BPCE - 2020 Universal Registration Document

ACTIVITIES AND FINANCIAL INFORMATIONS 2020

OUTLOOK FOR GROUPE BPCE

COST OF RISK Cost of risk is expressed in basis points and measures the level of risk by business division, as a percent of the volume of loan outstandings. It is calculated by dividing the net allowance for credit risk over the period by gross customer loan outstandings at the start of the period.

The Group will have to deal with numerous challenges that were already affecting the banking sector prior to the crisis: the low level of interest rates, which has become structural and is weighing on the revenues of various banking and insurance products; the new social order, with changes in society and people’s life paths, a return to the local level, fostering the development of players rooted in regional territories, the search for meaning, and increased client expectations regarding social and environmental responsibility; technological upheavals,which open up new opportunitiesand impose new standards; and also regulations, spurring the emergence of new players (DSP2), strengthening bank capital requirements (Basel IV), and heightening the protection of customer data (GDPR). The Group will position itself to tackle the new questions emerging from the Covid-19 crisis: the global health crisis raises questions about globalization, the state of healthcare systems and the connection to sustainability issues; the halting of most traffic flows raised questions about consumption patterns and the nature of production chains; and finally, the crisis in the real economy raises questions about the way companies are financed and the role of the State in the economy. A host of unanswered questions remains in terms of the duration and extent of the expected disruptions to come, particularly on the health and economic fronts. However, the current crisis will have permanently anchored certain accelerations and shifts in trends, in particular the transformations linked to remote consumption patterns, increased attention to the health sector and the environment, the future of work, and the strengthening of government action. In this context, the Group’s strategic plan will focus on the growth and development of its businesses by asserting their “essential” character and their ethical positioning, by supporting the regions, individual customers and companies, in particular with regard to retailers. challenges of environmental transition and health financing, and by supporting the economy alongside public authorities. The Group will explore ways to improve its performance and ensure it is sustainable, by strengthening its operational efficiency through economies of scale and pooling, through digitalization and automation, and by developing data usage. The Group will seek to maintain strong fundamentals in terms of financial resilience (solvency and liquidity) and be able to absorb the likely growth in the cost of risk in a context of pressure on revenues. Its strategic project will also focus on new modes of remote interaction with customers, while maintaining proximity, and the ramp-up in future ways of working. Lastly, the Group will be attentive to consolidation trends in Europe, particularly in businesses requiring sufficient critical mass to ensure their profitability. DEFINITIONS AND NOTES ON METHODOLOGY OPERATING EXPENSES Operating expenses are the aggregation of operating expenses as presented in the registration document (Note 4.7 to the Groupe BPCE consolidated financial statements) and “Depreciation, amortization and impairment of property, plant and equipment and intangible assets.”

LOAN OUTSTANDINGS, CUSTOMER SAVINGS AND DEPOSITS

The following restatements were carried out for the transition from accounting capital to loan outstandings and customer savings & deposits: customer savings and deposits: outstandings exclude debt • securities (certificates of deposit and savings bonds); loan outstandings: outstandings exclude equivalents of loans • and receivables due from customers and other financial activity equivalents. SOLVENCY Common Equity Tier 1 is determined in accordance with the applicable CRR/CRD IVrules after deduction, on the supervisor’s instructions, of irrevocable payment commitments; non phased-in capital is presented without applying phase-in measures. – Additional Tier 1 capital includes subordinated debt issues which have become ineligible for deferred tax assets, capped at the phase-out rate in force. – The leverage ratio is calculated using the rules of the Delegated Act published by the European Commission on October 10, 2014, without phase-in arrangements. Securities financing operations carried out with clearing houses are offset on the basis of the criteria set forth in IAS 32, without consideration of maturity and currency criteria. Subsequent to the ruling of the European Court of Justice on July 13, 2018, Groupe BPCE once again applied for ECB approval to exclude centralized regulated savings from the calculation of the ratio’s denominator. TOTAL LOSS ABSORPTION CAPACITY The amount of liabilities eligible for the TLAC numerator is determined in accordance with our interpretation of the FSB term sheet published on November 9, 2015, “Principles on Loss-Absorbing and Recapitalisation Capacity of G-SIBs in Resolution.” This amount is comprised of the following four items: Common Equity Tier 1 capital, in accordance with applicable • CRR/CRD IV rules; Additional Tier 1 capital, in accordance with applicable • CRR/CRD IV rules; Tier 2 capital, in accordance with applicable CRR/CRD IV rules; • subordinated debt not recognized in the above categories, • with a residual maturity of more than 1 year, i.e. : the share of AT1 instruments not recognized in capital ( i.e. – taken in phase-out), the share of the prudential discount on Tier 2 instruments – with a residual maturity of more than 1 year, the nominal amount of senior non preferred debt with a – maturity of more than 1 year. Eligible amounts vary somewhat from the amounts included in the numerator of solvency ratios; these eligible amounts are determined in accordance with the principles of the FSB term sheet of November 9, 2015.

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UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE