BPCE - 2019 Universal Registration Document

5

FINANCIAL REPORT

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

of the asset and where the impact of these events on estimated future cash flows can be reliably measured. Different rules are used for the impairment of equity instruments and debt instruments. For equity instruments, a lasting decline or a significant decrease in value are objective indicators of impairment. A decline of over 50% or lasting for over 36 months in the value of a security by comparison with its historic cost is an objective indicator of permanent impairment, leading to the recognition of an impairment loss in income. In addition, these impairment criteria are also supplemented by a line-by-line review of the assets that have recorded a decline of over 30% or for more than six months in their value by comparison with their historic cost or if events occur that are liable to represent a material or prolonged decline. An impairment charge is recorded in the income statement if the Group determines that the value of the asset will not be recovered in its entirety. For unlisted equity instruments, a qualitative analysis of their situation is carried out. Impairment losses recognized on equity instruments may not be reversed and nor may they be written back to income. Losses are recorded under “Net income from insurance businesses”. A subsequent increase in value is taken to “Gains and losses recognized directly in other comprehensive income” until disposal of the securities. Impairment losses are recognized on debt instruments such as bonds or securitized transactions (ABS, CMBS, RMBS, cash CDOs) when there is a known counterparty risk. The Group uses the same impairment indicators for debt securities as those used for individually assessing the

impairment risk on loans and receivables, irrespective of the portfolio to which the debt securities are ultimately designated. For perpetual deeply subordinated notes, particular attention is also paid if, under certain conditions, the issuer may be unable to pay the coupon or extend the issue beyond the scheduled redemption date. In the event of an improvement in the issuer’s financial position, impairment losses taken on debt instruments must be written back to the income statement. Impairment losses and write-backs are recorded in “Cost of credit risk” (for the insurer’s net share). Impairment of loans and receivables IAS 39 defines the methods for calculating and recognizing the impairment of loans. A loan or receivable is deemed to be impaired if the following two conditions are met: there is objective evidence of impairment on an individual • or portfolio basis: there are “triggering events” or “loss events” identifying counterparty risk occurring after the initial recognition of the loans in question. On an individual level, the criteria for deciding whether or not a credit risk has been incurred include the existence of past due payments; these events are likely to lead to the recognition of incurred • losses. Impairment is determined as the difference between the amortized cost and the recoverable amount of the receivable, i.e. the present value of estimated recoverable future cash flows taking into account the impact of any collateral.

12/31/2019

12/31/2018

in millions of euros

Investment property

1,887

1,664

Financial assets at fair value through profit or loss Available-for-sale financial assets Loans and receivables due from banks Loans and receivables due from customers

25,217 58,546

23,598 54,126

747

383

13,017

12,735

Held-to-maturity financial assets

1,622

2,060

Share held by cedents and retrocessionaires in liabilities relating to insurance policies and financial contracts

15,269

13,063

Receivables arising from insurance and assumed reinsurance activities

2,243

2,139

Receivables arising from ceded reinsurance activities

93

96

Deferred acquisition costs

405

431

TOTAL INSURANCE BUSINESS INVESTMENTS

119,046

110,295

298

UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE

www.groupebpce.com