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EDITORIALPage 4
CONTEXT Page 6
LOCATIONSPage 9
2017 HIGHLIGHTSPage 10
PROFILE AND KEY FIGURES Page 11
AN INTEGRATED GROUP WORKING FOR CUSTOMERS Page 12
CMNE GROUP FINANCIAL ORGANIZATIONAL CHARTPage 14
PRESENTATION OF THE CMNE
GROUP
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EDITORIAL
In 2017, the Group again posted strong results underpinned by non-recurring items. Our net banking income stands at €1.07 billion, down 5.2 % compared with the previous year, following the application of IFRS 5 to take into account the effects of the future merger of Nord Europe Assurance and Groupement des Assurances du Crédit Mutuel. Without this transaction, net banking income would be €1.267 billion and would have risen by 3.8 % compared with 2016 excluding the main non-recurring item, namely the capital gain on the sale of shares held by our Group in connection with the delisting of CIC shares.Our consolidated net income of €253 million reflects the contribution of all the Group’s entities.With a CET1 ratio of 15.70 %, an improvement of 0.57 points compared to last year, and a still high solvency ratio of 19.85 %, the Group has confirmed its sound financial structure, allowing it to approach 2018 with a positive outlook.In addition, the Group's regulatory capital continued to grow, reaching €3.362 billion, and net additions to/reversals from provisions for loan losses, falling from €21 million to €9 million, particularly in the Corporate segment. These results underscore the commitment and the significant efforts made by all those within the Group.
In an ever-changing world, our banking environment is becoming more complex every day. It has to address the exponential increase in digital usage, the proliferation of regulations, changes in customer behavior and the arrival of new players in the form of online banks, neo-banks and fintechs.
CMNE draws upon its innovative strength to carry out its transformation day by day. Its goal is to create a unique banking experience where digital tools go hand in hand with human advice. In this way, the Group seeks to reinforce its image as a modern bank while remaining true to its mutualist values and maintaining close ties to the region.
Financial strength
INTERVIEW WITH the Chairman and the
Chief Executive OfficerLeft: André Halipré, Chairman
Right: Éric Charpentier, Chief Executive OfficerHow did CMNE perform in 2017 and what were the year’s key events?
Our Group benefited from a more buoyant economic climate in 2017, despite the eroding impact of low market interest rates on margins. The local mutual bank network has expanded its business through consumer credit volumes and the sale of insurance and real estate products (AFEDIM, etc.). In Belgium, 2017 was a year of transition between two major projects for Beobank: the merger in 2016 of Beobank and Crédit Professionnel and preparing for the migration of its information system to the Group's system in October 2018. For its part, the Corporate division began the groundwork for the future integration of BCMNE into CFCMNE. This year of transition did not prevent strong sales growth, particularly in equipment leasing.In addition to banking, the results of the other business lines attest to vibrant sales activity. The Insurance division had outstanding results in terms of premium income from unit-linked policies and the development of personal protection insurance. In Asset Management, La Française had record-breaking inflows during the year, which was marked by strong enthusiasm for REITs, the take-off of Moniwan, the first REIT digital distribution fintech, and the launch of real estate companies in our regions and as part of the Grand Paris project.
CMNE currently has 536 points of sale that serve 1.6 million customers in France and Belgium. In response to the reduction in footfall at branches, we have started to adapt our network to a “phygital” model, which combines visits to branches with remote connection. By bringing greater flexibility to our opening times and pooling our sales forces, we are steadily increasing our efficiency. This approach offers the best of human relationships and digital technology by encouraging an “augmented” relationship between the advisor and the customer.
Business development
Changing customer behaviors
How are you dealing with changes in the banking model?
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As a vehicle for mutualist values, CMNE reinforces its identity as a committed bank by actively participating in the development of the regions in operates in. Its CSR approach is consistent with its values.Founded in 2013, CMNE’s Corporate Foundation has established more than 185 partnerships in the areas of culture, training and mutual support since its launch. For example, it supported the “Les Clowns de l’espoir” project in the Nord region for children in hospital or “À la bonne ferme” in Oise to help homeless people get back into work. Cultural partnerships include the “Musiques! Échos de l’Antiquité” exhibition at the Louvre-Lens museum or “Street Generation(s)” in Roubaix. Finally, it provided a number of scholarships to increase access to two top universities in the regions.
Our digital transformation, already well underway, continued in 2017. While also participating in community projects, we launched our own innovation initiative, "Cube by CMNE", which helps us drive innovative projects forward through business labs. This has led to the creation of apps and customer interfaces that are more user-friendly in terms of account opening (online forms, etc.), remote services (electronic signature, etc.) and product purchases (REITs). Together with our colleagues from Crédit Mutuel, we also launched Watson, the cognitive solution which gives advisors more time to focus on value-added services for customers by freeing them from repetitive tasks such as email analysis. In this way, we are enhancing our expertise in emerging technologies, while monitoring the security of data and the transparency of its use.
A committed local player
Wave of innovation
Crédit Mutuel took first place in the banking sector in the Podium de la Relation Client customer service rankings for the tenth time in 13 years, attesting to the relationship of mutual trust between Crédit Mutuel and its member-customers. We can be proud of this achievement, but we wanted to go even further, which is why we launched the SPOT project. SPOT is a large-scale initiative aimed at measuring the level of customer satisfaction across all channels and gathering feedback from customers in order to continuously improve the quality of our customer relations and service.
Customer satisfaction
Supporting the Bank’s transformation means first of all supporting all of our staff in the businesses of the future and providing them with training. Nearly 88 % of our 4,440 employees attended at least one training course in 2017. To better cater to them, we opened a modern technological campus at Arras. In 2017, CMNE spent a total of 4.76 % of its payroll on continuing vocational training, an area of major importance for the Group. We also want to organize work in a way that is consistent with staff autonomy and accountability and to start discussions on new forms of work.Transforming
the businesses
In launching its “Plus proches pour aller plus loin” strategic plan in late 2015, CMNE’s aim was to achieve a dynamic vision of its development, in which it is open to its environment and able to contend in a competitive banking environment. The first projects have been launched successfully.In 2018, the Group will begin a project to update its medium-term plan, involving all of its entities, since the accelerating pace of change necessitates an in-depth review of the adjustments that need to be made to this plan, mid-way through its implementation. The challenges that await us require the same response: to be more competitive and ever more efficient and to seize opportunities to develop a more agile, inventive and responsive banking model through digital technology. More generally, we must continue to focus on customer relations and give priority to societal themes where we can provide tailored solutions such as real estate and housing. In this way, we will be able to combine performance and responsibility in serving our customers and regions.
Acceleration of its transformation into
a high-performance, responsible bank
And where do you see CMNE going in the future?
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DIGITAL TECHNOLOGY - A VITAL INGREDIENT IN CUSTOMER SATISFACTIONIN RESPONSE TO DIGITAL DEVELOPMENTS, THE BANKING SECTOR IS PROVIDING GREATER EXPERTISE AND VALUE ADDED TO INCREASINGLY CONNECTED AND MOBILE CUSTOMERS WHO DEMAND INNOVATIVE BANKING AND FINANCIAL SERVICES.
Among the key emerging trends in banking are automated dialog and customer interaction systems also known as chatbots.
Cognitive intelligence enhances interactive digital experiences by helping implement more intuitive user interfaces, improving assisted interactions with customers, and providing more targeted advice and robot-based process automation while strengthening data security.
Customer behavior-based data, which is constantly expanding, can be used for concrete operational purposes, helped by the centralization of data and more refined customer segmentation.
It facilitates personalized communication and in doing so ensures greater customer satisfaction.
CONTEXT
AT CMNECommunication is enhanced through the adaptation of the cmne.fr website, the launch of the blog, the newsletter, the advice section and the project area.
More fluid customer interfaces and a large number of functions are available on the apps, including standard personal loan applications, access to Passeport Crédit revolving credit, auto insurance quotes or property and casualty and comprehensive homeowners insurance claims.
To serve customers more efficiently, CMNE relies on artificial intelligence, including the Watson e-mail analyzer, and experienced virtual assistants, which are used in areas such as savings and insurance.
To better understand our customers and anticipate their needs, customer segmentation has been refined and new applications have been developed to gain a clearer picture of their requirements.
Customer satisfaction is a priority, which is why we listen to customers by gathering and analyzing information on their level of satisfaction through the SPOT “lumière sur la satisfaction client” project.
“Towards a new banking model that is open to digital technology and combines proximity and performance”
2017
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THE NEXT GENERATION BRANCH - A SOLID LINK THAT PROMOTES A SPECIAL RELATIONSHIP AND EXPERT ADVICE CUSTOMERS ARE LOOKING FOR THE BEST OF TWO WORLDS, PHYSICAL AND DIGITAL, WITH LESS FREQUENT CONTACT WITH THEIR BRANCHES AND HIGHER VALUE-ADDED. TODAY’S CUSTOMERS WANT A NEW “À LA CARTE” RELATIONSHIP WITH THEIR BANK. FOR EVERYDAY BANKING, CUSTOMERS PREFER TO USE THEIR SMARTPHONE OR TABLET. HOWEVER, THEY PREFER TO MAINTAIN A PHYSICAL RELATIONSHIP WITH AN ADVISOR FOR PRODUCTS AND SERVICES THAT INVOLVE A SUBSTANTIAL COMMITMENT. THE NEED FOR HUMAN CONTACT, BUT ALSO SECURITY AND TRUST, REMAIN FUNDAMENTAL.
AT CMNETo better adapt to the level of footfall at our branches, we have adjusted our branch formats and optimized our network coverage by developing our phygital concept to include more friendly and welcoming spaces in-branch. The goal is to refocus on advice and customer relationship management by adapting the network to provide scalability in the form of meetings by appointment or periodic branch openings with mobile teams, while giving a prominent role to new technologies.
To win back customers and connect to them wherever they are, we offer “distanceless” remote banking including real-time appointment booking in the advisor’s calendar, the option of online meetings with dedicated sales teams and the expansion of remote purchasing of products and services. Our objective is to coordinate all of our distribution channels as effectively as possible in a way that is responsive to customers.
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GROWING COMPETITION AND EVER-PRESENT REGULATIONBANKS FACE YET MORE CHALLENGES IN THE FUTURE (BLOCKCHAIN, NEW PAYMENT METHODS, CYBERSECURITY AND ARTIFICIAL INTELLIGENCE, ETC.), WHICH THEY WILL HAVE TO ADDRESS EITHER ALONE OR WITH FINTECHS.
AT CMNERegulations and the faster than ever pace of current change are constantly posing new challenges.
Adapting to increased competition and leveraging fintechs In a world where digital usage and technological development is expanding exponentially, we need to be innovative and build relationships with these new financial players in a partnership framework. We want to develop synergies with them because we share real complementarities. In the case of NewAlpha from the La Française Group for example, we are drawing on its eco-system to invest in the most innovative entrepreneurial management companies, accelerate their development and support them in their growth.Similarly, CMNE has launched CMNE INNOV&THIC, a private equity fund focused on innovation and environmental and social initiatives. It plans to invest €15 million in unlisted companies of this type operating in its core regions (Hauts-de-France, Marne, Ardennes and Belgium).
Pursuing opportunities offered by regulation to leverage performance We are responding to this challenge by enhancing our regulatory watch. To achieve this, we have created a regulatory technology (“RegTech”) lab which, in association with fintechs, will help us to manage regulatory constraints innovatively and to streamline processes. We are relying on these new partners in order to build solutions in biometrics (individual identification), blockchain technology (digital identity verification) and cryptography (data security).
Supporting staff with changes in their businesses In order to constantly increase employees’ skills, we have “reinvented” training by incorporating new digital tools into our CMNE Campus, including e-learning, social learning and new concepts that promote learning, adaptation and sharing between participants.
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LOCATIONS
Manche
North Sea NL
UK
D
Crédit Mutuel Nord Europe branches
50 kilometers
Beobank branches
Paris
Brussels
Londres
Amsterdam
Luxembourg
LILLE
Bruges Antwerp
Ghent
LouvainHasselt
LiegeWavre
Mons Namur
Arlon
Arras
Amiens
Beauvais Laon
Charleville-Mézières
Reims
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2017 HIGHLIGHTS
2017 HIGHLIGHTSIn late 2017, mid-way through CMNE's strategic plan, a number of projects for the continuing transformation of the Group were launched or completed. All of these advances are helping it keep pace with ongoing and far-reaching technological, economic and regulatory changes.
THE GROUP
• Activity: sustained sales growth (consumer credit, distribution of property and personal insurance products, real estate, asset management, etc.);
• Innovation: setting up of a 10-lab innovation and production unit;
• Organization: streamlining of regulated structures;• Results: the results reflected the contribution of all Group
entities and were boosted by capital gains from the sale of CIC securities.
BANKING
FRANCE NETWORK • Innovation:
– Development of artificial intelligence (Watson),– Launch of the internal Innovation initiative,– Further development of apps.
• Network: – Scalability of branch formats and adjustment of network
coverage,– Pooling of business lines, – Introduction of teleworking, – Launch of the “SPOT” quality initiative.
• Activities:– Strong growth in savings account inflows and consumer
credit outstandings, – Excellent growth in real estate products (AFEDIM and
REITS and unit-linked real estate inflows),– UL policies account for more than 50 % of inflows, – Hugely successful marketing of EMTNs.
BELGIUM NETWORK • Innovation:
– Success of the first commercial chatbot, – Exploitation of big data for business development.
• Convergence: – IT migration to the Group’s system,– Launch of the sole headquarters project.
• Network:– Optimization of the sales network, – Strengthening of the bases of the self-employed
professionals market.• New products:
– Launch of three new Property and Casualty insurance options.
CORPORATE NETWORK • Organization:
– Integration of BCMNE into CFCMNE and consequences in terms of IT migration,
– Refocusing of banking and real estate activities on CMNE’s historical regions,
– Implementation of the new lending process. • Commercial activities:
– Diversification of the offering, particularly in wealth management and real estate,
– Strong leasing activity.
INSURANCE
• Commercial activities:– 51 % of gross inflows in UL policies,– Success of personal protection.
• Convergence:– Planned merger between NEA and GACM,– Transfer of savings contracts distributed by ACMN-Vie
and NELL to NELB.• Products:
– Extension of Discretionary Management for certain life insurance policies,
– New personal protection product and expansion of the Homeowners and Health cover offerings.
• Organization:– Improvement in NEA’s solvency (“de-risking”, product mix), – Continuation of the Quality action plan.
ASSET MANAGEMENT
• Commercial activities:– Strong REITS intake,– Success of the Moniwan digital platform.
• International development:– Increased presence, particularly in Asia, – Commercial growth in Canada alongside Investeam Canada.
• Real estate: – A real estate project dedicated exclusively to the Grand
Paris project.• Innovations:
– Investor interest in the Zero Carbon Equities strategy, – Success of the FinTech fund managed by NewAlpha.
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PROFILE AND KEY FIGURES
PROFILE AND KEY FIGURESPEOPLE
1 630 212Customers and
membersCustomers of France
and Belgium networks
1 483Directors
4 438Employees
(FTE, permanent contract)
BALANCE SHEET
€42.19 billionConsolidated total
€3.362 billionBasel III
regulatory capital
ORGANIZATION
536Points of sale:France network: 281
(152 local cooperative banks, 104 offices and 25 business centers)
Belgium network: 236(65 branches with salaried
staff, 12 business centers and 159 delegated officers)Corporate network: 19
(16 business centers and 3 offices)
660ATMs
France: 506Belgium: 154
RESULTS
€1.070 billionConsolidated Net Banking Income
€276 millionGross Operating
Income before net additions to/reversals
from provisions for loan losses
€253 millionConsolidated
net income (loss)
ACTIVITY
€16.589 billion*Deposit
outstandings
€65.519 billion*
Savings and insurance
outstandings
€15.676 billion*
Loan outstandings
1 879 000Insurance policies
* This is an Alternative Performance Measure (APM), as defined in accordance with EMSA guidelines (ESMA/20151415) and Article 223-1 of the AMF General Regulations (Transparency and Prospectus Directives, and Market Abuse Regulation)
BASEL III SOLVENCY RATIOS
15.70 %Common equity
tier one
19.85 %Solvency ratio
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AN INTEGRATED GROUP WORKING FOR CUSTOMERS
AN INTEGRATED GROUP
WORKING FOR CUSTOMERS
ONE GROUP, THREE BUSINESSES The Crédit Mutuel Nord Europe Group is structured around Caisse Fédérale, the Group’s holding company, and three core businesses: Banking, Insurance and Asset Management.
BANKING
CNME operates a Euro-regional universal bank serving individuals, self-employed professionals, farmers, associations and companies. It offers a full line of products covering everything from day to day banking to corporate financing and wealth management. In addition, it offers a range of online services for an increasingly digitalized society. This global approach is based on a strong value-added offering.
With a catchment area of 18.5 million people in the north of France and Belgium, the CMNE networks served 1.6 million customers at end-2017 and affirmed their position as one of the best-placed networks to support customers in all of their needs.
Z France network As a local retail bank, the France network is the historic heart of the market, reinforced in the early 1990s by the merger of Crédit Mutuel Artois-Picardie, Nord and Champagne-Ardenne. The network currently consists of 256 points of sale located across seven departments (Aisne, Ardennes, Marne, Nord, Oise, Pas-de-Calais and Somme).
Z Belgium network Belgium is the Group’s second biggest market. Since May 2016, following the merger of two banks under the motto “one bank, one brand”: Beobank, the unified Belgian network has 65 branches with salaried staff and 159 delegated officers. A leader on the consumer credit market in Belgium, the network offers wealth accumulation and credit solutions to individual customers, self-employed professionals, and companies.
Z Corporate network Since the late 1990s, CMNE has developed its organization and expanded on the regional corporate market, including the creation of BCMN, the acquisition of SDR de Normandie, the BIN/Batiroc business combination and the establishment of the Corporate division). Banque Commerciale du Marché Nord Europe (BCMNE) is a dedicated SME bank, while Bail Actéa and Nord Europe Lease are companies specializing in equipment and real estate leasing and financial leases.With a strong presence in corporate segments ranging from very small to medium-sized enterprises, the division offers a wide range of products and services including tailored financing and financial and wealth engineering, and is now well recognized in these areas.
INSURANCE
Formed in 2004, Nord Europe Assurances is a holding company that houses all of the Crédit Mutuel Nord Europe Group's expertise in life, personal protection, health, auto and homeowners insurance. On its various markets, NEA has adapted its offering to provide customers with a comprehensive range of products to meet their specific needs, whether this concerns retirement savings, the transmission of assets, health insurance, nursing care insurance or the protection of their assets.
The NEA Group comprises three life insurance companies (ACMN-Vie, North Europe Life Belgium and Nord Europe Life Luxembourg), a property and casualty insurance company (ACMN IARD), and a reinsurance company (CPBK-Re). They develop the insurance products alone or in partnership with the ACM subsidiaries.
The history of the Crédit Mutuel Nord Europe Group began more than a century ago. The first Crédit Mutuel Nord Europe local banks set up in the Nord-Pas-de-Calais region helped lay the foundations of the cooperative movement and the principles of social responsibility, solidarity between members and local roots.Over time, CMNE has built a solid model of a European regional universal bank, adapted to the needs of its members-customers. Today, it boasts many winning assets: retail banking expertise; good geographic coverage in the north of France and Belgium; a business model that places special emphasis on customer satisfaction and innovation, and positions in all banking, insurance and asset management activities.
Crédit Mutuel Nord Europe is the third largest unit in the Crédit Mutuel Group.
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AN INTEGRATED GROUP WORKING FOR CUSTOMERS
ASSET MANAGEMENT
Crédit Mutuel Nord Europe’s third and final business, the La Française Group, is the third-party asset management subsidiary.
La Française positions itself as a global asset manager, in terms of both business lines and commercial coverage. It provides a full range of products and services for a diversified customer base, including institutional investors, banking networks, distribution platforms, specifiers and private customers.
Formed in 1975, the Group has come a long way in 40 years and is now structured around four core businesses: • La Française Global Asset Management: management
and marketing of securities;• La Française Global Real Estate Investment Managers:
management and marketing of real estate solutions;• La Française Global Investment Solutions: management
and marketing of investment solutions;• La Française Global Direct Financing: management and
marketing of direct financing solutions for the economy.
These entities are mainly located in France, with a head office on the Boulevard Raspail in Paris. They also have offices in Luxembourg, London, Frankfurt and Hong Kong, as well as in Italy and Spain (representative offices). They develop financial products either alone or in partnership with other affiliated asset management companies, which they distribute through their own networks or those of the CMNE Group or their partners (CGPI and financial networks).
RESHAPING THE GROUP
CMNE has begun to adjust its organization in order to rationalize these operating and control processes. It aims to streamline the number of regulated structures, while maintaining services, in a framework that affords greater efficiency in serving customers and members.
The following developments initiated in 2017 should come into effect in 2018: • Refocusing of the life insurance activities in Belgium
around Nord Europe Life Belgium, which will become Beobank's sole life insurer;
• In Luxembourg, the disposal of two companies: NELL SA, the life insurance subsidiary of NEA, after the transfer of its Belgian bancassurance portfolio to NELB SA (process underway) and CPBK Ré SA, the non-life reinsurance subsidiary of NEA;
• Integration of the BCMNE Corporate division within Caisse Fédérale. On completion of this merger in June 2018, BCMNE will be transformed into dedicated branches for the corporate market and will be fully integrated into CMNE;
• Tie-up of the GACM and NEA groups through the merger of their insurance entities. This will help to simplify the business links that already exist between Crédit Mutuel Nord Europe and the Crédit Mutuel CM11 Group in the area of insurance, facilitate the integration of certain regulatory requirements and manage capital adequacy and allocation requirements more effectively.
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CMNE GROUP FINANCIAL ORGANIZATIONAL CHART
CMNE BelgiumFinancial company
- Holding company -
Beobank99.42 %
Retail banking
BCMNECorporate banking
- Holding company -
Bail Actéa100 %
Equipment leasing
Nord Europe Lease100 %
Real estate leasing
Nord Europe Partenariat
99.65 %Venture capital
Caisse Fédérale du CMNE
Nord Europe Assurances
Insurance- Holding company -
ACMNE-Vie100 %
Life insurance
Nord Europe Life Luxembourg
99.98 %Life insurance
ACMN IARD51 %
Property and casualty insurance
CPBK Ré100 %
Reinsurance - Luxembourg
North Europe Life Belgium
51 %Life and property
& casualty insurance
La Française Group
Third-party asset management- Holding company -
La Française Asset-Management
99.98 %UCITS management
La Française Real Estate Managers
95.94 %Real estate asset management
La Française Global Real Estate Investment
Management100 %
Real estate investment management
La Française AM Finance Services
100 %Investment product distribution
La Française AM International
100 %International distribution
of UCITS and UCI
La Française Investment Solutions
56.04 %EMTN structuring advisory
& UCITS management
Next AM100 %
Equity investments
La Française Global Investments
60 %Investment services
Inflection Point Capital Management
100 %Investment research
99,91 % 100 % 100 %
100 %
91,93 %
40 %
0,09 %
152 Crédit Mutuel Nord Europe local banks
Banking Insurance Asset Management
Situation at 12/31/2017
