BPCE - 2019 Universal Registration Document

FINANCIAL REPORT

IFRS CONSOLIDATED FINANCIAL STATEMENTS OF GROUPE BPCE AS AT DECEMBER 31, 2019

Right-of-use assets are measured using the amount of the lease liability determined on this date and adjusted for lease items already recognized on the balance sheet prior to the application of IFRS 16. The corresponding amount, recorded under “Property, plant and equipment” at January 1, 2019, came to €2 billion. The application of IFRS 16 had no effect on Groupe BPCE’s opening shareholders’ equity at January 1, 2019. Its application had no material impact on Groupe BPCE’s income. IFRIC 23 IAS 12 “Income taxes” gave no particular details on how to account for uncertainties in income taxes, and was clarified by IFRIC 23 “Uncertainty over Income Tax Treatments”, which was adopted by the European Commission on October 23, 2018 with effect from January 1, 2019. The Interpretation clarifies how to apply the deferred income tax recognition and measurement requirements when there is uncertainty over income tax treatments. If there is doubt as to the acceptability of the income tax treatment by the tax authority under tax law, then this tax treatment is an uncertain tax treatment. Assuming it is likely that the tax authority will not accept the income tax treatment used, IFRIC 23 states that the amount of the uncertainty to be reflected in the financial statements shall be estimated using the method that will better predict the resolution of the uncertainty. To determine this amount, two approaches may be used: the most likely amount, or the expected value of the tax treatment (that is, the weighted average of the different scenarios possible). Furthermore, IFRIC 23 requires the measurement of tax uncertainties to be reassessed if facts and circumstances change or new information arises. Tax uncertainties are reported as assets or liabilities and according to whether they relate to a current or deferred tax under the balance sheet headings “Deferred tax assets”, “Current tax assets”, “Deferred tax liabilities” and “Current tax liabilities”. Application on January 1, 2019 of IFRIC 23 had no impact on Groupe BPCE’s shareholders’ equity. The impact in terms of presentation in the financial statements relates only to the presentation in the financial statements of uncertainty over tax treatments, which are now classified under Tax Assets and Liabilities and no longer under Provisions for all Group entities, in accordance with the IFRIC Update of September 2019. The process of collecting, analyzing and monitoring uncertainties has been revised in order to better document the compliance of the methods of recognition and measurement used by Groupe BPCE with the requirements set out in the Interpretation. AMENDMENT TO IAS 12 OF DECEMBER 2017, APPLICABLE AS OF JANUARY 1, 2019 In December 2017, the IASB published amended IAS 12, clarifying that the income tax consequences of payments on financial instruments classified as equity under IAS 32 should be recognized in income, other comprehensive income (OCI) or equity, depending on the source of the amounts paid. Accordingly, the tax consequences of payments considered as dividends (as per IFRS 9) must be recorded in the income

statement when recognizing the liability for the obligation to pay the dividend. The tax consequences of payments not considered dividends are to be recorded in equity. As the Group must exercise judgment in making this distinction, it applied the definition of dividends to interest payable from January 1, 2019 on its perpetual deeply subordinated notes. The tax saving arising from the payment of coupons to the holders of these instruments was previously allocated to retained earnings, and the impact on the income statement was +€25 million in 2019. The retroactive restatement made at January 1, 2019 had no impact on equity as tax on these payments was already recognized in this item. In September 2019, the IASB published amendments to IFRS 9 and IAS 39 to provide relief for instruments eligible for hedge accounting in the lead up to the interest rate benchmark reform. The amendments were adopted by the European Commission on January 16, 2020. Their application date is January 1, 2020 and they may be applied earlier. Groupe BPCE chose to apply the amendment early as of December 31, 2019. The amendments allow for the following: transactions designated as cash flow hedges are considered • “highly probable”, as it is assumed that the cash flows will not change as a result of the reform; prospective assessments of fair value hedges and cash flow • hedges are not affected by the reform, and in particular hedge accounting can continue if retrospective assessment results are outside the 80%-125% range during the transition period, while the ineffective portion of hedging relationships shall continue to be recognized in the income statement; hedged risk components determined using a benchmark rate • are considered to be separately identifiable. These amendments apply until the uncertainty arising from the reform is resolved or the hedging relationship is discontinued. Groupe BPCE considers that all its hedging agreements with a BOR or EONIA component are concerned by the reform and therefore qualify for the amendments for as long as there is uncertainty as to the contractual changes required by regulations or regarding the replacement benchmark to be used or the application period of temporary rates. Groupe BPCE’s exposure primarily lies with its derivatives contracts and lending and borrowing contracts that use the EURIBOR, EONIA or US LIBOR interest rates. Hedging transactions are presented in Note 5.3. Uncertainty arising from the benchmark rate reform and the organization set up at Groupe BPCE to address this matter are described in Note 2.3. The degree of uncertainty regarding derivatives or hedged items indexed to the EURIBOR or EONIA rates, which account for most of Groupe BPCE’s hedging activities, is less pronounced than the uncertainty surrounding those indexed to the LIBOR. The other standards, amendments and interpretations adopted by the European Union did not have a material impact on the Group’s financial statements. AMENDMENTS TO IAS 39 AND IFRS 9: INTEREST RATE BENCHMARK REFORM

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UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE