BPCE - 2019 Universal Registration Document

5

FINANCIAL REPORT

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

For French “3/6/9” commercial leases, the term used is usually 9 years. The reasonable certainty of whether the options relating to the lease term will be exercised is assessed by considering Group entities’ real estate management strategy. At the end of the lease, the contract is no longer enforceable and the lessee and the lessor each has the right to terminate the lease without permission from the other party with no more than an insignificant penalty. Leases that are not extended or canceled at the end of the term (leases with automatic renewal) are considered as having

a remaining lease term of nine months, corresponding to the current period plus the period of notice for lease termination. For leases recognized on the balance sheet, the expense relating to the lease liability is reported as an interest expense under net banking income while the amortization expense of the right-of-use is recognized as a depreciation and amortization expense in gross operating income. Lease contracts not recognized in the balance sheet and variable payments that are excluded from lease liabilities are recorded as an expense for the period under operating expenses.

Impact of lease contracts on the income statement – lessee

12/31/2019

in millions of euros

Expenses from leases

(524)

Interest expenses on lease liabilities Amortization of right-of-use assets

(25)

(395)

Variable lease expenses not included in measurement of lease liabilities

(35) (62)

Expenses on short-term leases (1)

(6) 14

Expenses on underlying assets of low value (1) Income from sub-leasing/operating leases

Related to leases not recognized in the balance sheet. (1)

When the Group sub-lets all or part of an asset it leases, the sub-letting contract is analyzed, in substance, using the same approach as that applied by lessors, separating operating leases from finance leases.

Income on these contracts is presented using the same approach as lessors: as income from other activities for operating leases, and as interest income for finance leases.

Schedule of lease liabilities

12/31/2019

in millions of euros

Amounts of non-discounted future payments

1,845

< 1 year 1-5 years > 5 years

396 997 452

Commitments on leases not yet recognized in the balance sheet In accordance with IFRS 16, future minimum payments relating to leases to which the Group is committed but whose underlying assets have not yet been made available are not recognized on the balance sheet prior to their commencement date. The following table shows the minimum payments expected on these contracts.

12/31/2019

in millions of euros

Amounts of non-discounted future payments

382

< 1 year 1-5 years > 5 years

3

65

314

330

UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE

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