Adapting to big changes : Economic

A NEW WORLD ORDER

• Erosion of the dynamics of globalisation, economic fragmentation and geopolitical tensions
• Deterioration of multilateralism and challenging of institutions and international agreements
• Strengthening of regional growth hubs, with a shift towards Asia

Opportunities

• Positions that can be expanded in Asia

Risks

• Significant market volatility
• Increase in legal risks due to the growing number of regulations

OUR ACTIONS

• Launch in November 2019 of a Panda bond issue, denominated in Chinese yuan, to diversify our sources of financing and support the development of CACIB in China

AN UNCERTAIN FINANCIAL ENVIRONMENT

• Increased volatility of financial variables
• Context of lasting low interest rate environment
• Complex market valuation of new risk factors (geopolitical, health-related and non-financial)

Opportunities

• Development of credit solutions to support people launching new projects
• Recomposition of business models and differentiation of revenue sources

Risks

• Bank balance sheet exposure to the risk of a sharp increase in interest rates
• Decline in retail banking margins
• Reduced attractiveness of savings products and life insurance funds in euros

OUR ACTIONS

• Diversification of our services with the creation of non-banking offers
• Help to create a business with Jesuisentrepreneur, a complete platform created to inspire and support entrepreneurs
• Life insurance: broadening the range of offers in unit-linked contracts

MULTI-FACETED COMPETITION

• Presence of new players and diverse models (aggregators, FinTech companies, Google, Amazon, Facebook and Apple, etc.)
• Steady roll-out of new technologies that challenge the traditional banking mode
• Growing number of participants in the value chain
• New fee models, such as freemium and low-cost offers, that increase pricing pressure

Opportunities

•  Assertion of our position as a trusted third party
• Using new technologies and artificial intelligence to provide more personalised and effective support
• Development of commercial and distribution partnerships

Risks

• Eroding revenues and market share
• Disintermediation (customer relationship, payments, data, etc.)
• Decoupling of offerings and limited opportunities for cross-selling
• Difficult development in relation to FinTech companies

OUR ACTIONS

• Merger of CACEIS and Santander
• Strengthening consumer finance partnerships between CACF and Banco BPM
• Signature of an insurance partnership between CAA and Abanca in Spain

SUSTAINED REGULATORY REQUIREMENTS

• Stronger protection for customers and investors
• Fight against money laundering and financing of terrorism
• Multiple regulatory authorities and tighter prudential rules
• Transparency requirement
• Taking into account climate and ESG risks

Opportunities

• Confirmation of our role as provider of financing to the economy
• Continuous improvement in the Group’s processes and ethical framework
• Continued management of new risks

Risks

• Higher capital requirements and stricter liquidity management
• Increase in compliance and operating costs (HR, IT, etc.)
• Distorted competition with new, less-regulated players

OUR ACTIONS

• €310.9bn assets under management using ESG criteria
• Signature of the Principles for Responsible Banking