BPCE - 2020 Universal Registration Document

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FINANCIAL REPORT

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

December 15, 2020 adopts the amendmentsmade to IFRS 4 to extend the exemption from applying IFRS 9 for insurers. IFRS 17 establishes the principles of recognition, measurement, presentation and disclosure for the insurance contracts and investment contracts with discretionary profit sharing provisions that fall within its scope. Currently measured at historic cost, contract obligations shall be recognized at present value, in accordancewith IFRS 17. To that end, insurance contracts will be measured based on their future cash flows, including a risk margin in order to factor in the uncertainty relating to these cash flows. IFRS 17 also introduces the concept of contractual service margin. This represents the insurer’s unearned profit and will be released over time as the services are rendered to the policyholder. The standard demands a more detailed level of granularity in calculations as it requires estimates by group of contracts. These accounting changes could modify the profile of insurance income (in particular for life insurance) and also introduce greater volatility in income. Groupe BPCE’s insurance entities have set up project teams to address the changes brought about by the standard and are continuing their preparatory work. This work includes making decisions and documenting the choices made pertaining to the standard, modeling, adapting systems and organizations, producing financial statements and the switchover strategy, financial disclosures and change management. 2.3 Preparation of the financial statements requires Management to make estimates and assumptions in certain areas with regard to uncertain future events. These estimates are based on the judgment of the individuals preparing these financial statements and the information available at the balance sheet date. Actual future results may differ from these estimates. With respect to the financial statements for the period ended December 31, 2020 in particular, accounting estimates requiring assumptions were mainly used for the following measurements: the fair value of financial instruments determined on the basis • of valuation models (Note 10); the amount of expected credit losses on financial instruments • as well as on loan and guarantee commitments the results of hedge effectiveness tests (note 7.1); the results of hedge effectiveness tests (Note 5.3); • provisions recorded under liabilities in the balance sheet and • more specifically the provision for home savings products (Note 5.15) and provisions for insurance policies (Note 9); calculations related to the cost of pensions and future • employee benefits (Note 8.2); uncertainties relating to the tax treatment of income taxes • (Note 11); deferred tax assets and liabilities (Note 11); • uncertainties related to the application of certain provisions of • the regulations regarding benchmarks (Note 5.20); goodwill impairment tests (Note 3.5.2). • USE OF ESTIMATES AND JUDGMENTS

Judgmentmust also be exercised to assess the businessmodel and the basic characteristics of a financial instrument. The procedures are described in the relevant paragraphs (Note 2.5.1). The adoption of IFRS 16 led Groupe BPCE to extend its use of judgment to estimate the term of leases in order to recognize the right of use of lease assetsand to record lease liabilities. Uncertainties arising from the Covid-19 crisis are described in Note 1.5. BREXIT On June 23, 2016, the UK decided to leave the European Union (Brexit) following a referendum. After the triggering of Article 50 of the treaty on European Union on March 29, 2017, the United Kingdom and the 27 other member countries of the European Union gave themselves two years to prepare for the country’s effective withdrawal. The Brexit date was postponed three times and finally set at January 31, 2020. A transition period followed until December 2020, during which the future deal on goods and services was negotiated while existing European rules remained in force. On December 24, 2020, the United Kingdom and European Union reached an exit deal, which set out a framework for future trade once the transition period ended. However, the deal does not cover financial services. Groupe BPCE therefore applied, as from January 1, 2021, the measures prepared for a no-deal Brexit, which had no material impact on its business. The two parties (UK and EU) gave themselves 3 months, until March 31, 2021, to negotiate specific rules for the financial sector. Groupe BPCE is keeping a close eye on the outcome of these negotiations, in order to incorporate them, where necessary, in the assumptions and estimates used in preparing the consolidated financial statements. Lastly, the risk of European regulations not recognizing UK clearing houses is no longer a short-term risk. On September 21, 2020 ESMA announced an extension of the temporary equivalence period to June 30, 2022. As no specific format is required under IFRS, the presentation used by the Group for summarized statements follows Recommendation No. 2017-02 issued by the Autorité des normes comptables (ANC – French national accounting standards authority) on June 2, 2017. The consolidated financial statements are based on the financial statements at December 31, 2019. The Group’s consolidated financial statements for the period ended December 31, 2020 were approved by the Management Board on February 9, 2021. They will be presented to the Annual General Shareholders’ Meeting on May 27, 2021. The amounts presented in the financial statements and in the notes are shown in millions of euros, unless otherwise indicated. Rounding may lead to differences between the amounts shown in the financial statements and those referred to in the notes. PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS AND CLOSING DATE 2.4

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UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE

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