SFIL Annual financial report 2018

Management report I 1 11 Annual Financial Report 2018 SFIL Management report Report on corporate governance Consolidated financial statements in accordance with IFRS Annual financial statements in accordance with French GAAP Shareholders’ Meeting of May 29, 2019 General information The main items on the SFIL Group’s consolidated balance sheet (management data (1) ) as of December 31, 2018, are presented in the table below: (In EUR billions, equivalent value after currency swaps) ASSETS LIABILITIES 72.7 72.7 of which main items of the notional balance sheet of which main items of the notional balance sheet 60.3 60.3 Cash assets 2.0 (of which 1.3 for CAFFIL and 0.7 for SFIL) SFIL bond issues 4.9 Securities 9.5 (of which 8.1 for CAFFIL and 1.4 for SFIL) Obligations foncières 50.3 Certificates of deposit 0.6 Loans 46.7 Refinancing by shareholders 1.9 Cash collateral paid 2.1 Cash collateral received 1.2 (of which 0.5 for CAFFIL and 0.7 for SFIL) Equity and other items 1.4 (1) As regards the loans shown in the tables below, the notional balance sheet item concept corresponds to outstanding principal for euro transactions and, for foreign currency transactions, the euro equivalent value after swap hedging. Notional balance sheet items notably exclude hedging relationships and accrued interest not yet due. The assets on the SFIL Group’s balance sheet mainly consist of: –– the loans and securities on CAFFIL’s balance sheet and the securities on SFIL’s balance sheet; –– the cash collateral paid by SFIL in respect of its deriva‑ tives portfolio; –– the cash assets of SFIL and CAFFIL, cash deposited at Banque de France. The liabilities on the SFIL Group’s balance sheet mainly con‑ sist of: –– CAFFIL’s obligations foncières liabilities; –– SFIL’s bond issues; –– the debt financing provided by SFIL’s shareholders; –– the certificates of deposit issued by SFIL. The last three items cover SFIL’s financing requirements, which are mainly made up of the refinancing of CAFFIL’s over-collateralization and of its specific needs related to the cash collateral paid in respect of its off-balance sheet derivatives and to the refinancing of its cash reserves. –– the cash collateral received by CAFFIL or SFIL; –– equity and other resources. Changes in the main balance sheet items 1. Changes in assets 1.1 – MAIN CHANGES IN ASSETS IN 2018 The net change in the SFIL Group’s main assets in 2018 was an increase of EUR 0.8 billion. This change can be analyzed as follows: (In EUR billions, equivalent value after currency swaps) 2018 BEGINNING OF YEAR 59.5 Purchase of loans from La Banque Postale 3.4 New export credit loans granted 0.9 New post-sensitivity reduction loans granted 0.2 Change in cash collateral paid by SFIL (0.3) Amortization of loans and securities granted to the French public sector (excluding cash investment securities) (4.1) Amortization of loans and securities granted outside the French public sector (excluding cash investment securities) (0.7) Cash investment securities 2.0 Change in cash assets (0.6) Other (0.0) END OF YEAR 60.3 –– Through its subsidiary CAFFIL, the SFIL Group acquired EUR 3.4 billion in loans marketed by La Banque Postale to the French local public sector. –– The export credit activity resulted in a EUR 0.9 billion drawdown. –– The sensitivity reduction operations resulted in EUR 0.2 billion of new assets on CAFFIL’s balance sheet, recog‑ nized under the refinancing of early repayment indemni‑ ties and new investment financing. The risky structured loan sensitivity reduction program is nearing completion. By the end of 2019, taking into account the sensitivity reduction operations already completed and excluding outstanding loans for which customers have opted into the support fund’s lower interest rate assisted payment scheme, the SFIL Group’s total sensitive structured loan outstandings will have decreased by at least 86% com‑ pared with the amount recorded when SFIL was cre‑ ated, and by more than 91% for local government entities alone. The initial sensitive loan outstandings of EUR 8.5 billion will therefore be reduced to less than EUR 1.0 bil‑ lion by the end of 2019 and, for local government entities alone, to a maximum of EUR 0.6 billion, compared with EUR 6.7 billion initially. –– In some cases SFIL acts as an intermediary for certain of CAFFIL’s swaps; to that end it had paid a total of