and provisioned according to ANC Regulation No. 2014-07. Other long-term investments are securities acquired with the intention of promoting the development of lasting business relationships by creating special ties with the issuer, without taking an active part in its management 2.3.4 SECURITIES due to the small percentage of voting rights that the investment represents. The term “securities” covers interbank market securities, treasury bills and Other long-term investments are recognised at acquisition cost, less negotiable debt securities, bonds and other fixed-income instruments, and transaction costs. equities and other variable-income instruments. They are included in the balance sheet at the lower of historical cost or value in The accounting policies for securities transactions are defined by ANC use. Value in use is determined for listed and non-listed securities on the basis Regulation No. 2014-07, which provides rules on the recognition and valuation of the amount the Company would agree to pay to obtain the securities, given of securities as well as outlining rules on certain specific transactions such as its investment objective, if it were to acquire them. An impairment charge is temporary sales of securities. recognised for any unrealised capital losses. Unrealised capital gains are not recognised. Securities are classified according to the following categories: investments in associates and affiliates, other long-term investments, debt securities held to Securities classified as other long-term investments may not be transferred to maturity, equity securities available for sale in the medium term, securities any other accounting category. available for sale, and trading securities. The only long-term investments booked under Crédit Foncier’s assets With respect to trading securities, securities available for sale, debt securities correspond to partner and association certificates for the Deposit Guarantee held to maturity, and equity securities available for sale in the medium term, Fund. provisions for counterparties with known default risks whose impact can be separately identified are recognised in the form of impairment charges. Changes in impairment are recorded under cost of risk. RECLASSIFICATION OF FINANCIAL ASSETS In order to harmonise accounting practices and ensure consistency with IFRS, Disposals of securities are recorded in Crédit Foncier’s financial statements at ANC Regulation No. 2014-07 reiterates the provisions of Opinion No. 2008-19 the date of delivery/settlement and not at the transaction date. of December 8, 2008 related to the reclassification of securities out of the “Trading securities” and “Available-for-sale securities” categories. Crédit Foncier does not hold any trading or portfolio securities. Since December 31, 2017 it no longer holds any securities available for sale. The reclassification out of the “Trading securities” category to the “Available-for-sale securities” and “Debt securities held to maturity” categories HELD-TO-MATURITY SECURITIES is now allowed in the following two cases: These include fixed-income securities with fixed maturity that were acquired or ❯ under exceptional market circumstances necessitating a change of strategy; have been reclassified from “Trading securities” or “Available-for-sale securities” and for which the Company has the positive intent and ability to ❯ where fixed-income securities are no longer, after their acquisition, tradeable hold to maturity. The securities should not be subject to an existing restriction, on active markets, and provided that the Company has the intention and the legal or otherwise, which may have an adverse effect on the Company’s capacity to hold them in the foreseeable future or until they reach maturity. intention to hold the securities to maturity. Classification as held-to-maturity Reclassifications from the “Available-for-sale securities” category to the “Debt securities is not incompatible with their designation as items hedged against securities held to maturity” category are effective as from the reclassification interest rate risk. date in either of the following conditions:

Debt securities held to maturity are recorded in the accounts at cost as of their ❯ under exceptional market circumstances necessitating a change of strategy; acquisition date, less transaction costs. When previously classified as available for sale, they are recorded at cost and the previously recognised impairment charges are reversed over the residual life of the relevant securities. The difference between the acquisition cost and the redemption value of the securities, and the corresponding interest, are recorded according to the same rules as those applicable to fixed-income securities available for sale.

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❯ where fixed-income securities are no longer tradeable on an active market. Other property, plant and equipment is recorded at cost, production cost or revalued cost. The cost of assets denominated in foreign currencies is Note that in its news release of March 23, 2009, the French National translated into euros at the exchange rate prevailing on the transaction date. Accounting Board (CNC) stated that, “Portfolio transfer options, especially These assets are depreciated or amortised in order to reflect the pattern in from the available-for-sale securities portfolio to the held-to-maturity securities which the asset’s future economic benefits are expected to be consumed by portfolio as set out in Article 19 of CRB Regulation No. 90-01 before it was the entity, which generally corresponds to the asset’s useful life. updated by CRC Regulation No. 2008-17, remain in effect and are not abrogated by ANC Regulation No. 2014-07”. Where applicable, assets may be subject to impairment. As CRC Regulation No. 2008-17, replaced by ANC Regulation No. 2014-07, Investment properties correspond to non-operating assets and are accounted provides additional transfer options between portfolios, these new transfer for using the component method. options supplement those previously defined, beginning on the application date of this regulation – July 1, 2008. 2.3.6 DEBT SECURITIES Consequently, it is still possible to reclassify available-for-sale securities to the held-to-maturity securities portfolio by simply changing the intent, if, on the Debt securities are classified on the basis of the nature of the underlying asset: transfer date, all of the criteria are met for a held-to-maturity securities retail certificates of deposit, interbank securities and negotiable debt securities, portfolio. bonds and similar, with the exception of subordinated debt, which is recorded in a separate line item under liabilities. As Crédit Foncier holds no trading or available-for-sale securities, no transfers between portfolios were made in 2018. The gross amount of the principal outstanding on instruments issued by Crédit Foncier is recognised as a liability in the balance sheet. Loans in foreign currencies are valued in euros at year-end exchange rates. 2.3.5 INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT Interest accrued but not due relating to these securities is recorded in a related liabilities account as a balancing entry to the income statement entry. The accounting policies for fixed assets are defined by ANC Regulation No. 2014-03. Issuance premiums are recognised on a straight-line basis over the lifetime of the corresponding debt. Bond issuance or redemption premiums are spread over the life of the loan via a deferred expenses account. The amortisation of INTANGIBLE ASSETS these share premiums and fees is recorded under “Interest and similar income An intangible asset is an identifiable non-monetary asset without physical and expenses on bonds and other fixed-income securities”. substance. Intangible assets are recorded at cost (purchase price including Crédit Foncier has no structured debt liabilities in its balance sheet. costs). They are amortised over their estimated useful life. Software is amortised over a maximum of five years. Any additional 2.3.7 SUBORDINATED DEBT amortisation to which software may be entitled for tax purposes is recorded as accelerated amortisation. Subordinated debt comprises proceeds from issues of term or perpetual subordinated debt securities and mutual guarantee deposits. In the event of Goodwill is not amortised but is impaired when necessary. liquidation of the debtor, the repayment of subordinated debt is only possible Leasehold rights are depreciated at their market value. after all other creditors have been satisfied. Accrued interest payable on subordinated debt is disclosed separately as a PROPERTY, PLANT AND EQUIPMENT related payable, as a balancing entry to the income statement entry. Property, plant and equipment consists of tangible assets that: are held for use in the production or supply of goods and services, for rental to others or 2.3.8 PROVISIONS for administrative purposes; and are expected to be used during more than one fiscal year. This item includes provisions set up to cover contingencies and losses that are clearly identifiable but of uncertain timing or amount, that are either directly Insofar as buildings are assets consisting of a number of components that related or unrelated to banking transactions as defined under Article L. 311-1 have different uses at the outset, each component is recognised separately at of the French Monetary and Financial Code or related transactions defined cost and a depreciation schedule specific to each component is used. under Article L. 311-2 of this Code. Unless covered by a specific text, such provisions may only be recognised if the Company has an obligation to a third The depreciable amount is the gross value less the residual value where the party at the end of the fiscal year and no equivalent consideration is expected latter is material, lasting and can be measured reliably. The primary in return, in accordance with ANC Regulation No. 2014-03. components of buildings are depreciated or amortised in order to reflect the pattern in which their future economic benefits are expected to be consumed It notably includes provisions for restructuring (See note 1.3.1) and provisions by the entity, which generally corresponds to the asset’s useful life. for employee benefit commitments.

Component Life EMPLOYEE BENEFITS Walls, foundations, framework and fixed partitions 20 to 50 years Provisions for employee benefits are recognised in accordance with ANC Roofing 25 years recommendation No. 2013-R-02. They can be divided into the following categories: Lifts 15 years Heating and air-conditioning installations 10 years ❯ Short-term employee benefits Signboards and façade fittings 5 to 10 years Short-term benefits mainly comprise wages and salaries, paid annual leave, incentive plans, profit-sharing and bonuses payable within 12 months of the Doors and windows 20 years end of the period in which the employee renders the service. They are Enclosures 10 years recognised as expenses for the period, including balances due at the balance sheet date. Security equipment 5 to 7 years Long-term employee benefits Wiring 10 years ❯ Other fixtures and fittings 10 years Long-term employee benefits are generally linked to long-service awards accruing to current employees and payable 12 months or more after the end of the period in which the employee renders the related service. A provision is set aside for the value of these obligations at the balance sheet date.

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The obligations are valued using an actuarial method that takes account of ❯ speculative positions/isolated open positions; demographic and financial assumptions such as age, length of service, the ❯ specialised management of a trading book. likelihood of the employee being employed by the Group at retirement and the discount rate. This calculation spreads the expense over time, according to Income and expenses on the first two categories are recognised in the income the activity period of the employees (projected unit credit method). statement on a pro rata basis. ❯ Termination benefits Realised gains or losses on instruments used to hedge an asset or group of similar assets are recognised in the income statement symmetrically with the Termination benefits are granted to employees on termination of their gains or losses on the hedged item. These items are accounted for on the employment contract before the normal retirement date, either as a result of a same line as income and expenses on the hedged item as “Interest and similar decision by the Group to terminate a contract or a decision by an employee to income” and “Interest and similar expenses”. The line “Gains or losses on accept voluntary redundancy. A provision is set aside for termination benefits. trading book transactions” is used when the hedged items are included in the Termination benefits payable more than 12 months after the balance sheet trading book. date are discounted to present value. In the event of over-hedging, a provision will be made for the hedging ❯ Post-employment benefits instrument in proportion to the over-hedged amount, if the instrument Post-employment benefits include lump-sum retirement bonuses, pensions experiences unrealised losses. In this case, the charge to provisions will and other post-employment benefits. impact the line “Gains or losses on trading book transactions”. Post-employment benefits can be broken down into two categories: Swaps taken out to hedge specific loans are systematically reclassified as defined-contribution schemes, which do not require the Group to book any separate open positions if the loan becomes doubtful. provision for the related obligation, and defined-benefit schemes, which give rise to an obligation for the Group and are therefore measured and recognised Income and expenses on forward financial instruments used to hedge and by means of a provision. manage the Company’s overall interest rate exposure are recognised in the income statement on a pro rata basis as “Interest and similar income” and Employee benefit obligations which are not covered by contributions in “Interest and similar expenses”. Unrealised gains and losses are not expenses and paid into pension or insurance funds are provisioned in recognised. liabilities. Income and expenses on certain contracts representing separate open The same assessment method is used as for long-term benefits. positions are recorded in the income statement when the contracts are unwound or on a pro rata basis depending on the nature of the instrument. Obligations are recognised taking into account the value of assets used to cover these commitments and unrecognised actuarial items. Unrealised gains and losses are recognised based on the nature of the market in question (organised markets and similar exchanges or over-the-counter). Actuarial gains and losses on post-employment benefits arising from changes in calculation assumptions (early retirement, discount rates, etc.) or experience On over-the-counter markets, any unrealised losses observed in comparison adjustments (return on plan assets) are recognised for the portion that with the market value are provisioned. Unrealised gains are not recognised. exceeds the greater of 10% of the present value of the obligation and 10% of the fair value of any plan assets (“corridor” method). In organised and similar markets, instruments are traded continuously and are sufficiently liquid to justify valuation at market price. The annual expenses regarding defined-benefit schemes include current service cost, net interest cost related to the discounting of the commitment Contracts relating to specialised trading book management are valued using net of covering assets, the past service costs and eventually the amortisation the replacement cost or fixed income method after recognising a discount to of any unrecognised items such as actuarial gains and losses. reflect counterparty risk and the present value of future management fees, if these valuation adjustments are significant. Derivatives for which the counterparty is a member of the Groupe BPCE solidarity mechanism (See 2.3.9 FUND FOR GENERAL BANKING RISKS note 1.2) are not subject to these adjustments. Changes in value from one closing date to another are immediately recognised in the income statement This fund is intended to cover risks inherent to the Company’s banking under “Gains or losses on trading book transactions”. activities, in accordance with the provisions of Article 3 of CRBF Regulation No. 90-02. The termination balances or transfers are recognised as follows:

❯ for transactions classified as specialised management transactions or isolated 2.3.10 FORWARD FINANCIAL INSTRUMENTS open positions, the balances are posted immediately on the income statement; Hedging and trading transactions on interest rate, currency or equity futures are recognised in accordance with ANC Regulation No. 2014-07. ❯ for micro-hedging and macro-hedging transactions, the remaining amounts are either amortised over the remaining term of the previously-hedged item or Commitments arising from these transactions are recorded as off-balance posted immediately on the income statement. sheet items for the nominal value of the contracts. On December 31, the amount of these commitments represents the volume of transactions that had When a micro-hedged item is disposed of, the termination balances of the not been unwound by year-end. associated swap and, as applicable, the non-amortised closing balance are entered as income in the same accounting aggregate as the one that posted Instruments held are mainly interest rate or currency swaps, forward swaps the income on the disposal of the hedged item. and interest rate caps or floors. All these instruments are traded over the counter (including transactions processed by the clearing house LCH). OPTIONS Crédit Foncier does not hold any forward contracts on organised markets or The notional amount of the underlying asset of an option or forward or futures similar. contract is recognised by distinguishing between hedging contracts and contracts traded as part of capital market transactions. The accounting methods used are based on the type of instrument and the intentions of the issuers at inception. Premiums paid or received on interest rate, currency or equity options are recorded in a suspense account. At the closing date, these options are valued FORWARD TRANSACTIONS and carried on the income statement, for products listed on an organised or similar market. For over-the-counter markets, only losses are provisioned, and Interest rate swaps and similar contracts (future rate agreements, caps and unrealised capital gains are not entered. Resale, redemption, exercise or floors) are classified according to their initial purpose, in the following expiry premiums are recorded immediately in the income statement. categories: Income and expenses on hedging instruments are reported symmetrically with ❯ micro-hedging (specific transactions); those on the hedged item. Seller options are not eligible for classification as ❯ macro-hedging (overall asset and liability management); macro-hedging instruments.

2018 Registration document CRÉDIT FONCIER 209 FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS

Over-the-counter markets can be considered similar to organised markets if Moreover, the line item “Income tax” records a deferred tax amount related to institutions acting as market makers provide continuous price quotations the adjustment of the amortisation of tax credits generated by the production within a realistic range, or if the underlying asset is itself listed on an organised of interest-free loans. market. According to opinion No. 2007-B of May 2, 2007 from the Emergency Committee of the CNC, “institutions allowed to originate loans redeemable 2.3.11 INTEREST AND SIMILAR INCOME AND without interest for the purchase of housing, must record the expense relating EXPENSES – FEES AND COMMISSIONS to this tax credit and calculated through a discounted method, on the same base as the interest income already recorded over the lifetime of the loan”. Interest and similar fee and commission income is recorded in the income statement on a pro rata basis. To correct the difference between amounts recorded for tax and accounting purposes arising from the recognition of the tax credit over five years and the The Group has chosen the following option to record negative interest: amortisation of the subsidy over the lifetime of the loan, Crédit Foncier calculates deferred taxes based on the claim against the French Treasury in ❯ when an asset generates negative interest, it is deducted from interest income respect of the tax credit less outstanding subsidies to be amortised. on the income statement; ❯ when a liability generates positive interest, it is deducted from interest 2.3.14 CONTRIBUTION TO BANK RESOLUTION expenses on the income statement. MECHANISMS Fees and commissions relating to the approval or acquisition of loans are spread over the effective lifespan of the loan pro rata to the amount of The terms governing the formation of the bank deposit insurance and principal outstanding. resolution fund were amended by decree dated October 27, 2015. In 2016, the French Prudential Supervision and Resolution Authority (ACPR), in decision Other commission income is recorded according to the type of service No. 2016-C-51 dated October 10, 2016, approved a method for calculating provided: contributions to deposit guarantee mechanisms that takes into account contributions made in previous years. The total amount of contributions made ❯ fees recorded for instant services are recognised on completion of the service; to the fund for deposit, collateral and securities guarantee mechanisms in the ❯ fees for ongoing or irregular services paid for in several instalments are form of refundable deposits, partner or association certificates totalled €0.1m. recognised over the period the service is provided. European directive 2014/59/EU (the Bank Recovery and Resolution Directive - BRRD) set out a framework for the recovery and resolution of banks and 2.3.12 INCOME FROM SECURITIES investment firms, and European Regulation 806/2014 (the Single Resolution Mechanism (SRM) Regulation) set up a resolution fund from 2015. In 2016, Dividends are recorded once their payment has been decided by the this fund became a Single Resolution Fund (SRF) between the member states competent body. They are booked under “Income from variable-income participating in the Single Supervisory Mechanism (SSM). The SRF is available securities”. to the resolution authority (Single Resolution Board) to finance bank resolution. The portion of income received during the year from bonds or negotiable debt The authority can draw on the fund when resolution procedures are instruments is also recognised. The same approach is applied to perpetual implemented. deeply subordinated notes that fit the definition of a Tier 1 prudential equity In 2018, in accordance with Commission Delegated Regulation 2015/63 and instrument. The Group treats these revenues as interest. Commission Implementing Regulation 2015/81 on ex-ante contributions to resolution financing arrangements, the Single Resolution Board determined the 2.3.13 INCOME TAX contributions for 2018. For 2018, the amount of contributions made to the fund totalled €15m, of which €13m recognised as an expense and €2m in In 2010, Crédit Foncier signed a tax consolidation agreement with BPCE, its cash security deposits recognised as assets on the balance sheet (15% in consolidating entity, enabling it to act as head of a BPCE tax consolidation cash security deposits). The cumulative amount of contributions recognised as subgroup. This agreement was amended as of January 1, 2014 in order to assets on the balance sheet totalled €9m at December 31, 2018. return to Crédit Foncier the overall corporate tax income representing the share of the subgroup’s deficit used by BPCE. 2.3.15 INTERNAL TRANSFERS OF RECEIVABLES In this subgroup, Crédit Foncier signed a “neutral” tax consolidation agreement with all its consolidated subsidiaries , under which each entity Crédit Foncier uses two different methods to recognise gains and losses on calculates its tax expense based on its own fiscal income and recognises it as the sale of loans to its refinancing subsidiary. if there were no tax consolidation, with the exception of Compagnie de Either the interest rate position is adjusted by the termination of hedging Financement Foncier, which is reimbursed the overall amount of corporate tax swaps of disposed assets; in this case the gains and losses on sale of loans income in proportion to the share of its tax deficit used by Crédit Foncier. as well as cash payments for termination of derivatives are fully recognised in Consequently, the following items are recognised in Crédit Foncier’s financial income of the fiscal year in which the sale was stated. statements: Or the gains and losses on the sale of loans are recognised in the balance ❯ on the one hand, a tax consolidation gain representing the income tax amount sheet to be amortised over the life of these loans. due by each consolidated subsidiary, and if applicable an expense Whatever the method used, pursuant to ANC Regulation No. 2014-07, the corresponding to the reimbursement to Compagnie de Financement Foncier gains and losses deriving from the difference between the carrying amount of of the corporate tax saving in proportion to the share of the tax deficit used by the loans sold and the selling price are recognised in the income statement in Crédit Foncier; “Net interest income”, whether the income or loss is are immediately ❯ on the other hand, in the name of the fiscal subgroup: recognised at the time of disposal or spread over time. The termination balances on hedging derivatives are recorded in “Net interest income”. ❯ a global expense for income tax if the overall result is positive, It should be noted that the gains on sales carried out before 2006 benefit from ❯ a gain from income tax proportional to the share used by BPCE if the overall result is negative. an exemption scheme. They are amortised in accounting and tax terms via a reversal of regulated provisions.

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NOTE 3 NOTES TO THE BALANCE SHEET

Certain information relating to the credit risk required by Regulation 2014-07 of the French Accounting Standards Authority (Autorité des Normes Comptables - ANC) is presented in the risk management report. It is part of the company's accounts certified by the Statutory Auditors.

3.1 LOANS AND RECEIVABLES DUE FROM CREDIT INSTITUTIONS

(in €k) 12/31/2018 12/31/2017 Non-Group 149,858 83,716 ❯ Demand 123,582 58,027 Current accounts with overdrafts 123,115 58,027 Unallocated items 467 ❯ Term 26,276 25,689 Loans and advances 9,918 2,026 Securities received under repurchase agreements Subordinated loans 16,345 23,651 Accrued interest 13 12 ❯ Doubtful loans and receivables ❯ Impairment Group 8,306,631 9,943,744 ❯ Demand 7,165 474,463 Current accounts with overdrafts 7,165 474,463 ❯ Term 8,299,466 9,469,281 Loans and advances 6,717,781 7,651,162 Securities received under repurchase agreements 1,549,272 1,785,941 Subordinated loans 30,000 30,000 Accrued interest 2,413 2,178 TOTAL 8,456,489 10,027,460

No outstanding loan due from credit institutions is eligible for refinancing at the Banque de France or at the European System of Central Banks.

2018 Registration document CRÉDIT FONCIER 211 FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS

3.2 CUSTOMER TRANSACTIONS 3.2.1 CUSTOMER TRANSACTIONS

(in €k) 12/31/2018 12/31/2017 Non-Group 31,928,714 34,437,108 Facilities granted to customers 30,730,002 33,240,876 Export loans Short-term credit facilities 424,466 482,572 Equipment loans 9,911,129 10,512,762 Home loans 18,695,724 20,484,406 Other customer loans 1,139,252 1,124,226 Loans to financial sector customers 385,896 446,003 Unallocated amounts 5,457 4,374 Accrued interest 168,078 186,532 Current accounts with overdrafts 357 318 Current accounts with overdrafts 357 318 Accrued interest Doubtful loans and receivables 1,786,955 1,788,393 Impairment of loans and advances to customers * -588,600 -592,478 Group 41,977 42,106 TOTAL 31,970,691 34,479,215 o/w restructured doubtful loans 295,188 254,698 o/w restructured loans reclassified as performing loans 52,079 54,747 * Impairment of loans and receivables to customers includes, on one hand, write-downs on doubtful receivables for €535,221k and, on the other hand, impairments for significant increases in credit risk on sound receivables for €53,379k. As of December 31, 2017, sound receivables amounting to €33,240,876k led to collective and/or segment provisions totalling €36,732k.

No permanent credit facilities had been granted to customers at December 31, 2018. Customer loans eligible for refinancing at the Banque de France or the European System of Central Banks amounted to €5,704k.

3.2.2 IMPAIRMENT AND PROVISIONS RECORDED TO COVER CREDIT RISK

Exchange Other (in €k) 12/31/2017 difference Allocations (2) Reversals (2) changes 12/31/2018 Impairment deducted from assets 592,478 2,541 583,259 -589,678 588,600 Credit institutions Customer transactions (1) 592,478 2,541 583,259 -589,678 588,600 Current accounts Provisions recognised as liabilities 185,806 168,933 -179,568 175,171 Provisions for customer counterparty risk (1) 36,732 35,418 -36,732 35,418 Provisions for losses and expenses on commitments 147,574 133,515 -142,836 138,253 Provisions for country risk Provisions for real estate contingencies 1,500 1,500 TOTAL 778,284 2,541 752,192 -769,246 763,771 (1) A provision is recorded on non-doubtful loans recorded on or off-balance sheet, where there is information suggesting a risk of default or losses on maturity. (2) In accordance with the Regulation No. 2014-07 of the French accounting standards authority, Compagnie de Financement Foncier now recognizes its impairment flows in accumulated stock: reversal of all impairment for the previous fiscal year and full allocation of impairment for the current fiscal year.

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3.2.3.A BREAKDOWN OF AMOUNTS DUE FROM CUSTOMERS BY SECTOR

12/31/2018 12/31/2017 (in €k) Gross Impairment Net Net Mortgage loans France 13,363,360 36,586 13,326,774 15,106,619 Mortgage loans France 13,363,360 36,586 13,326,774 15,106,619 Public entities 13,897,546 14,019 13,883,526 14,840,535 French public sector 12,748,350 13,956 12,734,394 13,657,245 Social housing 5,259,550 1,551 5,257,999 5,464,959 French local authorities (FLA) 7,488,800 12,405 7,476,395 8,192,286 Sovereign France Public Private Partnerships (PPP) 1,081,644 63 1,081,581 1,115,024 International public entities 67,552 67,552 68,266 International public sector (IPS) 67,552 67,552 68,266 Sovereign Securities backed by sovereign or similar Large Corporates Commercial mortgage loans 3,505,974 2,774 3,503,200 3,331,771 Exposures to banking sector 5,457 5,457 4,375 o/w banking sector backed by sovereign or similar o/w other banking sector 5,457 5,457 4,375 Sub-total performing customer loans 30,772,336 53,379 30,718,958 33,283,300 Doubtful customer loans 1,786,955 535,221 1,251,734 1,195,915 TOTAL CUSTOMER LOANS 32,559,291 588,600 31,970,691 34,479,215

3.2.3.B BREAKDOWN OF DOUBTFUL CUSTOMER LOANS

12/31/2018 Total doubtful loans o/w irrecoverable loans (in €k) Gross Impairment Net Gross Impairment Net Mortgage loans France 1,555,490 420,578 1,134,912 386,157 222,011 164,146 Mortgage loans France 1,555,490 420,578 1,134,912 386,157 222,011 164,146 Public entities 22,259 3,710 18,549 10,677 3,637 7,040 French public sector 22,259 3,710 18,549 10,677 3,637 7,040 Social housing 11,817 3,650 8,166 9,274 3,617 5,657 French local authorities (FLA) 10,442 60 10,382 1,403 20 1,383 Sovereign France Public Private Partnerships (PPP) International public entities International public sector (IPS) Sovereign Securities backed by sovereign or similar Large Corporates Commercial mortgage loans 209,206 110,933 98,273 59,693 27,670 32,023 Exposures to banking sector o/w banking sector backed by sovereign or similar o/w other banking sector TOTAL DOUBTFUL CUSTOMER LOANS 1,786,955 535,221 1,251,734 456,527 253,319 203,209

Under Regulation 2014-07 of the French accounting standards authority, irrecoverable doubtful loans do not include loans benefiting from a guarantee covering the entire exposure. This mostly concerns loans guaranteed by FGAS.

2018 Registration document CRÉDIT FONCIER 213 FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS

3.3 SECURITIES PORTFOLIOS 3.3.1 TREASURY BILLS, BONDS, EQUITY INTERESTS AND OTHER FIXED- AND VARIABLE-INCOME SECURITIES

12/31/2018 12/31/2017 (in €k) Gross Impairment Net Net Bonds and other fixed-income securities 140,769 140,769 149,391 Available-for-sale securities Listed securities Unlisted securities Held-to-maturity securities 139,052 139,052 147,630 Listed securities 48,512 48,512 47,305 Unlisted securities 90,540 90,540 100,325 Doubtful loans and receivables Accrued interest 1,717 1,717 1,761 Equity interests and other long-term investments 111,848 2,709 109,139 108,318 Equity investments 111,834 2,709 109,125 108,304 Listed securities Unlisted securities 111,834 2,709 109,125 108,304 Other long-term investments 14 14 14 Deposit guarantee fund certificates 14 14 14 Investments in affiliates 3,470,571 139,459 3,331,112 3,342,146 Listed securities 242,595 50,244 192,351 185,753 Unlisted securities 3,227,976 89,215 3,138,761 3,156,394 TOTAL 3,723,188 142,168 3,581,020 3,599,855

Crédit Foncier does not hold any trading or portfolio securities, or any Unrealised capital gains on held-to-maturity securities amounted to €5,294k securities issued by Public sector organisations or any subordinated debt. before swaps at December 31, 2018, compared to €9,289k as of December 31, 2017. No specific impairment was recorded for counterparty risk on held-to-maturity securities as of December 31, 2018. The total fair value of the held-to-maturity Unrealised capital losses on held-to-maturity securities amounted to €6,300k securities portfolio is +€138,046k, excluding accrued interest. before swaps at December 31, 2018, compared to €9,810k as of December 31, 2017. The company has not made any reclassification of assets in accordance with the provisions of the ANC Regulation No. 2014-07.

3.3.2 CHANGE IN EQUITY INTERESTS, INVESTMENTS IN AFFILIATES AND OTHER LONG-TERM INVESTMENTS

Other (in €k) 12/31/2017 Reclassifications Increase Decrease changes 12/31/2018 Equity interests and other long-term investments 111,854 -6 111,848 Investments in affiliates 3,472,892 -2,321 3,470,571 Gross amounts 3,584,746 -2,327 3,582,419 Equity interests and other long-term investments -3,536 841 -15 -2,709 Investments in affiliates -130,755 6,598 -15,302 -139,459 Impairment -134,291 7,439 -15,317 -142,168 TOTAL 3,450,455 7,439 -17,644 3,440,251

The net carrying value of the shares of civil real estate companies presented as financial assets amounted to €490k as of December 31, 2018, unchanged compared with December 31, 2017.

3.3.3 CHANGE IN HELD-TO-MATURITY SECURITIES

Change in Premium/ Other (in €k) 12/31/2017 Purchases Disposals Redemptions Transfers Discount changes 12/31/2018 Bonds 47,305 1,206 48,511 Other fixed-income securities 100,325 -8,230 -1,554 90,541 Total 147,630 -8,230 -348 139,052 Accrued interest 1,761 -44 1,717 TOTAL 149,391 -8,230 -348 -44 140,769

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3.4 LEASE FINANCING AND LEASES WITH PURCHASE OPTION

(in €k) 12/31/2018 12/31/2017 Real estate leasing Outstanding customer loans 79,990 87,993 Property temporarily not rented 518 518 Doubtful loans 3,128 3,280 Amortisation -55,024 -58,692 Asset impairment -3,826 -2,620 Accrued interest -201 2,233 TOTAL 24,585 32,712

3.5 INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT 3.5.1 CHANGES IN ASSET ITEMS

Depreciation, Gross Acquisitions Disposals Gross amortisation Net (in €k) 12/31/2017 2018 2018 12/31/2018 & impairment 12/31/2018 Intangible assets 51,455 103 -17 51,542 -32,031 19,511 Leasehold rights and goodwill 5,945 -17 5,928 -2,988 2,940 Software 18,404 103 18,507 -18,390 117 Other 27,106 27,106 -10,653 16,454 Property, plant and equipment 117,467 2,570 -2,793 117,244 -101,421 15,823 Land 4,947 -176 4,771 -129 4,642 Used in operations 4,882 -171 4,711 -129 4,582 Not used in operations 65 -5 60 60 Buildings, fittings and fixtures 75,649 -2,512 73,137 -68,170 4,967 Used in operations 75,332 -2,507 72,825 -67,877 4,948 Not used in operations 317 -5 313 -294 19 Other 36,871 2,570 -105 39,336 -33,122 6,214 Other property, plant & equipment 36,414 684 -105 36,993 -33,122 3,871 Property, plant & equipment under construction 457 1,886 2,344 2,344 TOTAL 168,923 2,673 -2,810 168,786 -133,452 35,334

3.5.2 DEPRECIATION, AMORTISATION AND IMPAIRMENT OF INTANGIBLE ASSETS AND PROPERTY, PLANT & EQUIPMENT

Impairment Allocations/ Allocations to Reversals of Disposals/ (in €k) 12/31/2017 Depreciation provisions provisions Scrap 12/31/2018 Intangible assets 28,835 117 3,878 -799 32,031 Property, plant and equipment 78,882 6,626 17,716 -1,803 101,421 TOTAL 107,717 6,743 21,594 -2,602 133,452

3.6 OTHER ASSETS

(in €k) 12/31/2018 12/31/2017 Premiums on options purchased 57,913 68,732 Security deposits paid on collateralisation transactions 4,118,480 4,500,966 Other deposits and guarantees 65,707 29,763 Advances to partners or shareholders 10,931 33,367 Interest-free loan tax credit amounts used 163,880 161,792 Outstanding interest-free loan tax credits to be used in the future 347,274 359,033 Tax consolidation receivables 187,274 598,409 Other miscellaneous debtors 168,023 214,110 TOTAL 5,119,482 5,966,171

2018 Registration document CRÉDIT FONCIER 215 FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS

3.7 ACCRUAL ACCOUNTS – ASSETS

(in €k) 12/31/2018 12/31/2017 Deferred expenses Issuance and redemption premiums on fixed-income securities 467 Fees on PAS, PTZ and PVH (social/interest-free/reverse mortgage) loans 597 30,007 Losses on sales of receivables * 458,351 1,167,270 Other accrual accounts – assets Deferred losses on hedging instruments 971,896 1,043,547 Prepaid expenses 223,411 217,687 Accrued income on swaps 194,393 199,546 Other accrued income 78,442 59,309 Other accruals 729,511 489,339 TOTAL 2,656,602 3,207,173 * Starting from 2018, Crédit Foncier modified the presentation of this position in order to give a more faithful image and to better respond to the principle of the pre-eminence of reality over form. Losses on sale of receivables due to the sale of loans to its subsidiary Compagnie de Financement Foncier that are intended to be amortized over the life of loans have been "netted" against the subsidies corresponding to the benefits of tax credits on PTZ loans recorded in liabilities (see note 3.12). Since these tax credits are not transferable, the sale of PTZ loans generates a large discount that is roughly equivalent to the proceeds of the remaining tax credits acquired by Crédit Foncier.

3.8 AMOUNTS DUE TO CREDIT INSTITUTIONS

(in €k) 12/31/2018 12/31/2017 Non-Group debt 4,775,634 4,985,415 Demand 65,341 68,031 Current accounts in credit 65,110 60,000 Other amounts payable 200 8,000 Accrued interest 31 31 Term 4,710,293 4,917,384 Term deposits and loans 4,696,716 4,903,000 Securities sold under repurchase agreements Other values sold under repurchase agreements Accrued interest 13,577 14,384 Group debt 38,739,169 41,582,815 Demand 78,581 212,078 Term 38,660,588 41,370,737 TOTAL 43,514,803 46,568,230

2018 Registration document 216 CRÉDIT FONCIER FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS 5

3.9 CUSTOMER TRANSACTIONS

(in €k) 12/31/2018 12/31/2017 Non-Group debt 315,448 183,502 Regulated savings accounts 218 291 Demand 11 20 Term 207 271 Other non-Group amounts 315,230 183,212 Demand 269,442 137,492 Current accounts in credit 49,138 63,875 Other amounts due to customers 220,304 73,617 Accrued interest Term 45,788 45,720 Term deposits 45,786 45,718 Accrued interest 2 2 Group debt 5,000 43,625 Demand 5,000 39,429 Term 4,196 TOTAL 320,448 227,128

3.10 DEBT SECURITIES

(in €k) 12/31/2018 12/31/2017 Interbank market instruments and money market instruments Bonds 238,000 1,188,831 Accrued interest 4,682 39,114 TOTAL 242,682 1,227,945

3.11 OTHER LIABILITIES

(in €k) 12/31/2018 12/31/2017 Premiums on options purchased 1,495 1,347 Deposits received on collateralisation transactions 581,413 602,737 Tax and social security debts 83,410 286,987 Miscellaneous creditors * 181,189 216,210 Allocated public funds 2,695 6,932 TOTAL 850,202 1,114,213 * Under “Miscellaneous creditors”, the suppliers invoices received and not settled at December 31, 2018 amount to €311k.

3.12 ACCRUAL ACCOUNTS – LIABILITIES

(in €k) 12/31/2018 12/31/2017 Deferred subsidies for PAS and PTZ (social/interest-free) loans * 119,026 1,183,421 Deferred gains on sales of receivables 742,307 629,520 Deferred gains on financial instruments 767,168 817,697 Other unearned income 14,987 21,850 Accrued expenses on swaps 378,658 416,391 Accrued expenses 33,269 55,215 Other accrual accounts 747,876 744,674 TOTAL 2,803,291 3,868,768 * Subsidies corresponding to the tax credit on PTZ loans are spread over the life of loans and remain at Crédit Foncier even if the PTZ loans are sold. Given the non-transferability of tax credits, the sale of PTZ generates important capital losses presented on the assets side of the balance sheet and that are to be amortized. In order to give a more accurate picture of the accounts and due to correlation between the tax credits retained and the losses generated, the remaining subsidies that have to be spread over the transferred PTZ loans have been "netted" in "Capital losses" in the assets side of the balance sheet (see note 3.7).

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3.13 PROVISIONS

12/31/2017 12/31/2018 Reversals Other (in €k) Balance Allocations Used Not used movements Balance Provisions for contingencies and charges relating to operations 290,413 506,042 -9,291 -182,406 550 605,308 Banking provisions Provision for losses on interest rate swaps and caps 16,735 1,970 18,705 Provision for litigation 27,552 236 -1,524 -463 550 26,351 Provision for losses and expenses on commitments 64,436 54,257 -64,436 54,257 Provision for other banking transaction contingencies 108,448 102,660 -1,666 -88,069 121,373 Non-banking provisions Provision for operating claims and litigation 8,865 1,659 -441 -1,295 8,788 Provision for various contingencies 2,925 -2,925 Provision for other expenses 1,242 1,242 Provision for pre-retirement working time adjustment (1) 14,354 -2,493 11,861 Provision for retirement management plan 10,721 -1,594 -4,600 4,527 Provision for long-service awards 3,224 -465 2,759 Provisions for end-of-career benefits 8,510 1,413 9,923 Provision for IT restructuring 18,798 17,840 -1,599 -17,620 17,419 Provision for costs on adjustable-rate loan restructuring 16 -16 Provision for contingencies and charges relating to external services 4,588 2,000 -2,451 -40 4,097 Provision for restructuring 324,007 324,007 Provisions recognised in cost of risk 123,228 115,035 -260 -116,730 121,273 Banking provisions Provision for losses and expenses on commitments 83,138 79,258 -78,400 83,996 Provisions for real estate contingencies 1,500 1,500 Provision for counterparty risk on non-doubtful clients 35,418 35,418 Provisions for potential risks on performing loans (2) 36,732 -36,732 Provisions for contingencies 1,858 359 -260 -1,598 359 Other provisions 10,115 -115 10,000 Non-banking provisions Provision for tax disputes and other contingencies 115 -115 Provision for securities transactions 10,000 10,000 TOTAL 423,756 621,077 -9,551 -299,251 550 736,581 (1) This provision is intended to cover commitments assumed by Crédit Foncier where the collective labour agreement provides for a reduction in working hours in the year prior to retirement. (2) See note 1.3.5.

3.13.1 EMPLOYEE BENEFIT COMMITMENTS Crédit Foncier has thus outsourced all of its risk pertaining to pensions currently being paid out (3,484 pensions). Given the mechanisms in place and I. RETIREMENT SCHEMES the amounts transferred, Crédit Foncier has also largely covered its risk relative to current employees, who are the future beneficiaries of the scheme (around Employees who joined groupe Crédit Foncier prior to March 1, 2000 are 1,055 current employees or former Crédit Foncier employees who are covered by the following scheme: beneficiaries and are still working, who joined the Group before 2000). In In accordance with the provisions of Article 116 of the Fillon law of August 21, 2010, the management of the liquidation of pensions for members of the 2003, Crédit Foncier’s Caisse de Retraite (pension fund), created in 1989, was CRCFF plan was transferred to an external company. changed to a supplementary pension fund management institution, taking the This system has no impact on Crédit Foncier’s parent company financial name CRCFF-IGRS; this operation was approved by the decision of the statements. Autorité de Contrôle des Assurances et Mutuelles (ACAM – Insurance and Mutual Company Regulatory Authority) on March 11, 2009, published in the Employees hired after March 1, 2000, are members of the defined contribution Journal Officiel of April 3, 2009. pension plan (CGP) in place with the Group. As part of the transformation, the former Retirement fund transferred all of its In terms of end-of-career benefits, employees are entitled to receive a reserves and provisions covering the associated risk to insurers on March 31, one-time allowance at the time of their retirement that is directly proportional 2009: mainly AXA, in addition to CARDIF and SOGECAP. to their seniority. They also benefit from a lump-sum bonus for long service awards.

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II. CHANGE IN AMOUNTS RECOGNISED ON THE BALANCE SHEET 2018 2017 End-of- End-of- career Other career Other (in €k) benefits commitments Total benefits commitments Total Actuarial liabilities at start of year 40,249 17,578 57,827 49,843 28,479 78,322 Service cost 1,827 843 2,670 2,149 1,210 3,359 Interest cost 395 146 541 487 240 727 Benefits paid -3,224 -2,092 -5,316 -3,948 -2,094 -6,042 Actuarial gains or losses on past service cost -1,224 -1,880 -3,104 -8,591 -10,365 -18,956 Other (translation adjustments, changes in scope, etc.) -3,864 25 -3,839 309 108 417 Actuarial liabilities at end of year * 34,159 14,620 48,779 40,249 17,578 57,827 Fair value of assets at January 1 -28,925 -28,925 -23,679 -23,679 Expected return on plan assets 1,150 1,150 -21 -21 Plan participant contributions -10,000 -10,000 Benefits paid 3,833 3,833 4,909 4,909 Actuarial gains or losses for the period Other (translation adjustments, changes in scope, etc.) -276 -276 -135 -135 Fair value of plan assets at end of year -24,218 -24,218 -28,925 -28,925 Total net commitments 9,941 14,620 24,561 11,324 17,578 28,902 Unrecognised actuarial gains or losses and past service cost at December 31 -19 -19 -2,814 -2,814 NET AMOUNT REPORTED ON THE BALANCE SHEET 9,922 14,620 24,542 8,510 17,578 26,088 * Actuarial liabilities as of December 31, 2018 don't take into account any assumptions concerning the integration of Crédit Foncier's activities into Groupe BPCE, except for the "advance" voluntary departures.

Assets covering end-of-career benefits commitments have been outsourced and are not recognised in Crédit Foncier’s balance-sheet.

III. ANALYSIS OF EXPENSES FOR THE YEAR 12/31/2018 12/31/2017 End-of- End-of- career Other career Other (in €k) benefits commitments Total benefits commitments Total Service cost 1,827 843 2,670 2,149 1,210 3,359 Past service cost -1,224 -551 -1,775 -8,591 -10,866 -19,457 Interest cost 395 146 541 487 240 727 Interest income -276 -276 -135 -135 Benefits paid 609 -2,092 -1,483 962 -2,094 -1,132 Plan participant contributions -10,000 -10,000 Unrecognised actuarial gains or losses -1,330 -1,330 501 501 Other 81 26 107 169 108 277 TOTAL 1,412 -2,958 -1,546 -14,959 -10,901 -25,860

IV. MAIN ACTUARIAL ASSUMPTIONS 12/31/2018 12/31/2017 End-of- End-of- career Other career Other (as a %) benefits commitments benefits commitments Discount rate 1.19% 1.03% 0.92% 0.74% Inflation rate 1.70% 1.70% 1.70% 1.70% Wage growth rate 2.60% 2.60% 2.60% 2.60% Duration 10 * 10 * * At December 31, 2018, the estimated duration of other employee benefit obligations was unchanged against 2017. For long service awards, estimated duration is 8 years and 9 years for working time organisation for the last year before retirement.

2018 Registration document CRÉDIT FONCIER 219 FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS

3.14 SUBORDINATED DEBT I. ACCOUNTING DATA

(in €k) 12/31/2018 12/31/2017 Term subordinated loans Term subordinated securities 10,000 10,000 Perpetual deeply subordinated notes 550,000 830,000 Accrued interest 1,190 1,929 TOTAL SUBORDINATED DEBT 561,190 841,929

II. PERPETUAL DEEPLY SUBORDINATED NOTES Repayment (in €k) Issuance date Maturity date Interest rate terms 12/31/2018 Euribor 3-month Bonds with a value of €550m 12/21/2015 - +6.6% 550,000

Terms and conditions of early repayment Subordination conditions The issuer will be able to exercise an early redemption option for the first time The bonds are direct, unconditional, non-guaranteed, lowest ranking at the end of a six year period after the issue date, i.e. from December 21, commitments. They have the same ranking as other existing or future deeply 2021. This option can then be exercised on each anniversary of the issue subordinated notes. They will be repaid after holders of participation loans and date. securities and after ordinary subordinated and unsecured bonds.

III. DETAIL OF THE MAIN SUBORDINATED NOTES Repayment (in €k) Issuance date Maturity date Interest rate terms 12/31/2018 Non-Group subordinated bonds 03/06/2003 03/06/2023 CMS 20 In full at maturity 10,000 TOTAL 10,000

3.15 EQUITY 3.15.1 CHANGES IN EQUITY EXCLUDING FUND FOR GENERAL BANKING RISKS

Additional Share paid-in Regulated Retained Total equity (in €k) capital (1) capital Reserves provisions (2) earnings Income excl. FGBR At December 31, 2016 1,331,401 400,195 133,140 28,661 254,835 220,413 2,368,645 Changes during the year -7,042 220,413 183,108 396,479 At December 31, 2017 1,331,401 400,195 133,140 21,619 475,248 403,521 2,765,123 Change in capital Allocation to reserves Dividends paid 403,521 -403,521 Change in method Other changes -4,838 -4,838 Net income at December 31, 2018 -252,112 -252,112 Interim dividend AT DECEMBER 31, 2018 1,331,401 400,195 133,140 16,781 878,769 -252,112 2,508,173 (1) The share capital comprises 369,833,533 ordinary shares with par value €3.60, which confer identical rights on all shareholders. (2) At December 31, 2018, the regulated provisions consisted mainly of the neutralization of capital gains on loans sold to Compagnie de Financement Foncier for €16,655k.

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3.15.2 PROPOSED APPROPRIATION OF INCOME

(in €k) 12/31/2018 Sources Retained earnings 878,769 Net income for the period -252,112 Amount released from reserves Amount released from additional paid-in capital Uses Allocations to reserves Legal reserve Dividends Other distributions Retained earnings 626,656 TOTAL 626,656 626,656

NOTE 4 NOTES TO OFF-BALANCE SHEET ITEMS 4.1 FINANCING COMMITMENTS GIVEN

(in €k) 12/31/2018 12/31/2017 Non-Group commitments 4,082,100 4,428,885 Credit institutions Customers 4,082,100 4,428,885 Group commitments 35,202 29,275 Credit institutions 34,352 26,500 Customers 850 2,775 TOTAL 4,117,302 4,458,160

4.2 GUARANTEE COMMITMENTS GIVEN

(in €k) 12/31/2018 12/31/2017 Non-Group commitments 145,954 224,059 Credit institutions Customers 144,251 218,698 Doubtful items 1,702 5,361 Group commitments 1,019,105 803,370 Credit institutions 15,547 Customers 1,019,105 787,823 TOTAL 1,165,059 1,027,429

4.2.1 ASSETS PLEDGED AS COLLATERAL In view of the current liquidity situation, credit institutions in France can now use a number of refinancing arrangements based on financial asset guarantee mechanisms. Loans pledged by Crédit Foncier in the context of these measures include:

(in €k) 12/31/2018 12/31/2017 ❯ Debt instruments ❯ Loans and advances 27,428,904 30,031,451 TOTAL 27,428,904 30,031,451 of which €996,522k pledged as collateral against the €1,266,653k of funding from European Investment Bank (EIB) as of December 31, 2017.

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4.3 COMMITMENTS ON SECURITIES

(in €k) 12/31/2018 12/31/2017 Securities to deliver 4,670 4,670 Group commitments 4,670 4,670 Other commitments TOTAL 4,670 4,670

4.4 COMMITMENTS RECEIVED

(in €k) 12/31/2018 12/31/2017 Financing commitments 3,137 3,299 Non-Group commitments 3,137 3,299 Credit institutions 3,137 3,299 Group commitments Credit institutions Guarantee commitments 27,026,451 28,491,118 Non-Group commitments 13,727,132 15,237,094 Credit institutions 4,450,792 3,941,427 Customers (1) 9,276,340 11,295,667 Group commitments 1,522,247 1,514,621 Credit institutions (2) 874,164 798,159 Customers 648,083 716,462 Other commitments received 11,777,072 11,739,403 Mortgage guarantees 9,577,059 9,729,055 Pledges of securities 960,253 997,704 Other commitments received 1,239,760 1,012,643 Commitments on securities 4,670 4,670 Securities to be received 4,670 4,670 TOTAL COMMITMENTS RECEIVED 27,034,258 28,499,087 (1) The collateral received from the SGFGAS on FGAS-eligible loans stood at €4,901,145k at December 31, 2018, compared to €6,710,014k at December 31, 2017. (2) Group commitments notably include a guarantee received from BPCE for French local authority loans taken over from Natixis (formerly IXIS CIB) in the amount of €234,700k at December 31, 2018, compared to €277,044k at December 31, 2017.

