CRÉDIT FONCIER Update to the 2014 Registration document

Transcription

creditfoncier.com
CRÉDIT FONCIER
Update to the 2014 Registration document
including the 2015 half-year financial report
CONTENTS
Company profile
Key figures
4
5
1 CRÉDIT FONCIER IN THE FIRST HALF OF 2015
7
The Group
Commercial and financial activity
8
14
2 RISK MANAGEMENT
25
Introduction – General risks of groupe Crédit Foncier
2.1 General organisation & methodology
2.2 Risk factors
2.3 Pillar III
2.4 Capital and capital adequacy ratios
2.5 Credit and counterparty risk exposures
2.6 Analysis of delinquencies
2.7 Risk Mitigation Techniques
2.8 Recommendations of the Financial Stability Forum
2.9 Market risks
2.10 ALM risks
2.11 Operating risks
2.12 Brokerage risk
2.13 Non-compliance risk
26
26
26
26
27
31
40
41
43
48
49
53
56
56
3 FINANCIAL INFORMATION
57
Analysis of results
Condensed consolidated financial statements at June 30, 2015
Statutory Auditors’ report on the financial information for the first half of 2015
4 OTHER INFORMATION
58
61
92
93
General information
Persons responsible for the document and for auditing the financial statements
Cross-reference table
Cross-reference table between the interim financial report and the update to the Registration
document
Abbreviations used in this document:
Thousands of euros: €k
Millions of euros: €m
Billions of euros: €bn
94
95
96
99
UPDATE OF THE 2014
REGISTRATION DOCUMENT
including the 2015 half-year financial report
This document is a free translation into English of Crédit Foncier’s update to the 2014 Registration document issued in the
French language and is provided solely for the convenience of English speaking readers. Every effort has been made to ensure
that the English translation is an accurate representation of the original; however, in case of discrepancy the French version will
prevail and is the only binding version.
The original update to the Registration document was filed with the Autorité des marchés financiers (AMF - French Financial
Markets Authority) on August 25, 2015 in accordance with Article 212-13 of its General Regulations under the number
D.15-0163-A01. It supplements the Registration document filed with the AMF on March 18, 2015 in accordance with Article
212-13 of its General Regulations, under file no. D.15-0163. It may be used in support of a financial transaction if accompanied
by a prospectus duly approved by the AMF. This document was produced by the issuer and its signatories are responsible
for its content.
This update to the Registration document is available at www.creditfoncier.com
2015 Half-Year financial report
CRÉDIT FONCIER
3
COMPANY PROFILE
❯ PROFILE
■ MAKING ALL REAL ESTATE PROJECTS POSSIBLE
Crédit Foncier is specialised in real estate financing and services in
France.
professionals, investors and local authorities. Crédit Foncier provides all
these players with its innovation and creativity as well as the experience
it has gained on the real estate market for over more than 160 years.
As a wholly-owned subsidiary of Groupe BPCE, the second-largest
banking group in France(1), Crédit Foncier serves all those who seek,
for one reason or another, the expertise and unique insight that will
help them find tailored answers to their real estate needs: individuals,
Crédit Foncier focuses on five major business lines: real estate financing
for individuals, financing real estate investors and professionals,
financing public sector entities, real estate services and financial
operations with funding.
❯ COMPANY PROFILE
Founded: 1852
Industry: Banking, Real estate
7,000 business partners in the real estate sector
(developers, single-family home builders, real estate brokers
and property managers)
Facts and figures:
No. 1 lender to low-income households(2)
2,729 employees at Crédit Foncier
(consolidated FTE staff in 2014)
No. 1 issuer of covered bonds in the world(3)
253 points of sale
❯ BUSINESS LINES
■ FINANCING SOLUTIONS FOR INDIVIDUALS
■ REAL ESTATE SERVICES
Crédit Foncier provides individuals with home ownership financing for
both new and existing homes. It is particularly active in lending to lowincome first-time home buyers, a segment in which it held 40% market
share as of June 15, 2015(2). Crédit Foncier is also active in the buy-tolet sector and in financing older customers with specialised products
and services such as reverse mortgages (Prêt viager hypothécaire).
This activity is carried out by Crédit Foncier Immobilier, a whollyowned subsidiary of Crédit Foncier, which offers two types of service:
consultancy, research and valuation, and brokerage management.
It targets institutional clients, investors, residential and commercial
property groups and major landlords. Crédit Foncier Immobilier also
produces real estate market studies and forecasts. These are eagerly
awaited by professionals in the property sector, government entities
and, more broadly, the media, which draw heavily on the findings.
■ FINANCING REAL ESTATE INVESTORS
AND PROFESSIONALS
Crédit Foncier helps property investors and professional customers
complete their transactions. It also provides these partners with its
expertise in the areas of financing arrangement and syndication.
■ FINANCING PUBLIC SECTOR ENTITIES
Crédit Foncier lends to local authorities and entities in charge of
social housing. Its teams define and support the financing of major
infrastructure projects through complex deals such as Public-Private
Partnerships (PPP).
■ FINANCIAL OPERATIONS
This business line provides refinancing on loans granted by Crédit
Foncier and Groupe BPCE’s other banking networks. Most of the
business is handled by Compagnie de Financement Foncier, a whollyowned subsidiary of Crédit Foncier whose purpose is to fund mortgage
and public-sector lending activities by issuing obligations foncières or
through securitisation.
(1) 2nd by market share for customer savings and customer lending (source: Banque de France Q3-2014 – all non-financial customers), 2nd in penetration rate among
professional customers and entrepreneurs (source: Pépites CSA survey 2013-2014).
(2) Source SGFGAS – Data at mid-June 2015 for PAS and data of first quarter 2015 for PTZ.
(3) In terms of euro benchmark issuances, Natixis study, November 2014.
4
CRÉDIT FONCIER
KEY FIGURES
❯ Groupe Crédit Foncier activity
(in €m)
Loan production (management data)
(1)
First-half 2015
First-half 2014
4,800
4,340
Individuals
3,994
3,083
Corporates
806
1,257
Public sector
380
411
Private sector(2)
426
846
4,001
3,437
-
923
06/30/2015
12/31/2014
100,472
101,586
Individuals
50,795
50,996
Corporates
49,677
50,590
Public sector
41,774
42,485
Private sector
7,903
8,105
Receivables managed for third parties
4,216
4,111
06/30/2015
(Basel III)
12/31/2015
(Basel III)
Issuances of obligations foncières(3)
Securitisation
(1) Including loans issued by Banco Primus totalling €34m at June 30, 2014 and €40m at June 30, 2015.
(2) Including SOCFIM for an amount of €487m at June 30, 2014 and €349m at June 30, 2015.
(3) Excluding non-recurring transactions (buy-back and intra-group issuances).
(in €m)
(1)
Gross securities and receivables
(1) Management data under IFRS 7.
❯ Consolidated financial data
(in €m)
CONSOLIDATED BALANCE SHEET
Balance sheet total
135,251
141,070
Consolidated equity – Group share
2,908
2,900
Regulatory capital
3,282
3,607
o/w basic regulatory capital
3,228
3,363
3,032
3,139
Solvency ratio – Standard approach
9.5%
10.4%
Tier-1 ratio (basic capital)
9.3%
9.6%
Common Equity Tier-1 (CET1) ratio (core capital)
8.8%
9.0%
(1)
o/w regulatory core capital
(2)
(1) After deducting perpetual deeply subordinated notes.
(2) Calculated on the basis of capital requirements, details of which are presented in the Risk Management report.
CRÉDIT FONCIER
5
First-half 2015
First-half 2014
Net banking income(1)
427
336
Individuals
(in €m)
CONSOLIDATED RESULTS
350
282
Private corporate sector
44
46
Public corporate sector
45
23
International corporate sector
-2
8
Holding companies
-10
-23
Gross operating income
145
63
Income before tax
-13
-1
Group share of net income
-20
2
(1) The NBI breakdown by a business line is presented in the note 6 to the consolidated financial statements of the first-half 2015 and in the note 5 to the
consolidated financial statements of the first-half 2014, “Segment reporting”.
6
CRÉDIT FONCIER
1
CRÉDIT FONCIER
IN THE FIRST HALF OF 2015
THE GROUP
Highlights of 2015
Functional organisational structure
Administrative and executive bodies
Positioning
Ratings
Share capital
Capital transactions in the first half of 2015
8
8
9
10
11
12
12
13
COMMERCIAL AND FINANCIAL ACTIVITY
Economic environment
Commercial activity
Individual customers
Real estate investors and public sector entities
Real estate services companies
Financial operations
14
14
15
15
18
22
23
CRÉDIT FONCIER
7
CRÉDIT FONCIER IN THE FIRST HALF OF 2015
THE GROUP
THE GROUP
❯ HIGHLIGHTS OF 2015
CREDIT FONCIER REINFORCES ITS VISIBILITY AMONG ITS CLIENTS AND PARTNERS
January to June
Continued renovation of points of sale network, with a design and layout meant to reflect its business logic.
11 points of sale in the new format were reopened.
January and March
Television and Internet advertising campaigns.
Launch of a new corporate video.
February
Annual real estate markets conference in Paris at the Maison de la Mutualité conference centre – 800 participants.
May
Press conference on real estate loans in Europe (third annual event).
June
Launch of the “Saga de l’Eté” campaign in the 13 newly-created regions of France.
SOCIETAL AND ENVIRONMENTAL COMMITMENT
March
As part of the Cube 2020 awards, Crédit Foncier receives the bronze medal.
May
European Sustainable Development Week: Climate change and energy.
June
Two conferences organised to raise awareness about people with disabilities focusing on the topic of: “Disabilities
in the workplace: How can we work together?”
CRÉDIT FONCIER RESEARCH PUBLISHED AT: WWW.CREDITFONCIER.COM
January and May
Results of the 1st and 2nd Crédit Foncier/CSA surveys on sentiment among real estate professionals.
June
Crédit Foncier: 2014 Factbook.
Study – “The path to acquiring a principal residence: from dream to reality”.
INNOVATION
March
Launch of the fifth annual BPCE Innovation Awards.
REFINANCING
January, February and June
Benchmark issues by Compagnie de Financement Foncier in the first half of 2015:
❯ €1.0bn with a 10-year maturity in January;
❯ €1.0bn with a 5-year maturity in February;
❯ €1.5bn with a 3-year maturity in June.
Total public issuances and private placements at June 30, 2015 stand at €4.0bn (excluding non-recurring
transactions: buy-back and intra-group issuances).
CRÉDIT FONCIER IMMOBILIER
January
All business lines are grouped under a single brand: Crédit Foncier Immobilier.
March
Press conference on Crédit Foncier Immobilier’s development strategy.
17th Barometer on financing the French real estate market, held together with Crédit Foncier Immobilier.
June
Publication of Issue No. 90 of the magazine L’Observateur de l’Immobilier.
RUN-OFF OF THE INTERNATIONAL PORTFOLIO
8
May
Resolution by the Board of Directors to accelerate the disposal programme for international positions in 2015.
June
Compagnie de Financement Foncier, a wholly-owned subsidiary of Crédit Foncier, sells its entire exposure to Heta
Asset Resolution AG. The Group no longer has any exposure to Austria.
CRÉDIT FONCIER
THE GROUP
1
❯ FUNCTIONAL ORGANISATIONAL STRUCTURE
■ EXECUTIVE MANAGEMENT AND THE EXECUTIVE COMMITTEE
(At June 30, 2015)
Eric FILLIAT
Chief of Financial
Management
Finance Division
François PÉROL
Chairman
Mathieu LEPELTIER
Chief Risk Officer
Risk and Compliance
Division
Jean-Pierre POUGET
Deputy Chief of Financial
Management
Finance Division
Accounting and taxation
Bruno DELETRÉ
Chief Executive Officer
Muriel COLLE
Resources Division
Corinne DECAUX
Legal Affairs Division
Patrick CHASTANT
General Inspection
Resources
and Steering Division
Benoît CATEL
Deputy CEO
Retail and Corporate
Thierry DUFOUR
Deputy CEO
Finance and Operations
Sandrine GUÉRIN
Chief of Corporate
and Investment Banking
(CIB)
Financial Operations
Philippe DUPIN
Corporate Operations
François GUINCHARD
Individual Operations
Luc RONDOT
Information Systems
Isabelle SELLOS-MAHE
Corporates
Public & private
Nordine DRIF
Development
Alain DAVID
Development
Marc TRESSON
Individuals
Anne-Marguerite
GASCARD
Real Estate Services
Retail and Corporate Banking Division
Finance and Operations Division
Resources and Steering Division
Member of the Executive Management Committee
CRÉDIT FONCIER
9
THE GROUP
❯ ADMINISTRATIVE AND EXECUTIVE BODIES
■ EXECUTIVE MANAGEMENT
❯ Ms Anne-Claude PONT (since February 17, 2015) – Chairman of
COMPOSITION OF EXECUTIVE MANAGEMENT
❯ BPCE, represented by Mr Daniel KARYOTIS – Chairman of the Audit
(At June 30, 2015)
Bruno DELETRÉ, Chief Executive Officer.
Benoît CATEL, Deputy Chief Executive Officer in charge of Retail and
Corporate Banking.
Thierry DUFOUR, Deputy Chief Executive Officer in charge of Finance
and Operations.
The Executive Management Committee also includes:
❯ Éric FILLIAT, Chief of Financial Management, Finance Division;
❯ Sandrine GUÉRIN, Chief of Corporate and Investment Banking,
Financial Operations;
❯ Mathieu LEPELTIER, Chief Risk Officer, Risk and Compliance
Division.
the Risk Management Committee, member of the Audit Committee
Committee, member of the Risk Management Committee
NON-VOTING DIRECTORS
❯ Mr Jean-Marc CARCELÈS
❯ Mr Emmanuel POULIQUEN
REPRESENTATIVES OF THE CENTRAL WORKS COUNCIL
❯ Mr Jean-Marc GILANT (management representative)
❯ Ms Valérie FIX (non-management representative)
GOVERNMENT AUDITOR
❯ Mr Olivier BUQUEN
CHANGES TO THE COMPOSITION OF THE BOARD
OF DIRECTORS IN THE 1ST HALF OF 2015
CHANGES TO THE COMPOSITION OF EXECUTIVE
MANAGEMENT IN THE 1ST HALF OF 2015
The Board of Directors’ meeting of February 17, 2015 co-opted
Ms Anne-Claude PONT as Director.
On April 9, 2015, the Board of Directors appointed Benoît CATEL to
the position of Deputy Chief Executive Officer in charge of Retail and
Corporate Banking effective April 13, 2015.
On March 31, 2015, the Annual General Shareholders’ Meeting ratified
the co-opting of:
■ BOARD OF DIRECTORS
COMPOSITION OF THE BOARD OF DIRECTORS
❯ Mr Jean-Paul DUMORTIER as Director, replacing Mr Jean CLOCHET;
❯ Mr Nicolas PLANTROU as Director, replacing Mr Jean-Paul
FOUCAULT;
❯ Ms Anne-Claude PONT as Director, replacing Mr Jean-Hervé
LORENZI;
(At June 30, 2015)
❯ Mr Emmanuel POULIQUEN as non-voting director, replacing
BOARD OF DIRECTORS
❯ Mr François PÉROL – Chairman of the Board of Directors
At its meeting of May 5, 2015, the Board of Directors accepted the
resignation of Mr Michel SORBIER as non-voting director.
Mr Jean-Paul DUMORTIER.
❯ Mr Gérard BARBOT – Chairman of the Remuneration and Selection
Committee, Chairman of the Appointments Committee
❯ Ms Meka BRUNEL – Member of the Remuneration and Selection
Committee, member of the Appointments Committee
❯ Ms Nathalie CHARLES – Member of the Remuneration and Selection
❯ Mr Pierre DESVERGNES
❯ Mr Bruno DUCHESNE
❯ Mr Jean-Paul DUMORTIER – Member of the Remuneration and
Selection Committee, member of the Appointments Committee
❯ Ms Nicole ETCHEGOÏNBERRY – Member of the Audit Committee,
member of the Risk Management Committee
❯ Ms Christine FABRESSE
❯ Mr Jean-Yves FOREL
❯ Mr Dominique GARNIER – Member of the Audit Committee, member
of the Risk Management Committee
❯ Ms Catherine HALBERSTADT
❯ Mr Francis HENRY – Member of the Remuneration and Selection
❯ Ms Anne MERCIER-GALLAY
❯ Ms Stéphanie PAIX
❯ Mr Nicolas PLANTROU
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CRÉDIT FONCIER
SEPARATION OF THE AUDIT AND RISKS COMMITTEE
Pursuant to the decree of November 3, 2014, which enacted CRD IV
into French law, on May 5, 2015, the Board of Directors voted to
dissociate the Risk and Audit Committee into two separate committees,
an Audit Committee and a separate Risk Committee, and to allocate
the competencies.
THE GROUP
1
❯ POSITIONING
❯ Organisational structure of Groupe BPCE at June 30, 2015
9 MILLION COOPERATIVE SHAREHOLDERS
100%
100% *
50%
50%
BPCE
CENTRAL INSTITUTION
100%
71%
29%
* Indirectly through Local Savings Companies.
FLOAT
CRÉDIT FONCIER
11
THE GROUP
❯ RATINGS
Standard & Poor’s
Crédit Foncier
Affiliated with BPCE
CieFF(1)
Locindus
Moody’s
Fitch Ratings
ST
LT
Outlook
ST
LT
Outlook
ST
LT
Outlook
A-2
A-
Developing
P-1
A2
Stable
F1
A
Stable
A-1
A
Negative
P-1
F1
A
Stable
A-1+
AAA
Stable
AA
Stable
A-
Developing
A-2
VMG(2)
AAA
P-1
A2
Stable
Aaa
Stable
A2
Stable
Aaa
Ratings updated when the update to the 2014 Registration document was filed.
(1) CieFF: Compagnie de Financement Foncier.
(2) VMG: Vauban Mobilisations Garanties.
■ MOODY’S
On March 17, 2015, Moody’s Investors Service confirmed its A2 longterm rating of BPCE and Crédit Foncier and raised their outlooks from
negative to stable. On July 8, 2015, it confirmed its Aaa long-term
rating for Compagnie de Financement Foncier.
■ FITCH RATINGS
On June 23, 2015, Fitch Ratings confirmed Crédit Foncier’s long-term
and short-term ratings with a stable outlook. On December 16, 2014,
it confirmed Compagnie de Financement Foncier’s AA rating.
After a resolution passed by VMG’s Supervisory Board and consultation
with VMG’s bondholders, a decision was taken to no longer seek a
Fitch rating for VMG, a wholly-owned subsidiary of Crédit Foncier.
■ STANDARD & POOR’S
On July 13, 2015, Standard & Poor’s confirmed its credit ratings for
BPCE and Crédit Foncier. On June 10, 2015, it also confirmed its rating
for Compagnie de Financement Foncier.
❯ SHARE CAPITAL
■ CHARACTERISTICS
At December 31, 2015, Crédit Foncier’s share capital was
€1,331,400,718.80, divided into 369,833,533 shares fully paid-up in
cash, each with a nominal value of €3.60. Crédit Foncier does not
own any of its own shares. The total number of voting rights is equal
to the number of shares. The bylaws do not contain any provisions
that are more restrictive than legal provisions governing changes to
the shareholding structure and the rights of different share classes
that could be created.
Crédit Foncier has not issued securities that can be converted into
capital, such as convertible bonds, bonds that can be exchanged or
12
CRÉDIT FONCIER
redeemed for equity instruments, warrants etc., or stock options for
management and staff.
■ OWNERSHIP STRUCTURE
Since August 5, 2010, the subsidiaries owned by the holding company
CE Participations, including Crédit Foncier, have been incorporated
into BPCE, which now owns 100% of the equity and voting rights of
the Company, with the exception of the shares held by members of
the Board of Directors.
THE GROUP
1
❯ CAPITAL TRANSACTIONS IN THE FIRST HALF OF 2015
■ RESTRUCTURING
■ TRANSACTIONS WITHIN GROUPE BPCE
SWISS PUBLIC FINANCE SOLUTIONS
FIDEPPP
In May 2015, Crédit Foncier sold its entire 40% ownership stake in
Swiss Public Finance Solutions to Banque Cantonale de Genève, which
now owns 100% of its share capital.
Crédit Foncier paid out:
■ DEVELOPING AND IMPROVING THE GROUP’S
EXISTING STRUCTURES
COFIMAB
❯ on February 24, 2015, €1,428,000.00 for the allocation of 1,428 B
shares, bringing the paid-up portion of Crédit Foncier’s total
commitment to 67.90%;
❯ on April 22, 2015, €658,000.00 for the allocation of 658 B shares,
bringing the paid-up portion of Crédit Foncier’s total commitment
to 70.25%.
On May 22, 2015, Crédit Foncier advanced €8.57m to finance the
purchase of a business/office building belonging to MURPEN.
CRÉDIT FONCIER
13
❯ ECONOMIC ENVIRONMENT
■ POSITIVE GLOBAL INDICATORS
■ ENCOURAGING PROSPECTS
The improvement in international economic conditions is expected to
continue in 2015, with GDP growth that is projected to reach 2.8%
in 2015, compared to 2.6% in 2014(4). This improvement is expected
to favour mature economies due to a confluence of positive factors,
especially the sharp drop in oil prices that began in 2014 and the
accommodative monetary policies of the major central banks.
Nevertheless, some factors may negatively impact the performance
of emerging countries, which will have to take steps such as dealing
with the decline in income due to commodities prices.
The global economy should continue to benefit from low energy prices
in 2015. Furthermore, the monetary policies of the central banks are
expected to remain accommodating, although the US Federal Reserve
could start gradually raising its key interest rates between now and the
end of the year if it believes that the economic recovery in the United
States is sufficiently robust.
As for developed economies, the recovery appears to be the strongest
in the United States. The economic slump in the first quarter appears
to be the result of a combination of unusual factors (harsh winter,
disrupted port operations and lower investment in the energy
sector), the effects of which are not expected to last through 2015.
Furthermore, other indicators confirm the strong performance of the US
economy, such as the dollar’s 15% appreciation between March 2014
and March 2015(4).
The first downside risk stems from greater exchange rates volatility,
especially against the dollar, primarily due to the combined impact of
the decline in oil prices and the recovery of the US economy.
Japan is expected to derive further benefit from the effects of reforms
initiated in 2014 and from the worldwide decline in energy prices.
Last, the economic recovery is also confirmed in eurozone, which
is enjoying the benefits of lower oil prices and favourable financial
conditions. The asset purchase programme launched by the ECB
in 2014 will continue into 2015 with the same goals: reviving private
investment and restoring inflation to a level in line with the ECB’s
objectives of price stability(5).
Meanwhile, France is also expected to fully benefit from low oil
prices and the ECB’s monetary policy stance as well as the gradual
implementation of economic reforms. As a result, the International
Monetary Fund(5) and the Banque de France are forecasting 1.2%
growth for 2015(6).
(4) World Bank, Global economic prospects, June 2015.
(5) International Monetary Fund, World Economic Outlook, April 2015.
(6) Banque de France, Macroeconomic Projections for France, June 2015.
14
CRÉDIT FONCIER
■ A FEW REMAINING DOWNSIDE RISKS
The second downside risk is still linked to the geopolitical context
and the various trouble spots, the most important of which is Greece,
whose potential exit from the eurozone could have a serious impact on
the markets. In July, under the agreement reached with its creditors,
the Greek government received an additional €7bn in funding to allow it
to meet its repayment obligations to the IMF and the European Central
Bank. This agreement also resulted in the introduction of economic
reforms that should reassure the financial markets.
The last of the downside risks is posed by China, which has had to
deal with an economic slowdown and severe turbulence on its financial
markets, forcing the authorities to repeatedly intervene.
1
❯ COMMERCIAL ACTIVITY
■ INDIVIDUAL CUSTOMERS
After a lacklustre 2014, the real estate environment looks more
favourable in 2015, although a few worrisome signs persist,
mainly in the new property segment.
Interest rates on real estate loans remained low throughout
the 1st half of the year. They set a new record low of 1.99% on
average in June, all maturities included(7).
Combined with price erosion, this decline in interest rates
revived demand for real estate loans in the 1st half of 2015. This
includes demand from new customers tempted to buy a home
and mortgage holders seeking to refinance their current loans.
Furthermore, government initiatives introduced on October 1, 2014,
especially those focused on loans for low-income families, have
encouraged first-time buyers.
In this more positive context, the volume of real estate loan
production for 2015 is expected to total €138bn compared to
€120bn in 2014(8).
FRENCH REAL ESTATE MARKETS
RESIDENTIAL REAL ESTATE MARKET
The new property segment
Since the 2015 Budget Act and the introduction of various stimulus
measures, the new property segment is gradually recovering.
In the real estate development sector, the builders’ efforts with
regard to selling prices have softened the impact of higher building
costs associated with new building codes. As a result, new property
transactions appear to be on the rise once more and developers are
back in the black. At the end of March, year-on-year sales stood at
89,616 units, up 0.7% relative to 2014. This upswing in sales confirms
the recovery that began in the autumn of 2014 and is reflected in a
4.3% decline in available-for-sale inventories over the first quarter of
2015(9).
However, this improvement still has not been carried over into
construction: the numbers of issued building permits and housing
starts are still declining. Although both of these indicators remain in the
red, the situation has somewhat improved over the past twelve months.
At the end of May 2015, the total number of building permits issued
over 12 months stands at 362,000, i.e. a drop of 6.1% relative to the
end of May, 2014. Similarly, the number of housing starts fell by 3.4%
to 346,800 units(10).
Meanwhile, the prices are stable: in the first quarter of 2015, apartments
were selling at €3,845 per square meter compared to €3,858 in the first
quarter of 2014. The houses prices fell by 1.6% in one year(9).
Existing property
As for the existing property market, a recovery is long overdue. At
the end of May 2015, the number of transactions completed over
a rolling 12-month period was estimated at 711,000, down by 4%
relative to May 2014. However, over the last three months a recovery
has been noticeable, reflected in a 3% increase in transactions relative
to January 2015(11).
There has also been a recovery in existing property prices, which rose
in the first quarter of 2015, increasing by 0.3% relative to the previous
quarter(12).
REAL ESTATE LENDING MARKET IN FRANCE
2015 got off to a dynamic start as the real estate markets were
bolstered by the improvement in the macroeconomic picture and the
ongoing decline in prices. Continuing low interest rates fuelled keener
competition among the different market players, as well as increasing
the number of loans being renegotiated.
In line with the ongoing drop in 10-year French OAT yields, rates
reached all-time lows during the year. The ideal financing conditions
attracted a few segments of the population who had previously left the
homebuyers’ market, particularly young couples.
In May, however, tension arose on the bond market, caused primarily
by concerns over Greece, and the benchmark 10-year OAT rate was
pushed higher.
As a result, a slight uptrend in real estate loan rates was seen in late
May 2015. These rates are expected to keep increasing gradually until
the end of the year.
CRÉDIT FONCIER’S ACTIVITY IN THE FIRST HALF
OF 2015
ORGANISATION
The deployment of the revamped point of sale design, scheduled to
take place over a five-year period, is continuing. In the 1st half of the
year, 11 more points of sale were upgraded, bringing the total number
of refurbished points of sale to around 60 since the launch of the
programme. Twenty more points of sale are scheduled to be upgraded
in 2015.
By allowing the fast transmission of contacts via e-mail and text, the
“Foncier IMMO” web app, which was designed for the bank’s partners,
demonstrates the importance Crédit Foncier assigns to developing
new technologies that make the customer experience simpler and
smoother. The Foncier IMMO app update made changes and added
features demanded by users. This resulted in an unquestionable
increase in use: on June 30, 2015, 1,700 partners were regularly using
Foncier IMMO, with 300 to 400 logins per week.
(7) Observatoire Crédit Logement/CSA – June 2015.
(8) Crédit Foncier, The housing market in mid-2015.
(9) French Ministry of Ecology, Sustainable Development and Energy, Observation and Statistics department (Service de l’observation et des statistiques), No. 642 –
May 2015.
(10) Crédit Foncier Immobilier SOeS, Sit@del2, June 2015.
(11) Notaires de France, Note de Conjoncture, N° 28 – July 2015.
(12) Crédit Foncier Immobilier/Notaires IDF/Notaires de France – July 2015.
CRÉDIT FONCIER
15
PRODUCT RANGE
Loan production breakdown in the first half of 2015:
Crédit Foncier and GrDF (Gaz réseau Distribution France) have
partnered to launch the DUO GrDF loan for new homes built with a
natural gas heating system.
❯ By distribution channel
DUO GrDF is a fixed-rate €10,000 loan at an attractive rate thanks to
funding from GrDF. It is available only for the construction of singlefamily homes meeting the criteria imposed by Standard RT 2012. They
must be intended for use as a primary residence and be located in
continental France in areas served by a natural gas distribution network.
1%
3%
Foncier Direct online
Belgium
4%
2%
Foncier Patrimoine
Crédit Foncier Travaux
19%
COMMUNICATION
Exclusive agents
Crédit Foncier launched a new three-week television campaign in
January to support the momentum of loan production in 2015.
The purpose of the campaign was to strongly reaffirm the bank’s
specialist positioning as a provider of property financing and distinguish
it from its rivals in the real estate market. It did so by communicating
widely to the general public about how to make their property
ownership dreams come true.
A second advertising campaign took place from March 30 to May 4
on television and over the Internet, accompanied by a new advertising
poster rolled out across the points of sale network.
Crédit Foncier also improved its outreach to partners through the
creation of a monthly newsletter. Published in the form of a short
summary, this targeted communication is primarily based on a new
socio-behavioural survey of Crédit Foncier customers that identified
17 home purchaser profiles over three market segments (first-time
buyers, buyers with a property to sell and investors).
71%
Points of sale
❯ By market
31%
New property ownership
12%
Rental investment - new construction
2%
Renovation
17%
INDIVIDUAL CUSTOMERS: LOAN PRODUCTION
On June 30, 2015, the volume of loan production was well above the
volume at June 30, 2014. Total new loans distributed were up 30%
and amounted to €3,954m on June 30, 2015 compared to €3,048m
on June 30, 2014.
Despite keener competition, Crédit Foncier remains in the lead for the
low-income segment, with 40% market share in loans to low-income
families (PAS). Total new PAS loans distributed amounted to €1,430m,
i.e. an increase of 22% relative to the same period in 2014(13).
Interest-free loans were up by 14% to €83m, i.e. 25% market share in
the first quarter of 2015(13).
As for synergies with banks in the Groupe BPCE network, loan
production continues to grow. The volume generated in the first half
of the year was more than two times higher than that for the 1st half of
2014, with cumulative new loans distributed amounting to €163m on
June 30, 2015, compared to €70m on June 30, 2014.
Misc. Incl. Belgium
2%
Rental investment existing property
36%
Existing property ownership
OUTLOOK FOR 2015
THE REAL ESTATE MARKET
2015 is expected to be a dynamic year, with brisk competition and
sustained commercial pressure on interest rates. Consumer sentiment
is at its highest since January 2010(14). But economic conditions and
changes in the purchasing power of households are the warning signs
undermining the recovery and preventing the market from fully taking
off.
The appreciation of 10-year OAT bonds marks the end of 18 months
of virtually uninterrupted decline. The interest rate on real estate loans
could rise over the next few months but no sharp increase is expected
thanks to the European Central Bank’s asset purchase programme.
Borrowers will not feel the effects of higher interest rates immediately,
as they should rise only gradually.
(13) Source SGFGAS – Data at mid-June 2015 for PAS and data of first quarter 2015 for PTZ.
(14) INSEE, Monthly consumer confidence survey – April 28, 2015: The indicator has climbed to 94 and is improving for the third consecutive month.
16
CRÉDIT FONCIER
In light of the low rates, most market participants have experienced a
sharp increase in early repayments and requests for re-financing over
the 1st half of 2015. This trend is expected to continue throughout
the remainder of 2015. Crédit Foncier is being affected by this trend,
especially for older generations of loans granted at higher interest rates.
These conditions could restore some movement to the market. More
housing starts are hoped for by the end of the year. The effects of
support measures for housing under the Pinel Act should prevent new
property sales from sliding as they did in 2014, and provide support for
the mild recovery that began in the 1st quarter of 2015.
There are signs of an improvement in the existing market as well.
1
Thanks to the synergies with the BPCE’s regional banks that began in
2012, cooperation should be maximised this year, supported by the
structure set up jointly with the Groupe BPCE branches.
SUMMARY
ACTIVITY WITH INDIVIDUALS
(in €m)
Loan production*
*
First-half 2015
First-half 2014
3,994
3,083
Including Banco Primus : €34m as of June 30, 2014 and €40m as of
June 30,2015.
CRÉDIT FONCIER
Between now and the end of the year, Crédit Foncier plans to seize the
opportunities emerging from the economic environment to consolidate
its loan production for individuals.
Accordingly, Crédit Foncier has placed the emphasis on new ways of
communicating with its clients and business partners, primarily digital
and real time communication, to increase reliability and speed in order
to maintain its high quality of service and the current turnaround time
for loan applications. As the top specialised institution on the market,
the bank must deliver solutions reflecting its expertise and setting it
apart from its rivals.
06/30/2015
12/31/2014
Outstandings
at end of period
50,795
50,996
Direct loans to individuals
50,629
50,794
166
202
(in €m)
Residential mortgagebacked securities in
Europe (outstanding)
CRÉDIT FONCIER
17
■ REAL ESTATE INVESTORS AND PUBLIC SECTOR ENTITIES
In the first six months of 2015, the investment policies of economic
stakeholders differed and were strongly correlated to the type of
stakeholder: public or private.
The property development market has seen a slight rebound
but it remains weak due to the difficulties encountered with
launching new programmes. It is mainly being buoyed by the rental
investment market (Pinel Act): sales are up by 59.4% compared to
the first quarter of 2014.
The commercial real estate investment market is suffering due to
the lack of high-quality supply. After a very dynamic first quarter,
with €4.6bn in committed loans, activity in the second quarter
stalled despite ample liquidity on the market and a real estate
risk premium that is still competitive. As to the leasing market, it
recovered in the second quarter without, however, making up for
the weakness of the first quarter. As a result, the market is down
INVESTMENTS IN PUBLIC SECTOR ENTITIES
SOCIAL HOUSING
The market in the first half of 2015
Housing production is an ongoing concern for public authorities. The
long-term objective remains the construction of 150,000 social housing
units per year. In 2014 and early 2015, public authorities took some
measures to promote the construction of new social housing units and
the renovation of the existing supply.
These measures and resources include:
❯ a 25-year extension of the property tax exemption on constructed
property (TFBF)(15);
❯ the maintenance of brick-and-mortar subsidies at a level appropriate
by 22% compared to the same period last year. The gulf between
the investment market and the rental market continues to widen.
The project financing market is going through a transitional phase
owing to legislative developments (European directives and the
Ordinance on Public Procurement). Today’s market is concentrated
on the projects of local authorities. Large government projects
(high-speed railway lines, etc.), which once accounted for a
significant share of the volume have now disappeared.
This year, during which the 2015 Paris Climate Conference (COP
21) is being held, players in the social housing market are getting
ready to play a full role in the energy transition.
For the second consecutive year, investments by local authorities
are expected to fall owing to the combined effects of reduced
government subsidies and lower gross savings capacities.
Crédit Foncier’s activity in the first half of 2015
Alongside the entities of Groupe BPCE, Crédit Foncier supports
actors in the social housing segment. It intervenes directly by financing
programmes promoting low-cost home ownership (PSLA(16)), intensive
rehabilitation projects and portfolio buy-back transactions. Crédit
Foncier continues to intervene in social housing rental programmes
as a service provider to Groupe BPCE. The expertise of Crédit Foncier’s
teams enables it to help its customers with managing their outstanding
debt by providing them with solutions to take advantage of lower
interest rates.
LOAN PRODUCTION IN THE FIRST HALF OF 2015
❯ by customer
11%
to the needs of production: €400m for 2015(15);
EPLs*
❯ impetus for a large-scale social housing renovation plan over a
three-year period by extending the agreement pooling landlord
resources for homebuilders and renovators until 2018 (agreement
signed on August 22, 2014 between the State and the Union sociale
pour l’habitat). Under this agreement, all social housing landlords
will be required to contribute to a fund that will later redistribute
the funds in the form of premiums to homebuilder and renovator
associations each time a housing unit meeting specific criteria is
built or renovated. In all, €750m will be used over three years(15);
4%
Local authorities
85%
Social housing landlords
❯ since January 1, 2015, the stiffer penalties under the Urban
Solidarity and Renewal Act (SRU) are being enforced and prefects
are authorised to issue building permits in communities that fail to
honour their obligations;
*EPL (Entreprises Publiques Locales): Public local companies
❯ mobilisation of institutional investors to finance the construction of
middle-income housing (construction target of 25,000 units over
the next five years);
❯ maintaining measures supporting the construction of “very low-cost
social housing units”.
(15) Ministry of Housing, Agenda 2015-2018 between the French State and the Union for Social Housing (Union sociale pour l’habitat).
(16) Lease-to-own loans.
18
CRÉDIT FONCIER
FRENCH LOCAL AUTHORITIES
PROJECT AND INFRASTRUCTURE FINANCING
2015 is another election year (departments and regions), and, of
particular note, they are the first elections following the French
territorial reforms announced in June. Above all, 2015 is a year of a
further decline in transfers from the State to local authorities (down
by €3.67bn). This drop was only partially offset by higher revenue
thanks to the use of taxes, especially by local governments. This
combination of factors has caused a reduction in gross savings by
local governments for the fourth consecutive year (down 5.4%)(17). To
create some leeway, local governments must cut their spending. The
lack of elasticity in the structure of public accounts means that the
investment line item will now become an adjustment variable. Overall,
investments by local authorities are expected to decline by 7.3% in
2015 (a decrease of €3.9bn) and, for the first time since 2006, will slip
below the threshold of €50bn(17).
The project and infrastructure financing market can be divided into
two segments:
This reduction in investment will lead to a drop in the demand for loans.
The volume of new loans, excluding re-financing, is expected to fall
further to €19.7bn in 2015 (-2.1%)(17). Whether to take out new loans
or to refinance existing ones, local governments have a favourable
economic environment in which to act: ample liquidity, multiple lenders
and low interest rates.
Local governments are still seeking new ways to create some financial
leeway. In this respect, managing the assets of local authorities is
becoming more pressing since the start of 2015. Some local authorities
have embarked on a programme to centralise the management of
their assets.
In this environment of fewer public tenders, Crédit Foncier is putting
all its expertise to work to help Groupe BPCE meet the needs of its
customers. New loan production in the first half of 2015 reflects the
changing demands and investment policies at the various levels of
government. As a result, the percentage of departments seeking new
loans fell from 33.0% in the first half of 2014 to 28.8% in the 1st half
of 2015. Meanwhile, the percentage of new loans made to hospitals
is marginal at best.
LOAN PRODUCTION
❯ by type of customer
1%
2%
Hospitals
Other
40%
EPCI*
28%
Municipalities
1
❯ the financing of projects sponsored or backed by public authorities;
❯ the financing of wholly private projects.
For projects backed by public authorities, which means that the
financial burden is ultimately borne by a local authority, 2015 was a
year of transition.
The market is currently undergoing substantial change, not only at the
legislative level, but at the project category level.
The enactment of three European directives into French law (the
directive on Public Procurement in the Water, Energy and Transport
Sectors, the directive on Public Procurement and the directive on the
Award of Concession Contracts) as well as the Ordinance on Public
Procurement are going to change the legislative framework for PublicPrivate Partnership agreements. These contracts will be either be
refocused on the most legally and technically complex transactions, or
arranged with project companies with which the local authorities have
partnered. At the same time, the public service delegation in the form
of a concession has its supporters, notably for distribution networks:
water, electricity, heating/cooling and high speed Internet.
With respect to project category, projects sponsored by the State have
virtually disappeared, which has produced a consequent decline in
market volume since each year one or two projects such as high-speed
railway lines accounted for an important part of the volume. As for
projects sponsored by local authorities and financed by Crédit Foncier,
the decline has been held at about 30% compared to the “good years”,
namely 2008-2010.
In connection with the energy transition, new types of private projects
are emerging.
Crédit Foncier’s activity in the first half of 2015 reflects the ongoing
transition as demand for financing has increasingly less to do with
traditional Public-Private Partnership arrangements and more to do
with hybrid arrangements, such as semi-public companies possessing
a single corporate purpose (SEMOP)(18) or Public Service Concession
(DSP) agreements(19).
Moreover, ensuing elections and the implementation of territorial
reforms have contributed to delays in the completion of some projects.
The expertise of Crédit Foncier’s teams is helping it to adapt to
changing demands related to both legal arrangements and the types
of projects. Consequently, Crédit Foncier has agreed to finance projects
under arrangements involving a emphyteutic lease (BEA)(20), sponsored
by an SPV(21) or a SEMOP.
29%
Department
*EPCI (Établissement Public de Coopération Intercommunale): Inter-municipal cooperative bodies
(17) Sectoral Report: Local Finances, 2015 Trends – La Banque Postale – May 2015.
(18) SEMOP (Société d’économie mixte à opération unique): Single transaction semi-public company.
(19) DSP (Délégation de service public): Public service delegation contract.
(20) BEA (Bail emphytéotique administratif): Administrative perpetual lease.
(21) SPV: Special purpose vehicle.
CRÉDIT FONCIER
19
REAL ESTATE INVESTORS AND PROFESSIONALS
Commercial real estate investment market in the first half of
2015
After getting off to a good start in the first quarter with commitments
amounting to €4.6bn, the market stalled in the second quarter. Overall,
nearly €7bn was invested in the first quarter, translating into a 33% drop
compared to the same period last year(22).
The main features of the investment market in the first half of the year
were:
❯ 77% of all investments were made in Ile-de-France(23);
❯ 66% in office space, 21% in retail space and 5% in logistical
facilities(23);
❯ in Ile-de-France, a decline in transactions of more than €100m and
the levelling off of the number of transactions in the range of €50m
to €100m(22);
❯ 57% of all investments were made by French investors(22);
❯ continued domination by stakeholders with ample equity (insurance
companies and mutual insurers, sovereign funds, SCPIs, and OPCIs
for retail investors).
Considering the volumes currently in the process of negotiation, the
2nd half of the year is expected to be particularly active; for Ile-deFrance, volume is projected to reach €15bn(22).
It is also clear that, in order to address the scarcity of high-quality
supply, unsecured transactions are taking place. To date, 15
transactions are in progress, all of which were initiated by institutional
investors(22).
The office space leasing market is still struggling. The first quarter
was troubled and the recovery in sales during the second quarter was
unable to offset the lag. There was a 22% decline year-on-year. As in
2014, the large-scale transactions segment (for properties >5,000 m2)
was the hardest hit. Transactions on medium-sized properties (1,000 –
5,000 m2) also fell (down 7%). Only small properties performed well
(up 10%). This segment represents 40% of the space sold in the first
six months of the year(22). In terms of location, one out of every two
square metres sold was in Paris. Relocation to central districts or
established neighbourhoods was facilitated by the drop in prices.
Commercial property, shopping centres, street level shops and retail
parks continued to attract investors, most of them French. The first
half of the year was marked by two landmark transactions: the sale of
50% of Qwartz (Villeneuve-La-Garenne) and the sale of Nicetoile. Pentup demand associated with the lack of high quality supply negatively
impacted rates of return, which are less than 4% for core properties(24).
(22) Source: JLL/Immostat.
(23) Source: CFI July 2015.
(24) BNP Paribas Real Estate: Let’s talk retail – June 2015.
20
CRÉDIT FONCIER
The logistical facilities market is following a trend somewhat opposite
to that of office space, with a decline in investment of 23% over one
year (nearly €500m invested) and a rise of 9% in leased square metres.
The market was driven by grey market transactions put together on
behalf of mass market retailers.
The financing market is being impacted by the characteristics of the
investment market: fewer transactions, the dominant position of equityrich stakeholders and high prices for core property. Today, an important
share of all transactions is concluded without recourse to debt. This
situation is increasing the competition between lenders to finance new
transactions.
Simultaneously, exceedingly low interest rates are prompting investors
to restructure their long-term debt and lengthen the term of their loans.
Crédit Foncier’s activity in the first half of 2015 reflects changes in
the market while being negatively impacted by the dual effects of the
decline in recourse to bank loans by the most dynamic stakeholders
and the lower number of transactions. As a result, few financing deals
were signed but the number of transactions in the pipeline points to a
substantial increase in new loan production in the third quarter.
Crédit Foncier’s extensive experience on the commercial real estate
investment market helps it support its customers, especially with their
debt management strategy. Through its Locindus subsidiary, Crédit
Foncier has been able offer financing solutions in the form of mortgages
or long-term lease financing.
SOCFIM is a Crédit Foncier subsidiary specialised in providing shortterm financing to real estate professionals. In 2015, SOCFIM benefited
when the Pinel Act entered into effect, reviving sales. However, market
operators are struggling to launch new programmes due to delays in
obtaining government authorisations.
The total volume of transactions recorded over the first six months
of 2015 stands at €505m. After syndication operations, SOCFIM’s
cumulative production stood at €349m on June 30, 2015.
Outlook for 2015
Commercial real estate investment is expected to approach the volume
achieved in 2014, namely €22bn. In fact, volume will continue to be
fuelled by ample liquidity, an attractive real estate premium and the
stability of the French market. Institutional investors, both French and
foreign, will most likely remain the most active stakeholders.
As for the rental market, the slowdown early in the year will be difficult
to offset and the volume of rented space in Ile-de-France should
amount to approximately 1.9 million m2, down relative to 2014.
SUMMARY
First-half 2015
First-half 2014
Loan production
806
1,257
Public sector
380
411
French Local Authorities
203
301
Social housing
177
110
(in €m)
o/w:
Private sector*
*
06/30/2015
12/31/2014
Outstanding
at end of period
49,677
50,590
Public sector
41,774
42,485
18,442
18,833
8,142
8,194
15,190
15,458
7,903
8,105
(in €m)
Business with real estate investors and public sector entities
o/w:
French Local Authorities
Social housing
426
Including SOCFIM: €487m as of June 30, 2014 and €349m as of
June 30, 2015.
846
1
International public
and sovereign sector*
Private sector
(France and international)
*
Of which sovereign France.
CRÉDIT FONCIER
21
■ REAL ESTATE SERVICES COMPANIES
In March 2015, Crédit Foncier’s real estate subsidiary combined
all of its brands under one banner, Crédit Foncier Immobilier.
This simplification made it easier for both its external customers
and internal Groupe BPCE customers to understand its range of
products. It also demonstrated that Crédit Foncier Immobilier is
one of the leaders in real estate consulting in France. Meanwhile,
Crédit Foncier Immobilier’s business activity was satisfactory,
with revenues of €20.5m before retrocessions in the 1st half of
2015, up by 21% compared to the same period in 2014.
CONSULTING AND VALUATION
VALUATION
With revenues of €8.30m net of retrocessions, Crédit Foncier
Immobilier – Expertise saw strong activity in the 1st half, up by 18%
compared to the 1st half of 2014.
Work carried out on behalf of Crédit Foncier mainly involved valuation
services related to lending to individuals. Externally, Valuation ensured
its relationships with major customers would last over the long term.
It won major bids for multi-year valuation of OPCI, SPCI, insurers and
investment companies.
BROKERAGE
INVESTMENT
The real estate market in Ile-de-France finished the 1st half at €5.4bn,
down by 38% compared to 2014. This decline in volumes will likely be
offset in the 2nd half due to major transactions of more than €600m that
will sustain activity. Nonetheless, the market is currently experiencing
a shortage of mid-sized deals (between €20m and €50m), a segment
on which Crédit Foncier Immobilier is positioned. The Investment
department (Capital Markets) carried out 9 transactions of €1.20m net
of retrocessions and projected revenues amounted to €1.96m given
upcoming deals, up by 67% compared to projected revenues for the
1st half of 2014.
OFFICE SPACE
In a persistently sluggish market where demand for office space in Ilede-France dropped by 22% in the 1st half of 2015 compared to 2014,
and where the available supply exceeded the symbolic threshold of
4 million m2 in available space (equivalent to more than two years’
worth of sales activity), the Office Leasing department was in line with
the target set at the start of the year, with revenues of €220,000 net of
retrocessions at the end of June and projected revenues of €281,000,
up by 7% compared to June 2014.
RESIDENTIAL
ESTIMATES (SEREXIM)
The specialist in residential appraisals changed its trade name
in March 2015, now operating under the name Crédit Foncier
Immobilier – Estimation. Beating its production record in March with
3,021 assignments completed, it achieved revenues of €4.67m net
of retrocessions in the 1st half. Crédit Foncier Immobilier – Estimation
benefited from the context of very low banking interest rates, which
spurred the market for mortgage refinancing and debt restructuring,
bolstering its development. Production on behalf of Crédit Foncier
remained strong.
CONSULTING AND AUDIT
The Consulting & Audit department continued to develop with revenues
of €1.27m and projected revenues(25) of €1.79m, up by 16% compared
to the same period in 2014. Project management assistance represents
a major share of revenues, but the number of fixed asset repositioning
and even real estate master planning assignments is increasing rapidly.
At the same time, the department made proposals on 85 assignments
over the period, which suggests a high level of future activity.
RESEARCH
The activities of Crédit Foncier Immobilier’s Research department
generated revenues of €402,000, net of retrocessions. The department
is currently rolling out a new service providing residential property
market prices for institutional investors, banks and local authorities.
New real estate activity saw a sustained pace of reservations in the
1st half (254 reservations made), with a 14% increase compared to
June 2014. At the same time, the rollout of this range of products in
Groupe BPCE is beginning to bear fruit, accounting for 14% of overall
reservations recorded in the 1st half of 2015.
Meanwhile, the existing property business was characterised by
promesses de vente being signed at a much faster pace than in 2014,
with 181 deals signed in the first six months of 2015. The market is
more dynamic in a context of continued low interest rates that are
undeniably encouraging this recovery. Note that the successful launch
of the Avenue de Messine in the 8th arrondissement of Paris, with
27% of units rented since it was launched in January 2015. For the
both, new homes and existing property, the challenge is to replenish
inventory, particularly of smaller units, which are in high demand.
For new builds, revenues net of retrocessions were €970,000 in the
1st half of the year and €2.79m when taking signed promesses de
vente into account. This is up by 9% compared to the 1st half of 2014.
For existing property, this amounted to €965,000 (€2.13m projected)
and, for Millesime, Crédit Foncier Immobilier’s high-end branch, it
amounted to €362,000 (€453,000 projected), bringing revenues net
of retrocessions for the entire department to €2.30m for the 1st half
of 2015.
PROPERTY MANAGEMENT
At the end of June, the Leasing department leased 247 properties,
or 40 leases per month, bringing in €244,000 in revenues net of
retrocessions. The first open house for the Caisse des dépôts project
located on Boulevard MacDonald in the 19th arrondissement of Paris
(210 housing units leased) should show results in terms of fees by
July. Once you add revenue from the lease management activity to the
above items, the department generated €372,000 in revenues net of
retrocessions in the 1st half.
(25) Projected Revenues include orders, reservations and signed promesses de ventes (agreements to sell).
22
CRÉDIT FONCIER
BANCO PRIMUS ACTIVITY
Loans outstanding at June 30, 2015 break down as follows:
Banco Primus distributes loans to individual customers in Portugal for
the purchase of used cars and has managed its portfolios in run-off
since the end of 2011 (mortgage loans in Portugal and Spain, car
loans in Hungary).
❯ Active portfolio:
Auto loan production in the first half of 2015 was €39.6m, up by 13%
compared to the first half of 2014. Banco Primus’ share of the secondhand vehicle financing market in Portugal was 9.2% for the half-year.
1
€283m
❯ Run-off portfolio: €303m
❯ Total:
€586m
The active portfolio represents 48.3% of the total portfolio, versus
45.8% at June 30, 2014.
The company had a Core Tier-1 ratio of 12.0% at June 30, 2015.
Crédit Foncier owns 100% of Banco Primus equity and provides all
of its refinancing.
❯ FINANCIAL OPERATIONS
■ MARKET CONTEXT
In the first six months of the year, benchmark euro-denominated
covered bond issuances reached €61bn, down by 11.6% compared
to the same period in 2014(26). However, this level of supply remains in
line with the €116.5bn projected for 2015 as a whole(27).
The low supply is accentuated by the ECB’s continued intervention
through its asset purchasing programme, the Covered Bond Purchase
Programme (CBPP3), which began in October 2014 and is continuing
in 2015. The overall amount of purchases under this programme at
the end of June 2015 amounted to €95.0bn, of which €65bn was
purchased in 2015 and 80% of which was purchased on the secondary
market due to the limited supply on the primary market(28).
