BPCE - 2020 Universal Registration Document

5

FINANCIAL REPORT

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

Breakdown of goodwill

Carrying amount

12/31/2020

12/31/2019

in millions of euros

Oney Bank (1)

170 170

170 170

Other networks

Financial Solutions & Expertise

27 93

27 93

Insurance

Equity interests (Coface) (2)

282 137 709

Payments

137 427

Retail Banking and Insurance Asset & Wealth Management (3) Corporate & Investment Banking

3,168

3,235

135

144

TOTAL GOODWILL

3,730

4,088

Including +€138 million recognized on the acquisition of Oney Bank by BPCE in 2019 and +€32 million in goodwill recorded on the books of Oney Bank. (1) Including -€282 million corresponding to the cancellation of goodwill following the loss of control of Coface (see Note 1.3). (2) Including +€52 million following the acquisition of a 55% stake in La Banque Postale AM following the merger of Natixis IM’s fixed-income and insurance asset management (3) activities with the latter (see Note 1.3).

GOODWILL IMPAIRMENT TESTS 3.4.2 All items of goodwill are impaired, based on the value in use of the cash-generating units (CGUs) to which they have been allocated. Key assumptions used to calculate recoverable value Value in use was primarily calculated based on the discounting of the estimate of each CGU’s future cash flows ( i.e. the discounted cash flow method (DCF)) as they result from the

business lines’ latest results forecasts reassessed for the health crisis. For Corporate & Investment Banking, in an extremely uncertain environment (impact of the crisis on market and credit activities, regulatory changes, etc. ), in which a DCF valuation was deemed insufficient for this CGU at December 31, 2020, the impairment test was rounded out by the use of a number of criteria (DCF, multiples) for the scope of the M&A activity (which bears all goodwill at December 31, 2020), as this approach is

more meaningful.

The following assumptions were used:

Discount rate Long-term growth rate

Retail Banking & Insurance Insurance

7.6% 6.7% 8.0% 7.6% 9.5%

2.5% 2.5% 2.0% 2.0% 2.5%

Payments

Financial Solutions and Expertise Asset & Wealth Management Corporate & Investment Banking

estimated future cash flows: data from the most recent • multi-year earnings projections for each business line, drawn up in the course of preparing Natixis's strategic plan; perpetual growth rate: set at 2.5% for the Insurance and • Payments CGUs and for Corporate & Investment Banking's M&A activity, based on the growth outlook supported by their level of activity and resilience in the face of the crisis. The perpetual growth rate is unchanged at +2% for the Asset & Wealth Management CGU in a context still marked by intense stock market volatility. The perpetual interest rate was set at +2% for all CGUs for the June 30, 2020 test; discount rate: a different rate was applied to each CGU: 7.6% • for Asset & Wealth Management (versus 9.1% at December 31, 2019), 9.5% for Corporate & Investment Banking (versus 11.4% at December 31, 2019), 7.6% for Insurance (versus 10.6% at December 31, 2019) and 6.7% for Payments (versus 6.9% at December 31, 2019). Market data are now calculated on a 5-year historical basis (vs 10 years previously) to reflect a period more representative of current trading conditions for the CGUs, notably the constant fall in interest rates since the euro zone crisis. This change in

methodology is the main reason for the reduction in discount rates this year. In addition, in more detail, the discount rates were determined by taking into account: for the Insurance and Payments CGUs, the 10-year OAT • risk-free rate of return averaged over a depth of five years; for the Asset & Wealth Management and Corporate & • Investment Banking CGUs, the average of the 10-year OAT and the US 10-year, averaged over a depth of five years. This is then increased by a risk premium based on a sample of representative companies in the CGU, averaged over a depth of 5 years; for the Financial Solutions & Expertise CGU, a risk-free rate • (10-year OAT) over a depth of nine years, plus a risk premium calculated based on a sample of listed European banks with a similar banking business, while factoring in the specific characteristics of these institutions. These tests did not lead to the recognition of any impairment at December 31, 2020.

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UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE

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