2018 Registration document 222 CRÉDIT FONCIER FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS 5

4.5 FORWARD FINANCIAL TRANSACTIONS

12/31/2018 12/31/2017 Foreign Foreign (in €k) Euros currency (1) Euros currency (1) Over-the-counter markets Options (notional amounts) 4,968,456 5,575,693 Hedging transactions Interest rate instruments Purchases 2,982,065 190,948 Sales 237,720 190,948 Foreign exchange instruments Purchases Sales Other instruments Purchases 364,000 3,578,125 Sales Other options Purchases Sales 1,384,671 1,615,671 Options (fair value) 3,141 5,758 Forward transactions (notional amounts) 128,255,555 1,454,196 120,630,689 1,790,064 Hedging transactions Interest rate instruments 126,874,284 118,946,204 Micro-hedging 9,295,632 10,191,581 Macro-hedging 117,578,652 108,754,623 Foreign exchange instruments (2) 1,368,146 1,454,196 1,671,019 1,790,064 Micro-hedging 1,368,146 1,454,196 1,671,019 1,790,064 Macro-hedging Other instruments Other transactions 13,125 13,466 Forward transactions (fair value) -3,339,457 -3,217,536 Total forwards and options 133,224,011 1,454,196 126,206,382 1,790,064 TOTAL (NOTIONAL AMOUNTS) 134,678,207 127,996,446 TOTAL (FAIR VALUE) -3,336,316 -3,211,778 (1) Euro equivalent of notional amounts at the closing date. (2) These positions correspond to currency swaps. They represent a forward foreign exchange position, and an identical opposite position is recorded under OTC foreign exchange positions on the balance sheet (See note 6.2).

The notional amounts of the contracts listed in this table are only an indication Crédit Foncier did not carry out any foreign currency interest rate derivatives of the volume of the company's activity on financial markets at the year end transactions in 2017 or 2018. and do not reflect the market risks arising from these instruments. Crédit Foncier does not carry out any forward financial transactions on There were no portfolio transfers during 2018. organised markets. There are no irrecoverable commitments.

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NOTE 5 NOTES TO THE INCOME STATEMENT 5.1 INTEREST AND SIMILAR INCOME AND EXPENSES

Income Expenses (in €k) FY 2018 FY 2017 FY 2018 FY 2017 On transactions with credit institutions 71,477 76,639 -343,096 -388,837 On transactions with customers 1,035,354 1,296,340 -290,219 -382,773 On bonds and other fixed-income securities 27,171 49,798 -29,266 -87,638 On subordinated notes and securities - - -37,667 -39,554 Other * -451,003 -522,707 TOTAL 1,134,001 1,422,777 -1,151,250 -1,421,509 * o/w in respect of macro-hedging transactions -446,960 -517,864

5.2 INCOME AND EXPENSES ON LEASE FINANCING AND OPERATING LEASES

Income Expenses (in €k) FY 2018 FY 2017 FY 2018 FY 2017 Lease financing and related transactions 6,800 7,772 -5,411 -5,804 Rental income 6,502 7,336 Gains or losses on disposal -276 Impairment 35 163 -442 -362 Amortisation -4,335 -4,550 Other income and expenses 263 273 -634 -616 TOTAL 6,800 7,772 -5,411 -5,804

5.3 INCOME FROM VARIABLE-INCOME SECURITIES

(in €k) FY 2018 FY 2017 Investments in associates 23,617 7,351 Investments in affiliates 85,117 111,180 TOTAL 108,734 118,531

5.4 FEES AND COMMISSIONS

FY 2018 FY 2017 (in €k) Income Expenses Net Income Expenses Net On cash and interbank transactions 443 -5,847 -5,404 127 -34,178 -34,051 On transactions with customers 39,340 -2,184 37,156 44,026 -1,113 42,913 On securities transactions 293 -253 40 305 -650 -345 On sales of insurance products 112,058 -46 112,012 114,628 -56 114,572 Other fees and commissions 10,414 -2,555 7,859 12,491 -2,948 9,543 TOTAL 162,548 -10,885 151,663 171,577 -38,945 132,632

5.5 GAINS OR LOSSES ON TRADING BOOK TRANSACTIONS

(in €k) FY 2018 FY 2017 Currency and arbitrage transactions 103 -29 Transactions on forward financial instruments * -1,390 7,386 TOTAL -1,287 7,357 * Including reversals of provisions on structured loans to French local authorities 1,028 9,088

2018 Registration document 224 CRÉDIT FONCIER FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS 5

5.6 OTHER BANKING INCOME AND EXPENSES

FY 2018 FY 2017 (in €k) Income Expenses Net Income Expenses Net Real-estate operations 215 -53 162 938 -182 756 Rebilled services * 52,939 52,939 73,567 73,567 Income from ancillary activities 1,116 1,116 1,449 1,449 Other operating income and expenses 2,535 -3,310 -775 3,412 -3,961 -549 Net change in provisions relating to other operating income and expenses 3,399 -1,012 2,387 22,076 -5,905 16,171 TOTAL 60,204 -4,375 55,829 101,442 -10,048 91,395 * o/w rebilling of services to: - lease financing companies 4,273 4,273 3,256 3,256 - real estate services companies 15,465 15,465 16,153 16,153

5.7 OPERATING EXPENSES

(in €k) FY 2018 FY 2017 Personnel costs Wages and salaries -131,436 -143,624 Pension costs and similar -24,770 -38,810 Other employee benefit expenses (1) -34,679 -38,849 Payroll taxes -22,577 -24,789 Employee incentive scheme -5,518 -3,884 Employee profit sharing scheme -515 -1,972 Movements in provisions for operating claims and litigation -291 5,172 Movements in provisions for personnel-related contingencies and charges 7,740 18,050 Movements in provisions for restructuring costs -107,543 Expenses rebilled (in €) 7,302 8,403 Taxes other than on income Taxes other than on income (2) -6,085 -25,016 Movements in provisions for miscellaneous risks 115 Net tax relief 81 80 External services and other administrative expenses External services (2) -148,709 -148,419 Movements in provisions for restructuring costs -216,464 Net movements in other provisions 4,812 1,567 Expenses rebilled (in €) 30,989 34,051 TOTAL -647,548 -358,040 (1) The French employment and competitiveness tax credit (Crédit d’impôt pour la compétitivité et l’emploi – CICE) is credited back to personnel costs and amounted to €1,454k in 2018. In 2017, it amounted to €1,913k. (2) Crédit Foncier now applies the Groupe BPCE method and classifies its contribution to Bank Resolution Mechanism as external services. They accounted for €17,079k in 2018. In 2017 where they were included in Taxes and amounted to €17,691k.

5.7.1 MANAGEMENT REMUNERATION Key management personnel are corporate officers and members of Crédit Foncier’s Board of Directors. Remuneration paid amounted to €832k (including attendance fees), comprising mainly short-term benefits as detailed in the Management report.

2018 Registration document CRÉDIT FONCIER 225 FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS

5.8 COST OF RISK

(in €k) FY 2018 FY 2017 Allocations to impairment and provisions -588,402 -522,002 Interbank transactions Customer transactions (2) -419,988 -442,025 Other financial assets Off-balance sheet commitments -79,617 -79,977 Performing loans -88,797 Reversals of impairment and provisions (1) 564,391 586,806 Interbank transactions Customer transactions 447,396 499,839 Other financial assets 5 12 Off-balance sheet commitments 80,258 64,949 Performing loans 36,732 22,006 Net change in impairment and provisions -24,011 64,804 Losses on irrecoverable loans and receivables covered by impairment -86,611 -54,955 Losses on irrecoverable interbank loans Losses on irrecoverable loans and receivables due from customers -86,605 -54,955 Losses on other financial assets -6 Losses on off-balance sheet commitments Losses on irrecoverable loans and receivables not covered by impairment -24,576 -21,813 Losses on irrecoverable interbank loans Losses on irrecoverable loans and receivables due from customers -19,232 -16,826 Losses on other financial assets Losses on off-balance sheet commitments Others -5,344 -4,987 Recoveries of loans and receivables written-off 5,804 4,970 Recoveries of interbank loans written off Recoveries of customer loans written off 5,233 4,867 Recoveries of other financial assets 571 103 Recoveries of off-balance sheet commitments TOTAL -129,394 -6,994 (1) of which reversals of impairment and provisions used 86,605 54,955 of which reversals of impairment and provisions no longer required 477,786 531,851 (2) This item icludes, inter alia, an allocation of €30,000k to cover a risk of losses on disposals of “non performing” loans to be realized over the next few years.

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5.9 GAINS OR LOSSES ON LONG-TERM INVESTMENTS

(in €k) FY 2018 FY 2017 Intangible assets and property, plant and equipment: 1,010 1,958 Gains on disposals of operating assets 2,014 2,934 Losses on disposals of operating assets -1,004 -975 Financial assets: 1,117 12,335 Reversals of provisions for investments in affiliates 6,598 6,415 Allocations to provisions for investments in affiliates -15,302 -19,139 Reversals of provisions for investments in associates 1,081 2,290 Allocations to provisions for investments in associates -254 -13 Losses on written-off receivables Gains on disposals of financial assets 155 19,598 Losses on disposals of financial assets -1 -1,830 Other income relating to disposals 8,840 5,015 NET BALANCE 2,127 14,294

5.10 INCOME TAX

(in €k) FY 2018 FY 2017 Tax income and expenses for subgroup – standard rate 168,439 307,149 Tax income and expenses for subgroup – reduced rate -40 -244 Tax consolidation income and expenses 41,200 -34,036 Adjustment of income taxes 2,411 150,305 Prepaid taxes and tax credits on interest-free loans * 5,213 -27,321 Movements in provisions for tax claims and litigation 4,968 TOTAL 217,223 400,821 * Including -€3,258k of future tax rate changes in 2018 compared with -€31,333k in 2017 (2018 Finance Law).

Since 2010, the Crédit Foncier tax subgroup has been part of the BPCE parent company tax consolidation group.

5.11 MOVEMENTS IN THE FUND FOR GENERAL BANKING RISKS AND REGULATED PROVISIONS

(in €k) FY 2018 FY 2017 Reversals of regulated provisions * 4,738 6,852 Allocations to regulated provisions Reversals from the fund for general banking risks 30,000 TOTAL 34,738 6,852 * o/w gains on the sale of loans and receivables to Compagnie de Financement Foncier carried out before 2006, recognised over the term of the loans 4,636 6,498

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NOTE 6 OTHER INFORMATION 6.1 TRANSACTIONS WITH RELATED PARTIES (1)

Credit Other (in €k) institutions companies 12/31/2018 12/31/2017 Loans and receivables 8,306,631 41,977 8,348,608 9,985,850 o/w loans and advances 6,717,781 6,717,781 7,651,162 o/w securities received under repurchase agreements 1,549,272 1,549,272 1,785,941 o/w subordinated debt 30,000 30,000 30,004 Debt 38,739,169 5,000 38,744,169 41,626,441 o/w subordinated debt Securities transactions Bonds and other fixed-income securities o/w subordinated debt Debt securities 551,057 551,057 831,818 o/w subordinated debt 551,057 551,057 831,818 Commitments given Financing commitments 34,352 850 35,202 29,275 Guarantee commitments 1,019,105 1,019,105 803,370 Other commitments given 4,670 4,670 4,670 Commitments received Financing commitments Guarantee commitments 874,164 648,083 1,522,247 1,514,621

6.1.1 RELATED-PARTY TRANSACTIONS BPCE, its parent company, carried out transactions in 2018 that are included in related-party agreements: Related parties are defined as entities related to the credit institution presenting its financial statements, and over which it has a total or joint ❯ on March 29, 2012, BPCE and Crédit Foncier signed a rebilling agreement control. relative to Crédit Foncier’s affiliation. This agreement resulted in €4,575k in expenses for 2018; In application of ANC Regulation No. 2010-04 of October 7, 2010 on ❯ lthe re-invoicing of the personnel seconded by Crédit Foncier to BPCE in 2018 information on transactions carried out with affiliates, Crédit Foncier and amounted to € 51k.

(1) Related parties include all entities within the Groupe BPCE consolidation scope.

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6.2 STATEMENT OF CURRENCIES POSITIONS AS OF DECEMBER 31, 2018

Other (in €k) USD GBP CHF JPY currencies Total Balance sheet Financial assets 4 20,054 81,099 1,197 280 102,634 Financial liabilities 20,030 3,695 1,162 156 25,043 Balance sheet differential 4 24 77,404 35 124 77,591 Off-balance sheet items Commitments received 335,537 193,800 159,341 688,678 Commitments given 335,537 270,639 159,341 765,517 Off-balance sheet differential -76,839 -76,839 OVERALL DIFFERENTIAL 4 24 565 35 124 752

Financial assets comprise loans and receivables due from credit institutions and customers, bonds, other fixed-income securities and subordinated term loans. Financial liabilities comprise amounts due to credit institutions and customers.

6.3 STATEMENT OF LIQUIDITY POSITIONS: LIQUIDITY RISK

Residual term > 1m and > 3m and > 1yr and (in €k) < 1 month < 3m < 1yr < 5yr > 5 yrs Not defined Total * Balance sheet Financial assets 1,713,688 1,790,560 2,405,788 7,891,756 23,182,770 2,100,000 39,084,562 Treasury bills and equivalent Loans and receivables due from credit institutions 1,548,100 1,504,917 1,071,194 742,845 1,354,521 2,100,000 8,321,577 Loans and receivable due from customers 164,909 285,643 1,332,703 7,063,426 21,730,907 30,577,588 Bonds and other fixed-income securities 679 1,891 85,485 50,997 139,052 Subordinated term loans 46,345 46,345 Financial liabilities 2,495,573 4,640,527 11,905,541 8,375,777 16,797,930 44,215,348 Amounts due to credit institutions 2,495,366 4,640,527 11,860,710 8,234,822 16,139,930 43,371,355 Amounts due to customers 207 44,831 955 45,993 Debt securities: 130,000 108,000 238,000 Interbank market instruments Negotiable debt securities Bonds 130,000 108,000 238,000 Other debt securities Term subordinated debt 10,000 550,000 560,000 Balance sheet differential (I) -781,885 -2,849,967 -9,499,753 -484,021 6,384,840 2,100,000 -5,130,786 Off-balance sheet Financing commitments received 3,137 3,137 Financing commitments given 408,699 60,564 601,849 1,738,731 1,307,459 4,117,302 Off-balance sheet differential (II) -405,562 -60,564 -601,849 -1,738,731 -1,307,459 -4,114,165 TOTAL DIFFERENTIAL (I) + (II) -1,187,447 -2,910,531 -10,101,602 -2,222,752 5,077,381 2,100,000 -9,244,951 Outstanding options 12,664 1,500 928,726 1,313,663 2,711,903 4,968,456 Positions fermes 118,800 6,272,157 14,969,934 22,241,297 86,107,563 129,709,751 * The difference between this column and amounts appearing on the balance sheet is mainly due to unpaid loans, doubtful items and accrued interest.

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6.4 FIVE-YEAR FINANCIAL SUMMARY

Type of indication (amounts in €) 2014 2015 2016 2017 2018 I) FINANCIAL POSITION AT YEAR-END: a) Share capital 1,331,400,719 1,331,400,719 1,331,400,719 1,331,400,719 1,331,400,719 b) Number of shares issued 369,833,533 369,833,533 369,833,533 369,833,533 369,833,533 c) Number of convertible bonds None None None None None II) RESULTS FOR THE YEAR: a) Net revenue 2,687,069,351 2,706,094,717 2,541,778,268 1,834,275,050 1,471,000,547 b) Income before tax, employee profit-sharing and incentive schemes for the year, depreciation and amortisation expenses and provisions 164,985,918 91,620,670 236,337,194 -92,017,775 -156,010,467 c) Income tax -56,561,791 145,746,639 -20,657,864 400,821,103 217,222,855 d) Impact of employee profit-sharing and incentive schemes for the year 16,480,000 -4,597,292 -3,204,720 -5,855,508 -6,033,000 Income after tax, employee profit-sharing for the year and amortisation expenses e) and provisions -94,480,430 257,483,143 220,412,530 403,520,746 -252,112,332 f) Dividends paid III) PER SHARE DATA: a) Income after tax, employee profit-sharing and incentive schemes for the year but before amortisation expenses and provisions 0.25 0.65 0.59 0.85 0.60 b) Income after tax, employee profit-sharing and incentive schemes for the year, depreciation and amortisation expenses and provisions -0.26 0.70 0.60 1.09 -0.68 c) Dividend per share IV) EMPLOYEE DATA: a) Number of employees (FTE) 2,662 2,598 2,490 2,328 2,149 ❯ managerial staff 1,517 1,494 1,444 1,369 1,307 ❯ non-managerial staff 1,145 1,104 1,046 959 842 b) Total payroll 153,886,607 149,862,804 149,133,530 140,788,876 133,028,809 c) Employee benefits paid (social security, benefits, etc.) 76,444,364 77,960,945 73,865,474 79,571,553 62,880,267

