BPCE - 2020 Universal Registration Document

FINANCIAL REPORT

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

IFRS 16 IFRS 16 “Leases” replaced IAS 17 “Leases” and its interpretations from January 1, 2019. At its meeting of November 26, 2019, the IFRS Interpretation Committee (IFRS IC) issued clarifications on the application of IFRS 16 pertaining to lease terms. On July 3, 2020, the Autorité des normes comptables published a summary of conclusionson the application of IFRS 16, replacing that published on February 16, 2018. As a result, the Group reviewed the way it applied accounting principles to determine the terms of French law commercial leases with automatic renewal. The changes made had no material impact on the financial statements. Amendments to IAS 39 and IFRS 9: interest rate benchmark reform (phase 1 and phase 2) Note that in September 2019,the IASB published amendments to IFRS 9 and IAS 39 to provide relief for instrumentseligible for hedge accounting in the lead up to the interest rate benchmark reform (phase 1). The amendments were adopted by the European Commission on January 16, 2020. Their application date is January 1, 2020 and they may be applied early. Groupe BPCE chose to apply the amendment early as of December 31, 2019. On August 27, 2020, the IASB published amendments dealing with issues related to the replacement of benchmark rates by their alternative benchmark rate (phase 2). These amendments involved IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16 regarding modifications of financial assets and financial liabilities (including lease liabilities), whether or not these are related to the enforcement of existing contractual clauses ( i.e. fallback clauses), hedge accounting, and disclosures. These amendments were adopted by the European Commission on January 13, 2021. Their application date is January 1, 2021 and they may be applied early. Groupe BPCE chose to apply the amendment early as of December 31, 2020. Uncertainty arising from the benchmark rate reform and the organizationset up at the BPCE SA group to address this matter Guidelines issued by the European Banking Authority (EBA) on the application of the definition of default under Article 178 of European Regulation 575/2013, effective from January 1, 2021, and Regulation (EU) 2018/1845 of the European Central Bank on the threshold for assessing the materiality of credit obligations past due, effective by December 31, 2020 at the latest, will make European banks more consistent in the way they identify loans in default. are described in Note 5.20. New definition of default

The definition of loans in default is tightened up by the introduction of relative and an absolute thresholds for past due payments to identify defaults, clearer criteria for returning to performing status with the introduction of a probationary period and explicit criteria for classifying restructured loans as in default. Groupe BPCE applied these new methods for identifying loans in default from October 22, 2020. The new method for identifying loans in default is consistent with the criteria used to classify non-performingloans in Stage 3 under IFRS 9 rules for recognizing expected loss due to credit risk. Changes resulting from the new rules on loans in default have no material impact on the consolidated financial statements. The other standards, amendments and interpretations adopted by the European Union did not have a material impact on the Group’s financial statements. NEW STANDARDS PUBLISHED AND NOT YET APPLICABLE IFRS 17 IFRS 17 “Insurance contracts” was published by the IASB on May 18, 2017 and will replace IFRS 4 “Insurance contracts”. Initially applicable on January 1, 2021, with a comparison at January 1, 2020, this standard is only expected to come into force from January 1, 2023. At its meeting on March 17, 2020, the IASB decided to defer its application by two years, as clarifications still need to be given regarding key aspects of the standard. It also decided to defer the expiry of insurance companies’ temporary exemption from IFRS 9 to January 1, 2023, to align it with the application of IFRS 17. An amendment was published on June 25, 2020. This amendment improves the application of IFRS 17. Regulation (EU) 2020/2097, of 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. BPCE SA group’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.

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UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE