Groupe BPCE: full-year 2012 results

Sun Feb 17, 2013 2:32pm EST

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Paris, February 17, 2013

 Groupe BPCE: full-year 2012 results                                                                                                                                                                                                                                                                                                                                                                                                                           
 
 l     Operation to simplify the Group's organizational structure: projected buy-back by the Banque Populaire banks and the Caisses d'Epargne, for a total of EUR12.1 billion[1] #_ftn1 , the Cooperative Investment Certificates (CCIs) held by Natixis in the capital of the Banque Populaire banks and Caisses d'Epargne, followed by the cancellation of these certificates.                                                                             
 
 l     Net income attributable to equity holders of the parent (excluding revaluation of the Group's own debt) of EUR2.3 billion: solid results in a tight business environment.                                                                                                                                                                                                                                                                             
 
At the end of the "Together" strategic plan launched in 2010 - which has enabled the Group to return to profit, to reinforce its capital adequacy and liquidity, to reduce its risk profile, notably regarding Natixis, and to make Natixis a fully-fledged member of the Group via the development of synergies with the Banque Populaire banks and the Caisses d'Epargne - Group BPCE is announcing major plans to simplify its organizational structure.  


l     Projected simplification of the Group's organizational structure

>     Plan for the Banque Populaire banks and the Caisses d'Epargne to buy back the Cooperative
Investment Certificates (CCIs) held by Natixis in the capital of the mutual banks, in an amount of
EUR12.1 billion1

>     A threefold objective: projected simplification of the Group's organizational structure,
clearer appreciation of Natixis' performance, and optimization of the allocation of equity within
the Group 

>     An operation that creates value for Natixis' shareholders: exceptional payment[2] #_ftn2  of
dividends in an amount of EUR2 billion (EUR0.65 per share), improvement of the cost/income
ratio[3] #_ftn3 , enhanced ROTE3 (from 8.1% before the operation to 8.5% after the operation)

>     No impact on Groupe BPCE results and marginal impact on its capital adequacy (estimated
15-basis point decline in the Common Equity Tier-1 ratio under Basel 3[4] #_ftn4  on a pro-forma
basis at Dec. 31, 2012)

l     Enhancement of the Group's financial structure in 2012 

>     Core Tier-1 ratio under Basel 2.5 of 10.7%[5] #_ftn5  at Dec. 31, 2012, +160 basis points in
1 year

>     Common Equity Tier-1 ratio under Basel 3 in excess of 9%4,5 at Dec. 31, 2012, ahead of
target  

>     Goal to reduce liquidity requirements by EUR35 billion achieved one year in advance.
Liquidity reserves of EUR144 billion at Dec. 31, 2012, equal to an increase of EUR34 billion in
one year

>     2013 Medium-/Long-Term refunding program 50%[6] #_ftn6  complete at January 31, 2013
l     Solid results in a tight business environment

>     Stability in core business line revenues at EUR20.9 billion (-1.0% vs. 2011)

>     Net income attributable to equity holders of the parent (excluding revaluation of the
Group's own debt) of EUR2.34 billion (-5.9% vs. 2011[7] #_ftn7 )

>     Net income attributable to equity holders of the parent: EUR2.15 billion

l     Continued adaptation of the business models of the core business lines

>     Banque Populaire banks and Caisses d'Epargne: strong growth in the number of active
customers leading to substantial growth in on-balance sheet savings deposits and continued funding
of the French economy

>     Crédit Foncier: active balance sheet management with the disposal of international assets
for EUR4.9 billion since November 30, 2011; 7% cost reduction vs. 2011; launch of the project to
pool IT resources with the creation of the Caisses d'Epargne platform

>     Natixis: goal of reducing capital and liquidity consumption achieved one year ahead of
schedule; implementation of the Originate to Distribute model in the Wholesale Banking arm and
launch of the Operational Efficiency Plan



On February 17, 2013, the Supervisory Board of BPCE convened a meeting chaired by Yves Toublanc to
examine the Group's financial statements for the full year and fourth quarter of 2012.

François Pérol, Chairman of the Management Board of BPCE, said: "Building on sound results in
2012, generated in a tight business environment, Groupe BPCE is today announcing a major project
aimed at simplifying its organizational structure. The projected buy-back of Cooperative
Investment Certificates (CCIs) follows on directly from the strategic decisions that we have taken
since 2009: confirmation of the Group's cooperative banking model, clarification of its
organization, transformation of Natixis' business model and risk profile, a stronger customer
focus adopted by all our business activities. Once the operation has been completed, the entire
capital of the Banque Populaire banks and Caisses d'Epargne will be held by their cooperative
shareholders; Natixis, a fully-fledged member of Groupe BPCE, is BPCE's listed entity responsible
for pursuing core business lines in favor of the Group's long-term strategy. Our results for last
year, the further strengthening of our financial structure and the launch of the CCI buy-back
operation allow us to look forward with confidence to drawing up our new strategic plan for the
period running from 2014 to 2017."


1. Groupe bpce simplifies its organizational structure and announces the projected joint buy-back
by Banque populaire banks and Caisses d'Epargne of the Cooperative Investment Certificates (CCIs)
held by Natixis in the capital of its parent companies 


With the buy-back of the CCIs held by Natixis, BPCE is announcing plans to substantially simplify
its organizational structure. In this context, Natixis would pay its shareholders an exceptional
dividend[8] #_ftn8  in an amount of EUR2.0 billion. This plan is consistent with the
implementation of the 2012-2013 strategic plan "Together". 

BPCE S.A. and Natixis announced today that they have presented to their respective Supervisory
Board and Board of Directors, a project implying a significant simplification of Groupe BPCE's
structure. The contemplated operation would consist in the buy-back by the Banque Populaire banks
and the Caisses d'Epargne of all the Cooperative Investment Certificates (CCIs), they had issued
and which are currently wholly-owned by Natixis. Following the cancellation of the CCIs bought
back by each Banque Populaire bank and Caisse d'Epargne, these banks would be fully owned by their
cooperative shareholders. This buy-back operation of CCIs would be accompanied by the unwinding of
associated financing agreements and intra-group mechanisms (such as the P3CI instrument).

This operation would represent a new key milestone in the construction of Groupe BPCE. Since its
creation in 2009, BPCE has already managed to simplify its legal structures, its organization and
its governance; it has achieved the greatest part of the disposal program regarding its non-core
assets (including GAPC) and drawn conclusions of unstable macroeconomic and financial conditions
on its accounts. This operation, while concluding "Together", Groupe BPCE's strategic plan for
2009-2013, would enable Groupe BPCE to engage in the preparation on solid foundations of its new
strategic plan for the period 2014-2017 to be announced in the autumn. As part of this future
plan, Natixis, one of Groupe BPCE's core businesses, will keep deploying its offering and services
in the Banque Populaire and Caisse d'Epargne networks, making it possible to further enhance
revenue and cost synergies that have already materialized over the past few years (EUR616m and
EUR930m respectively as at the end of 2012), achieved ahead of the target initially fixed for the
end of 2013.

For Natixis, the envisaged buy-back of the CCIs, in the context of this operation, would allow it
to show an improved profitability profile as well as a simplified financial and prudential
structure. This operation would constitute a new key milestone in the transformation of its
business model, which is now clearly based on three customer-centric core business lines -
Wholesale Banking, Investment Solutions, and Specialized Financial Services - and on Coface.
Natixis also demonstrates a significantly lowered risk profile since 2009, while presenting, on a
consistently recurring basis, a profitable activity since then.

The price paid for this buy-back would amount to EUR12.1 billion (with 2012 dividend rights
attached), hence valuing the CCIs marginally above (1.05x) their share of the aggregated book
value of the Banque Populaire banks and Caisses d'Epargne. This disposal would have a neutral
impact on Natixis' net income attributable to equity holders of the parent in 2012. Détroyat
Associés[9] #_ftn9  will assess the fairness of this operation and will present its conclusions to
Natixis' Board of Directors and general shareholders' meeting. 

This buy-back operation of the CCIs would result in an approximately EUR16 billion decrease in
Natixis' risk weighted assets (net of the impact of the P3CI instrument). In order to distribute
the capital surplus thus generated, Natixis would propose the payment of a EUR2.0 billion
exceptional dividend8 to its shareholders (EUR0.65 per share) in addition to the ordinary EUR0.10
per share dividend to be proposed for approval in the general shareholders' meeting. 

Natixis would present a 9.2%[10] #_ftn10  Core Tier-1 ratio under Basel 310 (pro forma the
contemplated operation) as at January 1, 2013, consistent with the Core Tier-1 ratio10 posted by
the company as at January 1, 2013, before this operation (9.0%10). Natixis would thus further
improve - post operation - its already highly robust solvency position.

At Groupe BPCE's level, this CCI buy-back operation, coupled with the distribution of an
exceptional dividend by Natixis, would have a marginal impact (-15bps) on its Common Equity
Tier-13 ratio10 as at January 1, 2013. This reflects the fact that the CCIs are already cancelled
in Groupe BPCE's consolidated accounts.

With this operation, Groupe BPCE once again demonstrates its ability to optimize capital
circulation within its perimeter in order to ensure an appropriate allocation of its resources.
Thus, in the context of this operation, BPCE S.A. would reimburse the highly-subordinated debt
(EUR2.0 billion nominal) subscribed by the Banque Populaire banks and Caisses d'Epargne, and
reduce the capital of BPCE SA by EUR2 billion in favor of the Banque Populaire banks and the
Caisses d'Epargne.

This operation will be submitted, after approval of employees representative bodies, for approval
by the Boards of Directors of Banque Populaire banks and by the Supervisory Boards of the Caisses
d'Epargne (joint and equal shareholders of BPCE S.A.), by the Board of BPCE and by the Board of
Directors of Natixis. This operation could be closed during the third quarter of 2013. 

Rothschild & Cie Banque and Bredin Prat are advising Natixis and Groupe BPCE in this Operation. 
JP Morgan is providing financial consultancy services to Natixis' audit committee. 
Détroyat Associés consulting firm is acting as an expert and fairness arbitrator on behalf of
Natixis.
The Ricol, Lasteyrie firm has been appointed as experts by BPCE on behalf of the Banque Populaire
banks and the Caisses d'Epargne.


2. Consolidated results of Groupe BPCE for the full year and 4th quarter of 2012


2.1 Consolidated results for full-year 2012[11] #_ftn11 

The Group has recorded solid results in a tight business environment. Revenues from its core
business lines stand at EUR20.9 billion, down 1.0% compared with 2011, while 2012 net income
attributable to equity holders of the parent amounts to EUR2,754 million, down 18.3% compared with
2011[12] #_ftn12 .

The negative impact of non-operating items on net income attributable to equity holders of the
parent represents an aggregate total of -EUR607 million including, in particular, -EUR198 million
revaluation of the Group's own debt, -EUR273 million in goodwill impairment and value adjustments,
and -EUR190 million representing the prolonged decline in value of the interest in Banca Carige.

Groupe BPCE is efficiently pursuing its drive to adapt to changes in the regulatory environment by
strengthening its capital adequacy before the transition to the new Basel 3 regulatory framework,
with a Core Tier-1 ratio of 10.7%[13] #_ftn13 , up 160 basis points in the course of 2012.

The net banking income of Groupe BPCE came to EUR22,504 million, down 1.2% (excluding
non-operating items) compared with 201112. 

The revenues posted by the core business lines of BPCE remain stable despite the adverse economic
environment, buoyed up by the dynamism of the Group's commercial activities. 
Revenues posted by the Group's core business lines[14] #_ftn14  stand at EUR20,867 million, down
just 1.0% compared with 2011. 
The Group's operating expenses reached a total of EUR15,935 million, up 2.1%. If new fiscal
measures are excluded, the Group's expenses rose by 1.0%. The operating expenses of the core
business lines increased 2.9% to reach a total of EUR14,061 million, (+1.8% in the absence of new
fiscal measures). The cost/income ratio stands at 70.8% for the Group and at 67.4% for the core
business lines. 

Gross operating income came to EUR6,569 million, down 8.3% compared with 2011. The contribution
made by the Group's core business lines came to EUR6,806 million, down 8.1% compared with 2011.

The cost of risk came to a total of EUR2,176 million, representing a 17.7% increase over 2011. The
cost of risk of the core business lines follows the same upward trend, rising 22.5% to EUR1,788
million, reflecting the downturn in the economic environment and the impact of a specific case of
funding of a financial leasing activity in partnership with a specialized company (+13.3%
excluding the impact of this item). 

Net income attributable to equity holders of the parent shows considerable resilience and stands
at EUR2,754 million, down 18.3% if non-operating items are excluded. The net income of the core
business lines has declined by 18.2% and amounted to EUR3,075 million in 2012. 

The ROE of the core business lines stands at 9%, down 2.0 percentage points.

2.2 Results for the 4th quarter of 2012[15] #_ftn15 

In the 4th quarter of 2012, net banking income came to a total of EUR5,662 million, up 0.2%, while
the net banking income of the core business lines reached a total of EUR5,326 million. 

Operating expenses represent a charge of EUR4,157 million, representing a closely managed increase
of 2.0%; for the core business lines, operating expenses have risen 4.0% to a total of EUR3,678
million.

Gross operating income declined 4.5% to reach EUR1,505 million. For the core business lines, it
fell 7.8% to EUR1,648 million.

The cost of risk stands at EUR644 million, up 5.3%.

Net income attributable to equity holders of the parent is down 12.4% at EUR521 million.

The ROE of the core business lines stands at 8%, down 1.0 percentage point.

The 2010-2013 strategic plan "Ensemble" is continuing to drive Groupe BPCE's banking model, which
is achieving enhanced results in terms of operational efficiency, with results ahead of the
predetermined target. At December 31, 2012, additional net banking income worth an aggregate
EUR616 million since the launch of the strategic plan had been generated from synergies developed
between Natixis and the Banque Populaire and Caisse d'Epargne retail networks, chiefly in the
areas of consumer finance, payments and insurance. As a result, the rollout of the personal loan
offering in the Banque Populaire banks and the sustained growth enjoyed by leasing activities have
enabled businesses related to financing to exceed their targets. The business context is more
difficult for financial savings products.

At December 31, 2012, cost synergies for Groupe BPCE as a whole amount to an aggregate EUR930
million since the strategic plan was first launched thanks, in particular, to the rationalization
of third-party expenses, the optimization of Group purchasing, and the pooling of IT-related
expenses.

2.3 Workout portfolio management (GAPC)

The GAPC is continuing to implement its asset disposal program by reducing the amount of assets
managed on a run-off basis, without having a significant impact on net income attributable to
equity holders of the parent. Assets worth a total of EUR3.6 billion were divested in 2012.

Risk-weighted assets declined by EUR1.7 billion in the 4th quarter of 2012, falling 58% since June
2009.


3. Capital adequacy and Liquidity: Adapting the Group to its new environment


Groupe BPCE is pursuing its drive to reinforce its financial strength and has enhanced its capital
adequacy by 160 basis points compared with December 31, 2011. The Core Tier-1 ratio under Basel
2.5 stood at 10.7%[16] #_ftn16 at December 31, 2012.

Core Tier-1 capital represented EUR40.9 billion at December 31, 2012, up from EUR23.3 billion in
June 2009 when Groupe BPCE was first created (excluding the temporary capital injection received
from the French government and which has since been reimbursed in full).

Groupe BPCE has already reached its target of Common Equity Tier-1 under Basel 3, without
transitional measures[17] #_ftn17 , of more than 9% in 2013, considering that it stood at 9%16 at
December 31, 2012.

Groupe BPCE had set itself the target of reducing its wholesale funding requirements by    
EUR25-35 billion between the end of June 2011 and the end of 2013. At December 31, 2012, it
achieved this target one year ahead of schedule, enabling the Group to enjoy a good liquidity
position with EUR144 billion in liquidity reserves (including EUR98 billion in available assets
eligible for central bank financing, and EUR46 billion in liquid assets placed with central banks
at December 31, 2012) for short-term refinancing outstandings of EUR103 billion16 at the end of
December 2012.
At December 31, 2012, short-term refinancing outstandings were covered by liquidity reserves by a
factor of 140%.
On-balance sheet deposits continued to increase in the Banque Populaire and Caisse d'Epargne
retail banking networks, with a loan-to-deposit ratio of 114%16 at December 31, 2012.

3.1 Medium-/Long-Term Funding: 50% of the 2013 program completed at January 31, 2013

The 2013 Medium-/Long-Term Funding program for a total of EUR21 billion - smaller than the 2012
program of EUR24.5 billion - was 50% completed at the end of January 2013 (including amounts
raised at the end of 2012 above and beyond the 2012 funding program), with an average maturity of
5.8 years and an average mid-swap rate of +60 basis points.

The Group has raised EUR10.6 billion[18] #_ftn18  from its two funding pools: EUR6.8 billion from
unsecured bond issues and EUR3.8 billion from covered bond issues. 

BPCE's Medium-/Long-Term Funding pool has completed 59% of its EUR14 billion program with EUR8.3
billion raised with an average maturity of 4.0 years.

As for the Crédit Foncier Medium-/Long-Term Funding pool, 33% of the EUR7 billion program has been
completed, with EUR2.3 billion8 in resources raised with an average maturity of 12.1 years. 

2012 CONSOLIDATED RESULTS OF GROUPE BPCE EXCLUDING NON-OPERATING ITEMS

 in EURm                                                    2012         2012 /           CORE BUSINESS LINES*    2012/    
                                                                     2011[19] #_ftn19             2012             2011    
 Net banking income                                          22,504              -1.2%                   20,867      -1.0% 
 Operating expenses                                         -15,935             + 2.1%                  -14,061     + 2.9% 
 Excluding new fiscal measures                              -15,760             + 1.0%                  -13,913     + 1.8% 
 Gross operating income                                      6,569               -8.3%                    6,806      -8.1% 
 Cost/income ratio                                            70.8%          + 2.3 pts                    67.4%   + 2.5 pt 
 Cost of risk                                                -2,176            + 17.7%                   -1,788    + 22.5% 
 Résultat avant impôt                                         4,605             -16.6%                    5,236     -14.7% 
 Net income attributable to equity holders of the parent  2,754                 -18.3%                    3,075     -18.2% 
 ROE                                                                                                         9%   -2.0 pts 


* The core business lines are Commercial Banking and Insurance (with, in particular, the Banque
Populaire and Caisse d'Epargne retail banking networks along with Crédit Foncier, Banque Palatine
and BPCE International et Outre-mer) and Wholesale Banking, Investment Solutions, and Specialized
Financial Services (Natixis).




CONSOLIDATED RESULTS OF GROUPE BPCE IN THE 4th QUARTER OF 2012, EXCLUDING NON-OPERATING ITEMS

 in EURm                                                   Q4-12  Q4-12 /      CORE BUSINESS LINES*   Q4-12 /   
                                                                    Q4-11                              Q4-11    
 Net banking income                                         5,662     +0.2%                    5,326          - 
 Operating expenses                                        -4,157    + 2.0%                   -3,678     + 4.0% 
 Gross operating income                                     1,505     -4.5%                    1,648      -7.9% 
 Cost/income ratio                                          73.4%   +1.3 pt                   -69.1%   +2.6 pts 
 Cost of risk                                                -644    + 5.3%                     -469    + 15.2% 
 Résultat avant impôt                                         915    -12.4%                    1,239     -13.2% 
 Net income attributable to equity holders of the parent      521    -12.4%                      728     -15.5% 
                                                                          -                                     
 ROE                                                                                              8%    -1.0 pt 


* The core business lines are Commercial Banking and Insurance (with, in particular, the Banque
Populaire and Caisse d'Epargne retail banking networks along with Crédit Foncier, Banque Palatine
and BPCE International et Outre-mer) and Wholesale Banking, Investment Solutions, and Specialized
Financial Services (Natixis).




4. RESULTS OF THE CORE BUSINESS LINES


4.1 Commercial Banking and Insurance: buoyant commercial activity resulting in  growth in
on-balance sheet savings deposits

The Commercial Banking and Insurance core business line groups together the activities of the
Banque Populaire and Caisse d'Epargne retail banking networks, of the Real Estate Financing
division (chiefly Crédit Foncier de France) and the Insurance, International and "Other networks"
activities.

 


2012: initiatives for the benefit of our customers 


In 2012, the Commercial Banking and Insurance division took a great many initiatives for the
benefit of its customers while developing synergies within Groupe BPCE.

In response to new consumer habits, in line with technological developments, the two retail
networks pursued their multi-channel distribution program with the final rollout of on-line
branches and the development of websites, thereby enhancing the public visibility of its brands:
54 million visitors per month for the Caisse d'Epargne website and 25 million visitors for the
Banque Populaire on-line account management area alone. This visibility  is also reflected in the
2.7 million mobile applications downloaded in 2012 for both retail networks.

In the means of payment area, the Banque Populaire banks and the Caisses d'Epargne have also
innovated, by developing a range of payment solutions via mobile phone. This offering represents a
tangible step towards the "bank of the future": S-money, launched in July, is the first banking
solution that allows customers to pay, receive and send money instantaneously from a smartphone.

Another innovative customer-centric initiative was launched in 2012:  "Digital Enterprise. It
allows customers to sign up for savings products in a bank branch by using an electronic signature
without using any paper during the process.

To firmly establish the distribution of insurance products (provident and non-life) within the
Group's entities, the "Ambition Banquier Assureur" project - has led to substantial growth in the
net revenues from general insurance products (+50%) and provident insurance (+ 81 %). The number
of contracts in portfolio has increased significantly to reach 4.5 million at the end of 2012.

Synergies are continuing to be generated with Natixis notably with the sale of consumer finance
products. The general rollout of the sales application in the  Banque Populaire banks, previously
implemented successfully in the Caisses d'Epargne, led to a 4% increase in new loan production in
2012 in a contracting market (-4%). Moreover, regarding factoring, revenues grew by 4.4% to reach
EUR15.1 billion for the year as a whole.


Strong growth in the customer base, savings deposits and loan outstandings



Building on their image as (respectively) the French public's first and third most preferred
banking institution[20] #_ftn20 , the Caisses d'Epargne and Banque Populaire banks have pursued
their dynamic commercial policies. The focus on customer relations, at the very heart of their
strategy, has led to the capture of new customers and a strengthening of relationships with their
existing clientele. This growth is tangible for all customer categories served by both retail
banking networks.

This dynamic growth in the customer base has resulted in 7.2%[21] #_ftn21  growth in on-balance
sheet savings deposits driven by passbook savings accounts (+10%) and term accounts (+12.5%). Loan
outstandings also display significant growth (+6%) in what remains an adverse economic environment
both for households and for business organizations.


Full-year 2012 financial results for Commercial Banking and Insurance


In 2012 as a whole, the revenues generated by the Commercial Banking and Insurance core business
line came to EUR14,846 million21, representing a decline of 1.821% compared with 2011.

These figures reflect resilient revenue performance in an adverse environment regarding both the
economy and changes in the regulatory environment (with, notably, the reduction in commissions
paid on centralized savings deposits and interbank payment operations). In this context, the net
interest margin of the Banque Populaire and Caisse d'Epargne networks rose +3.1%[22] #_ftn22 ,
whereas commissions earned by the retail banking networks declined by 4.9%.

Operating expenses stood at EUR10,063 million, up +2.3% compared with 2011 (if the impact of new
fiscal measures is excluded, growth is limited to +1.0%).

Gross operating income stands at EUR4,761 million.
The cost/income ratio comes to 68.1%, up 3.3 points compared with last year. 

The cost of risk has risen 13.3%, standing at EUR1,447 million, reflecting the deterioration in
the economic environment. The increase is limited to 6.6% if the impact of a specific case of
funding of a financial leasing activity in partnership is excluded.

Net income attributable to equity holders of the parent generated by the Commercial Banking and
Insurance core business line is EUR2,233 million. 

The ROE of the core business line in 2012 stands at 8%.

3.1   Banque Populaire

The Banque Populaire network comprises the 19 Banque Populaire banks, including CASDEN and Crédit
Coopératif and their subsidiaries, Crédit Maritime Mutuel and the Mutual Guarantee Companies

 

*Customer base

The Banque Populaire network is pursuing its drive to offer products and services to its
customers. Regarding the individual customer segment, the number of active customers rose by
+3.3%, and by +4.9% for active customers using banking services and insurance products. The number
of professional and corporate customers increased by +1.6%.

*Savings deposits

The growth in on-balance sheet savings for the Banque Populaire banks remained buoyant, up +6.0%
in relation to the fourth quarter of 2011 (excluding centralized savings). This positive trend was
driven by an increased flow of deposits on passbook savings accounts held by individual customers
(deposits +17.3%), related to the increased ceilings of the livret A and LDD sustainable
development passbook savings accounts, but also as a result of the strategy to develop term
accounts destined for professional and corporate customers (+ 22.7%). Within a context of lower
yields, life funds remained stable.

*Loan outstandings

The lending activity of the Banque Populaire banks stood up well in 2012. 

Home loan outstandings advanced +4.0% despite the 25% drop in new lending activity compared with
2011, a percentage that remains, however, better than the market performance overall (-26.4%[23]
#_ftn23 ).

Regarding consumer finance, the continued industrialization of personal loans with Natixis has led
to a 5% rise in new lending and reversed the current trend of loan outstandings, which is now
oriented upwards (+0.4%).

With regards corporate customers, the more uncertain economic situation has led to slower growth
in equipment loans (+1.4%) and a rapid expansion in short-term credit facilities (+16.6%). 

*Financial results

Net banking income for the Banque Populaire network for the full-year 2012 was down 3.6%[24]
#_ftn24 , at EUR6,049 million23. Operating expenses increased by 2.9% to EUR4,185 million, leading
to gross operating income of EUR1,847 million and a cost/income ratio of 69.4%, up 5.1 percentage
points. The cost of risk has increased by 12.5% to reach EUR747 million.

In 2012, the Banque Populaire network contributed EUR731 million to the net income of Groupe BPCE.

3.2   Caisse d'Epargne

 

The Caisse d'Epargne network comprises the 17 individual Caisses d'Epargne.

*Customer base

The Caisse d'Epargne network put up a solid commercial performance in 2012, in line with its
strategy of deepening customer relations, which is reflected in the dynamic policy of developing
the customer base with the addition of 313,000 active individual customers, including 247,000
active customers banking principally with the Caisses d'Epargne in 2012. The other markets also
posted strong growth, with an annual growth rate of 7% in respect of active professional customers
and 9% for corporate customers.

*Savings deposits

The Caisses d'Epargne enjoyed dynamic growth in on-balance sheet savings in all segments: passbook
account savings rose +8.1%21 in 2012, demand deposits +6.1% and term accounts +4.8%. Overall,
on-balance sheet savings (excluding centralized savings) rose by +8.1% in relation to 2011.

In adverse market conditions, financial savings deposits showed resilience, with life insurance
growth remaining positive at +1.3% compared with the fourth quarter of 2011.

*Loan outstandings

After two record-breaking years, the Caisses d'Epargne enjoyed 8.4% growth in aggregate loan
outstandings in 2012. 

Real estate loans continued to advance at a good rate (+ 8.1% over one year), propped up by new
lending which, despite being down 17%, declined less than the market overall (which fell by
26.4[25] #_ftn25 %).

Consumer finance continues to display growth, with a 3.5% increase in outstandings. Despite the
sluggish business environment (due to a fall in consumption and a decline in new car
registrations), new lending remained stable at a high level. 

Finally, equipment loans are up 11.1%, driven by growth in the customer base. New lending was
bolstered in particular, in the corporate customer market. 

*Financial results

Net banking income for the year as a whole increased by +0.2% to EUR6,806 million (excluding
changes in provisions for home purchase savings schemes). Operating expenses increased by 2.5% to
EUR4,518 million, leading to gross operating income of EUR2,238 million and a cost/income ratio of
66.9%, up by 2.1 percentage points. The cost of risk stands at EUR441 million (+24.2%). 
The Caisse d'Epargne network contributed EUR1,147 million to the net income of Groupe BPCE in
2012.

3.3      Real estate financing 

Crédit Foncier is the principal entity contributing to the Real estate financing business line.

 

As part of the implementation of its strategic plan, Crédit Foncier has continued to reduce the
size of its balance sheet via a policy geared to divesting its international portfolio, in an
amount of EUR3.6 billion in 2012 (representing EUR4.9 billion since the plan was first launched);
and debt buy-backs came to EUR1.3 billion (or EUR2.3 billion since the plan was first launched).
The net impact on net banking income in 2012 of these disposals was -EUR41 million and listed
under "Other businesses" for last year.

The cost-cutting plan led to a 7% reduction in costs in 2012 compared with 2011, thanks to the
success of the forward-looking management retirement plan, whose final take-up rate was 88%, and
the launch of the plan to pool IT resources with the IT-CE platform used by the Caisses d'Epargne.

Crédit Foncier has adapted its business model with the launch of the first syndication operations
in the Corporatesector and the securitization of individual customer receivables (EUR1 billion
securitized in 2012). 

Aggregate new loan production came to EUR9.8 billion in 2012. The presence of products for
first-time buyers and solutions designed to facilitate home-ownership among low-income families
(where Crédit Foncier boasts a market share in excess of 40%[26] #_ftn26 ) made it possible to
limit the decline in new loan production in the individual customer segment to 15%. The France
Corporate customer segment is still proving resilient thanks to social housing funding activities.

4.    Wholesale Banking, Investment Solutions and Specialized Financial Services 
(Core Business Lines included in Natixis)

The 2012 net banking income of the core business lines of Natixis (Wholesale Banking, Investment
Solutions and Specialized Financial Services) came to EUR6,088 million in 2012, rising 3.3%
compared with 2011. Two core business enjoyed growth: Investment Solutions (+9.4%) and Specialized
Financial Services (+2.7%). Net banking income for the Wholesale Banking division was very
slightly down (0.7%).

Operating expenses, at EUR3,998 million, increased by 4.4%.

The cost/income ratio was down by 0.7 percentage points, at 65.7%.

The cost of risk rose to 341 million euros reflecting the decline in the economic environment.

The income before tax of the three business lines declined 7.1% to EUR1,764 million.

After accounting for minority interests and income tax, the contribution to Groupe BPCE's net
income came to EUR842 million, down 10.4%.

The return on equity of these core business lines stands at 14%.

For Natixis, the underlying net income came to EUR1,141 million; non-operating items amounted to
-EUR240 million, net of tax (chiefly the revaluation of the Group's own debt).

(For a more detailed analysis of the core business lines and results of Natixis, please refer to
the press release published by Natixis that may be consulted online at www.natixis.com
http://www.natixis.com/ ).

5.    EQUITY INTERESTS[27] #_ftn27 

 

Equity Interests chiefly concern the activities pursued by Coface and Nexity

 

The net banking income posted by the Equity Interests division stood at EUR1,756 million in 2012,
compared with EUR1,724 million in 2011. Group net income for the division amounted to EUR76
million.

*[28]Coface core businesses

Revenues amounted to EUR1,571 million, up 1% compared to 2011, including a 3% increase in the
credit insurance business, in a more challenging business environment. The year has nevertheless
been characterized by a significant improvement in profitability with pre-tax income rising to
EUR164 million.

The claims ratio remains under close managmenet at 56.7% in 2012, in a sluggish environment down
0.8 percentage points compared with 2011. 

6 Groupe BPCE, a socially responsible banking institution 

Groupe BPCE, a socially responsible banking institution, has staged a number of large-scale
operations in environmental, societal and social areas in 2012.

Chosen by the European Commission to be the first French bank to finance energy efficient
projects, BPCE entered into a partnership with the German bank KfW to support geographical
regions, local authorities, companies and individuals taking initiatives in this area. This
partnership forms part of the European mechanism (ELENA) designed to promote local energy
efficiency initiatives.

Groupe BPCE remains the leading banking institution for solidarity-based savings in France[29]
#_ftn29  and the No1 French banking group for microcredits. A leader in solidarity-based
initiatives, BPCE devoted EUR32.5 million in 2012 to societal activities.

A cooperative banking institution, a bank active at the local and regional level, and the bank for
all types of clientele, with its 36 million customers and 117,000 employees, the Group considers
itself duty bound to reflect the rich diversity of its clientele. Gender equality, identified as
one of the strategic thrusts of its human resources policy, has been one of the vectors driving
the adaptation of HR processes, and has led to the systematic adoption of awareness-building and
employee training activities, as well as the introduction of support measures specifically
dedicated to female employees.

Notes on methodology 
Capital is now allocated to Groupe BPCE's core business lines on the basis of 9% of average
risk-weighted assets against 7% in 2011. Furthermore, the consumption of capital related to the
securitization operations involving a deduction from regulatory Tier-1 capital is now attributed
to the core business lines. Related figures are published on a pro-forma basis to account for this
new allocation.
The Eurosic and Foncia equity interests, sold in June and July 2011, were reclassified under
"Other Businesses" on June 11, 2011.
Groupe BPCE sold part of its equity interest in Volksbank International AG (previously attributed
to the Commercial Banking and Insurance Division) on February 15, 2012. On December 31, 2011, the
financial items corresponding to the businesses in the process of divestment were reclassified
under "Other Businesses" and the businesses not subject to divestment were attributed to the
Equity Interests core business line.
The impact of Crédit Foncier's dynamic balance sheet management operations (divestment of
securities and debt buy-backs) have been classified under "Other Businesses" as of the 2nd quarter
of 2012.
The segment information of Groupe BPCE has been restated accordingly for the periods in question.
The audit procedures relating to the consolidated financial statements for the year ended December
31, 2012 have been substantially completed. The reports of the statutory auditors regarding the
certification of these consolidated financial statements will be published following the
verification of the Management Report and the finalization of the procedures required for the
registration of the reference document.


