CFM INDOSUEZ Wealth Management - 2020 Annual Report

33 ACTIVITIES AND RESULTS (CFM INDOSUEZ WEALTH MANAGEMENT SCOPE) At 31 December 2020, wealth under custodywas down 1.7% on the previous year, due to a combination of market effects and inflow items. Loans and receivable granted to clients were down nearly 2.9%compared to 31 December 2019. Accounts payable to customers amounted to €5,366 million, a decrease of 2.6% compared to 31 December 2019. PRESENTATION OF THE CFM INDOSUEZ WEALTH MANAGEMENT 2020 SEPARATE FINANCIAL STATEMENTS (UNDER FRENCH ACCOUNTING STANDARDS) • CFM INDOSUEZ WEALTH PARENT COMPANY/SEPARATE FINANCIAL STATEMENTS UNDER FRENCH ACCOUNTING STANDARDS The balance sheet total amounted to €5,928 million at 31 December 2020, a decrease of -2% compared with 31 December 2019. On the assets side, loans granted to clients amounted to €3,333 million, a decrease of -3% over the 2020 financial year. The volume of securities in the portfolio and central bank deposits ensure the overall liquidity coverage ratio (LCR) is observed. Loans and receivables fromcredit institutions increased by 2% to €1,664 million. On the liabilities side, shareholders' equity was €356 million, excluding €4.5 million in funds for general banking risks. The increase in equity between December 2019 and December 2020 (+ €20 million) resulted from the rise in income over the period and the appropriation of income for 2020. Net banking income, down -9%compared with 2019, stood at €111million and cannot be comparedwith the previous year due to transactions involving working capital relating to adjustments made to CFM Indosuez’s real estate portfolio in 2019. Restated for these extraordinary items, banking income fell by -5.5%. The negative impact of the decline in interest rates on ourmarginswas only partially offset by robust brokerage activities. Operating expenses were down -6% compared with the previous year, reflecting tight cost control in a context pervaded by the health crisis. CFM Indosuez Wealth Management’s separate financial statements show a profit of €20 million in 2020 (after income tax for an amount of €3.8million), integrating the dividends of the wealth management subsidiary (€14.1 million). Despite robust sales activity, these results are down from those recorded in 2019 which, it should be noted, integrated extraordinary items (+€31.9million) as well as income from equalisation payments on hedging swaps. Restated for extraordinary items from the previous year and the change in dividends received by the subsidiary, net incomewas up + 3%fromthe previous year. In the context of the Covid-19 pandemic, the European Central Bank (ECB) and theFrenchPrudential Supervision andResolution Authority (ACPR) issued on 27March 2020 a strong recommendation to banks under their supervision not to pay dividends until October 2020 at the earliest, and for as long as the health crisis continued to impact the economy in general and the activity of banks’ counterparties, and therefore banks themselves, necessitating an adaptation of the dividend distribution model. Consequently, the CFM Indosuez Board of Directors on 5May 2020wasunable toproposeapayment of dividends, and instead recommended that the Ordinary Annual General Meeting of 19 June 2020 allocate the entire profit for 2019, or a total of €217,552 million, to retained earnings. In press releases dated 28 July 2020, the ECB and the ACPR extended the ban on dividend payments until 1 January 2021. On 15 December 2020, the ECB revised its recommended ban while emphasising that the health and macro- economic context remained strongly uncertain, and encouraged institutions to remain particularly prudent and to adoptmoderate payment policies in linewith their medium-term equity outlooks until 30 September 2021.