First quarter 2020 results : Positive earnings capacity despite an unprecedented market context

A DIVERSIFIED ASSET-LIGHT MODEL DEDICATED TO CLIENTS' NEEDS

UNDERLYING NET REVENUES³ EXCLUDING CVA/DVA AT €1.9BN IN 1Q20 (-3% YOY)

AWM: Resilient results, fee rate and flow dynamics

Strength of our active asset management model with underlying net revenues³ flat YoY in 1Q20 despite some mark-downs on the seed money portfolio. Revenue growth of +9% YoY excluding the seed money contribution i.e. +4pp above expense growth

Average fee rate slightly down to 29bps over the quarter due to a mix effect following the drop in equity markets

Net outflows on LT products limited to ~€(5)bn in North America and ~€(2)bn in Europe (excluding Life Insurance General Accounts)

Outlook: Pursue the development of a truly global and diversified model, building up on key strategic initiatives (e.g. LBPAM) and already successful growth relays (e.g. WCM, Mirova and Thematics) while maintaining good cost management and flexibility in order to adapt to the environment. Good 2Q20 start so far

CIB: Strong revenue diversification together with a tight control on expenses

Supporting clients with more than €9bn financing granted since the beginning of the COVID-19 crisis as at 30/04/20⁴

Underlying net revenues³ impacted by the COVID-19 context in 1Q20, notably across market activities through elevated CVA/DVA effects and mark-downs (Equity dividends). Strong FICT performance with revenues up +46% YoY and from Investment banking/M&A, up +19%. Global finance activity impacted by lower syndication fees in March

Costs under control, down -5% YoY at constant exchange rate in 1Q20

Cost of risk increase in 1Q20 due to higher provisioning, notably across energy exposures

Outlook: Ongoing cost saving efforts to mitigate the combined effect of lower revenues and higher cost of risk. Under severe assumptions, notably including a -9% drop in the 2020 French GDP and a -4% cumulative drop over 2020-2021, cost of risk for the rest of the year could be along the lines of 1Q20 or moderately above

Insurance: Particularly resilient model, driver of growth and profitability

Underlying net revenues³ up +5% YoY in 1Q20 with a limited impact of market volatility

Underlying RoE³ at ~33% in 1Q20

Outlook: Limited impacts from the current environment expected on the 2020 Gross operating income

Payments: Value creation accelerating through the beginning of 2020

Underlying net revenues³ up +9% YoY in 1Q20 of which +13% in January/February

Underlying RoE³ at ~15% in 1Q20

Outlook: 2020 net revenues are expected to continue to exhibit positive momentum vs. 2019

SOLID BALANCE SHEET AND REINFORCED FINANCIAL STRENGTH

Basel 3 FL CET1 ratio¹ at 11.4% as at March 31, 2020, vs. 11.3% at 2019 year-end. Ratio +310bps above regulatory requirements which are now established at 8.29%, down -120bps vs. January 1^st, 2020. Following this capital requirement reduction, mainly driven by the CRD V article 104 being brought forward, Natixis is now targeting a Basel 3 FL CET1 ratio¹ of 10.2% for the 2020-2021 period

Liquidity: LCR ratio >100% as at March 31, 2020 through an efficient joint funding platform together with BPCE. Besides, >70% of assets on balance sheet have a duration < 1 year. This short-term balance sheet should potentially limit IFRS 9 provisioning based on lifetime expected loss

Positive earnings capacity¹ of +€60m in 1Q20 despite volatile items impacting the quarter

“Since the beginning of the COVID-19 crisis, our employees have been fully mobilized to support our clients and the real economy. They have been working very efficiently, and we have been able to function in a very satisfactory way, thanks to our early adoption of remote working practices. I pay tribute to the commitment and professionalism of our incredible teams, which has equally been noted by our clients.

Despite the crisis, operating revenues and expenses across our businesses are largely stable compared with last year. In Asset & Wealth Management, strong declines in financial markets reduced our assets under management and led us to mark down our seed money portfolio, but client outflows were limited and the fee rate was close to flat, demonstrating the relevance of our multi-boutique offering to our clients. In Corporate & Investment Banking, we recorded strong results for fixed income, investment banking and M&A, while other businesses were impacted negatively by the environment, including financing and equity derivatives. Insurance and Payments both recorded a solid quarter marked by increased revenue and profit, and the fundamentals of both businesses remain strong even as confinement measures will reduce activity in the short-term.

Our results in the first quarter of 2020 were characterized by the unprecedented environment, which had a significant asset and liability mark-to-market effect under IFRS rules, reversible depending on market evolution and that has a noticeable impact on our accounts. Despite such effect, our earnings capacity remains positive taking into account the exceptional impact stemming from the sale of a ~30% stake in Coface at a pre-crisis price and if we smooth over the year the regulatory taxes and contributions that we pay upfront every first quarter.

Our results demonstrated the robustness of our diversified business model as well as our solid capital and liquidity positions. Natixis' CET1 ratio is well above regulatory requirements and our liquidity is assured through our joint funding platform with BPCE. The measures that have been announced by the ECB also allow us to reduce our CET1 target by 100 basis points to 10.2% for the period 2020-2021. Our excess capital position will be assessed upon this level across the two coming years.

The current COVID-19 crisis is strong and its economic consequences remain uncertain. In such a context, we have decided to push back the announcement of our next strategic plan until the end of 2021. In the meantime, we will continue to focus on creating value for our stakeholders by generating diversified revenues, further reducing our operating expenses and, above all, serving our clients during this period when they most need support and advise.”

François Riahi, Natixis Chief Executive Officer