About Groupe BPCE: 
Groupe BPCE, the 2nd-largest banking group in France, includes two independent and complementary
commercial banking networks: the network of 19 Banque Populaire banks and the network of 17
Caisses d'Epargne. It also works through Crédit Foncier de France in the area of real estate
financing. It is a major player in wholesale banking, asset management and financial services with
Natixis. Groupe BPCE serves more than 36 million customers and enjoys a strong presence in France
with 8,000 branches, 117,000 employees and more than 8.6 million cooperative shareholders.

 BPCE Press Contacts                          BPCE Investor Relations                                               
 
 Sonia Dilouya: 01 58 40 58 57              
 Roland Charbonnel: 01 58 40 69 30                                   
 Terence de Cruz: 01 40 39 64 30              Evelyne Etcheverry: 01 58 40 57 46                                    
 
mail: presse@bpce.fr mailto:presse@bpce.fr  
 mail: investor.relations@bpce.fr mailto:investor.relations@bpce.fr  


ANNEX

Simplification of the Group's structure

   www.bpce.fr http://www.bpce.fr/                                                        
@GroupeBPCE


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[1] #_ftnref1  2012 dividend rights attached; representing 1.05 x the aggregate equity of the
Banque Populaire banks and Caisses d'Epargne 



[2] #_ftnref2  Proposal submitted to the Extraordinary General Shareholders' meeting 



[3] #_ftnref3  Return on Tangible Equity, or return on total shareholders' equity less deeply
subordinated notes, intangible assets and goodwill. Excluding non-operating items - 2012 pro forma
versus real 2012



[4] #_ftnref4  Without transitional measures and after restatement for deferred tax assets and
subject to the finalization of regulatory provisions 



[5] #_ftnref5  Estimate



[6] #_ftnref6  Including amounts raised at the end of 2012 in excess of the 2012 program



[7] #_ftnref7  Pro forma to account for the disposal of Eurosic and Foncia in June and July 2011



[8] #_ftnref8  Proposal subject to the approval of the General Shareholders' meeting of Natixis



[9] #_ftnref9  A consultancy specializing in financial valuations



[10] #_ftnref10  Without transitional measures and after restatement for deferred tax assets and
subject to the finalization of regulatory provisions  



[11] #_ftnref11  Excluding non-operating items 



[12] #_ftnref12  Pro forma to account for the disposal of Eurosic and Foncia in June and July 2011



[13] #_ftnref13              Estimate at December 31, 2012



[14] #_ftnref14  The core business lines are Commercial Banking and Insurance (with, in
particular, the Banque Populaire and Caisse d'Epargne retail banking networks along with Crédit
Foncier, Banque Palatine and BPCE International et Outre-mer) and Wholesale Banking, Investment
Solutions, and Specialized Financial Services (Natixis)



[15] #_ftnref15  Excluding non-operating items 



[16] #_ftnref16              Estimate at December 31, 2012.



[17] #_ftnref17 After restating to account for deferred tax assets and subject to the finalization
of regulatory provisions



[18] #_ftnref18  Including EUR5.4 billion raised in excess of the 2012 program and deducted from
the 2013 program (EUR4.0 billion from the BPCE funding pool and EUR1.5 billion from the CFF pool)



[19] #_ftnref19  Pro forma to account for the disposal of Eurosic and Foncia in June and July 2011



[20] #_ftnref20  JDD/Posternak/IPSOS public image barometer survey, January 2012



[21] #_ftnref21  Excluding centralized savings products



[22] #_ftnref22  Excluding changes in provisions for regulated home purchase savings schemes



[23] #_ftnref23  Source : Observatoire Crédit Logement



[24] #_ftnref24  Excluding changes in provisions for home purchase savings schemes



[25] #_ftnref25  Source: Observatoire Crédit Logement 



[26] #_ftnref26  Source : SGFAS, January 2013



[27] #_ftnref27  Le pôle Participations financières comprend les participations dans Nexity,
Meilleutaux, Volksbank Romania, Coface et les activités de Private Equity de Natixis 



[28] #_ftnref28  Activités d'assurance-crédit dans le monde entier et activités d'affacturage en
Allemagne et en Pologne. 



[29] #_ftnref29  Soource : Finasol 2012



Groupe BPCE 2012 results - PR http://hugin.info/143409/R/1678857/548069.pdf 


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information contained therein.

Source: BPCE via Thomson Reuters ONE


HUG#1678857