BPCE - 2018 Registration document

FINANCIAL REPORT IFRS Consolidated Financial Statements of BPCE SA group as at December 31, 2018

Breakdown of goodwill

Carrying amount

12/31/2018

01/01/2018

in millions of euros

BPCE International (1)

28 82 13

Fidor AG

82

Crédit Foncier (2)

Other

4

Other networks

82

127 163

Specialized Financial Services

185

Insurance

93

93

Equity interests (Coface) Retail Banking and Insurance Asset & Wealth Management Corporate & Investment Banking

281 641

281 664

3,136

2,987

129

77

TOTAL GOODWILL

3,906

3,728

Pursuant to IFRS 5, goodwill on Banque Malgache de l’Océan Indien and Banque de Nouvelle-Calédonie is classified as “Non-current assets held for sale” (see Note 5.7). (1) Goodwill amounting to -€13 million on Crédit Foncier Immobilier, a Crédit Foncier subsidiary, was fully impaired as of December 31, 2018. (2)

Impairment tests 3.4.2 All goodwill has been impairment-tested, based on the assessment of the value in use of the Cash-Generating Units (CGUs) to which it is attached.

Key assumptions used to determine recoverable value Value in use was primarily determined based on the estimated present value of the CGU’s future cash flows under medium-term plans drawn up for the purposes of the Group’s budget process.

5

The following assumptions were used:

Discount rate Long-term growth rate

Retail Banking and Insurance Specialized Financial Services

11.2% 10.2% 9.3% 8.7% 10.6%

2.5% 2.5% 2.5% 2.5% 2.5%

Insurance

Equity interests (Coface)

Asset & Wealth Management Corporate & Investment Banking

The discount rates were determined by factoring in the following: for the Asset & Wealth Management, Corporate & Investment ● Banking, Insurance and Specialized Financial Services CGUs, the risk-free interest rate of the Euro-Bund zone, averaged over a depth of 10 years, plus a risk premium calculated according to a representative sample of companies from the CGU; for the Coface CGU, the benchmark interest rates used were ● determined according to a similar method as applied to the other CGUs, using samples of equivalent companies for insurance, services and factoring activities;. The impairment tests performed at the level of each CGU led to the recognition of impairment on Crédit Foncier Immobilier (a Crédit Foncier subsidiary) in the amount of - € 13 million, and impairment on Ariès Assurances (a Banque Palatine subsidiary) for - € 3 million at December 31, 2018. Sensitivity of recoverable values A 30 bp increase in discount rates (assumption based on the historical annual variability observed over one year using 2012-2018 historical

data) combined with a 50 bp reduction in perpetual growth rates would reduce the value in use of CGUs by: -9.7% for the Asset & Wealth Management CGU; ● -5.0% for the Corporate & Investment Banking CGU; ● -7.6% for the Insurance CGU; ● -5.3% for the Specialized Financial Services CGU; ● -4.8% for the Coface CGU. ● These variations would not lead to the recognition of any impairment losses for these CGUs. Similarly, the sensitivity of these CGUs’ future cash flows, as forecast in the business plan, to changes in the main assumptions would not significantly affect their recoverable value: for Asset & Wealth Management, a 10% decline in the equity ● markets (a uniform decline across all years) would have a 5% negative impact on the CGU’s recoverable value and would not lead to the recognition of impairment;

437

Registration document 2018