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  • Commitment, openness, boldness

    A N N U A L R E P O R T I 2 0 1 6

  • This Annual Report also constitutes the Annual

    Management Report of the Board of Directors of Crdit

    Mutuel Arka to be presented to the Shareholders General

    Meeting held to approve the financial statements for the

    year ending December 31, 2016.

  • CONTEN

    TS

  • 1 Presentation of Crdit Mutuel Arka 7

    1.1 Group profile 81.2 Crdit Mutuel Arkas history 111.3 Crdit Mutuel Arka business lines 121.4 Crdit Mutuel Arkas strategy 181.5 2016 highligts 191.6 Solidarity relations 22

    6 General information 2547 Person responsible 2578 Statutory auditors 2589 Statutory auditors report on the 2016 consolidated

    financial statements 259

    10 Statutory auditors report on the report of the Chairman

    of the Board of Directors 261

    11 Statutory auditors special report on related party agreements

    and commitments 263

    12 Report by the independent third party on the consolidated

    human resources, environmental and social information 265

    Cross-referencetable 268

    2 Corporate governance 242.1 Board of Directors of Crdit Mutuel Arka 262.2 Other officers and directors 322.3 Chairmans report on the conditions for preparing and organi-

    zing the work of the Board of Directors and on internal control procedures 35

    2.4 Executive Management bodies and their work 552.5 Conflicts of interest of officers and directors 572.6 Compensation of officers 58

    3 Financial information 62 3.1 Activites 643.2 Financial results 683.3 Capital and regulatory ratios 703.4 Outlook 743.5 Consolidated financial statements at December 31, 2016 763.6 Aggregate financial statements at December 31, 2016 155

    5 Corporate social responsibility 198

    5.1 Crdit Mutuel Arkas Social Responsibility 2025.2 Cooperation and co-development with our stakeholders 2045.3 CSR central to supporting our customer shareholders and customers 2105.4 The development of Credit Mutuel Arkeas CSR footprint 2245.5 CSR indicators 245

    4 Risk factors 1604.1 Credit risk 1644.2 Market risks 1744.3 Structural interest rate and liquidity risks 1794.4 Foreign exchange risk 1844.5 Risk to equities and other variable income securities and risk

    to investment securities 1854.6 Operational risk 1864.7 Legal risk 1904.8 Compliance risk, including money-laundering risk 1914.9 Risks specific to the insurance business 193

    ANNUAL REPORT 2016 I 5

  • Presentationof Crdit Mutuel Arka

    1

  • ANNUAL REPORT 2016 I 7

    1.1 Group profile1.2 Crdit Mutuel Arkas history1.3 Crdit Mutuel Arka business lines1.4 Crdit Mutuel Arkas strategy1.5 2016 highligts1.6 Solidarity relations

  • PRESENTATION OF CRDIT MUTUEL ARKA

    Retail banking for individuals and sole proprietorships Retail banking for companies and institutions

    1.1Group profile

    CRDIT MUTUEL ARKA BUSINESS LINES

    A banking and insurance group, Crdit Mutuel Arka comprises the Crdit Mutuel de Bretagne, Crdit Mutuel du Sud-Ouest and Crdit Mutuel du Massif Central federations as well as approxima-tely 30 specialized subsidiaries that cover all business lines in the banking and financial arena.

    A cooperative company, Crdit Mutuel Arka is not listed on the stock exchange. Crdit Mutuel Arka is owned by its customer shareholders, who are both shareholders and customers. The group, which combines a strong financial position and long-term growth, thereby puts its performance to work on behalf of the real economy and the projects of its 3.9 million customers.

    As a producer and distributor, Crdit Mutuel Arka is able to offer its customers whether individuals, companies, associations or government bodies a comprehensive line of banking, financial, asset management, insurance and other products and services. The group also stands apart through its development of private label banking services on behalf of other financial institutions and payments providers. At the same time, Crdit Mutuel Arka is enhancing its know-how in assembling services in order to offer the best solutions to its shareholders and customers both indivi-duals and major accounts to ensure long-term co-development with its partners.

    A pioneer and innovator, Crdit Mutuel Arka is known and recognized for its technology culture. Building on this expertise, the group has forged very close ties with players in the digital ecosystem and is developing various forms of cooperation with them, whether technological or through capital transactions. In

    a fast-changing environment, these partnerships with startups and fintechs allow it to remain at the forefront of technology and consumer trends and cultivate its agility.

    A banking and insurance entrepreneur, Crdit Mutuel Arka pursues an original development strategy that benefits the real economy and places customer satisfaction at the heart of all its initiatives.

    As a decentralized bank, Crdit Mutuel Arka is committed to keeping its decision-making centers and employment catchment areas at the regional level. This approach based on regional stron-gholds enables the group to extend its reach throughout France and to other countries:

    n A network of 468 points of sale, including 334 local savings banks in Brittany, Southwestern France and the Massif Central region ;

    n 18 regional business centers for Arka Banque Entreprises et Institutionnels ;

    n 9 regional branches for Leasecom ;

    n 8 regional branches for Financo ;

    n A presence in Belgium with Keytrade Bank and ProCapital Secu-rities Services. Keytrade Bank is also present in Switzerland and Luxembourg.

    n Leetchi and Mangopay are present in the United Kingdom, Ger-many, Spain and Luxembourg.

    n Activity throughout Europe through Monext, the subsidiary that specializes in electronic payments.

    1 Contraction of finance and technology: a fintech is a startup that uses information and communication technologies to deliver financial services.

  • ANNUAL REPORT 2016 I 9

    CRDIT MUTUEL ARKA SITES

    Crdit Mutuel de Bretagne

    Crdit Mutuel du Sud-Ouest

    Crdit Mutuel Massif Central

    Paris

    Lille

    Bruxelles

    Metz

    Strasbourg

    RouenCaen

    Rennes

    Brest

    Quimper

    Vannes

    St-Brieuc

    Nantes

    Tours

    Lyon

    Grenoble

    Luxembourg

    NiceNmes

    AixMontpellierToulouse

    Dijon

    Marseille

    Poitiers

    LimogesClermont-Ferrand

    Prigueux

    Bordeaux

    Angoulme

    Subsidiaries offices and branches

    Banking and insurance services production subsidiaries

    Subsidiaries specializing in the business-to-business (BtoB) market

    Subsidiaries providing non-banking services

    BANKING SERVICESBANKING SERVICES

    *Nouvelle dnomination de Federal Finance

  • PRESENTATION OF CRDIT MUTUEL ARKA

    Solvency and financial rating

    AS OF 31/12/2016 SHORT-TERM RATINGS

    Standard & Poors A-1

    Moodys P-1

    LONG-TERM RATINGS

    Standard & Poors A

    Moodys Aa3

    OUTLOOK

    Standard & Poors Stable

    Moodys Negative

    2012 2013 2014 2015 2016Net banking and insu-rance inco-me

    1,668 1,620 1,724 1,780 1,852

    Gross opera-ting income 406 481 531 545 570

    Net income attributable to equity holders of the parent

    168 213 269 296 336

    Total assets 90,900 93,969 103,204 110,112 120,393

    Sharehol-ders equity attributable to equity holders of the parent

    4,721 5,010 5,463 5,774 6,070

    ( millions)Key figures

    Common Equity Tier 1 ratio

    13.5%

    15.9% 15.8% 15.3%

    14.3%

    2012 2013 2014 2015 2016

  • ANNUAL REPORT 2016 I 11

    1.2Crdit Mutuel Arkas HistoryCrdit Mutuel Arkas history goes back more than 100 years in Brittany and continues today across all of France and elsewhere in Europe. With an entrepreneurial and open approach, Crdit Mutuel Arka has adopted successful strategic orientations at key points in its development.

    The first Crdit Mutuel Agricole rural savings banks were inspired by the local German cooperatives created by Frdric-Guillaume Raiffeisen and established in Brittany, Southwestern France and the Rhne-Alpes region beginning in 1884. In western France, after several years of uneven growth and development that often varied from one city to the next, the local savings banks in Brittany for-med a union in the 1970s and in 1979 created a federation Cr-dit Mutuel de Bretagne covering the entire region.

    In the 1980s, the range of banking and insurance needs of indivi-duals, sole proprietorships and companies became more diverse. Crdit Mutuel de Bretagne provided a competitive solution by becoming both a producer and distributor of its products and services. Between 1984 and 2000, it thus created its first spe-cialized subsidiaries: Suravenir (life insurance and protection), Suravenir Assurances and Novlia (non-life insurance), Federal Finance (asset management), Arka Banque Entreprises et Ins-titutionnels (formerly BCME, commercial banking) et Financo (consumer credit).

    In 2002, a solid and diversified group was formed around the three federations: Crdit Mutuel de Bretagne, Crdit Mutuel du Sud-Ouest, and Crdit Mutuel Massif Central and some 20 subsidiaries. This step constituted the creation of Crdit Mutuel Arka.

    2008 marked another key moment, as Crdit Mutuel Arka adopted the Horizons 2015 strategic business plan. With this plan, the group confirmed its prominent role as a locally based banking and insurance company while developing its online activi-ties and services, strengthening its position in the companies and institutions market and provi