creditfoncier · 2018-10-11 · – 3 – 2012 half-year financia report - c rÉd it foncier 1....

creditfoncier.com

UPDATE OF THE 2011 REGISTRATION DOCUMENT

INCLUDING THE 2012 HALF-YEAR FINANCIAL REPORT

This update of the registration document is available at www.creditfoncier.com

The present update of the registration document was filed with the French Financial Markets Authority (AMF) on August 30, 2012, under the number D.12-0374-A01, in accordance with Article 212-13 of its general regulations. It completes the registration document filed with the AMF on April 19, 2012, in accordance with Article 212-13 of its general regulations, under the number D.12-0374. It may be used in support of a financial transaction if accompanied by a prospectus duly approved by the AMF. This document was established by the Issuer and is legally binding on its signatories.

The present document is a free translation into English of Crédit Foncier 2012 Half-Year Financial Report issued in the French language and is provided solely for the convenience of English speaking readers. In case of discrepancy the French version prevails.

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2012 HALF-YEAR FINANCIAL REPORT - CRédIT FONCIER

1. CREDIT FONCIER IN FIRST-HALF 2012 5

2. RISK MANAGEMENT 31

3. FINANCIAL STATEMENTS 81

4. OTHER INFORMATION 117

UPDATE OF THE 2011 REGISTRATION DOCUMENTINCLUDING THE 2012 HALF-YEAR FINANCIAL REPORT

Abbreviations used in the document:Millions of euros: €mBillions of euros: €bnThousands of euros: €k

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1 CREDIT FONCIER IN FIRST-HALF 2012

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1 - CRÉDIT FONCIER IN FIRST-HALF 2012

Crédit Foncier Profile 6

Key figures 7

Highlights 9

Ratings 10

Crédit Foncier positioning 11

Share capital 12

Capital transactions 13

Executive and administrative bodies 14

Economic and financial environment 16

Commercial activity 17

Client relations 26

Analysis of results 27


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Crédit Foncier ProfileServing clients for 160 years

A historic vocation...Created in 1852, Crédit Foncier has played a special role in the French banking industry for 160 years. Its involvement from the very beginning in funding major urbanisation works for the State and local authorities quickly established it as a key player in housing policy. Crédit Foncier has weathered a number of financial crises in its history, but has always maintained its vocation: namely facilitating homeownership for all and contributing to regional development.

Promoting the development of housing...As a global real estate financing player, Crédit Foncier holds a leading position in the distribution of regulated loans. As a player in housing policies, it draws on its technicity and knowledge of the real estate markets to help many consumers, and particularly first-time buyers, to become homeowners.

...and the improvement of living environmentsCrédit Foncier also works alongside professionals and local authorities to help them manage the issues they are currently facing, such as land use optimisation, social housing, housing renovation, compliance with energy standards, public-private partnerships, regional attractiveness, etc. Its forward-looking analyses and financial engineering combine to generate a comprehensive approach to promoting individual and collective life projects.

Facts and figures• 3,300 employees;• 8,700 professional partners;• 1,025,000 individual clients under management;• 262 branches.

Subsidiary of Groupe BPCECrédit Foncier is part of Groupe BPCE, the second-largest bank in France, which was created in July 2009 from the merger of the central nstitutions of the Caisse d’Epargne and Banque Populaire groups. Crédit Foncier became a wholly-owned subsidiary of BPCE in August 2010. Today it is the primary component of the group, in charge of real estate financing.


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Key figuresCrédit Foncier Group Activity

(in millions of euros)

H1 2011 pro forma (1) H1 2012 Change 2012-2011

Loan production (management data) 4,891 4,138 -15.4%

Individuals 3,483 3,012 -13.5%

Corporates 1,408 1,126 -20.0%

o/w:

• Public sector 540 523 -3.1%

• Private sector 868 603 -30.6%

Funding (2) 7,522 7,291 -3.1%

o/w Issues of obligations foncières 6,322 6,340 +0.3%

Liquidity reserves (immediately available assets) (3) 37,223 (4) 61,542 (5) +65.3%

(1) Termination of certain Banco Primus operations.(2) €6,655m and €6,851m, respectively, in H1 2012 and H1 2011, excluding RCBs (registered covered bonds).(3) Nominal amount before haircut. See 9.3 - Management of liquidity risk in Section 2 - Risk Management.(4) o/w mobilized assets for €5,189m in net advances received.(5) o/w €30,920m from a transitional Banque de France scheme and o/w mobilized assets for €6,118m in net advances received.


At Dec. 31, 2011 At June 30, 2012 Change 2012-2011

Gross securities and receivables (1) 117,609 121,839 +3.6%

Individuals 59,659 59,920 +0.4%

Corporates 57,950 61,919 +6.8%

o/w:

• Public sector 49,100 52,180 +6.3%

• Private sector 8,850 9,739 +10.0%

(1) Adjusted management figures at period-end (IFRS 7).


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Consolidated financial statements (IFRS)


At December 31, 2011 At June 30, 2012 Change 2012-2011

Consolidated balance sheet

Balance sheet total 148,317 166,494 +12.3%

Group share of consolidated equity 3,407 3,463 +1.6%

Regulatory capital 4,547 4,555 +0.2%

o/w basic regulatory capital 4,186 4,193 +0.2%

o/w regulatory core capital (1) 3,906 3,913 +0.2%

Basel II solvency ratio - Standard method (2) 9.9% 10.7% +0.8 pt

Regulatory capital 9.1% 9.9% +0.8 pt

Core capital 8.5% 9.2% +0.7 pt

(1) After deducting undated deeply subordinated notes.(2) Based on capital requirements presented in section 3.3 of the Risk Management Report.


H1 2011 H1 2012 Change 2012-2011

Consolidated results

Net banking income 464 330 -28.9%

Gross operating income 152 57 -62.5%

Income before tax 57 5 -91.2%

Group share of net income 41 3 -92.7%


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HighlightsKey Group eventsCrédit Foncier

February Foncier Direct: development of synergies with the commercial network.

March to June Commercial highlights on independent agents.

May Synergies with the Banques Populaire sand Caisse d’Epargne networks: convention in Montpellier with the Caisses d’Epargne and the Banque Populaire banks.

May Creation of a film on the 160th anniversary of Crédit Foncier.

Crédit Foncier Immobilier (CFI)

FebruaryJuly

Organisation of Noctinvest private real estate auction evenings:• 21st evening: 68 lots on auction;• 22nd evening: 67 lots on auction.

March Annual real estate market review: overview and outlook.

April CFI launches a consumer website dedicated to the Ad Valorem brand.

Expertly positioned to promote housing

JanuaryJune

Organisation of regional conferences with real estate professionals:• Toulouse; Nîmes;• La Baule.

March First-time homeowner’s “passport” awarded in Bordeaux (1), attended by Alain Juppé.

April 5Organisation of a conference on the range of mortgage loans designed for Paris-area notaries at Foncier Home, in partnership with BFM.

JulyH1 2012

ENFI (National real estate financing institute) assists AXA Banque with the creation of its Banking University.ENFI also establishes a training course with BPCE.

H1 2012Continued sponsorship of TV shows on M6, with solid audience ratings: Maison à vendre, D&CO and Recherche appartement ou maison.

Commitment to the community and the environmentMarch Crédit Foncier Travaux: participation in Rénover trade show with the Thermo Rénov’ association.

April Participation in Sustainable Development Week conferences hosted by Monoprix and Unis-Cité.

JuneParticipation, as a partner of MFC (Maison France Confort), in the inauguration of the innovative home: Concept MFC 2020 in St Priest.

Group fundingPositive reception of Crédit Foncier’s first general public issue, Compagnie de Financement Foncier issues still sought-after.

January 9February 10

Compagnie de Financement Foncier, a wholly-owned subsidiary of Crédit Foncier, carries out new benchmark issues of EUR-denominated obligations foncières:• Issue of €1bn with a 10-year maturity;• Issue of €2bn with a 3.5-year maturity.

January 13 to February 12

Crédit Foncier launches its first bond for individuals and small investors inflows of €950m.

April 11 Participation in the fourth Euromoney conference in New York on US covered bonds.

(1) Financial aid provided by the city allowing the borrower to obtain a preferred loan in addition to the PTZ+ (enhanced zero-interest rate loan) from the State in order to purchase a first primary residence (new or calling for renovation) in the old city centre.


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RatingsRATINGS *

Standard & Poor’s/Moody’s/Fitch

Crédit Foncier A-/A2/A+(affiliated with BPCE A/A2/A+)Compagnie de Financement Foncier AAA/Aaa/AAA(affiliated with BPCE A/A2/A+)Vauban Mobilisations Garanties AAA/Aaa/AAA

Changes in Crédit Foncier Group ratings in H1 2012

Standard & Poor’s (S&P)

Crédit Foncier’s rating downgraded by one notchThe ratings of BPCE and its subsidiaries were impacted by the downgrading of the French government’s rating by S&P (from AAA to AA+) on January 13, 2012. Consequently, on January 23, 2012, S&P downgraded BPCE’s long-term rating from A+ to A and Crédit Foncier’s short- and long-term credit ratings from A/A-1 to A-/A-2.The outlooks remained stable for all Groupe BPCE long-term ratings, including Crédit Foncier.

Compagnie de Financement Foncier’s ratings confirmedOn January 24, 2012, following the downgrading of Crédit Foncier’s rating, S&P confirmed the AAA rating awarded to the obligations foncières issued by Compagnie de Financement Foncier.

Moody’s

Moody’s downgrades Crédit Foncier’s rating by two notches• Like other European banks, Crédit Foncier saw its rating

placed on negative watch by Moody’s on February 15, 2012. • On June 15, 2012, at the same time it downgraded BPCE’s

rating, Moody’s downgraded the long-term ratings of four of Groupe BPCE’s subsidiaries, placing them all at A2: Natixis, Banque Palatine, Locindus and Crédit Foncier. This brought Crédit Foncier’s rating from Aa3 to A2.

• However, Compagnie de Financement Foncier kept its Aaa rating.

Changes in the Crédit Foncier group’s ratings since the end of H1 2012Compagnie de Financement Foncier’s ratings confirmedOn July 25, 2012, Fitch Ratings confirmed the AAA rating awarded to the obligations foncières issued by Compagnie de Financement Foncier.

* Ratings updated at filing date.


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Crédit Foncier PositioningGroupe BPCE organisation chart at June 30, 2012

BPCE Central institution

Groupe BPCE

19 BanquePopulaire banks

17 Caisses d’Epargne

Free float

Commercial Bankingand Insurance subsidiaries

Equity interests

Natixis

80%

72,4%

27,6%

50%50%20%

(CICs 2)

80% 1

20%(CICs 2)

8.1 million cooperative shareholders

• Crédit Foncier de France (100%)

• Banque Palatine (100%) 3

• BPCE International et Outre-mer (100%)

• BPCE Assurances (46.4%) 4

• Nexity (41.8%) 5

• Coface (100%)

Commercial Banking and Insurance CIB, Investment Solutions and Specialized Financial Services

1. Indirectly through Local Savings Companies.2 CICs: Cooperative Investment Certificates (economic interests, no voting rights).3 With the equity interest held by Crédit Foncier de France in Banque Palatine, the group owns a 100% stake in the company.4 With the equity interest held by the Caisses d’Epargne in BPCE Assurances, the group owns a 60% stake in the company.5 Via CE Holding Promotion.


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Share capitalDistribution of capitalSince August 5, 2010, BPCE has owned 100% of Crédit Foncier’s share capital and voting rights, with the exception of the shares held by the members of the Board of Directors.

Changes in share capital in H1 2012The Extraordinary General Meeting of May 10, 2012 decided to reduce the share capital from €2,403,917,964.50 to €1,331,400,718.80 by reducing the nominal value of the shares from €6.50 to €3.60. Article 4 of the by-laws was amended accordingly.At June 30, 2012, the share capital therefore amounted to €1,331,400,718.80 divided into 369,833,533 fully paid-up shares each with a nominal value of €3.60.


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Capital transactionsRestructuring

CofimabOn February 20, 2012, as part of the assignment of Montargis debt (held by Locindus), Cofimab acquired the 9,914,433 Montargis shares from Locindus for the symbolic amount of €1.

Crédit Foncier Immobilier (CFI)In an effort to continue simplifying the legal structure of the Real Estate Services division, CFI, which owns 100% of B&D Conseils and Fontec, merged the two companies on March 15, 2012, with retroactive effect at January 1, 2012.

SoclimIn the interest of simplifying the Group’s structure, leading to the full transmission of assets comprising certain real estate entities, Soclim was subject to a full transmission of assets on November 28, 2011, with effect at January 2, 2012.

Development and enhancement of existing Group entities

EnfiAs a result of a decision taken on June 1, 2012, Crédit Foncier, the sole shareholder of ENFI with share capital of €2,037m, decided to pay up the €1m balance of the €2m capital increase.

European DatawarehouseOn June 29, 2012, Crédit Foncier acquired a stake in European Datawarehouse for €250,000. European Datawarehouse centralises and houses data pertaining to collateral for refinancing transactions eligible for the Eurosystem Repo (2).

Foncier DiagnosticsIn the first half of 2012, Crédit Foncier set up cash advances of:• €310,000 for the balance of the 2011 budget,• €744,000 for H1 2012.It should be noted that, in early H1 2012, the Group decided to cease the entity’s operations.

LocindusCrédit Foncier opted to receive payment of Locindus’ dividends in shares. Accordingly, on June 21, 2012, Crédit Foncier received 623,821 Locindus shares with a value of €6,755,981.43, raising its total percentage of ownership from 72.69% to 74.15%.

Sem Yvelines AmenagementCrédit Foncier had acquired a €30,000 stake in the capital of Sem Yvelines Aménagement, having already paid up €15,000. On January 10, 2012, Crédit Foncier paid up the balance of the capital subscription, i.e. €15,000.

Sipari• On January 31, 2012, Sipari converted its 34,560 Foncière

Atland bonds into shares for a total of €2,246,400, bringing its percentage of ownership in Foncière Atland to 7.40%.

• On June 8, 2012, Sipari repaid €316,693 to Crédit Foncier for the advances made as part of the Foncier Pro deal in Limeil-Brevannes.

Groupe BPCE transactions

Capital Région 2On January 19, 2012, Crédit Foncier received €200,000 from Alliance Entreprendre (asset management company in charge of the venture capital fund Capital Région 2) following the sale of Fermaillance (a company belonging to the fund).

Ecureuil CréditEcureil Crédit’s General Meeting of December 26, 2011 approved the withdrawal of Crédit Foncier as of January 17. Consequently, Ecureil Crédit repaid €1,013 to Crédit Foncier for the 1,013 shares held, each with a nominal value of €1.

FidepppOn May 31, 2012, Crédit Foncier subscribed for 826 Fideppp shares for a total of €826,000, bringing the amount of its paid-up subscription to €16.45m.

Fideppp 2As the Fideppp fund became saturated due to the ongoing investment plan, a second fund (Fideppp 2) was launched. Crédit Foncier subscribed for €5m in Fideppp 2 shares on June 12, 2012, with an initial fully paid-up amount of €125,000.

(2) Repo (repurchase agreement): a money market financial instrument.


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Executive and administrative bodiesExecutive Officers (At June 30, 2012)

Bruno DELETRÉ, Chief Executive Officer,Thierry DUFOUR, Deputy Chief Executive Officer, Chief Financial Officer in charge of Finance and Operations,Christophe PINAULT, Deputy Chief Executive Officer in charge of Retail and Corporate Banking.

Executive officers are assisted by an Executive Officer Committee:• Éric FILLIAT, Chief of Financial Management,• Sandrine GUÉRIN, Chief of International Corporate and Investment Banking,• Mathieu LEPELTIER, Chief Risk Officer.

Administrative organisation chart

Resources and Steering Division. Finance and Operations Division.

Retail and Corporate Banking Division. Member of the General Management Committee.

Éric FILLIATChief of financial

managementFinance Division

Mathieu LEPELTIERChief Risk Officer

Risks and Compliance Division

Sandrine GUÉRINChief of Corporate and

Investment Banking (CIB)Financial Operations

Philippe DUPINCorporate transactions

François GUINCHARDIndividual transactions

Luc RONDOTInformation systems

Corinne DECAUXLegal Department

Patrick CHASTANTGeneral Inspection

Bruno DELETRÉChief Executive Officer

Jean-Pierre POUGETAccounting and taxation

Muriel COLLEHR and Facilities Planning

Thierry DUFOURDeputy CEO

Chief Financial OfficerFinance and Operations

Nordine DRIFMarketing and supervision

Alain DAVIDMajor accounts

Stéphane IMOWICZReal Estate Services

Isabelle SELLOS-MAHECorporates

(public and private)

Anne-Marguerite GASCARD

Sales networks

Anne-Marguerite GASCARD (interim)

Partners networks

Christophe PINAULTDeputy CEO

Retail and Corporate

François PÉROLChairman


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Board of Directors

Composition of the Board of Directors(At June 30, 2012)

Board of Directors • Mr. François PÉROL, Chairman of the Board of Directors• Mr. Gérard BARBOT - Chairman of the Remuneration Committee• Ms. Meka BRUNEL - Member of the Remuneration Committee• Ms. Nathalie CHARLES - Member of the Remuneration Committee• Mr Jean CLOCHET - Member of the Remuneration Committee• Mr. Jean-Claude CREQUIT• Mr. Pierre DESVERGNES• Ms. Nicole ETCHEGOÏNBERRY - Member of the Audit Committee• Mr. Jean-Paul FOUCAULT• Mr. Dominique GARNIER• Ms. Catherine HALBERSTADT• Mr. Francis HENRY - Member of the Remuneration Committee• Mr. Olivier KLEIN• Mr. Jean-Michel LATY• Mr. Jean-Hervé LORENZI - Member of the Audit Committee• Ms. Stéphanie PAIX - Member of the Audit Committee• Mr. François RIAHI• BPCE, represented by Mr. Nicolas DUHAMEL - Chairman of

the Audit Committee

Non-Voting Directors• Mr. Jean-Marc CARCELES• Mr. Marc JARDIN• Mr. Michel SORBIER

Central Works Council Delegates• Mr. Michel LAMY (management representative)• Ms. Valérie FIX (clients executives, banking representative)

Government Auditor• Mr. Antoine MERIEUX

Changes to the composition of the Board of Directors in H1 2012The General Meeting of May 10, 2012 renewed the terms of office of Directors and Non-Voting Directors which had expired.The following individuals were appointed as Directors:• Ms. Meka BRUNEL, replacing Mr. Pierre QUERCY following

his resignation,• Ms. Nathalie CHARLES, replacing Mr. Alain DININ following

his resignation,• Ms. Catherine HALBERSTADT, replacing Mr. Jean-Marc

CARCELES following his resignation.

The same General Meeting appointed the following individual as a Non-Voting Director:• Mr. Jean-Marc CARCELES.

Subsequent to the General Meeting, the Board of Directors renewed the term of Mr. François PÉROL as Chairman of the Board of Directors. The same Board of Directors redefined the composition of the committees.

Changes to the composition of the Board of Directors since the end of H1 2012

At its meeting of July 31, 2012, the Board of Directors accepted the resignation of Mr. François RIAHI as Director and co opted Ms. Anne MERCIER-GALLAY as his replacement.


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Economic and financial environmentAfter heavily impacting Greece to begin with, the European sovereign debt crisis spread to peripheral countries in 2012. Though respectively Europe’s third and fourth biggest economies, Italy and Spain began worrying the markets, causing them to fluctuate.

Both economies were hurt by the global slowdown in growth in the first half and experienced funding problems. They responded quickly and massively, adopting unprecedented austerity plans which nevertheless were not enough to reassure the markets.In such a restrictive and unstable environment, economic players across the board were cautious and guarantee requirements were stepped up.

Sharp global economic slowdownGlobal growth had already fallen significantly in 2011 (dropping from 4.5% in 2010 to 3.8% in 2011, a trend that not only continued but worsened, with the International Monetary Fund pegging 2012 growth at just 3.5%.

There are several correlated reasons for this trend: the European sovereign debt crisis has driven investors to be more cautious and thus decreased their appetite for investment. Furthermore, a number of austerity plans have been implemented, which have further hampered investment and thus growth. What’s more, the global rise in unemployment, exacerbated by the European crisis, has amplified the negative growth trend. European countries are not the only ones affected: the United States has also seen an increase in the number of unemployed as well as a poor level of consumer sentiment, encouraging savings rather than consumption.The problems facing developed countries have had worldwide negative economic consequences due to sharply slower demand from Europe and the US.

Some developing countries have also seen their growth take a turn for the worse. China, for example, posted growth of 7.8% in H1 2012 versus 8.9% in 2011. In addition, growth of purchasing power for the middle classes has slowed considerably.

Several downgrades and disparities in access to funding over the course of H1 2012In the first half of 2012, rating agencies downgraded the ratings of several companies along with countries and supranational organisations. Spain, Italy and Greece were hit with a series of downgrades in the first six months of the year. Other countries, including non-European countries, suffered the same fate due to their debt. Japan is one example, with its debt now more than double its GDP.

These countries are finding it increasingly difficult to obtain funding on the capital markets. Investors have begun turning to better-rated countries enjoying historically low refinancing costs, such as Germany, Austria and the Netherlands, but also France. Though 2011 proved challenging, the first half of 2012 was positive for France in terms of cost of debt. High demand brought yields down to near-zero.

Interest ratesFive-year rates

en %

0

1

2

3

4

5

6

06/30/07 06/30/08 06/30/09 06/30/10 06/30/11 06/30/12

BCESwap 10 yearsEuribor 3 months

On July 5, the European Central Bank (ECB) cut its refi rate by 25 basis points to 0.75%, below its historic floor of 1%.

The ECB’s refi rate had not budged since the cut in December 2011. Returning to its interest rate policy can be seen as a sign of the limits to the unconventional measures tested during the crisis.

The massive loans granted to banks in December and March, totalling some €1,000bn, ended up easing the level of long rates, with the 10-year swap rate on the decline in 2012.

The ECB’s low-rate policy also has an impact on the 3-month Euribor spot rate, which has also declined. The three-month Euribor and ECB rates have also come down.


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Commercial activityIndividual customersFrench real estate market environment

2011 was a year of contrasts for the real estate market, with the new housing segment struggling and the existing housing segment doing well.

The number of transactions in existing homes hit a new record in 2011 at 858,200 transfers, i.e. nearly 10% more than in 2010 (3).

In new housing, sales of single-family homes declined (-8% in 2011 compared to 2010) due to the new provisions of the PTZ+ loan, which are less beneficial for first-time home buyers with modest incomes (4).Real estate development fell by 10% compared to 2010 following the reform of the Scellier Act, making it less attractive (5).

Preliminary trends in 2012 point to a difficult year for the real estate market, both in existing and new housing.

Residential real estate marketNew construction sector: sales in the property development segment have fallen sharply since 2011.2012 started off on this trend, with sales 14.4% lower than those for the same period in 2011 (5). The sector was hurt by reduced government aid as of January 1st, 2012, particularly stemming from the Scellier reform.Sales to investors shed 9% from 2011 to 2012 (6).Figures also flagged in single-family homes: in H1 2012, the number of gross sales was down 19% year-on-year (4).

In the existing homes sector, January was boosted by solid year-end 2011 results; however, since February notaries have seen sales ebb, particularly in Île-de-France (-25% in existing apartments). The same can be said for the provinces.Prices of existing homes have fallen slightly (-1.1% for existing apartments and -1.2% for existing houses), with a more pronounced decline in the provinces (-1.6% for existing apartments and -1.4% for existing houses) (7).

Real estate lending market2011 was adversely impacted by a deterioration in the economic climate and a more restrictive credit offer, leading to a drop in new housing loans of nearly 4% compared to 2010 (8).New housing loans fell by 30.6% in H1 2012 versus H1 2011. This decrease was more pronounced in the renovation segment (-39%) and existing homes, a segment which no longer receives government aid (-29.9% versus -26.8% in existing homes) (9).The main reasons for the downturn in the real estate lending market were the economic climate and particularly the wait-and-see attitude preceding the elections.

Crédit Foncier activity in first-half 2012

Range of products Crédit Foncier began 2012 with an in-depth analysis of its distribution network. As a result of this analysis, a new branch concept was developed and a pilot branch was opened on July 17, 2012.The aim of this new concept is to position the branch at the hub of the commercial relationship and to enhance the Crédit Foncier brand.Crédit Foncier also strengthened its relations with its partners, with dedicated tools and products.• The “Foncier duo Partenaire” loan was revisited to make

it easier to use and better suited to the needs of Crédit Foncier’s partners.

• The “Foncier Duo Collectivité” loan was further developed, with new agreements entered into with local authorities.

• A subsidised loan, in partnership with the Guy Hoquet network, was launched in June. This was a first for Crédit Foncier, which had never implemented such a large-scale initiative with a national network of real estate agencies.

• A Crédit Foncier label for display at the branches was offered to independent agents having entered into a partnership agreement with Crédit Foncier. This “2012 label” met with great success, with over half of partners solicited to date displaying their partnership with Crédit Foncier.

(3) Notaires de France - Notes de conjoncture immobilière (French notaries’ real estate climate analysis) No. 11 - April 2011 and No. 5 - May 2012.(4) Markemétron Bulletin No. 162 - June 2012.(5) MEDDLT - Ministère de l’Écologie, du Développement durable, du Logement et des Transports (French Ministry of Ecology, Sustainable Development, Housing

and Transport).(6) FPI - Fédération des promoteurs immobiliers (French federation of real estate developers).(7) Notaires de France - Note de conjoncture immobilière (French notaries’ real estate climate analysis) No. 16 - July 2012.(8) CSA housing loan observatory.(9) OPCI - Real estate lending observatory.


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• A new widget was developed and installed for over 2,000 partners. This widget summarises Crédit Foncier’s expertise and can be used by independent agents to use simulators to give referrals.

• Since the beginning of the year, Crédit Foncier has also emphasised the recognition and visibility of its brand online, particularly by providing a mini “Crédit Foncier” section on its partners’ websites.

Individuals: production


Production H1 2011 H1 2012 Change 2012-2011

Physical networks (1) 2,703 2,191 -19.0%

Partners networks (2) 780 821 +5.3%

Total individuals 3,483 3,012 -13.5%

(1) Loans originated by individual agents and branches, high-end and real estate asset managers, and Belgium.

(2) Loans originated by exclusive agents, sales units, major partners, special channels (Internet, renovations, non-residents) and miscellaneous.

The total production volume for individual customers fell by 13.5% compared to the first half of 2011. This decline should be placed in perspective with that of the French real estate lending market, which lost 31% over the same period (10).Nevertheless, the partner networks fared well, driven by increased production by exclusive La Hénin agents.

Drawing on its expertise in this area, Crédit Foncier remained the No. 1 distributor of PAS new homeownership loans, with nearly 36% market share.

As part of Groupe BPCE, Crédit Foncier also draws on the strength of the Caisse d’Epargne and Banque Populaire networks to develop the distribution of loans, and particularly long-term loans and new homeownership loans.

Production structure in H1 2012

By distribution channel

Approved agents59%

Branches*10%

Exclusive agents16%

Premium/Patrimonial2%

Sales units2%

Large partners3%

Miscellaneous8%

€3.0bn

* Loans to walk-in clients.

By market

€3.0bn

New property ownership33%

Existing property ownership42%

Rental investment new construction14%

Rental investment existing4%

Miscellaneous7%

(10) OPCI - Real estate lending observatory.


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Outlook for 2012

In light of the sluggish economic environment, fiscal tightening projects expected to undermine rental investment in both the new and existing markets, persistently high property prices, and the likely increase interest rates on loans, the real estate market is liable to contract in 2012.

In existing homes, Crédit Foncier projects a decline of around 18% in business volume compared to 2011, with the number of transactions pegged at around 700,000.Prices should continue to decline anywhere from 5% to 10% depending on the region, with the exception of certain sectors such as Paris, where demand pressure is still strong and prices are expected to remain stable (11).

New construction, despite the continued development of the PTZ+ loan, is liable to be hurt by the reform of the Scellier Act.Crédit Foncier therefore estimates some 380,000 housing starts.Collective housing is expected to reach 90,000 sales by year’s end.The single-family home market, which is primarily oriented toward first-time buyers, should end the year with 130,000 sales (11).

Summary: activity with Individuals


H1 2011pro forma (1) H1 2012 Change

2012-2011

Production 3,483 3,012 -13.5%

(1) Disposal of certain Banco Primus operations.


Dec. 31, 2011 June 30, 2012 Change 2012-2011

Outstandingsat period-end

59,659 59,920 +0.4%

Loans to individuals 47,678 49,047 2.9%

Securities backed by residential mortgage loans (RMBS) in Europe (stock)

11,981 10,873 -9.2%

(11) Crédit Foncier Immobilier.


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Corporate clientsPUBLIC SECTOR

Social housing

Activity in first-half 2012

On the social housing market, Crédit Foncier primarily distributes intermediary regulated loans.The funding mechanisms established in 2011 have been carried over in 2012, as have the margins applied to the various segments of clients eligible for regulated loans. Unlike previous years, it is now BPCE as head of the networks that enters into the funding agreements with Caisse des Dépôts et Consignations for the members of the Group operating on this market.Activity was robust in H1 2012, with total loan production of €397m at June 30.


By type of client

€0.4bn

HLM cooperative company5%

Association20%

SACIp.m.

SEM5%

Public housing office (OPH) 7%

Social housing company63%

Outlook for 2012

Given the public sector’s focus on substantial social housing construction targets, the social housing market is poised to continue expanding within the limit of available land holdings.As a historic provider of funding for social housing, Crédit Foncier will actively contribute to the implementation of this pro-active policy by issuing specific loans to the relevant intermediaries.

French Local Authorities

Environment of the French local authorities market

French local authorities have been hampered by restrictive lending conditions in the private banking sector since 2011.The largest local authorities have attempted to adapt to this situation in order to cover their funding requirements for 2012 and have sought to diversify their sources of funding since the start of the year, including bonds, public debt offerings, private investors, etc. Local authorities have also changed their method of operation, planning their funding requests more regularly throughout the year rather than saving most for the third quarter.However, the gradual advent of Banque Postale on this market should expand the loan offering. Banque Postale has begun to establish its position with an offer of short-term credit facilities. For its part, Groupe BPCE has stated its intention to maintain the same level of activity as 2011. Crédit Foncier will continue to support the Groupe BPCE networks through technical assistance and liquidity, although its market share will decrease compared to 2011.

Activity in first-half 2012

At the end of June 2012, production on the French Local Authorities market totalled €126m. In addition to granting new loans, Crédit Foncier assists its clients and the BPCE network banks in managing the debt held by local authorities. To this end, it offers its entire arsenal of expertise and responsiveness.It also provides smaller local authorities with a fixed-rate loan, which proved very successful in the first half.


By type of client

€0.1bn

Towns 22%

Inter-municipal authorities*48%

Departements17%

Regions4%

Towns > 50,000 residents 9%

* EPCI: Établissement public de coopération intercommunale (French inter-commune cooperative organisation).


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Outlook for 2012

H1 2012 is expected to echo H1 2011 in terms of production and margin levels. Due to limited liquidity, relations between banks and local authorities are clearly evolving. No longer just a lender, the bank is increasingly becoming a partner to local authorities and an arranger of comprehensive funding solutions.

PRIVATE SECTORMarket environment in first-half 2012

Real estate developmentThere has been a noticeable drop in the number of authorised housing units year-to-date (-3.9% in Q2 2012). Over the same period, the decline was very significant for individual single-family homes (-20.3%) and grouped single-family homes (-10.0%) alike, and was only partially offset by the rise in collective housing permits (+11.9%).This trend can be attributed to economic and fiscal uncertainties, and particularly the current lack of any mechanism to replace the Scellier Act, which has provided much-needed support to the market in recent years.The decline was even more pronounced in housing starts for all types of housing: the number of housing starts fell 11.8% in Q2 2012 versus Q2 2011 to 79,800 (12).In existing homes, Paris real estate dealers maintained a dynamic level of activity in line with H2 2011. Competition for high potential buildings is fierce with the arrival of capital-rich players.

Investment in commercial real estateDespite the tense economic climate, the commercial real estate investment market held steady in the first half of 2012, driven by a very busy second quarter (€4.4bn) preceded by a sluggish first quarter (€2.2bn). With outstandings of €6.6bn, H1 2012 showed a 20% improvement over H1 2011 (13).The market was largely dominated by capital-rich players (e.g. insurance companies, supplementary health coverage providers, investment funds and REITs), which accounted for 75% of funds invested, focused on deals exceeding €100m, i.e. 48% of the total volume versus 35% for the same period in 2011. It should be noted that Middle Eastern investment funds have made considerable headway in the French market since the beginning of the year, having closed three major deals. As in previous periods, offices in Île-de-France were the prime target.

Project financing and partnershipsThe public-private partnerships that will be signed in 2012 are those that were subject to calls for tenders in late 2010 and 2011. The market should therefore be relatively similar to that of 2011. However, there has been a freeze on State programmes since the start of 2012 (the State being the main initiator of projects in recent years) and a scarcity of calls for tenders due to the elections and budget constraints. The public-private partnership market is currently evolving.

CompaniesGiven the decline in the economic environment since the end of 2011, companies have adopted a wait-and-see attitude and have put off their real estate investment projects.The upcoming termination of the tax exemption on capital gains from disposals subsequent to lease-backs could keep the real estate leasing market afloat at around €5bn.

Crédit Foncier activity in first-half 2012

Production in the private corporate segment reflected developments in the various markets, posting a 30.6% drop compared to H1 2011.Due to the challenging financial environment, Crédit Foncier had to limit its commitment per transaction.


Production (France) H1 2011 H1 2012 Change 2012/2011

Developers 547 363 -33.6%

Companies & investors (1) 246 177 -28.0%

Project financing and partnerships

75 62 -17.2%

Total Private sector 868 603 -30.6%

(1) Including production by subsidiary Locindus.

Real estate developmentCrédit Foncier’s production fell by nearly 33.6% compared to H1 2011. Demand from real estate developers decreased substantially, particularly in terms of guarantee and surety products. Paris real estate dealers continued to operate on the market and carried out solid financing deals in which Crédit Foncier took part.

(12) Commissariat général au développement durable - chiffres et statistiques (Department of the commissioner general for sustainable development - data and statistics) No. 339 - Housing construction - Results at end-June 2012.

(13) BNP Real Estate - At a glance - Investment in France - H1 - 06-07-2012.


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InvestorsThe Investors market saw the same trend as the commercial real estate investment market, with a sluggish first quarter followed by a pick-up in the second quarter. However, it should be noted that the funding market contracted sharply, with 75% of transactions completed by players contributing capital only. Nevertheless, Crédit Foncier participated in a number of large-scale deals, including those carried out for Mercialys, Foncière des Régions, Foncière Paris France and Focsa.

Project financing and partnershipsCrédit Foncier’s production in H1 2012 declined by 17.2% compared to H1 2011. However, with the number of projects currently in the final offer phase, the company is fully expected to meet its 2012 targets. Crédit Foncier is well-known to industrial partners, and as such is able to maintain its position in the public-private partnership segment (less than €150m) and to begin building relations to penetrate new segments and meet the needs generated by issues surrounding the question of sustainable cities and energy performance. Its unique business model and experience make it the ideal candidate to meet calls for tenders for complex public-private partnerships.

CompaniesOne year after the corporate business was taken over by Locindus, activity in H1 2012 was divided between User and Investor transactions. With mortgage lending levels revised downward, real estate leasing is once again attracting the interest of private investors, which are historic clients of Crédit Foncier.

Outlook for 2012

InvestmentsH1 2012 performances, the end of the SIIC (listed real estate investment companies) tax scheme that favoured foreign companies, and the traditional seasonality of the market point to better-than-initially-expected performances (about €12bn) for full-year 2012, with a volume close to that of 2011.

Project financing and partnershipsIn the coming years, public-private partnerships will in all likelihood be restricted to more complex projects from a legal, technical, technological or urbanistic standpoint.

Real estate developmentIn the real estate development sector, the trend seen in the first half may continue, with the decline in housing starts potentially reaching 9% over the full year (14). For real estate dealers, the existing housing market is expected to stay the course in 2012, subject to legislative amendments concerning sales by lot.

Summary - activity with Corporates


H1 2011 pro forma (1) H1 2012 Change

2012-2011

Production 1,408 1,126 -20.0%

Public sector 540 523 -3.1%

o/w:

• French local authorities

278 126 -54.7%

• Social housing 262 397 +51.6%

Private sector 868 603 -30.6%

(1) Pro forma France given the termination of international production in order to focus on the implementation of the new strategic plan.


Dec. 31, 2011 June 30, 2012

Change 2012-2011

Outstanding at period-end (2) 57,950 61,919 +6.8%

Public sector 49,100 52,180 +6.3%

o/w:

• French local authorities

17,108 16,658 -2.6%

• Social housing 7,724 7,513 -2.7%

• International public and sovereign (3) financing

16,914 20,752 +22.7%

• Securities backed by loans to individuals with a guarantee from a Step 1 (≥ AA-) state

7,354 7,257 -1.3%

Private sector (France and international)

8,850 9,739 +10.0%

(2) Basel segmentation.(3) o/w French sovereigns: €616m at December 31, 2011 and €5,527m

at June 30, 2012.

Studies, Valuation and Real Estate

(14) Housing climate analysis - Crédit Foncier Immobilier - June 18, 2012.


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ServicesCreated in 2010 from the combination of Ad Valorem with Crédit Foncier’s real estate services, Crédit Foncier Immobilier began its second financial year in 2012. The brand has gained recognition and credibility on the market, particularly with respect to its competitors, consisting of major international real estate consultancies and dedicated bank subsidiaries. Today, Crédit Foncier Immobilier ranks fourth in its profession and first in terms of valuation (Crédit Foncier Expertise) and appraisals (Serexim). Its clients are made up of institutional owners, business users, developers and local authorities, on the one hand, and the Caisses d’Epargne and Banques Populaires banks comprising the Groupe BPCE network, on the other.Crédit Foncier Immobilier’s activity is divided between two major divisions: consulting and valuation (consulting & audit, valuation, appraisals and studies) and transactions (investment, office lettings, sales by lot of existing buildings, sales of new investment properties, management and lettings).

Consulting & Valuation

Crédit Foncier Consulting & AuditCrédit Foncier Immobilier’s consulting business continued to expand in the first half of 2012.The late-2011 launch of Delta Green and property audit offer, under the Grenelle de l’environnement “green” initiatives, strengthened the entity’s reputation with users and international investors alike. Assignment orders in the first half generated a volume of €0.9m.

Crédit Foncier ExpertiseCrédit Foncier Expertise (CFE) has seen a decline in average fee income in the profession. Competition has intensified, as demonstrated in the calls for tenders issued by major property owners, where price is a key factor.Having taken up this challenge, Crédit Foncier Expertise focused on its strategy for developing and improving the quality of its services. Private banking clients were approached, while new REIT and real estate mutual fund assets were incorporated into the portfolio of recurring assignments, confirming CFE’s leading position in both highly coveted segments. Furthermore, CFE won the calls for tenders issued by CGLLS and Sofilo, and renewed its framework agreement with Poste Immo, a major source of potential business.

The number of assignments carried out for Groupe BPCE’s Caisses d’Epargne and Banques Populaires and for Natixis increased, particularly in the regions.Total revenue from assignment orders rose by 8% in H1 2012 versus H1 2011.

Serexim (appraisals)Serexim’s appraisals production generated fee income of €3m in the first half of 2012. This activity was driven in particular by assignments ordered by the parent company, Crédit Foncier.Serexim also won a call for tenders issued by Laser Cofinoga, thus continuing the relationship with a valued client for which 3,000 assignments are completed each year.

Research departmentCrédit Foncier Immobilier’s Research Department has further developed its business for Crédit Foncier in 2012, both in terms of risk analysis and support for the company’s communication policy. It also prepares quarterly market reviews and analyses for external publication, thus boosting Crédit Foncier Immobilier’s recognition as a creator of high value-added content.The Department is expected to generate revenue of about €1.4m in 2012.

Transactions

Ad Valorem InvestissementThe investment department, dedicated to large-scale property deals, got off to a great start in 2012. Fees invoiced at end-June totalled some €0.95m for 10 transactions. What’s more, about €0.65m (8 deals) are currently subject to agreement and will boost this revenue by the end of 2012.Business in 2012 will be better distributed in terms of location between Paris and the provinces and in terms of types of assets sold (residential, mixed properties, offices and shops).

B&D Conseils (office lettings)B&D Conseils’ office lettings business was beset by a relatively sluggish lettings market (-28% in volumes over the first quarter and -22% over the second quarter), due to ailing growth and an adverse calendar effect. The market picked up again slightly in June and July. B&D Conseils’ business volumes improved in these two months: with six contracts signed in June and six scheduled for July, coupled with an inventory of nearly €1m, significant revenue growth is targeted for the second half, though cautious remains the watchword for September.


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Ad Valorem Vente par Lot (Sales by lot)Sales of residential building by lot, developed under the Ad Valorem brand, slowed in the first half of 2012. Potential revenue (deeds signed and sales agreements) amounted to €3.4m. Reasons for the slowdown include the wait and-see attitude of buyers hoping for prices to fall as well as the presidential elections and its repercussions on real estate and taxes, all against the backdrop of the financial crisis.Nevertheless, April and May delivered very solid results, better than 2010 in fact, which is thought to be one of the best years ever for this business.Another encouraging signs is the continued success of the “Noctinvest” private real estate auctions targeting investors with an offer of attractive discounts.Although markets like Paris and Neuilly-sur-Seine have been less affected by the current climate, the same cannot be said for other sectors. Price adjustments have begun to be seen, for example, in the outer suburbs of Paris and in cities such as Lyon and Marseille.

Ad Valorem Patrimonial (sales of new properties)Sales of new properties to investors slid substantially in the first half, posting a volume of 147 net reservations and €1.3m in fee income. Like 2011, this contraction can be attributed to the particularly high comparison base of Q2 2011, boosted by a “windfall effect” preceding the termination of certain tax benefits at the end of the year. The strong activity in the entity’s partner networks generated a large number of reservations for Scellier products in March and April, while the month of May was hit hard by the presidential elections and more waiting-and-seeing. Inventory is currently higher, quality strong and diversity broader, with a large majority of products that can be signed for this year, which will be a determining factor.

Ad Valorem Gestion et Location (management and lettings)Development of the management and lettings business was impacted by two major events in H1. Firstly, the partnership with Ciloger was continued, with 570 homes put up for lease. These homes, which were purchased off plan by this investor, are spread out over 29 locations around France and are held by the HABITAT 1 and 2 REITs. They will be delivered over the 2012, 2013 and 2014 financial years.Secondly, the call for tenders won by the entity, for the lease management of 200 homes purchased off plan by the Élysées Rédience 5 REIT, managed by HSBC REM. These homes are spread out over 11 locations in Île-de-France and Lyon, and are scheduled for delivery in 2012 and 2013.In light of these new contracts, which are quite promising for new market share gains, the department’s revenue is likely to exceed an initial threshold of €1m in 2012.

Banco Primus activityBanco Primus, a 94.94%-owned subsidiary of Crédit Foncier, whose head office is based in Lisbon, previously provided debt restructuring through mortgage loans in Portugal and Spain, and auto loans in Portugal and Hungary.

At December 31, 2011, outstanding loans totalled €660m and could be broken down as follows:

Loan book at December 31, 2011 (in millions of euros)

Mortgage loans in Portugal 101

Mortgage loans in Spain 250

Auto loans in Portugal 261

Auto loans in Hungary 48

Total 660

Due to the scarcity of liquidity and intensification of the economic crisis in the Iberian Peninsula (particularly in real estate), Banco Primus’ Board of Directors decided at its meeting of November 23, 2011 to cease production of mortgage loans in Portugal and Spain as well as production of auto loans in Hungary.

A redundancy plan was implemented in these three countries at the start of 2012 (the headcount decreased from 268 at December 31, 2011 to 194 at June 30, 2012). The teams are now focused on management and collection of the existing loan book, maintaining internal control procedures and selling foreclosed properties.

The entity is still offering auto loans in Portugal, but at reduced volumes. At June 30, 2012, loan production totalled €40m (versus €50m for the same activity at June 30, 2011).

The company expects its overall outstandings to stabilise at December 31, 2012.


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Financial transactions

Market environmentThe first half of 2012 was overshadowed by the spreading of the debt crisis to Spain and Italy. Yields on Spanish and Italian sovereign debt increased sharply as a result. Against this backdrop, the biggest constraints for major international issuers were access to liquidity and refinancing terms at consistently acceptable spread levels.

Review of transactionsIn this restricted market environment, the Crédit Foncier Group raised nearly €7.3bn in long-term resources on the capital markets at June 30, 2012, including €6.3bn in obligations foncières via Compagnie de Financement Foncier.• Compagnie de Financement Foncier carried out two new

EUR benchmark issues with maturities of 3.5 years and 10 years and nominals of €2bn and €1bn, respectively, once again proving it can access the entire euro curve, particularly at the longer end despite persistently low long rates.At the same time, the private placement business was dynamic and flexible in its continuous search for new opportunities. At €1.7bn, the volume of issues in H1 2011 reflected constant demand from German investors for registered covered bonds (RCBs).

• Crédit Foncier also obtains funding through direct Crédit Foncier issues. In 2012, Crédit Foncier issued a bond to the general public that met with great success, tallying up €950m in subscriptions. This refinancing instrument holds a significant place in Crédit Foncier’s fund raising programme and testifies to its recognition with the general public.

Breakdown of obligation foncière issuance in H1 2012

By type of investor

€6.3bn

Others2.2%

Pension funds1.6%

Central banks8.2%

Asset managers39.4%

Insurance companies25.3%

Banks23.3%

By geographic area

€6.3bnOthers1.6%

Benelux3.2%

Europe (others)4.9%

UK4.4%

Scandinavia2.1%

Asia1.7%

Switzerland1.3%

France 34.5%

Germany46.3%

Active asset and liability managementIn conjunction with BPCE and in line with its strategic plan, Crédit Foncier initiated an asset disposal policy in Q3 2011 centred on deleveraging assets deemed high-risk and assets offering capital gains or low capital losses, with the aim of offsetting potential losses as much as possible by redeeming obligations foncières liabilities.

Since the fourth quarter of 2011, Crédit Foncier has sold €2.6bn in assets and redeemed €1.9bn in obligations foncières.


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Client relationsQuality of relations with individual customersWith business remaining stable, Crédit Foncier continued its efforts to consistently improve its quality of service.The Online Customer Resources created at the end of 2008 continued to develop. Already, more than 30% of customers have signed up and used the services offered.In 2012, Crédit Foncier is working on an ambitious loan digitisation project, paving the way for better customer service and pooling the activity between the various locations. The ISO 9001-2008 certification, already covering customer reception and qualification and the handling of individual customer requests, was renewed and expanded in 2011 to include prevention of payment problems, thus guaranteeing comprehensive, high-quality service for all standard after-sales needs.Collection activities and the banking platform are also working toward certification and hope to receive an ISO 9001 2008 certification by 2012.

Quality of relations with corporate clientsIn today’s uncertain economic climate, which calls for continuous adaptation and innovation, management of new production and greater focus on oversight of existing commitments go hand-in-hand with increasing determination to meet the needs of corporate clients.In addition to drawing on yearly quality surveys targeting this specific clientele, this effort is aided by ongoing initiatives aimed at harmonising and standardising communications with each category of corporate clients: real estate developers, public and private sector investors, social housing players, and PPP partners.The results of recent surveys show an improvement in the quality of Crédit Foncier’s relations with its corporate clients and in the quality of service provided. Inspired by these results, Crédit Foncier intends to continue on this path, in accordance with its constraints as a specialised financial institution.


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Analysis of resultsConsolidated resultsGroup share of net income in H1 2012 totalled e3m.

Crédit Foncier’s main consolidated financial indicators at June 30, 2012 were as follows:• Production: e4.1 bn• Outstanding loans (end of period): e121.8bn• Net banking income: e330m• Group share of net income: e3m

• Total balance sheet assets: e166.5bn• Group share of consolidated equity: e3.5bn• Consolidated European capital adequacy ratio: 10.7% o/w

Tier One of 9.9%


H1 2011 H1 2012 Change 2012-2011

Net banking income (NBI) 464 330 -29%

Management expenses -312 -273 -13%

Gross operating income (GOI) 152 57 -63%

Cost of risk -101 -57 -44%

Income from companies accounted for by the equity method and other assets

6 5 insignificant

Income before tax (IBT) 57 5 insignificant

Corporate tax -16 -1 insignificant

Minority interests - -1 insignificant

Group share of net income 41 3 insignificant

C/I ratio (Operating expenses/NBI) 67.2% 82.7% +15.5 pts

In line with its strategic plan (2012-2016), Crédit Foncier initiated balance sheet reduction initiatives in Q4 2011. Under this plan, securities were sold for nearly e1.4bn (15) and liabilities redeemed for close to e900m in 2012, generating a net capital loss of e71m before taxes at June 30, 2012.

Net banking income amounted to e330m in H1 2012 (down 29% compared to H1 2011). Corrected for the net impact of asset disposals and liability redemptions carried out in the first half, net banking income was down 14% compared to the first half of 2011.

Operating expenses decreased sharply to e273m, down by 13% versus H1 2011. Cost-cutting is a big factor in the success of the strategic plan.

Gross operating income came to e57m.

Cost of risk resulted in a net provision of e57m in the first half. This figure includes provisions for certain corporate disputes and an additional collective provision following the harmonisation of calculation methods with those used by Groupe BPCE.

Net income was positive at e3m in H1 2012.

At June 30, 2012, risk-weighted assets were down 8% compared to December 31, 2011. Equity was solid at e4.6bn at the end of the first half, giving a Tier One ratio of 9.9%.

(15) Plus e167m in securities in the process of being delivered at June 30, 2012.


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Simplified consolidated balance sheet

ASSETS (in millions of euros)

Dec. 31, 2011 June 30, 2012

Cash and amounts due from central banks 15 19

Financial assets at fair value through profit or loss 3,469 3,530

Hedging derivatives 10,124 10,351

Available-for-sale financial assets 2,587 4,219

Loans and receivables due from credit institutions 7,294 23,392

Loans and receivables due from customers 112,264 111,355

Revaluation adjustment on interest rate risk hedged portfolios 4,536 5,397

Held-to-maturity financial assets 465 136

Current tax assets 414 -

Deferred tax assets 582 589

Accrued income and other assets 6,310 7,252

Investments in companies accounted for by the equity method 53 54

Investment property 41 42

Property, plant and equipment 132 128

Intangible assets 18 17

Goodwill 13 13

TOTAL 148,317 166,494

LIABILITIES (in millions of euros)

Dec. 31, 2011 June 30, 2012

Financial liabilities at fair value through profit or loss 5,805 5,749


Due to credit institutions 16,294 32,350

Due to customers 396 407

Debt securities 104,119 104,456

Revaluation adjustment on interest rate risk hedged portfolios 109 86

Current tax liabilities 2 17

Deferred tax liabilities 24 39

Accrued expenses and other liabilities 6,148 6,795

Provisions 200 222

Subordinated debt 824 819

Group share of consolidated equity 3,407 3,463

o/w net income for the period -409 3

Minority interests 100 97

TOTAL 148,317 166,494


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The IFRS consolidated balance sheet total at June 30, 2012 amounted to e166.5bn, representing an increase of 12.3% compared to December 31, 2011.

Available-for-sale financial assets rose by e1.6bn following the Group’s subscription for negotiable debt securities issued by BPCE.

Loans and receivables due from credit institutions increased by e16.1bn, due in large part to the set-up of funding operations totalling e14bn vis-à-vis BPCE and investment of e2.7bn in cash holdings with the Banque de France.

Loans and receivables due from customers fell by e0.9bn, i.e. 0.8%, with the e1.8bn decrease in securitised receivables offset by the e1bn increase in customer loans.

Amounts due to credit institutions reached e32.4bn, up by e16bn versus 2011, due in large part to the set up of a funding operation of e15.4bn by BPCE in favour of Crédit Foncier and the increase in refinancing of PLS/PLI loans by CDC (Caisse des Dépôts et Consignations) for e0.8bn.

Debt securities were stable over the period.

Group share of consolidated equity rose by 1.6% compared to December 31, 2011.

OutlookCrédit Foncier is unaware of any deterioration affecting the Group’s outlook since the date of its half-year financial statements.

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2 RISK MANAGEMENT

– 31 –


2 - RISK MANAGEMENT

Introduction - General risks of the Crédit Foncier group 34

1. General organisation & methodology 34

2. Scope of application 37

3. Internal capital adequacy and regulatory capital requirements 37

4. Credit and counterparty risk exposures 41

5. Risk mitigation techniques 56

6. Securitisations 58

7. FSF (G7) Reporting 65

8. Market risks 71

9. Asset & liability management risks 73

10. Operational risks 76

11. Intermediation risk 76

12. Settlement risk 76

13. Non-compliance risk 77

14. Other risks 77

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RISK MANAGEMENT Detailed contents

INTRODUCTION 34GENERAL RISKS OF THE CREDIT FONCIER GROUP 34

1 - GENERAL ORGANISATION & METHODOLOGY 34

1.1 - Assignments entrusted to the Risk, Compliance and Permanent Control functions 34 1.2 - Organisation of the Risk, Compliance and Permanent Control Departments 34 1.3 - Operations under the Basel II environment 35 1.4 - Information system and quality of Crédit Foncier group data 35 1.5 - Summaries of risk management procedures and methods 35

2 - SCOPE OF APPLICATION 37

2.1 - Scope of accounting consolidation and of prudential consolidation (Basel) 37 2.2 - Scope of application within Crédit Foncier 37

3 - INTERNAL CAPITAL ADEQUACY AND REGULATORY CAPITAL REQUIREMENTS 37

3.1 - Capital management 37 3.2 - Composition of prudential capital 37 3.3 - Capital requirements 39 3.4 - Solvency ratio 41

4 - CREDIT AND COUNTERPARTY RISK EXPOSURES 41

4.1 - Overall analysis of commitments 41 4.2 - Commitments by customer portfolio 50

5 - RISK MITIGATION TECHNIQUES 56

5.1 - Valuation and management of collateral 56 5.2 - Main insurers and effect of credit risk mitigation techniques 56 5.3 - Balance sheet and off-balance sheet netting 57

6 - SECURITISATIONS 58

6.1 - Objectives, activities and risk monitoring 58 6.2 - Approaches and external credit ratings 58 6.3 - Description of Crédit Foncier group’s exposures to securitisation transactions 59

7 - FSF (G7) REPORTING 65

7.1 - CDOs and exposures to monoline insurers and other credit enhancers 65 7.2 - Exposures to Commercial Mortgage-Backed Securities (CMBS) 67 7.3 - Other subprime and Alt-A exposures (RMBS, loans, etc.) 69 7.4 - Special Purpose Entities 69 7.5 - Leveraged buyouts (LBOs) 70 7.6 - Securitisation glossary 70

8 - MARKET RISKS 71

8.1 - Market risk monitoring 71 8.2 - Equity risk 71

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9 - ASSET & LIABILITY MANAGEMENT RISKS 73

9.1 - Organisation of ALM risk monitoring 73 9.2 - Methodology for assessing liquidity, interest rate and foreign exchange risks 73 9.3 - Liquidity risk monitoring 73 9.4 - Interest rate risk monitoring 74 9.5 - Foreign exchange risk monitoring 75

10 - OPERATIONAL RISKS 76

11 - INTERMEDIATION RISK 76

11.1 - Trading on behalf of third parties 76 11.2 - Proprietary trading (*) 76

12 - SETTLEMENT RISK 76

13 - NON-COMPLIANCE RISK 77

14 - OTHER RISKS 77

14.1 - Insurance 77 14.2 - Outsourced operations 79 14.3 - IT Risks 79 14.4 - Organisation of business continuity plans (BCP) 79 14.5 - Legal risks 79 14.6 - Caisse de Retraite (French pension fund) of Crédit Foncier for employees who entered employment before March 1, 2000 79

(*) According to the definition of investment services by the AMF, the French financial markets authority.

2 RISK MANAGEMENT

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Introduction

General risks of the Crédit Foncier groupCrédit Foncier is primarily exposed to three types of risks:• credit and counterparty risks: Section 4;• structural balance sheet risks (liquidity risk, interest rate risk

and foreign exchange risk): Section 9;• and operational risks: Section 10.

Crédit Foncier is also exposed to the following risks:• intermediation risk: Section 11;• settlement and settlement-delivery risks: Section 12;• non-compliance risk: Section 13;• other risks including insurance, IT, legal, etc.: Section 14.

In contrast, Crédit Foncier does not conduct any financial market business for its own account and does not therefore directly assume any financial market risk on its ordinary transactions other than ALM: Section 8 - market risks.

1 - General organisation & methodology1.1 - Assignments entrusted to the Risk, Compliance and Permanent Control functionsSee the 2011 Registration Document pertaining to this section (pages 100-101).

1.2 - Organisation of the Risk, Compliance and Permanent Control DepartmentsCrédit Foncier’s “Risk and Compliance” Departments are part of Groupe BPCE’s Risk management structure: see the 2011 Registration Document pertaining to this section (pages 101 to 104).

1.2.1 - Groupe BPCE’s Risk Department

See the 2011 Registration Document pertaining to this section (page 101).

1.2.2 - Crédit Foncier’s Risk Department

See the 2011 Registration Document pertaining to this section (pages 102-103).

1.2.3 - Crédit Foncier’s Compliance Department


1.2.4 - Crédit Foncier’s Coordination of Permanent Controls


1.2.5 - Business Continuity Plan

See the 2011 Registration Document pertaining to this section (pages 103-104).

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1.2.6 - Information system security


1.3 - Operating in a Basel II environmentCrédit Foncier is included in the Basel II programme spearheaded by Groupe BPCE. This programme is divided into several areas (retail, corporate, public sector, etc.). The main focus in 2012 is on the retail portfolio (individuals and similar) and corporate portfolio (long-term investors and developers).

The new segmentation standards applicable to the all retail and corporate customers, within the entire scope of Groupe BPCE, were implemented in early 2012 at Crédit Foncier. These new segmentation standards are adjusted to the specific requirements of Basel II and make it possible to distinguish between the different Basel customer categories (retail, corporate, bank, etc.).

While bringing its Basel II system up to standard, Crédit Foncier also established a new third-party rating process in H1 2012, drawing on an application for corporate clients shared with the Caisse d’Epargne and Banque Populaire networks and an in-house application for retail customers. As these new applications were rolled out, an adjustment was also made to the IRBA models (PD, EAD, LGD).

In preparing for the submission for approval of its internal credit risk rating models, Crédit Foncier re-aligned its methodologies for declassifying doubtful loans by aligning the accounting definition of doubtful loans with the Basel definition of default. This change resulted in an increase in doubtful loans without material impact on the level of impairment losses recorded by the Group, barring any change in its risk exposures, all else being equal.

Efforts focusing on the retail portfolio moved forward, with the implementation of a new collective provisioning methodology. The aim of this new methodology is to switch from booking provisions based on arrears to booking provisions based on risk sensitivity, in accordance with Basel II.

These new pillars of the Basel framework (segmentation, rating, incidents, default-doubtful loan alignment, prudential reporting data) are now applied from end to end, i.e. from loan approval to collection.

All of these projects will be continued in the second half of 2012 in preparation for obtaining approval to use the advanced measurement approach, scheduled for the end of 2013.

1.4 - Information system and quality of Crédit Foncier group data

1.4.1 - Accounting consistency of risk data

In implementing the Basel II reform, Groupe BPCE entities have to ensure that all data provided to the Group’s regulated information systems have been subjected to a procedure to ensure accounting consistency at least every quarter. The new system was deployed across the scope of the Group’s commercial transactions (retail and corporate) and will be expanded to include financial transactions in the second half of 2012.

1.4.2 - Data quality

In the interest of ensuring the highest quality of Basel data, in H1 2012 Crédit Foncier formally defined a system based on three pillars: namely monitoring indicators, permanent controls and targeted action plans. The technical and operational components of the system are being rolled out over the course of 2012.

1.5 - Summaries of risk management procedures and methodsAs a general rule, the Business Lines are first and foremost responsible (Level One) for the risks they assume as a result of their transactions, both at the time they are entered into and throughout the term of each transaction. The Risk Department (DRI) lays down the principles for intervention and risk monitoring and management by preparing a risk policy in line with the Group policy, and disseminating it to the Business Lines.

The risk management system is based on:• definition of authorisations, intervention principles and

exposure selection criteria, including the establishment of limits for joint counterparties set at the Crédit Foncier and Groupe BPCE level;

• assessment system to determine the borrower’s solvency and transaction quality, primarily via counter analyses carried out by the Risk Department. Ratings play an essential role in risk assessment;

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• risk monitoring based on an overall consolidation of detailed indicators and controls;

• risk oversight leading to the measurement and upstream management of these indicators.

1.5.1 - Authorisations and risk control procedures


1.5.2 - Procedures for assessing creditworthiness

Ratings system

Internal ratings


External credit assessments


Deployment of assessment procedures by portfolio

Retail portfolio


Corporate portfolio


International sector portfolio

No new investments have been carried out in this segment since H2 2011 and the portfolio has been in run-off management since then.

Counter-analysis system


1.5.3 - Risk supervision (Pillar 3)

Risk supervision involves two main procedures:• quarterly review of portfolios to ensure the overall quality of

exposures and verify the calculation of the cost of risk;• monitoring of “sensitive operations” on at least a quarterly

basis.In addition, specific procedures are applied to securitisation and structured products for French public sector entities.

Monitoring of Sensitive Operations


Review of portfolios

Quarterly reviews are conducted to assess the quality of exposures. This involves a detailed analysis of the quality of commitments between the Business lines and the Risk Department. This analysis applies to all of Crédit Foncier’s significant exposures.

Monitoring bodies


Specific procedures


1.5.4 - Consolidated risk oversight


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2 - Scope of application2.1 - Scope of accounting consolidation and prudential consolidation (Basel)The scope of prudential consolidation, as defined in the decree of February 20, 2007 on capital requirements, is identical to that of the scope of accounting consolidation (see note 8 of the consolidated financial statements of Crédit Foncier).

2.2 - Scope of application within Crédit FoncierCrédit Foncier is required to submit a regulatory consolidated report to the Autorité de contrôle prudentiel (French prudential supervisory authority). Accordingly, Pillar III is established on a consolidated basis.

3 - Internal capital adequacy and regulatory capital requirements3.1 - Capital managementThe General Management team is responsible for managing the Crédit Foncier group’s regulatory capital, with the dual goal of observing regulatory ratios and optimising the allocation of capital and the profitability of group activities.Crédit Foncier is subject to the capital adequacy ratio under the standard method.In the first half of 2012, Groupe BPCE and Crédit Foncier performed capital consumption simulations under the advanced method.

3.2 - Composition of prudential capitalPrudential capital is determined in accordance with Regulation 90-02 of February 23, 1990 of the French Banking and Financial Regulation Committee (CRBF).It is divided into two categories (core capital and supplementary capital), from which a number of deductions are taken:• core capital is determined from the Group’s consolidated

equity capital (excluding unrealised or deferred gains or losses), taking into account net income for the period, adjusted for items recorded under “prudential filters”. These adjustments consist primarily of deductions of goodwill and other intangible assets;

• supplementary capital comprises prudential restatements of unrealised capital gains or losses on available-for-sale equity instruments (booked to Level 1 supplementary capital) and items meeting the terms of Article 4d of Regulation No. 90-02;

• the following items are deducted for the determination of prudential capital (50% from core capital and 50% from supplementary capital): items comprising prudential core capital in credit institutions and financial companies more than 10%-owned by the Group as well as securitisation positions subject to 1,250% risk weighting.

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TOTAL REGULATORY CAPITAL Dec. 31, 2011 June 30, 2012

CORE CAPITAL

Share capital 2,804 1,732

Reserves and retained earnings 1,599 2,264

Minority interests 98 96

Profit or loss -409 11

Dividend payment -2

Income from unrealised gains/losses subject to prudential restatements -1

Issues of Tier One hybrid securities 280 280

Deductions from core capital -56 -55

o/w goodwill -43 -43

o/w other intangible fixed assets -13 -12

Other core capital items -109 -109

CORE CAPITAL BEFORE DEDUCTIONS (A) 4,206 4,216

SUPPLEMENTARY CAPITAL

Level one supplementary capital 3 10

Level two supplementary capital 378 375

Deductions from supplementary capital

SUPPLEMENTARY CAPITAL BEFORE DEDUCTIONS (B) 381 385

DEDUCTIONS FROM EQUITY CAPITAL

Investment and subordinated loans in credit institutions or financial institutions -1 -1

Other deductions -39 -45

Equity holdings in insurance entities

DEDUCTIONS FROM EQUITY CAPITAL (C) -40 -46

of which

Deductions from core capital -20 -23

Deductions from supplementary capital -20 -23

Deductions from overall capital

TOTAL PRUDENTIAL CAPITAL (A)+(B)+(C) 4,547 4,555

o/w core capital 4,186 4,193

o/w supplementary capital 361 362

o/w deductions from overall capital

Source: COREP December 31, 2011 and June 30, 2012.

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3.3 - Capital requirementsThe Crédit Foncier group calculates regulatory capital requirements for both credit risk and operational risk according to Basel II standards. The Crédit Foncier group is not subject to market risk disclosure rules.


REGULATORY CAPITAL REQUIREMENTS Dec. 31, 2011 June 30, 2012

CREDIT RISK

Public administrations and central banks 13 13

Institutions 456 405

Companies 852 778

Retail customers 1,335 1,328

Shares 39 42

Securitisation position 738 578

Other non credit-obligation assets 123 139

TOTAL REQUIREMENTS FOR CREDIT RISK (A) 3,556 3,283

TOTAL REQUIREMENTS FOR MARKET RISK (B) - -

TOTAL REQUIREMENTS FOR OPERATIONAL RISK (C) 121 121

CAPITAL REQUIREMENTS (A)+(B)+(C) 3,677 3,404

Source: COREP December 31, 2011 and June 30, 2012.

In accordance with Common Reporting Framework (COREP), by convention, earnings are presented by initial asset class (before substitution of the final counterparty’s risk-exposed asset class, for exposures covered by a personal guarantee).

79% of these capital requirements are linked to exposures to companies, retail customers and securitisations.

The average Basel II credit risk weighting is 26%, reflecting the low level of risk of Crédit Foncier’s loan portfolio, with most loans backed by mortgages or guarantees.

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At June 30, 2012 (in millions of euros)

CAPITAL REQUIREMENTS FOR CREDIT RISK

with breakdown of VaR according to Basel II regulatory weightings

Public administrations

and central banks

Institutions CompaniesRetail

customers (**) Shares Securitisations TotalWeighted

assetsCredit risk

requirements

Gross exposure (*) (on- and off-balance sheet)

15,711 54,582 17,489 52,208 346 18,421 158,757

Value-at-risk (***) 14,933 51,872 16,007 50,815 346 18,421 152,394

WEIGHTING AFTER TAKING INTO ACCOUNT THE CREDIT RISK MITIGATION TECHNIQUE

0% 14,128 26,380 1,538 4,528 - - 46,575 - -

7% - - - 278 - - 278 20 2

10% - 1,663 - - - - 1,663 166 13

15% - - - 10,040 - - 10,040 1,506 120

20% 805 23,554 4,105 4,142 - 10,722 43,327 8,666 693

35% - - 1,772 24,758 - - 26,530 9,286 743

50% - 166 1,136 216 - 6,092 7,611 3,805 304

75% - - - 5,776 - - 5,776 4,332 347

100% - 107 6,917 955 - 1,371 9,349 9,349 748

150% - 1 539 122 346 - 1,008 1,512 121

350% - - - - - 190 190 666 53

Deducted from equity capital

- - - - - 45 45 565

Total value-at-risk 14,933 51,872 16,007 50,815 346 18,421 152,394 39,873 3,145

Total weighted value at risk

161 5,068 9,735 16,597 519 7,228 39,308

Average weighting 1% 10% 61% 33% 150% 39% 26%

Credit risk requirements 13 405 779 1,328 42 578 3,145

OTHER NON CREDIT-OBLIGATION ASSETS 139

TOTAL CREDIT RISK REQUIREMENTS 3,283

(*) Source: COREP June 30, 2012, based on a slightly different structural presentation compared to the presentation of overall credit risk exposure under IFRS 7.

(**) The Basel «Individual customers» classification consists mainly of individuals and to a lesser extent professionals (craftsmen, merchants, independent professionals) and associations.

(***) Value at risk corresponds to on and off-balance sheet items to which a credit equivalent conversion factor is applied.

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3.4 - Solvency ratiosAt June 30, 2012, the solvency ratio stood at 10.7%, up 80 basis points compared to December 2011. The Tier One ratio was 9.9% at end-June 2012, up 80 basis points over December 31, 2011.

The increase in the solvency ratio can be attributed to the decline in capital requirements resulting primarily from disposals and restructuring of securities.

8.1% 7.8%

9.9% 10.3%

10.7%

7.2%

7.1%

9.1%

9.5%

9.9%

6%

7%

8%

9%

10%

11%

June-11 Sept.-11 Dec.-11 Mar-12 June-12

Solvency ratio Tier one ratio

4 - Credit and counterparty risk exposures4.1 - Overall analysis of commitmentsIn the interest of clarity and consistency, Crédit Foncier has chosen, since the decree of end-2008, to unify the disclosures provided under IFRS 7, Pillar 3 of Basel II (Section IX of the decree of February 20, 2007) and the Financial Stability Forum (G7). The disclosures on risk management required by IFRS 7 and the disclosures on capital required by amendment IAS 1 form an integral part of the consolidated financial statements reviewed in part by the Statutory Auditors.

4.1.1 - Exposure to credit risk

Against the backdrop of the European crisis, the property market began to lose steam at the end of 2011, a trend that continued into early 2012.In residential property, prices were stable in H1 2012 after climbing for the past two years in a row. The capital gains reform, coupled with the elimination of certain tax benefits and subsidised loans, refocused loan production to individuals on homeownership rather than leasing.Commercial real estate consumption declined in the first half of 2012. The leasing market saw what appeared to be a significant downtrend, with the exception of Paris. In this sector, the immediate supply of second-hand properties was stable, while new construction posted a sharp slowdown.

The main event on the international scene in the first half was once again the European sovereign debt crisis. Crédit Foncier has maintained its policy of reducing its exposure to European sovereigns in 2012.What’s more, the European crisis, combined with the revaluation of rating methods used by external rating agencies, led to the downgrading of several ratings in the public sector and securitisation portfolios, despite the total lack of arrears.The stress tests conducted on the securitisation portfolio highlighted a low level of credit risk, defined as the risk of a deterioration in the borrower’s financial situation or the risk of default liable to result in the failure to repay part of the principal and interest due.

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4.1.2 - Exposure to counterparty risk


4.1.3 - Overall exposure to credit risk (IFRS 7 summary)

4.1.3.1 - Table summarising overall exposure to credit risk

The table below shows all of the Crédit Foncier group’s exposures, including financial guarantees given and off balance sheet undertakings, net of impairment losses.

Consolidated contribution Dec. 31, 2011 June 30, 2012 (in millions of euros)

OVERALL NET EXPOSURE TO CREDIT RISK (1) 148,694 166,246

See note 5.7.4 to the Consolidated

Financial Statements

Financial assets at fair value through profit or loss (excl. variable-income securities)

3,478 3,530

Hedging derivatives (2) 10,124 10,351

Available-for-sale financial assets (excl. variable-income securities) 2,301 3,916

Interbank transactions 7,294 23,392

Customer transactions 112,290 111,355


Subtotal (excluding financial guarantees given and off-balance-sheet commitments) 135,936 152,680

Financial guarantees given 1,590 1,363

Off-balance sheet commitments 11,167 12,203

(1) Net outstandings after write-downs.(2) Amounts largely offset under liabilities (see the consolidated financial statements).

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The table below shows all of the Crédit Foncier group’s exposures, at December 31, 2011 and June 30, 2012, before write-downs, including financial guarantees given and off-

balance sheet undertakings and excluding reverse mortgages generating insurance risk within the meaning of IFRS 4 (see note 4.12 to the financial statements).


Dec. 31, 2011 June 30, 2012 Change June 2012/Dec 2011

OVERALL GROSS EXPOSURE TO CREDIT RISK (1) 149,502 167,159 11.8%

o/w excluding financial guarantees given and off-balance sheet commitments (2) 136,713 153,562 12.3%

O/W OUTSTANDING CUSTOMER LOANS (2) 117,609 121,839 3.6%

RETAIL (2) (a) 59,659 59,920 0.4%

o/w outstanding direct loans (France and Europe) 47,678 49,047 2.9%

o/w securities backed by residential mortgage loans (RMBS) in Europe 11,981 10,873 -9.3%

CORPORATES (public and private sector) 57,950 61,919 6.9%

Public sector (2) (b) 49,100 52,180 6.3%

of which direct loans to the French public sector 24,832 24,171 -2.7%

o/w French local authorities (FLA) 17,108 16,658 -2.6%

o/w Social housing 7,724 7,513 -2.7%

o/w direct loans and commitments on international public sector and sovereigns 16,914 20,752 22.7%

o/w French sovereign and linked to 616 5,527 797.0%

o/w International 16,298 15,225 -6.6%

o/w securities backed by loans with government guarantees 7,354 7,257 -1.3%

Private sector (2) (c) 8,850 9,739 10.1%

o/w direct loans and bonds (3) 8,489 9,380 10.5%

o/w securities backed by commercial mortgage loans (CMBS) 361 359 -0.5%

O/W BANKS AND OTHERS (2) (d) 19,104 31,723 66.1%

(1) Gross outstandings before write-downs, excluding reverse mortgages generating insurance risk within the meaning of IFRS 4 (see note 4.12). Outstanding reverse mortgages amounted to €562m at June 30, 2012 versus around €497m at December 31, 2011.

(2) Adjusted management figures.(3) Obligations = reclassification of three International Public Financing counterparties as corporate clients in line with the Basel II new segmentation carried

out in Q1 2012.

(a), (b), (c), (d): see diagram of the relative weight in percentage terms overleaf.

Exposure to credit risk rose substantially (12.3%) at June 30, 2012 due to the increase in outstanding loans to banks. Under financial guarantee agreements covered by Article L.211-38 of the French Monetary and Financial Code, in previous financial years Compagnie de Financement Foncier set up several credit lines with its parent company, Crédit Foncier, for a total of €14.6bn at December 31, 2011. In order to reduce exposure to the parent company, these credit lines have now been transferred to BPCE SA, in the amount of €14bn at June 30, 2012, excluding related receivables, which explains the significant change in the consolidation scope of the Crédit Foncier group not impacting the Groupe BPCE level.Outstanding loans to banks remained limited, however, at just 21% of total gross exposure.

Following the segmentation changes impacting the breakdown of exposures, the Group’s exposure to French sovereign and

linked to rose significantly from €616m to €5.5bn.After incorporating updated market data (rating agencies), considering semi-sovereigns as a sovereign risk, and in the interest of harmonisation within Groupe BPCE, the following reclassifications were carried out:• increase in “French sovereign and linked to” due to the

inclusion of the Banque de France in this segment, whose outstandings had also risen, and Caisse des Dépôts (€4.8bn), both of which were previously classified in “Banks and others”;

• reclassification of ISPA securities (€834m), previously classified in “International Public Sector”, as Italian sovereign and linked to.

In addition, the Private sector mortgage lenders portfolio increased by 10% due to the inclusion of exposures to Hydroquebec, SNCB Holding, Sogetram and Italian Post in this segment, all of which were previously classified in “International Public Sector”.

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4.1.3.2 - Categories of underlying risk

Breakdown of exposures by business line (balance sheet portion)

The breakdown of the data presented below only shows gross on-balance sheet commitments, excluding off-balance sheet

undertakings, financial guarantees given and other credit risk mitigation factors.

The Crédit Foncier group thus maintains a strong exposure to its core business, namely individual customers (with a high level of guarantees) and the public sector.

Exposures (*) by business

Dec. 31, 2011

Retail (a)44%

Public Sector (b) 36%

Private Sector (c)6%

Banks and others (d)14%

€136,712m

June 30, 2012

Retail (a)39%

Public Sector (b) 34%

Private Sector (c)6%

Banks and others (d)21%

€153,562m

Comments on trends in loans by customer portfolio are presented in section 4.2.

Breakdown by Basel category stemming from COREP

The breakdown by Basel type covers exposures to credit risk on a comprehensive base, including off-balance sheet undertakings and financial guarantees given.

The breakdown by Basel type of the Crédit Foncier group’s balance sheet commitments (loans, securities and financial transactions) at June 30, 2012 varied little from the breakdown at December 31, 2011. It shows a concentration in the Basel “retail customer” segment (33%), comprised of individuals, professionals and associations, on the one hand, and the “organizations” segment (34%) on the other.


Dec. 31, 2011 June 30, 2012

Amount As a% Amount As a%

Exposures to credit risk by category

Public administrations and central banks 12,694 9% 15,711 10%

Institutions 39,558 28% 54,582 34%

Companies 18,606 13% 17,489 11%

Retail customers (*) 52,482 37% 52,208 33%

Shares 327 0% 346 0%

Securitisations 19,628 14% 18,421 12%

Exposure to credit risk 143,295 100% 158,757 100%

(*) The Basel “Retail customers” classification consists mainly of individuals and to a lesser extent professionals (craftsmen, merchants, independent professionals) and associations.

(*) Source: adjusted management figures. Balance-sheet commitments (excluding off-balance sheet commitments and financial guarantees given) representing overall exposure to credit risk under IFRS consolidated gross figures (performing and doubtful).

(a), (b), (c), (d): the bases are indicated in the above table.

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4.1.4 - Breakdown of credit risk exposures

4.1.4.1 - Geographic breakdown

The geographic breakdown of the portfolio at the end of June 2012 underwent few changes, remaining concentrated in the European Economic Area (90%) and in France in particular (71%).

Commitments located in the European Economic Area mainly include société de crédit foncier eligible assets; other commitments in the European Economic Area are almost entirely made up of bank commitments for cash management or derivatives transactions.

It should be noted that commitments located in the United States consist only of loans to States or highly-rated local authorities that are guaranteed by the federal government and do not include any direct or indirect real estate exposures.

Geographic breakdown of exposures Dec. 31, 2011 June 30, 2012

France 66% 71%

Other European Economic Area countries 23% 19%

• o/w Germany 2% 2%

• o/w Spain 6% 5%

• o/w Italy 6% 5%

• o/w Netherlands 4% 3%

• o/w United Kingdom 2% 2%

• o/w other countries < 1% 4% 3%

Switzerland 2% 1%

North America (US and Canada) 7% 7%

Africa/Middle East 0% 0%

Latin and Central America (incl. Mexico) 0% 0%

Asia (excl. Japan) 0% 0%

Japan 2% 2%

Oceania 0% 0%

Others 0% 0%

Balance sheet total 100% 100%

BALANCE SHEET ASSETS (*) in millions of euros 136,713 153,562


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4.1.4.2 - Sector breakdown

The breakdown of outstanding balance-sheet loans by business sector covers loans to Corporate clients. It therefore includes exposures to RMBS in Europe, for which the final

risk is linked to individual customers. Only exposures to direct loans to individual customers (€49bn at June 30, 2012) are not covered in this table.

Sector breakdown of exposures (*) to credit risk (excluding direct loans to individual customers)

Dec. 31, 2011 June 30, 2012

Administration 33% 32%

95% in the top 5 business sectors

Finance-Insurance 22% 31%

Securitisations 22% 18%

Property rentals 11% 10%

Pharmaceuticals-Healthcare 5% 4%

Real estate 2% 1%

Others 5%

Holding companies and diversified 1% 1%

Services 1% 1%

Energy (**) 1%

Utilities (***) 1%

Others 2% 1%


BALANCE SHEET ASSETS (in millions of euros) 89,035 104,515

(*) Source: adjusted management figures, excluding retail customers and banks. Balance-sheet commitments excluding direct loans to individual customers (excluding off-balance sheet commitments and financial guarantees given) representing overall exposure to credit risk under IFRS consolidated gross figures (performing and doubtful).

(**) In “others” at December 31, 2011, in ninth position at June 30, 2012. (***) In ninth position at December 31, 2011, in “others” at June 30, 2012.

Excluding retail, the five leading sectors account for 95% of these exposures. They reflect the Crédit Foncier group’s corporate purpose, namely to finance the real estate and public sectors. The principal sectors are:• Administration (32%) - under the BPCE classification, this

includes local authorities and sovereigns;• Finance-Insurance (31%), which mainly concerns the

banking sector;• Securitisation (18%), with real estate or public sector

underlyings only;• Real Estate, in the broad sense of the term (11%), covering

property rentals (comprised predominantly of real estate leasing) and real estate, strictly speaking.

Furthermore, other sectors that are financed (particularly Pharmaceuticals-Healthcare, 4%) mainly receive financing for real estate assets.

Lastly, the “Others” line covers a number of different sectors (transport, tourism, construction, communication, agri-food, energy, etc.).

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4.1.4.3 - Breakdown of exposures by product family

The breakdown of the Crédit Foncier group’s balance sheet commitments (loans, securities and financial transactions) by product family at June 30, 2012, shows a concentration of

loans (54%) and securities (12% for securitisations and 12% for bonds). It remains comparable to that observed at end 2011.

Product families (breakdown as a%) (*) Dec. 31, 2011 June 30, 2012

Shares/funds 0% 0%

Other balance sheet products 0% 0%

Cash facilities 4% 15%

Derivatives 8% 7%

Loans (**) 61% 54%

Bonds (banking) 13% 12%

Bonds (trading) (***)) 0% 0%

Securitisations 14% 12%


BALANCE SHEET ASSETS (*) (in millions of euros) 136,713 153,562


(**) Customer loans excluding cash advances. (***) Crédit Foncier does not own any trading securities; bonds are held in connection with credit transactions or for hedging the ALM portfolio.

4.1.5 - Losses and cost of risk

Crédit Foncier group’s risk hedging


Exposures (*) Dec. 31, 2011 June 30, 2012

Balance sheet

Doubtful loan

percentage

Doubtful loan percentage

(excl. subsidised sector)

Balance sheet

Doubtful loan

percentage

Doubtful loan percentage

(excl. subsidised sector)

Retail 59,659 2.7% 2.7% 59,920 3.1% 3.1%

• Direct loans (France and Europe) 47,678 3.4% 3.3% 49,047 3.8% 3.8%

• Acquisitions of securities backed by residential mortgage loans in Europe (RMBS) 11,981 n/a n/a 10,873 n/a n/a

Public sector 49,100 0.0% 0.0% 52,180 0.0% 0.0%

• French public sector 24,832 0.0% 0.0% 24,171 0.0% 0.0%

• International Public Finance and sovereign states (direct loans & Bonds) 16,915 0.0% 0.0% 20,752 0.0% 0.0%

• Securities backed by individual customer loans with government guarantee 7,354 n/a n/a 7,257 n/a n/a

Private corporate sector 8,850 9.7% 9.8% 9,739 8.7% 7.9%

Exposure to Banking sector and other 19,104 0.0% 0.0% 31,723 0.0% 0.0%

TOTAL 136,713 1.8% 1.8% 153,562 1.8% 1.7%


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The percentage of doubtful loans out of all Crédit Foncier exposures was stable in the first half of 2012.In terms of loans to companies and private-sector real estate professionals, there was nevertheless a decline in the percentage of doubtful loans in the private corporate sector (8.7% versus 9.7%), which should also be compared to the change in outstandings.The slight increase in the percentage of doubtful loans in the retail sector (excluding subsidised loans) was more pronounced in the homeownership segment, due to the challenging economic climate, which has notably exacerbated tensions in the social homeownership segment.Cost of risk at June 30, 2012 resulted in a net provision of €57m, vs. €149m for 2011.

At the end of June 2012, this cost of risk could be broken down as follows:• an individual risk charge of €53m, mainly concentrated

in the retail sector due to the reduction in the value of guarantees in the second quarter of 2012 and to changes in methodology for declassifying doubtful loans (aligning the accounting definition with the Basel definition of default).A few operations in the International sector and Banco Primus were also subject to an additional risk charge, but to a lesser extent;

• an increase in net collective provisions of €4m, mainly associated with a greater provision in the retail sector owing to a change in the calculation of the collective provision (which is now based on the concept of risk sensitivity, as defined by internal rating models). This calculation was previously based on arrears.


COST OF RISK

2011 AllocationsNet

reversals

Losses on non-hedged receivables

Recoveries of amortised

receivablesJune 2012

Interbank loans and receivables

Customer loans and receivables -144 -240 84 -61 161 -56

Other financial assets -2

Off-balance sheet commitments -2 -1 -1

Cost of risk (A) -148 -241 84 -61 161 -57

o/w individual cost of risk -152 -53

o/w cost of risk on portfolio basis (collective provisions)

3 -4

Overall exposure to credit risk (*) (B) 148,675 166,246

Cost of risk as% of total exposures (C = A/B) -0.10% -0.03%

(*) Overall exposure to credit risk: gross outstandings (performing + doubtful) including off-balance sheet commitments.

The cost of risk is consistent with the level incorporated into the pricing structure for the determination of the ROE target during credit approval.

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4.1.6 - Diversification of risks 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 the light of their relative weight in terms of amounts. This ranking was established on groups of counterparties and exposures, including off-balance sheet commitments and financial guarantees given.For securitisations, which account for a significant proportion of the portfolio of large counterparties, over 85% of risks are concentrated in the top 50 exposures. This concentration

can be attributed to the strategy implemented by the Crédit Foncier group a number of years ago, aimed at acquiring large-scale deals on the primary market. In terms of credit risk, this concentration is only apparent since the underlying assets are mainly housing loans to individuals and therefore have a high degree of granularity.The French Local Authorities-Social Housing sector and large companies have a much lower concentration, reflecting the risk diversification policy.Direct exposure to sovereign risk is relatively concentrated (less than 20 counterparties) as it involves only a few European states.

Summary - Concentration of major counterparties in millions of euros and as a percentage at June 30, 2012

Exposures (*) by Basel category Top 10 Top 20 Top 50 Top 100 Total

Securitisations6,483[35%]

10,370[56%]

15,642[85%]

18,215[99%]

18,489

FLAs and Social Housing (**) 4,072[15%]

6,193[23%]

10,349[38%]

14,071[52%]

27,288

Large companies2,082[25%]

2,841[35%]

4,201[51%]

5,481[67%]

7,685

International Public Financing4,970

[45%]6,992

[63%]10,099[91%]

11,154[100%]

11,154

Sovereigns10,674[98%]

10,912[100%]

10,912[100%]

10,912[100%]

10,912

Specialised financing1,369

[39%]1,998[57%]

3,038[86%]

3,495[99%]

3,516

(*) Source: management figures. Commitments at half year-end (including off-balance sheet commitments and liabilities), gross figures (performing and doubtful).

(**) The “FLAs and Social housing” grouping is as defined for the Crédit Foncier, i.e. it includes general public administration (8411Z).

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4.2 - Commitments by customer portfolio

4.2.1 - Individual Customers Portfolio

4.2.1.1 - Direct loans

Retail exposure is concentrated (99.2%) in individual customers (€48.6bn); exposures to professionals and small associations is marginal.

4.2.1.1.1 - Direct real estate loans to individual customers

The vast majority of outstandings are backed by Basel II-eligible guarantees, with a high proportion of first-rank mortgages. A portion of regulated new loans are also backed by a SGFGAS counter-guarantee. The remaining outstandings are backed by a guarantee provided by Compagnie Européenne de Garantie (formerly SACCEF), Crédit Logement or a mortgage insurance company, or by pledges.

New direct loans to individuals in H1 2012 and changein outstanding loansAverage debt ratios in H1 2012 remained under control, i.e. below 35% for 97% of overall production and 99% of social homeownership production.Fixed-rate loans (fixed rate over the life of the loan) accounted for 98% of all new direct loans to individuals in H1 2012, versus 95% in 2011.

Quality of outstanding direct loans and internal scoringChange in outstanding direct loansIn France, loans to first-time home buyers accounted for 73% of outstanding loans, stable against 2011, half of which are state-subsidised (PAS/PTZ).Fixed-rate loans were stable compared to 2011 at 66% of outstandings.

Internal rating (*) of outstandingsThe breakdown of outstandings by rating at June 30, 2012 was determined using the methodology presented in section 1.3 of this report. Following the change in rating system implemented in January 2012, a pro forma breakdown of outstandings by rating was prepared for December 31, 2011.The breakdown below indicates the quality of outstanding direct loans to individuals: 66% have a positive rating ranging from 3 to 7. Including the “acceptable” rating (8), this percentage climbs to 84%. This breakdown is close to that observed at end-2011, with a stable Basel II default ratio of 4%.

Internal ratings of outstanding individual loans (*)

64%

19%

5% 4% 5% 3%

66%

18%

5% 4% 5% 3%

0%

10%

20%

30%

40%

50%

60%

70%

Favourable(6 to 7)

Acceptable(8)

Uncertain(9)

Default Not rated - Crédit Foncier

(exemptions)

Not rated -subsidiaries

and branches

pro forma Dec.-11 : €47,678m

June-12 : €48,633m

Real estate bridging loans to individual customersAfter a sharp rise in outstanding bridging loans in 2011, outstandings totalled €326m at June 30, 2012 (versus €353m at December 31, 2011). Bridging loans are subject to enhanced vigilance, in terms of quality and liquidity of assets backing the bridging portion of the loan.

Loss analysis - arrearsDirect loans to individuals in the doubtful category stood at 3.8% at June 30, 2012 versus 3.4% at end-2011. This increase can be attributed to changes in the methodology for declassifying doubtful loans, which involved aligning the accounting definition of doubtful loans with the Basel definition of default. This difference should be seen in perspective against the risk of loss, which remains low.

Out-of-court collection, insolvency and litigation involving individual customersIn June 2012, outstanding loans subject to out-of-court collection rose to 1.8% of the amount of outstanding loans in December 2011, thus returning to its 2010 level. The percentage of insolvent borrowers also rose slightly to 0.4%. In addition, the percentage of outstandings in litigation picked up slightly to 2.1% versus 2% in December 2011.

Percentage of loans in arrears by level of arrears

Litigation

Total outstanding (**)

Overindebtedness

Out-of-court collection

€46,378m

1.6% 1.8%

0.3% 0.4%

2.0% 2.1%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5%

12/31/11 06/30/12

4% 4,2% €47,197m

(*) Source: management figures. Commitments at year-end (including off-balance sheet commitments and liabilities), gross figures (performing and doubtful).(**) Management data, outstandings-under-management excluding Banco Primus and the Belgian branch.

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4.2.1.1.2 - Banco Primus

The main activity of Banco Primus, a subsidiary of the Crédit Foncier group with its head office located in Portugal, was restructuring mortgages for individual customers. The subsidiary has been refocusing its activity since the second half of 2011 on production of auto loans in Portugal and has ceased its restructuring mortgage business.

TOTAL OUTSTANDINGS at June 30, 2012 €659 million

Average mortgage ratio (mortgage business) 64.3%

Debt ratio (mortgage business) 42%

Solvency ratio ( Core Tier 1) 9.8%

The portfolio of outstanding loans has been stable since the end of 2011.

The risks inherent in the auto financing business in Portugal, which accounted for over 41% of outstandings at end June 2012, have been brought under control: the percentage of loans 90 days in arrears was 8.1% of outstandings, representing an increase in H1 2012 (mainly due to a slowdown in monthly production).

In Portugal, outstanding mortgage loans were adversely affected by the quality of initial production, with the percentage of loans in litigation exceeding 55% at end-June 2012. The resulting losses have nevertheless been covered by regulatory provisions.

The portfolio of restructuring loans in Spain has also been in run-off since 2011. The Bank has collected real estate assets that will be difficult to sell without a discount on the depressed local property market.

Given the small percentage of these outstandings (less than 7%), activity in Hungary generates limited residual risk.

4.2.1.2 - Positions in securities backed by residential mortgage loans (RMBS) in Europe

The securitisation/residential mortgage acquisition activities are addressed in a separate section of this report, in accordance with the rules of financial transparency (see section 6.3.1 in Chapter 6 - Securitisations - for more details).

4.2.2 - Public sector portfolio

4.2.2.1 - French public sector

In the first half of 2012, outstanding direct loans to the French public sector, which includes French local authorities and social housing (€24,171m at June 30, 2012) decreased by

2.7%. The doubtful loans ratio was stable at near 0%; once again, few borrowers in the social housing and French local authorities sectors were downgraded to the doubtful category.

4.2.2.1.1 - French Local Authorities (FLA)

The Crédit Foncier group partners Groupe BPCE network’s financing activities targeting French local authorities and institutions.

Exposure to French local authorities fell 2.6% in H1 2012 as a result of a production decline.

Developments since the end of 2010 led to a significant increase in the share of outstandings with a favourable rating. 89% of outstanding loans to French local authorities are now rated in the “favourable” category (ratings 0 to 5). This percentage rises to 93% if “acceptable” ratings are included (ratings 6 and 7), a reflection of the excellent quality of outstandings.

The share of unrated outstandings is 6%. The absence of a rating is for technical reasons not related to the quality of the counterparty, meaning that the loans in question are not covered by BPCE’s ratings tools.

The rate of default/doubtful loans in this portfolio is still insignificant.

Internal rating of the French Local Authorities portfolio (*)

86%

9% 1%

3%

89%

4% <0.5%

<0.5%

<0.5%

<0.5% 1% 0.5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Favourable Acceptable Uncertain Otherformats

Default Not rated

Dec-11 : €17,108m

June-12 : €16,658m

4.2.2.1.2 - Social housing

This business line originates regulated loans (“prêt locatif social” - PLS; “prêt locatif intermédiaire” - PLI) or unregulated loans for the social housing sector in collaboration with Groupe BPCE.

(*) Source: management figures. Balance-sheet commitments (excluding off-balance sheet commitments and financial guarantees given) representing overall exposure to credit risk under IFRS consolidated gross figures (performing and doubtful).

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In the social housing sector, the majority of loans were granted within the PLS budget by Caisse des Dépôts et Consignations. Crédit Foncier is thus highly active in the financing of social housing transactions (particularly within the framework of the recovery plan) and medical/social transactions (retirement homes, care homes) meeting strong social demand, with strong support from the government. These transactions are backed by sureties provided by local authorities or by mortgage guarantees.Outstanding loans decreased by 2.7% in H1 2012.The percentage of loans to counterparties with a “favourable” rating remained high (72%). Adding in the “acceptable” category, this percentage is 76%.The share of unrated outstandings is 17%. The risk profile is solid: the outstandings are comprised mainly of loans to organisations that receive the Employers’ Contribution to the Construction Effort (PEEC) (1) and their subsidiaries, which are not covered by BPCE’s rating systems. When the commitment decision is taken, these counterparties are subject to an individual analysis.

Internal rating of the social housing portfolio

83%

3% <0.5% <0.5%

<0.5% 2% 2%

9%

72%

4% 6%

17%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Favourable Acceptable Uncertain Otherratings

Default Not rated/not rateable

Dec-11 €7,724m June-12 €7,513m

4.2.2.2 - International Public Financing (IPF) and Sovereigns

In the first half of 2012, additional investment lines were sold off from the IPF and Sovereigns portfolio, which was placed in run-off in H2 2011.Outstanding loans comprise:• funding for sovereign European states, either directly or

via government-backed organisations. The credit analysis of these entities is performed with the analysts of Groupe BPCE and Natixis;

• funding for international local authorities in European countries, the United States, Canada and Japan: federated states, the “Länder”, 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 model.

4.2.2.2.1 - International Public Financing

IPF outstandings are concentrated in the euro zone, Switzerland, Japan, Canada and the U.S.

In the first half, they amounted to €11.2bn versus €12.6bn at end-2011, i.e. a drop of nearly €1.5bn (-11.5%).

There were several reasons for this decline, primarily the continuation of the sell-off initiated in 2011 as part of the run-off of Crédit Foncier’s IPF portfolio: in the first half of 2012, the Group decreased its exposure to public sector counterparties in Europe and North America. Furthermore, in terms of euro-equivalent net book value under IFRS (without taking the swap into account) of micro-hedged assets (the large majority of which are classified as loans and receivables), Crédit Foncier’s IPF and Sovereigns portfolio was impacted by the change in the interest rate of the hedged component and by the difference in the foreign exchange rate for securities denominated in foreign currencies (mainly USD, JPY and CHF).

Exposures (**) by internal rating for the International Public Financing sector (***)

Dec. 31, 2011

€12,604m

Not rated12%

BBB5%

BBfor the record

A28%

AA55%

June 30, 2012

€11,154m

Not rated7%

BBB7%

BBfor the record

A34%

AA51%

AAA1%

(1) The Employers’ Contribution to the Construction Effort (PEEC) is a mechanism in which private, non-agricultural companies with 20 employees or more (10 employees or more prior to 2006) contribute to the construction of new homes. This programme was formerly known as the “1% Logement” scheme.

(*) Source: management figures. Balance-sheet commitments (excluding off-balance sheet commitments and financial guarantees given) representing overall exposure to credit risk under IFRS consolidated gross figures (performing and doubtful).

(**) Balance-sheet commitments at period-end (excluding off-balance sheet commitments and liabilities) representing overall exposure to credit risk under IFRS consolidated gross figures (performing and doubtful).

(***) Bonds issued by local authorities; based on “Basel” segments.

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These charts indicate portfolio concentration in the higher rating categories (52% of the portfolio is in the Step 1 ≥ AA- category).

Most of the remainder (7% “Not rated”) is due to the lack of an internal rating on certain assets. The corresponding risks are equated to Category A or above (based on external ratings).

Internal ratings on the IPF sector are slightly more conservative than the ratings published by the rating agencies, with the difference averaging one-half to one notch.

4.2.2.2.2 - Sovereigns

At June 30, 2012, outstanding loans comprising the Sovereigns portfolio (including France) totalled €9.6bn. Internal reclassifications were carried out in the first half of 2012 in order to align the segmentation of Crédit Foncier’s outstandings with that of Groupe BPCE. As a result, exposure to the Banque de France and Caisse des Dépôts et Consignations is now considered as exposure to French sovereigns.

Exposures to sovereigns (*) by internal rating (**)

Dec. 31, 2011

AAA to AA-29%

A+ to A50%

A- to BBB+8%

BBB to BBB-7%

CCC+ to CC6%

€4,310m

June 30, 2012

AAA to AA-58%

A+ to A33%

A- to BBB+8%

BBB to BBB-2%

BB+ to BBp.m.

€9,598m

The portfolio of sovereign exposures excluding France has been in run-off since H2 2011. Further disposals were carried out in H1 2012, including in particular disposals of exposure to Cyprus and, to a lesser extent, to Hungary and the Czech Republic. It should be noted that securities issued by the Italian public counterparty ISPA are now classified as exposure to Italian sovereigns (previously classified as exposure to the IPF sector).

2,61

6

1,69

5

555

547

259

238

247

247

168

179

127

112

57126

41570

492

0

500

1,000

1,500

2,000

2,500

3,000

Greece

Hungary

Cyprus

Ireland

Czech republic

Slovakia

Slovenia

Poland

Italy

Dec-11: €3,693m

June-12: €4,071m

In H1 2012, Crédit Foncier sold the bonds received in exchange for Greek sovereigns under the PSI (private sector involvement) plan on the market. The bank, which also held Greek sovereigns backed by Assured Guaranty, was able to activate the guarantee mechanism; consequently a receivable from this monoline issuer, rated Aa3/AA- by the Moody’s and Standard & Poor’s, has now been recognised in the private corporate sector portfolio.As a result, Crédit Foncier no longer held any exposure to Greek sovereigns at June 30, 2012.

4.2.3 - Exposure to Banks

Exposure to credit risk rose substantially (67.1%) as at June 30, 2012. Under financial guarantee agreements covered by article L.211-38 of the French Monetary and Financial Code, in previous financial years Compagnie de Financement Foncier set up credit lines with its parent company, Crédit Foncier, totalling €14.6bn at December 31, 2011. In order to reduce exposure to the parent company, these lines have now been attributed to BPCE SA, for a total of €14bn at June 30, 2012, excluding accrued interest, which primarily explains the increase in exposures to the banking sector.

(*) Balance-sheet commitments at period-end (excluding off-balance sheet commitments and liabilities) representing overall exposure to credit risk under IFRS consolidated gross figures (performing and doubtful).

(**) Basel II ratings after credit enhancement.

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Most of these exposures resulted from hedging requirements associated with its various activities (mainly swaps) or with short-term treasury investments (particularly following debt issues). A significant share of banking exposures is also linked to long-term transactions executed for IPF production purposes: the corresponding portfolio is backed by sovereigns or semi-sovereigns (Landesbank grandfathered debt in Germany, district guarantee on Swiss district banks, etc.).Transactions with banks involve high gross volumes (nominal amounts) ultimately accounting for low net amounts due to valuations and offsetting impacts (derivative transactions are accompanied by collateralisation hedging mechanisms).Netting and collateralisation agreements have been largely renegotiated since 2008, including with well-rated banks, in order to reduce the Crédit Foncier group’s exposure to banking counterparties.

It should be noted that, for the past several months, Crédit Foncier has been working to optimise its stock of derivatives by reducing the number of outstanding contracts, in preparation for the leverage ratio (100% of the notional amount of interrupted swaps goes in the ratio’s denominator).The banking sector continues to be the focus of attention, with its limits having been substantially lowered since 2010. In accordance with the group’s policy, Crédit Foncier limits its exposure for each banking group to 15% of its equity capital, which is more cautious than the regulatory requirement of 25%. Furthermore, since 2011, major risks associated with banking counterparties have been weighted 100% (vs. 20% previously).

Exposures to banks (*) by internal rating

Dec. 31, 2011

€18,811m

AA 29%

Not rated7%

AAA 16%

A 48%

June 30, 2012

€31,430m

AA 17%

Not rated3%

AAA 3%

A 77%

BBB<0,5%

4.2.4 - Private sector portfolio

Overall, private corporate activities account for only a minor share of Crédit Foncier’s operations (€9,739m at end-June 2012), most of which (€9,380m) comprises direct loans and bonds, and the rest CMBS (€359m).

The private corporate sector covers several types of activities:• real estate development, housing developments and, to a

lesser extent, property dealers, via short-term loans or off balance sheet undertakings, granted either directly by Crédit Foncier or its subsidiary Socfim;

• long-term investments, covering real estate asset financing via conventional medium- and long-term loans and real estate leasing, either granted directly by Crédit Foncier or its subsidiaries Cinergie and Locindus;

• public-private partnerships (PPPs). 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. The risk in this segment is essentially tied to construction phases as builders may be weakened by current economic conditions. Most of Crédit Foncier’s PPP partners are major leading French groups. Once operational, a local authority or the government is generally exposed to most of the risk;

• LBOs. It should be noted that LBO-specific risk exposure accounts for limited outstandings (€140m), covering a small number of transactions (7). This activity is described in greater detail in section 7.5 - Leveraged buyouts.


Note: The breakdown of exposures to banks is based on management amounts.

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For private corporate sector clients, new loan production in the first half of 2012 was very limited and restricted to high-quality transactions.

4.2.4.1 - Direct loans

4.2.4.1.1 - Analysis of exposuresOutstanding direct loans to the private corporate sector amounted to €9,380m at June 30, 2012. The main exposures arose from property development activities in France, long-term investors and companies totalling €5,972m.

Real estate developmentHalf of real estate development financing was granted to major clients, with other loans issued to smaller developers with satisfactory ratings as well as solid capital and pre-construction sales.Strict monitoring of these activities continued with periodic sector reviews and limited new commitments made within the exposure management system, with the approval of Groupe BPCE’s Risk Department. Problematic loans related to a stable and limited number of players.

InvestorsOutstanding loans to investors decreased by 9.6% in H1 2012. Risk linked to long-term investors was closely monitored, particularly with respect to rental vacancies and rent trends.Total exposure to unlet offices was €168m at the end of June 2012 versus €182m at the end of 2011. A budget of €270m had been allocated for the Crédit Foncier group in 2011.As in the real estate development segment, here problematic loans relate to a limited number of counterparties.

CompaniesFor Crédit Foncier, this sector mainly consists of real-estate leasing transactions carried out by its subsidiaries Cinergie and Locindus. After aligning with the Group standards, part of the portfolio was reclassified in the Investors category, with outstandings increasing by 47.2% as a result.Furthermore, it should also be noted that real estate leasing operations contain an intrinsic guarantee, in that the lender owns the building and thus enjoys a solid guarantee, making it easier to put the property back up for rent.

4.2.4.1.2 - Breakdown by rating

In the French private corporate sector, 76% of outstandings are rated favourable or acceptable, while 8% are in default.

Internal rating of the private sector portfolio (*)

60%

12% 16%

5% 3% 9% 8% 10% 12%

0%

10%

20%

30%

40%

50%

60%

70%

Favourable Acceptable Uncertain Default Others

Dec-11 €6,149m

June-12 €5,972m

63%

4.2.4.2 - Other securitisation transactions

These activities are addressed in a separate section of this report, in accordance with the rules of financial transparency (see section 6.3.1 in Chapter 6 - Securitisations - for more details).

(*) Source: regulated management figures. Balance-sheet commitments in France (excluding off-balance sheet commitments and financial guarantees given) representing overall exposure to credit risk under IFRS consolidated gross figures (performing and doubtful).

Breakdown of ratings within the rated scope, i.e. 87% of the private sector portfolio at June 30, 2012 (84% at December 31, 2011).

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5 - Risk Mitigation TechniquesThe portfolio of loans to non-public sector counterparties (individuals, social housing, private corporate sector) is mostly covered by real estate mortgages or personal guarantees.

5.1 - Valuation and management of collateralEach year, Crédit Foncier updates the mortgage values pledged as collateral. This revaluation can be done automatically using real estate indices that give the year-on-year price change or based on an advanced assessment depending on the type and/or amount of the pledged asset.

For the financing of professional assets or large home loans, the assets pledged to guarantee the loans are valued by an appraiser (Foncier Expertise). The terms of these valuations have not changed.

Of the loans backed by a first-rank mortgage or lender’s rank, some are doubly secured by an additional guarantee provided by a mortgage insurance company, local authority or SGFGAS, which is in fact the main guarantee for the social housing market.

5.2 - Main insurers and effect of credit risk mitigation techniquesThe main suppliers of personal guarantees on mortgage loans to Individual customers are the SGFGAS, mortgage insurance companies (e.g. CEGC (formerly Saccef)) as well as 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 home ownership loans governed by regulated loan agreements and guaranteed by first-rank collateral (mortgage or lender’s lien). 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, guarantees granted thereafter have a 15% weighting for the loans in question;

• Crédit Logement is a financial institution, a subsidiary of most large French banking networks, whose long-term rating is Aa2 at Moody’s and AA- at Standard & Poor’s. Loans covered by Crédit Logement receive a 20% weighting under the standard approach, related to the regulatory weighting applicable to credit institutions and deducted from the credit ratings of the country where the underlying collateral is located (France in this case);

• SACCEF (recently renamed Compagnie Européenne de Garanties et Cautions - CEGC) is a company that specialises in bank loan surety and is owned by Natixis Garanties. Since December 31, 2008 and until the transition to the IRB approach, the Autorité de contrôle prudentiel (French prudential supervisory authority) has authorised real estate loans guaranteed by SACCEF to be classified using the standard approach for the purpose of applying a single weighting of 35% to these loans;

• miscellaneous mortgage insurance companies (MG PTT, Mutuelle du Trésor, Mutaris Caution, etc.);

• NHG is a guarantee provided by the Dutch government on mortgages acquired by Crédit Foncier in late 2007. This portfolio of loans guaranteed by NHG totalled €76.3m at end-June 2012;

• other insurers are credit institutions, mainly providing intra-group guarantees (Caisses d’Epargne and BPCE), or public parties (mainly for PPPs). Note: a financial guarantee of €3.6bn has been provided by Caisse Nationale des Caisses d’Epargne in connection with the acquisition of Ixis CIB’s French local authorities business.

Crédit Foncier’s portfolio is predominantly covered by first-rank mortgages or eligible personal sureties.The charts below summarises personal guarantees, broken down according to Basel asset class, that are eligible for regulatory capital requirement reductions.

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Loan insurers

Dec. 31, 2011

1st rankmortgages+ other protection(including SGFASguarantee)11%

Localmunicipalities+ French Sovereign19%

Public sectorsecuritisation6%

1st rankmortgages only24%

RMBS10%

Internationallocalmunicipalities14%

Other secured exposures3%

Other sureties10%

€118bn

Developer loans, bridging loans, others 3%

June 30, 2012

1st rank mortgages+ other protection(including SGFASguarantee)11%

Localmunicipalities+ French Sovereign22%

Public sectorsecuritisation6%

1st rankmortgages only23%

RMBS9%

Internationallocalmunicipalities13%

Other secured exposures3%

Other sureties 10%

€122bn

Developer loans, bridging loans, others3%

5.3 - Balance sheet and off-balance sheet nettingThe group assesses exposures to off-balance sheet derivatives by applying an add-on (BIS weightings) to current exposures. Groupe BPCE has a policy of systematically entering into framework agreements with its banking counterparties. The vast majority of the time, these are collateralisation agreements with margin call triggers that reduce the actual exposure. In the specific case of Compagnie de Financement Foncier, these agreements are asymmetrical, meaning that only the counterparties provide collateral if needed.

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6 - Securitisations6.1 - Objectives, activities and risk monitoringFor the purposes of applying the European CRD 3 directive, it should be noted first and foremost that all of Crédit Foncier’s securitisation transactions belong to the banking book and that Crédit Foncier is not an investor in any resecuritisation transactions.

6.1.1 - Objectives

The Crédit Foncier group invests in shares of securitisations originated by third parties, mainly European financial institutions selling mortgage loan portfolios through RMBS deals.The developments described in this section refer exclusively to tranches of securitisations held by the bank with respect to its operations as an investor and are classified in its banking book.

6.1.2 - Crédit Foncier group’s business, risk monitoring

In terms of securitisation, Crédit Foncier’s main objective in recent years has been to build a diversified portfolio of excellent quality loans (predominantly mortgage loans) originated outside France. Crédit Foncier has a strong and substantial track record with mortgage loans, which are linked to its core business: housing loans and public sector loans. No further investments have been made in this segment since early 2011 and the portfolio has been placed in run-off.

In terms of risk, the Crédit Foncier group’s business is concentrated in transactions with a limited risk profile:• senior securities, publicly rated by one or more agencies

(AAA on acquisition), issued by entities boasting strong investor protection mechanisms: subordination of junior tranches, reserve fund, interest rate differential, protection against foreign exchange and interest rate risks;

• underlyings of residential and, very marginally, commercial mortgage debt;

• underlyings of public sector debt backed by a sovereign state (FFELP student loans in the United States, NHG debt in the Netherlands) or local authority debt (healthcare securitisations in Italy).

As regards risk supervision procedures, the entire portfolio is monitored by the Risk Department, which holds all the necessary portfolio-specific expertise. For more information, see the 2011 Registration Document (page 131).

Groupe BPCE’s Risk Department also reviews the risk analysis and monitoring of the portfolio.

6.2 - Approaches and external credit ratings

6.2.1 - Approaches used

At June 30, 2012, the amounts of the weighted exposures of securitisation positions were determined using the standard method for all Groupe BPCE entities (excluding Natixis), and therefore for Crédit Foncier.

6.2.2 - External ratings

The weighting of securitisation positions was determined based on the tranches’ external ratings by the three major rating agencies: Moody’s, Standard & Poor’s and Fitch Ratings. At June 30, 2012, all the tranches held by Crédit Foncier were rated by external agencies (had any tranches not been rated by an external agency, a risk weighting of 1,250% would have been applied). If the tranche has different ratings by the three agencies, the Basel II criterion is applied: the lower of the two highest ratings issued by the three ratings agencies is used. It should be noted that exposures with a risk weighting of 1,250% are deducted directly from equity capital, in practice.

6.2.3 - Summary of accounting standards used in connection with securitisations

Crédit Foncier’s securitisation portfolio is held to maturity and is carried on the balance sheet under “Loans and receivables due from customers” (which protects the portfolio from any fair value changes). The impact of any disposals of shares held by Crédit Foncier is immediately taken to the income statement.

6.2.4 - Stress scenario for external securitisations portfolio

The Crédit Foncier group’s entire portfolio of mortgage-backed securities is regularly stress-tested to assess the resilience of the assets held in extreme scenarios.

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For RMBS, these extreme simulations involve massive defaults, falling prepayment rates and sudden and lasting crash in real estate prices. Only the most damaging scenarios are liable to generate losses on some of the RMBS positions held by the Crédit Foncier group. These scenarios assume a combination of events considered unlikely at this point:• doubling to maturity of historic default rates per transaction

(i.e. 15% to 30% of cumulative defaults, depending on the transaction);

• a sudden and lasting crash in real estate prices, varying in magnitude by country (as much as -60% versus the 2008 peak in Spain’s case);

• and a one-quarter decrease in the last known prepayment rates.

The default models used in stress tests correspond to foreclosures, using a conservative hypothesis because, in reality, loans that have reached the default stage do not systematically lead to foreclosure.

In the event of such a “catastrophic” scenario, a final cash flow deficit could be recorded at maturity, accounting for 0.5% (discounted) of the outstanding principal of the stressed transactions. Note: for the previous stress test, the cash deficit was 0.7%: at an equivalent level of stress, the portfolio’s resilience further improves thanks to the mechanisms protecting the senior shares and the disposals carried out in the half-year.

For CMBS, the simulations involved a break-even type approach used to determine the stress levels that the tranches held could withstand in terms of:• a decline in the value of underlying assets, particularly in

relation to documented LTV triggers;• and a decline in rent levels or increase in vacancy rates,

specifically compared to documented hedging ratios.

6.2.5 - Impaired assets/External securitisations

No arrears or losses were recognised in H1 2012 on Crédit Foncier group’s securitisation portfolio.In addition to exposures deemed “at risk” and subject to individual provisioning (detailed in section 7.2), no other fair value impairments were booked to securitisation portfolio assets in H1 2012.

6.2.6 - Credit-enhanced securitisations

At June 30, 2012, only three transactions, totalling €450m, were covered by financial guarantees provided by two monoline insurers.To date, following the massive ratings downgrades on the majority of these monolines, only a single security (€41.6m) still receives a positive impact from credit enhancement, as it was originally enhanced by FSA (now Assured Guaranty Municipal Corp.). This monoline was rated Aa3/AA- (Moody’s/S&P) at June 30, 2012. This is a public sector securitisation backed by an Italian local authority with a public BBB rating. In the event the monoline is downgraded, at worst the securities’ rating would be aligned with that of the local authority.

6.3 - Description of Crédit Foncier group’s exposures to securitisation transactions

6.3.1 - Securitisation exposures by type of underlying

At June 30, 2012, the Group held a portfolio of external securitisations totalling €18,489m. The portfolio consists exclusively of conventional securitisations, most of which were acquired from 2005 to 2007.The reduction of the portfolio’s outstanding securitisations (6% since end-2011) can be attributed to the decision made in 2011 to run off the portfolio: no further investments have since been made and the level of outstandings varies according to amortisation profile and the disposals carried out (mainly in Spanish and Dutch securitisations).

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Dec. 31, 2011 June 30, 2012 Difference

Residential mortgageMIX 207 178 -29

RMBS 11,775 10,694 -1,081

Total - Residential mortgage 11,981 10,872 -1,109

Public sector

Healthcare 437 431 -6

NHG RMBS 3,621 3,539 -82

Sovereign states 2 1 -1

FFELP Student Loans 3,294 3,287 -7

Total - Public sector 7,354 7,258 -96

OthersCMBS 356 354 -2

Corporate 5 5 -

Total - Others 361 359 -2

GENERAL TOTAL 19,696 18,489 -1,207

Source: regulated management figures. Balance-sheet commitments (excluding off-balance sheet commitments and financial guarantees given) representing overall exposure to credit risk under IFRS consolidated gross figures (performing and doubtful).

• MIX: Residential and commercial mortgage-backed securities (mostly residential, individuals over 80%).

• RMBS: residential mortgage-backed securities (individuals market).

• Healthcare: Healthcare ABS guaranteed by local authorities.

• NHG RMBS: residential mortgage-backed securities with the NHG guarantee in the Netherlands.

• Sovereigns: securitisations of loans with an explicit guarantee from the Italian sovereign state.

• FFELP student loan: securitisations of U.S. student loans; at least 98% of the principal is guaranteed by the US federal government (FFELP programme).

• CMBS: commercial mortgage-backed securities (office buildings, malls, logistics and storage assets, etc.).

• Corporate: securitisations in the aeronautical sector.

6.3.2 - Geographic breakdown of external securitisation positions

The securitisation portfolio is predominantly exposed to Europe and the United States (17.8% of total outstandings). European outstandings are mainly located in Spain (RMBS, 29.8% of total outstandings), the Netherlands (RMBS and NHG RMBS, 23.6%) and Italy (RMBS or public sector, 18.3%).

The US portfolio is highly secure as 99.9% are AAA-rated senior US student loan securitisations backed by the Federal government under the FFELP programme. The rest of Crédit Foncier’s securitisation portfolio (10.5%) is divided between other European countries.

This breakdown observes the country limits and diversification criteria set forth by the risk policy of Crédit Foncier and the Group.

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Exposures to external securitisation positions by country (**)

Dec. 31, 2011 June 30, 2012

Amount % Amount %

Germany 702 3.6% 690 3.7%

Spain 6,143 31.2% 5,518 29.8%

United States 3,299 16.7% 3,291 17.8%

Europe (*) excluding France 124 0.6% 123 0.7%

France 148 0.8% 143 0.8%

Greece 7 - 6 -

Italy 3,561 18.1% 3,376 18.3%

Netherlands 4,695 23.8% 4,362 23.6%

Portugal 960 4.9% 923 5.0%

United Kingdom 58 0.3% 56 0.3%

GENERAL TOTAL 19,696 100.0% 18,489 100.0%

(*) Europe includes “pan-European” transactions involving assets in several European countries.(**) Source: regulated management figures. Balance-sheet commitments (excluding off-balance sheet commitments and financial guarantees given)

representing overall exposure to credit risk under IFRS consolidated gross figures (performing and doubtful). These gross amounts are net of any guarantees received.

Geographic breakdown of external securitisation positions

Dec. 31, 2011

€19,696mEurope excl. France1%Portugal

5%

USA17%

Spain31%

Germany3%

UKp.m.

Netherlands24%

France 1%

Italy18%

June 30, 2012

UKp.m.

€18,489mEurope excl. France1%

Portugal 5%

USA18%

Spain30%

Germany4%

Netherlands23%

France 1%

Italy18%

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6.3.3 - Breakdown of external securitisation positions by rating


Exposures to external securitisation positions by rating

Dec. 31, 2011 June 30, 2012

Amount % Amount %

Base

l II r

atin

gs

AAA 8,324 42.3% 5,823 31.5%

AA+ 1,566 8.0% 1,200 6.5%

AA 2,519 12.8% 2,119 11.5%

AA- 1,923 9.8% 1,580 8.5%

A+ 921 4.7% 1,096 5.9%

A 1,396 7.1% 210 1.1%

A- 757 3.8% 4,787 25.9%

BBB+ 394 2.0% 650 3.5%

BBB 528 2.7% 520 2.8%

BBB- 202 1.0% 201 1.1%

BB+ 926 4.7% 48 0.3%

BB 131 0.7% 126 0.7%

BB- 16 0.1%

B+

B

B- 6

CCC 9 9 0.1%

CC 98 0.5% 98 0.5%

TOTAL 19,696 100.0% 18,489 100.0%

Breakdown of external securitisation positions by rating

Dec. 31, 2011

€19,696m

≤B1%

BBB 6%

BB 5%

A 16%

AAA 42%

AA 30%

June 30, 2012

€18,489m≤B1%

BBB 7%

BB 1%

A 33%

AAA 31%

AA 27%

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A number of ratings were downgraded in the first half of 2012, with Step 1 outstandings (≥ AA-) now accounting for 58% of total outstandings, versus 73% at end-2011. A rating migration took place in favour of category A (33% of total outstandings versus 15.6% previously) and, to a lesser extent, categories BBB-BB.The rating downgrades affecting Crédit Foncier’s securitisation portfolio mainly resulted from comparable downgrades in the RMBS portfolio, without any real increase in credit risk observed (see section 6.3.5). Transactions rated ≤ B mainly consist of CMBS appearing on the Watch List, which are noted in section 6.3.7.

6.3.4 - Breakdown by weighting

Crédit Foncier uses the standardised approach to determine its capital requirements for the securitisation segment. The breakdown of outstandings by Basel weighting category is as follows:

Breakdown of external securitisation positions by rating

Basel II weighting -

Standardised approach

Dec. 31, 2011 June 30, 2012

(in €m) % (in €m) %

20% 14,334 72.8% 10,722 58.0%

50% 3,073 15.6% 6,092 33.0%

100% 1,124 5.7% 1,371 7.4%

350% 1,057 5.4% 190 1.0%

1,250% 108 0.5% 113 0.6%

TOTAL 19,696 100% 18,489 100%

Source: regulated management figures. Balance-sheet commitments (excluding off-balance sheet commitments and financial guarantees given) representing overall exposure to credit risk under IFRS consolidated gross figures (performing and doubtful).The amounts shown in the table are gross, not including the impact of provisioning.

Exposures deemed “at-risk” by Crédit Foncier (see section 6.3.7) are shown here in the 1,250% weighting category, though in practice they are taken directly from equity.

6.3.5 - Securitisation positions backed by individual-customer residential mortgage loans (RMBS) in Europe

58.8% (i.e. €10.9bn) of the securitisation portfolio is comprised of positions in securities backed by “prime” residential mortgage loans in European Union countries. Furthermore, Crédit Foncier doesn’t held any direct or indirect exposure to the US mortgage market.

Several ratings were downgraded in H1 2012: 7.6% of Crédit Foncier’s RMBS portfolio is now rated AAA (Basel II rating), versus 36% in 2011. Outstandings in the Step 1 category (≥ AA-) fell from 64% to 40%.

As in 2011, these downgrades were mainly due to the European sovereign debt crisis:• in line with their methodology, after the sovereign debt

ratings were downgraded, the rating agencies applied more or less the same downgrades to the securitisation ratings, regardless of the performance of the underlying assets;

• the deterioration of Europe’s economies affected the performance of the mortgage loans underlying the securitisations, thus warranting rating migrations linked to the increased credit risk.

External RMBS (*) backed by loans to individuals

Dec. 31, 2011

€11,981m

BB9%

A 21%

BBB 6%

AA 28%

AAA 36%

June 30, 2012

€10,873m

A 50%

BBB 9%

BB 2% AA

32%

AAA 8%


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6.3.6 - External securitisation positions (**) in the public sector

Outstanding securitisation positions in the Crédit Foncier group’s public sector portfolio amounted to €7.3bn at June 30, 2012 (i.e. 39% of total outstanding securitisations), representing a slight decrease in the first half.

There are three main types of transactions making up this portfolio:• €3,539m in Dutch mortgage loans securitisations backed

by an NHG guarantee (a Dutch public entity similar to SGFGAS in France). These transactions therefore generate a final risk on the Dutch government. 86% of the portfolio’s outstandings have a Step 1 category rating (≥ AA-);

• €3,287m in US FFELP student loans, backed by a Federal guarantee covering at least 98% of the outstanding. Despite the rating downgrades by Moody’s and S&P, 94% of outstandings still had a Basel II rating of AAA at June 30, 2012;

• €431m in healthcare outstandings exposed to the Italian public sector, most with a BBB rating.

Overall, 86% of the public sector portfolio had a Step 1 category rating (≥ AA-) at end-June 2012, down slightly compared to end-2011 (88%). Nevertheless, all the positions are classified in the Investment Grade category. Lastly, it should be noted that, with the enhancement of senior NHG RMBS tranches held by Crédit Foncier, a restructuring operation that had a positive impact on the external rating of these positions, 68% of public sector securitisation outstandings have a Basel II rating of AAA.

External securitisation positions backed by public sector assets (*)

Dec. 31, 2011

€7,354m

BBB5%

AA 35%

A 7%

AAA 53%

June 30, 2012

€7,257m

BBB6%

AA 18%

A 8%

AAA 68%

6.3.7 - Other external securitisation transactions

Crédit Foncier group’s exposure to other types of securitisations includes:• Commercial Mortgage-Backed Securities (CMBS) for €354m;• a securitisation position in the aeronautical sector for €5m.

With the exception of two CMBS transactions (€98m and €9.3m), formally appearing on the Watch List since mid-2008 and mid-2011, respectively, and deemed “at risk” by Crédit Foncier (see section 7.2), the ratings of the CMBS portfolio

remained satisfactory in H1 2012. 56% of the portfolio is still rated in the Step 1 category (≥ AA-). It should be noted, however, that the ratings declined in H1 2012, as Step 1 CMBS made up 70% of the portfolio in 2011. These downgrades were primarily attributable to methodology revisions by external agencies, particularly the revision of the counterparty risk criterion by Standard & Poor’s.

An individual provision covers 63.4% of at-risk CMBS.

An analysis of the CMBS portfolio can be found in section 7.2.


(**) Securities backed by loans with government guarantees.

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7 - FSF (G7) ReportingIn 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 ratings 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 monolines;• exposure to CMBS (Commercial Mortgage-Backed Securities);• other subprime and Alt-A exposure and exposure to US

mortgages more generally;• vehicles;• leveraged buyouts (LBOs).

These disclosure requirements were discussed in a working group involving the FBF (French Banking Federation), the SGCB (General Secretariat of the French Banking Commission) and the AMF (French prudential supervisory authority) in order deploy the FSF recommendations for France. The financial information tables presented below have been drawn up to meet these requirements.

7.1 - CDOs and exposures to monoline insurers and other credit enhancers

7.1.1 - Collateralised Debt Obligations (CDOs)

The Crédit Foncier group has no exposure to CDOs.

7.1.2 - Credit enhancers

The book value 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 over some of its assets. In all cases, Crédit Foncier holds an initial claim against a primary counterparty other than the monoline. These guarantees generally cover public sector financing transactions (loans or securities) extended directly to a sovereign state or to a local authority or public institution.

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).

The breakdown of this monoline-insured portfolio is based on the nominal value of the investment lines at June 30, 2012, according to the initial credit enhancer (without taking into account takeovers of certain companies by rival monolines which have since taken place).

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7.1.2.1 - Enhanced assets


ENHANCED ASSETS

June 30, 2012Gross notional

amount of enhancements

Gross notional amount

of hedged instruments

Fair value of hedged

instruments

Fair value of enhancements

before adjustments

Fair value of hedges

purchased

Fair value of enhancements net of hedges

and before adjustments

Fair value adjustments for monoline

credit risk (recognised

on the enhancement)

Residual exposure to

counterparty risk from

monolines

Enhancements acquired from monolines

On CDOs (U.S. residential market) with subprime underlyings

- - - - - - - -

On CDOs (U.S. residential market) with non-subprime underlyings

- - - - - - - -

Counterparty risk on other transactions

2,684 2,684 3,270 - - - - -

TOTAL at June 30, 2012 2,684 2,684 3,270 - - - - -

TOTAL at June 30, 2011 2,987 2,987 3,478


The breakdown of underlying assets by intrinsic rating is shown below.

7.1.2.2 - Breakdown of gross exposures by rating of underlying (nominal value)


June 30, 2012 Nominal%

Monoline Monoline rating AA A BBB Non Investment Grade Not Available Total

AMBAC Not available 138 473 610 22.7%

CIFG Not available 163 163 6.1%

FGIC Not available 107 107 4.0%

AGMC (1) AA- 462 1,119 1,580 58.9%

MBIA (2) BBB 85 139 225 8.3%

TOTAL 462 1,341 635 246 2,684100%

% 17.2% 50.0% 23.7% 9.1%

(1) Rating of Assured Guaranty Municipal Corp (for FSA).(2) Rating of National Public Finance Guarantee Corp. (for MBIA).

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The monoline rating is the lower of the two best ratings from S&P, Moody’s and Fitch Ratings at June 30, 2012. The intrinsic rating of the underlying asset is consistent with its pre-enhancement Basel II rating at the same date.

The bank, which also held Greek sovereigns securities backed by Assured Guaranty, was able to activate the guarantee mechanism; consequently a receivable from this monoline issuer, rated Aa3/AA- by the Moody’s and Standard & Poor’s, is now classified in the private corporate sector portfolio.

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 monoline was rated Aa3 by Moody’s and AA- S&P at June 30, 2012. Similarly, securities enhanced by MBIA now have the rating of the National Public Finance Guarantee Corporation (Baa2 by Moody’s and BBB by S&P at June 30, 2012), which now guarantees North American local authorities.

Exposures whose 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 predominantly direct commitments to IPF entities (United States).

7.2 - Exposures to Commercial Mortgage-Backed Securities (CMBS)After refocusing its business, Crédit Foncier began to run off its CMBS portfolio in 2011. With outstandings of €354m at June 30, 2012, CMBS exposures remained modest in relation to Crédit Foncier’s entire securitisation portfolio (accounting for only 1.9% of total outstandings at June 30, 2012). At-risk exposures totalled €107m.The “at-risk” CMBS held by the Crédit Foncier group were publicly rated in the speculative category by the rating agencies in the wake of the series of downgrades since 2008. The gross book value of these tranches at June 30, 2012 was €107.4m. They are comprised of commercial real estate exposures (mainly office buildings in the Paris region). These exposures have been on Crédit Foncier’s Watch List since June 30, 2008 and are subject to individual provisioning. At present, no payment defaults have been recorded on the tranches held by Crédit Foncier.

These assets are the only two positions classified “at risk” by Crédit Foncier. They are carried on Crédit Foncier’s balance sheet and provisioned for 63% of their amount on average.

7.2.1 - Table of at-risk CMBS exposures(in millions of euros)

June 30, 2012 Table of at-risk CMBS exposures

Portfolio type United States Other markets at risk

(a)Gross exposure (gross value on the balance sheet before losses/impairments)Residual balance sheet value

- 107.4

(b)Accumulated losses and impairments recognised through profit or loss (since outset)o/w losses and impairments for this year onlyHaircuts recognised through profit or loss

--68.1

o/w (0) in H1 2012

(c)Accumulated changes in value recognised in equity (since outset)o/w changes in value for this year onlyHaircuts recognised in equity (OCI)

- -

(b+c)/a% of total CMBS haircuts(accumulated losses and impairments recognised through P&L/gross exposure)

- 63.4%

(d)Fair value of hedgesExternal hedges not included in the loss and impairments calculation

- -

(a - b - c - d) Net exposure (net of losses and impairments) - 39.3


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7.2.2 - Breakdown of CMBS by sector

Exposures deemed “at-risk” (rated lower than B) were stable compared to 2011 (30% of CMBS portfolio).

Breakdown of CMBS by sector

Dec. 31, 2011

At risk(based onWatch List)30%

€356mNot risky70%

June 30, 2012

At risk(based onWatch List) 30%

€354mNot risky70%


7.2.3 - Geographic breakdown of CMBS

Crédit Foncier’s entire CMBS portfolio is located in Europe and thus contains no exposure to the United States or Asia. The “Europe” category contains pan-European CMBS (whose underlying assets are divided between several European countries).

Breakdown of CMBS by location

Dec. 31, 2011

Europe35%€356m

UK16%

France40%

Italy5%

USA, Asiap.m.

Germany4%

June 30, 2012

Europe35%

€354m

UK16%

France40%

Italy5%

Germany4%

USA, Asiap.m.


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7.2.4 - Breakdown of CMBS by rating

100% of the portfolio is rated by one or more rating agencies. Tranches rated ≤ B correspond to the “at risk” exposures mentioned above. A number of ratings were downgraded in the first half of 2012, with Step 1 outstandings (≥ AA-) accounting for 38.8% of total CMBS outstandings, versus 49% at end-

2011. However, excluding securities on the Watch List, Step 1 outstandings accounted for 56% of the remaining portfolio.

The rating migration was due to both the downgrading of sovereign ratings and changes in the methodology for assessing counterparty risk by rating agencies (including Standard & Poor’s).

Breakdown of CMBS by rating

Dec. 31, 2011

AA32%

€356m

≤B30%

BBB5%

A15%

AAA17%

June 30, 2012

AA22%

A26%

€354m

≤B30%

BBB5%

AAA17%


7.3 - Other subprime and Alt-A exposures (RMBS, loans, etc.)Crédit Foncier group has no direct or indirect exposure to subprime or Alt-A assets. Crédit Foncier has no exposure to the U.S. mortgage market in general.

Excluding the “at-risk” assets described in section 7.2 and subject to individual provisioning, Crédit Foncier group has no other exposure to securitisations on the Watch List.

7.4 - Special Purpose Entities (SPEs)

7.4.1 - General information on exposures to SPEs

At June 30, 2012, Crédit Foncier group had no exposure to SPEs (ABCP or other) other than those mentioned below, relating to the SIRP vehicle included in the Crédit Foncier group consolidation scope since the second half 2008.

7.4.2 - Sponsored vehicles

Since September 25, 2008, Crédit Foncier had held 100% of the €457m in commercial paper issued by SIRP. SIRP’s asset portfolio consisted of a perpetual subordinated note issued by a wholly-owned subsidiary of Crédit Foncier and an AIG zero coupon. Having matured in April 2012, this exposure was unwound in H1 2012.

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7.5 - Leveraged buyouts (LBOs)

7.5.1 - Exposure to leveraged buyouts (LBOs)

At June 30, 2012, the Crédit Foncier group identified 7 leveraged buyout deals amounting to €140m.


Dec. 31, 2011 June 30, 2012

FINAL SHARES

Number of deals 7 7

Commitments 141 140

SHARES FOR SALE

Number of deals

Commitments

TOTAL 141 140

Source: adjusted management figures. Balance-sheet commitments (excluding off-balance sheet commitments and financial guarantees given) representing overall exposure to credit risk under IFRS consolidated gross figures (performing and doubtful).

Definition of an LBO:• a structured credit transaction, with a leverage effect, i.e.

bank borrowings, 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.

The involvement of a financial sponsor and a holding company is what qualifies this type of transaction as an LBO.

7.5.2 - Change in exposures to leveraged buyouts (LBOs)


LBO exposures Dec. 31, 2011 June 30, 2012

Total (gross) 141 140

Provisions (37) (37)

Total (net of provisions) 104 103

o/w final shares 104 103

o/w shares for sale - -

Source: adjusted management figures. Balance-sheet commitments (excluding off-balance sheet commitments and financial guarantees given) representing overall exposure to credit risk under IFRS consolidated gross figures (performing and doubtful).

Crédit Foncier’s LBO exposures were stable at €103m, net of provisions, at end-June 2012.

7.5.3 - Breakdown of LBO final shares by sector (*)

At June 30, 2012, 50% of target companies belonged to the real estate sector and 50% to the service sector (identical to December 31, 2011).

7.5.4 - Geographic breakdown of LBO final shares (**)

At June 30, 2012, all target companies were located in France (identical to December 31, 2011).

7.6 - Securitisation glossarySee the 2011 Registration Document pertaining to this section (page 146).

(*) Breakdown of target companies by sector. The percentage is calculated on the commitment.(**) Geographic location of target companies.The percentage is calculated on the commitment.

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8 - Market risksIn May 2011, Crédit Foncier’s balance sheet was broken down into the new categories set forth by BPCE GAP and BPCE ALM risk standards, which classify transactions according to their initial management strategy. As a result:• Crédit Foncier has no proprietary transactions, in accordance

with its financial charter;• as Crédit Foncier’s business is primarily commercial

in nature, the majority of balance sheet transactions (particularly financial transactions) are recorded under the heading “customer transactions”;

• a few transactions are recorded under the sub-heading “equity - capital expenditures”. No transactions are recorded under the sub-heading “equity - financial investments”.

The ALM Department monitors balance sheet headings on a quarterly basis. A presentation of the headings and their quarterly changes is given at the quarterly ALM Committee meetings (first presentation on March 31, 2012).

Given the nature of its business (primarily commercial), the Group is therefore not fundamentally exposed to market risk.

8.1 - Market risk monitoring

8.1.1 - Operation

Crédit Foncier’s market risk is mainly assessed by keeping track of parametric VaR calculated daily by BPCE (using Scenarisk). This Groupe BPCE tool assesses the potential losses that speculative activity may cause, by calculating a synthetic value-at-risk (VaR) measurement, with a confidence level and holding period of 99% and one day, respectively. The results are consolidated at the BPCE level.

The sensitivity and volatility measures used by the Scenarisk tool are selected on a rolling 12-month basis.

8.1.2 - Scope and measurement

In accordance with BPCE’s market risk standards, VaR is monitored for the following headings/sub-headings:• own account (proprietary transactions);• equity - financial investments.

Crédit Foncier’s Risk Department reports transaction flows for these headings (currently empty) to BPCE on a daily basis.

8.1.3 - Limit

Since the start of 2012, no transactions have been carried out under the equity/financial investments heading.

8.1.4 - Overrun supervision and management

No overruns were recorded in the first half-year 2012.

8.1.5 - Control system

Trading activity (for the Group’s own account) could only be developed after prior, explicit approval has been granted by Crédit Foncier’s Executive Officers and Board of Directors. This approval would have to be renewed each year.

8.2 - Equity risk

8.3.1 - Investment approaches and procedures


8.2.2 - Objectives

In 2007, the Crédit Foncier group established an investment policy for real estate investment vehicles (SIIC, OPCI and closed funds) and equity investments to develop growth drivers for Crédit Foncier’s financing and related activities.

Investment rules are adapted at least once every six months, after approval by the Investment Committee, to reflect new developments in the economy. All new investments are subject to the process indicated. Investments in group and non-group real estate funds may not exceed 5% of gross regulatory capital.

2 RISK MANAGEMENT

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Since July 1, 2011, in light of the economic and financial climate, Crédit Foncier has frozen the budget for real estate investment. As a result, no new projects are being considered until further notice, with the exception of two developed deals: one closed fund and one real estate mutual fund for which Crédit Foncier had already entered into commitments.

At June 30, 2012, these commitments totalled €61.8m, €55.3m of which had been disbursed. As regards long-term equity holdings, Crédit Foncier does not include this portfolio in its daily VaR monitoring.

8.2.3 - Accounting techniques and valuation method


8.2.4 - Crédit Foncier’s exposure

At June 30, 2012, the Crédit Foncier group’s exposure to equity risk amounted to €303m (vs. €286m at December 31, 2011) and could be broken down as follows:


At June 30, 2012Cost or historic

valueFair value or

adjusted value

Unrealised capital gains or

losses

Gross unrealised

capital gains

Gross unrealised

capital losses

Financial assets and liabilities at fair value through profit or loss (fair value option)

- - - - -

Available-for-sale financial assets 280 303 23 26 - 3

TOTAL 280 303 23 26 -3

Total at December 31, 2012 281 286 5 5

Source: accounting data (IFRS consolidation June 30, 2012).

At June 30, 2012, total unrealised gains or losses (consolidated figures) on equity exposures in the banking portfolio amounted to €22.5m booked to unrealised or deferred gains and losses.

Prudentially, this unrealised capital gain of €22.5m on available-for-sale financial assets, booked to equity, is deducted from core capital where it does not pertain to available-for-sale securities deducted from equity. Therefore, at June 30, 2012, 45% of this almost fully-neutralised pre-tax capital gain was recognised as in supplementary capital (Tier 2), in the amount of €10.1m.

2 RISK MANAGEMENT

– 73 –


9 - Asset & Liability Management RisksIntroductionSee the 2011 Registration Document pertaining to this section (page 150).

9.1 - Organisation of ALM risk monitoringSee the 2011 Registration Document pertaining to this section (pages 150 to 151).

9.2 - Methodology for assessing liquidity, interest rate and foreign exchange risksSee the 2011 Registration Document pertaining to this section (page 151).

9.3 - Liquidity risk monitoring

9.3.1 - Organisation of the Crédit Foncier group’s refinancing business

The majority of Crédit Foncier group’s resources is derived from medium- and long-term issues carried out by Compagnie de Financement Foncier, the three-time AAA-rated société de crédit foncier and group subsidiary that issues obligations foncières.

Crédit Foncier group successfully raised €7.3bn in the first half of 2012, of which €6.3bn for Compagnie de Financement Foncier and €1bn for Crédit Foncier.

The Crédit Foncier group also holds assets that can be mobilised with the central bank.

One level of assets comprises securities and receivables that can be mobilised with the ECB, predominantly held by Compagnie de Financement Foncier.

At June 30, 2012, the gross pre-haircut value of these assets totalled €61.5bn, including eligible residential receivables for €30.9bn (expansion in respect of the temporary ECB mechanism).

Also at June 30, 2012, real mobilised resources came to €6.1bn, including €4.5bn with the ECB.In addition to this available reserve, certain assets provide an additional source of resources.

9.3.2 - Compliance with limits

In terms of liquidity risk management, the Crédit Foncier group is required to observe a one-month regulatory liquidity ratio.Groupe BPCE also requires its subsidiaries to observe three limits:• a limit associated with the asset/liabilities ratio (observed

over a 10-year horizon rather than annually);• a daily (borrower) limit of €2bn: this amount must be

continuously covered by a similar outstanding (in net value after discount) deposited in a 3G pool and not used;

• liquidity stress tests, performed under various standardised asset and liability scenarios.

9.3.2.1 - Regulatory 1-month liquidity ratio

At June 30, 2012, Crédit Foncier’s liquidity ratio (on a parent company basis) was 110%.Compagnie de Financement Foncier’s liquidity ratio was 772% at June 30, 2012. It must also have one year’s worth of cash available at all times.

9.3.2.2 - Internal limit associated with the asset/liabilities ratio

The static liquidity gap limits are as follows:• 0 to 3 years: 85%• 3 to 6 years: 70%• 6 to 10 years: 55%

Furthermore, in order to anticipate liquidity management requirements, a benchmark level approved by the Risk Committee has been established based on the observed static liquidity ratio, as follows:• 0 to 3 years: 90%• 3 to 6 years: 75%• 6 to 10 years: 60%

2 RISK MANAGEMENT

– 74 –


Assets/Liabilities ratio

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

105%

110%

115%

120%

Limit

Ratio at 03/31/2012

Ratio at 06/30/2012

Reference level set by the Groupe BPCE Risk Committee 02/02/2011

06/1

2 12

/12

06/1

3 12

/13

06/1

4 12

/14

06/1

5 12

/15

06/1

6 12

/16

06/1

7 12

/17

06/1

8 12

/18

06/1

9 12

/19

06/2

0 12

/20

06/2

1 12

/21

9.3.2.3 - Daily borrower limit

Over the period, Crédit Foncier did not have recourse to very short-term refinancing (daily borrower limit), which is subject to a limit defined by BPCE; there were no matters to report regarding compliance with the limit.

9.3.2.4 - Liquidity Stress Tests

In accordance with the provisions of Groupe BPCE’s ALM charter, liquidity stress tests are performed using BPCE standards and internal scenarios.

9.3.3 - Key events in H1 2012

• Crédit Foncier participated in Groupe BPCE’s working group on the Basel Committee’s new ratios, i.e. the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR), with preliminary simulations.

• Revision of deferred instalments and prepayments, currently being rolled out.

• Application improvement projects.

9.3.4 - Outlook for 2012

• Continuation of the working groups on LCR and NSFR calculation, in relation to the texts currently being drafted, and within the framework of launching the “observation” period in order to have periodic reports by 2013.

• Improvement of management tools.• Incorporation of prudential liquidity management mechanisms

required by the central institution.

9.4 - Interest rate risk monitoringGroupe BPCE now requires its subsidiaries to observe three limits for interest rate risk management purposes:• the first limit aims to manage the group’s static interest rate

gap at 10 years, using a diminishing proportion of capital (assessed at the closing date), from 95% in year 1 to 50% in year 10);

• the net present value (NPV) of capital (standard Basel II indicator), which must not exceed 20%;

• the sensitivity of net interest margin to short- and long-term interest rate fluctuations under four scenarios communicated quarterly by the central institution.

9.4.1 - Compliance with limits

9.4.1.1 - Static gap limit

Crédit Foncier applies the fixed interest rate gap method.The limit shown falls within the BPCE system. At June 30, 2012, the Crédit Foncier group was in compliance with this limit over the entire observation period.

LT fixed interest rate gap

-5,000

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

4,000

5,000

12/0

1/20

19

06/01/20

20

12/01/20

20

06/01/20

21

12/01/20

21

06/01/20

22

12/01/20

22

06/01/20

23

12/01/20

23

06/01/20

24

12/01/20

24

06/01/20

25

12/01/20

25

06/0

1/20

13

12/01/20

13

06/0

1/20

12

12/01/20

12

06/01/20

14

12/01/20

14

06/01/20

15

12/01/20

15

06/01/20

16

12/01/20

16

06/01/20

17

12/01/20

17

06/01/20

18

12/01/20

18

06/01/20

19

06/01/20

26

12/01/20

26

06/01/20

27

12/01/20

27

06/01/20

28

12/01/20

28

06/01/20

29

12/01/20

29

06/01/20

30

12/01/20

30

SE Limit (+) Fixed-rate gap March 2012 Fixed-rate gap June 2012* SE Limit (-)

(*) Estimate at June 30, 2012, based on real data at March 31, 2012.

2 RISK MANAGEMENT

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9.4.1.2 - Net Present Value (NPV) of capital

Consumption of regulatory capital (including working capital in fixed-rate outstandings and their run-off over 20 years under the group’s new agreements) with a 200-bp curve came to -5.10% at March 31, 2012.

9.4.1.3 - Sensitivity of net interest margin

After applying 4 stress tests with varying degrees of severity, the gap sensitivity divided by net interest margin should be lower than 5% in the year N+1 and 9% in N+2 (year-on-year).Interest margin sensitivity is measured using four interest rate shocks against the central scenario: 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).

The worst-case scenarios for the net interest margin were as follows in Years 1 and 2 at March 31, 2012:

Year 1 Year 2

NIM sensitivity limits (-5%) (-9%)

“Worst-case” sensitivity -2.2% -0.7%

9.4.2 - Key events in H1 2012

The following key events took place in H1 2012:• the ageing of interest rate indicators between two quarterly

closing dates;• continued analysis of the group’s net interest margin;• analysis of the operational balance sheet before and after

hedging;• work on the short-term interest rate risk model.

9.4.3 - Outlook for 2012

• work to refine the measurement and monitoring of short-term interest rate risk;

• internalisation of interest rate risk sensitivity calculations in Bancware.

9.5 - Foreign exchange risk monitoringThe following forex risk limit must be observed: the spot forex position by currency is limited to 5% of total balance sheet assets in the currency. This limit only applies if the outstandings in the foreign currency exceed the euro equivalent of €1m.Based on data provided by the Middle Office, quarterly information is sent to the ALM Committee indicating compliance with these position limits.At June 30, 2012, this limit was observed across all relevant currencies.

2 RISK MANAGEMENT

– 76 –


10 - Operational RisksIn H1 2012, 128 operational risk incidents were declared, with an estimated potential cost of €3.5m.Over this period, the main focuses of the Operational Risk Department were as follows:• overseeing the update of risk mapping by business (review of

their rating and any risk events that need to be eliminated);• convergence of process standards and Crédit Foncier/BPCE

risk mapping;• raising the business lines’ awareness (individuals, corporates)

of the OR management system;• completion of permanent controls provided for by BPCE OR

standards;• enhancement of action plans regarding operational risks

with the greatest impacts on processes and/or in terms of potential losses.

More recently, the first change management meetings regarding the deployment of the Group’s new target management tool, “PARO” (operational risk oversight and analysis), resulted in the definition of prerequisites and a timetable for this IT/organisational project.

The coordination of operational risk and permanent control initiatives continued, particularly through joint meetings with business line management teams and with reports presented each month to the Internal Control Committee.

For more information on the coordination of operational risk and permanent control initiatives, see the 2011 Registration Document (pages 155-156).

11 - Intermediation Risk11.1 - Trading on behalf of third partiesSee the 2011 Registration Document pertaining to this section (page 157).

11.2 - Proprietary trading (*)


12 - Settlement riskSee the 2011 Registration Document pertaining to this section (pages 157-158).

(*) According to the definition of investment services by the AMF, the French financial markets authority.

2 RISK MANAGEMENT

– 77 –


13 - Non-compliance riskNon-compliance risks are monitored by the Compliance Department, which has three separate units: Compliance and Ethics, Financial Security, and Mediation and Regulatory Monitoring. See the 2011 Registration Document pertaining to this section (pages 158-160).

In the first half of 2012, the Compliance Department focused on:• enhancing the regulatory watch system, with the transition

to monthly meetings of the Regulatory Watch Coordination Committee. This Committee is made up of regulatory watch contributors as well as the businesses and support functions, and its objective is to analyse regulatory texts and launch the actions needed to incorporate these texts in the conduct of the bank’s operations;

• monitoring the publication of regulatory texts reforming the status of banking intermediaries. The bank launched a cross-business project aimed at carrying out appropriate actions in preparation for the reform and helping its business partners implement this regulation, which takes effect in early 2013;

• incorporation of the US FATCA (Foreign Account Tax Compliance Act), in view of its application for Crédit Foncier and its subsidiaries. This project is part of the Groupe BPCE approach.

In the interest of maintaining internal procedures, the Compliance Department updated three major procedures concerning:• the approval of new products, services and activities;• the warning faculty;• the contractualisation and follow-up of essential outsourced

services.Regarding the prevention and management of money laundering, terrorism financing and fraud risks, the projects under way were continued, including the computer processing of the risk approach, effective November 2011. Financial Security also implemented special procedures for the bonds issued to the general public in January and February 2012.

14 - Other risks14.1 - InsuranceSince January 1, 2011, Crédit Foncier has been covered by corporate insurance policies taken out and set up by BPCE for all the group entities.

Crédit Foncier is insured against employer liability risks. It is also covered by several types of policies covering third party liability and property damage that may be caused by its employees in the course of their work.It is covered against the risk of theft, computer fraud and other forms of fraud. In addition, “losses of banking activity” are covered, although the company’s computer data is backed up and its management units and business continuity plan are divided up between several sites.

Crédit Foncier also took out a comprehensive professional liability policy covering all its activities, including those carried out by its subsidiaries, as well as a civil liability policy for its Directors and Corporate Officers.

2 RISK MANAGEMENT

– 78 –


The main policies taken out for 2012 have the following features:

Corporate multi-risk “property damage” coverage

Multi-risk coverage on all movable property (including all IT equipment) and Crédit Foncier’s immovable property for such events as fire, theft, water damage and other damages, etc.Consequences of property damage.Financial consequences of company liability.Coverage for consecutive losses of banking activity.Maximum coverage is set at €250,000,000 per year, with sub-limits for large property claims.

Fraud and valuables insurance

Coverage of financial losses incurred by the Company due to fraud or malicious acts, including computer fraud as defined by the French Criminal Code.Coverage of financial losses incurred by the company due to the theft, deterioration or destruction of valuables.Coverage for consecutive losses of banking activity.Total coverage amounts to €60,000,000 per claim per year, increased to €85,000,000 with the combined excess coverage, which is shared with the Professional civil liability policy.

Intangible IT damage

Coverage of intangible damage: human error, failure or interruption of technical systems, acts of sabotage and computer viruses, etc.Coverage for consecutive losses of banking activity.The contractual limit for losses arising from intangible IT damage is set at €65,000,000 per year, with sub-limits.

Loss of guaranteesCrédit Foncier is covered against financial losses due to both partial and total property damage (e.g. fire, hail, lightning, etc.) that would make it impossible to exercise the mortgage.Maximum coverage is set at €15,000,000 per claim and per year.

Employee protection insurance

• Collective coverage of death, work incapacity and disability risks through a supplementary collective insurance scheme, participation in which is mandatory for all company employees.

Coverage amount (capital or annuity) is set as a percentage of gross annual salary.

Operational civil liability• Coverage for the financial consequences of civil liability claims against the company or its staff for bodily injury,

property damage and consequential losses caused to third parties.Maximum coverage is set at €75,000,000 per claim and per year (all damages combined), with sub-limits.

Professional civil liability

• Coverage for the financial consequences resulting from any claim made by a third party against the company and its civil liability for genuine or assumed professional misconduct committed in the performance of its activities. This guarantee covers the following risks in particular: (i) activities involving real estate loans and banking operations (Individual and Corporate), (ii) financial transactions, (iii) real estate activities, (iv) international activities, (v) third party management.

• Total coverage amounts to €60,000,000 per claim per year, increased to €85,000,000 with the combined excess coverage, which is shared with the fraud and valuables insurance policy.

Civil liability for regulated activities

Regulated activities (i.e. financial intermediation, insurance intermediation, real estate transactions/management) are covered by a separate policy in the amount of €10,000,000 per year. Should this coverage be completely used, the excess coverage provided by the professional civil liability policy can be used.

Directors’ and Corporate Officers’ civil liability

• Coverage for the financial consequences of the civil or joint liability of the Directors and Corporate Officers arising from professional misconduct committed in their capacity as insured parties of Crédit Foncier, its subsidiaries or external entities.

• Maximum coverage is set at €200,000,000 per claim and per year, with sub-limits.

2 RISK MANAGEMENT

– 79 –


14.2 - Outsourced operationsSee the 2011 Registration Document pertaining to this section (page 162).

14.3 - IT RisksSee the 2011 Registration Document pertaining to this section (page 162).

14.4 - Organisation of business continuity plans (BCP)Given the number of tests carried out in H2 2011, the first few months of 2012 were spent strengthening the control system. The timetable was not changed from 2011 and the BCP officers are still responsible for the operational controls of critical activities within their remit. The head of the BCP is now in charge of operational controls, in addition to and based on the declarations submitted by the BCP officers on the business line procedure forms. These controls are focused on the listing of employees and tools needed to get the bank’s operations up and running again.

An exercise aimed at mobilising and convening all BCP offers and business line managers was performed, in line with the evacuation of the Charenton-le-Pont building (Crédit Foncier’s head office) in May. The annual critical operations back-up test (accounting, risks, ALM, financial transactions, corporate transactions and sales network) was conducted in June at the two main back-up sites in Île-de-France.

Technical tests, tests on the control of essential outsourced services, and a marketplace test are scheduled for the second half, along with a new version of the crisis materials in the fourth quarter, in order to further refine the business continuity plan.

14.5 - Legal risksFor further information, see pages 163-164 of the 2011 Registration Document.In addition to this information, the following changes took place in H1 2012.Regarding Crédit Foncier’s alleged involvement in the marketing of adjustable-rate loans in 2003-2007, it should be noted that the full financial distribution carried out under the mediation agreement of November 12, 2009 is now complete.Regarding the problems encountered by a property developer that prevented it from meeting its scheduled delivery of properties sold off plan, negotiations are continuing with

the aim of finding a solution that will ensure delivery of the developments purchased by these buy-to-let investors. Certain worksites are still under way and, to date, some additional residences have been delivered, while others are about to be delivered.

14.6 - Caisse de Retraite (French pension fund) of Crédit Foncier for employees who entered employment before March 1, 2000See the 2011 Registration Document pertaining to this section (page 165).

– 80 –


3 FINANCIAL STATEMENTS

– 81 –



Condensed consolidated financial statements at June 30, 2012 82

Statutory auditors’ reports on financial information for the first half of 2012 115


– 82 –


Condensed consolidated financial statements at June 30, 2012Prepared using IFRS

1 - CONSOLIDATED BALANCE SHEET - ASSETS 842 - CONSOLIDATED BALANCE SHEET - EQUITY AND LIABILITIES 853 - CONSOLIDATED INCOME STATEMENT 864 - NET INCOME AND GAINS OR LOSSES POSTED TO EQUITY 875 - STATEMENT OF CHANGES IN EQUITY 886 - CASH FLOW STATEMENT 89

NOTE 1 - Legal and financial framework - Significant events during the period and events subsequent to June 30, 2012 91 1.1 - Legal framework 91 1.2 - Guarantee system 91 1.3 - Significant events of H1 2012 91 1.4 - Post-closing events 92

NOTE 2 - Accounting standards and comparability 93 2.1 - Regulatory framework 93 2.2 - Accounting standards 93 2.3 - Use of estimates 93 2.4 - Presentation of the consolidated financial statements and balance sheet date 93

NOTE 3 - Operating segments 94 3.1 - Income statement 95 3.2 - Balance sheet 95

NOTE 4 - Notes to the balance sheet 96 4.1 - Financial assets and liabilities at fair value through profit or loss 96 4.2 - Available-for-sale financial assets 97 4.3 - Fair-value hierarchy of financial assets and liabilities 98 4.4 - Loans and receivables 100 4.5 - Reclassification of financial assets 102 4.6 - Held-to-maturity financial assets 103 4.7 - Goodwill 103 4.8 - Due to credit institutions 104 4.9 - Debt securities 104 4.10 - Provisions 104 4.11 - Subordinated debt 106


– 83 –


NOTE 5 - Notes to the income statement 107 5.1 - Interest income and expense 107 5.2 - Fee and commission income and expense 107 5.3 - Net gains/(losses) on financial instruments at fair value through profit or loss 108 5.4 - Net gains/(losses) on available-for-sale financial assets 108 5.5 - Income and expense on other activities 108 5.6 - Operating expenses 109 5.7 - Credit risk 109 5.8 - Income tax 111

NOTE 6 - Financing and guarantee commitments and commitments on securities 112 6.1 - Financing commitments 112 6.2 - Guarantee commitments 112 6.3 - Commitments on securities 112 6.4 - Financial assets pledged as collateral 113

NOTE 7 - Scope of consolidation at June 30, 2012 114


– 84 –


1 - Consolidated balance sheet - ASSETS(in millions of euros)

Notes June 30, 2012 Dec. 31, 2011

Cash and amounts due from central banks 19 15

Financial assets at fair value through profit or loss 4.1.1 3,530 3,469


Available-for-sale financial assets 4.2 4,219 2,587

Loans and receivables due from credit institutions 4.4.1 23,392 7,294

Loans and receivables due from customers 4.4.2 111,355 112,264

Revaluation adjustment on interest rate risk hedged portfolios 5,397 4,536

Held-to-maturity financial assets 4.6 136 465

Current tax assets 414

Deferred tax assets 589 582

Accrued income and other assets 7,252 6,310

Investments in companies accounted for by the equity method 54 53

Investment property 42 41

Property, plant and equipment 128 132

Intangible assets 17 18

Goodwill 4.7 13 13

TOTAL ASSETS 166,494 148,317


– 85 –


2 - Consolidated balance sheet - EQUITY AND LIABILITIES


Notes June 30, 2012 Dec. 31, 2011

Amounts due to central banks

Financial liabilities at fair value through profit or loss 4.1.2 5,749 5,805


Due to credit institutions 4.8 32,350 16,294

Due to customers 407 396

Debt securities 4.9 104,456 104,119

Revaluation adjustment on interest rate risk hedged portfolios 86 109

Current tax liabilities 17 2

Deferred tax liabilities 39 24

Accrued expenses and other liabilities 6,795 6,148

Underwriting provisions on insurance policies 36 31

Provisions 4.10 186 169

Subordinated debt 4.11 819 824

Share capital 3,560 3,507

• Group share of consolidated equity 3,463 3,407

Share capital and reserves 1,732 2,804

Consolidated reserves 2,264 1,598

Gains and losses posted to equity -536 -586

Net income for the period 3 -409

• Minority interests 97 100

TOTAL EQUITY AND LIABILITIES 166,494 148,317


– 86 –


3 - Consolidated income statement(in millions of euros)

Notes H1 2012 H1 2011

Interest and similar income 5.1 4,448 4,164

Interest and similar expense 5.1 -4,030 -3,842

Fee and commission income 5.2 86 128

Fee and commission expense 5.2 -6 -10

Net gains/(losses) on financial instruments at fair value through profit or loss 5.3 -24 -15

Net gains/(losses) on available-for-sale financial assets 5.4 -174 12

Income from other activities 5.5 62 65

Expense on other activities 5.5 -32 -38

NET BANKING INCOME 330 464

Operating expenses 5.6 -264 -300

Depreciation, amortisation and impairment of property, plant & equipment and intangible assets

-9 -12

GROSS OPERATING INCOME 57 152

Cost of risk - Individuals and Corporates 5.7 -53 -43

Cost of risk - Sovereigns 5.7 -4 -58

OPERATING INCOME - 51

Share in net income from companies accounted for by the equity method 1 1

Gains or losses on other assets 4 5

Goodwill impairment

INCOME BEFORE TAX 5 57

Income tax 5.8 -1 -16

Net income on activities closed or being sold

NET INCOME 4 41

Group share of net income 3 41

Minority interests 1 -


– 87 –


4 - Net income and gains or losses posted to equity


H1 2012 H1 2011

Net income before tax 5 41

Translation differences

Change in value of available-for-sale financial assets 72 -37

Change in value over the period posted to equity 68 -42

Change in value over the period through profit or loss 4 5

Change in value of derivatives used for hedging purposes

Change in value over the period posted to equity

Change in value over the period through profit or loss

Actuarial differences on defined-benefit schemes

Share of unrealised gains and losses of companies accounted for by the equity method and posted to equity

Change in value over the period posted to equity

Change in value over the period through profit or loss

Tax expense -21 12

Gains and losses posted to equity (net of tax) 51 -25

NET INCOME AND GAINS OR LOSSES POSTED TO EQUITY 56 16

Group share 55 16

Minority interests 1


– 88 –


5 - Statement of changes in equity

(in m

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– 89 –


6 - Cash flow statementThe statement of cash flows is presented in accordance with the indirect method.Investing activities represent cash flows relating to the acquisition and sale of interests in consolidated companies, held-to-maturity financial assets, property, plant and equipment and intangible assets.Financing activities include financial transactions involving equity, subordinated debt and bonds.Operating activities include activities that do not fall into the other two categories, and mainly comprise strategic equity investments recognised under “Available-for-sale financial assets”.The cash and cash equivalents line item comprises cash on hand, amounts due from and to central banks, demand accounts and deposits with credit institutions.


H1 2012 H1 2011

Income before tax 5 57

+/- Net depreciation and amortisation of property, plant and equipment and intangible assets 9 13

+/- Goodwill impairment

+/- Net allocations to provisions and impairments 118 21

+/- Share in income/loss of companies accounted for by the equity method -1 -1

+/- Net gains/losses on investing activities 145 -39

+/- Income/expense on financing activities 17 17

+/- Other changes 682 671

= Total non-monetary items included in net income before tax 970 682

+/- Net increase (decrease) in cash and cash equivalents from transactions with credit institutions 715 -1,612

+/- Net increase (decrease) in cash and cash equivalents from transactions with customers 2,823 4,138

+/- Net increase (decrease) in other transactions affecting financial assets and liabilities -3,594 -3,142

+/- Net increase (decrease) in other transactions affecting non-financial assets and liabilities -391 -175

- Taxes paid 410 293

= Net increase (decrease) in assets and liabilities from operating activities -37 -498

Net increase (decrease) in cash and cash equivalents from operating activities (A) 938 241

+/- Net increase (decrease) in cash and cash equivalents from financial assets and equity interests -134 12

+/- Net increase (decrease) in cash and cash equivalents from investment properties 1

+/- Net increase (decrease) in cash and cash equivalents from property, plant & equipment and intangible assets

-3 -1

Net increase (decrease) in cash and cash equivalents from investing activities (B) -136 11

+/- Net increase (decrease) in cash and cash equivalents from transactions with shareholders 7 -79

+/- Net increase (decrease) in cash and cash equivalents from financing activities -21 -4

Net increase (decrease) in cash and cash equivalents from financing activities (C) -14 -83

Effects of changes in exchange rates on cash and cash equivalents (D)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C+D) 788 169


– 90 –


H1 2012 H1 2011

Cash balance at January 1 1,600 818

Cash on hand and net balances with central banks 15 6

Net demand deposits with credit institutions 1,585 812

Closing cash balance 2,388 987

Cash on hand and net balances with central banks 19 10

Net demand deposits with credit institutions 2,369 977

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 788 169


– 91 –


Note 1 - Legal and financial framework - Significant events during the period and events subsequent to June 30, 2012

Note 1.1 - Legal framework

Crédit Foncier, a subsidiary of BPCE, specialises in real estate and public sector financing. It operates on the individual customers market (real estate financing, appraisals and services), the private corporate market and the public sector market.

Note 1.2 - Guarantee system

Crédit Foncier is an affiliated subsidiary of BPCE. As such, it is covered by its parent company guarantee and the Groupe BPCE guarantee and liquidity mechanism. As an affiliated 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’Epargne default.

Note 1.3 - Significant events of H1 2012

Note 1.3.1 - Change in Crédit Foncier’s share capital

The Extraordinary General Meeting of May 10, 2012 decided to reduce the share capital from e2,403,917,964.50 to e1,331,400,718.80 by reducing the nominal value of the shares, which decreased from e6.50 to e3.60. Article 4 of the by-laws was amended accordingly.At June 30, 2012, share capital stood at e1,331,400,718.80, divided into 369,833,533 fully paid-up shares, each with a nominal value of e3.60.

Note 1.3.2 - Reinforcing the group’s existing structures

LocindusCrédit Foncier exercised its option to receive its Locindus dividends in shares. As a result, on June 21, 2012 Crédit Foncier received 623,821 Locindus shares with a value of e7m, raising its stake from 72.69% to 74.15%.

Note 1.3.3 - Impairment of cash-generating units (CGUs)

As there was no evidence of impairment in H1 2012, the Group did not record any additional impairment losses.

Note 1.3.4 - Valuation of issuer spreads

The recognition of the change in credit spreads on structured issues measured under the fair value option had a negative impact on income of e11m before tax in the first half of 2012.

Note 1.3.5 - Change in cost of risk

H1 2012 recorded a negative cost of risk of -e57m versus -e101m in H1 2011, impacted by an impairment on Greek bonds for -e58m.

Note 1.3.6 - Dynamic asset-liability management

Under its new strategic plan, and due to the strengthening of prudential rules in respect of the implementation of the European CRD3 Directive at December 31, 2011 and in anticipation of the entry into force of Basel III (draft CRD4 and European CRR regulation, a preliminary version of which was published in July 2011, liable to end up introducing a leverage ratio requirement), the Crédit Foncier group continued the dynamic asset and liability management initiatives begun in late 2011, selling off several lines of securities and redeeming previously issued obligations foncières.

The securities sold totalled e1,362m, plus e167m in the process of being delivered at June 30, 2012.They comprised IPF securities and units in debt securitisation funds.

These transactions, coupled with the termination of the associated hedging swaps, generated net capital losses of e196m, booked to gains or losses on available-for-sale financial assets.In relation to these asset reduction initiatives, the Group continued to redeem some of the Compagnie de Financement Foncier obligations foncières issued on the market. These securities redeemed on the secondary market, totalling e899m, were cancelled, thus reducing bond debt accordingly.

The impact of these redemptions on the income statement was a gain of e124m, recorded under interest income and expense.

Note 1.3.7 - Reclassification of financial assets

The Group carried out no reclassification of financial assets in H1 2012.


– 92 –


Note 1.3.8 - Establishment of funding with BPCE

Under financial guarantee agreements covered by article L.211-38 of the French Monetary and Financial Code, in previous financial years Compagnie de Financement Foncier set up several credit lines with its parent company, Crédit Foncier, totalling €14.2bn at December 31, 2011.

In order to reduce exposure to the parent company, these lines have now been attributed to BPCE, for a total of €14bn at June 30, 2012.

Similarly, the cash holdings from the debt securitisation funds and Vauban Mobilisations Garanties were invested with BPCE for a total of €1.4bn.At the same time, BPCE set up refinancing of €15.4bn in favour of Crédit Foncier.

Note 1.3.9 - Off-balance sheet restructuring methods

In the interest of meeting the twofold objective of reducing the size of Crédit Foncier’s off-balance sheet commitments, in order to minimise the level of capital allocated to derivatives and to limit counterparty exposures, the Group carried out several interest rate derivative restructuring transactions.

Macro-hedging swaps with a notional amount of €1,793m were cancelled. The Group thus made a net termination payment of €235m.

At the same time, several hedging swaps with external counterparties were cancelled for a total of €2,128m. The Group thus received a net termination payment of €222m.

All of these net termination payments, as well as the unamortised balance at June 30, 2012 of the initial termination payments, were spread out and reported on the income statement according to the maturity of the underlyings under “Interest and similar income” or “Interest and similar expense”.

Note 1.3.10 - Doubtful loans

In preparation for the standardisation of internal credit risk rating models, the Group changed its methodology for declassifying doubtful loans, by aligning the accounting definition of doubtful loans with the Basel definition of default. This change resulted in an increase of €141m in doubtful loans, with no material impact on the level of impairments recorded by the Group, barring any changes in risk exposures, all else being equal.

Note 1.4 - Post-closing events

Draft second rectifying Finance Act for 2012

As the rectifying Finance Act was not extended at June 30 and the draft Finance Act was not published until July 4, 2012, the financial statements at June 30 do not include these new provisions on non-recurring contributions, new taxes for 2012 or the increase in the rate of existing taxes (particularly the social security contribution).

The draft rectifying Finance Act for 2012 provides in particular for an additional non-recurring contribution in respect of the systemic banking tax, equivalent to the tax paid in 2012 and payable by September 30, 2012 at the latest.

The non-recurring contribution in respect of the systemic banking tax will generate an additional expense of about €9m before taxes for the bank. It will be recognised in the second half.


– 93 –


Note 2 - Accounting standards and comparability

Note 2.1 - Legal framework

Pursuant to EU regulation 1606/2002 of July 19, 2002 relating to the application of international accounting standards, the Crédit Foncier group has prepared its consolidated financial statements for the first half of 2012 in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and applicable at that date, excluding certain provisions of IAS 39 regarding hedge accounting (1).The condensed half-year consolidated financial statements at June 30, 2012 have been drawn up in accordance with IAS 34 on “Interim financial reporting”. As such, the notes presented apply to the most significant items from the period and should be read in conjunction with the Group’s full-year consolidated financial statements at December 31, 2011.

Note 2.2 - Accounting standards

The accounting standards and principles applied are identical to those used and described in the financial statements at December 31, 2011.

The other standards, amendments and interpretations adopted by the European Union that became compulsory as of 2012 had no significant impact on the Group’s financial statements.The Crédit Foncier group did not early-apply the texts adopted by the European Union at June 30, 2012 but not yet effective at that date:• the amendment to IAS 1 “Presentation of financial

statements” adopted by the European Commission on June 5, 2012, with mandatory application to financial years beginning on or after July 1, 2012. The aim of this amendment is to expand the financial disclosures included in the Statement of net income and gains or losses posted to equity. The presentation of gains and losses posted directly to equity must clearly distinguish between items liable to be recycled to net income from items that will never be recycled to net income;

• the amendment to IAS 19 “Employee benefits” adopted by the European Commission on June 5, 2012, with mandatory retroactive application to financial years beginning on or after January 1, 2013. This amendment amends the recognition and presentation of pension obligations and similar, notably regarding actuarial differences fully and immediately booked to equity and past service costs immediately booked to the income statement. The Group is currently calculating the impacts of the first application of this new standard.

IFRS 13 “Fair value measurement” is applicable on a prospective basis to financial years beginning on or after January 1, 2013. IFRS 13 explains how to measure fair value but does not change the conditions of application of fair value. The Group is currently calculating the impacts of the first application of this new standard.

Note 2.3 - Use of estimates

The preparation of the financial statements requires the use of assumptions and estimates with regard to uncertain future events.Management is required to exercise judgement in making these estimates and assumptions, based on information available at the balance sheet date.Future results may differ from these estimates.In particular, for the financial statements at June 30, 2012, accounting estimates that require assumptions were largely used for the following assessments:• fair value of financial instruments assessed using valuation

techniques (note 4.3);• impairment of financial assets, and particularly, individual or

portfolio-based impairments (note 5.7);• provisions recorded on the balance sheet under liabilities,

and particularly provisions relating to insurance policies;• assessment of expenses related to pension schemes and

future employee benefits;• deferred taxes (note 5.8);• goodwill impairment tests.

Note 2.4 - Presentation of the consolidated financial statements and balance sheet date

The IFRS imposes no model for summary financial statements, so the format used complies with that proposed by Recommendation no. 2009 R 04 of the French national accounting board, dated July 2, 2009.

The consolidated half-year financial statements were drawn up on the basis of the accounts as at June 30, 2012 of entities included within the Crédit Foncier group’s consolidation scope. The Group’s half-year consolidated financial statements were approved by the Board of Directors on July 31, 2012.

1. These standards are available on the European Commission’s website: http://ec.europa.eu/internal_market/accounting/ias_fr.htm.


– 94 –


Note 3 - Operating segmentsAffiliated to BPCE, the Crédit Foncier group is the largest specialised real estate financing institution in France, providing customised financing solutions and real estate services to individuals and corporations as part of an overall asset management approach. It also provides financing for the public sector, both in France and abroad.

Pursuant to IFRS 8 and given the considerable size of Crédit Foncier’s businesses, the Group’s internal organisation and management structures are based around five main business lines within the framework of the Group’s governing and decision-making bodies.

Individual customers segment

This sector involves three 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 individuals and corporates;

• value-enhancement of Crédit Foncier’s property assets through leasing and sales of buildings.

Private corporate sector

This sector has access to a full range of financing products and solutions designed for real estate professionals (developers, investors, corporations and public-private partnerships): • 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).

International corporate sector

In this sector, Crédit Foncier provides international financing services in the form of:• financing for foreign local authorities (by acquiring bonds

issued by public entities or quasi-public entities and financing for foreign local authorities in the form of loans or subscriptions to bond issues);

• acquisition of risk-free residential mortgage loans.

Holding structure

Indirect income and expenses from support activities have been reallocated to the businesses since 2011.Income from bond redemptions and sales of securities, the impact of the valuation of the issuer spread, and the impact on cost of risk associated with Greek sovereign debt are carried by the Holding structure, and under “Net income of companies accounted for by the equity method”, “Gains and losses on other assets” and “Goodwill impairment”.


– 95 –


Note 3.1 - Income statement(in millions of euros)

IndividualsPrivate

corporate sector

Public sector

International corporate

sectorHolding

Total first-half 2012

Net banking income 302 52 16 42 -82 330

Management expenses -212 -32 -15 -14 -273

Gross operating income 90 20 1 28 -82 57

C/I ratio 70.2% 61.5% 93.8% 33.3% 82.7%

Cost of risk -53 3 -3 -4 -57

Net income of companies accounted for by the equity method

1 1

Gains and losses on other assets 4 4

Income before tax 37 23 -2 28 -81 5

Current and deferred taxes -13 -8 1 -10 29 -1

Minority interests -1 -1

GROUP SHARE OF NET INCOME 24 15 -1 18 -53 3

Note 3.2 - Balance sheet(in millions of euros)

Individuals Private

corporate sector

Public sector International

corporate sector

Holding Total at June 30, 2012

Financial assets 49,047 9,532 24,171 39,089 121,839

Others 44,655 44,655

TOTAL BALANCE SHEET ASSETS 49,047 9,532 24,171 39,089 44,655 166,494


– 96 –


Note 4 - Notes to the balance sheet

Note 4.1 - Financial assets and liabilities at fair value through profit or loss

Note 4.1.1 - Financial assets at fair value through profit or loss


June 30, 2012 Dec. 31, 2011

Trading FV option Total Trading FV option Total

Fixed-income securities 14 14

Bonds and other fixed-income securities 14 14

Equities and other variable-income securities

Loan book 2,931 2,931 2,907 2,907

Loans to customers 2,931 2,931 2,907 2,907

Repurchase agreements

Derivatives held for trading purposes 599 599 548 548

TOTAL FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 599 2,931 3,530 548 2,921 3,469

Financial assets accounted for under the fair value option comprise structured loans granted to the French Local Authorities (FLA), recorded in the “different accounting treatment” category. This choice enables the hedging procured through the structured derivative to be shown.

Loans and receivables accounted for at fair value under the fair value option and credit risk

The item “Loans to customers” includes solely structured loans granted to French local authorities. Changes in the fair value of these financial assets attributable to credit risk are not material.

Derivatives held for trading purposes

Derivative assets and liabilities in the trading portfolio are mainly contracted to hedge structured transactions.


– 97 –


Note 4.1.2 - Financial liabilities at fair value through profit or loss


June 30, 2012 Dec. 31, 2011

Financial liabilities held for trading

Derivatives held for trading purposes 1,087 967

Financial liabilities accounted for at fair value under the fair value option 4,662 4,838

Interbank term accounts and loans

Customer term accounts and loans 14

Debt securities 4,662 4,824

TOTAL FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS 5,749 5,805

Financial liabilities valuated at fair value under the fair value option consist mainly of structured issues carried out by Compagnie de Financement Foncier.This item includes privileged resources within the meaning of Article L.515-19 of the French Monetary and Financial Code for a nominal amount of €4,320m.

Note 4.2 - Available-for-sale financial assets(in millions of euros)

June 30, 2012 Dec. 31, 2011

Fixed-income securities 3,883 2,266

Bonds and other fixed-income securities 3,883 2,266

Equities and other variable-income securities 327 309

Equity investments 326 307

Other variable-income securities 1 2

Loan book 34 34

Loans to customers 34 34

Doubtful loans 2 1

GROSS AMOUNT OF AVAILABLE-FOR-SALE FINANCIAL ASSETS 4,246 2,610

Impairment of doubtful loans -2 -1

Long-term impairment on equity investments -25 -22

TOTAL AVAILABLE-FOR-SALE FINANCIAL ASSETS 4,219 2,587

Gains and losses on available-for-sale financial assets (before tax) posted to equity -728 -793


– 98 –


At June 30, 2012, exposures to sovereigns subject to the European Union bailout plan (Greece, Ireland, Portugal) were as follows:

December 31, 2009 Nominal Book value excluding ICNE Fair value excluding ICNE

Ireland 135 125 125

The Group’s sovereign risk exposure in other countries is covered in the risk management report.

Note 4.3 - Fair-value hierarchy of financial assets and liabilities

At June 30, 2012


Quoted on active market

(level 1)

Valuation techniques using observable data

(level 2)

Valuation techniques using

non-observable data

(level 3)

Total

FINANCIAL ASSETS 2,317 15,473 310 18,100

Derivatives 599 599

Financial assets held for trading 599 599

Securities

Other financial assets 2,931 2,931

Financial assets at fair value through profit or loss (FV option) 2,931 2,931


Securities 2,317 1,583 285 4,185

Other financial assets 9 25 34

Available-for-sale financial assets 2,317 1,592 310 4,219

FINANCIAL LIABILITIES 17,743 17,743

Derivatives 1,087 1,087

Financial liabilities held for trading 1,087 1,087


Securities 4,662 4,662

Other financial liabilities

Financial liabilities at fair value through profit or loss (FV option) 4,662 4,662

At June 30, 2012, financial assets valued using non-observable data essentially comprised equity investments.

During the period, €7m in gains and losses were posted in the income statement for level 3 financial assets and liabilities, of which €3m for transactions unresolved at June 30, 2012. These losses exclusively impacted net banking income.


– 99 –


During the period, €13m in gains and losses were posted to equity for level 3 financial assets, of which €9m for transactions unresolved at June 30, 2012.

At December 31, 2011


Quoted on active market

(level 1)

Valuation techniques using observable data

(level 2)

Valuation techniques using

non-observable data

(level 3)

Total

FINANCIAL ASSETS 2,188 13,699 293 16,180

Derivatives 548 548

Financial assets held for trading 548 548

Securities 14 14

Other financial assets 2,907 2,907

Financial assets at fair value through profit or loss (FV option) 2,921 2,921


Securities 2,188 97 268 2,553

Other financial assets 9 25 34

Available-for-sale financial assets 2,188 106 293 2,587

FINANCIAL LIABILITIES 16,683 11 16,694

Derivatives 967 967

Financial liabilities held for trading 967 967

Hedging derivatives 10,878 11 10,889

Securities 4,824 4,824

Other financial liabilities 14 14

Financial liabilities at fair value through profit or loss (FV option) 4,838 4,838


– 100 –


Note 4.4 - Loans and receivables

Note 4.4.1 - Loans and receivables due from credit institutions


June 30, 2012 Dec. 31, 2011


TOTAL LOANS AND RECEIVABLES DUE FROM CREDIT INSTITUTIONS 23,392 7,294

Breakdown of loans and receivables due from credit institutions


June 30, 2012 Dec. 31, 2011

Current account overdrafts 306 647

Repurchase agreements (1) 14,190 189

Deposits and loans (1) 6,853 4,190

Finance leases 3 3

Subordinated and participating loans 24 21

Securities ranked as loans and receivables 2,015 2,243

Impaired loans and receivables 1 1

TOTAL LOANS AND RECEIVABLES DUE FROM CREDIT INSTITUTIONS 23,392 7,294

(1) Pension transactions rose by €14bn due to the set-up of funding with BPCE, described in section 1.3.8.

Note 4.4.2 - Loans and receivables due from customers


June 30, 2012 Dec. 31, 2011

Loans and receivables due from customers 112,235 113,050

Impairment calculated on an individual basis -738 -648

Impairment calculated on a collective basis -142 -138

TOTAL LOANS AND RECEIVABLES DUE FROM CUSTOMERS 111,355 112,264


– 101 –


Breakdown of loans and receivables due from customers


June 30, 2012 Dec. 31, 2011

Current account overdrafts

Other customer items 77,329 76,556

Loans to financial customers 3 4

Cash facilities 2,017 3,095

Equipment loans 16,550 15,968

Home loans 56,837 55,973

Export loans 1 1

Other loans 1,921 1,515

Other receivables 32,173 33,997

Securities ranked as loans and receivables 31,630 33,422

Other loans and receivables due from customers 543 575

Impaired loans and receivables 2,733 2,497

TOTAL LOANS AND RECEIVABLES DUE FROM CUSTOMERS 112,235 113,050

At June 30, 2012, the Group had no exposure to loans and receivables due from governments subject to the European Union bailout plan (Greece, Ireland, Portugal).The Group’s sovereign risk exposure in other countries is covered in the risk management report.


– 102 –


Note 4.5 - Reclassification of financial assets

In compliance with the amendments to IAS 39 and IFRS 7 “Reclassification of Financial Assets”, the Group reclassified certain available-for-sale financial assets as “Loans and receivables” in 2008.

The table below shows the carrying amount and fair value of these assets.


Dec. 2011 June 2012 Changeo/w principal

repayments over the period

o/w change in value due to

exchange rate differences

o/w change in value due to

interest rates

o/w amortisation of credit

component at reclassification

date

Amortised cost (nominal +/- premium/discount)

10,707 10,015 -692 -755 62 n/a n/a

Accrued interest 122 123 1 n/a insignificant insignificant n/a

Valuation of interest rate component (hedged)

2,108 2,106 -2 n/a 23 -25 n/a

Valuation of credit component (unhedged)

-110 -98 12 n/a n/a n/a 12

Impairment -5 -5 n/a n/a n/a n/a

Impairment discount -209 209

Net book value 12,613 12,141 -472 -755 85 -25 12

FAIR VALUE 11,221 10,492 -729

n/a: not applicable

Fair value hedges were contracted for 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 posted to income and offset by the amortisation of unrealised losses on available-for-sale assets carried in equity to be recycled to the income statement at the time of reclassification.

If these assets had not been reclassified, equity to be recycled to the income statement would have included additional post-tax capital losses of €168m at June 30, 2012.

As the “interest rate” component and the “exchange rate” component of these assets were hedged, the impact on the income statement is limited to interest for the period.


– 103 –


Note 4.6 - Held-to-maturity financial assets(in millions of euros)

June 30, 2012 Dec. 31, 2011

Bonds and other fixed-income securities 136 465

GROSS AMOUNT OF HELD-TO-MATURITY FINANCIAL ASSETS 136 465

At December 31, 2011, the Group held Greek bonds with a nominal value of €1,080m, of which €300m guaranteed by an external credit enhancer. Under the guarantees, 70% of the amount of these bonds was provisioned. For the non-guaranteed bonds, the Group took part in the private sector involvement plan, under which the bonds were traded in February and March according to the following terms:

For each 1,000 nominal amount in Greek bonds, the following securities were received:• 2 securities issued by the EFSF each with a nominal value of 75, with a maturity of one year and two years, respectively, with

interest payable at normal market conditions;• 6-month securities issued by the EFSF, used to pay accrued interest on the previous bonds;• Greek bonds with a total nominal of 315, maturing from 2023 to 2042; these bonds pay fixed interest rates below the market

rate for similar issues;• warrants indexed to Greek GDP: if GDP hits certain limits predefined in the contract, the investor receives additional remuneration

of 1% maximum; the amortisable notional amount of this option is identical to the cumulative nominal amount of the Greek bonds.

The exchange of non-guaranteed bonds resulted in the derecognition of the previous bonds and the recognition of the bonds received in exchange at their fair value, measured at 22% of the nominal amount of the previous bonds; the difference compared to the net book value at December 31, 2011 generated an additional loss.

The guaranteed bonds were remitted to the guarantor and an associated receivable was booked. At end-July, some of the outstanding bonds had been redeemed.

The additional expense booked to cost of risk in respect of all the above transactions came to -€4m.The bonds received in exchange for the non-guaranteed bonds were sold in the second quarter. As a result, the Group no longer held any exposure to Greek sovereigns at June 30, 2012.

Note 4.7 - Goodwill(in millions of euros)

June 30, 2012 Dec. 31, 2011

Gross value at opening 13 50

Acquisitions

Disposals

Fair value adjustment -30

Translation differences

Other changes -7

Net value at closing date 13 13


– 104 –


Goodwill by cash-generating unit (CGU)


June 30, 2012 Dec. 31, 2011

Net book value

CFI 13 13

TOTAL GOODWILL 13 13

Impairment tests

As there was no evidence of impairment in H1 2012, the Group did not record any additional impairment losses.

Note 4.8 - Due to credit institutions(in millions of euros)

June 30, 2012 Dec. 31, 2011

Due to credit institutions - repayable on demand 186 235

Demand deposits 183 231

Accrued interest 3 4

Due to credit institutions - repayable at agreed maturity dates 32,164 16,059

Term deposits and loans 16,385 14,306

Repurchase agreements 15,704 1,699


TOTAL - DUE TO CREDIT INSTITUTIONS 32,350 16,294

Pension transactions rose mainly due to the set-up of funding with BPCE, described in section 1.3.8.

Note 4.9 - Debt securities(in millions of euros)

June 30, 2012 Dec. 31, 2011

Bonds 95,436 95,249

Interbank securities and negotiable debt securities 7,440 6,845

Total 102,876 102,094

Accrued interest 1,580 2,025

TOTAL DEBT SECURITIES 104,456 104,119

This item includes privileged resources within the meaning of Article L.515-19 of the French Monetary and Financial Code for a nominal amount of €80,921m.


– 105 –


Note 4.10 - Provisions(in millions of euros)

Dec. 2011

Changes during the period

June 2012Additions Utilised

Reversals not utilised

Other changes (1)

Provisions for employee benefits 37 2 39

Provisions for end-of-career benefits 12 1 13

Provisions for other long-term benefits 21 1 22

Provisions for long-service awards 3 3

Provisions for post-employment benefits 1 1

Provisions for off-balance sheet commitments

30 1 31

Provisions for litigation 44 7 -4 -1 46

Provision for litigation, fines and penalties relating to operating activities

16 6 -4 -1 17

Provision for litigation, fines and penalties relating to banking activities

28 1 29

Other provisions 58 7 -2 -5 58

Other provisions for contingencies and charges relating to operating activities

44 3 -1 -1 45

Other provisions for contingencies and charges relating to consolidated equity investments

4 1 -4 1

Other provisions for contingencies and charges

10 3 -1 12

Provision for restructuring costs 12 12

TOTAL PROVISIONS 169 29 -2 -9 -1 186

(1) Including changes in consolidation scope and exchange rates.


– 106 –


Note 4.11 - Subordinated debt(in millions of euros)

June 30, 2012 Dec. 31, 2011

Term subordinated debt 481 501

Undated subordinated debt

Undated deeply subordinated debt 280 280

Total 761 781


Revaluation of hedged items 31 30

TOTAL SUBORDINATED DEBT 819 824

Change in subordinated debt in H1 2012


Dec. 2011 Issues Redemptions Other changes (1) June 2012

Term subordinated debt 501 -20 481

Undated subordinated debt

Undated deeply subordinated debt 280 280

Accrued interest 13 14 27

Revaluation of hedged items 30 1 31

TOTAL SUBORDINATED DEBT 824 -20 15 819

(1) Including changes in consolidation scope and exchange rates.


– 107 –


Note 5 - Notes to the income statement

Note 5.1 - Interest income and expense(in millions of euros)

H1 2012 H1 2011

Income Expense Net Income Expense Net

Customer loans and receivables 1,843 -3 1,840 1,731 -5 1,726

Due to and from credit institutions 102 -194 -92 117 -151 -34

Finance leases 16 16 15 15

Debt securities and subordinated debt -1,684 -1,684 -1,718 -1,718

Hedging derivatives 2,413 -2,074 339 2,200 -1,964 236

Available-for-sale financial assets 61 61 79 79

Held-to-maturity financial assets 8 8 22 22

Impaired financial assets

Other interest income and expense 5 -75 -70 -4 -4

TOTAL INTEREST INCOME AND EXPENSE 4,448 -4,030 418 4,164 -3,842 322

Note 5.2 - Fee and commission income and expense(in millions of euros)

H1 2012 H1 2011


Interbank and cash transactions -1 -1

Customer items 21 -1 20 62 -3 59

Financial services rendered 3 -1 2 4 -2 2

Sale of insurance products 57 57 54 54

Securities transactions -2 -2 1 -3 -2

Transactions on financial instruments and off balance sheet items

3 -1 2 4 -1 3

Other commission 2 -1 1 3 3

TOTAL FEE AND COMMISSION INCOME AND EXPENSE 86 -6 80 128 -10 118


– 108 –


Note 5.3 - Net gains/losses on financial instruments at fair value through profit or loss(in millions of euros)

H1 2012 H1 2011

Financial instruments held for trading -39 222

Financial instruments accounted for at fair value through profit or loss under the fair value option

16 -237

Hedging transactions -1 -1

- Ineffective portion of fair value hedges -1 -1

• fair value adjustment on hedging instruments -482 -267

• fair value adjustment on hedged items attributed to the hedged risks 481 266

Foreign exchange transactions 1

TOTAL NET GAINS OR LOSSES ON FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

-24 -15

Note 5.4 - Net gains/losses on available-for-sale financial assets(in millions of euros)

H1 2012 H1 2011

Income from sale or termination of loans and related receivables -182 2

Dividends received 10 10

Long-term impairment of variable-income securities -2

TOTAL NET GAINS OR LOSSES ON AVAILABLE-FOR-SALE FINANCIAL ASSETS -174 12

Note 5.5 - Income and expense on other activities(in millions of euros)

H1 2012 H1 2011


Income and expense on insurance activities (1) 28 -8 20 19 -8 11

Income and expense on real estate activities 1 -1

Income and expense on leasing activities 2 -2 2 -1 1

Income and expense on investment property 2 -1 1 1 -1

Other banking income and expense 29 -20 9 43 -28 15

Share of income from joint ventures 1 1 1 1

Reinvoiced expenses, income paid over -1 -1

Other operating income and expense 26 -15 11 25 -25

Changes in provisions on other operating income and expense 2 -4 -2 17 -3 14

TOTAL INCOME AND EXPENSE ON OTHER ACTIVITIES 62 -32 30 65 -38 27

(1) The Group’s insurance activity consists in the sale of reverse mortgages to senior citizens. These capitalised-interest loans are repayable on the death of the borrower by transfer of the property pledged to guarantee the loan.In this respect, they correspond to the definition of contracts that incur insurance risk as per IFRS 4.


– 109 –


Note 5.6 - Operating expenses(in millions of euros)

H1 2012 H1 2011

Personnel costs -166 -173

Other administrative costs -98 -127

Taxes -18 -19

External services -80 -108

TOTAL OPERATING EXPENSES -264 -300

Note 5.7 - Credit risk

Note 5.7.1 - Cost of risk - Individuals and Corporates


Allocations Net reversals (1)


Recoveries of amortised receivables

H1 2012 H1 2011

Customer loans and receivables -135 84 -3 2 -52 -42

Off-balance sheet commitments -1 -1 -1

COST OF RISK - INDIVIDUALS AND CORPORATES -136 84 -3 2 -53 -43

(1) Corresponding to the reversal of impairment and net provisions on hedged losses.

Note 5.7.2 - Cost of risk - Sovereigns


Allocations Net reversals (1)


Recoveries of amortised receivables

H1 2012 H1 2011

Customer loans and receivables -105 -58 159 -4

Other financial assets -58

TOTAL COST OF RISK - SOVEREIGNS -105 -58 159 -4 -58

(1) Corresponding to the reversal of impairment and net provisions on hedged losses.


– 110 –


Note 5.7.3 - Impairment and provisions for credit risk


Dec. 2011 Additions UtilisedReversals not

utilisedOther

changes June 2012

Customer items 786 240 -83 -64 2 881

Other financial assets 3 3

Impairment deducted from assets 789 240 -83 -64 2 884

Provisions for off-balance sheet commitments and financial guarantees granted

30 1 -1 30

TOTAL IMPAIRMENTS AND PROVISIONS FOR CREDIT RISK

819 241 -83 -65 2 914

Note 5.7.4 - Total exposure to credit risk


June 30, 2012 Dec. 31, 2011

Financial assets at fair value through profit or loss (excl. variable-income securities) 3,530 3,469


Available-for-sale financial assets (excl. variable-income securities) 3,916 2,301


Customer loans and receivables 111,355 112,264


Net exposure of balance sheet commitments 152,680 135,917

Financial guarantees given 1,363 1,590

Off-balance sheet commitments 12,234 11,198

Provisions for off-balance sheet commitments -31 -30

Net exposure of off-balance sheet commitments 13,566 12,758

TOTAL NET EXPOSURE TO CREDIT RISK 166,246 148,675


– 111 –


Note 5.8 - Income tax

Note 5.8.1 - Breakdown of income tax expense


H1 2012 H1 2011

Current taxes -16 -68

Deferred taxes (o/w deferred tax on zero interest rate loans) 15 52

INCOME TAX -1 -16

Note 5.8.2 - Reconciliation of accounting tax expense and theoretical tax expense


H1 2012 H1 2011

NET INCOME BEFORE TAX AND GOODWILL IMPAIRMENT (A) 5 57

Group share of net income 3 41

Minority interests in consolidated companies 1

Share in net income from companies accounted for by the equity method 1

Tax expense -1 -16

French statutory income tax rate (B) 36.10% 34.43%

THEORETICAL INCOME TAX EXPENSE AT CURRENT FRENCH TAX RATE (AxB) -2 -20

Impact of permanent differences 7 6

Temporary increase in income taxes -3

Impact of reduced tax rates and exemptions

Taxes on previous year, tax credits and other taxes -6 -2

Impacts of change in tax rate -2

Other items 5

INCOME TAX -1 -16

Effective tax rate (income tax expense divided by taxable income) 22.40% 28.02%


– 112 –


Note 6 - Financing and guarantee commitments and commitments on securities

Note 6.1 - Financing commitments(in millions of euros)

June 30, 2012 Dec. 31, 2011

Financing commitments given 12,195 11,169

- to credit institutions 3,139 996

- to customers 9,056 10,173

• Confirmed credit facilities 7,971 9,117

• Other commitments given 1,085 1,056

Financing commitments received 7,879 5,596

- from credit institutions 7,879 5,594

- from customers 2

Note 6.2 - Guarantee commitments(in millions of euros)

June 30, 2012 Dec. 31, 2011

Guarantee commitments given 26,182 14,174

- to credit institutions 24,984 12,750

- to customers 1,198 1,424

Guarantee commitments received 84,534 81,835

- from credit institutions 23,989 12,694

- from customers 60,545 68,360

- insurance commitments 781

The increase in guarantees given to and received from credit institutions was mainly due to the set-up of funding with BPCE, described in section 1.3.8.

Note 6.3 - Commitments on securities(in millions of euros)

June 30, 2012 Dec. 31, 2011

Commitments on securities (securities for delivery) 251 125

Commitments on securities (securities receivable) 46 147


– 113 –


Note 6.4 - Financial assets pledged as collateral(in millions of euros)

June 30, 2012 Dec. 31, 2011

Equity instruments

Debt instruments 5,623 4,425

Loans and advances 20,826 9,695

o/w ECB (TRICP asset transfer process) 6,846 7,200

o/w EIB 1,833 1,386

o/w covered bonds

o/w Caisse des Dépôts et Consignations 2,033 1,109

o/w BPCE 10,114

TOTAL 26,449 14,120


– 114 –


Note 7 - Scope of consolidation at June 30, 2012

Consolidated companies Legal form Consolidation method % control % interest

Financial institutions

Compagnie de Financement Foncier SA Full 100.00 100.00

Cinergie SA Full 99.99 99.99

SCA Ecufoncier SCA Full 95.00 5.00

Financière Desvieux SA Full 100.00 100.00

Comptoir financier de garantie (CFG) SA Full 100.00 100.00

Locindus SA Full 74.15 74.15

SOCFIM SA Full 99.99 99.99

Banco Primus SA Full 94.94 94.94

Non-financial companies

Cofimab SNC Full 99.99 99.99

Crédit Foncier Immobilier SA Full 74.93 74.93

Gramat Balard 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

SEREXIM SAS Full 100.00 74.93

Foncière d’Evreux SA Full 100.00 99.99

SOCFIM Participations Immobilières SNC Full 100.00 99.99

Crédit Foncier Expertise SA Full 100.00 74.93

GCE Coinvest SAS Equity 49.00 49.00

Maison France Confort P-I SAS Equity 49.00 24.01

Debt securitisation funds (combined in technical entity E0222)

Partimmo 10/2001 FCC Full 100.00 100.00





Zèbre 1 FCC Full 100.00 100.00

Zèbre two FCC Full 100.00 100.00

Zèbre 2006-1 FCC Full 100.00 100.00

Special Purpose Entities

Securitised Instantly Repackaged Perpetuals Limited Full 100.00 100.00


– 115 –


Statutory auditors’ report on financial information for the first half of 2012Period from January 1, 2012 to June 30, 2012

To the Shareholders,

In compliance with the assignment entrusted to us by your Annual General 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 half-year

consolidated financial statements of Crédit Foncier de France S.A., for the period from January 1 to June 30, 2012;

• the verification of information contained in the half-year management report.

These condensed consolidated half-year 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.

I. 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 an audit carried out in accordance with the professional standards applicable in France. As a result, we are less confident that the financial statements, taken as a whole, do not contain significant misstatements than we would be based on a full audit.

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 IFRSs as adopted by the European Union applicable to interim financial information.

II. Specific verification

We have also verified the information given in the interim management report on the condensed interim consolidated financial statements subject to our review. We have no observations to make regarding its fair presentation and consistency with the condensed half-year consolidated financial statements.

Paris La Défense et Neuilly-sur-Seine, August 29, 2012KPMG AuditA division of KPMG S.A.Jean-François DANDÉPartner

Neuilly-sur-Seine, August 29, 2012PricewaterhouseCoopers AuditJean-Baptiste DESCHRYVERPartner

– 116 –


4 ADDITIONAL INFORMATION

– 117 –


4 - ADDITIONAL INFORMATION

Persons responsible for the document and for auditing the financial statements 118

Cross-reference tables 119

Cross-reference table between the annual financial report and the updated registration document 122


– 118 –


Persons responsible for the document and for auditing the financial statementsPerson responsible for updating the registration document and the half-year financial report M. Bruno DELETRÉ, Chief Executive Officer of Crédit Foncier

Statement from the person who assumes responsibility for the registration document

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 2012 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 companies, and that the half-year 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.

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 and have read the update in its entirety.

Paris, August 30, 2012

Chief Executive OfficerBruno DELETRÉ

Person responsible for the financial informationMs. Sandrine GUÉRIN, Chief of International Corporate and Investment Banking

Persons responsible for auditing the financial statementsPermanent Statutory Auditors

KPMG AuditMember of the Compagnie Régionale des Commissaires aux Comptes de Versailles (Regional Association of Statutory Auditors of Versailles)1, Cours Valmy - La Défense 92923Represented by Jean-François DandéStart of first term: April 26, 2010Length of term: 6 yearsExpiry of current term: At the end of the General Meeting called to approve the financial statements for the financial year ending December 31, 2015

PricewaterhouseCoopers AuditMember of the Compagnie Régionale des Commissaires aux Comptes de Versailles (Regional Association of Statutory Auditors of Versailles)63, rue de Villiers - 92200 Neuilly-sur-SeineRepresented by Jean-Baptiste DESCHRYVERLength of term: 6 yearsDate term was renewed: May 10, 2012Expiry of current term: At the end of the General Meeting called to approve the financial statements for the financial year ending December 31, 2017

Alternate Statutory Auditors

Malcolm McLARTYMember of the Compagnie Régionale des Commissaires aux Comptes de Versailles (Regional Association of Statutory Auditors of Versailles)1, Cours Valmy - La Défense 92923Start of first term: April 26, 2010Length of term: 6 yearsExpiry of current term: At the end of the General Meeting called to approve the financial statements for the financial year ending December 31, 2015

Étienne BORISMember of the Compagnie Régionale des Commissaires aux Comptes de Versailles (Regional Association of Statutory Auditors of Versailles)63, rue de Villiers - 92200 Neuilly-sur-SeineLength of term: 6 yearsDate term was renewed: May 10, 2012Expiry of current term: At the end of the General Meeting called to approve the financial statements for the financial year ending December 31, 2017


– 119 –


Cross-reference tablesListing of debt security issues and derivatives with a nominal value of less than €50,000(Appendix IV of EC regulation no. 809/2004)

Update of the 2011 Registration

Documentfiled with the AMF on

August 30, 2012

2011 Registration Document

filed with the AMF on April 19, 2012

Items Pages Pages

1. PERSONS RESPONSIBLE

1.1. Persons responsible for the information 118 321

1.2. Statement by persons responsible 118 321

2. STATUTORY AUDITORS

2.1. Identification of Statutory Auditors 118 322

2.2. Statutory Auditors for the period covered by the historical financial information 118 322

3. SELECTED FINANCIAL INFORMATION

3.1. Financial information 6

3.2. Financial information for interim periods 7-8 n.a.

4. RISK FACTORS 31-79 97-165

5. INFORMATION ABOUT THE ISSUER

5.1. History and development of the Company

5.1.1. Legal and commercial name of the issuer 312

5.1.2. Place of registration of the issuer and its registration number 312

5.1.3. Date of incorporation and term of the issuer 312

5.1.4. Registered office and legal form of the issuer 312

5.1.5.Recent events affecting the issuer which have a material impact on the evaluation of the issuer’s solvency

n.a. n.a.

5.2. Investments

5.2.1.Description of the main investments carried out since date of last financial statements

13 16-18

5.2.2.Information on main forthcoming investments for which the Executive Bodies have already made significant commitments

n.a. n.a.

5.2.3.Information on the expected sources of financing needed to honour the commitments referred to in 5.2.2

n.a. n.a.


– 120 –


6. BUSINESS OVERVIEW

6.1. Principal activities 17-25 21-36

6.1.1. Main categories of services provided 21

6.1.2. New product sold or new activity 17-18 23

6.2. Main markets 17-25 22/24/-28

6.3. Competitive positioning 18 23

7. ORGANISATIONAL STRUCTURE

7.1. Description of the Group and the Company’s position within the Group 11 13

7.2. Dependence upon other group entities 11/114 13/36/243/297-298

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

29 313

8.2. Events that are reasonably likely to have a material effect on the issuer’s outlook 29 313

9. PROFIT FORECASTS OR ESTIMATES n.a. n.a.

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

14-15 44-61

10.2. Statement that there are no conflicts of interests 62

11. FUNCTIONING OF THE ADMINISTRATIVE AND EXECUTIVE BODIES

11.1. Information on the Audit Committee. Name of members and summary of terms 42-44/46/73-75/79

11.2. Corporate Governance 42-82

12. MAIN SHAREHOLDERS

12.1. Share ownership, % control 11-12 15-16

12.2. Known arrangements which may result in a change in control n.a.

13. FINANCIAL INFORMATION CONCERNING THE COMPANY’S ASSETS & LIABILITIES, FINANCIAL POSITION AND PROFIT OR LOSSES

13.1. Historical financial information 2010 Registration

Document (*)

13.2. Annual Financial Statements

a) Balance sheet 170-171

b) Income Statement 172

c) Cash flow statement 175-176

d) Accounting methods and explanatory notes 177-244

13.3. Auditing of annual historical financial information

13.3.1. Statutory Auditors Report 245-246

13.3.2. Other information from the registration document audited by the statutory auditors 83

13.3.3.Financial information contained within the registration document not obtained from the audited financial statements

n.a.


– 121 –


13.4. Date of latest financial information

13.4.1. Last year for which financial information has been audited Dec. 31, 2011

13.5. Interim financial information and others

13.5.1.Financial information contained within the registration document not obtained from the audited financial statements

a) Balance sheet 84-85

b) Income Statement 86

c) Cash flow statement 89-90

d) Accounting methods and explanatory notes 91-114

13.5.2. Interim financial information since the end of the last year n.a. n.a.

13.6. Legal and arbitration proceedings 163-165

13.7. Significant change in the financial or sales position 29 313

• Statement 29 313

14. ADDITIONAL INFORMATION

14.1. Share capital 12 15

14.1.1. Total subscribed capital 12 15

14.2. Memorandum and by-laws 312-313

14.2.1. Register and corporate purpose 312

15. MATERIAL CONTRACTS

• Related-party agreements 302-309

16. THIRD-PARTY INFORMATION, STATEMENTS BY EXPERTS AND DECLARATIONS OF INTEREST n.a.

17. DOCUMENTS AVAILABLE TO THE PUBLIC

Location where documents can be consulted throughout the period of validity of the Registration Document

313

(*) In accordance with Articles 28 of EC Regulation No. 809-2004 and 212-11 of the AMF General Rules, the consolidated financial statements for the financial year ended December 31, 2010 and the related Statutory Auditors’ report, presented on pages 252 to 325 and 326 to 327, respectively, of Registration Document No. D.11-0423 filed with the AMF on April 29, 2011, are included in this Registration Document for reference purposes.Chapters in Registration Document No. D. 12-0374 not referred to above either serve no purpose for investors or are covered by another part of this update.


– 122 –


Cross-reference table between the annual financial report and the updated registration documentIn accordance with Article 212-13 of the AMF’s General Regulations, the present 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 HALF-YEAR FINANCIAL REPORT AT JUNE 30, 2012

Update of the 2011

Registration Document

Pages

STATEMENT FROM THE PERSON RESPONSIBLE FOR THE DOCUMENT 118

MANAGEMENT REPORT

• Main events during the first six months of the year 5-29

• Main risks and uncertainties 31-79

CONSOLIDATED FINANCIAL STATEMENTS

• Half-year financial statements 82-114

• Statutory Auditors’ report on the half-year financial statements 115

Production - Printing

Crédit Foncier de France: S.A. (French public limited company) with share capital of €2,403,917,964.50Paris Trade and Companies Register No. 542 029 848

Executive offices and postal address: 4, quai de Bercy 94224 - Charenton Cedex - Tel: +33 1 57 44 80 00Head office: 19, rue des Capucines - 75001 Paris

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