2018 Registration document 230 CRÉDIT FONCIER FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS 5

6.5 INFORMATION ON SUBSIDIARIES AND AFFILIATES

Guarantees Loans & & advances endorse- Revenue Income granted ments for the for the Dividends by the granted by past past received Share Other Interest parent the parent financial financial by Crédit Company Adresses capital equity held Carrying amount company company year year Foncier Gross Net €k €k % €k €k €k €k €k €k €k A) SUBSIDIARIES AND AFFILIATES WHOSE CARRYING AMOUNT EXCEEDS 1% OF THE CAPITAL (€13,314,007) 1 – Subsidiaries (at least 50% of capital held by Crédit Foncier) Credit institutions 10, bld de Grenelle SOCFIM 75015 PARIS 46,629 39,107 100 57,604 57,604 699,889 951,178 43,779 21,692 5,595 19, rue des Capucines Locindus 75001 PARIS 61,347 197,870 75 242,595 192,351 364,429 61,340 17,042 7,104 Compagnie de 19, rue des Capucines Financement Foncier 75001 PARIS 2,537,460 549,469 100 2,875,050 2,875,050 4,943,474 2,258,212 89,783 58,203 Quinta da Fonte. Edificio D. João I – 1a 2770-192 Banco Primus Paço d’Arcos Portugal 99,000 -20,706 100 129,106 65,000 368,930 34,992 10,449 - Other companies 19, rue des Capucines Cofimab 75001 PARIS 182 33,094 100 41,649 41,649 8,888 32,739 6,788 - Crédit Foncier 19, rue des Capucines Immobilier 75001 PARIS 1,500 667 100 25,706 598 1,629 24,368 -370 - Vendôme 19, rue des Capucines Investissements 75001 PARIS 19,462 36,142 100 70,366 70,366 - - - 3,160 3,179 2 – Equity investments (10% to 50% of capital held by Crédit Foncier) B) OTHER SUBSIDIARIES AND AFFILIATES 1 – Subsidiaries not included in section A a) French subsidiaries (all) 28,180 26,549 - - 10,918 b) Foreign subsidiaries (all) - - - - - 2 – Affiliates not included in section A a) French affiliates 50, bld de Sébastopol Crédit Logement 75002 PARIS - - - 87,649 87,649 - - 18,493 Other entities - - - 24,499 23,421 - - 157 b) Foreign affiliates (all) ------C) INFORMATION ON PARTNERSHIPS IN WHICH THE PARENT HAS UNLIMITED RESPONSIBILITY (NOT INCLUDED IN SECTION A) PURSUANT TO APPENDIX IV OF FRENCH BANKING REGULATIONS COMMITTEE REGULATION 91-01 Commercial partnerships 19, rue des Capucines SNC Sofipar Logement 75001 PARIS ------19, rue des Capucines SNC Sofoneg 75001 PARIS ------SNC Domaine 19, rue des Capucines du Grand Duc 75001 PARIS ------Non-commercial partnerships 6, place Abel-Gance 92100 BOULOGNE- CAD (SCI du) BILLANCOURT ------11, rue du Noyelles (SCI de) Fort-de-Noyelles (440,154,953) 59113 SECLIN ------

2018 Registration document CRÉDIT FONCIER 231 FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS

6.6 FEES PAID TO STATUTORY AUDITORS

KPMG PricewaterhouseCoopers Total 2018 2017 2018 2017 2018 2017 (in €k) Amount % Amount % Amount % Amount % Amount % Amount % Audit Statutory audit 715 98% 816 98% 645 92% 820 94% 1,359 95% 1,636 96% Other services * 18 2% 14 2% 54 8% 48 6% 72 5% 62 4% TOTAL 733 100% 830 100% 699 100% 868 100% 1,431 100% 1,698 100% * The other services mainly come from missions related to the overview of fiscal and accounting impacts of certain significant transactions and to provision of CACEIS certificate and depositary report.

Amounts indicated represent accounting expenses and take into account non-deductible VAT. As a reminder, in 2017 the amounts fot the two cabinets PWC & KPMG, included fees for missions on the passage under IFRS 9 and the preparing works for the FTA. The 2018 amounts for the two cabinets PWC & KPMG include fees for work related to financial reporting as part of the first application of IFRS 9 as well as various missions (in-depth work on the provision for restructuring, tax missions ...).

6.7 PRESENCE IN UNCOOPERATIVE TAX HAVENS Article L. 511-45 of the French Monetary and Financial Code and the These obligations are part of global efforts to combat uncooperative tax Economy Ministry decree of October 6, 2009 require that credit institutions havens sponsored by the OECD, and also form part of anti-money laundering publish in their annual financial statements information on their activities and and counter-terrorist financing initiatives. presence in uncooperative tax havens that have not signed an administrative assistance agreement with France authorising access to banking information At December 31, 2018, Crédit Foncier had no activity or presence in any in order to combat tax fraud and tax evasion. uncooperative tax havens.

2018 Registration document 232 CRÉDIT FONCIER FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS 5

❯ 5.2.6 REPORT OF THE STATUTORY AUDITORS ON THE PARENT COMPANY FINANCIAL STATEMENTS

Year ended December 31, 2018 Our responsibilities under these standards are further described in the section of this report entitled “Responsibilities of the Statutory Auditors in respect of Crédit Foncier de France S.A. the audit of the parent company financial statements”. Registered Office: 19 Rue des Capucines - 75001 Paris Share capital: €1,331,400,718.80 INDEPENDENCE We have conducted our audit assignment in accordance with the rules of To the Shareholders of Crédit Foncier de France S.A., independence applicable to us, over the period from January 1, 2018 to the date of our report. In particular, we have not provided any services prohibited by Article 5, paragraph 1 of Regulation (EU) No. 537/2014 or by the Statutory OPINION Auditors’ Code of Ethics. In compliance with the assignment entrusted to us by your Annual General Shareholders’ Meeting, we have audited the parent company financial JUSTIFICATION OF OUR ASSESSMENTS - KEY AUDIT statements of Crédit Foncier de France SA for the year ended December 31, MATTERS 2018, as enclosed with this report. Pursuant to the provisions of Articles L.823-9 and R.823-7 of the French In our opinion, the financial statements give a true and fair view of the assets Commercial Code regarding the justification of our assessments, we draw and liabilities and of the financial position of the Company as at December 31, your attention to the key audit matters, which cover areas identified during our 2018 and of the results of its operations for the year then ended in accordance audit that we consider bear the biggest risks of significant misstatements, with French accounting principles. based on our professional judgement, as well as the responses we provided The opinion expressed above is consistent with the content of our report to to these risks. the Audit Committee. These assessments were part of our audit of the parent company financial statements as a whole, and therefore contributed to the opinion expressed BASIS OF THE OPINION above. We do not express an opinion on individual items of the parent company financial statements. AUDIT STANDARDS We conducted our audit in accordance with professional standards applicable in France. We believe that our audit has provided us with sufficient relevant information on which to base our opinion.

❯ Project to integrate Crédit Foncier’s operations into Groupe BPCE

Risk identified Our audit approach As part of the plan to integrate Crédit Foncier’s activities and reorganise its expertise We have tested the completeness and accuracy of the basis used for within Groupe BPCE, Groupe Crédit Foncier has recorded provisions for restructuring. the calculation of provisions for employee-related expenses and the These provisions primarily cover the personnel expenses that are expected to be incurred other costs of the plan. further to the implementation of the collective agreements negotiated with the trade We have verified that the estimates made by Crédit Foncier unions (voluntary redundancy, transfers within Groupe BPCE, support for staff remaining incorporated all the measures included in the employment protection at Crédit Foncier and end-of-career support measures). They also cover other estimated plans negotiated with the trade unions and the costs incurred and costs, in particular real estate expenses and the cost of terminating contracts with subject to provisions in terms of accounting standards. exclusive agents. We assessed the reasonable and substantiated nature of the main Assessing provisions involves exercising judgement and is based on assumptions, in assumptions made with regard to available information. particular regarding employee take-up of the different components of the employment We tested the provision calculations and verified that labour law was protection plan. correctly applied in respect of the agreements negotiated as of We considered that these provisions for restructuring were a key audit matter, because December 31, 2018, based on samples. of: We reviewed the information presented in the notes to the financial ❯ the relative importance of the impacts of this project, statements. ❯ the importance of the assumptions used by management in calculating the amount of the provision, ❯ the complexity of the agreements and their interpretation in terms of labour law and accounting standards. The provision recorded for the restructuring plan at December 31, 2018 amounted to €334m. For further details on the accounting principles applied, the main assumptions made and the impacts, please refer to Notes 1.3.1.2 and 2.3.8 to the parent company financial statements.

2018 Registration document CRÉDIT FONCIER 233 FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS

❯ Credit risks: impairment of loans to individuals

Risk identified Our audit approach Crédit Foncier records provisions to cover the risk of losses arising if its customers are We reviewed the process used by the Risk Division to classify unable to meet their financial commitments. These provisions are recognised for expected performing or non-performing loans and calculate the amount of losses on impaired loans (non-performing loans) and on performing loans identified as expected or incurred credit losses on these loans. being at risk or having seen a significant increase in credit risk. We tested the controls used by the Division to identify performing or At December 31, 2018, Crédit Foncier wished to align the methods used to estimate non-performing loans and assess hopes of recovery and impairment. provisions for these two types of exposures with the expected credit loss calculations We were also informed of the main conclusions of the specialised now required under IFRS 9, which took effect for the Group’s consolidated financial committees responsible for monitoring these loans. statements at the start of the year. This alignment involved: For impairment on performing loans identified as being at risk or subject ❯ identifying the two categories of exposures: non-performing loans (90 days past due) to a significant increase in credit risk: and loans at risk (alignment with the terms for identifying a significant increase in credit ❯ we reviewed the methods used to identify the different inputs and risk (SICR) as defined for the first-time application of IFRS 9), expected credit loss calculation models and verified their compliance ❯ estimating provisions for both categories of exposures. with the applicable accounting standards; The impact of this alignment was treated as a change of estimate in Crédit Foncier’s ❯ we examined the terms for identifying a significant increase in credit parent company financial statements. risk (SICR); The assessment of provisions involves the exercise of judgement when classifying ❯ we were informed of the system in place to periodically review the exposures (performing or non-performing loans) and when calculating recoverable future main inputs used in the calculation models; cash flows and recovery times. ❯ we tested the controls of data flows used to calculate expected Given the importance of the use of judgement in determining these provisions and the credit losses, the reconciliation of data between the databases used complexity of the new estimates made under IFRS 9, we considered that the estimation for these calculations and accounting databases and the general of expected credit losses on loans to individuals was a key audit matter. controls of the specific IT applications; we also made independent As of December 31, 2018, outstanding loans to customers amounted to €31,971m, expected credit loss calculations on a sample basis. including €1,787m in gross non-performing loans. Impairment and provisions recorded to In view of how Groupe BPCE is organised, some of the work described cover credit risks totalled €764 million, including €88m in impairment for significant above was performed with the support of BPCE’s Statutory Auditors. increases in credit risk on performing loans. For the impairment of non-performing loans, we examined the method For further details on the accounting principles and exposures, please refer to Notes used to update recoverable values and revalue collateral for loans 1.3.5, 2.3.2, 3.2 and 5.8 to the parent company financial statements. impaired individually or as portfolios of similar receivables. We also verified provisioning calculations on a sample basis. We verified that appropriate information is provided in the notes to the financial statements.

❯ Financial operations and migration of IT systems

Risk identified Our audit approach In the first quarter of 2018, Crédit Foncier de France migrated to a new Groupe BPCE IT We reviewed the system used by the bank’s management during the system for the management of its financial operations. year to secure the processing of its financial operations. This migration involved the recovery of data from the existing system, the configuration of In particular, we tested the operational efficiency of the manual controls the new system (valuation of instruments, interest calculation, accounting charts, etc.) and set up and performed a critical review of the new processes. the implementation of new automated or manual processes and controls. With the support of Groupe BPCE’s Statutory Auditors, we tested the The migration led Crédit Foncier to implement a specific solution to secure the process for automated controls in the new application and verified the checks used, recording transactions completed during the year, including in particular the recording of in particular in terms of user access rights. the manual entries that proved necessary. We completed tests on the valuation of the securities portfolio on a We considered that this situation constituted a key audit matter in view of the volume of sample basis. manual entries and the critical nature of this information system in ensuring the quality of We tested bank reconciliation and verified that the value of derivatives accounting and financial information on financial instruments. matched that recorded by counterparties. We also performed a critical review of the documentation of micro-hedging transactions. We reviewed a sample of manual entries made during the year.

2018 Registration document 234 CRÉDIT FONCIER FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS 5

SPECIFIC VERIFICATIONS information relating to the continuity of operations in the financial statements, as appropriate, and apply the going-concern accounting principle, unless the We have also performed, in accordance with professional standards Company is to be wound up or cease trading. applicable in France, the specific verifications required by French law and regulations. The Audit Committee is responsible for monitoring the process used to prepare the financial information and for verifying the effectiveness of internal control and risk management systems, and of the internal audit, as applicable, INFORMATION GIVEN IN THE MANAGEMENT REPORT AND regarding the procedures for the preparation and treatment of accounting and IN THE OTHER DOCUMENTS ON THE FINANCIAL POSITION financial information. AND THE FINANCIAL STATEMENTS PROVIDED TO The financial statements are the responsibility of the Board of Directors. SHAREHOLDERS We have no matters to report regarding the fair presentation and consistency with the financial statements of the information provided in the Board of RESPONSIBILITIES OF THE STATUTORY AUDITORS Directors' management report and in the documents addressed to IN RESPECT OF THE AUDIT OF THE PARENT shareholders with respect to the financial position and financial statements. COMPANY FINANCIAL STATEMENTS We make the following observation as to the fair presentation and the consistency with the financial statements of the information relating to OBJECTIVES AND AUDIT APPROACH payment terms mentioned in Article D.441-4 of the French Commercial Code: We are required to produce a report on the parent company financial as indicated in the management report, this information does not include statements. Our objective is to obtain reasonable assurance that the parent banking transactions and related transactions, as your Company considers company financial statements as a whole contain no material misstatements. that they do not fall within the scope of information to be reported. Reasonable assurance corresponds to a high level of assurance, but there is no guarantee that an audit performed in accordance with professional standards will detect all material misstatements. Misstatements can arise from REPORT ON CORPORATE GOVERNANCE fraud or errors and are considered material when it can be reasonably We certify that the Report of the Board of Directors on Corporate Governance expected that they may - either individually or together - influence the contains the information required by Articles L.225-37-3 and L.225-37-4 of decisions that users of the financial statements make based on their content. the French Commercial Code. As stipulated in Article L.823-10-1 of the French Commercial Code, our duty in With regard to the information provided in accordance with the provisions of certifying the financial statements does not consist in guaranteeing the viability Article L.225-37-3 of the French Commercial Code on the remuneration and of your Company or the quality of its management. benefits paid to corporate officers and the commitments made in this respect, In an audit performed in accordance with the professional standards we verified its consistency with the financial statements and with the data used applicable in France, the Statutory Auditors use their professional judgement to prepare the financial statements and, where applicable, with the information throughout the audit. In addition: gathered by your Company from companies controlling it or controlled by it. Based on our work, we hereby attest to the true and fair presentation of these ❯ they identify and assess the risks that the parent company financial disclosures. statements contain material misstatements, caused by fraud or by error, establish and implement audit procedures to address these risks and gather sufficient and appropriate information to be able to form an opinion. The risk of INFORMATION ARISING FROM OTHER LEGAL not detecting a material misstatement resulting from fraud is higher than for AND REGULATORY OBLIGATIONS one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; APPOINTMENT OF THE STATUTORY AUDITORS ❯ they are informed of relevant internal controls for the audit in order to establish We were appointed Statutory Auditors of the company Crédit Foncier de appropriate audit procedures, and not for the purposes of expressing an France SA by the Annual General Shareholders’ Meeting on May 26, 2004, for opinion on the effectiveness of the internal control system; KPMG SA and by the meeting of May 24, 2000 for PricewaterhouseCoopers Audit. ❯ they assess the appropriateness of the accounting policies used and whether the accounting estimates made by management are reasonable, and verify As of December 31, 2018, KPMG SA was in its 15th successive year in office, the information contained in the parent company financial statements; and PricewaterhouseCoopers Audit in its 19th year. ❯ they verify that management applies the going-concern accounting principle appropriately, and, based on the information gathered, establish whether or RESPONSIBILITIES OF MANAGEMENT AND not there is significant uncertainty arising from events or circumstances that THE PERSONS IN CHARGE OF CORPORATE may undermine the Company’s ability to continue its operations. This assessment is based on information obtained up to the date of the report, it GOVERNANCE IN RESPECT OF THE PARENT being understood that subsequent circumstances or events may threaten COMPANY FINANCIAL STATEMENTS the continuity of operations. If the auditors conclude that there is significant uncertainty, they will draw the attention of readers of the report to the Management is responsible for preparing true and fair parent company information provided in the parent company financial statements regarding financial statements in compliance with French accounting rules and principles this uncertainty, or, if such information is not provided or is not relevant, and for setting up the internal controls it deems necessary to ensure the they will issue a qualified opinion or refuse to issue an opinion; preparation of parent company financial statements that are free of material misstatements, be they caused by fraud or by error. ❯ they assess the overall presentation of the parent company financial statements and decide whether they reflect the underlying transactions and When preparing the parent company financial statements, management must events in such a way as to present a fair view thereof. assess the Company’s ability to continue as a going concern, present

2018 Registration document CRÉDIT FONCIER 235 FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS

REPORT TO THE AUDIT COMMITTEE We also issue the Audit Committee with the statement required under Article 6 We submit a report to the Audit Committee setting out our audit work and the of Regulation (EC) No. 537-2014 confirming our independence within the audit plan followed, as well as the conclusions of our work. We also draw its meaning of the rules applicable in France as stipulated in Articles L.822-10 to attention, if need be, to any significant internal control weaknesses we L.822-14 of the French Commercial Code and in the Statutory Auditors’ Code identified in the procedures used for the preparation and treatment of of Ethics. If need be, we discuss the risks relating to our independence and accounting and financial information. the safeguards applied with the Audit Committee. The information contained in the report to the Audit Committee includes the biggest risks of significant misstatements that we identified during our audit of the parent company financial statements for the period, which constitute the key audit matters that we are required to describe in this report.

The Statutory Auditors

Paris La Défense, March 22 mars 2019 Neuilly-sur-Seine, March 22 mars 2019 KPMG S.A. PricewaterhouseCoopers Audit Xavier de Coninck Anik Chaumartin Partner Partner

Marie-Christine Jolys Partner

2018 Registration document 236 CRÉDIT FONCIER 6 LEGAL INFORMATION

GENERAL INFORMATION 238 STATUTORY AUDITORS’ SPECIAL REPORT Corporate identity 238 ON RELATED PARTY AGREEMENTS AND Share capital 238 COMMITMENTS 243 Dividend policy 239 Bylaws 239 PERSONS RESPONSIBLE FOR General Shareholders’ Meetings 240 THE DOCUMENT AND FOR AUDITING Documents on display 240 THE FINANCIAL STATEMENTS 246 Material contracts 241 Crédit Foncier’s outlook 241 CROSS-REFERENCE TABLES 247 Cross-reference table for the Registration document 247 ORDINARY GENERAL MEETING Cross-reference table for the annual financial report and the OF MAY 31, 2019 241 management report 249 Report of the Board of Directors 241 Draft resolutions 241

2018 Registration document CRÉDIT FONCIER 237 LEGAL INFORMATION GENERAL INFORMATION

GENERAL INFORMATION

❯ CORPORATE IDENTITY

LEGAL NAME: Crédit Foncier de France REGISTRATION: Identification No. 542 029 848, Paris Trade and Companies Register - APE Code 6419Z. TRADING NAME: Crédit Foncier REGISTERED OFFICE: 19, rue des Capucines – 75001 Paris. Crédit Foncier de France is incorporated as a French société anonyme (limited company) with a Board of Directors. Crédit Foncier de France is a credit PRINCIPAL EXECUTIVE OFFICES: 4 quai de Bercy – 94220 institution authorised to carry out banking transactions and is subject to the Charenton-le-Pont – Tel.: +33 1 57 44 80 00. provisions of the French Monetary and Financial Code applicable to credit institutions. It has a Government Auditor appointed by the Ministry for the FINANCIAL YEAR: January 1 to December 31. Economy, whose duties are defined by Articles D. 615-1 et seq. of the French TERM: the term of the Company was set in the bylaws at 99 years from Monetary and Financial Code. December 31,1965. INCORPORATION: Crédit Foncier was incorporated in March 1852 under the name Banque Foncière de Paris. It changed its name to Crédit Foncier de France on March 3, 1853.

❯ SHARE CAPITAL

■ CHARACTERISTICS ■ IMPROPER CONTROL At December 31, 2018, Crédit Foncier’s share capital amounted to The Company is controlled as described in the paragraph entitled “Ownership €1,331,400,718.80, divided into 369,833,533 shares fully paid-up in cash, structure”. However, the Company believes there is no risk of said control each with a par value of €3.60. Crédit Foncier does not own any of its own being exercised improperly. shares. The total number of voting rights is equal to the number of shares. The bylaws do not contain any provisions that are more restrictive than legal provisions governing changes to the shareholding structure and the rights of different share classes that could be created. ■ DELEGATIONS OF AUTHORITY GRANTED TO Crédit Foncier has not issued securities that can be converted into capital, THE BOARD OF DIRECTORS TO RAISE CAPITAL such as convertible bonds, bonds that can be exchanged or redeemed for No delegation of authority was granted by the Annual General Shareholders’ equity instruments, warrants etc., or stock options for management and staff. Meeting to the Board of Directors pursuant to Articles L. 225-129-1 and L. 225-129-2.

■ OWNERSHIP STRUCTURE ■ BPCE SA owns 100% of the Company’s equity and voting rights with the CRÉDIT FONCIER SHARES exception of the shares held by Directors. Crédit Foncier’s shares have not been listed on a regulated market since November 9, 2004. Therefore, shares must be in a registered form. ❯ Changes in shareholder structure over the past five years ■ DIFFERENT VOTING RIGHTS Number of shares Owner Total The bylaws do not assign double voting rights to fully paid up shares registered to the same shareholder for at least two years. Each member of the December 31, 2014 369,833,533 Annual General Shareholders’ Meeting has one vote for each share they own December 31, 2015 369,833,533 or represent. December 31, 2016 BPCE 369,833,533 December 31, 2017 369,833,533 December 31, 2018 369,833,533

To the Company’s knowledge, no person who is not a member of an administrative or management body holds, either directly or indirectly, a percentage of the issuer’s share capital or voting rights that must be notified pursuant to national legislation in this regard.

2018 Registration document 238 CRÉDIT FONCIER LEGAL INFORMATION GENERAL INFORMATION 6

❯ DIVIDEND POLICY

2018 2016 The Annual General Shareholders’ Meeting of May 16, 2018 decided not to The Ordinary General Shareholders’ Meeting of May 2, 2016, resolved that a pay a dividend in respect of fiscal year 2017. dividend of €23,380,875.96 would be paid out to shareholders in respect of fiscal year 2015, equal to €0.06322 per share. 2017 The Annual General Shareholders’ Meeting of May 4, 2017 decided not to pay a dividend in respect of fiscal year 2016.

❯ BYLAWS

■ More generally, it may engage in any operations related to its corporate CORPORATE PURPOSE purpose or to any similar or related purposes likely to directly or indirectly help (ARTICLE 2 OF THE BYLAWS) the Company reach its goals or promote its expansion or development. ART. 2 – I The Company’s purpose in France and abroad is to perform: ■ ORGANISATION OF THE COMPANY: BOARD OF ❯ as part of its routine business, any banking transactions or provide any DIRECTORS (ARTICLE 18 OF THE BYLAWS) investment services, as defined by the French Monetary and Financial Code, as well as any transactions relating to such activities, with or for any person or ART. 18 legal entity, under private or public law, whether they be French or of any The Board of Directors determines the overall strategy for the Company’s other nationality, under the conditions defined by current legislation and business activities and monitors its implementation. Subject to the powers regulations; expressly granted to General Shareholders’ Meetings by law, and within the ❯ as a secondary activity, and in accordance with current regulations, any limits of the corporate purpose, it addresses all issues relating to the transactions other than those referred to above, including insurance brokerage functioning of the Company and makes decisions to settle matters concerning activities and intermediation in real estate transactions. it. In its relationships with third parties, the Company is bound even by decisions ART. 2 – II of the Board of Directors that do not follow the corporate purpose, unless it can prove that the third party knew that the decision in question fell outside More specifically, but not exclusively, the Company is authorised to perform all said purpose or that in the circumstances they must have been aware of this, types of credit transactions: it being stipulated that the publication of the bylaws does not constitute ❯ involving real estate, under any terms and conditions; sufficient proof to this end. ❯ for the financing of transactions of any kind, so long as the loans are secured The Board of Directors can perform all the controls and verifications it deems by a mortgage or an equivalent real estate security, or by a legally enforceable appropriate at any time. claim on the equity or cooperative shares of real estate companies; Each Director must receive all the information needed to fulfil their duties and ❯ for the financing of any investments or development or construction projects can obtain any useful documents from Executive Management. carried out by governments, local authorities or groups of local authorities, public institutions, institutions, organisations or other Public sector entities, or Moreover, without this provision being binding on third parties, unless the carried out on their initiative or on their behalf. Company can prove that they were aware thereof or could not ignore such fact, the following decisions are subject to approval by the Board of Directors: In particular, the Company may originate any loans that are likely to be granted or acquired by a société de crédit foncier. (i) the five-year business plan; It is also authorised to complete any projects in the public interest as (ii) the Company’s annual budget; requested by the French government or, more generally, by a local, national or (iii) authorisations for acquisitions, incorporations, or investments in any international authority. company deemed useful to developing groupe Crédit Foncier de France’s activities and involving a payment of over thirty million (30,000,000) euros, unless such transactions are provided for in the annual budget or the ART. 2 – III business plan; The Company may obtain any appropriate source of funding to finance its (iv) authorisations for the disposal of equity investments or voting rights in any operations, within the limits of the legislation governing its activities, particularly company in which Crédit Foncier de France and/or its subsidiaries hold at by: least 10% of the share capital or voting rights, where such transactions involve payment of over thirty million (30,000,000) euros, or if they would ❯ issuing securities, negotiable debt securities or other financial instruments; have the effect of Crédit Foncier de France and/or one of its subsidiaries ❯ selling loans it has originated to a société de crédit foncier; it controls an losing their majority voting rights in an Ordinary or Extraordinary authorised société de crédit foncier for this purpose, in accordance with the Shareholders’ Meeting or minority rights that enable them to oppose provisions of Articles L. 515-13 et seq. of the French Monetary and Financial decisions made by an Extraordinary Shareholders’ Meeting, or when they Code; have the effect of terminating the investment of Crédit Foncier de France and/or one of its subsidiaries in said company; ❯ selling receivables to any debt securitisation fund or equivalent entity; (v) the strategic guidelines for groupe Crédit Foncier de France; ❯ using any other means to pledge assets with or without transfer of ownership. (vi) any plans to restructure the Company, one of its subsidiaries or branches (including by merger, demerger or the transfer of assets), with the ART. 2 – IV exception of internal restructuring projects carried out by groupe Crédit Foncier de France; It may acquire, hold and sell shares in any company or group that furthers the interests of its business. (vii) any plans involving the business activities of the Company or its subsidiaries (disposal, leasing under a management contract, etc.), the acquisition or leasing of a new activity or business, with the exception of internal restructuring projects carried out by groupe Crédit Foncier de France;

2018 Registration document CRÉDIT FONCIER 239 LEGAL INFORMATION GENERAL INFORMATION

(viii) all investments or expenditure in excess of thirty million (30,000,000) euros; General Shareholders’ Meeting. A non-voting director appointed to replace another only remains in office for the remainder of their predecessor’s term. (ix) the granting of sureties, pledges or other guarantees on the Company’s assets, with the exception of bank guarantees; (x) the granting of loans to any third party outside groupe Crédit Foncier de ART. 23 France or Groupe BPCE for amounts that exceed a limit set by the Board Non-voting directors are responsible for ensuring the bylaws are fully of Directors; observed. (xi) authorisations for proposals to issue financial securities (bonds, other debt securities and hybrid securities) other than those approved in the They attend Board of Directors’ meetings in an advisory capacity, however, Company’s budget or issuance programme; their absence does not affect the validity of the Board’s decisions. (xii) the strategy and policy regarding risk-taking and the monitoring, The Board of Directors can compensate non-voting directors by making a management and mitigation of risk; deduction from the attendance fees allocated to its members at the Annual General Shareholders’ Meeting. (xiii) the results of the review of liquidity risk policy, procedures and limits that are not included in the risk appetite statement; (xiv) regular checks on outsourced activities and the associated risks; ■ STATUTORY APPROPRIATION OF EARNINGS (xv) the annual review of the efficiency and effectiveness of the risk management function in terms of its positioning, resources and (ARTICLE 40 OF THE BYLAWS) independence. ART. 40 The Board of Directors can delegate authority to any agent of its choice, within Net earnings consist of the net income for the financial year, less the the limit of the powers it holds under the law and the provisions of these Company’s general and other expenses, including all depreciation, bylaws. amortisation and provisions. The Board of Directors can grant one or more of its members special At least 5% of net earnings, less any previous losses, is first allocated to the mandates for one or more specific purposes and can decide to create board legal reserve; this appropriation ceases to be mandatory once the legal reserve committees that act under its responsibility. It will appoint the members of reaches ten percent of the share capital. such committees and decide on their remit. Earnings available for distribution consist of net income for the year, less any losses carried over from previous years and the appropriation referred in the ■ NON-VOTING DIRECTORS preceding paragraph, plus retained profits. (ARTICLES 22 AND 23 OF THE BYLAWS) Earnings are appropriated as follows: ART. 22 1) the General Meeting may take up the Board of Directors’ proposal and allocate earnings to one or more extraordinary reserve funds or allocate The Ordinary Annual General Shareholders’ Meeting can appoint up to four them to retained earnings; non-voting directors. Non-voting directors may or may not be chosen from among the shareholders. 2) any remaining earnings are paid out as dividends to shareholders, in equal amounts per share. They are appointed for a period of six (6) years ending at the Ordinary Annual The General Meeting that approves the annual financial statements, or the General Shareholders’ Meeting called to approve the financial statements for Board of Directors, depending on whether a dividend or an interim dividend is the previous year and held during the year in which their term expires. under discussion, may offer each shareholder the possibility to receive all or The maximum age of non-voting directors is 72 years old. part of their dividend payment in cash or in kind, in particular in the form of shares in Crédit Foncier de France. If a vacancy arises following the death or resignation of one or more non-voting directors, the Board of Directors may make a temporary Dividends are paid out annually on the dates set by the General Meeting or by appointment. Such appointments must be ratified by the next Ordinary Annual the Board of Directors. However, dividends must be paid out within nine months of the end of the financial year.

❯ GENERAL SHAREHOLDERS’ MEETINGS

Annual General Shareholders’ Meetings are convened pursuant to the Any shareholder may take part in Annual General Shareholders’ Meetings procedures determined by French law. under the conditions set forth by law. Registered shareholders of Crédit Foncier are individually convened to Annual Multiple voting rights cannot be granted. General Shareholders’ Meetings by letter.

❯ DOCUMENTS ON DISPLAY

Financial press releases, annual reports and Registration documents for the Legal documents may be consulted at the Company’s principal executive current year and the previous financial years may be consulted on the offices located at 4 quai de Bercy, 94220 Charenton-le-Pont. Company’s website at www.creditfoncier.com.

2018 Registration document 240 CRÉDIT FONCIER LEGAL INFORMATION ORDINARY GENERAL MEETING OF MAY 31, 2019 6

❯ MATERIAL CONTRACTS

As of the date of publication of this financial information, with the exception of the agreements referred to in this chapter (related-party agreements), Crédit Foncier has not entered into any material contracts other than those entered into in the normal course of business.

❯ CRÉDIT FONCIER’S OUTLOOK

■ RECENT EVENTS ■ TRENDS The Company has not recorded any significant recent event that would Since the date of its most recently released audited financial statements, there materially impact the assessment of its solvency. has been no significant deterioration affecting the Company’s outlook. There are no known trends, uncertainties or requests or any commitments or events that could materially influence the Company’s outlook. ■ CONTROL To the Company’s knowledge, there are no agreements whose implementation could result in a future change in control. ■ SIGNIFICANT CHANGE No significant changes in the Company’s financial or commercial situation have occurred between February 11, 2019, the date the Board of Directors approved the financial statements, and the date on which this Registration document was filed.

ORDINARY GENERAL MEETING OF MAY 31, 2019

❯ REPORT OF THE BOARD OF DIRECTORS

ORDINARY GENERAL MEETING OF MAY 31, 2019 The sixth and seventh resolutions cover the individual remuneration of Company Directors in respect of the year ended December 31, 2018. Dear Shareholders, The eighth and ninth resolutions concern the approval of the principles and The Ordinary Annual General Meeting, having considered the report of the the criteria for calculating, distributing and assigning the total remuneration Board of Directors and the Statutory Auditors’ report, is asked to issue an and benefits payable to the Chairman of the Board of Directors and the Chief opinion on the draft resolutions put forward by the Board of Directors. Executive Officer in respect of their functions for 2018, pursuant to Article L. 225-37-2 of the French Commercial Code. The first and second resolutions concern the approval of the parent company and consolidated financial statements for the year ended The tenth resolution is a consultation, in accordance with the requirements December 31, 2018. of Article L. 511-73 of the French Monetary and Financial Code, on the overall budget for remuneration of all kinds paid to persons referred to in The third resolution relates to the proposed allocation of earnings. Article L. 511-71 of the French Monetary and Financial Code, for the financial Income available for distribution amounted to €626,656,291.18, year ended December 31, 2018. corresponding to retained earnings of €878,768,623.35 less losses for the The eleventh resolution assigns powers to complete formalities. period of €252,112,332.17. The fourth resolution concerns the approval of the agreements referred to in Article L. 225-38 of the French Commercial Code. The fifth resolution concerns a Directorship.

❯ DRAFT RESOLUTIONS

■ FIRST RESOLUTION: APPROVAL OF THE PARENT ■ SECOND RESOLUTION: APPROVAL OF COMPANY FINANCIAL STATEMENTS THE CONSOLIDATED FINANCIAL STATEMENTS The Annual General Meeting, having considered the Board of Directors’ report The Annual General Meeting, having considered the report of the Board of on the Company’s management, the report of the Chairman of the Board and Directors and the Statutory Auditors’ report on the consolidated financial the Statutory Auditors’ report concerning the parent company financial statements of Crédit Foncier de France for the year ended December 31, statements of Crédit Foncier de France for the year ended December 31, 2018, approves the consolidated financial statements as presented, showing a 2018, approves the parent company financial statements as presented, loss of €194,483,000.00. showing a loss of €252,112,332.17. The Annual General Meeting notes that the financial statements for the year do not take into account expenses not deductible from fiscal income, covered by Article 39-4 of the French Tax Code.

2018 Registration document CRÉDIT FONCIER 241 LEGAL INFORMATION ORDINARY GENERAL MEETING OF MAY 31, 2019

■ THIRD RESOLUTION: APPROPRIATION ■ EIGHTH RESOLUTION: APPROVAL OF OF EARNINGS THE PRINCIPLES AND THE CRITERIA FOR The Annual General Meeting notes that the loss for the year ended CALCULATING, DISTRIBUTING AND ASSIGNING December 31, 2018 came to €252,112,332.17 and notes the existence of THE TOTAL REMUNERATION AND BENEFITS retained earnings amounting to €878,768,623.35. PAYABLE TO MR LAURENT MIGNON IN RESPECT The earnings available for distribution amount to €626,656,291.18. OF HIS ROLE AS CHAIRMAN OF THE BOARD The General Meeting decides to allocate the earnings available for distribution OF DIRECTORS FOR 2019 amounting to €626,656,291.18 to retained earnings. The Annual General Meeting, voting under the quorum and majority conditions In accordance with disclosure requirements, the following table shows the required for Ordinary General Meetings, having read the report drawn up dividends paid out in respect of the previous three financial years: pursuant to Article L. 225-37-2 of the French Commercial Code, issues a favourable opinion on the provisional remuneration of Mr Laurent MIGNON, Number of Amount Dividend per Chairman of the Board of Directors, in respect of 2019. Financial year shares (in €) share (in €) 2015 369,833,533 23,380,875.96 0.06322 2016 369,833,533 - - ■ NINTH RESOLUTION: APPROVAL OF 2017 369,833,533 - - THE PRINCIPLES AND THE CRITERIA FOR CALCULATING, DISTRIBUTING AND ASSIGNING THE TOTAL REMUNERATION AND BENEFITS PAYABLE TO MR BENOÎT CATEL IN RESPECT ■ FOURTH RESOLUTION: APPROVAL OF HIS ROLE AS CHIEF EXECUTIVE OFFICER OF THE AGREEMENTS REFERRED TO FOR 2019 IN ARTICLE L. 225-38 OF THE FRENCH The Annual General Meeting, voting under the quorum and majority conditions COMMERCIAL CODE required for Ordinary General Meetings, having read the report drawn up pursuant to Article L. 225-37-2 of the French Commercial Code, issues a The Annual General Meeting, having considered the Statutory Auditors’ special favourable opinion on the provisional remuneration of Mr Benoît CATEL, Chief report concerning the agreements referred to in Articles L. 225-38 and Executive Officer, in respect of 2019. following of the French Commercial Code, approves each of the agreements that are mentioned therein. ■ TENTH RESOLUTION: CONSULTATION, IN ■ FIFTH RESOLUTION: RATIFICATION OF ACCORDANCE WITH THE REQUIREMENTS OF A DIRECTOR ARTICLE L. 511-73 OF THE FRENCH MONETARY The Annual General Meeting ratifies the co-opting by the Board of Directors on AND FINANCIAL CODE, ON THE OVERALL BUDGET May 16, 2018 of Mr Laurent MIGNON as Director, to replace Mr François FOR REMUNERATION OF ALL KINDS PAID TO PEROL following his resignation, for the duration of his predecessor’s term, i.e. until the Annual General Meeting called to approve the financial statements for PERSONS REFERRED TO IN ARTICLE L. 511-71 the 2021 financial year. OF THE FRENCH MONETARY AND FINANCIAL CODE, FOR THE FINANCIAL YEAR ENDED ■ SIXTH RESOLUTION: APPROVAL OF DECEMBER 31, 2018 THE INDIVIDUAL REMUNERATION OF The Annual General Meeting, consulted in accordance with the Article L. 511-73 of the French Monetary and Financial Code, voting under the MR LAURENT MIGNON, CHAIRMAN OF quorum and majority conditions required for Ordinary General Meetings, and THE BOARD OF DIRECTORS AND COMPANY after considering the Board of Directors’ report, issues a favourable opinion of the overall budget for remuneration of all kinds, totalling €11,361,525 paid DIRECTOR, IN RESPECT OF THE YEAR ENDED during the financial year ended December 31, 2018 to persons referred to in DECEMBER 31, 2018 Article L. 511-71 of the French Monetary and Financial Code, for a total of 77,986 full-time equivalent employees. The Annual General Meeting, voting under the quorum and majority conditions required for Ordinary General Meetings, approves the remuneration due or assigned in respect of the year ended December 31, 2018 to Mr Laurent MIGNON, Chairman of the Board of Directors and Company Director, as ■ ELEVENTH RESOLUTION: POWERS presented in Chapter 2 of the 2018 Registration document, under Full powers are conferred to the holder of a copy or extract of these Remuneration. resolutions to carry out all legal publication and disclosure formalities.

■ SEVENTH RESOLUTION: APPROVAL OF THE INDIVIDUAL REMUNERATION OF MR BENOÎT CATEL, CHIEF EXECUTIVE OFFICER AND COMPANY DIRECTOR, IN RESPECT OF THE YEAR ENDED DECEMBER 31, 2018 The Annual General Meeting, voting under the quorum and majority conditions required for Ordinary General Meetings, approves the remuneration due or assigned in respect of the year ended December 31, 2018 to Mr Benoît CATEL, Chief Executive Officer and Company Director, as presented in Chapter 2 of the 2018 Registration document, under Remuneration.

2018 Registration document 242 CRÉDIT FONCIER LEGAL INFORMATION STATUTORY AUDITORS’ SPECIAL REPORT ON RELATED PARTY AGREEMENTS AND COMMITMENTS 6

STATUTORY AUDITORS’ SPECIAL REPORT ON RELATED PARTY AGREEMENTS AND COMMITMENTS

Annual General Shareholders' Meeting called to approve the financial statements for the year ended December 31, 2018

Crédit Foncier de France S.A. At its meeting of February 9, 2018, the Board of Directors of Crédit Foncier de Registered Office: 19 Rue des Capucines - 75001 Paris France updated the agreement under which the periodic control of Share capital: €1,331,400,718.80 Compagnie de Financement Foncier is delegated to the General Inspection Division of its parent company, Crédit Foncier. This amendment to the agreement dated December 28, 2006 was signed on February 10, 2018. To the Shareholders of Crédit Foncier de France S.A., Under this agreement, Compagnie de Financement Foncier entrusts its period controls to Crédit Foncier’s General Inspection Division, pursuant to Article 20 In our capacity as Statutory Auditors of your Company, we hereby present our of the Order of November 3, 2014. Compagnie de Financement Foncier also report on related-party agreements and commitments. falls within the audit scope of BPCE’s Inspection Générale Division. We are required to inform you, on the basis of the information provided to us, of the key features and terms and conditions of, as well as the reasons behind, the contractual agreements and commitments indicated to us or that we may NEW AMENDMENT TO THE MANAGEMENT have identified in the performance of our assignment. It is not our role to AGREEMENT WITH LOCINDUS comment as to whether they are beneficial or to ascertain whether any other agreements or commitments exist. It is your responsibility, in accordance with Person concerned: Mr. Benoît Catel, Chief Executive Officer of Crédit Foncier Article R.225-31 of the French Commercial Code, to assess the merit of these de France and Chairman of the Board of Directors of Locindus. agreements and commitments before approving them. At its meeting of December 18, 2018, the Board of Directors of Crédit Foncier In addition, it is our responsibility to provide you with the information stipulated de France updated its management services agreement with Locindus. This in Article R.225-31 of the French Commercial Code regarding the amendment to the agreement dated December 31, 2017 was signed on implementation during the past year of agreements and commitments December 18, 2018 with effect from April 1, 2019. previously approved at the Annual General Shareholders’ Meeting, if any. This amendment to the management agreement of December 21, 2017 was We performed the procedures we considered necessary in accordance with approved as part of the reorganisation of some of the activities of Crédit the professional standards issued by the Compagnie Nationale des Foncier and its subsidiaries within Groupe BPCE from April 1, 2019, which will Commissaires aux Comptes (France’s National Association of Statutory mark the end of Locindus’ business activity. Auditors) relating to this assignment. Our work consisted in verifying that the Under Article 236-6 of the AMF General Regulation, the implementation of the information provided to us is consistent with the underlying documents from restructuring plan obliges Crédit Foncier to file a public offer to delist Locindus which it was extracted. shares.

■ AGREEMENTS AND COMMITMENTS TO BE ■ AGREEMENTS AND COMMITMENTS APPROVED SUBMITTED TO THE ANNUAL GENERAL BY THE ANNUAL GENERAL SHAREHOLDERS’ SHAREHOLDERS’ MEETING MEETINGS IN PREVIOUS YEARS Pursuant to Article L.225-40 of the French Commercial Code, we have been notified of the following agreements and commitments made during the past AGREEMENTS AND COMMITMENTS APPROVED fiscal year, which were approved by the Board of Directors. IN PREVIOUS YEARS a) which continued to apply during the financial year NEW PERIODIC CONTROL SERVICES AGREEMENT In accordance with Article R.225-30 of the French Commercial Code, we have WITH SOCFIM been informed that the following related party agreements and commitments, which were approved at the Annual General Shareholders’ Meetings in Person concerned: Mr. Benoît Catel, Chief Executive Officer of Crédit Foncier previous years, continued to apply during the previous financial year. de France and Chairman of the Supervisory Board of Socfim. In its meeting of February 9, 2018, the Board of Directors of Crédit Foncier de 1. AGREEMENT WITH BPCE France approved the agreement between Crédit Foncier and Socfim covering ❯ Rebilling agreement periodic control services. The agreement was signed on April 6, 2018 with effect from this date. It applies until December 31, 2021. The agreement, signed on March 29, 2012, sets an annual fee based on the actual cost, excluding tax, payable for the administrative work carried out by Under this agreement, Socfim entrusts its periodic controls to Crédit Foncier’s BPCE on behalf of your Company, specifically: General Inspection Division, pursuant to Article 20 of the Order of November 3, 2014. Socfim also falls within the audit scope of BPCE’s Inspection ❯ the implementation of all measures to guarantee the Company’s liquidity Générale Division. and solvency; ❯ the exercise of administrative, technical and financial control over its NEW AMENDMENT TO THE INTERNAL CONTROL organisation and management; AND COMPLIANCE AGREEMENT WITH COMPAGNIE ❯ the monitoring of compliance with legislative and regulatory provisions, DE FINANCEMENT FONCIER ❯ the provision of seconded staff. Person concerned: Mr. Benoît Catel, Chief Executive Officer of Crédit Foncier In 2018, your Company recorded €4.6m of expenses in connection with this de France and Chairman of the Board of Directors of Compagnie de agreement. Rebilling for staff seconded by Crédit Foncier de France in 2018 Financement Foncier. amounted to €0.05m.

2018 Registration document CRÉDIT FONCIER 243 LEGAL INFORMATION STATUTORY AUDITORS’ SPECIAL REPORT ON RELATED PARTY AGREEMENTS AND COMMITMENTS

2. AGREEMENTS WITH COMPAGNIE DE FINANCEMENT Your Company recorded aggregate income of €69m for the payment of FONCIER services under this agreement in the year ended December 31, 2018. ❯ Management services agreements ❯ Guarantee agreement on variable-rate loans Pursuant to Articles L.513-2 et seq of the French Monetary and Financial In connection with the exceptional measures granted to customers holding Code, Compagnie de Financement Foncier entrusted your Company with the variable-rate loans to secure their monthly payments, your Company decided management and recovery of loans and other assets, the management of the to indemnify Compagnie de Financement Foncier for the costs incurred and obligations foncières and other preferred or non-preferred resources that it the effects of the measures on its balance sheet receivables through a holds, and more generally with carrying out all services necessary for its guarantee agreement. operational, financial, administrative and accounting management, and the audit and control services required for its operations. In 2018, your Company recognised a €0.5m charge in connection with this agreement. All of these services are governed by a framework agreement signed by your Company and its subsidiary. ❯ Mortgage subordination agreement The agreements that are directly related to it are as follows: This agreement provides for the systematic subordination of your Company’s mortgage rights to those of Compagnie de Financement Foncier, with ❯ Framework agreement payments to Compagnie de Financement Foncier taking precedence in the event of joint mortgage rights. ❯ Agreement relating to the assignment of assets and liabilities ❯ Agreement relating to the management and collection of loans This agreement had no direct financial impact in accounting terms since it concerned legal items on guarantees relating to the loans sold by your ❯ Agreement relating to financial services Company to Compagnie de Financement Foncier.

❯ Agreement relating to administrative and accounting services ❯ Agreement relating to an advance to a shareholder’s current account ❯ Agreement relating to compliance and internal control services On the date of signature of the agreement (September 15, 2015), the funds ❯ Agreement relating to asset and liability management (ALM) generated by the reimbursement of redeemable subordinated notes were deposited into the newly opened shareholder’s current account. This account is ❯ Agreement relating to IT services remunerated, in accordance with the agreement, at the 3-month Euribor +2.50% ❯ Agreement relating to seconded staff and to human resources and is reimbursable at any time by Compagnie de Financement Foncier (with 15 management days’ notice). ❯ Agreement on the bank settlement service The remuneration of this current account resulted in the recognition by your Company of financial income of €46.3m for the year ended December 31, The amounts received by your Company for these services are included in the 2018. payment for financial services as defined in a specific agreement described in detail below. 3. AGREEMENT WITH CRÉDIT FONCIER IMMOBILIER Pursuant to the agreement relating to the management and collection of loans, your Company advances to Compagnie de Financement Foncier the unpaid ❯ Service agreement amounts on regulated loans in this market in proportion to the share it has This agreement specifies the kind of general services and specific services financed. Accordingly, the Company granted to its subsidiary cash advances involving real-estate expertise and research carried out by your Company on amounting to €80.9m during 2018. As payment for these advances, your behalf of Crédit Foncier Immobilier. These services are invoiced by your Company keeps all the late payment fees billed to customers, totalling €7.7m Company based on management indicators specific to Crédit Foncier in 2018. Immobilier’s business. ❯ Disbursing agent agreement In 2018, this produced income of €3.1m for Crédit Foncier. Your Company has entered into a disbursing agent agreement with Compagnie de Financement Foncier, under which your Company committed to providing centralised financial management of debt from the first and 4. AGREEMENT WITH COMPAGNIE FONCIÈRE second bond issues. DE CONSTRUCTION ❯ Debt waiver The compensation payable by your subsidiary for this financial service is included in the payment for financial services. In 1998, your Company granted a debt waiver of €41.2m to Compagnie Foncière de Construction, associated with a return to financial health clause. ❯ Agreement on the management and collection of state-subsidised loans The application of this clause generated the recognition of income of €0.5m for the year ended December 31, 2018. This agreement sets out the responsibilities of your Company in the management and collection of loans issued by the French state. 5. AGREEMENT WITH COMPTOIR FINANCIER DE GARANTIE This agreement on the terms of application to subsidised loans managed by (CFG) Entenial of the principles set out in the agreement between Crédit Foncier and the French government on May 19, 1999 was signed after the merger and ❯ Management services agreement absorption of Entenial by Crédit Foncier. As a result, an amendment to the The agreement entrusts your Company with the administrative management of agreement of May 19, 1999 was signed by the government, Crédit Foncier CFG’s business and its relations with its supervisory authorities. and Compagnie de Financement Foncier. Your Company invoices these services at actual cost, which comprises the The compensation due to your Company under the agreement with the state direct and indirect costs allocated on a full time equivalent basis, as declared regarding the management and collection of state-subsidised loans by Crédit by personnel working on behalf of CFG. The invoices issued by your Company Foncier de France is included in the payment for services. for these services amounted to €0.3m for the financial year ended December 31, 2018. ❯ Agreement on the payment for services The agreement on the payment for services rendered by your Company on ❯ Guarantee agreement behalf of its subsidiary under the agreements for management, loan In application of this agreement, CFG provides borrowers from your Company management and recovery, financial services, administrative and accounting with guarantees for the loans granted. management, internal control and compliance, and asset and liability management sets forth the terms for calculating the annual amount payable to As of December 31, 2018, guarantees granted by CFG to your Company Crédit Foncier de France for these services. This amount is invoiced by your amounted to €542.6m. The commission fees paid to CFG and recorded by Company based on management indicators specific to Compagnie de your Company in relation to these guarantees amounted to €4.8m in 2018. Financement Foncier’s business.

2018 Registration document 244 CRÉDIT FONCIER LEGAL INFORMATION STATUTORY AUDITORS’ SPECIAL REPORT ON RELATED PARTY AGREEMENTS AND COMMITMENTS 6

6. AGREEMENT SIGNED WITH LOCINDUS 3. AGREEMENTS WITH COMPAGNIE DE FINANCEMENT ❯ Management services agreement FONCIER The agreement covers legal and technical assistance on the implementation of ❯ Warranty and indemnification agreements financing transactions, financial management, accounting, administrative and In connection with the agreement to transfer its assets and liabilities to IT services, internal control services as well as marketing and communications Compagnie de Financement Foncier, your Company: services, provided by your Company to Locindus. These services are invoiced by your Company based on management indicators specific to Locindus’ ❯ has undertaken to offset the effects of any changes in market interest business. rates on Compagnie de Financement Foncier’s net income should it not be able to obtain fixed-rate financing in the market; Under this agreement, signed on December 21, 2017 for a three-year term effective from January 1, 2018, your Company recorded income of €4.3m for ❯ has guaranteed a minimum return on the outstanding loans transferred; the year ended December 31, 2018. ❯ has undertaken to indemnify Compagnie de Financement Foncier in the event of changes in the treatment of borrowing costs relating to b) with no effect during the financial year subsidised loans. In addition, we have been informed of the following agreements and commitments approved at the Annual General Shareholders’ Meetings in 4. AGREEMENT WITH SOCIÉTÉ DES IMMEUBLES previous financial years, which continued to apply but which were not DE FRANCE implemented in the financial year. ❯ Guarantee of liabilities The guarantee was granted in connection with the takeover of Société des 1. AGREEMENT WITH NATIXIS AND BPCE Immeubles de France by Immobilière Foncier Madeleine (IFM). The guarantee ❯ Agreement for the transfer of the French public sector activity and has been extended until 2028. agreement on the use of resources The agreement relating to the transfer of Natixis’ French public sector business 5. AGREEMENT SIGNED WITH COMPANY DIRECTORS - MR. activity to your Company sets forth the technical terms of the transfer as well BENOÎT CATEL as the organisational arrangements concerning Crédit Foncier de France, the Caisses d’Épargne and Natixis. ❯ Indemnification agreement This agreement sets out the indemnification rules applicable to Mr. Benoît The parties signed an agreement on the use of the resources involved in the Catel in his capacity as Chief Executive Officer. This compensation scheme transfer agreement. falls within the scope of French law No. 2007-1223 of August 21, 2007 on labour, employment and purchasing power (known as the "TEPA” law). 2. AGREEMENT WITH GCE COVERED BONDS AND BPCE ❯ Guarantee agreement This agreement defines the assets eligible to back bonds issued by GCE Covered Bonds and sets out the procedures for managing this guarantee between GCE Covered Bonds, BPCE and the guarantee providers, i.e. the Caisses d’Épargne and your company.

The Statutory Auditors

Paris La Défense, March 22, 2019 Neuilly-sur-Seine, March 22, 2019 KPMG S.A. PricewaterhouseCoopers Audit Xavier de Coninck Anick Chaumartin Partner Partner Marie-Christine Jolys Partner

2018 Registration document CRÉDIT FONCIER 245 LEGAL INFORMATION PERSONS RESPONSIBLE FOR THE DOCUMENT AND FOR AUDITING THE FINANCIAL STATEMENTS

PERSONS RESPONSIBLE FOR THE DOCUMENT AND FOR AUDITING THE FINANCIAL STATEMENTS

■ PERSON RESPONSIBLE FOR THE REGISTRATION Tour EQHO – 2 avenue Gambetta – 92066 Paris La Défense DOCUMENT Represented by Xavier de CONINCK and Marie-Christine JOLYS Benoît CATEL, Chief Executive Officer of Crédit Foncier Start of first term: May 26, 2004 Statement by the person responsible Length of term: 6 years

“I hereby declare, after having taken every reasonable measure for this Date term was renewed: May 2, 2016 purpose, that the information provided in this Registration document is, to the best of my knowledge, true to fact and that no information has been omitted Expiry of current term: At the end of the Annual General Shareholders’ Meeting that would change the interpretation of the information provided. called to approve the financial statements for the financial year ending December 31, 2021 To the best of my knowledge, I certify that the financial statements have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, financial position and profit or loss of the Company PRICEWATERHOUSECOOPERS AUDIT and all the consolidated entities, and that the information provided in the Member of the Compagnie Régionale des Commissaires aux Comptes de management report and identified in the cross-reference table of the annual Versailles (Regional Association of Statutory Auditors of Versailles) financial report provided on page 249 presents a true and fair picture of the development of the business, results and financial position of the Company 63 rue de Villiers – 92200 Neuilly-sur-Seine and all consolidated entities, as well as a description of the main risks and uncertainties to which they are exposed. Represented by Anik CHAUMARTIN I have received a letter from the Statutory Auditors indicating that they have Start of first term: May 26, 2004 completed their work which consisted of verifying the information on the Length of term: 6 years financial position and the financial statements provided in this Registration document, which they have read in its entirety.” Date term was renewed: May 16, 2018 Paris, March 22, 2019 Expiry of current term: At the end of the Annual General Shareholders’ Meeting called to approve the financial statements for the financial year ending Chief Executive Officer December 31, 2023 Benoît CATEL ALTERNATE STATUTORY AUDITORS ■ PERSON RESPONSIBLE FOR THE FINANCIAL KPMG AUDIT FSI Member of the Compagnie Régionale des Commissaires aux Comptes de INFORMATION Versailles (Regional Association of Statutory Auditors of Versailles) Mr Christophe TIREL, Director in charge of the Financial Communications & Tour EQHO – 2 avenue Gambetta – 92066 Paris La Défense Investor Relations Division. Appointment date: May 2, 2016 ■ PERSONS RESPONSIBLE FOR AUDITING Length of term: 6 years THE FINANCIAL STATEMENTS Expiry of current term: At the end of the Annual General Shareholders’ Meeting called to approve the financial statements for the financial year ending PERMANENT STATUTORY AUDITORS December 31, 2021 KPMG SA Member of the Compagnie Régionale des Commissaires aux Comptes de Versailles (Regional Association of Statutory Auditors of Versailles)

2018 Registration document 246 CRÉDIT FONCIER LEGAL INFORMATION CROSS-REFERENCE TABLES 6

CROSS-REFERENCE TABLES

❯ CROSS-REFERENCE TABLE FOR THE REGISTRATION DOCUMENT

To facilitate understanding of this document, the following cross-reference table refers to the main items required in Annex 1 of EC Regulation No. 809/2004 of April 29, 2004 implementing the Prospectus directive.

Page in the Registration Items in Annex 1 of EC Regulation No. 809/2004 document 1. Persons responsible 246 2. Statutory Auditors 246 3. Selected financial information 3.1. Selected historical financial information regarding the issuer for each financial year 4-5 3.2. Selected financial information for interim periods na 4. Risk factors 74-77 5. Information about the issuer 5.1. History and development of the issuer 8; 238 5.2. Investments 84 6. Business overview 6.1. Principal activities 8-10; 14-21 6.2. Principal markets 13-15; 17-18; 20 6.3. Exceptional events 12-13; 134; 204 Dependence of the issuer on patents or licenses, industrial, commercial or financial contracts or new manufacturing 6.4. processes 115 6.5. Basis for statements made by the issuer regarding its competitive position 4-5 7. Organisational structure 7.1. Description of the Group 8-11 7.2. List of significant subsidiaries 9-10; 193 8. Property, plant and equipment 8.1. Existing or planned material tangible fixed assets 161; 215 8.2. Environmental issues that may affect the issuer’s utilisation of tangible fixed assets 84 9. Operating and financial review 9.1. Financial condition 70-73; 122-194; 199-232 9.2. Operating results 70-71; 122-123; 202; 230 10. Capital resources 10.1. Information concerning the issuer’s capital resources 93-95; 157; 220-221 10.2. Sources and amounts of the issuer’s cash flows 128 10.3. Information on the issuer’s borrowing requirements and funding structure 20-21; 111 Information regarding any restrictions on the use of capital resources that have affected, or could materially affect, 10.4. the issuer’s operations na 10.5. Information regarding the anticipated sources of funds needed to fulfil commitments referred to in items 5.2 and 8.1 na 11. Research and development, patents and licenses 84; 115 12. Trend information 12-13; 16; 17; 18; 84; 241 13. Profit forecasts or estimates na 14. Administrative, management and supervisory bodies and senior management 14.1 Administrative bodies 24-49 14.2. Administrative, management and supervisory bodies’ and senior management conflicts of interests 65 15. Remuneration and benefits 15.1. Amount of remuneration paid and benefits in kind 56-64 15.2. Total amounts set aside or accrued by the issuer to provide pension, retirement or similar benefits 57; 190; 225 16. Board practices 16.1. Date of expiration of the current term of office 36 16.2. Service contracts with members of the administrative, management or supervisory bodies 65 16.3. Information about the issuer’s Audit Committee and Remuneration Committee 31; 36; 51-52 16.4. Compliance with the country of incorporation’s corporate governance regime 24-29 17. Employees

2018 Registration document CRÉDIT FONCIER 247 LEGAL INFORMATION CROSS-REFERENCE TABLES

Page in the Registration Items in Annex 1 of EC Regulation No. 809/2004 document 17.1. Number of employees 4 17.2. Shareholdings and stock options 238 17.3. Arrangements for involving employees in the capital of the issuer 238 18. Major shareholders 18.1. Shareholders with over 5% of the issuer’s capital or voting rights 238 18.2. Different types of shareholder voting rights 238 18.3. Control of the issuer 238 18.4. Any arrangement, known to the issuer, which may at a subsequent date result in a change in control of the issuer 241 19. Related party transactions 189 20. Financial information concerning the issuer’s assets and liabilities, financial position and profits and losses 20.1. Historical financial information 122-194; 199-232 20.2. Pro forma financial information na 20.3. Financial statements 122-194; 199-232 20.4 Auditing of annual historical financial information 195-198; 233-236 20.5. Age of latest financial information 2017 Registration document 20.6. Interim and other financial information na 20.7. Dividend policy 73; 230; 239 20.8. Legal and arbitration proceedings 114-115 20.9. Significant change in the issuer’s financial or trading position 241 21. Additional information 21.1. Share capital 238 21.2. Memorandum and articles of association 52-55; 239-240 22. Material contracts 115; 241 23. Third party information and statements by experts and declarations of interest na 24. Documents on display 240 25. Information on holdings 69; 189; 231

2018 Registration document 248 CRÉDIT FONCIER LEGAL INFORMATION CROSS-REFERENCE TABLES 6

❯ CROSS-REFERENCE TABLE FOR THE ANNUAL FINANCIAL REPORT AND THE MANAGEMENT REPORT

Page in the Registration Information required under Article L. 451-1-2 of the French Monetary and Financial Code document Annual financial report Consolidated financial statements 122-194 Statutory Auditors’ report on the consolidated financial statements 195-198 Parent company financial statements 199-232 Statutory Auditors’ report on the individual financial statements 233-236 Management report 1 Activity report (Articles L. 225-100, R. 225-102 and L. 233-6 of the French Commercial Code) 1.1 Situation and activity during the year 14-21; 68-73 1.2 Results of the Group, its subsidiaries and the companies it controls 5; 68-73; 122-194; 199-232 1.3 Key financial and non-financial performance indicators 4-5 1.4 Analysis of the change in results and financial position 70-73 1.5 Significant post-balance sheet events 136; 205; 241 1.6 Outlook 12-13; 16; 17; 18; 84; 241 1.7 Research & Development 84; 115 1.8 Main risks and uncertainties 74-77; 84 1.9 Significant investments or controlling interests in companies headquartered in France 69; 189; 231 2 Information pertaining to share buybacks (Article L. 225-211, paragraph 2 of the French Commercial Code) na 3 Social, environmental and societal information (Article L. 225-102-1 of the French Commercial Code) 77; 84 4 Information on locations by country and activities (Article 511-45 of the French Monetary and Financial Code) 192 Key characteristics of the internal control and risk management procedures relating to the preparation and 5 processing of accounting and financial information 78-82 6 Vigilance plan (Article L. 225-102-4 of the French Commercial Code) 118-119 Report on corporate governance Information on governance 30-55 Information on remuneration 56-64 Capital structure 238 Information required by Article L. 225-37-5 of the French Commercial Code relating to factors that may have an impact in the event of a public offering 238-241 Information on agreements entered into by a subsidiary and a corporate officer holding more than 10% of the voting rights (Article L. 225-37-4 2° of the French Commercial Code) 243-245 Table summarising capital increase authorisations, in accordance with Articles L. 225-129-1 and L. 225-129-2 of the French Commercial Code, and use of these authorisations in fiscal year 2017 238 Pursuant to Articles 212-13 and 221-1 of the AMF General Regulation, the Registration document also contains the following regulatory information Statutory Auditors’ special report on related-party agreements and commitments 243-245 Statutory Auditors’ fees 63; 192; 232 Statement by the person responsible for the document 246

In accordance with Article 28 of European regulation No. 809/2004 of April 29, pages 229 to 268 of the Registration document filed with the AMF on 2004, the following information is incorporated by reference in this Registration March 23, 2017 under number D.17-0214; document: ❯ the management report for the fiscal year ended December 31, 2017, ❯ Groupe Crédit Foncier’s consolidated financial statements for the fiscal year presented on pages 79 to 99 of the Registration document filed with the AMF ended December 31, 2017 and the Statutory Auditors’ report, presented on on March 28, 2018 under number D.18-0206; pages 174 to 246 of the Registration document filed with the AMF on ❯ the management report for the fiscal year ended December 31, 2016, March 28, 2018 under number D. 18-0206; presented on pages 7 to 14 and 156 to 159 of the Registration document ❯ Crédit Foncier’s annual financial statements for the fiscal year ended filed with the AMF on March 23, 2017 under number D.17-0214; December 31, 2017 and the Statutory Auditors’ report, presented on ❯ the principal markets in which Crédit Foncier competes presented on pages pages 247 to 289 of the Registration document filed with the AMF on 17 to 28 of the 2017 Registration document filed with the AMF on March 28, March 28, 2018 under number D.18-0206; 2018 under number D.18-0206; ❯ Groupe Crédit Foncier’s consolidated financial statements for the fiscal year ❯ the principal markets in which Crédit Foncier competes presented on pages ended December 31, 2016 and the Statutory Auditors’ report, presented on 19 to 30 of the 2016 Registration document filed with the AMF on March 23, pages 160 to 228 of the Registration document filed with the AMF on 2017 under number D.17-0214. March 23, 2017 under number D.17-0214; ❯ Crédit Foncier’s annual financial statements for the fiscal year ended December 31, 2016 and the Statutory Auditors’ report, presented on

2018 Registration document CRÉDIT FONCIER 249 LEGAL INFORMATION CROSS-REFERENCE TABLES

2018 Registration document 250 CRÉDIT FONCIER

Crédit Foncier de France - S.A. (French public limited company) with share capital of 1,331,400,718.80 euros Paris Trade and Companies Register No. 542 029 848 Executive ofﬁces and postal address: 4, quai de Bercy - 94224 Charenton Cedex - France - Tel.: +33 (0)1 57 44 80 00 Head ofﬁce: 19 rue des Capucines – 75001 Paris - France creditfoncier.com