BPCE - 2019 Universal Registration Document

FINANCIAL REPORT

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

9.1.1.4

Loans and receivables

Accounting principles The portfolio of loans and receivables included in “Insurance business investments” comprises non-derivative financial assets with fixed or determinable payments and which are not quoted in an active market. In addition, these assets must not be exposed to a risk of material losses unrelated to a deterioration in their credit quality. Some securities not quoted in an active market may be classified in this portfolio. These are initially recognized at fair value, plus any transaction costs and less any transaction income. Securities classified in this category comply with the rules for recognition, measurement and impairment applicable to loans and receivables. When a financial asset recorded under loans and receivables is sold before its maturity, the income from the disposal is recorded under “Net income from insurance businesses”.

12/31/2019

12/31/2018

in millions of euros

Loans and receivables due from banks

747

383

13,017 13,764

12,735 13,118

Investments of loans and receivables due from customers (1)

TOTAL LOANS AND RECEIVABLES

Including €11,602 million for guarantee deposits made for the acceptance of reinsurance treaties versus €11,598 million at December 31, 2018. (1)

9.1.1.5

Held-to-maturity financial assets

Accounting principles Held-to-maturity (HTM) financial assets are securities with fixed or determinable payments and fixed maturity dates that the Group has the intention and ability to hold until maturity. IAS 39 does not permit the sale or transfer of these securities before maturity except in certain specific circumstances. In the event that the securities are sold before maturity, all held-to-maturity assets must be reclassified and the held-to-maturity category cannot be used during the current year or the following two years. Exceptions to the rule apply in the following cases: a material deterioration in the issuer’s credit quality; • a change in tax regulations canceling or significantly • reducing the tax exemption on interest earned on investments held-to-maturity; a major business combination or significant withdrawal of • activity (sale of a sector, for example) requiring the sale or transfer of held-to-maturity investments in order to maintain the entity’s existing situation in terms of interest rate risk or its credit risk policy; a change in legal or regulatory provisions significantly • modifying either the definition of an eligible investment or

the maximum amount of certain types of investment, requiring that the entity dispose of a held-to-maturity asset; a significant increase in capital requirements forcing the • entity to restructure by selling held-to-maturity assets; a significant increase in the risk weighting of • held-to-maturity assets in terms of prudential capital regulations. In the exceptional cases described above, the income from the disposal is recorded under “Net income from insurance businesses”. The hedging of these securities against interest rate risk is not permitted. However, hedges against exchange rate risk or the inflation component of certain held-to-maturity financial assets are allowed. Held-to-maturity financial assets are recognized at fair value at inception, plus any transaction costs directly attributable to their acquisition. They are subsequently measured at amortized cost using the effective interest method, including any premiums, discounts and acquisition fees, where material.

5

12/31/2019

12/31/2018

in millions of euros

Treasury bills and equivalent

636 987

1,002 1,059 2,061

Bonds and other fixed income securities

Gross amount of held-to-maturity investments

1,623

Impairment

(1)

(1)

TOTAL HELD-TO-MATURITY FINANCIAL ASSETS

1,622

2,060

301

UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE