Bpce: RESULTS FOR THE 3RD QUARTER AND FIRST 9 MONTHS OF 2024

Paris, November 6^th, 2024

RESULTS FOR THE 3RD QUARTER AND FIRST 9 MONTHS OF 2024

• Rebound in Financial Performances •

• Dynamic Implementation of Vision 2030 Strategic Plan •

Q3-24: strong growth in net banking income, +8% vs. Q3-23, to €5.9bn; gross operating income up +13% thanks to a positive jaws effect; reported net income up 1% to €925m

9M-24: revenues increased by 3% YoY to €17.3bn, driven by all business lines; 12% growth in gross operating income; reported net income² reached €2.6bn, up 8% vs. 9M-23

Solvency and liquidity levels meeting the highest standards, increasing CET1 ratio to 15.7%³ after booking the coming impacts of SGEF and Nagelmackers acquisitions ; LCR stood at 154%⁴ end-September 2024

RETAIL BANKING & INSURANCE Net banking income up 4% in Q3-24, notably driven by the rebound in net interest margin; revenues up 1% YoY in 9M-24; 658,000 new clients⁵ YtD for the Banque Populaire and Caisse d'Epargne networks

• Local and regional financing: 1% growth in loan outstandings year-on-year, reaching €719bn end-September 2024
• 1% YoY increase in deposits & savings⁶ at end-September 2024, bringing an additional €10bn for a total of €679bn
• Insurance: gross inflows of €11.2bn for life insurance in 9M-24. The equipment rate⁷ for P&C and Personal Protection insurance stood at 34.6% at end-September 2024, +0.5% YtD. Strong growth in premiums, +16% vs. 9M-23

• Financial Solutions & Expertise: 3% growth in NBI vs. 9M-23 notably driven by Leasing and Consumer Credit businesses
• Digital & Payments: 5% increase in the number of transactions per card at end-September 2024 YoY

• Corporate & Investment Banking: 12% increase in NBI in Q3-24 YoY; revenues up 4% for Global Markets driven by the Fixed-income and Equity businesses; 17% growth in NBI for Global Finance; NBI up 38% in Investment Banking in Q3-24 YoY and very strong momentum in M&A activities with revenues multiplied by 1.7 in Q3-24

• Asset & Wealth Management: +10% YtD in assets under management for Natixis IM, reaching the all-time level of €1,279bn at end-September 2024, notably thanks to very dynamic net inflows of €41bn in 9M-24, including €24bn in Q3-24. NBI up 12% vs. T3-23. Strong dynamic in new inflows on Fixed-income products, especially for Loomis Sayles and DNCA
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Prudent provisioning policy: cost of risk stood at €1.5bn in 9M-24, up vs. a low basis of comparison in 9M-23, which included S1/S2 provision reversals. Cost of risk down 7% in Q3-24 QoQ

Financial strength: increase in the CET1 ratio to 15.7%³ at end-September 2024 including coming impacts of SGEF and Nagelmackers acquisitions; liquidity reserves stand at €328bn

Rollout of the Vision 2030 strategic plan in line with the targeted trajectory; Groupe BPCE has already successfully begun to implement its strategic growth initiatives

• France: active acquisition of new clients in the retail banking networks, AuM of more than €100bn in Life Insurance, and growth in the customer equipment rate in P&C insurance, reaching a total of 34.6% at end-September 2024
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• Europe: project to acquire Société Générale Equipment Finance (scheduled for Q1-25) and Nagelmackers (scheduled for late 2024/early 2025) progressing according to their initial timetables

• International: very high net inflows for Loomis Sayles (€25bn YtD), continued development of CIB in the US and APAC region
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• Success of the payments system operated by BPCE: 12.1 million tickets sold on the world's largest ticketing platform

• Financing of emblematic infrastructures, such as the Athletes Village, illustrating our position as the leading private provider of finance for sports infrastructure in France

• Record performances: 136 athletes and para-athletes supported by Group companies qualified for the Games and won 51 medals, equal to more than 37% of all medals won by France

• 28,000 guests welcomed during the period of the Games; more than 10,000 employees involved

Nicolas Namias, Chairman of the Management Board of BPCE, said: "The 3^rd quarter of the year was a particularly intense period for Groupe BPCE, both in terms of sport - with the exceptional success of the Paris 2024 Games, which we helped to make possible thanks to the involvement of our employees, our professional expertise, and our support for France's largest team of athletes and para athletes - as well as in terms of the performance of our business lines in banking, insurance, and asset management activities.

With 8% growth in revenues this quarter, all our business lines contributed to this performance characterized by a set of high-quality financial metrics (13% growth in gross operating income) and by particularly buoyant commercial activities leading to the acquisition of almost 660,000 new clients since the beginning of the year. These results testify to the effectiveness of the actions taken in recent months. The development of our VISION 2030 strategic plan has been accompanied by several initiatives enabling us to take full advantage of the project's strong initial momentum.

The Retail Banking & Insurance division has seen its net interest margin return to growth, as previously anticipated, helping to drive the revenue growth enjoyed by the Banques Populaires and Caisses d'Epargne. Our global businesses - Natixis CIB and Natixis IM - achieved an excellent performance notably illustrated by strong growth in the financing of CIB clients and extremely dynamic inflows in asset management.

Lastly, the Group has consolidated its financial strategy with an increase in its CET1 ratio to 15.7% - a figure that already takes account of the coming impact of the new acquisitions undertaken - and leaves us ideally placed to realize our strategic growth ambitions.”

The quarterly financial statements of Groupe BPCE for the period ended September 30, 2024, approved by the Management Board on November 5, 2024, were verified and reviewed by the Supervisory Board, chaired by Eric Fougère, on November 6, 2024.

In this document, 2023 figures have been restated on a pro-forma basis (see annex for the reconciliation of reported data to pro-forma data).

Groupe BPCE

² "Underlying” means exclusive of exceptional items

³ The underlying cost/income ratio of Groupe BPCE is calculated on the basis of net banking income and operating expenses excluding exceptional items. The calculations are detailed in the annex on pages 17 and 22.

1.     Groupe BPCE

Unless specified to the contrary, the financial data and related comments refer to reported results of the Group and business lines. Changes express differences between Q3-24 and Q3-23 and between 9M-24 and 9M-23 on a YoY basis.

Groupe BPCE's net banking income rose by 8% to 5,892 million euros in Q3-24 thanks to dynamic commercial activity in all business lines. At the end of September 2024, it stood at 17,271 million euros, up 3%.

Revenues from the Retail Banking and Insurance business unit (RB&I) reached a total of 3,869 million euros, up 4% in Q3-24, and a total of 11,333 million euros, up 1% in 9M-24. Banques Populaires and Caisses d'Epargne posted strong commercial performances, with the acquisition of more than 658,000 new clients¹ in all market segments since the beginning of the year. The continuing rise in the return on assets has led to a rebound in the net interest margin; net banking income for the retail banking networks was up 4% in Q3-24 and remained stable in 9M-24. The Financial Solutions & Expertise business unit saw its revenues rise by 1% in Q3-24, driven by dynamic business generated with the retail banking networks, particularly in the Leasing and Consumer credit businesses. The Insurance business benefited from strong momentum in life insurance, with assets under management exceeding 100 billion euros and highly positive net inflows. Business was also very dynamic for the Digital & Payments division.

Revenues for the Global Financial Services (GFS) business unit rose by 12% to 1,976 million euros in Q3-24, and by 8% in 9M-24, to a total of 5,892 million euros. Corporate & Investment Banking revenues, buoyed up by strong sales performance across all business lines, totaled 1,118 million euros, up 12% in Q3-24 and 9M-24. Net banking income for the Asset & Wealth Management division rose by 12% in Q3-24 and by 10% in 9M-24. Assets under management have enjoyed 10% growth since the beginning of the year, reaching an all-time high thanks to record inflows and positive market effects.

The net interest margin came to 5.5 billion euros and commissions stood at 8.1 billion euros in 9M-24.

In 9M-24, operating expenses remained stable at 12,200 million euros but they were up 6% in Q3-24, leading to positive jaws effects over the 2 periods.

The underlying cost/income ratio² improved by 1.0pp in Q3-24 to 67.9%, and by 2.4pp in 9M-24 to stand at 69.9%.

Gross operating income rose by 13% to 1,851 million euros in Q3-24 and by 12% to 5,071 million euros in 9M-24.

Groupe BPCE's cost of risk came to -523 million euros, up 64% in Q3-24 vs. a low basis of comparison in 2023, and to -1,465 million euros, up 48% in 9M-24 vs. a 2023 level that included reversals of provisions for future risks.

Performing loans are deemed to be rated 'Stage 1' or 'Stage 2,' while loans with proven risk are rated 'Stage 3.'

¹ 137,300 additional active clients over the last 9 months ² The underlying cost/income ratio of Groupe BPCE is calculated on the basis of net banking income and operating expenses excluding exceptional items. The calculations are detailed in the annex on page 22.  

For Groupe BPCE, the amount of provisions for performing loans rated 'Stage 1' or 'Stage 2' corresponds:

• For the quarter, to an allocation to provisions of 34 million euros in Q3-24 vs. a reversal of 35 million euros in Q2-24 and vs. a reversal of 98 million euros in Q3-23,
• For the 9-month period, to a reversal of 146 million euros in 9M-24 vs. a reversal of 258 million euros in 9M-23.

• For the quarter, to an allocation to provisions of 488 million euros in Q3-24 vs. an allocation of 595 million euros in Q2-24 and vs. an allocation of 417 million euros in Q3-23,
• For the 9-month period, to an allocation of 1,611 million euros in 9M-24 vs. an allocation of 1,245 million euros in 9M-23.

The cost of risk for the Retail Banking & Insurance business unit came to 23bps (26bps in Q2-24), including a 1bp provision for performing loans (vs. a 1bp reversal in Q2-24) and a 22bp allocation to provisions on loans with proven risk (vs. a 27bp provision in Q2-24).

The cost of risk for the Corporate & Investment Banking business came to 22bps (52bps in Q2-24), including a 1bp allocation to provisions for performing loans (vs. a 9bp reversal in Q2-24) and a 21bp allocation to provisions for loans with proven risk (vs. a 61bp allocation to provisions in Q2-24).

In 9M-24, the cost of risk for Groupe BPCE stood at 23bp in terms of gross customer outstandings (16bps in 9M-23). This figure includes a 2bp reversal of provisions on performing loans (vs. a 4bp reversal in 9M-23) and a 25bp allocation to provisions for loans with proven risk (vs. a 20bp allocation in 9M-23).

For the Retail Banking & Insurance business unit, the cost of risk came to 22bps (16bps in 9M-23), including a 2bp reversal of provisions on performing loans (vs. a 4bp reversal in 9M-23) and a 24bp provision on loans with proven risk (vs. a 20bp allocation to provisions in 9M-23).

The cost of risk of the Corporate & Investment Banking business came to 35bps (19bps in 9M-24), including a 3bp reversal on performing loans (vs. a 10bp reversal in 9M-23) and a 38bp allocation to provisions on loans with proven risk (vs. a 30bp provision in 9M-23).

The ratio of non-performing loans to gross loan outstandings stood at 2.5% at September 30, 2024, up 0.1pp vs. end-December 2023.

Reported net income (Group share) came to 925 million euros in Q3-24, up 1%. It stood at 2,607 million euros in 9M-24, up 8%.

The impact of exceptional items on net income (Group share) was -31 million euros in Q3-24 vs. -40 million euros in Q3-23 and    -91 million euros in 9M-24 vs. -22 million euros in 9M-23.

Underlying net income (Group share)¹ remained stable at 957 million euros in Q3-24 and rose by 10% to 2,698 million euros in 9M-24.

2.   A positive-impact group committed to making impact accessible to all its clients

Groupe BPCE is strengthening its commitment to the environment by teaming up with Act4nature International

This international coalition aims at mobilizing businesses, public authorities, scientists and environmental associations to protect, enhance and restore biodiversity. Groupe BPCE has set itself a number of ambitious objectives related to its activities as a banker, insurer and investor, focusing on 5 areas:

1. Make biodiversity-related issues an integral part of strategy,
2. Assess impacts and dependencies related to nature,
3. Reduce pressures on natural ecosystems and the environment,
4. Mobilize financial resources by directing a portion of investments towards biodiversity,
5. Enhance knowledge, particularly among employs, about biodiversity.

It is strengthening its partnership with the European Investment Bank (EIB) in order to support the innovation and energy transition projects of SMEs, ISEs and local authorities in France, an effort reflected in the securitization of a loan portfolio of 800 million euros, making it possible to mobilize a total of 1.6 billion euros in financing for SMEs and ISEs and to provide the regional BPs and CEs with 250 million euros to finance the projects of these small-, medium- and intermediate-sized French enterprises in the area of renewable energy.

Groupe BPCE is offering a new green banking savings product to the individual clients of the BP and CE retail banking networks, with the launch of CATVair (BP) and CATVert (CE) term accounts. This approach is aligned with the Group's VISION 2030 strategic project to put savings at the service of transitions.

Groupe BPCE is innovating by launching the 1^st shared-coupon Social Bond for the benefit of the Institut Robert-Debré du Cerveau de l'Enfant supported by the Paris Hospital Association APHP, illustrating its ability to offer innovative financing solutions to support transitions towards a more inclusive world.

¹ "Underlying” means exclusive of exceptional items

3.           Capital, loss-absorbing capacity, liquidity, and funding

3.1        CET1¹ ratio

Groupe BPCE's CET1 ratio at end-September 2024 reached an estimated level of 16.2%, up over the quarter. This change can be explained by the impact of the following factors:

• Retained earnings: +21bps,
• Net issuance of cooperative shares: +1bp,
• Changer in risk-weighted assets: +42bps,
• Other changes: - 2bps.

Organic capital creation for the quarter stood at 21bps, generated by earnings. Risk-weighted assets remained stable if changes in the model and regulatory effects are excluded.

Groupe BPCE held a buffer estimated at 18.9 billion euros above the threshold, at end-September 2024, for triggering the maximum distributable amount (MDA) for equity capital, taking account of the prudential requirements laid down by the ECB, applicable as of June 30, 2024.

3.2 TLAC ratio¹

The Total Loss-Absorbing Capacity (TLAC) stood at an estimated 120.5 billion euros at the end of September 2024. The TLAC ratio, expressed as a percentage of risk-weighted assets, stood at an estimated 27,0%² at the end of September 2024 (without taking account of preferred senior debt for the calculation of this ratio), well above the standard requirements of the Financial Stability Board that were equal to 22.4% at September 30, 2024.

3.3 MREL ratio¹

Expressed as a percentage of risk-weighted assets at September 30, 2024, Groupe BPCE's subordinated MREL ratio (without taking account of preferred senior debt for the calculation of this ratio) and the total MREL ratio stood at 27,0%² and 35.1%, well above the minimum requirements laid down by the SRB at September 30, 2024, of 22.4%³ and 27.3%³ respectively.

3.4 Leverage ratio¹

At September 30, 2024, the estimated leverage ratio stood at 5.1%, well above the requirement.

3.5 Liquidity reserves at a high level

The LCR (Liquidity Coverage Ratio) for Groupe BPCE is well above the regulatory requirement of 100%, at an average of 154% of month-end LCRs for the^3rd quarter of 2024.

Liquidity reserves stood at 328 billion euros at September 2024, representing a coverage ratio of 195% of short-term financial debt (including short-term maturities of medium- to long-term financial debt).

3.6 MLT funding plan: 91% of the 2024 objectives completed as at October 23, 2024

The size of the MLT funding plan, excluding structured private placements and Asset Backed Securities (ABS), has been set at 28.3 billion euros for 2024, and the breakdown by type of debt is as follows:

• 8.5 billion euros in TLAC funding: 2.0 billion euros in Tier 2 funding and 6.5 billion euros in senior non-preferred debt,
• 5.5 billion euros senior preferred debt,
• 14.3 billion euros in covered bonds.

As at October 23, 2024, Groupe BPCE had raised 25.7 billion euros, excluding structured private placements and ABS (91% of the 28.3 billion euro funding plan):

• 7.8 billion euros in TLAC funding: 1.6 billion euros in Tier 2 funding (80% of requirements) and 6.2 billion euros senior non-preferred debt (96% of requirements),
• 5.0 billion euros senior preferred debt (91% of requirements),
• 12.9 billion euros in covered bonds (90% of requirements).

Capital adequacy, Total loss-absorbing capacity - see the note on methodology

¹ Estimated at September 30, 2024 ² Groupe BPCE has chosen to waive the possibility provided by Article 72 Ter (3) of the Capital Requirements Regulation (CRR) to use senior preferred debt to ensure compliance with its TLAC/subordinated MREL requirements ³ Following reception of the annual MREL letter dated September 30, 2024

4.   Results of the business lines

Unless specified to the contrary, the financial data and related comments refer to the reported results of the Group and business lines, changes express differences between Q3-24 and Q3-23 and between 9M-24 and 9M-23.

4.1        Retail Banking & Insurance 

At the end of September 2024, on-balance sheet customer deposits & savings at 679 billion euros, up 10 billion euros year-on-year, with term accounts up 20% and passbook accounts, both regulated and unregulated, up 2% year-on-year.

Net banking income for the Retail Banking & Insurance division rose by 4% in Q3-24 to reach 3,869 million euros, and increased by 1% in 9M-24 to stand at 11,333 million euros. In Q3-24, these changes reflect the good level of activity: revenues rose by 3% for the Banque Populaire retail banking network and by 6% for the Caisse d'Épargne retail banking network. In 9M-24, net banking income for both networks remained stable.

The Financial Solutions & Expertise business lines continued to benefit from strong sales momentum, particularly in the leasing segment. Revenues rose by 1% in Q3-24 and by 3% in 9M-24. In Insurance, revenues were up 19% in Q3-24 and 7% in 9M-24, driven by very strong sales momentum in life insurance. The Digital & Payments business unit reported a 4% increase in revenues in Q3-24 and 5% growth in 9M-24, driven by card transactions and instant payments, and improved margin rates for Oney.

Operating expenses were kept well under control, up 2% in Q3-24 to 2,043 million euros, and up 1% in 9M-24 to 7,405 million euros.

The underlying cost/income ratio³ improved by 1.5pps in Q3-24, to 61.7%, and remained stable in 9M-24 at 64.7%.

The gross operating income generated by the business unit benefited from a positive jaws effect, with 9% growth in Q3-24 to 1,467 million euros, and remained stable in 9M-24 at 3,928 million euros.

The cost of risk amounted to -423 million euros in Q3-24, up 40%, and stood at -1,195 million euros in 9M-24, up 38% vs. a low basis of comparison in 2023.

Pre-tax income for the business unit as a whole totaled 1,044 million euros in Q3-24, down by a marginal 1%, and came to 2,809 million in 9M-24, down 10%.

Underlying income before tax² stood at 1,061 million euros in Q3-24, down 2%, and at 2,878 million euros in 9M-24, down 7%.

¹ Reported figures up to "income before tax”

² "Underlying” means exclusive of exceptional items

³ The business line cost/income ratios are calculated on the basis of net banking income and underlying operating expenses

4.1.1         Banque Populaire retail banking network

The Banque Populaire network is comprised of 14 cooperative banks (12 regional Banques Populaires along with CASDEN Banque Populaire and Crédit Coopératif) and their subsidiaries, Crédit Maritime Mutuel, and the Mutual Guarantee Companies.

Customer deposits & savings increased by 10 billion euros, or +3% year-on-year at end-September 2024, with 16% year-on-year growth in term accounts, and 1% year-on-year growth in both regulated and unregulated passbook savings accounts.

Net banking income came to 1,506 million euros in Q3-24, up 3%. This total includes:

• 785 million euros in net interest margin^4,5, up 3%,
• 709 million euros in commissions⁵ (stable).

Operating expenses rose by 4% in Q3-24 to 999 million euros, and by 2% in 9M-24 to 3,067 million euros.

As a result, the underlying cost/income ratio³ rose by 0.7pps in Q3-24 to 65.5%, and by 0.9pps in 9M-24 to 67.6%.

Gross operating income consequently remained stable at 508 million euros in Q3-24 and declined by 5% in 9M-24 to 1,417 million euros.

The cost of risk came to -195 million euros in Q3-24, up 54%, and to -548 million euros in 9M-24, up 49%.

Income before tax stood at 315 million euros in Q3-24 (-21%) and 933 million euros in 9M-24 (-19%).

Underlying income before tax² stood at 326 million euros in Q3-24 (-20%) and 967 million euros in 9M-24 (-16%).

¹ Reported figures up to "income before tax”

² "Underlying” means exclusive of exceptional items

³ The business line cost/income ratios are calculated on the basis of net banking income and underlying operating expenses

⁴ Excluding changes in provisions for home-purchase savings schemes

⁵ Income on regulated savings has been restated to account for the net interest margin and included under commissions

4.1.2        Caisse d'Epargne retail banking network

The Caisse d'Epargne network is comprised of the 15 cooperative Caisses d'Epargne and their subsidiaries.

Customer savings & deposits increased by 16 billion euros year-on-year, with 23% growth in term accounts and a 2% increase in regulated and unregulated passbook savings accounts.

Net banking income came to 1,517 million euros, up 6% in Q3-24. This total includes:

• 651 million euros in net interest margin^4,5, which remained stable,
• 835 million euros in commissions⁵, which rose 3%.

Operating expenses rose by a slight 2% to 1,008 million euros in Q3-24 and increased by 1% to 3,132 million euros in 9M-24.

The underlying cost/income ratio³ improved by 3.0pps to 66.1% in Q3-24 and by 0.3pps to 69.8% in 9M-24.

Gross operating income benefited from a positive jaws effect in Q3-24 (+16%) and stood at 509 million euros, down 2% in 9M-24 to 1,306 million euros.

The cost of risk stood at -159 million euros in Q3-24, up 39%, and at -435 million euros in 9M-24, up 30%.

Income before tax came to 350 million euros in Q3-24, up 8%, and to 878 million euros in 9M-24 (-13%).

Underlying income before tax² amounted to 355 million euros in Q3-24 (+8%) and stood at 905 million euros in 9M-24

(-7%).

¹ Reported figures up to "income before tax”

² "Underlying” means exclusive of exceptional items

³ The business line cost/income ratios are calculated on the basis of net banking income and underlying operating expenses

⁴ Excluding changes in provisions for home-purchase savings schemes

⁵ Income on regulated savings has been restated to account for the net interest margin and included under commissions

4.1.3        Financial Solutions & Expertise