BPCE - 2019 Universal Registration Document

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FINANCIAL REPORT

STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

Our response

IMPAIRMENT OF STAGE 1 AND STAGE 2 OUTSTANDING LOANS Our work mainly consisted in: verifying the existence, at the main Group establishments, of • internal control which enables the ratings of different loan outstandings to be updated at appropriate intervals; evaluating the internal control system governing the validation • of internal models and the definition of the inputs used in the calculation of impairment; assessing the relevance of the inputs used for the impairment • calculations at December 31; redoing the calculations on the main loan portfolios; • reviewing the updating measures for local sectoral provisions, • when necessary

IMPAIRMENT OF STAGE 3 LOANS OUTSTANDING As part of our audit procedures, we generally reviewed the internal controls related to identifying exposures, monitoring credit and counterparty risk, assessing non-recovery risk and determining related impairment and provisions on an individual basis. Our procedures consisted in assessing the quality of the measures for monitoring sensitive, doubtful and litigious counterparties; the loan review process. Furthermore, based on a sampling of files selected using materiality and risk criteria, we redid the calculations for the provision amounts. We have also assessed the relevance of the disclosures set forth in the notes required by the IFRS 9 standard with respect to “impairment” at December 31, 2019.

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UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE

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