C O N D E N S E D I N T E R I M C O N S O L I D AT E D F I N A N C I A L I N F O R M AT I O N A S AT 3 0 J U N E

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1 CONDENSED INTERIM CONSOLIDATED FINANCIAL INFORMATION AS AT 30 JUNE 2016

2 CONTENTS CONSOLIDATED INTERIM MANAGEMENT REPORT DECLARATION ON THE CONFORMITY OF THE CONDENSED INTERIM CONSOLIDATED FINANCIAL INFORMATION AND THE MANAGEMENT REPORT AS AT 30 JUNE 2016 CONDENSED INTERIM CONSOLIDATED FINANCIAL INFORMATION AS AT 30 JUNE 2016 REPORT OF THE APPROVED COMPANY AUDITOR CONDENSED INTERIM CONSOLIDATED FINANCIAL INFORMATION NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL INFORMATION

3 BCEE GROUP MANAGEMENT REPORT BASED ON THE INTERIM CONDENSED CONSOLIDATED INFORMATION AS AT 30 JUNE 2016 Economic activity in Luxembourg remains quite robust. The European Central Bank s pursuit of its policy of monetary expansion and the resulting extremely low interest rates are nonetheless having an impact on net income in the financial sector in general and at the Bank in particular. Furthermore, the outcome of the Brexit referendum surprised the financial markets by exerting additional pressure on long-term interest rates. Against this backdrop, the increase in the volume of loans granted and deposits taken by BCEE only partially offset the impact of low, if not negative, rates. The BCEE Group thus reported net income of EUR million, down 17.0% from first-half Banking income fell by 12.4% from first-half 2015 to EUR million, with trends varying according to revenue category. Net interest margin declined 6.9% in a low, if not negative, rate environment that limited the Bank s investment and maturity-switching opportunities. Income from variable-income securities rose 16.6% due to the acquisition of an interest in Enovos International S.A. and the higher dividends received from holdings of the parent company that are not included in the scope of consolidation. Fee income was down 3.3% due to adverse stock market conditions for the asset management businesses and lower income from payment transactions. Income from financial instruments fell by 27.3% compared with first-half 2015 to stand at EUR 28.0 million. This comprises income from the sale of securities in the Bank s own portfolio, both bonds and equities, as well as the value adjustment of derivatives held and income from foreign exchange transactions. The change in income in this item can primarily be attributed to the decrease in income from sales of securities in the Bank s own portfolio. General expenses increased by 4.0% in the first half of the year, in line with budget forecasts, reflecting investments in strategic projects, expenses associated with increasing regulation and the Bank s annual contribution to the pension fund for its employees, calculated on an actuarial basis. The BCEE Group s balance sheet total was up 5.2% from December 31, This increase came primarily from the increase in deposits from customers in the private and public sectors. 1

4 Outstanding loans and advances to customers rose by 2.4% compared with December 31, This sharp increase was driven by the development of the housing loan and investment loan businesses, thus illustrating the Bank s continuing desire to support the projects of individuals and businesses. Private and public sector deposit volumes increased by 7.6% compared with December 31, The new 19 Liberté building was inaugurated on July 5, 2016 after a one-and-a-half-year renovation project to improve its energy efficiency and interior. The corporate and private banking departments, among others, now work out of these new facilities and strive to provide individualised and state-of-theart service to customers. In its investment funds business, BCEE completed the restructuring of its range of in-house Lux funds with the objective, on the one hand to clearly differentiate between investment policies and, on the other hand, to streamline the management and administration of the different types of funds. On the regulatory front, the Bank participated in the 2016 Supervisory Review and Evaluation Process (SREP) stress test organised by the European Central Bank (ECB) to verify the ability of systemically important financial institutions to withstand adverse macroeconomic developments. The outcome of this exercise, which confirmed BCEE s soundness, will be considered in the ongoing assessment of BCEE s risks. Ms Françoise Thoma was appointed Chief Executive Officer effective June 1, She succeeded Mr Jean-Claude Finck, who has retired. Mr Aly Kohll joined the Executive Committee following the retirement of Mr Gilbert Ernst. Outlook for second-half 2016 The IMF raised its growth forecasts for the Eurozone slightly in July 2016 following the recovery in the financial and oil markets. The negative impacts of Brexit will dampen growth in the coming years but the magnitude of the effects remains difficult to estimate. Against this backdrop, the Bank of England decided to cut its key rate by 25 basis points to an all-time low of 0.25% and to increase its bond-buying programme to keep the UK economy from entering recession. The European Central Bank expects to maintain its key rates at current or lower levels for an extended period, far beyond the time frame set for asset purchases. 2

5 2016 growth forecasts for Luxembourg are unchanged at this time and economic activity remains robust despite the smaller contribution from financial activities. No significant events, which could jeopardise the normal course of business of the BCEE Group, occurred after June 30, Luxembourg, August 29, 2016 For the Executive Committee Aly Kohll Director, Member of the Executive Committee Guy Rosseljong Director, Member of the Executive Committee 3

6 Luxembourg, August 29, 2016 Statement on the compliance of the condensed interim consolidated financial statements and the management report in accordance with the provisions of article 4 of the Luxembourg transparency law ( Loi Transparence") We hereby declare that to the best of our knowledge, the consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) on interim financial reporting (IAS 34) as adopted by the European Union, and give a true and fair view of the assets and liabilities, the financial position and results, and that the interim management report is an accurate description of the information required pursuant to article 4 (4) of the Luxembourg Transparency Law. For the Executive Committee Aly Kohll Director, Member of the Executive Committee Guy Rosseljong Director, Member of the Executive Committee

7 BANQUE ET CAISSE D ÉPARGNE DE L ÉTAT, LUXEMBOURG Head office: 1, Place de Metz, Luxembourg R.C.S. Luxembourg B Self-governing public institution, established pursuant to the law of 21 February 1856 (Memorandum 1, no. 6 of 10 March 1856) and governed by the constitutional law of 24 March 1989 (Memorandum A, no. 16 of 28 March 1989) Interim condensed consolidated financial information

8 TABLE OF CONTENTS PAGE STATUTORY AUDITOR S REPORT... 4 INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION... 7 Condensed consolidated balance sheet... 8 Condensed consolidated income statement Condensed consolidated statement of comprehensive income Condensed statement of changes in consolidated equity Condensed consolidated statement of cash flows NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION GENERAL INFORMATION BASIS OF PREPARATION OF THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION Compliance with general principles Accounting principles and rules Foreign currency transactions NOTES TO THE CONDENSED CONSOLIDATED BALANCE SHEET Cash and sight accounts with central banks Financial instruments Securities held to maturity Investments in associates accounted for using the equity method Securities collateralised Convertible bonds included in the different portfolios Derivative instruments Financial assets designated at fair value through profit or loss Change in fair value of a portfolio of financial instruments hedged against interest rate risk Loans and receivables at amortised cost Credit institutions Loans and receivables at amortised cost Customers Tangible assets for own use Other assets Taxes: Tax assets and liabilities Deposits at amortised cost Credit institutions Deposits at amortised cost Private customers and public sector Financial liabilities designated at fair value through profit or loss Issuance of debt securities Pension funds - Defined-benefit pension plan Provisions Other liabilities Related-party transactions

9 3.23 Off-balance sheet items NOTES TO THE CONDENSED CONSOLIDATED INCOME STATEMENT Interest income Income from variable-income securities Fee and commission income Income from financial instruments not recognised at fair value through profit or loss Income from financial instruments held for trading Income from financial instruments designated at fair value through profit or loss Net income from hedging transactions Other net operating income Personnel expenses Other general and administrative expenses Allowances for impairment of individual and collective credit risks Provisions and reversal of provisions Tax expense HIERARCHY OF FINANCIAL INSTRUMENTS AT FAIR VALUE Methodologies used Levels of hierarchy of financial instruments at fair value FINANCIAL INSTRUMENTS FAIR VALUE ANALYSIS SEGMENT REPORTING

10 BANQUE ET CAISSE D EPARGNE DE L ETAT, LUXEMBOURG STATUTORY AUDITOR S REPORT June 30,

11 Report on review of the interim condensed consolidated financial information To the Executive Committee of the Banque et Caisse d Epargne de l Etat, Luxembourg Introduction We have reviewed the accompanying condensed consolidated balance sheet of Banque et Caisse d Epargne de l Etat, Luxembourg and its subsidiaries (the Group ) as of June 30, 2016 and the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity and the condensed consolidated statement of cash flows for the six-month period then ended and notes, comprising a summary of significant accounting policies and other explanatory notes. The Executive Committee is responsible for the preparation and presentation of this condensed consolidated interim financial information in accordance with International Financial Reporting Standards as adopted by the European Union related to Interim Financial Information ( IAS 34 ). Our responsibility is to express a conclusion on this condensed consolidated interim financial information based on our review. Scope of review We conducted our review in accordance with the International Standard on Review Engagements ( ISRE ) 2410, Review of interim financial information performed by the Réviseur d entreprises agréé of the entity as adopted for Luxembourg by the Institut des Réviseurs d Entreprises. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. PricewaterhouseCoopers Société coopérative, 2, rue Gerhard Mercator, B.P. 1443, L-1014 Luxembourg T: , F: , Approved audit firm. Public accountants (government authorisation no ) Company registration: Luxembourg B VAT LU

12 Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial information do not give a true and fair view of the financial position of the Group as of June 30, 2016, and of its financial performance and its cash flows for the six-month period then ended in accordance with International Financial Reporting Standards as adopted by the European Union. PricewaterhouseCoopers, Société coopérative Luxembourg, August 29, 2016 Represented by Roxane Haas Only the French version of the present Report has been reviewed by the auditors. In case of differences between the French version and the translation, the French version should be retained. 6

13 BANQUE ET CAISSE D EPARGNE DE L ETAT, LUXEMBOURG INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION June 30,

14 Interim condensed consolidated financial information Condensed consolidated balance sheet ASSETS in euros Notes 30/06/ /12/ /06/2016 Cash and sight accounts with central banks Loans and receivables at amortised cost Credit institutions Loans and receivables at amortised cost Customers Financial instruments held for trading / Hedging derivatives Financial assets designated at fair value through profit or loss Available-for-sale securities Fixed-income securities Available-for-sale securities Variable-income securities Held-to-maturity securities Investments in associates accounted for using the equity method Change in fair value of a portfolio of financial instruments hedged against interest rate risk Tangible assets for own use Investment property Intangible assets Other assets TOTAL ASSETS LIABILITIES in euros Notes 30/06/ /12/ /06/2016 Deposits at amortised cost Credit institutions Deposits at amortised cost Private customers and public sector Financial instruments held for trading / Hedging derivatives Financial liabilities designated at fair value through profit or loss Issuance of debt securities Provisions Other liabilities Current taxes Deferred taxes Net pension fund commitment Sub-total of LIABILITIES (before equity capital) to be carried forward The notes on pages 16 to 52 are an integral part of this interim condensed consolidated financial information. 8

15 Interim condensed consolidated financial information Condensed consolidated balance sheet (continued) EQUITY in euros 30/06/ /12/ /06/2016 Sub-total of LIABILITIES (before equity capital) carried forward Share capital Revaluation reserve Available-for-sale assets Consolidated reserves Equity method adjustment Income for the year/period Sub-total of equity attributable to equity holders of the parent company Minority interests Total equity TOTAL LIABILITIES, including EQUITY The notes on pages 16 to 52 are an integral part of this interim condensed consolidated financial information. 9

16 Interim condensed consolidated financial information Condensed consolidated income statement in euros Notes 30/06/ /06/2016 Interest income Income from variable-income securities Fee and commission income INCOME FROM INTEREST, DIVIDENDS AND FEES AND COMMISSIONS Income from financial instruments not recognised at fair value through profit or loss Income from financial instruments held for trading Income from financial instruments designated at fair value through profit or loss Net income from hedging transactions Exchange gains or losses Other operating income Other operating expenditure BANKING INCOME Personnel expenses Other general and administrative expenses Depreciation allowances for tangible and intangible assets INCOME AFTER GENERAL EXPENSES Net allowances for impairment of individual and collective credit risks Provisions Share in the profit of equity-accounted associates INCOME BEFORE TAXES AND NON-CURRENT ASSETS Profit from non-current assets and disposal groups classified as held for sale and not qualifying as discontinued operations Tax on income from continuing operations Deferred taxes INCOME FOR THE PERIOD OF WHICH: INCOME FOR THE PERIOD ATTRIBUTABLE TO MINORITY INTERESTS INCOME FOR THE PERIOD ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT The notes on pages 16 to 52 are an integral part of this interim condensed consolidated financial information. 10

17 Interim condensed consolidated financial information Condensed consolidated statement of comprehensive income in euros 30/06/ /06/2016 INCOME FOR THE PERIOD Items not reclassified in net income subsequently Actuarial gains/(losses) on the defined-benefit pension scheme Contribution of equity-accounted associates Impact of deferred taxes Items to be reclassified in net income subsequently Available-for-sale assets Variation in measurement results Net reclassification to the income statement of realised net gains Cash flow hedges Contribution of equity-accounted associates - - Impact of deferred taxes Total items of comprehensive income for the period - net of tax TOTAL COMPREHENSIVE INCOME FOR THE PERIOD share attributable to - minority interests: equity holders of the parent company: For purposes of comparability, the half-year period ending June 30, 2015 has been restated in accordance with the amendment to IAS 1 82A (b). The notes on pages 16 to 52 are an integral part of this interim condensed consolidated financial information. 11

18 Interim condensed consolidated financial information Condensed statement of changes in consolidated equity in euros Share Consolidated Revaluation Net income Total equity Minority Total capital reserves reserve - equity interests equity holders of the As at January 1, Appropriation of 2015 income First-half 2016 net income Distribution for FY Actuarial gains/(losses) on pension fund Net measurement results of available-for-sale financial instruments Net measurement results of cash flow hedges parent Other As at June 30, Share Consolidated Revaluation Net income Total equity Minority Total capital reserves reserve - equity interests equity holders of the As at January 1, Appropriation of 2014 income First-half 2015 net income Distribution for FY Actuarial gains/(losses) on pension fund Net measurement results of available-for-sale financial instruments Net measurement results of cash flow hedges parent Other As at June 30, The notes on pages 16 to 52 are an integral part of this interim condensed consolidated financial information. 12

19 Interim condensed consolidated financial information Condensed consolidated statement of cash flows Cash and cash equivalents in euros 30/06/ /06/2016 Cash and sight accounts with central banks Loans and receivables at amortised cost Credit institutions Loans and receivables at amortised cost Customers Total The statement of cash flows represents the inflow and outflow of cash. Cash and cash equivalents include cash on hand, deposits with central banks, and assets with an original maturity of 90 days or less. The cash flow statement classifies the cash flows of the period into operating activities, investment activities and financing activities. Cash flow from operating activities - Cash flow from operating activities before changes in operating assets and liabilities: in euros 30/06/ /06/2016 Interest received Interest paid Income from variable-income securities Fees and commissions received Fees and commissions paid Other operating income Current taxes Other general and administrative expenses Other operating expenditure Sub-total The notes on pages 16 to 52 are an integral part of this interim condensed consolidated financial information. 13

20 Interim condensed consolidated financial information - Cash flow from changes in operating assets: Net changes 30/06/ /06/2016 Financial instruments held for trading Available-for-sale securities Fixed-income securities Available-for-sale securities Variable-income securities Financial assets designated at fair value through profit or loss Loans and advances at amortised cost Credit institutions Loans and advances at amortised cost Customers Hedging derivatives Other assets Sub-total Cash flow from changes in operating liabilities: Net changes 30/06/ /06/2016 Financial instruments held for trading Financial liabilities designated at fair value through profit or loss Deposits at amortised cost Credit institutions Deposits at amortised cost Customers Hedging derivatives Other liabilities Issuance of debt securities Sub-total Cash flow from operating activities Cash flow from investment activities in euros 30/06/ /06/2016 Acquisition of available-for-sale securities Variable-income securities Disposals of available-for-sale securities Variable-income securities Acquisition of held-to-maturity securities Acquisition/redemption of held-to-maturity securities Acquisitions/disposals of intangible and tangible assets Cash flow from investment activities The notes on pages 16 to 52 are an integral part of this interim condensed consolidated financial information. 14

21 Interim condensed consolidated financial information Cash flow from financing activities in euros 30/06/ /06/2016 Proceeds from subordinated liabilities Income distribution - - Cash flow from financing activities Net change The profit distribution for financial year 2015 was made to the Luxembourg state on July 1, Change in cash and cash equivalents Position as at January Net change in cash Effect of exchange rates on cash and cash equivalents Position as at June The notes on pages 16 to 52 are an integral part of this interim condensed consolidated financial information. 15

22 BANQUE ET CAISSE D EPARGNE DE L ETAT, LUXEMBOURG NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION June 30,

23 1 GENERAL INFORMATION Banque et Caisse d Epargne de l Etat, Luxembourg (hereinafter the Group s parent company ), established by the law of 21 February 1856 and governed by the law of 24 March 1989, is a self-governing public law institution endowed with legal personality. Ultimate responsibility for the institution lies with the Government Minister with responsibility for the Treasury. The Group s parent company s registered office is located at 1, place de Metz, L-2954 Luxembourg. Within the limits set by the laws and regulations applicable to credit institutions, the objective of the Group's parent company is to perform all financial and banking activities, as well as all similar, related or ancillary operations. On August 29, 2016, the Executive Committee of the Group s parent company authorised the publication of the interim condensed consolidated financial information. The Group had an average headcount of (1.807 as at December 31, 2015). The Group's business is not subject to seasonality. The financial year coincides with the calendar year. 17

24 2 BASIS OF PREPARATION OF THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION 2.1 Compliance with general principles The Group s condensed consolidated financial information was prepared in accordance with IAS 34 Interim Financial Reporting. It should be read in conjunction with the Group s annual consolidated financial statements as at December 31, 2015, which were prepared under IFRS, as adopted by the European Union. a) New or revised standards adopted by the Group The following standards, whose application is compulsory in financial years beginning on or after January 1, 2016, were adopted by the Group's parent company and have had no material impact on the halfyear financial statements: - Amendment to IAS 1: Disclosure initiative, - Amendment to IAS 19: Employee Contributions to Defined Benefit Plans, - Improvements to IFRS, cycle, which are a series of amendments to the existing standards, - Improvements to IFRS, cycle, which are a series of amendments to the existing standards, - Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation, - Amendment to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations, - Amendment to IAS 27: Equity Method in Separate Financial Statements. b) New and revised standards and interpretations relevant for the Group s parent company, which are not yet compulsory and which have not been adopted by the European Union: - IFRS 9: Financial Instruments, - IFRS 15 and amendments: Revenue from Contracts with Customers, - Amendments to IFRS 10, IFRS 12, IAS 28: Investment Entities: Applying the Consolidation Exception, - Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture, - IFRS 16: Leases, 18

25 - Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses, - Amendments to IAS 7: Disclosure initiative, - Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions. 2.2 Accounting principles and rules With one exception, the accounting principles are the same as those applied to the consolidated financial statements as at December 31, 2015 and described therein. Effective January 1, 2016, the Group s parent company introduced a new measurement category for financial instruments provided for in IAS 39 for new acquisitions/issuances, namely the fair value option. This category covers financial asset and liability instruments including embedded derivatives not closely related and are consequently measured at fair value through profit or loss. These instruments are hedged by interest-rate swap- and cross-currency interest-rate swap-type derivatives, also measured at fair value through profit and loss, thereby offsetting an accounting mismatch at the profit and loss level Scope of consolidation Fully consolidated subsidiaries The scope of fully consolidated subsidiaries remained unchanged from December 31, Subsidiaries included in the scope of consolidation: Name % of voting rights held 31/12/ /06/2016 Lux-Fund Advisory S.A. 89,16 88,58 BCEE Asset M anagement S.A. 90,00 90,00 Bourbon Immobilière S.A. 99,90 99,90 Luxembourg State and Savings Bank Trust Company S.A. 100,00 100,00 Spuerkeess Ré S.A. 100,00 100,00 19

26 Investments in associates There has been no change in the scope of investments in associates since December 31, The Group s investments in associates: Associates % of capital held 31/12/ /06/2016 Direct interests Société Nationale de Circulation Automobile S.à r.l. 20,00 20,00 Luxair S.A. 21,81 21,81 Société de la Bourse de Luxembourg S.A. 22,75 22,75 Europay Luxembourg S.C. 25,40 25,40 FS-B S.à r.l. 28,70 28,70 FS-T S.à r.l. 28,70 28,70 Visalux S.C. 36,26 36,26 La Luxembourgeoise S.A. 40,00 40,00 La Luxembourgeoise-Vie S.A. 40,00 40,00 BioTechCube (BTC) Luxembourg S.A. 50,00 50,00 Indirect interests Pecoma International S.A. 33,33 33,33 EFA Partners S.A. 29,05 29, Foreign currency transactions The following exchange rates were used for translation of the main currencies in the consolidated financial statements. One euro is equal to: 30/06/ /12/ /06/2016 CHF 1,0403 1,0828 1,0872 GBP 0,7124 0,7368 0,8287 JPY 137, , ,4700 SEK 9,2194 9,1796 9,4340 USD 1,1196 1,0916 1,

27 3 NOTES TO THE CONDENSED CONSOLIDATED BALANCE SHEET 1 (in euros) 3.1 Cash and sight accounts with central banks Cash consists of cash and cash balances with central banks. The minimum reserve requirement with the Banque centrale du Luxembourg is entered under this heading. This is the minimum mandatory reserve to satisfy the reserve requirement imposed by the Luxembourg central bank. Hence, these funds are not available to finance the Group s ordinary operations. Headings 30/06/ /12/ /06/2016 Cash Reserve requirement Deposits with central banks Other sight deposits Total Beginning with year-end 2015, the Group's parent company reclassified the Loans and receivables at amortised cost Credit institutions, Interbank loans sub-heading to Cash and sight deposits with central banks to comply with the requirements of the reporting methods defined by the EBA. This reclassification was not applied to the period ending June 30, 2015 and the corresponding amount of EUR was still recognised under Loans and receivables at amortised cost Credit institutions. 1 Minor differences between the figures in the notes to the financial statements and the figures in the different condensed consolidated statements are rounding differences only. 21

28 3.2 Financial instruments Assets and liabilities held for trading Assets 30/06/ /12/ /06/2016 Non-derivative financial instruments Derivative instruments (note 3.7.) Total Liabilities 30/06/ /12/ /06/2016 Non-derivative financial instruments Derivative instruments (note 3.7.) Total Assets - Non-derivative financial instruments 30/06/ /12/ /06/2016 Debt instruments Public sector Credit institutions Corporate customers Equity instruments Total Unrealised profit/loss at the reporting date Liabilities - Non-derivative financial instruments 30/06/ /12/ /06/2016 Short sales Bonds Shares Total Available-for-sale financial assets Headings 30/06/ /12/ /06/2016 Debt instruments Public sector Credit institutions Corporate customers Equity instruments Credit institutions Corporate customers Other Total Impairment of financial assets Unrealised profit/loss at the reporting date

29 Impairment of available-for-sale financial assets: Corporate customers ABS/MBS Other Credit institutions Total Position as at January 1, Additions Reversals Exchange gain or loss Position as at June 30, Position as at July 1, Reclassification Additions Reversals Write-off of receivables Exchange gain or loss Position as at December 31, Position as at January 1, Additions Reversals Write-off of receivables Exchange gain or loss Position Outstanding amount at June 30, Unrealised profit/loss on available-for-sale financial assets: The unrealised profit/loss as at the reporting date breaks down as follows: o Debt instruments Debt instruments include variable-rate bonds, fixed-rate bonds and structured bonds. Fixed-rate and structured bonds are converted into variable-rate bonds using derivatives (asset swaps). The Group applies fair value hedge accounting to these transactions. The prospective and retrospective efficiencies are close to 100%. 30/06/2016 Fair value adjustments of debt instruments Fixed-rate bonds and structured bonds Variable-rate bonds Fair value adjustment of the swap leg hedging the asset Changes in unhedged Changes in hedged risk Changes in hedge risk Retrospective risk ( credit and (interest rate and price) efficiency rate liquidity spread ) ,98% /12/2015 Fair value adjustments of debt instruments Fixed-rate bonds and structured bonds Variable-rate bonds Fair value adjustment of the swap leg hedging the asset Changes in unhedged Changes in hedged risk Changes in hedge risk Retrospective risk ( credit and (interest rate and price) efficiency rate liquidity spread ) ,00%

30 30/06/2015 Fair value adjustments of debt instruments Fixed-rate bonds and structured bonds Variable-rate bonds Fair value adjustment of the swap leg hedging the asset Changes in unhedged Changes in hedged risk Changes in hedge risk Retrospective risk ( credit and (interest rate and price) efficiency rate liquidity spread ) ,00% o Equity instruments Headings 30/06/ /12/ /06/2016 Equity instruments Total Impairment of financial assets Unrealised profit/loss at the reporting date Securities held to maturity Headings 30/06/ /12/ /06/2016 Debt instruments Public sector Credit institutions Corporate customers Total Impairment of financial assets Investments in associates accounted for using the equity method 30/06/ /12/ /06/2016 Acquisition value as at January Establishment Disposals Total (as acquisition value)

31 List of associates: Associates Fraction of Acquisition Equity-accounted capital held (% ) value value 30/06/2016 Société Nationale de Circulation Automobile S.à r.l. 20, Luxair S.A. 21, Société de la Bourse de Luxembourg S.A. 22, Europay Luxembourg S.C. 25, FS-B S.à.r.l. 28, FS-T S.à.r.l. 28, Visalux S.C. 36, La Luxembourgeoise S.A. 40, La Luxembourgeoise-Vie S.A. 40, BioTechCube (BTC) Luxembourg S.A. 50, Sub-total direct holdings in associates Pecoma International S.A. 33, EFA Partners S.A. 29, Sub-total indirect holdings in associates Total Associates Fraction of Acquisition Equity-accounted capital held (% ) value value 30/06/2015 Société Nationale de Circulation Automobile S.à r.l. 20, Luxair S.A. 21, Société de la Bourse de Luxembourg S.A. 22, Europay Luxembourg S.C. 25, FS-B S.à.r.l. 28, FS-T S.à.r.l. 28, Visalux S.C. 36, La Luxembourgeoise S.A. 40, La Luxembourgeoise-Vie S.A. 40, BioTechCube (BTC) Luxembourg S.A. 50, Sub-total direct holdings in associates Pecoma International S.A. 33, EFA Partners S.A. 29, Sub-total indirect holdings in associates Total

32 Pursuant to the provisions of IFRS 12 Disclosure of Interests in Other Entities, the Group considers all interests in other companies to be immaterial and therefore provides the following information: Associates Direct interests Net income from continuing operations Net income after tax from discontinued operations Other items of comprehensive income Total comprehensive income Société Nationale de Circulation Automobile S.à r.l Luxair S.A Société de la Bourse de Luxembourg S.A Europay Luxembourg S.C FS-B S.à.r.l FS-T S.à.r.l Visalux S.C La Luxembourgeoise S.A La Luxembourgeoise-Vie S.A BioTechCube (BTC) Luxembourg S.A Indirect interests 30/06/2016 Pecoma International S.A EFA Partners S.A Associates Direct interests Net income from continuing operations Net income after tax from discontinued operations Other items of comprehensive income Total comprehensive income Société Nationale de Circulation Automobile S.à r.l Luxair S.A Société de la Bourse de Luxembourg S.A Europay Luxembourg S.C FS-B S.à.r.l FS-T S.à.r.l Visalux S.C La Luxembourgeoise S.A La Luxembourgeoise-Vie S.A BioTechCube (BTC) Luxembourg S.A Indirect interests 30/06/2015 Pecoma International S.A EFA Partners S.A The table as at June 30, 2015 has been restated to facilitate the comparison with the new table format as at June 30,

33 3.5 Securities collateralised Securities collateralised in the framework of repurchase agreements Headings 30/06/ /12/ /06/2016 Debt instruments issued by the public sector Debt instruments issued by credit institutions Debt instruments issued - other Equity instruments Total Debt instruments issued are primarily available-for-sale and held-to-maturity assets. The decrease in debt instruments stems from the reduced use of this type of secured contract. Securities lent and other collateral Headings 30/06/ /12/ /06/2016 Securities lending Debt instruments issued by the public sector 14,465, ,989, ,529,192 Debt instruments issued by credit institutions 2,228,145 22,376,369 - Debt instruments issued - other 934, Other collateral Debt instruments issued by the public sector 37,094,720 37,184,960 36,232,800 Total 54,723, ,550, ,761, Convertible bonds included in the different portfolios The Group has no convertible bond positions in its different portfolios. 27

34 3.7 Derivative instruments Headings Assets Liabilities Notional Balances as at 30/06/2016 Derivative financial instruments held for trading Operations linked to exchange rates Foreign exchange swaps and forward exchange contracts CCIS economic hedge (FVO) other Operations linked to interest rates IRS IRS economic hedge (FVO) other Operations linked to equity Equity and index options Fair value hedges (micro) Operations linked to exchange rates CCIS Operations linked to interest rates IRS (interest rate) Operations linked to other indices IRS (other indices) Fair value hedges (macro) Operations linked to interest rates IRS (interest rate) Cash flow hedges Operations linked to exchange rates CCIS Operations linked to interest rates IRS Headings Balances as at 31/12/2015 Derivative financial instruments held for trading Operations linked to exchange rates Foreign exchange swaps and forward exchange contracts other Operations linked to interest rates IRS other Operations linked to equity Equity and index options Operations linked to credit risk Credit derivatives (CDS) Fair value hedges (micro) Operations linked to exchange rates CCIS Operations linked to interest rates IRS (interest rate) Operations linked to other indices IRS (other indices) Fair value hedges (macro) Operations linked to interest rates IRS (interest rate) Cash flow hedges Operations linked to exchange rates CCIS Operations linked to interest rates IRS

35 Headings Assets Liabilities Notional Balances as at 30/06/2015 Derivative financial instruments held for trading Operations linked to exchange rates Foreign exchange swaps and forward exchange contracts other Operations linked to interest rates IRS other Operations linked to equity Equity and index options Operations linked to credit risk Credit derivatives (CDS) Fair value hedges (micro) Operations linked to exchange rates CCIS Operations linked to interest rates IRS (interest rate) Operations linked to other indices IRS (other indices) Fair value hedges (macro) Operations linked to interest rates IRS (interest rate) Cash flow hedges Operations linked to exchange rates CCIS Operations linked to interest rates IRS Financial assets designated at fair value through profit or loss Headings 30/06/ /12/ /06/2016 Debt instruments Credit institutions Total Unrealised profit/loss at the reporting date This item includes financial instruments which, depending on their characteristics, include embedded derivative not closely related and are therefore not eligible for measurement at fair value through the revaluation reserve. 29

36 3.9 Change in fair value of a portfolio of financial instruments hedged against interest rate risk Headings 30/06/ /12/ /06/2016 Assets: Change in fair value of a portfolio of financial instruments hedged against interest rate risk Total This item includes the fair value of the Loans and receivables at amortised cost - Customers portfolios hedged against interest rate risk using a fair value macro-hedging strategy. The hedging relates solely to a fixed-rate loans portfolio hedged by IRS derivatives. The significant change in this item between 2015 and 2016 is due primarily to the twofold impact of the change in the interest-rate curves used to determine fair value and the volume effect for this type of hedging transaction Loans and receivables at amortised cost Credit institutions Headings 30/06/ /12/ /06/2015 Interbank loans Reverse repos Roll-over loans Finance leases Fixed-income securities Other Sub-total Undrawn confirmed credits Impairment of financial assets In the case of reverse repurchase transactions, the Group becomes the legal owner of the securities received as collateral and has the right to sell or collateralise these securities. No security received as collateral was sold or collateralised. Beginning with year-end 2015, the Group's parent company reclassified the Loans and receivables at amortised cost Credit institutions, Interbank loans sub-heading to Cash and sight deposits with central banks to comply with the requirements of the reporting methods defined by the EBA. This reclassification was not applied to the period ending June 30, 2015 and the corresponding amount of EUR was still recognised under Loans and receivables at amortised cost Credit institutions. 30