BPCE - 2019 Universal Registration Document

FINANCIAL REPORT

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

9.1.1.1

Investment property

12/31/2019

12/31/2018

Accumulated depreciation and impairment

Accumulated depreciation and impairment

Gross amount

Gross amount

Net amount

Net amount

in millions of euros

Investment property recognized at historic cost Investment property recognized at fair value (1) Investment property (unit-linked vehicles)

44

(14)

30

44

(14)

30

1,455

1,455

1,259

1,259

402

402

374

374

TOTAL INVESTMENT PROPERTY 1,664 Changes in fair value give rise to symmetrical recognition of a provision for deferred profit-sharing averaging, at December 31, 2019, 89% of the calculation base in question (1) versus 88% at December 31, 2018. 1,901 (14) 1,887 1,678 (14)

The fair value of investment property came to €1,915 million at December 31, 2019 versus €1,689 million at December 31, 2018. The fair value of investment property is classified in Level 3 of the fair value hierarchy in accordance with IFRS 13.

9.1.1.2

Financial assets at fair value through profit or loss

Accounting principles This asset category includes:

instruments managed under a single strategy. This treatment applies in particular to unit-linked policy assets and liabilities. Harmonization of accounting treatment for management and performance measurement The option applies for a group of assets and/or liabilities managed and measured at fair value, provided that it is based on a formally documented risk management or investment strategy, and information about the Group is also reported internally on a fair value basis. Hybrid financial instruments containing one or more embedded derivatives An embedded derivative is a component of a financial or non-financial hybrid (combined) instrument that qualifies as a derivative. It must be separated from the host contract and accounted for as a derivative if the hybrid instrument is not measured at fair value through profit or loss, and if the economic characteristics and risks associated with the derivative are not closely related to those of the host contract. The fair value option may be applied when the embedded derivative(s) substantially modify the cash flows of the host contract and when the separate recognition of the embedded derivative(s) is not specifically prohibited by IAS 39 ( e.g. an early redemption option at cost embedded in a debt instrument). The option allows the entire instrument to be measured at fair value, and therefore avoids the need to extract, recognize or separately measure the embedded derivative. This treatment applies in particular to certain financial instruments containing material embedded derivatives (convertible bonds, indexed bonds and structured securities).

financial assets held for trading, i.e. securities acquired or • issued principally for the purpose of selling them in the near term; and financial assets that the Group has chosen to recognize at • fair value through profit or loss at inception using the fair value option available under IAS 39. These assets are measured at fair value at the date of initial recognition and at each balance sheet date. Changes in fair value over the period, interest, dividends, gains or losses on disposals on these instruments are recognized in “Net income from insurance businesses”. Financial assets and liabilities designated at fair value through profit or loss The amendment to IAS 39 adopted by the European Union on November 15, 2005 allows entities to designate financial assets and liabilities at fair value through profit or loss on initial recognition. However, an entity’s decision to designate a financial asset or liability at fair value through profit or loss may not be reversed. Compliance with the criteria stipulated by the standard must be verified prior to any recognition of an instrument using the fair value option. In practice, this option may be applied only under the specific circumstances described below: Elimination of or significant reduction in an accounting mismatch Applying the option eliminates accounting mismatches stemming from the application of different valuation rules to

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UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE