BPCE - 2020 Universal Registration Document

FINANCIAL REPORT

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

Under IFRS 9, the treatment of loans restructured due to financial hardship is similar to that applied under IAS 39: a discount is applied to loans restructuredfollowinga credit loss event (impaired, Stage 3) to reflect the difference between the present value of the contractual cash flows expected at inception and the present value of expected principal and interest repayments after restructuring. The discount rate used is the original effective interest rate. This discount is expensedto “Cost of credit risk” in the incomestatementand offset against the correspondingitem on the balance sheet. It is writtenback to net interest income in the incomestatement over the life of the loan using an actuarial method. If the discount is immaterial, the effective interest rate on the restructured loan is adjusted and no discount is recognized. The restructured loan is reclassified as performing (not impaired, Stage 1 or Stage 2)when no uncertaintyremains as to the borrower’s capacity to honor the commitment. For substantially restructured loans (for example, the conversion of all or part of a loan into an equity instrument), the new instrumentsare booked at fair value. The difference between the carrying amount of the derecognized loan (or portion of the loan) and the fair value of the assets received in exchange is taken to income under “Cost of credit risk”. Any previouslyestablishedimpairmentloss on the loan is adjusted. It is fully reversed in the event of full conversion of the loan into new assets. The widespreadmoratoria granted to business customers in response to temporary cash flow difficulties arising from the Covid-19 crisis modified these loans’ repayment schedules without substantially modifying their features. These loans were therefore amended without being derecognized. In addition, the granting of the moratorium is not in itself an

indication of financial distress for the companies in question (see Note 1.5). Fees and commissions Costs directly attributable to the arrangement of loans are external costs which consist primarily of commissionspaid to third parties such as business provider fees. Income directly attributable to the issuance of new loans principally comprises set-up fees charged to customers, rebilled costs and commitment fees (if it is more probable than improbable that the loan will be drawn down). Commitment fees received that will not result in any drawdowns are apportioned on a straight-line basis over the life of the commitment. Expensesand incomearisingon loanswith a termof less than one year at inceptionare deferred on a pro rata basis with no recalculation of the effective interest rate. For floating or adjustable-rateloans, the effective interest rate is adjusted at each rate refixing date. Date of recognition Securities are recorded in the balance sheet on the settlement-delivery date. Temporary sales of securities are also recorded on the settlement/delivery date. The first-in, first-out (FIFO) method is applied to any partial disposals of securities, except in special cases. For repurchase transactions, a loan commitment given is recorded between the transaction date and the settlement-delivery date.

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5.5.1

SECURITIES AT AMORTIZED COST

12/31/2020

12/31/2019

in millions of euros

Treasury bills and equivalent Bonds and other debt securities Impairment for expected credit losses

14,959 11,953

15,734 13,373

(180)

(185)

TOTAL SECURITIES AT AMORTIZED COST

26,732

28,922

The fair value of securities at amortized cost is presented in Note 10. The classification of outstanding loans and impairment for credit losses by impairment stage is detailed in Note 7.1.

5.5.2

LOANS AND RECEIVABLES DUE FROM BANKS AND SIMILAR AT AMORTIZED COST

12/31/2020

12/31/2019

in millions of euros

Current accounts with overdrafts

5,786 2,155

6,713 5,032

Repurchase agreements Accounts and loans (1)

76,257

72,725

Other loans or receivables due from banks and similar

57

50

Security deposits paid

5,807

5,197

Impairment for expected credit losses

(44)

(61)

TOTAL LOANS AND RECEIVABLES DUE FROM BANKS 89,656 Livret A, LDD and LEP savings accounts centralized with Caisse des Dépôts et Consignations and recorded under “Accounts and loans” amounted to €73,557 million at (1) December 31, 2020 versus €68,187 million at December 31, 2019. 90,018

The fair value of loans and receivables due from banks and similar is presented in Note 10. The classification of outstanding loans and impairment for credit losses by impairment Stage is detailed in Note 7.1.

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UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE