BPCE_REGISTRATION_DOCUMENT_2017

5 FINANCIAL REPORT

IFRS Consolidated Financial Statements of Groupe BPCE as at December 31, 2017

USE OF ESTIMATES 2.3 Preparation of the financial statements requires Management to make estimates and assumptions in certain areas with regard to uncertain future events. These estimates are based on the judgement of the individuals preparingthese financialstatementsand the informationavailableat the balancesheet date. Actual future resultsmay differ from these estimates. With respect to the financial statements for the period ended December 31, 2017 in particular, accounting estimates requiring assumptions were mainlyused for the following measurements: the fair value of financial instruments determined on the basis of ● valuation models (Note4.1.6); the amount of impairmentof financialassets, and more specifically ● permanent impairment losses on available-for-sale assets and impairment losses applicable to loans and receivables on an individual basisor calculated onthe basis of portfolios (Note 4.1.7); provisions recorded under liabilities in the balance sheet and more ● specifically the provision for regulated home savings products (Note 4.5) andprovisionsfor insurancepolicies (Note4.13); CONSOLIDATING ENTITY 3.1 Due to the Group’s structure as described in Note consolidatingentity includes: the Banque Populaire banks, namely the 12 ● regional banks, CASDEN Banque Populaireand Crédit Coopératif; the 16 Caisses d’Epargne; ● the Caisses du Crédit Maritime Mutuel, affiliated with BPCE ● pursuant to Financial Security Law No. 2003-706 of August 1, 2003; the sociétés de caution mutuelle (SCM or Mutual guarantee ● companies) collectively affiliated with the Banque Populaire banks to which they are linked; the Group’s centralinstitution, BPCE. ● In addition, theGroup comprises: the subsidiaries of theBanquePopulairebanks; ● the subsidiaries of the Caisses d’Epargne, including CE Holding ● Participationsand itssubsidiaries; the subsidiariesowned by the central institution,includingNatixis, ● Crédit Foncier, Banque Palatine and BPCEInternational. 1, Groupe BPCE’s Banque Populaire Note 3

calculations related to the cost of pensions and future employee ● benefits (Note4.10);

deferredtax assets and liabilities (Note 4.12); ● goodwill impairment testing (Note 4.15). ●

2.4

PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS AND BALANCE SHEET DATE

As no specific format is requiredunder IFRS, the presentationused by the Group for summarized statements follows Recommendation No. 2013-04 issued by the Autorité des normes comptables (ANC – French national accounting standards authority) on November7, 2013. The consolidated financial statements are based on the financial statementsat December 31, 2017. The Group’s consolidatedfinancial statements for the period ended December 31, 2017 were approved by the Management Board on February 05, 2018. They will be presented to the Annual General Shareholders’Meeting on May 25, 2018.

Consolidation principles and methods

Entities controlled by the Group 3.2.1 The subsidiaries controlled by Groupe BPCE are fully consolidated. Definition of control Control exists when the Group has the power to govern an entity’s relevant activities, when it is exposed to or is entitled to variable returns due to its links with the entity and has the ability to exercise its power over the entity to influence the amount of returns it obtains. The existence and effect of potential voting rights that are currently exercisable or convertible are consideredwhen assessing the control exercised.These potential voting rights may result, for example, from share call options traded on the market, debt or equity instruments that are convertibleinto ordinary shares, or equity warrants attached to other financial instruments. However, potential voting rights are not taken into account o calculatethe percentage of ownership. Exclusive control is presumed to exist when the Group holds directly or indirectlyeither the majorityof the subsidiary’svoting rights, or at least half of an entity’s voting rights and a majority within the management bodies, or is in a position to exercise significant influence. Specific case of structured entities Entities describedas structuredentities are those organizedin such a way that voting rights are not a key criterionwhen determiningwho has control. This is the case in particular when voting rights only apply to administrative duties and relevant activities are managed throughcontractual agreements.

3.2

SCOPE OF CONSOLIDATION – CONSOLIDATION AND VALUATION METHODS

The Group’s financial statements include the financial statements of all the entities over which it exercisescontrol or significantinfluence, whose consolidation had a material impact on the aforementioned financial statements. The scope of entities consolidated by Groupe BPCE is described in Note 17 – Scopeof consolidation.

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Registration document 2017