BPCE - 2020 Universal Registration Document

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FINANCIAL REPORT

IFRS CONSOLIDATED FINANCIAL STATEMENTS OF GROUPE BPCE AS AT DECEMBER 31, 2020

The prepayment penalty is set in the contract, at a reasonable level (2% of the principal amount outstanding during the initial loan period, then 3%-6% of the principal amount outstanding during the repayment period). The terms and conditions for extending the loan are not set in advance but are established two to three months before the extension option expires, in line with market conditions. A State-guaranteed loan may not be covered by another collateral security or guarantee besides the state guarantee, with the exception of those granted pursuant to a ministerial order by the Minister of the Economy and Finance. The self-employed professional or business leader may request or be offered loan repayment insurance, but such insurance is not mandatory. In view of these features, the State-guaranteed loan meets the criteria of a basic lending arrangement (see Note 2.5.1). These loans are therefore recognized at amortized cost, because they are managed in a hold-to-collect business model (see Note 2.5.1). On subsequent balance sheet dates, they will be measured at amortized cost using the effective interest method. The State guarantee is considered to be an integral part of the terms of the loan and is taken into account when calculating impairment for expected credit losses. The guarantee fee paid to the government by Groupe BPCE on granting the loan is recorded in income over the initial term of the loan, using the effective interest method. The impact is recognized in net interest income. A State-guaranteedloan granted to a borrower considered to be non-performing on inception (Stage 3) is classified as a POCI (purchased or originated credit-impaired) asset. However, the grant of a State-guaranteed loan to a given counterparty is not in itself evidence of deterioration in risk, requiring a downgrade to Stage 2 or 3 of the other outstandings of this counterparty. At December 31, 2020, Groupe BPCE had issued approximately 197,000 State-guaranteed loans for an amount of approximately €31 billion (of which nearly 193,000 were disbursed as of December 31, 2021 for an amount of approximately €30 billion). Information on the segmentation of loans granted under State-guaranteed schemes in response to the Covid-19 crisis is presented in the Credit Risk section of Pillar III. Loan repayment moratoria and other loan 1.5.1.2 restructuring Due to the Covid-19 crisis, Groupe BPCE offered to grant a range of concessions to its retailer, professional, SME and large corporate clients (including temporarily suspending repayments, revising repayment schedules or renegotiating loan terms), to help them address temporary cash flow difficulties caused by the crisis. GENERAL MEASURES When the lockdown was announced in France, the Banque Populaire and Caisse d’Epargne networks offered all their professional and SME customers in certain business sectors the possibility of postponing their loan repayments (principal and interest) for six months. Other general measures were subsequently applied in specific sectors, for example, a moratorium of up to twelve months on loan repayments for SMEs in the tourism, hotel and catering sectors.

The terms of these moratoria observed the general moratorium provisions described in Article 10 of the EBA guidelines (EBA/GL/2020/02) published on April 2, 2020 and amended on December 2, 2020 (EBA/GL/2020/15). In France, the market protocol has not been updatedwith regard to this latest amendment. In accordancewith these guidelines, the widespread granting of moratoria to counterpartiesnot experiencing financial difficulties before the Covid-19 crisis, without applying any specific conditions, is not in itself an indicator of a material increase in credit risk. As such, the implementationof a general moratorium to address temporary liquidity problems arising from the Covid-19 crisis does not automatically lead to loans classed as Stage 1 pre-crisis being downgraded to Stage 2 (or Stage 3 where the loss is more than 1% of the difference between net present value before and after restructuring). In 2020, Groupe BPCE had granted six-month moratoria for 426,889 loans representing €25,233 million (including €13,991 million granted to small and medium-sizedenterprises). The moratorium may be extended to twelve months for businesses in the tourism, hotel and catering sectors. In addition, €1,785 million of loans granted a moratorium are classified as Stage 2 and €460 million of loans granted a moratorium are classified as Stage 3. More detailed information on the moratoria in the context of State-guaranteedschemes in response to the Covid-19 crisis is presented in the Credit Risk section of Pillar III. INDIVIDUAL MEASURES Groupe BPCE also individuallysupport its customersby granting various types of concessions (moratoria, rescheduling or other amendments to loan terms), with the terms and conditions established according to each customer’s individual situation. When granting such a concession, a specific analysis is performed to verify whether the borrower shows evidence of financial difficulties on that date. In the presence of such an indicator, the outstandingsare downgradedto Stage 2 (or Stage 3 when the loss is greater than 1% of the differencebetween the net present value before restructuringand the net present value after restructuring), which results in an adjustment to its provisioning level. Moratoria granted by the Group’s banks are generally charged at the loan’s initial interest rate, meaning that interest continues to accrue during the moratorium. At the end of the moratorium, this interest is added to the loan principal and repaid over the remaining term of the loan (which is extended due to the moratorium). In this case, the moratoriumdoes not imply a loss of cash flow for the bank. No income statement impact is therefore to be recognized. In practice, the granting of a moratorium does not lead to the loan’s derecognition insofar as it does not significantly affect the net economic value of the loan. 1.5.2.1 For 2020, Groupe BPCE’s cost of credit risk amounted to €2,998 million, a significant increase compared to fiscal year 2019, mainly due to the increase in expected credit losses in the context of the Covid-19 crisis. IMPACT ON THE USE OF ESTIMATES 1.5.2 Credit risk impairment

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UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE

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