■ REVIEW OF TRANSACTIONS
In this context, Compagnie de Financement Foncier raised €4.0bn in
new funding, excluding non-recurring transactions, over the first half
of 2015. This volume includes three benchmark issuances: a €1.0bn
10-year issuance carried out in January, a €1.0bn 5-year issuance
carried out in February and a €1.5bn 3-year issuance made in June. In
addition to this €4.0bn in funds raised, there were €0.6bn in issuances
completed under bond buy-backs and €0.8bn in issuances subscribed
for by Vauban Mobilisations Garanties under intra-group investment
transactions. All transactions were carried out with favourable interest
rates and subscription volumes, once again demonstrating Compagnie
de Financement Foncier’s ability to tailor its offer to investor demand.
The volume and conditions of issuances completed at June 30, 2015
are in line with the groupe Crédit Foncier financing plan.
❯ 2015 breakdown by geographic area*
9%
2%
Other
Benelux
2%
7%
Switzerland
Asia
6%
10%
UK
Scandinavia
4%
€4.0bn
Japan
34%
26%
France
Germany
* Excluding non-recurring transactions (buy-back and intra-group issuances)
❯ 2015 breakdown by investor type*
4%
2%
Insurance companies
2%
Other
Pension funds
19%
Asset managers
48%
Central banks
€4.0bn
25%
Banks
* Excluding non-recurring transactions (buy-back and intra-group issuances)
(26) Natixis Research, Covered Bond Weekly, June 2015.
(27) Natixis Research, Covered Bond Outlook, November 2014.
(28) European Central Bank data.
CRÉDIT FONCIER
23
■ INTERNATIONAL PORTFOLIO IN RUN-OFF
24
In May 2015, the Board of Directors of Crédit Foncier decided to
accelerate its programme to dispose of its international positions.
Financement Foncier, was the reason for a €142m provision recorded
on the Group accounts at March 31, 2015. Following the disposal,
this provision was completely reversed and a loss of €103.7m was
recorded.
In this context, the disposal of international positions by groupe Crédit
Foncier amounted to €1,300.5m in the 1st half of the year.
The disposals of other international positions over the half-year
(€1,040.5m), for their part, led to a recorded loss of €15.7m.
This amount includes the June sale of its entire stake in Heta Asset
Resolution AG. This position, which represented a nominal amount
of €260m on the balance sheet of its subsidiary Compagnie de
As of June 30, 2015, this portfolio no longer includes any exposure to
Austria, Germany, Cyprus or Slovakia.
CRÉDIT FONCIER
2
RISK MANAGEMENT
INTRODUCTION – GENERAL RISKS
OF GROUPE CRÉDIT FONCIER
2.8.1
2.8.3
2.8.4
2.8.5
CDOs and exposures to monoline insurers
and other credit enhancers
Exposures to Commercial Mortgage-Backed
Securities (CMBS)
Other subprime and Alt-A exposures (RMBS, loans, etc.)
Special Purpose Entities (SPEs)
Leveraged buyouts (LBOs)
2.9
MARKET RISKS
48
2.10
ALM RISKS
49
26
2.8.2
2.1
GENERAL
ORGANISATION & METHODOLOGY
26
2.2
RISK FACTORS
26
2.3
PILLAR III
26
2.4
CAPITAL AND CAPITAL ADEQUACY
RATIOS
2.4.1
2.4.2
2.4.3
2.4.4
Capital management
Composition of prudential capital
Capital requirements
Solvency ratios
2.5
CREDIT AND COUNTERPARTY RISK
EXPOSURES
27
27
27
28
30
2.10.1
2.10.2
2.10.3
2.10.4
2.10.5
2.11
2.5.1
2.5.2
Analysis of commitments
Commitments by customer portfolio
31
31
36
2.6
ANALYSIS OF DELINQUENCIES
2.6.1
2.6.2
Delinquencies
Cost of risk – Individuals and Corporates
40
2.7
RISK MITIGATION TECHNIQUES
2.7.1
2.7.2
2.7.3
2.7.4
Collateral valuation and management
Main providers of credit protection
Effect of credit risk mitigation techniques
Off-balance sheet netting
2.8
RECOMMENDATIONS
OF THE FINANCIAL STABILITY FORUM 43
40
40
2.11.1
2.11.2
2.11.3
2.11.4
2.11.5
2.11.6
2.11.7
2.11.8
41
41
41
42
42
Organisation and monitoring of ALM risks
Methodology for assessing structural risks
Liquidity risk monitoring
Interest rate risk monitoring
Foreign exchange risk monitoring
OPERATING RISKS
43
45
46
46
46
49
49
50
51
52
53
General framework
Governance
Management environment
Organisation of the Contingency and Business
Continuity Plan (CBCP)
IT risks
Legal risks
Insurance
Other risks: caisse de retraite (Pension Fund) of Crédit
Foncier for employees who joined the Group before
March 1, 2000
53
53
53
53
54
54
55
55
2.12
BROKERAGE RISK
56
2.13
NON-COMPLIANCE RISK
56
CRÉDIT FONCIER
25
RISK MANAGEMENT
INTRODUCTION – GENERAL RISKS OF GROUPE CRÉDIT FONCIER
INTRODUCTION – GENERAL RISKS
OF GROUPE CRÉDIT FONCIER
Groupe Crédit Foncier is potentially exposed to three types of risk:
❯ credit and counterparty risks: section 2.5;
❯ structural risks (liquidity risk, interest rate risk and foreign exchange
risk): section 2.10;
❯ operating risks: section 2.11.
The other risks to which groupe Crédit Foncier’s business lines are
exposed are:
❯ brokerage risk: section 2.12;
❯ settlement and settlement-delivery risks: section 2.9;
❯ non-compliance risk: section 2.13.
In contrast, groupe Crédit Foncier does not conduct any proprietary
trading and therefore does not directly assume any market risk on its
ordinary transactions other than ALM: section 2. 9 “Market risk”.
2.1 GENERAL
ORGANISATION & METHODOLOGY
The organisation of credit and counterparty risk management and the methods used to measure risk are described in detail in the 2014 Registration
document (p. 101 to 107).
2.2 RISK FACTORS
There has not been a material change in the risk factors of concern to groupe Crédit Foncier since the situation described in the 2014 Registration
document (p. 108 to 111).
2.3 PILLAR III
Regulatory supervision of capital is described in detail in the 2014 Registration document (p. 112).
26
CRÉDIT FONCIER
RISK MANAGEMENT
2.4 CAPITAL AND CAPITAL ADEQUACY RATIOS
2
2.4 CAPITAL AND CAPITAL ADEQUACY
RATIOS
❯ 2.4.1 CAPITAL MANAGEMENT
Capital management is described in detail in the 2014 Registration document (p. 113).
❯ 2.4.2 COMPOSITION OF PRUDENTIAL CAPITAL
Prudential capital is determined in accordance with the European CRR
Regulation, which is applicable as of January 1, 2014, in view of the
national options specified by the French Prudential Supervisory and
Resolution Authority (ACPR – Autorité de contrôle prudentiel et de
résolution). It is broken down into three categories: Common Equity
Tier One, Additional Tier One and Tier Two capital.
06/30/2015
12/31/2014
TOTAL PRUDENTIAL CAPITAL
3,282
3,607
Tier-1 capital
3,228
3,363
Common Equity Tier One (CET1)
3,032
3,139
Tier-1 capital instruments
1,732
1,732
Retained earnings
1,500
1,507
-324
-346
58
79
(in €m)
Unrealised or deferred capital gains and losses
Temporary adjustments related to minority interests
Temporary adjustments related to prudential filters
-35
-41
Goodwill receivables
-43
-43
Other intangible assets
-6
-6
Deferred tax assets dependent on future profits and resulting from temporary differences
-1
-1
Deferred tax assets dependent on future profits and resulting from temporary differences (above 10%
threshold)
-758
-743
Other temporary adjustments to Common Equity Tier One capital
907
1,001
Additional Tier One capital (AT1)
196
224
Tier-2 capital (T2)
54
244
Tier-2 capital instruments (T2)
48
76
Collective provisions for credit risk
0
155
Other temporary adjustments to Tier-2 capital
6
13
CRÉDIT FONCIER
27
RISK MANAGEMENT
❯ 2.4.3 CAPITAL REQUIREMENTS
Groupe Crédit Foncier calculates regulatory capital requirements
for both credit risk and operating risk according to the standardised
method under current regulations. Groupe Crédit Foncier is not subject
to market risk disclosure rules.
06/30/2015
(in €m)
Capital
requirement
RWA
Capital
requirement
RWA
2,590
32,376
2,609
32,617
74
922
75
936
Requirements for credit risk (A)
Public administrations
Institutions
43
542
44
553
Regional administrations
458
5,731
463
5,793
Corporates
360
4,495
373
4,667
Retail customers
144
1,802
141
1,760
1,257
15,711
1,286
16,072
173
2,157
165
2,063
23
286
24
300
3
34
0
0
Securitisations
20
244
6
78
Other assets
36
451
32
394
0
0
0
0
Total requirements for operating risk (C)
82
1,023
82
1,023
Exposure related to LCH default fund (D)
2
28
0
0
Mortgage-backed exposures
Exposures at default
Equities
High-risk exposures
Market risk-weighted exposures (B)
Credit value adjustment (E)
CAPITAL REQUIREMENTS (A)+(B)+(C)+(D)+(E)
Under COREP, calculated in accordance with CRR since January 1,
2014, by convention, results are presented by final exposure category
(after substitution of the final counterparty’s exposure category, for
exposures covered by a personal guarantee).
At June 30, 2015, 45.5% of these capital requirements were linked to
mortgage-backed exposures and 34.8% represented requirements on
corporates, retail customers and regional administrations.
28
12/31/2014
CRÉDIT FONCIER
90
1,121
97
1,213
2,764
34,548
2,788
34,854
The average credit risk weighting (excluding the “other assets” class)
is 26.5%, reflecting the low level of risk of groupe Crédit Foncier’s
portfolio of loans, with most loans backed by mortgages or sureties
and financial guarantees.
RISK MANAGEMENT
2
❯ Credit risk-weighted exposures
with breakdown of VaR according to Basel III regulatory weightings
(in €m)
At
06/30/2015
and central
banks
Institutions
Regional
MortgageadminisRetail
backed
trations Corporates customers(2) exposures
Exposures
High-risk Securitisaat default Equities exposures
tions
Total
Net
exposure(1)
(on-and
off-balance
sheet)
19,788 17,817
31,655
6,001
2,411
40,304
2,110
279
23
143
120,530
Value at
risk(3)
19,788 17,765
31,655
5,997
2,411
40,304
2,092
331
23
143
120,510
18
40,934
Weighted
assets
Weighting after taking into account the credit risk mitigation technique
0%
18,877 16,104
2%
178
5,927
9
-
178
4
52
4
10%
-
-
15%
-
-
26,438
5,288
34,709
12,148
6,194
3,097
5,461
4,096
5,795
5,795
7%
20%
52
418
677
23,884
1,433
12
34,697
198
806
1,683
877
2,544
0
105
3,468
2
198
35%
50%
75%
2,411
100%
150%
250%
26
52
33
3,050
12
1,964
246
128
296
23
0
350%
1,250%
Other
transactions
Total value
at risk
33
19,788 17,765
Total
weighted
value at risk
922
Average
weighting
5%
352
528
296
741
-
-
16
16
205
50
83
31
31,936
31,655
5,997
2,411
40,304
2,092
331
23
143
120,510
542
5,731
4,495
1,808
15,716
2,157
286
35
245
31,936
3%
18%
75%
75%
39%
103%
86%
150% 171%
27%
Other non-credit obligation assets
451
Operating risk weighted exposure
1,023
Exposure related to LCH default fund
Credit value adjustment
TOTAL WEIGHTED EXPOSURE(4)
28
1,121
34,560
(1) Source: COREP, June 30, 2015, based on a presentation that is structured slightly differently than the presentation of overall credit risk exposure under IFRS 7.
(2) The Basel “Retail customers” classification consists mainly of Individuals and Professionals (craftsmen, small retailers, self-employed professionals)
and Associations.
(3) Value at risk corresponds to on- and off-balance sheet items to which a credit conversion factor is applied.
(4) Weighted exposure before applying the credit risk factor associated with SMEs.
CRÉDIT FONCIER
29
RISK MANAGEMENT
❯ 2.4.4 SOLVENCY RATIOS
At June 30, 2015, the solvency ratio(1) was 9.5% and the Common Equity Tier One (CET1) ratio was 8.8%
The Tier-1 ratio was 9.3%.
(1) Basel II Regulation, standard approach, pillar 2.
30
CRÉDIT FONCIER
RISK MANAGEMENT
2.5 CREDIT AND COUNTERPARTY RISK EXPOSURES
2
2.5 CREDIT AND COUNTERPARTY RISK
EXPOSURES
Unless otherwise mentioned, the data shown in the tables and charts
in this section are management figures matching accounting data,
balance sheet commitments (excluding signed commitments and
financial guarantees given) representing the overall exposure to credit
risk under IFRS consolidated gross figures (performing and nonperforming).
❯ 2.5.1 ANALYSIS OF COMMITMENTS
In the interest of clarity and consistency, since the closing of the 2008
exercise Crédit Foncier has chosen to unify the disclosures provided
under IFRS 7, Pillar 3 of Basel III (European CRR Regulation). The
risk management disclosures required under this framework and the
capital disclosures required by amendment IAS 1 form an integral part
of the financial statements reviewed by the Statutory Auditors (with the
exception of disclosures indicated as “unaudited”).
■ 2.5.1.1 OVERALL CREDIT RISK EXPOSURE (IFRS 7 SUMMARY)
OVERALL NET CREDIT RISK EXPOSURE
The table below shows all of groupe Crédit Foncier’s exposures, including financial guarantees given and signed commitments, net of provisions
for impairment.
(in €m)
Consolidated contribution
(1)
Overall net credit risk exposure
06/30/2015
12/31/2014
127,408
131,478
Central banks(2)
1,973
1,200
Financial assets at fair value through profit or loss (excl. variable-income
securities)
2,896
2,967
Hedging derivatives(3)
7,913
8,366
Available-for-sale financial assets (excl. variable-income securities)
2,430
3,240
Interbank transactions
12,156
13,332
Customer transactions
92,582
94,226
136
136
Held-to-maturity financial assets
Sub-total (excluding financial guarantees given and signed commitments)
120,086
123,467
Financial guarantees given
1,091
1,102
Signed commitments
6,231
6,909
See note 7.1.2 to
the Consolidated
financial statements
at 12/31/2014
and note 4.7.3 to
the Consolidated
financial statements
at 06/30/2015
(1) Net outstandings after impairment.
(2) Exposure to demand deposits with central banks has been included in the credit risk financial statement since June 30, 2013.
(3) Amounts offset under liabilities (see the consolidated financial statements).
CRÉDIT FONCIER
31
RISK MANAGEMENT
OVERALL GROSS CREDIT RISK EXPOSURE
The following table shows all of groupe Crédit Foncier’s IFRS exposures at June 30, 2015 and at December 31, 2014, before impairment, including
financial guarantees given and signed commitments.
06/30/2015
12/31/2014
Change
June 2015/Dec.
2014
OVERALL GROSS CREDIT RISK EXPOSURE
128,412
132,449
-3.0%
of which excl. financial guarantees given and signed commitments(2)
121,063
124,411
-2.7%
100,472
101,586
-1.1%
50,795
50,996
-0.4%
50,629
50,794
-0.3%
(in €m)
(1)
(2)
Of which outstanding customer loans
❯ RETAIL(2) (a)
of which outstanding direct loans (France and Europe)
of which exposures backed by residential mortgage-backed securities
(RMBS) in Europe(3)
166
202
-17.6%
❯ CORPORATES, PUBLIC AND PRIVATE SECTOR
49,677
50,590
-1.8%
Public sector corporates(2) (b)
41,774
42,485
-1.7%
of which direct loans to the French public sector
of which French Local Authorities (FLA)
of which social housing
of which direct loans and commitments on International public sector and
sovereigns
of which French sovereigns
26,584
27,027
-1.6%
18,442
18,833
-2.1%
8,142
8,194
-0.6%
15,190
15,458
-1.7%
3,802
3,441
10.5%
11,388
12,017
-5.2%
Private sector corporates
7,903
8,105
-2.5%
of which direct loans and commitments
7,845
8,040
-2.4%
58
65
-11.0%
20,591
22,825
-9.8%
of which International
(2) (c)
of which Commercial Mortgage-Backed Securities (CMBS)
Of which banks and others(2) (d)
(1) Gross outstandings before impairment, excluding reverse mortgages €682m.
(2) Management figures adjusted to accounting data.
(a), (b), (c), (d): The relative weight in percentage terms is illustrated on the following page.
(3) Including exposures related to the Elise mutual fund and CFHL-1 2014.
Under groupe Crédit Foncier’s strategic plan, the major strategies are
the cessation of international activities and balance sheet deleveraging.
Accordingly, exposures were down by 3% to €128.4bn during the
1st half of 2015, following a 10% decrease in 2014 to €132.4bn.
The decrease is essentially due to the reduction in exposures to banks
backed by guarantees from sovereign or quasi-sovereign institutions
and related to disposal transactions during the half-year period through
securities issued by German and Austrian Landesbanken.
32
CRÉDIT FONCIER
Furthermore, ongoing disposals as part of run-off activities resulted in a
reduction in exposure (€0.2bn) to International Public Sector Financing
(IPF).
Exposure to French Local Authorities declined by -2.1% during the
1st half of 2015.
The retail loan portfolio also underwent a slight decrease of 0.4%.
RISK MANAGEMENT
For information, exposures to credit risk by Basel category as
established by COREP are calculated on a global basis that includes
off-balance sheet commitments (signed commitments and financial
2
guarantees given) to which a credit conversion factor is applied. These
exposures are as follows:
06/30/2015
Amount
As a %
19,788
15%
Institutions
17,817
14%
Regional administrations
31,655
25%
Corporates
6,001
5%
Retail customers
2,411
2%
40,304
32%
2,110
2%
279
<0.5%
23
<0.5%
(in €m)
EXPOSURES TO CREDIT RISK BY CATEGORY
Mortgage-backed exposures
Exposures at default
Equities
High-risk exposure
Securitisations
143
<0.5%
6,871
5%
CREDIT RISK EXPOSURE
127.401
100.0%
CREDIT RISK EXPOSURE AT DECEMBE 31, 2014
135,685
Other assets
Under COREP, calculated in accordance with CRR since January 1,
2014, by convention, results are presented by final exposure category
(after substitution of the final counterparty’s exposure category, for
exposures covered by a personal guarantee).
The breakdown of groupe Crédit Foncier’s exposures by Basel category
at June 30, 2015 shows a concentration in the Basel “Mortgage-backed
exposures” segment (32%) and in the “Regional administrations”
segment (25%).
41%
Banks and others (d)
7%
Retail (a)
€124,411m
34%
JUNE 30, 2015
Public sector corporates (b)
17%
42%
Banks and others (d)
Private sector
corporates (c)
18%
Private sector
corporates (c)
❯ Exposures by Basel category
7%
DECEMBER 31, 2014
Retail (a)
€121,063m
34%
Public sector corporates (b)
CRÉDIT FONCIER
33
RISK MANAGEMENT
■ 2.5.1.2 BREAKDOWN OF CREDIT RISK
EXPOSURES
2.5.1.2.1 BREAKDOWN BY REGION
The portfolio breakdown by region at the end of June 2015 shows little
change compared to year-end 2014, and remains concentrated in the
European Economic Area, especially in France.
Commitments in the European Economic Area mainly include assets
eligible for sociétés de crédit foncier. The other commitments in the
Breakdown of exposures by region
France
As a reminder, commitments located in the United States consist only
of loans to States or highly rated local authorities or loans guaranteed
by the federal government and do not include any direct or indirect
real estate exposures.
06/30/2015
12/31/2014
83%
83%
Other European Economic Area countries
9%
10%
❯ of which Italy
4%
4%
❯ of which United Kingdom
1%
1%
❯ of which Belgium
1%
1%
❯ of which Spain
1%
1%
❯ of which Germany
1%
1%
❯ of which Portugal
<0.5%
<0.5%
❯ of which Poland
<0.5%
<0.5%
❯ of which Slovenia
<0.5%
<0.5%
❯ of which Ireland
<0.5%
<0.5%
❯ of which Netherlands
<0.5%
<0.5%
❯ of which Iceland
<0.5%
<0.5%
❯ of which Hungary
<0.5%
<0.5%
❯ of which Austria
-
<0.5%
❯ of which Cyprus
-
<0.5%
❯ of which Slovakia
-
<0.5%
❯ of which Czech Republic
-
-
❯ of which Greece
-
-
Switzerland
2%
2%
North America (US and Canada)
4%
4%
Japan
2%
1%
Others
<0.5%
<0.5%
Balance sheet total
BALANCE SHEET ASSETS (in €M)
34
European Economic Area are almost entirely made up of commitments
with banks for cash management or derivatives transactions.
CRÉDIT FONCIER
100%
100%
121,063
124,411
RISK MANAGEMENT
2.5.1.2.2 BREAKDOWN BY BUSINESS SECTOR
The breakdown of outstanding balance sheet loans by business sector
covers loans to Corporate customers. It also includes exposures to
RMBS in Europe, for which the risk is ultimately linked to individual
customers.
The five leading sectors account for 95% of these exposures. Groupe
2
Crédit Foncier financed the real estate sector (18%) and Public local
authorities (40%). As for Finance-Insurance sector, it accounts for 30%
of the total exposure, 18% of which is to Groupe BPCE. An exposure
to Groupe BPCE is collateralised at 71%.
Furthermore, other sectors that received financing, especially the
pharma-health industry, mainly receive financing for real estate assets.
Breakdown of credit risk exposures by business sector
(excluding direct loans to individual customers)
06/30/2015
12/31/2014
Administration
40%
40%
Finance-Insurance
30%
32%
Property leasing
16%
14%
Pharma-Health
7%
7%
Real estate
2%
2%
Services
1%
1%
Utilities
1%
1%
Others
Balance sheet total
3%
3%
100%
100%
70,434
73,618
2.5.1.2.3 BREAKDOWN OF EXPOSURES BY PRODUCT FAMILY
The breakdown of groupe Crédit Foncier’s balance sheet commitments (loans, securities and financial transactions) by product family at June 30, 2015
shows a concentration on loans.
Product family (breakdown as a %)
06/30/2015
12/31/2014
Loans
72%
71%
Short-term credit facilities
11%
11%
Bonds (Banking)
10%
11%
<0.2%
<0.1%
7%
7%
Shares/Funds
-
-
Other on-balance sheet products
-
-
(1)
Securitisation
Derivatives
(2)
Bonds (Trading )
Balance sheet total
-
-
100%
100%
121,063
124,411
(1) Customer loans excluding short-term credit facilities.
(2) Groupe Crédit Foncier does not hold any trading securities. Bonds are held in connection with credit transactions or for hedging the ALM portfolio.
CRÉDIT FONCIER
35
RISK MANAGEMENT
■ 2.5.1.3 RISK DIVERSIFICATION
AND CONCENTRATION RISK
This table shows the weight of the leading counterparties in a specific
category, respectively the 10, 20, 50 or 100 largest counterparties. It
should be read in light of their relative weight in terms of amounts. This
ranking was established on groups of counterparties and exposures,
including signed commitments and financial guarantees given.
Direct exposures to Sovereigns are concentrated (less than
10 counterparties) as only a few European States are concerned.
❯ Summary – Concentration of major counterparties (in €m and as a percentage at June 30, 2015)
Exposures by Basel category
French Local Authorities and Social Housing*
Sovereigns
International public sector
Specialised financing
Large Corporates
Securitisation
*
Top 10
Top 20
Top 50
Top 100
3,503
5,424
9,104
12,639
[13%]
[20%]
[33%]
[46%]
7,677
7,677
7,677
7,677
[100%]
[100%]
[100%]
[100%]
4,431
6,023
7,527
7,613
[58%]
[79%]
[99%]
[100%]
1,473
2,106
3,255
4,324
[25%]
[35%]
[54%]
[72%]
1,498
1,984
2,699
3,273
[38%]
[51%]
[69%]
[84%]
224
224
224
224
[100%]
[100%]
[100%]
[100%]
Total
27,314
7,677
7,613
6,006
3,908
224
Including general public administrations (8411Z).
❯ 2.5.2 COMMITMENTS BY CUSTOMER PORTFOLIO
■ 2.5.2.1 INDIVIDUAL CUSTOMERS
LOAN RESTRUCTURING AND AUTO LOAN ACTIVITY (BANCO
PRIMUS)
2.5.2.1.1 DIRECT LOANS
Banco Primus, a Crédit Foncier subsidiary whose headquarters are
situated in Lisbon, Portugal, distributes auto loans to individuals (for
second-hand vehicles). It is also overseeing the run-off of a portfolio of
mortgage loans located in Spain and Portugal and a portfolio of auto
loans located in Hungary.
DIRECT REAL ESTATE LOANS
The vast majority of outstandings are backed by Basel III-eligible
guarantees, with a high proportion of first-ranking mortgages. A portion
of regulated loan production is also backed by a SGFGAS counterguarantee. The remaining outstandings are backed by a guarantee
provided by Compagnie européenne de garantie (formerly SACCEF),
Crédit Logement or a mutual guarantee company. Pledges can be
added to these guarantees.
586
of which auto loans (Portugal)
283
of which mortgages (Spain)
206
Outstanding loans to individuals in France and Europe were stable
(-0.34%) and amount to €50.6bn, 74% of which are loans to firsttime home buyers (75% at December 31, 2014) and 44% are loans
to low-income families (PAS/PTZ) (42% in 2014). The slight increase
in outstandings occurred in a moribund real estate lending market.
of which mortgages (Portugal)
86
of which auto loans (Hungary)
11
Fixed-rate loans represented a stable percentage of outstandings at
79%, compared to 78% at end-2014. At the same time, variable-rate
loans recorded a steady decline.
Solvency ratio (Core Tier-1)
REAL ESTATE BRIDGING LOANS TO INDIVIDUALS
Outstanding bridging loans have declined sharply and amount to
€303m in the first half of 2015 compared to €336m at end-2014.
New bridging loan production, which accounted for 0.6% of total
outstanding loans to individuals, is still subject to enhanced vigilance,
particularly with respect to the liquidity of the assets backing the
bridging portion of the loan.
36
TOTAL OUTSTANDINGS AT JUNE 30, 2015 (in €M)
CRÉDIT FONCIER
Loans at risk (payment past due by 90 days or more)
24.4%
Average LTV (mortgage business)
86.3%
12%
With nearly €40m in financed auto loans (up 13% from the first half
of 2014), activity in the 1st half of 2015 was strong and in line with
the 2nd half of 2014. Banco Primus thus maintained its position as
the fifth-largest player on the second-hand vehicle financing market.
The delinquency rate of the Portuguese auto loan portfolio remained
stable, with payments past due by 90 days or more accounting for
less than 9.5%.
RISK MANAGEMENT
In the run-off portfolio, particularly the Spanish mortgage portfolio,
indicators continued to worsen despite a shift in the portfolio’s
environment due to the marked slowdown in the decline in real estate
values.
2.5.2.1.2 POSITIONS ON RESIDENTIAL MORTGAGEBACKED SECURITIES (RMBS) IN EUROPE
Crédit Foncier’s exposure to this asset category is low as a result of
the disposal of most of its external securitisation portfolio in 2014.
At June 30, 2015, this exposure amounted to €166m, consisting of
residual exposure to CFHL-1 2014, Elise and to a Spanish RMBS
(Shipo 3, amounting to €59). The A3 tranche held in the Shipo 3 RMBS
is rated B2/BB-/CCC by Moody’s/Standard & Poor’s/Fitch, but it is
guaranteed by Royal Bank of Scotland, which is rated A3/BBB+/BBB+
by Moody’s/Standard & Poor’s/Fitch. As of June 30, 2015, no RMBS
is on the Watch List.
■ 2.5.2.2 PUBLIC SECTOR PORTFOLIO
2.5.2.2.1 FRENCH PUBLIC SECTOR
During the first half of 2015, outstanding direct loans to the French
public sector, which includes French Local Authorities and social
housing, decreased by 1.6% to €26.6bn at June 30, 2015. The
doubtful loans ratio remained close to zero.
2
2.5.2.2.2.1 INTERNATIONAL PUBLIC SECTOR FINANCING (IPF)
Outstandings in the IPF portfolio are essentially concentrated on the
local authorities of eurozone countries (including Italian regions and
the autonomous communities in Spain), the United States (states and
counties) and Japan (prefectures).
At June 30, 2015, outstandings in the IPF portfolio were €7.6 bn
compared to €7.9bn six months earlier. Aside from amortisation, this
change is due:
❯ primarily to the ongoing disposal of holdings as part of running off
the IPF portfolio. Most notably, Crédit Foncier disposed of securities
issued by local authorities in Spain during the half-year period;
❯ second, to the fact that the IFRS carrying amount of the
outstandings is presented here. This amount does not take into
account swaps and is shown at its equivalent value in euros. The
change in outstandings may thus be due to fluctuations in the rate
of the hedged component or in the exchange rate for securities in
foreign currencies.
Otherwise, the distribution of the portfolio’s holdings by internal rating
would be stable. This is because the ratings on the portfolio’s positions
are reviewed annually. This means that the internal ratings are the same
as those produced by the review at end-2014.
❯ Exposures by internal rating for the International
Public Sector Financing (IPF) portfolio
2.5.2.2.1.1 FRENCH LOCAL AUTHORITIES (FLA)
Groupe Crédit Foncier acts as a partner to the Groupe BPCE networks
in financing activities aimed at French Local Authorities and local
institutions.
FLA outstandings decreased (-2.1%) to €18.4bn.
2.5.2.2.1.2 SOCIAL HOUSING
JUNE 30, 2015
8%
1%
Not rated
AAA
4%
In collaboration with Groupe BPCE, this business line originates
regulated loans (prêt locatif social/PLS, prêt locatif intermédiaire/PLI)
and unregulated loans for providers of social housing.
BB
In the social housing sector, the majority of loans were granted as
part of the distribution of the remainder of the PLS budget obtained in
2012. These transactions are backed by guarantees provided by local
authorities or by mortgages.
BBB
26%
AA
26%
€7,613m
35%
A
Outstandings remain stable at €8.1bn (-0.6%).
2.5.2.2.2 INTERNATIONAL PUBLIC SECTOR
FINANCING (IPF) AND SOVEREIGNS
Crédit Foncier’s IPF and Sovereigns portfolio was placed in run-off in
the second half of 2011 and disposals continued in 2015.
DECEMBER 31, 2014
7%
This portfolio includes:
Not rated
❯ financing of European sovereign states, either directly or via state
5%
agencies. The credit analysis of these entities is conducted together
with analysts from Groupe BPCE and Natixis;
❯ financing of international local authorities in European countries, the
United States, Canada and Japan: federated states, districts and
provinces (i.e. local authorities with real fiscal autonomy, depending
on the jurisdiction), regions, departments, counties, prefectures
and cities. In this activity, Crédit Foncier applies a proprietary
methodology with an internal rating-based model.
1%
AAA
24%
BB
AA
28%
BBB
€7,860m
35%
A
CRÉDIT FONCIER
37
RISK MANAGEMENT
It should be recalled that outstandings are expressed in their carrying
amount under IFRS, without taking into account swaps, while securities
in foreign currencies are also shown at their equivalent value in euros –
this is notably the case for part of the exposure to Italy.
Crédit Foncier uses Groupe BPCE’s internal rating-based system.
❯ Exposures to Sovereigns by internal rating*
JUNE 30, 2015
2%
<0.5%
BBB to BBB-
42%
A- to BBB+
Not rated
50%
AAA to AA-
€7,577m
A+ to A
DECEMBER 31, 2014
0%
BB+ to BB
1%
3%
BB- to B
BBB to BBB-
A- to BBB+
45%
€7,599m
AAA to AA-
7%
A+ to A
* Basel II ratings after credit enhancement.
38
CRÉDIT FONCIER
3,1
20
3,0
35
€3,775m
2,500
2,000
1,500
0
Czech Hungary
Republic
Cyprus
Slovakia
23
7
16
6
500
Ireland
Slovenia
40
1
41
4
1,000
Poland
Italy
■ 2.5.2.3 EXPOSURE TO BANKS
Given the structure of its activities and its funding needs, Crédit Foncier
manages a significant volume of exposures to banking counterparties
on an ongoing basis. Most of these exposures result from hedging
requirements associated with the institution’s various activities.
A portion of Crédit Foncier’s banking exposures (€0.7bn) also
corresponds to long-term transactions carried out in connection
with the International public sector financing portfolio: since the sale,
during first-half 2015, of securities issued by German and Austrian
Landesbanken, this sub-portfolio consists entirely of exposures to
Swiss cantonal banks (including ZKB).
Netting and collateralisation agreements have been largely renegotiated
since 2008, including with top-rated banks, in order to reduce groupe
Crédit Foncier’s exposure to banking counterparties. Since 2012, Crédit
Foncier has been optimising its holdings in derivatives by reducing the
number of outstanding contracts.
Particular attention is being paid to the banking sector, for which the
limits have been considerably lowered since 2010. In accordance
with Groupe BPCE’s policy, Crédit Foncier limits its exposure for each
banking group to 15% of its capital, which is more cautious than the
regulatory requirement of 25%. Furthermore, since 2011, major risks
associated with banking counterparties have been weighted at 100%
(vs. 20% previously).
6%
43%
€4,157m
3,000
June 2015
19
2
16
0
With regard to the exposure to Italian sovereign debt, no disposal of
Italian securities took place during the period. Aside from the foreign
exchange effect, the change in outstandings is attributable to the
moderate impact of interest rates on the hedged component as well
as the change in the security’s credit risk.
December 2014
11
2
0
When restated for exposures to French sovereign debt, the
outstandings of the Sovereign portfolio declined by nearly 9% over
the period (see bar chart below). This change is primarily attributable
to ongoing disposals as part of run-off activities: Crédit Foncier no
longer has exposure to Cyprus or Hungary, and it has reduced its
exposure to Slovenia and Ireland. Its exposure to Slovakia ended with
the amortisation of securities that occurred within the first month of
2015.
3,500
57
0
At June 30 2015, the IFRS carrying amount of the Sovereign portfolio’s
outstandings was substantially the same as the value at end-2014
(€7,577m compared to €7,599m six months earlier).
The outstandings of the Sovereign portfolio excluding France are
broken down as follows:
38
0
Crédit Foncier’s Sovereigns portfolio comprises outstanding French
sovereign debt as well as exposures to foreign sovereigns, which have
been in run-off since the 2nd half of 2011.
0
0
2.5.2.2.2.2 SOVEREIGNS
Transactions with banks involve high gross volumes (nominal amounts)
ultimately accounting for low net amounts due to valuations and
the impact of netting (derivative transactions are accompanied by
hedging mechanisms in the form of collateralisation). The charts below
present the balance-sheet value of these transactions, which does
not necessarily accurately detail the credit risk incurred on derivative
transactions.
RISK MANAGEMENT
❯ Exposures to banks by internal rating
JUNE 30, 2015
1%
3%
Not rated
AAA
4%
3%
BBB
€20,440m
Outstanding direct loans to private sector corporates amounted to
€7.9bn at June 30, 2015. The main exposures concern real estate
development activities in France, long-term investors and corporates
amounting to €5.2bn at June 30, 2015, slightly down by 5% compared
with 2014.
REAL ESTATE DEVELOPMENT
AA
All of groupe Crédit Foncier’s real estate development, housing
development and, to a lesser extent, property vendor activities are
carried out by its subsidiary Socfim. Outstandings from this sector
have decreased to €797m (-9%).
89%
The majority of financing was granted to major clients in the real
estate development sector. Financed transactions for other clients had
satisfactory ratings and a solid capital to pre-construction sales ratio.
A
2
The monitoring of development activities continued, with periodic
sector reviews and a system of limits that is regularly updated with
assistance from BPCE’s Group Risk Management Division. Problematic
cases relate to a stable and limited number of players.
LONG-TERM INVESTORS AND SPECIALISED
FINANCING
DECEMBER 31, 2014
1%
3%
Not rated
AAA
4%
4%
BBB
Outstandings from this sector have decreased to €3,594m (-2%). Risk
linked to long-term investors is reviewed periodically, particularly with
respect to rental vacancies, rent trends and the valuation of mortgage
guarantees.
AA
CORPORATES
€22,679m
88%
A
For Crédit Foncier, this sector mainly consists of real-estate leasing
transactions carried out by its subsidiary Locindus. It should be noted
that in this sector, the lender owns the building and thus enjoys a
solid guarantee, making it easier to put the property back up for rent.
Outstandings from this sector have decreased to €891m (-7%).
PUBLIC-PRIVATE PARTNERSHIPS
Note: the breakdown of bank exposures is based on management amounts in the
IT systems.
In this segment, Crédit Foncier usually offers specialised financing
involving a revenue stream from the transaction, control over the
financed assets, and a significant percentage of public guarantees.
Outstandings remain stable at €1,513m.
■ 2.5.2.4 PRIVATE SECTOR PORTFOLIO
The Private Corporates portfolio represents slightly more than €7.9bn
on Crédit Foncier’s balance sheet, most of which is comprised of direct
loans (over 99%), with the remainder being CMBS securitisations (less
than 1%).
Direct loans concern several types of activities:
❯ real estate development;
❯ long-term investments;
❯ Corporates;
❯ Public-Private Partnership (PPP) transactions.
CRÉDIT FONCIER
39
RISK MANAGEMENT
2.6 ANALYSIS OF DELINQUENCIES
2.6 ANALYSIS OF DELINQUENCIES
❯ 2.6.1 DELINQUENCIES
❯ Groupe Crédit Foncier’s risk hedging
Exposures
(in €m)
30/06/2015
31/12/2014
Doubtful loan
percentage
(excl.
Doubtful
subsidised
Balance
loan
sector)
sheet percentage
Doubtful loan
percentage
(excl.
Doubtful
subsidised
Balance
loan
sector)
sheet percentage
Retail
50,795
5.25%
5.21%
50,996
5.01%
4.97%
Direct loans (France and Europe)
50,629
5.26%
5.23%
50,794
5.03%
4.99%
Exposures backing residential mortgage loans in Europe
166
-
-
202
-
-
Public sector
41,774
<0.5%
<0.5%
42,485
<0.5%
<0.5%
French public sector
26,584
<0.5%
<0.5%
27,027
<0.5%
<0.5%
IPF and Sovereigns
(direct loans and commitments)
15,190
-
-
15,458
-
-
Securities backed by individual customer loans with
government or institutional guarantees
Private Corporates sector
Exposure to banking sector and other
TOTAL
-
-
-
0
-
-
7,903
6.46%
5.58%
8,105
6.26%
5.38%
20,591
-
-
22,825
<0.5%
<0.5%
121,063
2.67%
2.59%
124,411
2.50%
2.41%
Retail doubtful loans covered by a mortgage or a lender’s preferential
claim (PPD) amounted to €1.2bn at June 30, 2015 (excl. FGAS).
These outstandings are covered by €310m in provisions (25%) and
the value of the real estate guarantees covering these assets is worth
€1.7bn.
❯ 2.6.2 COST OF RISK – INDIVIDUALS AND CORPORATES
At the end of June 2015, the cost of risk amounted to €160m (up
compared to June 2014). It includes the sale of securities issued by
HETA Asset Resolution AG.
Cost of risk on a consolidated basis
(in €m)
Excluding this transaction, the cost of risk was stable compared to
June 2014.
Losses on
non-hedged
FY 2014 Provisions Reversals receivables
Interbank loans and receivables
Customer loans and receivables (including signed commitments)
Other financial assets
-104
-109
H1 2015
-104
-185
133
-8
4
-56
-185
133
-112
4
-160
-1
Cost of risk – Individuals and Corporates (A)
-110
of which individual cost of risk
-166
-166
56
6
Overall credit risk exposure* (B)
131,478
127,408
COST OF RISK AS % OF TOTAL EXPOSURES (C=A/B)
-0.08%
-0.13%
of which cost of risk on portfolio basis (collective provisions)
*
40
Recovery on
written-off
loans and
receivables
Overall credit risk exposure: gross outstandings (performing and doubtful) including off-balance sheet commitments.
CRÉDIT FONCIER
RISK MANAGEMENT
2.7 RISK MITIGATION TECHNIQUES
2
The portfolio of loans to non-public sector counterparties (Individuals, social housing, Corporates) is mostly covered by real estate mortgages or
personal guarantees.
❯ 2.7.1 COLLATERAL VALUATION AND MANAGEMENT
For the financing of professional assets or home loans of significant
amounts, the real estate assets pledged as collateral are appraised
by an expert (Foncier Expertise). The terms of these valuations were
unchanged in the first half of 2015.
Some loans guaranteed by a first-ranking mortgage or a lender’s
preferential claim also benefit from an additional guarantee from
a mutual guarantee company or local authority, which is also the
predominant guarantee in the social housing market.
Crédit Foncier annually updates the mortgage values of pledged
collateral. These values may be updated automatically using real estate
indices showing annual pricing trends or by an appraiser, depending
on the type and/or amount of the collateral.
❯ 2.7.2 MAIN PROVIDERS OF CREDIT PROTECTION
The main providers of personal guarantees to Individual customers
are the SGFGAS, mutual guarantee companies such as CEGC
(formerly SACCEF), and other credit institutions (mainly Crédit
Logement and intra-group bank guarantees).
❯ The Société de gestion du fonds de garantie à l’accession sociale à
la propriété (SGFGAS) provides a guarantee from the French state
for loans to low-income first-time home buyers. These loans are
governed by regulated loan agreements and guaranteed by firstrank collateral (mortgage or lender’s preferential claim). Accordingly,
it receives the French’s government’s external ratings and allows a
0% weighting of loans for which SGFGAS coverage was signed
prior to December 31, 2006. Due to a change in SGFGAS coverage
methods, sureties granted after this date are assigned a weight
related to their mortgage guarantee that amounts to 50% of the
outstanding amount, with the other half weighted at 0%.
❯ Crédit Logement is a financial institution, a subsidiary of most
major French banking networks. Since the fourth quarter of 2014,
exposures guaranteed by Crédit Logement are weighted at 35%, in
compliance with BPCE’s standards.
❯ CEGC (Compagnie européenne de garanties et cautions,
formerly SACCEF) is a company that specialises in bank loan surety
and is owned by Natixis Garanties. The ACPR authorised loans in
the real estate loan portfolio guaranteed by CEGC (ex-SACCEF) to
be classified using the standardised approach in order to apply a
single weighting of 35% at December 31, 2008 and at subsequent
reporting dates until the advanced IRB approach is adopted.
❯ Other organisations, such as Mutuelle générale des Postes,
Télégraphes et Téléphones (MG PTT), Mutuelle du Trésor, Mutaris
Caution, etc., can also provide sureties and financial guarantees.
❯ NHG is a guarantee provided by the Dutch government on mortgage
loans acquired by groupe Crédit Foncier in 2007. This portfolio of
loans guaranteed by NHG amounts to €65m.
❯ Other insurers are credit institutions, mainly providing intra-group
guarantees (Caisses d’Épargne and BPCE), or public sector entities
(mainly for Public-Private Partnership). Note: a financial guarantee of
€2.5bn has been granted to Crédit Foncier by Caisse nationale des
Caisses d’Épargne in connection with the acquisition of Ixis CIB’s
French Local Authorities business.
CRÉDIT FONCIER
41
RISK MANAGEMENT
❯ 2.7.3 EFFECT OF CREDIT RISK MITIGATION TECHNIQUES
Crédit Foncier’s portfolio is predominantly covered by first-ranking
mortgages or eligible personal guarantees.
4%
❯ Providers of credit protection
Developer loans, bridging loans, others
8%
Other sureties
(including CEGC (ex-SACCEF)
guarantees(2))
20%
First-rank mortgages
and other protections(1)
24%
First-rank mortgages only
26%
€100bn
Developer loans, bridging loans, others
8%
6%
Other secured exposures
3%
Other secured exposures
JUNE 30, 2015
4%
DECEMBER 31, 2014
Local authorities
and French sovereign
Other sureties
(including CEGC (ex-SACCEF)
guarantees(2))
19%
and other protections(1)
25%
29%
€102bn
Local authorities
and French sovereign
12%
International
local authorities
<0,1%
Mortgage securitisation (RMBS)
12%
International
local authorities
<0,1%
(1) Outstandings that also benefit from the FGAS guarantee for an amount of €19bn.
(2) Other sureties of which Crédit Logement for an amount of €3.1bn.
Mortgage securitisation (RMBS)
(1) Outstandings that also benefit from the FGAS guarantee for an amount of €20bn.
(2) Other sureties of which Crédit Logement for an amount of €3.8bn.
❯ 2.7.4 OFF-BALANCE SHEET NETTING
There has not been a material change in off-balance sheet netting since the situation described in the 2014 Registration document (p. 130).
42
CRÉDIT FONCIER
RISK MANAGEMENT
2.8 RECOMMENDATIONS OF THE FINANCIAL STABILITY FORUM
2
2.8 RECOMMENDATIONS
OF THE FINANCIAL STABILITY FORUM
In its report of April 7, 2008, the Financial Stability Forum (FSF) –
G7 issued a series of recommendations in response to the financial
crisis, particularly in terms of financial transparency, valuation, risk
management and rating agencies.
In the conclusions of the Senior Supervisors Group report, the FSF
called for improved financial communication in the following five areas:
❯ exposure to CDOs (collateralised debt obligations) or direct exposure
to monoline insurers;
❯ exposure to CMBS (commercial mortgage-backed securities);
❯ other subprime and Alt-A exposure and exposure to US mortgages
more generally;
❯ special purpose entities;
❯ leveraged buyouts (LBOs).
These disclosure requirements were discussed in a working group
involving the FBF (French Banking Federation), the SGCB (Corporate
Secretariat of the Prudential Control Committee) and the AMF (French
Financial Markets Authority) in order to adapt the FSF recommendations
for France. Financial information tables were drawn up to meet these
five requirements.
❯ 2.8.1 CDOS AND EXPOSURES TO MONOLINE INSURERS
AND OTHER CREDIT ENHANCERS
■ 2.8.1.1 COLLATERALISED DEBT OBLIGATIONS
(CDO)
(loans or securities) extended directly to a sovereign state or to a local
authority or public institution.
Groupe Crédit Foncier has no exposure to CDOs.
These commitments are legally structured as financial guarantees (and
not CDS) and constitute an additional security for the underlying asset.
These guarantees are neither valued nor recognised on Crédit Foncier’s
balance sheet (only the enhancement premium is recognised as an
expense when the guarantee is extended outside of the underlying
security or loan).
■ 2.8.1.2 CREDIT ENHANCERS
2.8.1.2.1 ENHANCED ASSETS
The carrying amount of credit-enhanced assets in the table below does
not correspond to direct exposures to monoline insurers. It represents
secondary guarantees extended by monoline companies to Crédit
Foncier on some of its assets. In all cases, Crédit Foncier holds an initial
claim against a primary counterparty other than the monoline insurer.
These guarantees generally cover public sector financing transactions
The breakdown of this monoline-insured portfolio is based on the
nominal value of the investment holdings at June 30, 2015, according
to the initial credit enhancer (without taking into account takeovers of
certain companies by rival monoline insurers which have since taken
place).
CRÉDIT FONCIER
43
RISK MANAGEMENT
❯ Enhanced assets
Fair value of
Fair value
Gross
Gross
enhancements
of enhannotional
notional
cements Fair value net of hedges
amount Fair value
amount
and before
before of hedges
of enhan- of hedged of hedged
cements instruments instruments adjustments purchased adjustments
06/30/2015
(in €m)
Fair value
adjustments for
Residual
monoline
credit risk exposure to
(recognised counterparon the ty risk from
monoline
enhanceinsurers
ment)
Enhancements acquired from monoline insurers
On CDOs (US residential market)
with subprime underlyings
On CDOs (US residential market)
with non-subprime underlyings
Counterparty risk on other
transactions
1,637
1,637
2,066
TOTAL 06/30/2015
1,637
1,637
2,066
TOTAL 12/31/2014
1,562
1,562
2,008
The breakdown of underlying assets by intrinsic rating is shown below.
2.8.1.2.2 BREAKDOWN OF GROSS EXPOSURES
BY UNDERLYING RATING (NOMINAL VALUE)
The credit enhancer’s rating is the lowest of the two best ratings from
Standard & Poor’s, Moody’s and Fitch Ratings at June 30, 2015.
The intrinsic rating of the underlying asset is consistent with its preenhancement Basel II rating.
In light of the restructuring of the monoline sector, the rating now used
for securities initially enhanced by FSA is that of Assured Guaranty
Municipal Corp. This credit enhancer was rated A2 (Moody’s) and AA
(Standard & Poor’s) at June 30, 2015. Similarly, securities enhanced
by MBIA are now assigned the rating of the National Public Finance
Guarantee Corporation (A3 by Moody’s and AA- by Standard & Poor’s
at June 30, 2015), which now guarantees North American local
authorities.
Exposures whose intrinsic rating is shown as “not available” do not
strictly speaking have a Basel II rating, but are subject to internal
scoring by Crédit Foncier placing them in the investment grade
category (≥ BBB-), mainly owing to their external ratings. These are
direct commitments to North American public sector entities.
(in €m)
06/30/2015
Monoline
Nominal
Monoline rating
AMBAC
Not available
CIFG
Not available
FGIC
Not available
A
120
1,018
MBIA
A-
95
CRÉDIT FONCIER
Not
Available
127
A
%
BBB
13
AGMC
TOTAL
44
AA
NonInvestment
Grade
Total
%
13
1%
127
8%
120
7%
1,163
71%
119
214
13%
1,637
145
1,126
272
239
69%
17%
14%
100%
RISK MANAGEMENT
2
❯ 2.8.2 EXPOSURES TO COMMERCIAL MORTGAGE-BACKED
SECURITIES (CMBS)
■ 2.8.2.1 TABLE OF AT-RISK CMBS EXPOSURES
At June 30, 2015, no “at risk” CMBS position held by groupe Crédit
Foncier was on the securitisation watch list. The gross carrying amount
of these tranches was €58m. These are commercial real estate
exposures. At present, no payment defaults have been recorded on
the tranches held by Crédit Foncier.
■ 2.8.2.2 BREAKDOWN OF CMBS BY BUSINESS SECTOR
Having refocused its business, groupe Crédit Foncier has been running off its CMBS portfolio since 2011.
❯ Breakdown of CMBS by business sector
(in €m)
“At risk” (on Watch List basis)
06/30/2015
IFRS carrying
amount
0
12/31/2014
%
IFRS carrying
amount
%
0%
0
0%
Not at risk
58
100%
65
100%
TOTAL
58
100%
65
100%
■ 2.8.2.3 BREAKDOWN OF CMBS BY REGION
Crédit Foncier’s entire CMBS portfolio is located in Europe. The “Europe” category in the table below corresponds to pan-European CMBS (whose
underlying assets are divided between several European countries).
❯ Breakdown of CMBS by region
(in €m)
06/30/2015
IFRS carrying
amount
12/31/2014
%
IFRS carrying
amount
%
Germany
Europe
23
39%
25
39%
France
9
16%
12
18%
Italy
United Kingdom
26
45%
28
43%
TOTAL
58
100%
65
100%
CRÉDIT FONCIER
45
RISK MANAGEMENT
■ 2.8.2.4 BREAKDOWN OF CMBS BY RATING
All securities in the portfolio are rated by one or more rating agencies. At the end of the 1st half of 2015, the portfolio consists entirely of senior
tranches rated category 1 (>A-).
❯ Breakdown of CMBS by rating
06/30/2015
(in €m)
Basel II rating
12/31/2014
IFRS carrying
amount
%
25
44%
33
56%
IFRS carrying
amount
%
12
18%
18
28%
28
43%
7
11%
65
100%
AAA
AA
AAA
ABBBCC
OVERALL TOTAL
58
100%
❯ 2.8.3 OTHER SUBPRIME AND ALT-A EXPOSURES (RMBS,
LOANS, ETC.)
Groupe Crédit Foncier has no direct or indirect exposure to subprime
or Alt-A assets. More generally, Crédit Foncier has no exposure to the
US mortgage market.
Groupe Crédit Foncier had no CMBS on the Watch List at
June 30, 2015.
❯ 2.8.4 SPECIAL PURPOSE ENTITIES (SPEs)
At June 30, 2015, groupe Crédit Foncier had no exposure to Special Purpose Entities (ABCP type or other).
❯ 2.8.5 LEVERAGED BUYOUTS (LBOs)
Definition of an LBO:
❯ a structured credit transaction using leverage, i.e. bank borrowings,
that is set up for the buyer of a target company;
❯ with or without the participation of the target’s management;
❯ a holding company is created whose capital is wholly or partly
owned by one or more financial sponsors.
46
CRÉDIT FONCIER
The presence of a financial sponsor and a holding company is what
qualifies this type of transaction as an LBO.
RISK MANAGEMENT
2
■ 2.8.5.1 EXPOSURE TO LEVERAGED BUYOUTS
At June 30, 2015, groupe Crédit Foncier identified five leveraged buyout deals amounting to €102m, which are stable compared with the end of 2014.
06/30/2015
12/31/2014
5
5
102
102
102
102
06/30/2015
12/31/2014
Total (gross)
102
102
Provisions
-37
-37
TOTAL (NET OF PROVISIONS)
65
65
of which final shares
65
65
-
-
(in €m)
FINAL SHARES
Number of deals
Commitments
SHARES FOR SALE
Number of deals
Commitments
TOTAL
■ 2.8.5.2 CHANGE IN EXPOSURE TO LEVERAGED BUYOUTS
LBO exposures (in €m)
of which shares for sale
Crédit Foncier’s LBO exposures were stable compared to December 31, 2014.
■ 2.8.5.3 BREAKDOWN OF LBO FINAL SHARES BY BUSINESS SECTOR AND REGION
49% of LBO outstandings are related to target companies in the service sector and 51% are in the real estate sector.
All the target companies acquired through leveraged buyout deals are based in France.
CRÉDIT FONCIER
47
RISK MANAGEMENT
2.9 MARKET RISKS
2.9 MARKET RISKS
Owing to the nature of its activity, groupe Crédit Foncier is not
prudentially exposed to market risk, as defined under CRR: it does not
carry out short-term transactions in order to take advantage of price
fluctuations. However, although it holds a foreign exchange position,
this position is significantly lower than the regulatory threshold and
therefore cannot be considered as a market risk.
Transactions carried out by Crédit Foncier and recorded in the balance
sheet are compartmentalised according to their management strategy
as soon as they are implemented, in accordance with Crédit Foncier’s
Financial Charter.
Under the law on the separation and regulation of banking activities
of July 26, 2013, Groupe BPCE has implemented a new standard
segmentation of the operations on the balance sheet and the
associated governance, which applies in full to all Groupe BPCE
entities. This standard is being deployed at the groupe Crédit Foncier
level.
48
CRÉDIT FONCIER
Thus, pursuant to the provisions of the law N° 2013-672 on the
separation and regulation of banking activities, Crédit Foncier has
created in accordance with the provisions of Groupe BPCE, an
internal treasury unit in the beginning of first half of 2015. This unit is
not engaged in market activities as defined in the above-mentionned
law. Indeed, its activities fit into the exemption category “sound and
prudent management of the Group’s treasury”.
Note that Groupe BPCE’s Risk Management Division has monitored the
bond portfolio held by groupe Crédit Foncier since the second half of
2014. This includes controls on Compagnie de Financement Foncier’s
bond portfolio that are based on a stress threshold.
RISK MANAGEMENT
2.10 ALM RISKS
2
2.10 ALM RISKS
❯ 2.10.1 ORGANISATION AND MONITORING OF ALM RISKS
The organisation and monitoring of ALM risks are described in detail in the 2014 Registration document (p. 138).
❯ 2.10.2 METHODOLOGY FOR ASSESSING STRUCTURAL RISKS
■ 2.10.2.1 DEFINITION OF LIQUIDITY, INTEREST
RATE AND FOREIGN EXCHANGE RISKS
For further information, refer to the 2014 R egistration document
(p. 139).
■ 2.10.2.2 MEASUREMENT OF LIQUIDITY,
INTEREST RATE AND EXCHANGE RATE
RISKS
For further information, refer to the 2014 R egistration document
(p. 139).
■ 2.10.2.3 MANAGEMENT GUIDELINES
Since 2014, hedges are mainly carried out through Crédit Foncier,
including for the issuances and asset acquisitions of Compagnie de
Financement Foncier. In practice, external hedging swaps carried out
by Crédit Foncier result in an intra-group mirror swap between Crédit
Foncier/Compagnie de Financement Foncier.
Through this strategy, the Crédit Foncier parent company becomes
groupe Crédit Foncier’s main counterparty with outside participants for
asset- and liability-side interest rate swaps, making netting transactions
possible while reducing Crédit Foncier’s net exposure. In addition, it
reduces the outstanding swaps of Compagnie de Financement Foncier.
In general, this strategy does not apply to cross-currency swaps for
hedging foreign-currency issues or swaps structured to hedge private
issues, for which Compagnie de Financement Foncier continues to
hedge itself directly on the market.
❯ Liquidity
❯ Foreign exchange
Crédit Foncier’s refinancing is mainly carried out through the issuance
of obligations foncières by Compagnie de Financement Foncier.
Additional funding needs are met through BPCE.
Groupe Crédit Foncier does not have any open foreign exchange
positions, and its policy is based on not assuming any foreign exchange
risk. Consequently, all assets and liabilities in non-euro currencies are
systematically micro-hedged upon their recognition in the balance
sheet.
Funding is carried out under the terms of the financing plan proposed
by the Financial Management Division and validated with the Liquidity
Steering Committee. This financing plan is included in Groupe BPCE’s
funding budgets, as presented and decided upon with the Group ALM
Committee.
Groupe Crédit Foncier also has a significant portfolio of securities and
collateral that can be assigned instantly as repos with the ECB or the
market.
❯ Interest rates
The general principle is the systematic backing of operations either
by micro-hedging (for lending a unit amount of over €5m, or for any
derivatives sales to customers) or by macro-hedging (fair value hedge
coverage).
Hedging may be realised through foreign exchange swaps, term loans
or currency swaps. Residual mismatches may appear (transactions
of very small amounts that are difficult to hedge, mismatches
between received and paid cash flows, impairment of loans in foreign
currencies, etc.). These mismatches, which must be kept within
allowed limits, are monitored by the Financial Risk Division within Risk
and Compliance. This department is responsible for reporting overruns
or open positions and for asking the operating division that created
the situation to resolve it. It is also in charge of reporting to the ALM
Committee and the Executive Risk Committee.
The financial instruments used to hedge interest rate risk are primarily
interest rate swaps and cap purchases, intended primarily to cover the
rate caps sold to customers and incorporated into certain products.
CRÉDIT FONCIER
49
RISK MANAGEMENT
2.10 ALM RISKS
❯ 2.10.3 LIQUIDITY RISK MONITORING
■ 2.10.3.1 FUNDING OF GROUPE CRÉDIT FONCIER
Groupe Crédit Foncier’s funding is derived mainly from medium- and
long-term issuances carried out by Compagnie de Financement
Foncier (the AAA/Aaa/AA rated société de crédit foncier and subsidiary
of groupe Crédit Foncier). Short-term financing is mainly provided by
funding from BPCE, the parent company.
During the first half of 2015, groupe Crédit Foncier (or Compagnie de
Financement Foncier) issued €5.4bn in obligations foncières, including
non-recurrent operations.
Groupe Crédit Foncier also has a pool of eligible liquid assets.
Assets falling within the ECB’s funding eligibility criteria represent
a gross amount of €42.7bn (nominal amount before haircut if
pledged, and without recognising the regulatory overcollateralisation
ratio of Compagnie de Financement Foncier), including €31.3bn in
residential receivables in respect of the temporary ECB mechanism
of February 2012.
The majority of these assets are held by Compagnie de Financement
Foncier, for a gross total of €36.5bn. Compagnie de Financement
Foncier can use these eligible assets up to an estimated net amount
of €15bn after any haircut, based on the ECB’s current rules, while
respecting applicable regulatory constraints.
At June 30, 2015, groupe Crédit Foncier no longer had funding from
the ECB.
■ 2.10.3.2 COMPLIANCE WITH LIMITS
In addition to the regulatory liquidity ratio that applies on a per-company
basis, groupe Crédit Foncier monitors three main liquidity indicators:
❯ the overnight limit of €2bn, which must be covered by a similar
outstanding (net value after haircut) that can be pledged in a
comprehensive collateral management pool;
2.10.3.2.1 REGULATORY ONE-MONTH LIQUIDITY
RATIO
At June 30, 2015, Crédit Foncier’s liquidity ratio (on an individual basis)
was 148.5%.
Compagnie de Financement Foncier’s liquidity ratio was 8,833%. It
must also have a one-year cash surplus available at all times.
2.10.3.2.2 OVERNIGHT BORROWER LIMIT
Over the 1st half of 2015, Crédit Foncier made neither systematic nor
occasional use of very short-term (overnight-weekly) funding, which is
subject to a defined limit by BPCE; therefore, no observations on this
matter are required.
2.10.3.2.3 CASH PROJECTIONS AND LIQUIDITY
STRESS TESTS
On each of its balance sheets (Crédit Foncier and Compagnie de
Financement Foncier), Crédit Foncier makes liquidity projections under
its central scenario over one year and in stressed situations:
❯ a “catastrophic” three-month stress scenario with no new issuances
and no renewal of financing;
❯ a severe three-month stress scenario (maintaining a proportion
of new loan production and some refinancing facilities) subject
to limits. At June 30, 2015, it was verified that assets eligible for
ECB refinancing are sufficient to cover the post-stress cash flow
requirements.
2.10.3.2.4 LIMIT ASSOCIATED WITH THE ASSET/
LIABILITY RATIO
The asset/liability ratio is supervised by means of a limit and a reference
level. The latter ensures forward-looking liquidity management:
❯ 12-month liquidity according to the central scenario (funding plan)
and a three-month liquidity projection under stressed conditions at
the levels of Crédit Foncier as a parent company and Compagnie
de Financement Foncier, applying a catastrophic scenario (closure
of markets and end of groupe Crédit Foncier’s funding);
❯ a limit associated with the asset/liability ratio (observed over a 10year horizon in annual stages). The aim of this analysis is to ensure
that medium-term liquidity management does not create high
concentrations of liquidity needs over certain periods;
❯ the short term liquidity ratio (LCR) is superior to the regulatory limit
in force since the October 1, 2015.
50
CRÉDIT FONCIER
0 to 3 years
3 to 6 years 6 to 10 years
Limit
85%
70%
55%
Reference level
90%
75%
60%
RISK MANAGEMENT
2.10 ALM RISKS
2
❯ Asset/liability ratio at end-June 2015
120
Asset/liability ratio at June 30, 2015
Observation threshold
110
Regulatory Limit
100
90
80
70
60
50
40
d
d
jun
d
jun
d
jun
jun
d
jun
d
jun
d
d
jun
d
jun
jun
d
jun
jun
e-1 ec-1
e-1 ec-1
e-1 ec-1
e-2 ec-2
e-2 ec-2
e-2 ec-2
e-2 ec-2
e-2
e-2 ec-2
e-1 ec-1
e-1 ec-1
6
7
9
8
0
1
2
3
4
5
8
6
9
0
1
2
4
5
3
7
5
❯ 2.10.4 INTEREST RATE RISK MONITORING
■ 2.10.4.1 COMPLIANCE WITH LIMITS
2.10.4.1.1 STATIC GAP LIMIT
Groupe BPCE requires its subsidiaries to observe three key limits to
manage interest rate risk:
The static gap increased during the 1st half of 2015, mainly because
the level of early repayments on home loans was actually higher than
the estimated one initially used to cover the risk. As a result of this
evolution, the static gap limit was breached for August 2017 term. The
gap for this maturity reached €3.6bn for a limit set at €3.0bn.
❯ the first aims to manage groupe Crédit Foncier’s static interest rate
gap over 10 years using a diminishing proportion of capital (from
95% in year 1 to 50% in year 10);
❯ the Net Present Value (NPV) of capital (standard Basel II indicator);
❯ the sensitivity of net interest margin to interest rate fluctuations under
four scenarios that are sent each quarter by the central institution.
The risk was hedged in early July 2015 with a €1.1bn swap neutralizing
the negative effect generated by the difference between early
repayments on home loans and the estimate initially used for hedging.
As a result, this operation should bring the gap back within limits.
CRÉDIT FONCIER
51
RISK MANAGEMENT
2.10 ALM RISKS
Assets
Liabilities
❯ Static gap limit at June 30, 2015 (in €bn)
4.5
Fixed-rate gap
June 2015
4.0
Entity limits 30/06/2015
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
-0.5
-1.0
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
-4.5
d
d
d
d
d
d
d
d
d
june dec
ju
ju
ju
ju
ju
ju
ju
ju
june
ju
-15 ne-16 ec-16 ne-17 ec-17 ne-18 ec-18 ne-19 ec-19 ne-20 ec-20 ne-21 ec-21 ne-22 ec-22 ne-23 ec-23 ne-24 ec-24
-15
-25
2.10.4.1.2 NET PRESENT VALUE (NPV) OF CAPITAL
The consumption of regulatory capital (including working capital in
fixed-rate outstandings and their run-off as agreed over 20 years) for
a +200 bp curve shock amounted to 3.12% at June 30, 2015.
These four scenarios correspond to a 100-bp drop, 100-bp increase,
flattening (+50 bp short term, -50 bp long term) and steepening (-50 bp
short term, +50 bp long term).
At June 30, 2015, the “worst case” scenarios for the net interest margin
were as follows:
2.10.4.1.3 SENSITIVITY OF NET INTEREST MARGIN
After applying four yield curve deformation scenarios, the net interest
margin sensitivity should be lower than +/-5% in year N+1 and +/-9%
in N+2 (year-on-year).
NIM sensitivity limits
“Worst case” sensitivity
limits
Year 1
Year 2
+/-5%
+/-9%
-0.55%
-4.41%
❯ 2.10.5 FOREIGN EXCHANGE RISK MONITORING
Foreign exchange risk exists when the euro value of foreign currencydenominated assets or liabilities on groupe Crédit Foncier’s balance
sheet are liable to be negatively affected by foreign exchange rate
changes.
Consequently, all assets and liabilities in non-euro currencies are
subject to swaps upon their recognition in the balance sheet. This
hedging may be realised through a currency swap, a foreign exchange
swap or a term loan.
They are monitored by Crédit Foncier’s Risk Management Division,
which centralises foreign currency positions at month-end by individual
currency and by aggregated currencies.
In regard to foreign exchange risk, BPCE ALM standards specify that
the spot foreign exchange position by currency is limited to 5% of
total balance sheet assets in that currency. This limit only applies if
the outstandings in the foreign currency in question exceed the euro
equivalent of €1m.
In addition to BPCE’s foreign exchange limit, groupe Crédit Foncier has
reinforced monitoring of its exposure based on:
❯ internal foreign exchange limits for spot contracts calibrated in view
of the observed positions;
❯ in consolidated view, €5m by currency and €8m for the position
across all currencies,
❯ for Compagnie de Financement Foncier and Crédit Foncier, €3m
by currency and €5m for the position across all currencies;
❯ dynamic measurement of future positions related to the run-off of
foreign currency transactions by corporate entity.
This measurement of the foreign exchange position is limited at the
groupe Crédit Foncier level to €8m across all currencies.
On a quarterly basis, information is provided to the ALM Committee
regarding compliance with these observed limits.
The limit was adhered to over the 1st half of 2015.
52
CRÉDIT FONCIER
RISK MANAGEMENT
2.11 OPERATING RISKS
2
No major changes were observed for the first half of 2015 except for the definition of the action plans as the fourth pillar of the operating risk strategy.
❯ 2.11.1 GENERAL FRAMEWORK
The general framework is described in detail in the 2014 Registration document (p. 144).
❯ 2.11.2 GOVERNANCE
Governance is described in detail in the 2014 Registration document (p. 144).
❯ 2.11.3 MANAGEMENT ENVIRONMENT
■ 2.11.3.1 MANAGEMENT NETWORK
The management network is described in detail in the 2014 Registration
document (p. 145).
■ 2.11.3.2 METHODS AND TOOLS
No major changes were observed for the first half of 2015 except for
the establishment of certain action plans as the fourth pillar of the
operating risk strategy. These action plans cover serious incidents,
incidents whose recurrence should be avoided, the most significant
risks and KRIs (Key Risk Indicators) in persistent breach of a critical
threshold.
Methods and tools are described in detail in the 2014 Registration
document (p. 145).
❯ 2.11.4 ORGANISATION OF THE CONTINGENCY AND BUSINESS
CONTINUITY PLAN (CBCP)
In the first half of 2015, the network of business continuity officers and
their deputies was updated following the internal restructuring. The
business line managers in charge of critical activities were informed of
their duties and areas of responsibility, the crisis management manual
and the control programme for continued activities.
Additionally, at the request of Executive Management, the CBCP
was streamlined to better meet the Company’s current needs.
Implementation efforts are underway and should be finalised in time
for the switch to the new information system in 2015. Initial technical
testing of the new system will be conducted during the final quarter of
2015 and will be supplemented with user testing starting early 2016.
CRÉDIT FONCIER
53
RISK MANAGEMENT
❯ 2.11.5 IT RISKS
The organisation of IT risks is described in detail in the 2014
Registration document (p. 146).
was operationally launched in late 2012, with a switch to the new
information system planned for mid-November 2015.
Further to the decision to pool Crédit Foncier’s information systems
on the Caisse d’Épargne MYSYS platform developed by the IT-CE
Economic Interest Grouping (“EIG”), a migration programme (“MUT SI”)
To this date, the deadlines have been met and the budget remains
within the overall amount allocated to this project.
❯ 2.11.6 LEGAL RISKS
New developments in regard to legal disputes since the publishing of
the 2014 Registration document are as follows:
launched a third set of arbitration proceedings seeking to block the
implementation of a pledged account.
■ 2.11.6.1 EXCEPTIONAL EVENTS AND LITIGATION
The sharp increase in interest rates in 2007 and 2008 led some
borrowers holding variable-rate loans (with a payment calculation
clause based on a technical rate, called the Payment Calculation
Maximum Rate, which is different from the interest rate) to dispute the
meaning and scope of this contractual provision.
Due to financial difficulties experienced by a developer that can no
longer meet the delivery schedule for properties sold off-plan (VEFA
sales), some projects were halted. A solution to complete the properties
was found for the transactions benefiting from an intrinsic completion
guarantee, and delivery is nearly complete. Only one residence remains
under construction.
The number of cases still outstanding is very low. Crédit Foncier draws
on the numerous legal decisions made in its favour to counter the
claims launched against it.
For transactions benefiting from a financial completion guarantee, the
guarantors performed their contractual duties, thus enabling investors
to gradually take ownership of their lots.
***
Certain investors initiated legal proceedings to cancel the sale and loan.
The improvement of the overall situation has led an increasing number
of these investors to withdraw from proceedings and others, who had
received a ruling cancelling the sale and loan, to turn down the ruling
in their favour and instead take delivery of their asset.
***
In July 2008, Crédit Foncier financed the construction of a hospital in
Saudi Arabia. After disbursing the first two tranches, Crédit Foncier
refused to disburse the third tranche due to the non-completion of
the terms provided for in the contract. As no agreement was reached
between Crédit Foncier and the borrower to revise the project, Crédit
Foncier terminated the financing agreement in July 2009, with all sums
loaned immediately falling due, and initiated protective measures on
the guarantees it held. The borrower then filed a counter-claim against
Crédit Foncier for improper breach of loan, whereas the guarantor
contested the validity of its undertaking.
An initial arbitral ruling on July 31, 2012 validated Crédit Foncier’s claim
in respect of the loan. This sentence is now definitive following the
decision of the Cour de Cassation (French appeal justice court) on
June 24, 2015 rejecting the borrower’s appeal.
A second arbitral procedure concerning the guarantee pledged to
Crédit Foncier led to two other rulings, dated November 15, 2012 and
August 9, 2013, which validated the guarantee and the amount due
by the guarantor. On September 9, 2014, the Paris Court of Appeal
rejected the claim to cancel the guarantee contrary to the ruling of
November 15, 2012. The guarantor has appealed to the French
supreme court and the case is still pending. A decree dated April 10,
2014 confirmed the rejection of another claim made by the guarantor
against the ruling dated August 9, 2013. The guarantor nonetheless
filed a further appeal against the ruling of August 9, 2013, and the
procedure is ongoing before the Paris Court of Appeal.
The protective and enforcement measures that were taken are being
maintained. In view of the situation, the borrower and guarantor
54
CRÉDIT FONCIER
However, other investors have now decided to invoke the responsibility
of the various parties involved in the tax reduction transactions (builder,
notary, legal agent, lenders) to attempt to obtain a joint ruling to pay
damages.
***
Some local authorities whose loans were initially at preferential rates
before moving onto a structured rate formula based on the exchange
rate movements of certain currencies were concerned about the
trend of some of these currencies. Six local authorities submitted the
matter to the court. In three cases, an amicable solution was reached,
ending the procedure. However, in the remaining cases, an amicable
solution was not reached and the procedures are therefore ongoing.
The lender’s position is supported by the provisions of law 2014-844
of July 29, 2014 relating to the securitisation of structured lending
agreements taken out by legal entities governed by public law, as well
as those relating to the Support Fund (fonds de soutien) created by
the 2015 Budget Act.
■ 2.11.6.2 MATERIAL CONTRACTS
Crédit Foncier is not bound by any contracts that may confer a right
or an obligation on an entity of the Group likely to significantly affect its
ability to meet its obligations, relating to securities issued, towards the
owners of such securities.
RISK MANAGEMENT
2
❯ 2.11.7 INSURANCE
Insurance coverage is described in detail in the 2014 Registration document (p. 148).
❯ 2.11.8 OTHER RISKS: CAISSE DE RETRAITE (PENSION FUND)
OF CRÉDIT FONCIER FOR EMPLOYEES WHO JOINED
THE GROUP BEFORE MARCH 1, 2000
Other risks are described in detail in the 2014 Registration document (p. 149).
CRÉDIT FONCIER
55
RISK MANAGEMENT
2.12 BROKERAGE RISK
2.12 BROKERAGE RISK
There has not been a material change in brokerage risk since the situation described in the 2014 Registration document (p. 150).
2.13 NON-COMPLIANCE RISK
There has not been a material change in non-compliance risk since the situation described in the 2014 Registration document (p. 151-153).
56
CRÉDIT FONCIER
3
FINANCIAL INFORMATION
ANALYSIS OF RESULTS
Consolidated results
Consolidated balance sheet
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS AT JUNE 30, 2015
3.1.
3.2.
3.3.
3.4.
3.5.
3.6.
3.7.
Consolidated balance sheet – assets
Consolidated balance sheet – liabilities
and shareholders’ equity
Consolidated income statement
Comprehensive income
Statement of changes in equity
Consolidated cash flow statement (indirect method)
Summary of the notes to the consolidated financial
statements
58
58
59
STATUTORY AUDITORS’ REPORT
ON THE FINANCIAL INFORMATION
FOR THE FIRST HALF OF 2015
92
61
61
62
63
64
65
66
67
CRÉDIT FONCIER
57
ANALYSIS OF RESULTS
ANALYSIS OF RESULTS
❯ CONSOLIDATED RESULTS
The group share of net income in the first half of 2015 was -€20m.
Net banking income: €427m
Crédit Foncier’s main consolidated financial indicators at June 30, 2015
were as follows:
Group share of net income: -€20m
Origination: €4.8bn
Outstandings (end of period): €100bn
(in €m)
Net banking income
Management expenses
Cost of risk
Total assets: €135bn
Consolidated equity (group share): €2.9bn
Consolidated European capital adequacy ratio: 9.5% of which
Common Equity Tier One (CET1): 8.8%
06/30/2015
Income before tax
427
336
+27.1%
-273
+3.3%
145
63
+130.2%
-160
-64
+150.0%
1
NS
2
-1
NS
-13
-1
NS
Income tax
-7
4
NS
Non-controlling interests
-1
-1
NS
C/I ratio*
*
-20
2
NS
66.0%
81.3%
-15.3 pts
C/I ratio (operating expenses/NBI).
Net banking income amounted to €427m, up by 27.1% compared
to the 1st half of 2014, that was impacted by the carrying cost of the
RMBS portfolio sold to BPCE at the end of September 2014.
Overheads, depreciation and amortisation amounting to €282m,
up slightly compared to the first half of 2014. This increase is explained
by two factors. The first is the impact of the new IFRIC 21 standard,
which results in the majority of some taxes being recognised in the first
half, rather than spread out evenly over the financial year. The second is
the fact of taking into account the contribution to the single Resolution
Fund. Adjusted for these items, operating expenses continued to
decline in accordance with the strategic plan.
58
Change
-282
Income from holdings consolidated by the equity method
Gains or losses on other assets
06/30/2014
CRÉDIT FONCIER
Cost of risk resulted in a net provision of €160m, significantly up
compared to the same period in 2014. It includes €104m in losses
recorded for Austrian counterparty Heta Asset Resolution AG, whose
securities were sold in June 2015. All exposures to Austria have been
sold as well as other international exposures as part of the balance
sheet deleveraging carried out since 2011.
The group share of net income consequently amounted to -€20m
for the first half of 2015. The prudential ratios have therefore been met,
with a Common Equity Tier 1 ratio (Basel III CET1) of 8.8%.
ANALYSIS OF RESULTS
3
❯ CONSOLIDATED BALANCE SHEET
■ ASSETS
(in €m)
Cash and amounts due from central banks
06/30/2015
12/31/2014
1,973
1,200
Financial assets at fair value through profit or loss
2,896
2,967
Hedging derivatives
7,913
8,366
Available-for-sale financial assets
2,660
3,469
Loans and receivables due from credit institutions
12,156
13,332
Loans and receivables due from customers
92,582
94,226
6,054
7,631
136
136
Revaluation adjustment on interest rate risk-hedged portfolio
Current tax assets
16
310
Deferred tax assets
1,209
1,205
Accrued income and other assets
7,509
8,077
Investments in companies accounted for by the equity method
58
58
Investment property
22
26
Property, plant and equipment
48
48
Intangible assets
6
6
13
13
135,251
141,070
06/30/2015
12/31/2014
4,094
4,279
Hedging derivatives
10,056
11,298
Amounts due to credit institutions
33,790
34,601
809
346
76,463
80,509
3
2
6,198
6,204
250
251
Goodwill
TOTAL
■ EQUITY AND LIABILITIES
(in €m)
Financial liabilities at fair value through profit or loss
Amounts due to customers
Debt securities
Current tax liabilities
Deferred tax liabilities
Accrued expenses and other liabilities
Provisions
Subordinated debt
Group share of consolidated equity
o/w net income for the period
Non-controlling (minority) interests
TOTAL
582
581
2,908
2,900
-20
15
98
99
135,251
141,070
CRÉDIT FONCIER
59
ANALYSIS OF RESULTS
The IFRS consolidated balance sheet total at June 30, 2015
amounted to €135.3bn, representing a decrease of 4.1% compared
to December 31, 2014.
Working cash balances, placed with Banque de France, amounted
to €2.0bn.
Loans and receivables due from credit institutions fell by €1.2bn,
or 8.8%, mainly due to a €1bn decrease in securities classified as loans
and receivables.
Loans and receivables due from customers declined by €1.6bn,
or 1.7%, mainly due to a €0.6bn decrease in loans to customers, a
€0.4bn drop in short-term credit facilities, a €0.4bn decline in securities
classified as loans and receivables and a €0.2bn decrease in other
loans.
Accrued income and other assets decreased by €0.6bn, or 7.0%,
due to restructuring of derivatives during the financial year.
60
CRÉDIT FONCIER
Amounts due to credit institutions fell by €0.8bn, mainly due to the
€0.8bn decline in term borrowings.
Debt securities amounted to €76.5bn compared to €80.5bn as of
December 31, 2014. This decline primarily results from the €2.7bn
decrease in debt financing and a €1.3bn decrease in Medium-Term
Notes (MTNs) and certificates of deposit.
The group share of consolidated equity was stable compared to
December 31, 2014, at €2.9bn.
OUTLOOK
Crédit Foncier is not aware of any deterioration affecting the Group’s
outlook since the date of its half-year financial statements.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AT JUNE 30, 2015
3
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS AT JUNE 30, 2015
❯ 3.1.
CONSOLIDATED BALANCE SHEET – ASSETS
(in €m)
Notes
Financial assets at fair value through profit or loss
3.1.1
Hedging derivatives
06/30/2015
12/31/2014
1,973
1,200
2,896
2,967
7,913
8,366
3.2
2,660
3,469
3.4.1
12,156
13,332
3.4.2
92,582
94,226
6,054
7,631
136
136
3.5
Current tax assets
16
310
Deferred tax assets
1,209
1,205
Accrued income and other assets
7,509
8,077
Investments in associates
58
58
Investment property
22
26
Property, plant and equipment
48
48
6
6
Intangible assets
Goodwill
TOTAL ASSETS
3.7
13
13
135,251
141,070
CRÉDIT FONCIER
61
❯ 3.2.
CONSOLIDATED BALANCE SHEET – LIABILITIES
AND SHAREHOLDERS’ EQUITY
(in €m)
Financial liabilities at fair value through profit or loss
Notes
06/30/2015
12/31/2014
3.1.2
4,094
4,279
10,056
11,298
Hedging derivatives
Amounts due to credit institutions
3.8.1
33,790
34,601
Amounts due to customers
3.8.2
809
346
3.9
76,463
80,509
3
2
6,198
6,204
71
65
Debt securities
Current tax liabilities
Deferred tax liabilities
Accrued expenses and other liabilities
Insurance companies’ underwriting reserves
Provisions
3.10
179
186
Subordinated debt
3.11
582
581
Shareholders’ equity
3,006
2,999
❯ Consolidated equity (group share)
2,908
2,900
Share capital and additional paid-in capital
1,731
1,731
Consolidated retained earnings
1,521
1,500
-324
-346
Gains or losses recognised directly in other comprehensive income
Net income for the period
❯ Non-controlling interests
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
62
CRÉDIT FONCIER
-20
15
98
99
135,251
141,070
❯ 3.3.
3
CONSOLIDATED INCOME STATEMENT
Notes
H1 2015
H1 2014
Interest and similar income
4.1
2,650
2,987
Interest and similar expenses
4.1
-2,372
-2,759
Fee and commission income
4.2
137
107
(in €m)
Fee and commission expenses
4.2
-15
-6
Net gains or losses on financial instruments at fair value through profit or loss
4.3
8
-41
Net gains or losses on available-for-sale financial assets
4.4
-13
9
Income from other activities
4.5
56
69
Expenses from other activities
4.5
NET BANKING INCOME
Operating expenses
4.6
Depreciation and amortisation of property, plant, equipment and intangible assets
GROSS OPERATING INCOME
Cost of risk
4.7
OPERATING INCOME
Share in net income of associates
5
Gains or losses on other assets
INCOME BEFORE TAX
Income tax
NET INCOME
GROUP SHARE OF NET INCOME
4.8
-24
-30
427
336
-278
-268
-4
-5
145
63
-160
-64
-15
-1
0
1
2
-1
-13
-1
-7
4
-20
3
-1
-1
-20
2
CRÉDIT FONCIER
63
❯ 3.4.
COMPREHENSIVE INCOME
(in €m)
NET INCOME
Notes
H1 2015
H1 2014
-20
3
Revaluation adjustments on defined-benefit plans
Tax impact of revaluation adjustments on defined-benefit plans
Share of gains and losses recognised directly in the equity of associates
that cannot be reclassified in income
ITEMS NOT RECYCLABLE TO INCOME
Foreign exchange rate adjustments
-1
Change in value of available-for-sale financial assets
23
Change in value of hedging derivatives
Income taxes
83
12
-12
-29
ITEMS RECYCLABLE TO INCOME
22
54
GAINS AND LOSSES RECOGNISED DIRECTLY IN EQUITY (AFTER TAX)
Share of gains and losses recognised directly in the equity of associates
that can be reclassified in income
64
22
54
COMPREHENSIVE INCOME
3
57
Attributable to equity holders of the parent
2
56
1
1
CRÉDIT FONCIER
❯ 3.5.
3
STATEMENT OF CHANGES IN EQUITY
Share capital
and additional
paid-in capital
Gains and losses recognised
directly in equity
Change in fair value
of financial instruments
(in €m)
Consolidated equity
at January 1, 2014
Additional
Share paid-in
capital capital
1,331
400
Revaluation
adjustment
on
Consolida- employeerelated
ted retained
liabilities
earnings
2,129
2
Availablefor-sale
financial
Hedging
assets derivatives
Group
share
of net
income
-272
Total
group
share of
consolidated
equity
Equity
attributable
to noncontrolling
interests
Total
consolidated
equity
3,590
99
3,689
-3
-3
-3
-3
Dividends paid
Capital increase
Total activity arising
from relations with
shareholders
Impact of acquisitions
and disposals on
non-controlling interests
Gains or losses
recognised directly
in other comprehensive
income
54
54
Total for the period
54
54
2
2
1
3
2
56
1
57
Other changes
Consolidated equity
at June 30, 2014
1,331
400
2,129
2
-218
0
2
3,646
98
3,744
Consolidated equity
at December 31,
2014
1,331
400
1,500
-5
-195
-146
15
2,900
99
2,999
Appropriation of 2014
income
15
Impact of IFRIC 21
application
Consolidated equity
at January 1, 2015
-15
6
1,331
400
1,521
6
-5
-195
-146
2,906
Dividends paid
6
99
3,005
-2
-2
-2
-2
Capital increase
Total activity arising
from relations with
shareholders
Impact of acquisitions
and disposals on
non-controlling interests
Gains or losses
recognised directly
in other comprehensive
income
15
7
Income for the period
22
22
-20
-20
1
-19
15
7
-20
2
1
3
-180
-139
-20
2,908
98
3,006
Other changes
Consolidated equity
at June 30, 2015
1,331
400
1,521
-5
CRÉDIT FONCIER
65
❯ 3.6.
CONSOLIDATED CASH FLOW STATEMENT (INDIRECT METHOD)
In the cash flow statement below, “operating activities” refers to
the entity’s primary income-generating activities as well as all other
activities that are neither investment activities nor financing activities.
They include transactions related to obligations foncières and other
long-term non-subordinated resources.
“Investment activities” refers to acquisitions and disposals of long-term
assets, and to investments that are not included in cash equivalents.
“Financing activities” refers to activities that have an impact on capital
(both its amount and its composition), cash dividends paid and the
entity’s subordinated loans.
(in €m)
Income before tax
Net depreciation and amortisation of property, plant and equipment and intangible assets
Net change to provisions and provisions for impairment (incl. insurance companies’ underwriting reserves)
Net cash flows generated by investment activities
H1 2015
H1 2014
-12
-1
4
5
29
-12
0
-1
-23
-14
Income/expense from financing activities
Other changes
288
-1,406
Total non-monetary items included in net income before tax
298
-1,428
Net increase or decrease arising from transactions with credit institutions
Net increase or decrease arising from transactions with customers
Net increase or decrease from transactions involving financial assets and liabilities
338
4,471
1,913
243
-2,826
-2,312
Net increase or decrease from transactions involving non-financial assets and liabilities
785
-1,281
Income taxes paid
269
192
Net increase or decrease in assets and liabilities arising from operating activities
479
1,313
Net cash flows generated by operating activities (A)
765
-116
19
27
4
11
Net increase or decrease related to financial assets and equity interests
Net increase or decrease related to investment property
Net increase or decrease related to property, plant & equipment and intangible assets
-1
-5
Net cash flows generated by investing activities (B)
22
33
Net increase or decrease arising from transactions with shareholders
-3
-2
Net increase or decrease generated by financing activities
3
15
Net cash flows generated by financing activities (C)
0
13
Impact of changes in exchange rates (D)
TOTAL NET CASH FLOWS (A+B+C+D)
787
-70
1,200
7,400
572
-1,444
800
548
-128
-192
-100
-1,800
Opening cash and cash equivalents
1,772
5,956
1,973
5,343
1,973
5,343
586
543
733
626
Demand transactions with credit institutions
Current accounts with overdrafts
Demand accounts in credit
Other amounts payable
Deposits and loans at overnight rates
Cash and amounts due from central banks (assets)
Net balance of demand transactions with credit institutions
Demand accounts in credit
Deposits and loans at overnight rates
Closing cash and cash equivalents
NET CHANGE IN CASH AND CASH EQUIVALENTS
66
CRÉDIT FONCIER
-147
-83
2,559
5,886
787
-70
❯ 3.7.
Note 1
1.1
1.2
1.3
1.4
Note 2
2.1
2.2
2.3
2.4
Note 3
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11
3.12
Note 4
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
3
SUMMARY OF THE NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Legal and financial framework – Significant events
during the period and events subsequent
to June 30, 2015
Legal framework
Guarantee mechanism
Significant events during the first half of 2015
Post-balance sheet events
Note 5
68
68
68
68
68
Accounting principles and comparability
Regulatory framework
Accounting standards
Use of estimates
Presentation of the consolidated financial
statements and balance sheet date
69
69
69
69
Notes to the balance sheet
Financial assets and liabilities at fair value through
profit or loss
Fair value of financial assets and liabilities
Loans and receivables
Reclassification of financial assets
Goodwill
Amounts due to credit institutions and customers
Debt securities
Provisions
Subordinated debt
Share capital and equity instruments issued
71
Notes to the income statement
Interest and similar income and expenses
Fee and commission income and expenses
Net gains or losses on financial instruments at fair
value through profit or loss
Net gains or losses on available-for-sale financial
assets
Income and expenses from other activities
Operating expenses
Cost of risk
Income tax
70
71
72
73
76
77
77
78
78
79
79
79
80
5.1
5.2
Partnerships and associates
86
86
86
Note 6
Segment reporting
87
Note 7
Commitments
Financing and guarantee commitments
Commitments on securities
88
88
88
7.1
7.2
Note 8
8.1
8.2
Note 9
9.1
9.2
Financial assets pledged as collateral and assets
received as collateral that can be sold or repledged
Financial assets pledged as collateral
Financial assets received as collateral that can be
sold or repledged
Offsetting financial assets and liabilities
Financial assets
Financial liabilities
Note 10 Scope of consolidation
10.1
10.2
89
89
89
90
90
90
91
Changes in the scope of consolidation during the
first half of 2015
Scope of consolidation at June 30, 2015
91
91
81
81
81
82
82
83
83
83
85
CRÉDIT FONCIER
67
NOTE 1
LEGAL AND FINANCIAL FRAMEWORK – SIGNIFICANT EVENTS DURING THE PERIOD
AND EVENTS SUBSEQUENT TO JUNE 30, 2015
1.1 LEGAL FRAMEWORK
1.3.4 MARKET PRICE VALUATION METHODS
Crédit Foncier, a subsidiary of BPCE, is a specialist in real estate and
public sector financing. It operates on the individual customers’ market
(real estate financing, valuation and services), the private corporate
market and the public sector market.
Subsequent to the changes made in 2014 affecting the valuation
of derivatives without equivalents in the items hedged, the income
statement for the first half of the year was impacted positively by:
❯ +€25.4m due to the impact of the “bi-curve” method, compared to
-€15.1m in the first half of 2014s;
1.2 GUARANTEE MECHANISM
❯ +€1.2m due to the change in CVA/DVA on derivatives, compared
to +€0.6m in the first half of 2014.
Crédit Foncier is a direct subsidiary of BPCE. As such, it is covered by
its parent company guarantee and the Groupe BPCE guarantee and
liquidity mechanism. As a direct subsidiary, Crédit Foncier does not
contribute to the network solidarity mechanism and will not be called
upon in the event of a Banque Populaire or Caisse d’Épargne default.
1.3.5 VALUATION OF ISSUER SPREADS
1.3 SIGNIFICANT EVENTS DURING THE FIRST HALF
OF 2015
1.3.6 CHANGE IN COST OF RISK
1.3.1 DISPOSAL OF EXPOSURE TO HETA ASSET
RESOLUTION
At December 31, 2014, Compagnie de Financement Foncier, a whollyowned subsidiary of Crédit Foncier, held €260m in securities issued by
HETA (formerly Hypo Alpe Adria Bank).
In the first quarter, after a moratorium was imposed on the institution’s
debt on March 1, 2015, groupe Crédit Foncier set aside a provision
for this exposure in the amount of 50% of its par value, in accordance
with the recommendations of the ECB. A provision in the amount of
-€141.9m was also set aside for all of the accrued interest and positive
revaluations of fixed-income components.
In the second quarter, acting in accordance with its risk management
policy, Compagnie de Financement Foncier sold its entire exposure
to HETA. The securities have thus been sold for a higher price than
provisioned at March 31, 2015. The overall impact of this disposure
over the period was reduced to a net impairment under cost of risk in
the amount of -€103.7m.
The recognition of the change in credit spreads on structured issuances
designated at fair value had a negative impact of -€11.4m before tax,
compared to -€23.4m in the first half of 2014.
The first half of 2015 recorded a negative cost of risk of -€160m
compared to -€64m in 2014. Adjusted for the -€103.7m loss from the
sale of HETA securities, the cost of risk amounts to -€56.3m.
1.3.7 RECLASSIFICATION OF FINANCIAL ASSETS
No reclassifications were carried out by the Group during the period.
1.3.8 CLEARING
At June 30, 2015, the clearing house held 105 Crédit Foncier swaps
for a total notional amount of €9.9bn. These swaps can be broken
down as follows:
❯ 56 positions (€6.5bn) were transferred to the clearing house as soon
as they were initiated;
❯ 49 positions (€3.4bn) were novated.
Hedging relationships comply fully with the “Novation of Derivatives and
Continuation of Hedge Accounting” amendment to IAS 39, applicable
as of January 1, 2014.
1.3.2 MARKET DISPOSALS
The Group continued to dispose of securities (mostly recognised under
“loans and receivables”) in the first half of the year, acting in accordance
with its 2011 strategic plan and the Board of Directors decision of
May 5th, 2015.
Crédit Foncier no longer holds any exposures to Austria at
June 30, 2015.
In total, €1.04bn (excluding HETA securities) in assets were sold. These
disposals, along with the termination of swaps, resulted in net capital
losses (before tax) of -€15.7m.
1.3.3 IMPAIRMENT OF CASH-GENERATING UNITS
(CGUS)
As there was no evidence of impairment in the first half of 2015, the
Group did not record any additional impairment losses.
68
CRÉDIT FONCIER
1.4 POST-BALANCE SHEET EVENTS
No other event that is likely to have a material impact on the financial
statements at June 30, 2015 occurred between the closing date
and July 28, 2015, the date of the Board of Directors’ meeting that
examined the financial statements.
NOTE 2
3
ACCOUNTING PRINCIPLES AND COMPARABILITY
2.1 REGULATORY FRAMEWORK
In accordance with EU Regulation 1606/2002 of July 19, 2002 relating
to the application of international accounting standards, groupe Crédit
Foncier has prepared its consolidated financial statements for the half
year ended June 30, 2015 in accordance with International Financial
Reporting Standards (IFRS) as adopted for use by the European Union
and applicable at that date, thereby excluding certain provisions of
IAS 39 relating to hedge accounting(30).
These half-year consolidated financial statements at June 30, 2015
were prepared in accordance with IAS 34, “Interim Financial Reporting”.
As such, the notes presented cover the most important items for the
half-year period, and should be read in conjunction with the Group’s
consolidated financial statements at December 31, 2014.
“Provisions, Contingent Liabilities and Contingent Assets” clarifies the
conditions for recognising debt related to levies by public authorities.
On the date of the first application (January 1, 2014), the impacts of the
IFRIC 21 interpretation are recognised retroactively as follows:
❯ the change in method related to the social solidarity tax (contribution
sociale de solidarité des sociétés - C3S), which previously had been
recognised for the year in which the revenues were earned and is
now recognised on January 1 of the following year, had an impact
on the opening balance sheet at January 1, 2014: cancellation of the
provision recognised at December 31, 2013 against equity;
❯ as a result, the change in method related to the social solidarity tax
had an impact on net income for the 2014 fiscal year;
❯ the change in method related to the recognition at January 1, 2014
of taxes that had previously been recognised progressively (namely
the TSB, or Tax on Systemic Banks, the tax for ACPR supervisory
fees and the property tax) had an impact on the interim earnings for
the 2014 fiscal year.
2.2 ACCOUNTING STANDARDS
The accounting standards and interpretations applied and described in
groupe Crédit Foncier’s annual financial statements at December 31,
2014 were complemented by standards, amendments and
interpretations whose application is mandatory for reporting periods
starting from January 1, 2015.
As of January 1, 2015, groupe Crédit Foncier applies IFRIC 21
“Levies” retroactively to January 1, 2014. This interpretation of IAS 37
The impacts of the IFRIC 21 interpretation on the consolidated balance
sheet at December 31, 2014 primarily concern consolidated equity
(group share) and amount to +€6m, net of deferred taxes, recognised
against accrued liabilities and deferred tax assets.
The impacts of the IFRIC 21 interpretation on the consolidated income statement for the first half of 2014 are presented in the table below:
Impacted posts in the financial statements
H1 2014
Impact on
H1 2014
Restated amounts
H1 2014
H1 2015
Operating expenses
-273
-15
-288
-282
(of which taxes)*
(-20)
(-15)
(-35)
(-43)
Income tax
4
6
10
-12
2
-9
-7
-20
*
The increase under “Taxes other than on income” between the first half 2014 (restated) and the first half of 2015 is primarily the result of the new contribution to
the Single Resolution Fund that partially offsets the decrease of the rate applicable to the tax for systemic risks, for an -€5.5m impact, net of charges.
Given the non-materiality of the impact of this change in method, the
comparative periods presented in the financial statements have not
been adjusted.
In the specific case of the financial year ended June 30, 2015,
accounting estimates involving assumptions were mainly used for the
following assessments:
The other standards, amendments and interpretations adopted by the
European Union did not have a material impact on the Group’s financial
statements.
❯ fair value of financial instruments assessed using valuation
2.3 USE OF ESTIMATES
In some cases, the preparation of financial statements requires the use
of assumptions and estimates with regard to uncertain future events.
These estimates are based on the judgement of the individuals
preparing these financial statements and the information available at
the balance sheet date.
Actual future results may differ from these estimates.
techniques (note 2.3.1);
❯ the amount of impairment of financial assets, and more specifically
permanent impairment losses on available-for-sale assets and
impairment losses applicable to loans and receivables on an
individual basis or calculated on the basis of portfolios;
❯ provisions recorded under liabilities and provisions relating to reverse
mortgage loans;
❯ assessment of expenses related to pension schemes and future
employee benefits;
❯ deferred taxes;
❯ goodwill impairment testing.
(30) These standards can be found on the European Commission website at the following address: http://ec.europa.eu/internal_market/accounting/ias_fr.htm.
CRÉDIT FONCIER
69
2.3.1 DETERMINATION OF FAIR VALUE
Instruments valued by specific models or using non-observable inputs
more specifically include:
GENERAL PRINCIPLES
❯ unlisted shares, generally in the form of equities: Crédit Logement;
Fair value is defined as the amount received for the sale of an asset or
paid for the transfer of a liability in an arm’s-length transaction between
market participants at the valuation date.
Groupe Crédit Foncier assesses the fair value of assets and liabilities
based on the assumptions that market players would use to set the
price of an asset or liability. For derivatives, these assumptions include
the evaluation of counterparty risk (CVA – Credit Valuation Adjustment)
and own credit risk (DVA – Debit Valuation Adjustment). As of
September 30, 2014, they are evaluated based on market parameters.
The valuation of derivatives for which the counterparty is a member of
the Groupe BPCE solidarity mechanism (see note 1.2) is not subject
to CVA or DVA calculation in the Group accounts.
At June 30, 2015, the impacts of the CVA and DVA on the income
statement are -€5.1m and +€6.4m, respectively.
❯ certain UCITS, when the net asset value is an indicative value (in
the event of illiquidity, liquidation, etc.) and there is no price that
supports the said value;
❯ FCPRs (venture capital mutual funds): the net asset value is
frequently an indicative value because it is often not possible to exit;
❯ multi-asset structured products, hybrid rate products, securitisation
swaps and fixed-income options products;
❯ structured loans for which some valuation parameters are not
observable (credit spread, etc.);
❯ securitisation tranches for which there is no price quoted on an
active market. These instruments are frequently valued based on
contributor prices (structurers for example).
TRANSFERS BETWEEN FAIR-VALUE LEVELS
FAIR VALUE HIERARCHY
Level 1 fair value and the concept of an active market
In the case of financial instruments, the most reliable evidence of fair
value is a quoted price on an active market (“level 1 fair value”). Where
such prices exist, they must be used without adjustment to establish
fair value.
SPECIFIC INSTANCES
Fair value of financial instruments booked at amortised cost
An active market is a market on which transactions for assets or
liabilities occur with sufficient frequency and volume.
Fair value calculations for financial instruments that are not at fair value
on the balance sheet are provided for information only and should be
interpreted with caution.
Level 2 fair value
In fact, for most cases, the values provided are not intended to be
produced and in practice they normally cannot be.
If there are no quoted prices on an active market, fair value may be
determined in accordance with generally accepted valuation methods
reflecting accepted financial theories and preferring observable market
valuation methods (“level 2 fair value”).
“Level 2” valuations are based on observable data and models
recognised as industry standards (discounted cash flow method,
interpolation technique, etc.).
Level 3 fair value
If observable market inputs are inadequate, fair value may be
determined by applying a valuation method based on internal models
(“level 3 fair value”) using non-observable data. The model used must
be periodically updated by reconciling its results with prices for recent
transactions.
Over-the-counter instruments valued using uncommon models
or models that use a significant portion of non-observable data
(level 3)
When the valuations are not obtained using observable data or models
recognised as industry standards, the valuation is considered nonobservable.
70
The Group carried out no transfers between fair value levels during the
first six months of the financial year.
CRÉDIT FONCIER
Fair values calculated in this way are provided for information only in the
notes to the financial statements. These values are not the indicators
used to manage commercial bank activities, for which the management
model is the collection of contractual cash flows.
Consequently, when assessing the fair value of these instruments, the
following assumptions have been made for the sake of simplicity.
2.4 PRESENTATION OF THE CONSOLIDATED
FINANCIAL STATEMENTS AND BALANCE
SHEET DATE
The IFRS imposes no model for summary financial statements.
The financial statements’ presentation is compliant with the
Recommendation No. 2013-04 of the French National Accounting
Board, dated November 7, 2013.
The consolidated financial statements are drawn up on the basis of the
financial statements of the companies within groupe Crédit Foncier’s
scope of consolidation at June 30, 2015. The Group’s consolidated
financial statements at June 30, 2015 were approved by the Board of
Directors on July 28, 2015.
NOTE 3
3
NOTES TO THE BALANCE SHEET
3.1 FINANCIAL ASSETS AND LIABILITIES AT FAIR
VALUE THROUGH PROFIT OR LOSS
assets, and structured issuances from Compagnie de Financement
Foncier are posted as liabilities.
These assets and liabilities mainly comprise certain assets and liabilities
that the Group has chosen to recognise at fair value, at their date
of acquisition or issuance, using the fair value option available under
IAS 39, i.e.: structured loans granted by the Group are posted as
Derivative assets and liabilities in the trading book are contracted to
hedge the structured transactions described above.
3.1.1 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
06/30/2015
(in €m)
Trading
FV option
12/31/2014
Total
Trading
16
23
FV option
Total
Treasury bills and equivalent
Bonds and other fixed-income securities
16
23
Fixed-income securities
Equities and other variable-income
securities
Loans to credit institutions
Loans to customers
2,218
2,218
2,167
2,167
Loans
2,218
2,218
2,167
2,167
Repurchase agreements*
Trading derivatives*
662
TOTAL FINANCIAL ASSETS AT FAIR VALUE
THROUGH PROFIT AND LOSS
678
*
2,218
662
777
2,896
800
777
2,167
2,967
The information is presented taking into account netting effects, in accordance with IAS 32 (see note 9).
3.1.2 FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
(in €m)
06/30/2015
12/31/2014
1,089
934
Financial liabilities held for trading
Trading derivatives*
Debt securities
3,005
3,345
Financial liabilities designated at fair value through profit or loss
3,005
3,345
TOTAL FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
4,094
4,279
*
The information is presented taking into account netting effects, in accordance with IAS 32 (see note 9).
CRÉDIT FONCIER
71
3.2 AVAILABLE-FOR-SALE FINANCIAL ASSETS
These are non-derivative financial assets that could not be classified in any other category (“Financial assets at fair value”, “Held-to-maturity financial
assets”, or “Loans and receivables”).
(in €m)
Treasury bills and equivalent
Impaired securities
06/30/2015
12/31/2014
2,240
2,461
161
752
1
1
2,402
3,214
221
224
Other variable-income securities
Impaired securities
Equities and other variable-income securities
12
236
Loans to customers
28
27
Loans
28
27
2,668
3,477
-1
-1
Available-for-sale financial assets, Gross
Impairment of fixed-income securities and loans
Permanent impairment of equities and other variable-income securities
TOTAL AVAILABLE-FOR-SALE FINANCIAL ASSETS
Gains and losses recognised directly in equity on available-for-sale financial assets (before tax)
Available-for-sale assets are impaired on the basis of impairment
indicators when the Group believes that its investment will not be
fully recovered. For listed variable-income securities, the impairment
indicator is a decline of more than 50% over the historic cost or for a
period longer than 36 months.
72
17
238
CRÉDIT FONCIER
-7
-7
2,660
3,469
-214
-233
At June 30, 2015, the gains and losses recognised directly in equity
include, more specifically, the revaluation of the credit component on
sovereign securities.
3
3.3 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
3.3.1 FAIR-VALUE HIERARCHY OF FINANCIAL ASSETS AND LIABILITIES
The following statement provides a breakdown of financial instruments by type of price and valuation model:
(in €m)
FINANCIAL ASSETS
Price
quoted
on active
market
(level 1)
2,299
MeasuMeasurement
rement
techniques techniques
using using nonobservable observable
data
data
(level 3)
(level 2)
8,606
Securities
Derivatives
MeasureMeasurement techment techPrice
quoted on niques using niques using
Total at
non-obserobservable
Total at an active
vable data December 31,
data
market
June 30,
2014
(level 3)
(level 2)
(level 1)
2015
2,564
13,469
16
16
2,522
9,652
2,628
14,802
23
23
622
622
777
777
Interest-rate derivatives
540
540
681
681
Foreign-exchange derivatives
122
122
96
96
16
678
777
2,218
Financial assets designated
at fair value through profit
or loss
2,218
Financial assets held
for trading
662
23
800
2,218
2,168
2,168
2,218
2,168
2,168
Securities
5,462
5,462
6,724
6,724
2,451
2,451
1,642
1,642
Others
Hedging derivatives
7,913
23
2,299
Available-for-sale financial
assets
2,299
7,913
8,366
207
230
22
206
228
479
212
3,213
8
19
27
509
437
3,468
103
2,402
8
20
28
31
330
2,660
2,522
2,522
8,366
CRÉDIT FONCIER
73
(in €m)
FINANCIAL LIABILITIES
Price
quoted on
an active
market
(level 1)
MeasuMeasurement
rement
using using nonobservable observable
data
data
(level 3)
(level 2)
Price
quoted on
Total at an active
market
June 30,
(level 1)
2015
MeasuMeasurement
rement
using using nonTotal at
observable observable
data December 31,
data
(level 3)
2014
(level 2)
14,149
14,149
15,578
15,578
1,088
1,088
935
935
1,000
1,000
864
864
88
88
71
71
Financial liabilities held
for trading
1,088
1,088
935
935
Securities
3,005
3,005
3,345
3,345
3,005
3,005
3,345
3,345
7,379
7,379
8,955
8,955
2,677
2,677
2,343
2,343
10,056
10,056
11,298
11,298
Derivatives
Others
Other financial liabilities
Financial liabilities designated
at fair value through profit or
loss
Credit derivatives
Equity derivatives
Others
Hedging derivatives
74
CRÉDIT FONCIER
3
3.3.2 ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES UNDER LEVEL 3 OF FAIR VALUE HIERARCHY
Gains and losses recognised during Transactions carried
the period
out during the period Transfers of the period
in the income statement
(in €m)
FINANCIAL
ASSETS
On
transactions
in progress
at the
reporting
date
12/31/2014
On
transactions
eliminated
from the
balance
sheet at the
reporting
date
Purchases/ Disposals/
Is- RedempIn equity suances
tions
106
-270
to and
from
another
accounting to and from
Other
category levels 1 and 2 changes 06/30/2015
2,627
101
2,564
23
-7
16
23
-7
16
2,168
108
-58
2,218
Financial assets
designated at fair
value through profit
or loss
2,168
108
-58
2,218
Securities
Fixed-income
securities
Variable-income
securities
Derivatives
Financial assets
held for trading
Securities
Fixed-income
securities
Variable-income
securities
Hedging derivatives
Investments in
associates
206
-1
2
Other AFS securities
211
1
103
19
1
436
106
Available-for-sale
financial assets
207
-212
103
20
-212
330
FINANCIAL
LIABILITIES
Securities
Derivatives
held for trading
Hedging derivatives
Securities
designated at fair
value through profit
or loss
At June 30, 2015, financial instruments valued by a technique that
uses non-observable data include structured loans to local authorities
designated at fair value and equities and advances to unconsolidated
subsidiaries.
During the first half of 2015, -€101m in losses were recorded for level
3 financial assets that were still part of the portfolio at June 30, 2015.
During the first half of 2015, no gains and losses were recognised
directly in equity for level 3 financial assets that were still part of the
portfolio at June 30, 2015.
CRÉDIT FONCIER
75
3.4 LOANS AND RECEIVABLES
These are non-derivative financial assets with fixed or determinable
payments that are not traded on an active market. Most loans granted
by the Group fall into this category. Loans and receivables also include
securities that are not traded on an active market, as well as those
that are reclassified under the amendment to IAS 39 and IFRS 7, as
adopted by the European Union on October 15, 2008.
State-subsidised mortgage loans benefit from French government
guarantees for both credit and interest-rate risk. These are loans
granted in the period between 1950 and 1995, when Crédit Foncier
had a near monopoly on the distribution of state-subsidised loans
within the scope of a policy to promote construction.
Their amounts were €280m at June 30, 2015 and €319m at
December 31, 2014.
3.4.1 LOANS AND RECEIVABLES DUE FROM CREDIT INSTITUTIONS
06/30/2015
(in €m)
(1)
12/31/2014
12,156
13,332
TOTAL LOANS AND RECEIVABLES DUE FROM CREDIT INSTITUTIONS
12,156
13,332
(1) Of which €9,087m of loans to BPCE with guarantees received amounting to €8,867m.
Amounts due from transactions with the network amounted to €344m at June 30, 2015 (€383m at December 31, 2014).
The fair value of loans and receivables due from credit institutions was €12,124m at June 30, 2015 (€13,248m at December 31, 2014).
❯ Breakdown of gross loans and receivables due from credit institutions
(in €m)
06/30/2015
12/31/2014
733
801
11,193
11,310
Repurchase agreements
Loans and advances
Finance leases
Subordinated and participating loans
Securities classified as loans and receivables
24
23
206
1,198
12,156
13,332
06/30/2015
12/31/2014
93,559
95,169
-828
-788
Other loans and receivables due from credit institutions
Impaired loans and receivables
TOTAL LOANS AND RECEIVABLES DUE FROM CREDIT INSTITUTIONS, GROSS
3.4.2 LOANS AND RECEIVABLES DUE FROM CUSTOMERS
(in €m)
Specific impairment
Impairment on a portfolio basis
TOTAL LOANS AND RECEIVABLES DUE FROM CUSTOMERS
-149
-155
92,582
94,226
The fair value of loans and receivables due from customers was €96,235m at June 30, 2015 (€96,827m at December 31, 2014).
76
CRÉDIT FONCIER
3
❯ Breakdown of gross loans and receivables due from customers
(in €m)
06/30/2015
12/31/2014
1
2
Loans to financial sector customers
2
2
1,884
2,311
Equipment loans
18,661
18,796
Home loans
56,909
57,458
561
582
Short-term credit facilities
Export loans
Finance leases
Other loans
Other facilities granted to customers
Securities classified as loans and receivables
2,831
3,037
80,848
82,186
9,472
9,874
3,238
3,107
93,559
95,169
Other loans and receivables due from customers
Impaired loans and receivables
TOTAL GROSS LOANS AND RECEIVABLES DUE FROM CUSTOMERS
3.5 HELD-TO-MATURITY FINANCIAL ASSETS
These are non-derivative financial assets with fixed or determinable payments and fixed maturities that Crédit Foncier has the intention and ability
to hold until maturity.
06/30/2015
12/31/2014
136
136
Gross amount of held-to-maturity financial assets
136
136
TOTAL HELD-TO-MATURITY FINANCIAL ASSETS
136
136
(in €m)
The fair value of held-to-maturity financial assets was €136m at June 30, 2015 (€135m at December 31, 2014).
3.6 RECLASSIFICATION OF FINANCIAL ASSETS
In compliance with the amendments to IAS 39 and IFRS 7 “Reclassification of Financial Assets”, in 2008 the Group reclassified certain availablefor-sale financial assets to “Loans and receivables”.
The table below shows the book value and fair value of these assets:
(in €m)
Amortised cost (nominal +/- premium/
discount)
12/31/2014 06/30/2015
o/w principal o/w change
repayments/ in value due
disposals to exchange
rate
over the
period differences
Change
o/w change o/w amortisain value tion of credit
component
due to
interest rate at reclassification date
differences
6,833
6,196
-637
-916
279
N/A
N/A
84
92
8
N/A
NS
NS
N/A
1,893
1,264
-629
N/A
42
-671
N/A
-74
-71
3
N/A
N/A
N/A
3
0
0
0
N/A
N/A
N/A
N/A
Carrying amount
8,735
7,481
-1,254
-916
321
-671
3
FAIR VALUE
7,711
7,021
-690
Accrued interest
Valuation of interest rate component
(hedged)
Valuation of credit component
(unhedged)
Impairment
N/A: Not applicable.
NS: Not significant.
CRÉDIT FONCIER
77
Fair value hedges were contracted for all reclassified assets showing
interest rate and/or currency risk. Any change in value of the hedged
items between the reclassification date and the balance sheet date is
recognised in income and offset by the change in value of the attendant
hedging instruments (interest rate and/or currency swaps), where
appropriate. Amortisation of the credit component at the reclassification
date is also recognised in income and offset by the amortisation of
unrealised losses on available-for-sale financial assets carried in equity
to be recycled to the income statement at the time of reclassification.
The amortisation of both items is registered at the same pace.
3.7 GOODWILL
If these financial assets had not been reclassified, equity to be
reclassified to the income statement would have included a posttax loss of -€302m at June 30, 2015, an increase of +€369m since
December 31, 2014.
As the interest rate and the exchange rate components of these assets
were hedged, the impact on the income statement is limited to interest
for the period.
(in €m)
3.7.1 GOODWILL
This item comprises unallocated goodwill. Goodwill arising from
transactions carried out during the period is detailed in note 10 “Scope
of consolidation”.
06/30/2015
12/31/2014
CFI
13
13
TOTAL GOODWILL
13
13
06/30/2015
12/31/2014
Opening net value
13
13
Closing net value
13
13
(in €m)
3.8 AMOUNTS DUE TO CREDIT INSTITUTIONS AND CUSTOMERS
Amounts due that are not classified as financial liabilities at fair value through profit or loss are accounted for at amortised cost and posted to the
balance sheet under “Amounts due to credit institutions” or “Amounts due to customers”.
3.8.1 AMOUNTS DUE TO CREDIT INSTITUTIONS
(in €m)
Demand deposits
06/30/2015
12/31/2014
220
249
4
4
Accrued interest
Amounts due to credit institutions – repayable on demand
Term deposits and loans
224
253
33,503
34,290
63
58
Amounts due to credit institutions – repayable at agreed maturity dates
Accrued interest
33,566
34,348
TOTAL AMOUNTS DUE TO CREDIT INSTITUTIONS
33,790
34,601
The fair value of amounts due to credit institutions was €33,792m at June 30, 2015 (€34,603m at December 31, 2014).
Amounts due from transactions with the network amounted to €61m at June 30, 2015 (€59m at December 31, 2014).
3.8.2 AMOUNTS DUE TO CUSTOMERS
(in €m)
Current accounts in credit
06/30/2015
12/31/2014
181
194
129
70
Regulated savings accounts
Demand deposits and loans
Term deposits and loans
499
82
Other amounts due to customers
628
152
TOTAL AMOUNTS DUE TO CUSTOMERS
809
346
The fair value of amounts due to customers was €809m at June 30, 2015 (€350m at December 31, 2014).
78
CRÉDIT FONCIER
3
3.9 DEBT SECURITIES
Debt securities are broken down by type, except subordinated and deeply subordinated notes, which are shown under “Subordinated debt”.
(in €m)
06/30/2015
12/31/2014
Bonds
75,428
77,458
81
1,356
75,509
78,814
Interbank market instruments and negotiable debt securities
Total
Accrued interest
TOTAL DEBT SECURITIES
954
1,695
76,463
80,509
The fair value of debt securities was €79,786m at June 30, 2015 (€83,013m at December 31, 2014).
3.10 PROVISIONS
12/31/2014
Additions
Provisions for end-of-career benefits
24
1
Provisions for other long-term benefits
27
(in €m)
Provisions for long-service awards
3
Provisions for post-employment benefits
1
06/30/2015
25
3
55
1
27
1
Provisions for litigation, fines and penalties relating
to operating expenses
14
Provisions for litigation, fines and penalties relating
to banking activities
33
Provisions for litigation
Other provisions for liabilities and charges relating
to operating activities
to unconsolidated equity investments
1
-1
55
28
-1
-1
1
-1
-1
2
34
47
1
-2
-2
2
46
32
6
-2
-10
to banking activities
17
Other provisions
50
*
Other
changes*
-1
Provisions for off-balance sheet commitments
Total provisions
Unused
reversals
27
Provisions for employee benefit commitments
Provision for restructuring costs
Use
12
26
1
-1
16
6
-3
-10
10
-5
-13
43
7
186
7
1
179
Including changes in consolidation scope and exchange rates.
3.11 SUBORDINATED DEBT
This item includes subordinated debt and deeply subordinated notes.
Subordinated debt is classified separately from debts and issued
bonds, because in the event of default, holders of subordinated debt
rank after all senior debt holders but before holders of participating
loans and securities and deeply subordinated notes.
The deeply subordinated notes issued by groupe Crédit Foncier have
the following terms and conditions:
❯ newly issued notes are pari passu to each other as well as to all
other deeply subordinated securities of the issuer;
❯ interest must be paid when net income is reported for the year,
regardless of whether that income is paid out in the form of dividends
or not. Therefore, the payment of the coupon is no longer at the
discretion of the issuer, and the contractual obligation to deliver cash
is indeed a financial liability within the meaning of IFRS.
CRÉDIT FONCIER
79
06/30/2015
12/31/2014
Term subordinated debt
290
290
Perpetual deeply subordinated debt
280
280
Total
570
570
4
2
(in €m)
Accrued interest
Revaluation of hedged items
TOTAL SUBORDINATED DEBT
The fair value of subordinated debt was €583m at June 30, 2015
(€582m at December 31, 2014).
The perpetual deeply subordinated debt corresponds to a €280m debt
issued by Crédit Foncier and fully purchased by BPCE.
8
9
582
581
in case of changes in tax regulation or regulatory measures. In this
case, the early redemption will be submitted to the preliminary approval
of the French Prudential Supervisory Authority (Autorité de contrôle
prudentiel et de résolution - ACPR).
Subordination conditions:
Early repayment terms:
On July 30, 2014, a call option on this bond could have been exercised
in full at the issuer’s will. The issuer didn’t use this option, so the
issuance was extended under new financial conditions: the issuance
rate was changed from a 5.48% fixed-rate to a Euribor 3-months
+1.89% rate. The issuer will also be able to call for an early redemption
In the event of liquidation of the borrower, the debt shall be repaid
after all other preferential or unsecured creditors and ordinary holders
of subordinated debt have been paid, and after reimbursement of any
participating loans granted to the borrower or securities.
3.12 SHARE CAPITAL AND EQUITY INSTRUMENTS ISSUED
06/30/2015
(in €m)
12/31/2014
Number
of shares
Nominal
(in €)
Capital
(in €m)
Number
of shares
Nominal
(in €)
Capital
(in €m)
369,833,533
3.60
1,331
369,833,533
3.60
1,331
369,833,533
3.60
1,331
369,833,533
3.60
1,331
Ordinary shares
Value at opening
Decrease in capital
VALUE AT CLOSING
There are no special shares in the Group’s share capital.
80
CRÉDIT FONCIER
NOTE 4
3
NOTES TO THE INCOME STATEMENT
4.1 INTEREST AND SIMILAR INCOME
AND EXPENSES
This line item comprises interest income and expenses—calculated
using the effective interest rate method—on financial assets and
liabilities measured at amortised cost, which include interbank and
customer transactions, held-to-maturity assets, debt securities and
subordinated debt.
It also includes interest receivable on fixed-income securities classified
as available-for-sale financial assets and hedging derivatives, with the
understanding that accrued interest on cash flow hedging derivatives
is taken to income in the same manner and period as the accrued
interest on the hedged item.
H1 2015
H1 2014
Income
Expenses
Net
Income
Expenses
Net
1,548
-180
1,368
1,532
-2
1,530
Credit institution loans and receivables
52
-136
-84
56
-256
-200
Finance leases
11
11
12
(in €m)
Customers loans and receivables
Debt securities and subordinated debt
Hedging derivatives
991
47
1
Other interest income and expenses
TOTAL INTEREST INCOME AND EXPENSES
2,650
-1,088
-1,088
-956
35
1,334
47
52
1
1
-12
-12
-2,372
278
2,987
-1,303
-1,303
-1,191
143
52
1
-7
-7
-2,759
228
This line mainly includes fees and commissions for recurring services
(payment processing, securities deposit fees, etc.) and occasional
services (fund transfers, payment penalties, etc.), as well as fees and
commissions on the execution of major transactions.
4.2 FEE AND COMMISSION INCOME
AND EXPENSES
Fees and commissions are recorded based on the type of service
rendered and on the method of accounting for the financial instruments
to which the service relates.
However, fees or commissions that form an integral part of the effective
yield of a contract are recorded under “Interest margin”.
H1 2015
(in €m)
12
Income
H1 2014
Expenses
Net
Income
Expenses
Net
Cash and interbank transactions
60
-2
58
36
-1
35
Financial services rendered
4
-11
-7
4
-3
1
Sale of insurance products
63
63
61
1
1
Payment services
Securities transactions
-1
-1
61
-2
-2
Trust management services
4
4
2
2
Transactions on financial instruments and derivatives
3
3
2
2
Other fees and commissions
2
-1
1
2
2
137
-15
122
107
TOTAL FEE AND COMMISSION INCOME
AND EXPENSES
-6
101
CRÉDIT FONCIER
81
4.3 NET GAINS OR LOSSES ON FINANCIAL
INSTRUMENTS AT FAIR VALUE THROUGH
PROFIT OR LOSS
This item includes gains and losses (including the related interest) on
financial assets and liabilities held for trading or those designated at
fair value through profit or loss under the fair value option.
“Gains or losses on hedging transactions” includes gains and losses
arising from the revaluation of derivatives used as fair value hedges, as
well as gains and losses arising from the symmetrical revaluation at fair
value of the hedged item, as well as the revaluation at fair value of the
macro-hedged portfolio and the ineffective portion of cash flow hedges.
H1 2015
(in €m)
Gains or losses on financial instruments held for trading
Gains or losses on financial instruments designated at fair value through profit or loss
H1 2014
-141
15
141
-45
Gains or losses on hedging transactions
7
-12
❯ Ineffective portion of fair value hedges
7
-12
❯ Fair value adjustment on hedging instruments
719
-1,186
-712
1,174
Gains or losses on foreign exchange transactions
1
1
TOTAL NET GAINS OR LOSSES ON FINANCIAL INSTRUMENTS AT FAIR VALUE
THROUGH PROFIT OR LOSS
8
-41
❯ Fair value adjustment on hedged items attributable to the hedged risks
❯ Ineffective portion of cash flow hedges
❯ Ineffective portion of hedges of net investment in foreign currency
For the first half of 2015, the item “Gains or losses on hedging
transactions” includes the valuation of structured loans for -€7m in
June 2015 (in June 2014 the impact is non-material), the fair value
adjustment of derivatives impacted for some -€5m by the change in
Credit Value Adjustment (CVA), and impacted for some +€6m by the
change in Debit Valuation Adjustment (DVA). The introduction of the “bicurve effect” in the valuation of unstructured derivatives has a +€25m
impact on the interim financial statements.
The item “Gains or losses on financial instruments designated at fair
value through profit or loss” especially includes the valuation of issuer
spread on issuances classified as financial instruments designated
at fair value through profit or loss, which had a negative impact of
-€11m on the result before tax in June 2015 compared to -€23m in
June 2014.
4.4 NET GAINS OR LOSSES ON AVAILABLE-FORSALE FINANCIAL ASSETS
This item includes:
❯ variable-income securities;
❯ gains and losses on the sale of available-for-sale financial assets
and other financial instruments not valued at fair value and similar
securities;
❯ losses recognised on variable-income securities due to a permanent
impairment.
(in €m)
Net gains or losses on disposals*
Dividends received
H1 2015
H1 2014
-16
2
3
7
-13
9
Permanent impairment of variable-income securities
TOTAL NET GAINS OR LOSSES ON AVAILABLE-FOR-SALE FINANCIAL ASSETS
*
Corresponds to losses on disposals of international securities.
The automatic application of indicators of losses in value on listed securities presented in paragraph 2.3 did not result in any new material impairment
in the first half of 2015.
82
CRÉDIT FONCIER
4.5 INCOME AND EXPENSES FROM OTHER
ACTIVITIES
gains and losses on disposals, depreciation, amortisation and
impairment losses) and income and expenses relating to operating
leases.
This item mainly comprises income and expenses linked to the
insurance activity, investment property (rental income and expenses,
H1 2015
(in €m)
H1 2014
Income
Expenses
Net
Income
Expenses
Net
32
-12
20
33
-13
20
2
-1
1
5
-1
4
-1
-1
-13
13
Income and expenses from insurance activities
3
Income and expenses from real estate activities
Income and expenses from leasing activities
Income and expenses from investment property
2
-1
1
Share of joint ventures
Transfers of income and expenses
Other operating income and expenses
22
-11
11
26
3
-1
2
Other banking income and expenses
22
-11
11
29
-15
14
TOTAL INCOME AND EXPENSES FROM OTHER
ACTIVITIES
56
-24
32
69
-30
39
Additions to and reversals from provisions to other operating
income and expenses
4.6 OPERATING EXPENSES
Operating expenses include mainly payroll costs such as wages and
salaries net of rebilled amounts, social security taxes and employee
benefit expenses.
(in €m)
Payroll costs
This line also includes all administrative expenses and external services
costs.
H1 2015
H1 2014
-142
-143
Taxes other than on income
-43
-20
External services and other general operating expenses
-93
-105
Other administrative costs
-136
-125
TOTAL OPERATING EXPENSES
-278
-268
4.7 COST OF RISK
4.7.1 COST OF RISK
This item records the net impairment expenses attributable to credit
risk, including impairment calculated on both an individual and
collective basis for a portfolio of similar receivables.
It applies to loans and receivables and fixed-income securities with
a known counterparty risk. Losses on other types of instruments
(derivatives or securities designated at fair value) arising following the
insolvency of credit institutions are also included under this item.
❯ Cost of risk for the period
(in €m)
Net charge to provisions and provisions for impairment
Recovery on loans and receivables written-off
H1 2015
H1 2014
-52
-59
5
4
Irrecoverable loans not covered by provisions for impairment*
-113
-9
TOTAL COST OF RISK
-160
-64
*
See note 1.3.1 “Significant events during the first half of 2015”.
CRÉDIT FONCIER
83
❯ Cost of risk by asset type
H1 2015
(in €m)
Interbank transactions*
-104
-56
H1 2014
-63
-1
TOTAL COST OF RISK
*
-160
-64
See note 1.3.1 “Significant events during the first half of 2015”.
4.7.2 IMPAIRMENT AND PROVISIONS FOR CREDIT RISK
(in €m)
12/31/2014
Additions
Reversals
Other
changes
06/30/2015
1
1
Interbank transactions*
943
184
-153
2
976
Impairment losses recognised in assets
Provisions for off-balance sheet commitments
TOTAL IMPAIRMENT AND PROVISIONS
FOR CREDIT RISK
*
1
945
184
27
1
972
185
-153
2
978
28
-153
2
1,006
Changes related to the HETA provision of March 31 are not posted in this item given that the default and disposal occurred within the same half-year period.
4.7.3 TOTAL EXPOSURE TO CREDIT RISK AND
COUNTERPARTY RISK
The total exposure of all of groupe Crédit Foncier’s financial assets
to credit risk is shown in the table below. This exposure is calculated
on the basis of the carrying amount of the financial assets without
taking into account the impact of any unrecognised netting or collateral
agreements.
(in €m)
06/30/2015
12/31/2014
Amounts due from central banks
1,973
1,200
Financial assets at fair value through profit or loss (excl. variable-income securities)
2,896
2,967
Hedging derivatives
7,913
8,366
Available-for-sale financial assets (excl. variable-income securities)
2,430
3,240
12,156
13,332
92,582
94,226
136
136
Net exposure to balance sheet commitments
120,086
123,467
Financial guarantees given
1,091
1,102
Signed commitments
6,259
6,936
-28
-27
Provisions for signed commitments
Net exposure to off-balance sheet commitments
TOTAL NET EXPOSURE TO CREDIT RISK AND COUNTERPARTY RISK
84
1
CRÉDIT FONCIER
7,322
8,011
127,408
131,478
3
4.8 INCOME TAX
H1 2015
H1 2014
-26
-8
Deferred tax assets and liabilities
19
12
INCOME TAX
-7
4
0
0
(in €m)
Current income tax expense*
*
O/w provisions for claims, litigation, fines and penalties.
❯ Reconciliation between the tax charge in the financial statements and the theoretical tax charge
H1 2015
H1 2014
Net income before tax and change in the value of goodwill (A)
-13
-1
Net income attributable to equity holders of the parent
-20
2
(in €m)
Share of non-controlling interests in consolidated companies
1
1
0
1
-7
4
38.00%
38.00%
5
0
-9
5
Taxes on previous periods, tax credits and other taxes
-2
6
Variable carryforward impact
-1
-7
Income tax
Standard income tax rate in France (B)
Theoretical income tax expense (income) at the tax rate applicable in France (AxB)
Impact of permanent differences
Reduced tax rates and tax exempt activities
Difference in tax rates on income taxed outside France
Other items
Income tax
EFFECTIVE TAX RATE (INCOME TAX EXPENSES DIVIDED BY TAXABLE INCOME)
-7
4
-53.84%
-574.00%
CRÉDIT FONCIER
85
NOTE 5
PARTNERSHIPS AND ASSOCIATES
5.1 INVESTMENTS IN ASSOCIATES
5.1.1 INVESTMENTS IN ASSOCIATES
The Group’s main investments in associates involve the following joint ventures and associates:
(in €m)
06/30/2015
12/31/2014
56
56
Non-financial companies
Maisons France Confort PI
GCE Foncier Coinvest
TOTAL INVESTMENTS IN ASSOCIATES
2
2
58
58
H1 2015
H1 2014
5.2 SHARE IN NET INCOME OF ASSOCIATES
(in €m)
Maisons France Confort PI
1
Euroscribe
SHARE IN NET INCOME OF ASSOCIATES
86
CRÉDIT FONCIER
0
1
NOTE 6
3
SEGMENT REPORTING
Affiliated with BPCE, groupe Crédit Foncier is the leading financial
institution specialising in real estate financing services in France. It
provides customised financing solutions and real estate services to
individuals and corporates as part of an overall asset management
approach. It also provides financing for the public sector in France.
Pursuant to IFRS 8 and given the considerable size of groupe
Crédit Foncier’s businesses, the Group’s internal organisation and
management structures are based on five main business lines within
the framework of the Group’s governing and decision-making bodies.
INDIVIDUAL CUSTOMERS SECTOR
corporations and Public-Private Partnership):
❯ long-term or short-term financing via traditional or structured loans;
❯ real estate leasing;
❯ guarantees and other off-balance sheet commitments and related
banking services (deposit and investment activity).
PUBLIC SECTOR
In this sector, Crédit Foncier provides financing to French Local
Authorities and social housing organisations (HLM and semi-public
corporations).
This sector involves four different activities:
❯ mortgage financing for first-time home buyers or rental investment
property, through both regulated and non-regulated loans, along
with a range of banking services;
❯ real estate advisory and services for individual and corporate
customers;
❯ management of assets for third parties;
❯ value-enhancement of Crédit Foncier property assets through rentals
and the sale of buildings.
PRIVATE SECTOR
This sector has access to a full range of financing products and
solutions designed for real estate professionals (developers, investors,
RUN-OFF ACTIVITIES SECTOR
In this sector, Crédit Foncier provides international financing services
in run-off mode.
HOLDING STRUCTURE
Indirect income and expenses from support activities are reallocated
to the businesses. Certain items that are considered as non-business
line are shown separately in this division, which includes the valuation
impact of issuer spread, CVA/DVA and the contribution to the Single
Resolution Fund. The income tax expense is the difference between
income tax expenses paid by the business lines at a normative rate
and the total income tax expense.
Individuals
Private
sector
Public
sector
Run-off
activities
Holding
structure
06/30/2015
Net banking income
350
44
45
-2
-10
427
Operating expenses
-221
-20
-22
-5
-14
-282
129
24
23
-7
-24
145
63.1%
45.5%
48.9%
N/A
N/A
66.0%
-56
1
-1
-104
(in €m)
C/I ratio
Cost of risk
-160
Net income of associates
Gains and losses on other assets
2
2
Income before tax
75
25
22
-111
-24
-13
Current and deferred taxes
-28
-9
-9
42
-3
-7
-1
GROUP SHARE OF NET INCOME
47
16
13
-69
-27
-20
Individuals
Private
sector
Public
sector
Run-off
activities
Holding
structure
06/30/2015
50,629
7,858
26,584
11,600
3,802
100,473
50,629
7,858
26,584
11,600
(in €m)
Financial assets*
-1
Other
TOTAL BALANCE SHEET ASSETS
*
34,778
34,778
38,580
135,251
The breakdown of assets by sector is based on the distribution of commitments presented in the Risk Management report (overall gross exposure to credit risk,
IFRS 7).
CRÉDIT FONCIER
87
NOTE 7
COMMITMENTS
The amounts disclosed are the nominal values of the commitments given.
7.1 FINANCING AND GUARANTEE COMMITMENTS
FINANCING COMMITMENTS
(in €m)
Financing commitments given
❯ to credit institutions
❯ to customers
❯ Credit facilities granted
❯ Other commitments
06/30/2015
12/31/2014
6,258
6,936
16
4
6,242
6,932
6,064
5,906
178
1,026
Financing commitments received
5,178
4,931
❯ from credit institutions
5,178
4,931
06/30/2015
12/31/2014
1,093
1,102
6
5
GUARANTEE COMMITMENTS
(in €m)
Guarantee commitments given
❯ to credit institutions
❯ to customers
1,087
1,097
Guarantee commitments received
70,020
71,449
❯ from credit institutions
11,526
10,855
❯ from customers
58,494
60,594
06/30/2015
12/31/2014
Commitments on securities (securities to deliver)
8
10
Commitments on securities (securities to receive)
65
13
Guarantee commitments are signed commitments.
“Assets pledged as collateral” are presented in note 8 “Financial assets pledged as collateral”.
7.2 COMMITMENTS ON SECURITIES
(in €m)
88
CRÉDIT FONCIER
NOTE 8
3
FINANCIAL ASSETS PLEDGED AS COLLATERAL AND ASSETS RECEIVED AS
COLLATERAL THAT CAN BE SOLD OR REPLEDGED
8.1 FINANCIAL ASSETS PLEDGED AS COLLATERAL
06/30/2015
Outright
securities Repurchase
lending agreements
(in €m)
Carrying
amount
Carrying
amount
Assets sold
or pledged
as collateral
Carrying
amount
Securitisations
Carrying
amount
Fair value
Total
Carrying
amount
Financial assets held for trading
Financial assets designated at fair value through profit
or loss
208
208
59
59
13,979
13,979
14,246
14,246
Held-to-maturity assets
TOTAL FINANCIAL ASSETS PLEDGED
AS COLLATERAL
12/31/2014
Outright
securities Repurchase
lending agreements
(in €m)
Carrying
amount
Carrying
amount
Assets sold
or pledged
as collateral
Carrying
amount
Securitisations
Carrying
amount
Fair value
Total
Carrying
amount
Financial assets held for trading
Financial assets designated at fair value through profit
or loss
214
214
24
24
13,831
13,831
14,069
14,069
Held-to-maturity assets
TOTAL FINANCIAL ASSETS PLEDGED
AS COLLATERAL
Consistent with the French legal framework, intrinsic guarantees
attached to covered bond issuances are not recorded in guarantee
commitments given. Covered bonds issued by Compagnie de
Financement Foncier benefit from a preferential claim consisting of
eligible assets.
8.2 FINANCIAL ASSETS RECEIVED AS COLLATERAL THAT CAN BE SOLD OR REPLEDGED
To date, Crédit Foncier has not carried out any material re-use transactions.
CRÉDIT FONCIER
89
NOTE 9
OFFSETTING FINANCIAL ASSETS AND LIABILITIES
The Group does not offset financial assets and liabilities in the balance
sheet under IAS 32 netting rules.
and financial instruments pledged as collateral” columns include:
❯ for repurchase agreements:
Financial assets and liabilities “under netting agreements not offset in
the balance sheet” correspond to outstandings of transactions under
netting framework or similar arrangements, but which do not meet the
restrictive netting criteria in IAS 32. This is the case for derivatives or
repurchase agreements subject to master agreements under which the
net settlement criteria or the simultaneous settlement of the asset and
liability cannot be demonstrated or for which the offsetting right can
only be exercised in the event of default, insolvency or bankruptcy by
one of the parties to the agreement.
❯ borrowing or lending resulting from reverse repurchase
agreements with the same counterparty, as well as securities
received or given as collateral (at the fair value of these securities);
❯ margin calls in the form of securities (at the fair value of these
securities);
❯ for derivatives transactions, the fair value in the opposite direction
with the same counterparty, as well as margin calls in the form of
securities.
For these instruments, the “Associated financial assets and financial
instruments received as collateral” and “Associated financial liabilities
Margin calls received or paid in cash are included in the “Margin calls
received (cash collateral)” and “Margin calls paid (cash collateral)”
columns.
9.1 FINANCIAL ASSETS
Financial assets under netting agreements not offset in the balance sheet
06/30/2015
(in €m)
12/31/2014
Net Associated
financial
amount of
liabilities
financial
Margin
and
assets
calls
financial
disclosed
in the instruments received
(cash
balance received as
collateral collateral)
sheet
Net Associated
financial
amount of
liabilities
financial
Margin
and
assets
calls
financial
disclosed
in the instruments received
(cash
balance received as
Net
sheet
exposure
Net
exposure
Derivatives
8,536
4,386
3,651
499
9,092
5,061
3,613
419
TOTAL FINANCIAL ASSETS
8,536
4,386
3,651
499
9,092
5,061
3,613
419
9.2 FINANCIAL LIABILITIES
Financial liabilities under netting agreements not offset in the balance sheet
06/30/2015
(in €m)
Derivatives
12/31/2014
Net
amount of Associated
financial
financial
liabilities assets and
Margin
financial
disclosed
in the instruments calls paid
(cash
balance pledged as
sheet
Net
amount of Associated
financial
financial
liabilities assets and
Margin
financial
disclosed
in the instruments calls paid
(cash
balance pledged as
Net
sheet
exposure
Net
exposure
11,140
4,386
5,522
1,232
12,207
5,061
6,262
884
11,140
4,386
5,522
1,232
12,207
5,061
6,262
884
TOTAL FINANCIAL LIABILITIES
90
CRÉDIT FONCIER
3
NOTE 10 SCOPE OF CONSOLIDATION
10.1 CHANGES IN THE SCOPE OF CONSOLIDATION
DURING THE FIRST HALF OF 2015
The main change in the scope of consolidation that occurred in the
first half of 2015 was:
❯ liquidation of the Environnement Titrisation special purpose vehicle
in April 2015.
determined according to the increasing materiality method. Under this
principle, any entity included in a sub-consolidation scope is included
in higher levels of consolidation, even if it is not material at these levels.
Control and interest percentages are indicated for each entity in the
scope of consolidation. The interest percentage represents the Group’s
ownership stake, either direct or indirect, in the companies within the
scope of consolidation. The interest percentage is used to determine
the Group’s share of the company’s net assets.
10.2 SCOPE OF CONSOLIDATION AT JUNE 30, 2015
Entities whose contribution to the consolidated financial statements is
not material are not included in the scope of consolidation. Materiality is
Consolidated companies
Consolidation
method
% control
% interest
SA
Full
100.00
100.00
SCA
Full
95.00
5.00
Legal form
Financial institutions
Compagnie de Financement Foncier
SCA Ecufoncier
Comptoir Financier de Garantie (CFG)
SA
Full
100.00
100.00
Locindus
SA
Full
74.55
74.55
SOCFIM
SA
Full
99.99
99.99
Banco Primus
SA
Full
100.00
100.00
SNC
Full
99.99
99.99
Cofimab
Crédit Foncier Immobilier
SA
Full
100.00
100.00
SARL
Full
100.00
99.99
Vauban Mobilisations Garanties (VMG)
SA
Full
100.00
99.99
Vendôme Investissements
SA
Full
99.99
99.99
Foncier Participations
SA
Full
100.00
100.00
Société d’Investissement et de Participation Immobilière
(SIPARI)
SA
Full
99.99
99.99
SAS
Full
100.00
100.00
SA
Full
100.00
99.99
SNC
Full
100.00
99.99
Gramat Balard
SEREXIM
Foncière d’Évreux
SOCFIM Participations Immobilières
Crédit Foncier Expertise
SA
Full
100.00
100.00
Oxiane
SAS
Full
100.00
74.55
Scribe Bail
SAS
Full
100.00
74.55
Scribe Bail Activ
SAS
Full
100.00
74.55
Scribe Bail Com
SAS
Full
100.00
74.55
Scribe Bail Hôtel
SAS
Full
100.00
74.55
Scribe Bail Logis
SAS
Full
100.00
74.55
Scribeuro
SAS
Full
100.00
74.55
Euroscribe
SAS
Equity method
50.00
37.27
SAS
Equity method
49.00
49.00
Maison France Confort P-I
SAS
Equity method
49.00
24.01
Securitisation Mutual Funds
The Environnement Titrisation special purpose vehicle was liquidated
in April 2015.
As the funds it represented have been liquidated, only the impact on
the income statement for the first half of 2015 remains.
The five internal securitisation mutual funds were run off, including
4 that were run off in advance on April 28, 2015. The outstanding
receivables on the Mutual Securitisation Funds were taken on by Crédit
Foncier.
Now that these internal securitisation mutual funds have been run off,
groupe Crédit Foncier no longer holds their units as of June 30, 2015.
CRÉDIT FONCIER
91
STATUTORY AUDITORS’ REPORT ON THE FINANCIAL INFORMATION FOR THE FIRST HALF OF 2015
STATUTORY AUDITORS’ REPORT ON THE
FINANCIAL INFORMATION FOR THE FIRST
HALF OF 2015
This is a free translation into English of the Statutory Auditors’ review report issued in French and is provided solely for the convenience of Englishspeaking readers. This report should be read in conjunction with, and is construed in accordance with, French law and professional auditing
standards applicable in France.
Period from January 1, 2015 to June 30, 2015
■ 2. SPECIFIC VERIFICATION
CRÉDIT FONCIER DE FRANCE SA
19, rue des Capucines
75001 Paris
We have also verified the information given in the Group’s interim
management report commenting on the condensed interim financial
statements subject to our review.
To the Shareholders,
We have no observations to make regarding its fair presentation
and consistency with the condensed interim consolidated financial
statements.
In compliance with the assignment entrusted to us by your Annual
General Shareholders’ Meeting and in accordance with the
requirements of Article L. 451-1-2 III of the French Monetary and
Financial Code, we hereby report to you on:
❯ the review of the accompanying condensed interim consolidated
financial statements of Crédit Foncier de France SA for the period
from January 1 to June 30, 2015;
❯ the verification of information contained in the interim management
report.
These condensed consolidated interim financial statements have been
prepared under the responsibility of your Board of Directors. Our role
is to express an opinion on these financial statements based on our
review.
■ 1. OPINION ON THE FINANCIAL STATEMENTS
We conducted our review in accordance with professional standards
applicable in France. A review essentially consists of interviewing
persons responsible for accounting and financial matters and in
applying analytical procedures. A review is substantially less extensive
than a full audit carried out in accordance with the professional
standards applicable in France. As a result, there is a moderate
assurance that the financial statements, taken as a whole, do not
contain significant misstatements.
Based on our review, nothing has come to our attention that causes
us to believe that the accompanying condensed interim consolidated
financial statements are not prepared, in all material respects, in
accordance with IAS 34 – the standard of IFRS as adopted by the
European Union applicable to interim financial information.
Without prejudice to an opinion stated above, we draw your attention
to the note 2.2 to the annex to the consolidated financial statements
entitled “Accounting principles and comparability”, which explains the
effects of the first application of IFRIC 21 “Levies” interpretation.
92
CRÉDIT FONCIER
Paris La Défense and Neuilly-sur-Seine, August 25, 2015
The Statutory Auditors:
KPMG Audit
A department of KPMG SA
Jean-François Dandé
Partner
PricewaterhouseCoopers Audit
Anik Chaumartin
Partner
4
OTHER INFORMATION
GENERAL INFORMATION
Crédit Foncier’s outlook
94
94
PERSONS RESPONSIBLE FOR THE
DOCUMENT AND FOR AUDITING THE
FINANCIAL STATEMENTS
95
CROSS-REFERENCE TABLE
96
Listing of debt security issuances and derivatives
with a nominal value of less than €100,000
CROSS-REFERENCE TABLE BETWEEN
THE INTERIM FINANCIAL REPORT AND
THE UPDATE TO THE REGISTRATION
DOCUMENT
In accordance with Article 212-13 of the AMF’s General
Regulations, this update includes information from the interim
financial report mentioned in Article L. 451-1-2 of the French
Monetary and Financial Code
99
99
96
CRÉDIT FONCIER
93
OTHER INFORMATION
GENERAL INFORMATION
GENERAL INFORMATION
❯ CRÉDIT FONCIER’S OUTLOOK
■ RECENT EVENTS
■ CONTROL
The Company has not recorded any significant recent event that would
affect the assessment of its solvency.
To the Company’s knowledge, there are no agreements whose
implementation could result in a future change in control.
■ TRENDS
■ SIGNIFICANT CHANGE
Since the date of its most recently released audited financial statements,
there has been no significant damage affecting the Company’s outlook.
No significant change in the Company’s financial or commercial
situation has occurred between July 28th, 2015 the date the Board
of Directors approved the financial statements, and the date on which
the Update of the Registration document was filed.
There are no known trends, uncertainties or requests or any
commitments or events that would reasonably influence the Company’s
outlook.
94
CRÉDIT FONCIER
OTHER INFORMATION
PERSONS RESPONSIBLE FOR THE DOCUMENT AND FOR AUDITING THE FINANCIAL STATEMENTS
4
PERSONS RESPONSIBLE FOR THE DOCUMENT
AND FOR AUDITING THE FINANCIAL STATEMENTS
PERSON RESPONSIBLE FOR UPDATING THE
REGISTRATION DOCUMENT AND THE INTERIM
FINANCIAL REPORT
PERSON RESPONSIBLE FOR THE FINANCIAL
INFORMATION
Mr Bruno DELETRÉ, Chief Executive Officer of Crédit Foncier
Ms Sandrine GUÉRIN, Deputy Chief Executive Officer – Financial
Operations
STATEMENT FROM THE PERSON RESPONSIBLE FOR THE
REGISTRATION DOCUMENT
PERSONS RESPONSIBLE FOR AUDITING
THE FINANCIAL STATEMENTS
I hereby declare, after having taken every reasonable measure for this
purpose, that the information provided in this update to the registration
document is, to the best of my knowledge, true to fact and that no
information has been omitted that would change the interpretation of
the information provided.
I hereby declare that, to the best of my knowledge, the condensed
consolidated financial statements of Crédit Foncier de France for the
first half of 2014 have been prepared in accordance with applicable
accounting standards and are an accurate reflection of the assets,
financial position and results of the Company and the consolidated
entities, and that the interim management report presents an accurate
picture of the important events that occurred during the first six months
of the year, their impact on the accounts as well as a description of
the principal risks and uncertainties for the remaining six months of
the year.
PERMANENT STATUTORY AUDITORS
KPMG Audit
Member of the Compagnie régionale des Commissaires aux comptes
de Versailles (Regional Association of Statutory Auditors of Versailles)
2, avenue Gambetta - 92066 Paris La Défense
Represented by Jean-François DANDÉ
Start of first term: April 26, 2010
Length of term: 6 years
Expiry of current term: At the end of the Annual General Shareholders’
Meeting called to approve the financial statements for the financial year
ending December 31, 2015
I received a letter from the Statutory Auditors indicating that they have
completed their work, which consisted of verifying the information
on the financial position and the financial statements provided in
this update of the registration document, which they have read in its
entirety.
PricewaterhouseCoopers Audit
The historical financial information presented in the present update to
the Registration document is subject to the Statutory Auditors’ report,
which includes an observation presented on the page 92.
Represented by Anik CHAUMARTIN
Paris, August 25, 2015
Chief Executive Officer,
Bruno DELETRÉ
63, rue de Villiers – 92200 Neuilly-sur-Seine
Date term was renewed: May 10, 2012
SUBSTITUTE STATUTORY AUDITORS
Malcolm McLARTY
2, avenue Gambetta – 92066 Paris La Défense
Start of first term: April 26, 2010
Étienne BORIS
63, rue de Villiers – 92200 Neuilly-sur-Seine
Date term was renewed: May 10, 2012
CRÉDIT FONCIER
95
OTHER INFORMATION
❯ LISTING OF DEBT SECURITY ISSUANCES AND DERIVATIVES WITH
A NOMINAL VALUE OF LESS THAN €100,000
■ ANNEX IV OF REGULATION EC NO. 809/2004
Items
96
Update to the
2014 Registration
document
filed with the AMF
on August 25, 2015
2014 Registration
document
filed with the AMF
on March 18, 2015
Pages
Pages
1.
PERSONS RESPONSIBLE
1.1.
Persons responsible for information
95
277
1.2.
Statement by persons responsible
95
277
2.
STATUTORY AUDITORS
2.1.
Identification of Statutory Auditors
95
277
2.2.
Statutory Auditors for the period covered by the historical financial disclosures
95
277
3.
SELECTED FINANCIAL INFORMATION
3.1.
Financial information
5-6
3
3.2.
Historic financial information for interim periods
5-6
n/a
4.
RISK FACTORS
25-56
99-153
5.
INFORMATION ABOUT THE ISSUER
5.1.
History and development of the Company
5.1.1.
Legal and commercial name of the issuer
272
5.1.2.
Place of registration of the issuer and its registration number
272
5.1.3.
Date of incorporation and term of the issuer
272
5.1.4.
Registered office and legal form of the issuer
272
5.1.5.
Recent events affecting the issuer that have a material impact on the evaluation
of the issuer’s solvency
5.2.
Investments
5.2.1.
Description of the main investments carried out since date of last financial statements
5.2.2.
Information on main forthcoming investments for which the Executive Bodies have already
made significant commitments
5.2.3.
Information on the expected sources of financing needed to honour the commitments
referred to in 5.2.2.
4; 259
94
274
13
16
n.a.
n.a.
n.a.
n.a.
6.
BUSINESS OVERVIEW
6.1.
Principal activities
6.1.1.
Main categories of services provided
6.1.2.
New product sold or new activity
15-16
21
6.2.
Main markets
15-24
20-33
6.3.
Competitive positioning
4; 16
4-6; 12; 15; 19;
22; 78
CRÉDIT FONCIER
15-24
18-33
4
4-6; 18
OTHER INFORMATION
7.
ORGANISATIONAL STRUCTURE
7.1.
Description of the Group and the Company’s position within the Group
7.2.
Dependence on other entities in the Group
8.
TREND INFORMATION
8.1.
Declaration that no significant deterioration has affected the outlook of the Company
since the date of its last financial report
8.2.
Events reasonably likely to have a material effect on the issuer’s outlook
9.
PROFIT FORECASTS AND ESTIMATES
10.
ADMINISTRATIVE, EXECUTIVE AND SUPERVISORY BODIES
10.1.
Names, business addresses and functions of the administrative and management
bodies and principal activities performed by them outside the Company
10.2.
Conflicts of interest statement
11.
FUNCTIONING OF THE ADMINISTRATIVE AND EXECUTIVE BODIES
11.1.
Information on the Audit Committee. Name of members and summary of terms
10
36-68
11.2.
Corporate Governance
10
36-75
12.
MAJOR SHAREHOLDERS
12.1.
Ownership, control
11-12
14
n.a.
n.a.
11
12
11; 91
12/19/219/260-261
94
274
94
274
N.A.
N.A.
9-10
39-56
56
12.2.
Known arrangements liable to result in a change in control
13.
FINANCIAL INFORMATION CONCERNING THE COMPANY’S ASSETS & LIABILITIES, FINANCIAL POSITION AND PROFIT
AND LOSSES
13.1.
Historic financial information
13.2.
Annual Financial Statements
61-91
a) Balance sheet
160-161
162
c) Cash flow statement
165
167-222
Auditing of annual historical financial information
13.3.1. Statutory Auditors’ report
223
13.3.2. Other information from the registration document audited by the Statutory Auditors
66-75/77-96/
224-263
13.3.3. Financial information contained within the registration document not obtained from
the audited financial statements
13.4.
b) Income Statement
c) Consolidated cash flow statement
d) Accounting methods and explanatory notes
13.7.
2014 Registration
document*
2013 Registration
document
Interim and other financial information
a) Balance sheet
13.6.
n.a.
Date of latest financial information
13.4.1. Last year for which financial information has been audited
13.5.
160-222
b) Income Statement
d) Accounting methods and explanatory notes
13.3.
61-62
n.a.
63
n.a.
66
n.a.
68-91
n.a.
e) Statutory auditors’ report
92
n.a.
Legal and arbitration proceedings
54
146-148
Significant change in the financial or sales position
94
274
❯ Statement
94
274
14.
ADDITIONAL INFORMATION
14.1.
Share capital
12
14
14.1.1. Total subscribed capital
12
14
14.2.
Memorandum and by-laws
14.2.1. Register and corporate purpose
15.
4
272-273
272
MATERIAL CONTRACTS
❯ Related-party agreements
265-269
CRÉDIT FONCIER
97
OTHER INFORMATION
16.
17.
THIRD-PARTY INFORMATION, STATEMENTS BY EXPERTS AND DECLARATIONS OF INTEREST
DOCUMENTS AVAILABLE TO THE PUBLIC
Location where documents may be viewed during the dates that the registration document
is valid
*
98
N.A.
273
In accordance with Articles 28 of EC Regulation No. 809-2004 and 212-11 of the AMF General Regulations, the consolidated financial statements for the financial
year ended December 31, 2014 and the related Statuary Auditors’ report, presented on pages 160 to 223 of Registration document No. D.15-0163 filed with the
AMF on March 18, 2015.
CRÉDIT FONCIER
OTHER INFORMATION
CROSS-REFERENCE TABLE BETWEEN THE INTERIM FINANCIAL REPORT AND THE UPDATE TO THE REGISTRATION DOCUMENT
4
CROSS-REFERENCE TABLE BETWEEN
THE INTERIM FINANCIAL REPORT AND THE
UPDATE TO THE REGISTRATION DOCUMENT
❯ IN ACCORDANCE WITH ARTICLE 212-13 OF THE AMF’S GENERAL
REGULATIONS, THIS UPDATE INCLUDES INFORMATION FROM THE
INTERIM FINANCIAL REPORT MENTIONED IN ARTICLE L. 451-1-2
OF THE FRENCH MONETARY AND FINANCIAL CODE
Items comprising the interim financial report at June 30, 2015
Update to the
2014 Registration
document
Pages
STATEMENT FROM THE PERSON RESPONSIBLE FOR THE DOCUMENT
95
MANAGEMENT REPORT
❯ Main events during the first six months of the year
❯ Main risks and uncertainties
7-24/58-60
25-56
CONSOLIDATED FINANCIAL STATEMENTS
❯ Interim financial statements
❯ Statutory Auditors’ report on the interim financial statements
61-91
92
CRÉDIT FONCIER
99
OTHER INFORMATION
100
CRÉDIT FONCIER
Crédit Foncier de France - S.A. (French public limited company) with share capital of 1,331,400,718.80 euros
Paris Trade and Companies Register No. 542 029 848
Executive offices and postal address: 4, quai de Bercy - 94224 Charenton Cedex - Tel.: +33 (0)1 57 44 80 00
Head office: 19 rue des Capucines – 75001 Paris
creditfoncier.com

CRÉDIT FONCIER Update to the 2014 Registration document

Transcription

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