BPCE - 2019 Universal Registration Document

FINANCIAL REPORT

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

Under the BMR, the interest rate benchmarks EURIBOR, LIBOR and EONIA have been declared critical. In the euro zone, uncertainties surrounding the definition of the new benchmark rates were partially lifted in H1 2019. The new index proposals were finalized for the EONIA, which will become an €STR tracker from October 1, 2019 to December 31, 2021. The €STR will replace the “recalibrated” EONIA beginning on January 1, 2022. A new calculation approach aimed at transitioning to a hybrid methodology for the EURIBOR, which has been recognized by the Belgian regulator as being consistent with the requirements laid down by the Benchmark regulation, was finalized in November 2019. The valuation of Euribor-indexed contracts may also be affected by changes in the remuneration of collateralization agreements (usually indexed to the EONIA). In contrast, for the LIBOR, at this point alternative “risk-free rates” have been defined for the GBP, UK, CHF and Yen LIBOR. However, work is still underway to propose structures which will be based on these alternative rates. Greater uncertainties remain as regards transactions using the LIBOR Index. In the first half of 2018, Groupe BPCE established a project team tasked with anticipating the impacts of the benchmark reform, from a legal, commercial, financial and accounting viewpoint. From an accounting standpoint, amendments to IFRS 9, IAS 39 and IFRS 7 were published by the IASB in September 2019 on hedge accounting. The amendments to IAS 39 and IFRS 9 have provided for exceptions applicable temporarily to the requirements set out in these standards in terms of hedge accounting while the amendments to IFRS 7 require, for hedging relationships to which these exceptions are applied, disclosures on the reporting entity’s exposure to the IBOR reform, on how it manages the transition to alternative benchmark rates and on the major assumptions or judgments that it used to apply these amendments. The IASB’s objective is to make it possible for entities to avoid discontinuing hedging relationships as a result of the uncertainties associated with the IBOR reform. The IASB is currently holding discussions on post-IBOR reform matters. No draft regulations have been published at this stage; Special attention should be given to the potential effects of the reform in terms of the derecognition of IBOR-indexed financial assets and liabilities, issues of fair value, the application of the SPPI criterion and hedging relationships for the purposes of the transition. The Group reflects uncertainties regarding its tax treatment for income tax in its financial statements when it deems it probable that the tax authority will not accept its treatment. To ascertain whether a tax position is uncertain and to assess its effect on the amount of tax, the Group assumes that the tax authority will examine all amounts reported and have full knowledge of all UNCERTAINTIES OVER TAX TREATMENT FOR INCOME TAX

related information. It bases its judgment on administrative policy, case-law and on the existence of any corrections made by the administration relating to similar tax uncertainties. The Group reviews the estimate of the amount it expects to pay or recover from the tax authority due to tax uncertainties in the event of changes in the associated facts and circumstances, as these changes may result from (including, but not limited to) changes in tax law, the expiry of a statutory limitation period, or the outcome of audits and measures conducted by the tax authorities.

2.4

PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS AND BALANCE SHEET DATE

As no specific format is required under IFRS, the presentation used by the Group for summarized statements follows Recommendation No. 2017-02 issued by the Autorité des normes comptables (ANC – French national accounting standards authority) on June 2, 2017. The consolidated financial statements are based on the financial statements at December 31, 2019. The Group’s consolidated financial statements for the period ended December 31, 2019 were approved by the Management Board on February 4, 2020. They will be presented to the Annual General Shareholders’ Meeting on May 29, 2020. The amounts presented in the financial statements and in the notes are shown in millions of euros, unless otherwise indicated. Rounding may lead to differences between the amounts shown in the financial statements and those referred to in the notes. AND MEASUREMENT METHODS The general accounting principles set out below apply to the main items of the financial statements. Specific accounting principles are presented in the Notes to which they refer. OF FINANCIAL ASSETS IFRS 9 is applicable to Groupe BPCE excluding the insurance subsidiaries, which continue to apply IAS 39. On initial recognition, financial assets are classified at amortized cost, at fair value through other comprehensive income, or at fair value through profit or loss, according to the type of instrument (debt or equity), the characteristics of their contractual cash flows and how the entity manages its financial instruments (its business model). CLASSIFICATION AND MEASUREMENT 2.5.1 GENERAL ACCOUNTING PRINCIPLES 2.5

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UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE