SFIL Annual financial report 2018

Management report I 1 9 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 framework of the services provided in compliance with the latest regulatory developments (IFRS 9, the General Data Protection Regulation and legislation on critical outsourced services). 4. SFIL Group financing In 2018, the SFIL Group raised EUR 6.9 billion in the bond markets. The year was marked by further diversification of the Group’s access to the market, with the wide recognition of SFIL as a euro and US dollar issuer to French agencies and CAFFIL’s frequent activity as a leading covered bond market issuer. SFIL also continued to refinance itself through short-term issues in the money market. Lastly, as part of the implementation of the SFIL Group’s social and environ‑ mental policy and in order to further diversify its sources of financing, CAFFIL announced a social covered bond pub‑ lic issue project, which was implemented in February 2019. This issue, which is intended to finance investments by pub‑ lic hospitals, is the first step in the SFIL Group’s strategy of increasing its use of “social” and “green” bond issues. SFIL bond refinancing In 2018, SFIL continued to develop its franchise in the French agency market by building its reference curves in both euros and US dollars. It accordingly tapped the public primary market twice in 2018 for a total of EUR 1.85 billion, with a first issue of EUR 1 billion over 8 years in January and a second of USD 1 billion over 3 years in June. These two successful transactions both raised the SFIL Group’s profile as an issuer to the French agencies segment and broadened its investor base. At the same time, in February 2018 SFIL raised additional liquidity on one of its euro-denominated reference issues through a EUR 200 million tap transaction. SFIL’s total bond outstandings came to EUR 4.9 billion as of December 31, 2018. These issues are an alternative to the financing the Group receives from its shareholders, Caisse des dépôts et consig‑ nations and La Banque Postale. SFIL plans to continue to expand its market refinancing and in 2019 will seek to launch at least two issues in euros and US dollars in the public primary market. Five new banks signed the “SFIL Protocol” in 2018, bringing the number of partner banks to 25 and thereby ensuring an established relationship with almost all banks active in the French export credit market. In 2018, SFIL carried out four refinancing transactions in the fields of energy, infrastructure, defense and cruise liners, for EUR 3.8 billion. In total, since 2016 SFIL has refinanced more than EUR 7 bil‑ lion in 10 transactions representing EUR 12.6 billion of export contracts with 15 banks, thereby supporting 8 exporters. For the second consecutive year, SFIL was the sector’s leading provider of liquidity, with a market share of more than 40%. To ensure the effectiveness of the refinancing system, SFIL maintains an ongoing relationship with the main French exporters, providing assistance with these early stages. On their request, SFIL issues letters of interest in their com‑ mercial offers to accompany Bpifrance Assurance Export’s letters of interest. SFIL issued six such letters of support in 2018, bringing the number of letters provided since the activity’s launch to 23, for 13 major exporters. 3. Services provided to La Banque Postale SFIL provides services for the medium and long-term financ‑ ing activity in the local public sector (French local govern‑ ment entities and public hospitals) carried on by La Banque Postale and its joint venture with CDC, La Banque Postale Collectivités Locales. Within this framework, it provides ser‑ vices at all stages of medium and long-term loan issuance and management process (loan offerings, middle and back office management, ALM reporting, management control, accounting, third-party management, etc.). The perfor‑ mance indicators introduced to measure the quality of the services that SFIL provided in 2018 were satisfied at 96%. SFIL also coordinates and implements projects needed by La Banque Postale for this business activity, in particular by adapting the applications it makes available to LBP. Furthermore, after five years of activity, SFIL and La Ban‑ que Postale have reviewed and adapted the contractual in the name, on behalf and under the control of the French State Uncondition and irrevocable 100% guarantee Loan insurance at 95% Export loan Export refinancing loan Caisse Française de Financement Local Export buyer Commercial bank keeps at minimum 5% of the loan without coverage Operational diagram of export credit refinancing by SFIL and CAFFIL