BPCE - 2019 Universal Registration Document

5

FINANCIAL REPORT

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

Notes to the income statement Note 4

Key points Net banking income (NBI) includes: interest income and expenses; • fees and commissions; • net gains or losses on financial instruments at fair value • through profit or loss;

net gains or losses on financial instruments at fair value • through other comprehensive income; net gains or losses resulting from the derecognition of • financial assets at amortized cost;

net income from insurance businesses; • income and expenses from other activities. •

4.1

INTEREST AND SIMILAR INCOME AND EXPENSES

Accounting principles Interest income and expenses are recognized in the income statement for all financial instruments measured at amortized cost using the Effective Interest Method, which include interbank and customer items, the portfolio of securities at amortized cost, subordinated debt and lease liabilities. This item also includes interest receivable on fixed income securities classified as financial assets at fair value through other comprehensive income and hedging derivatives, it being specified that accrued interest on cash flow hedging derivatives is taken to income in the same manner and period as the accrued interest on the hedged item. Interest income also consists of interest on non-SPPI debt instruments not held under a trading model as well as interest on the related economic hedges (classified by default as instruments at fair value through profit or loss). The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or financial liability. The effective interest rate calculation takes account of all transaction fees paid or received as well as premiums and discounts. Transaction fees paid or received that are an integral part of the effective interest rate of the contract, such as loan set-up fees

and commissions paid to financial partners, are treated as additional interest. The Group has chosen the following option to account for negative interest:

when income from a financial asset debt instrument is negative, it is deducted from interest income in the income statement; • when income on a financial liability debt instrument is positive, it is deducted from interest expenses in the income statement. •

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UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE

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