BPCE - 2020 Universal Registration Document

FINANCIAL REPORT

STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

Our response

Our work has been reinforced to take into account the evolution of risks and an increased level of uncertainty. In this context, we have assessed the adequation of the coverage of credit risk and the overall level of cost of risk, as well as the appropriateness of the internal control framework, in particular the adjustments made in response to the crisis context. Impairment of Stage 1 and Stage 2 outstanding loans Our work mainly consisted in:

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 with respect to credit risk in the evolving context of the pandemic, in particular disclosures required by the IFRS 7 standard.

verifying the existence of an internal control governing the • validation of internal models and the definition of the inputs used in the calculation of impairment and analyzing the impairment evolutions; controlling methodological evolutions and adjustments to the • expected credit losses calculations in the context of the Covid-19 crisis; assessing the relevance of the inputs used for the impairment • calculations at December 31; redoing the calculations on the main loan portfolios; • evaluate the internal control system governing the validation • of internal models and the definition of the inputs used in the calculation of impairment; realizing controls on the Groupe BPCE IT framework, including • the review of IT General Controls, interfaces and embedded controls regarding specific data used in processing IFRS9 information; reviewing the updating measures for local sectoral provisions, • when necessary.

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UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE