BPCE - 2020 Universal Registration Document

FINANCIAL REPORT

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

At the start of the contract, assets under finance leases are recorded in the lessor’s balance sheet in the form of a receivable equal to the net investment in the lease contract. The net investment corresponds to the amount of lease payments receivable from the lessee, discounted at the interest rate implicit in the lease plus any unguaranteed residual value of the asset accruing to the lessor. More specifically, the lease payments used to calculate the net investment include fixed payments less any lease incentives payable and variable payments that depend on an index or rate. IFRS 16 requiresunguaranteedresidual values to be reviewed on a regular basis. A reduction in the estimatedunguaranteed residual value modifies the income allocation over the lease term. In this case, a new paymentscheduleis drawn up and a charge is recorded to adjust the amount of financial income already recorded. Any impairment recorded for counterpartyrisk on receivables in respect of finance leases is calculated in accordancewith IFRS 9 using the same method as for financial assets at amortized cost (Note 5.5).This impairment is recordedon the income statement under “Cost of credit risk”.

Finance lease income is considered to be interest and is recognized in the income statement under “Interest and similar income”. This income is recognizedusing the interest rate implicit in the lease, which reflects a constant periodic rate of return on the lessor’s net investment. The rate of return implicit in the lease is the discount rate that makes the following two items equal: the net investment; • the initial value of the asset (the fair value at the inception • of the lease, plus any direct initial costs comprising expenses incurred specifically by the lessor to set up the lease). Operating leases A lease which is not considered to be a finance lease is classified as an operating lease. Assets provided under operating leases are shown in the balance sheet under property, plant and equipment or intangible assets in the case of equipment leases, and investment property in the case of property leases. Lease income from operating leases is recognized in the income statement on a straight-linebasis over the lease term, under “Income or expenses from other activities”.

Schedule of finance lease receivables

12/31/2020

12/31/2019

in millions of euros

FINANCE LEASES Non-discounted lease payments (amount of gross investments)

12,409 2,855 6,528 3,025 2,757 5,976 2,338 1,338 11,071

12,489 2,755 6,443 3,291 2,673 5,970 2,475 1,371 11,118

< 1 year 1-5 years > 5 years < 1 year 1-5 years > 5 years

5

Discounted lease payments (amount of net investments)

Financial income not received

OPERATING LEASES

234

311

< 1 year 1-5 years > 5 years

47

64

123

154

64

94

501

UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE